SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
______ Exchange Act of 1934
For the Fiscal Year Ended December 31, 1994
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
______ Exchange Act of 1934
For the Transition Period from to
Commission File No. 0-11438
BURR-BROWN CORPORATION
______________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 86-0445468
________________________ _________________________________
(State of Incorporation) (IRS Employer Identification No.)
6730 South Tucson Boulevard
Tucson, Arizona 85706
________________________________________
(Address of Principal Executive Offices)
(520) 746-1111
_______________________________
(Registrant's Telephone Number)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
________________
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant based on the closing price as of February 22, 1995 was approximately
$76,526,052.
There were 9,555,710 shares of Burr-Brown Common Stock outstanding as of
February 22, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 1994--Incorporated by reference into Parts I, II and IV.
Portions of the Registrant's Proxy Statement for the Annual Meeting of Stock-
holders to be held on April 21, 1995--Incorporated by reference into Part III.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Burr-Brown Corporation (and its wholly-owned subsidiaries and majority-owned
affiliated companies, "Burr-Brown" or the "Company") is primarily engaged in
the design, manufacture and marketing of a broad line of proprietary, standard,
high-performance, analog and mixed signal integrated circuits used in the
processing of electronic signals. The Company's products are used primarily in
electronic and medical instrumentation, process and industrial control systems,
manufacturing automation, automatic test equipment, digital audio, telecommuni-
cations, power conversion products, and computer peripherals. The Company also
offers a product line of system components which include personal computer data
acquisition and signal processing products, data collection systems and data
entry terminals. The Company was incorporated in Arizona in 1956 and rein-
corporated in Delaware in 1983. The Company's management and technical team
has many years of experience in the design, manufacture, and worldwide marketing
of highly complex, high performance analog integrated circuits and in solving
customer problems in the markets served.
THE INDUSTRY
Integrated circuits are electronic building blocks used in Original Equipment
Manufacturers (OEM) products such as computers, process control systems, test
equipment, communications networks, and consumer electronics. Worldwide inte-
grated circuit sales are estimated by industry analysts to have been in excess
of $92 billion in 1994. Industry analysts estimate that analog integrated
circuits represent approximately 16 percent of total integrated circuits and
are expected to remain at this level in the near future.
Electronic signals may be categorized in two forms: analog (linear) and digital.
Integrated circuits that are used to process these electronic signals can be
categorized as either analog or digital depending upon the technique used in
the circuits to process or act on the signal. Mixed signal devices are those
that use both analog and digital techniques for signal processing. The general
characteristic that separates digital and analog circuits is this: digital
circuits operate using digital techniques which use many repetitive circuit
elements that are either on or off to represent the "ones" and "zeros" of the
binary number system used in digital computers for computation. Some digital
circuits may process analog signals by representing the analog signal in
digital form. Examples of digital circuits that are used to manipulate or
process electronic signals are memory devices, logic devices, microprocessors,
and digital signal processors.
Analog circuits process electronic signals using analog techniques, that is,
through the use of circuit elements whose output is a continuously varying
representation of the input signal. Unlike digital signals which have two
states, analog signals effectively have an infinite number of states. In
analog processing, signals continuously vary as an analogy of continuously
varying conditions such as temperature, pressure, position, frequency, sound
and speed. In some cases, digital data are represented as analog signals such
as in a modem in which the digital data are represented by the frequency of an
analog signal. Analog circuits also provide the power control signals that
are required to activate switches for the control of processes or equipment,
and regulate voltages for electronic systems. Examples of analog circuits are
amplifiers, voltage-to-frequency converters, and products that perform math-
ematical functions. Other analog circuits convert analog signals to digital
(analog-to-digital converter) so that the signals may be processed by digital
processors or digital data to analog signals (digital-to-analog converter) so
that the analog signal may be used to drive a "real world" element such as a
speaker to create sound.
The Company believes production of analog circuits has some important advan-
tages as compared to digital circuits. The market for analog integrated
circuits is generally more stable; prices for analog integrated circuits are
usually less volatile than digital circuits. Analog circuits are more
dependent on circuit design, circuit layout, and matching of circuit elements.
Analog circuit uniqueness and competitive advantage are achieved through inno-
vative circuit design in concert with the subtleties of the wafer fabrication
and packaging processes.
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In contrast, digital circuits rely heavily on the wafer fabrication process
capability to achieve exceptionally high circuit element density, small feature
size and low cost. Small circuit dimensions are usually not required to produce
most high-performance state-of-the-art analog devices. As a result, production
of analog circuits requires significantly less capital investment than that
demanded by digital circuits.
PRODUCTS
The Company operates predominately in one segment, the electronic component
industry. The Company has various classes of products within that one segment.
The following table shows the approximate product line revenues as a percentage
of total Company revenues:
PRODUCT LINE 1994 1993 1992
____________ ______ ______ ______
Analog Integrated Circuits 43% 42% 37%
Data Conversion Integrated Circuits 38% 41% 39%
Power Conversion Products 10% 6% 5%
Other 9% 11% 19%
ANALOG INTEGRATED CIRCUITS
Demand for analog circuits primarily has been driven by the need for increased
productivity manifested as the need for lower cost, lower power, smaller size,
greater functionality, and higher precision products. Semiconductor technology
has provided many effective solutions to this demand. The availability of
effective solutions has accelerated with the advent of more advanced digital
processing. This has led to greater use of digital computers or processors to
provide massive computational power, to control processes and equipment, and
in general to greater automation in industry. Since the early seventies, the
availability of low cost digital microprocessors and later digital signal pro-
cessing, in cost-effective single chip form, has enabled an acceleration of the
trend toward digitization of systems. This has led to a high degree of hier-
archaically distributed computational power leading to increased use of
computers or imbedded processors to measure, control, monitor, or process
electronic signals nearer or adjacent to the sensor that is detecting physical
conditions. This, in turn, has created the need for products that enable digital
computers, microprocessors, and digital signal processors to interact with
electronic signals derived from physical or analog phenomena. Burr-Brown
designs and manufactures the integrated circuits which perform the analog signal
conditioning and data conversion functions critical to this interaction.
Process control sensors generate continuously varying electronic signals,
called analog or linear signals, which represent the physical phenomenon being
measured or controlled. In many circumstances these analog signals are rela-
tively weak and contaminated with a large amount of electrical noise. The
Company's signal processing components are used to strengthen, filter, transmit
and otherwise process the signal. The resulting signal, still in analog form,
must be converted into a digital signal before it can be processed by a com-
puter. The Company's analog-to-digital circuits effect this conversion. After
the digital signal is processed by the computer, it is often necessary to
convert the digital signal back to analog form, and the Company's digital-to-
analog circuits also accomplish this reverse conversion. The resulting analog
signal controls the process.
The market requirements for analog signal processing and conversion products
range from high performance industrial applications to high volume consumer
applications. The Company's product strategy has been to concentrate on pro-
prietary high precision or high performance analog, data conversion, and
integrated analog/digital (mixed signal) circuits. The Company identifies
significant markets in which new or enhanced high performance products of this
type are required. The Company then attempts to develop and supply as com-
plete a function as is permitted by technological and cost constraints.
The Company's signal processing and data conversion products are generally
designed into a customer's product and usually remain a part of that product
throughout its life. The Company's experience has been that there is generally
a four-year period before the sales level of its products fully matures, and
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the sales life of the products may extend to eight years or more. Once the
Company's component has been designed into a customer's product, the relatively
low volume, high performance characteristics of the component significantly
deter potential competitors. As a result, the Company is often that customer's
sole source for that particular component.
Analog signal processing integrated circuits are used to process and transmit
analog data signals prior to their conversion to digital signals. The Company's
analog circuits include operational amplifiers, power amplifiers, instrumenta-
tion amplifiers, programmable gain amplifiers, isolation amplifiers, current
transmitters and other analog signal processing components. These components
are used in the construction of complete data acquisition systems, automatic
test equipment, analytical instruments, medical instruments and systems,
military equipment, industrial controls, computer peripherals and communica-
tions equipment.
OPERATIONAL AMPLIFIERS--Operational amplifiers are used to detect and amplify
weak (low level) analog signals and are included in many measurement and con-
trol systems. The operational amplifier is the fundamental building block in
analog systems design. In addition to amplification, it can perform mathema-
tical functions such as integration and differentiation. The Company's high
performance operational amplifiers are generally capable of amplifying typical
analog signals in the micro-volt range up to 100,000 times and provide ultra-
low drift, low bias current, low noise, high bandwidth and fast settling time.
Certain models provide high voltage and high current operation for special
applications. These high performance amplifiers are required to treat signals
generated in numerous applications, including scramblers for satellite communi-
cations systems, robotic vision systems and magnetic resonance and computer-
aided tomography (CAT) body scanning systems.
OTHER AMPLIFIERS--The Company manufactures a number of other amplifiers, includ-
ing instrumentation amplifiers, programmable gain amplifiers and isolation
amplifiers. These products perform a variety of functions related to the ampli-
fication and isolation of analog signals. Among other uses, these components
permit the measurement of weak signals in the presence of unwanted "noise" and
protect sensitive instruments from the effects of transient high-magnitude,
potentially damaging voltages caused by sources such as lightning or switching
of high voltage equipment. These amplifiers are used in many diverse applica-
tions ranging from temperature measurement in industrial processes to the
protection of sensitive medical instruments, and to isolate electrical power
line disturbances and faults.
OTHER SIGNAL PROCESSING AND TRANSMITTER COMPONENTS--The Company manufactures a
variety of other analog signal processing components including mathematical
function circuits, current transmitters and voltage-to-frequency converters.
Mathematical function circuits are used when information sought can be effec-
tively derived only through its mathematical relationship to analog signals.
Current transmitters send analog signal information from a process sensor to
measurement or control equipment in the form of a current on the same wires
that produce the power to the transmitter and sensor. Voltage-to-frequency
converters convert process signals to a frequency, making the signal immune to
electrical noise and permitting more efficient storage and processing of the
information.
DATA CONVERSION INTEGRATED CIRCUITS
Data conversion components are integrated circuit devices used to convert ana-
log signals to digital form (A/D converters) and vice versa (D/A converters).
This conversion is necessary in virtually all applications in which digital
computers or processors measure and control the analog signals from a physical,
"real world" process.
GENERAL PURPOSE CONVERSION PRODUCTS--The majority of the Company's data conver-
sion components revenue is derived from moderate speed, high resolution and high
accuracy converters. These general purpose converters are used primarily in
manufacturing process instrumentation, electronic test instrumentation, auto-
matic test systems and health care systems. For example, in a robot controller,
the position of the robot arm must be precisely measured and manipulated.
Analog signals from the robot's position sensors are converted by an A/D
converter for computer processing and, in turn, a D/A converter converts the
digital control signal from the computer to analog form to drive the actuators
and servo motors to position the robot arm accurately.
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HIGH SPEED CONVERSION PRODUCTS--In the early 1980's the Company began develop-
ing high speed, high resolution analog-to-digital and digital-to-analog
converters at speeds many times greater than general purpose products. These
products utilize a unique combination of technologies and design expertise to
achieve state-of-the-art performance.
High speed converters are used in a variety of applications such as image
processing, digital oscilloscopes, ultrasound, radar and sonar, as well as the
front end of advanced systems using digital-signal-processing (DSP) technology.
The Company believes that due to the unique combination of technologies
involved, competition in the high speed, high resolution product area is
limited.
DIGITAL AUDIO D/A CONVERTERS--The Company believes that it was the first to
introduce a viable low cost, high precision, single chip digital-to-analog con-
verter for the consumer market, a pulse-code-modulated (PCM) conversion device.
This product was being used by Japanese customers as early as 1979 and was
introduced publicly in 1982. Designed for the consumer high fidelity stereo
market, this D/A converter plays an essential role in digital audio systems,
which use laser technology to achieve improved audio reproduction performance.
These systems are playback units that use lasers to read Compact Discs (CD's)
containing stereo music encoded in digital form. The Company's component con-
verts the digital signals for each stereo channel into audio. The Company
believes it is one of the largest merchant market suppliers of such devices
worldwide.
Several generations of products of this type have been developed and introduced
for use in digital audio systems. Similar products produced by the Company have
been designed into digital audio tape (DAT) products. Digital audio tape sys-
tems are used to record and play back digitized high fidelity audio signals on
tape rather than the discs used in compact disc audio systems. PCM converters
have now found their way into musical instruments, computers, automobiles,
interfaces to digital signal processors, CD-ROMs for multimedia, and set top
box tuners for cable and satellite TV.
The Company believes that the technology developed for the digital audio D/A
converter enables the Company to develop products for other markets. For
example, serving the compact disc market expedited the Company's development
of complete 16-bit digital-to-analog converter integrated circuits for the
military and industrial markets. The Company believes it holds a strong posi-
tion in the 16-bit and higher precision converter market. Involvement in the
compact disc market also helped the Company's early entry into the DAT (digital
audio tape) market and multi-media markets.
DATA COLLECTION SYSTEMS, COMPONENT MICROTERMINAL DEVICES AND PERSONAL COMPUTER
INSTRUMENTATION
The products of Intelligent Instrumentation Inc. (III), a majority-owned
affiliate of Burr-Brown, address the rapidly growing markets for PC-based data
collection and automation.
III's data acquisition product line includes a broad range of plug-in boards,
portable data acquisition systems, and supporting software for IBM compatible
PC's, as well as a broad line of signal conditioning accessories for such
systems. These products are applied worldwide in a myriad of industrial and
scientific applications. III believes that these products compare well with
competition in performance, cost-effectiveness, and ease-of-use.
A key part of the data acquisition product line is software that is easy to
use, yet flexible enough to accomplish diverse applications. III's premier
software product for data acquisition is Visual Designer, a graphical develop-
ment environment which enables users to design applications by connecting
functional blocks, called icons, in a flow diagram. Once the diagram is
completed, Visual Designer generates code which runs under Microsoft Windows
on a standard PC.
The LANpoint line of products for enterprise data collection take advantage of
a widespread trend toward the use of networks of personal computers. These
products integrate a complete Ethernet-ready PC into a small rugged industrial
package, along with bar code and magnetic stripe capabilities, digital I/O and
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serial ports. In addition, network drivers and tools are provided for Novell,
LAN Manager, LANtastic, and TCP/IP networks, making the products usable in
almost any PC networking environment. These products are being marketed
through an established network of Value Added Resellers (VARs).
III also offers integrated data collection systems which not only collect the
data, but format and deliver that data to the customer's information system in
real time. This is achieved through the integration of III's data collection
hardware and software products to meet a customer's specific needs. The
engineering of such systems is a fertile source of inputs for new products, both
hardware and software.
III's line of microterminals is aimed at the market for embedded applications
of microprocessors. Microterminals communicate on a serial link, providing
numerous functions and options for the system designer and user. With their
aggressively low cost, excellent functionality, and rugged yet attractive
packages, microterminals offer system architects a desirable alternative to the
designing of customized panels.
POWER CONVERSION PRODUCTS
The products of Power Convertibles Corporation (PCC), a majority-owned affiliate
of Burr-Brown, address DC-to-DC conversion and battery chargers. PCC is one of
the leading suppliers of low power DC/DC converters as well as products to con-
dition and charge many types of batteries including cellular telephones. All
products are manufactured using surface mount technology with automated pro-
cesses at PCC's ISO9001 certified plants in Arizona and Mexico. Its products
are supplied worldwide to the computer, medical, industrial, telecommunications,
data communications and instrumentation markets.
PCC has numerous competitors in the low end DC/DC power conversion market. PCC
competes favorably in this market. Their competitive factors include surface
mount manufacturing techniques, price and quality. There are several new
products under development which will enable PCC to move into the higher end
power conversion market where high power density is critical to market success.
PCC's new products for this market are being designed to possess some of the
highest density ratings in the industry.
PCC also designs, produces and markets battery chargers for the cellular tele-
phone market. A significant proportion of PCC's revenues is generated from a
single customer in this market. PCC has established marketing and custom design
capabilities in an effort to increase its customer base in this area.
PRODUCT DEVELOPMENT
One of the important factors that distinguishes the analog integrated circuit
business from the digital integrated circuit business is the importance of the
contribution of innovative individual design engineers. Digital circuits have
an exceptional amount of repetition of circuit elements and are highly depen-
dent upon the ability to produce chips with vary high circuit element density
to minimize chip size and maximize speed. This type of wafer processing of
extremely small dimensions leads to the need for state-of-the-art, inordinately
costly capital investment in wafer fabrication facilities.
Analog circuits, on the other hand, require the ability to accurately match
elements and place elements with respect to one another. In addition, analog
circuits may require the ability to handle large voltages and currents and
therefore demand relatively large circuit element and spacing dimensions.
Although these requirements place stringent processing requirements on an
analog wafer fabrication facility, the necessary equipment and facilities are
substantially less costly and longer lived than required for digital circuit
processing.
Designers of analog circuits must take into account complex interrelationships
between the manufacturing process, the circuit elements, and the packaging
process, all of which may seriously affect the circuits' performance. The
number of creative design engineers who have the training and the experience
to handle these complexities is very limited. The Company's ability to compete
depends heavily on its continued introduction of innovatively designed and cost
effective new products. Therefore, the Company must continually invest in
design engineering talent, engineering tools, production processes, and test
equipment.
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The Company emphasizes the development of proprietary standard and application
specific products. The Company's product strategy is to identify markets in
which the application of microelectronics technology may be used to provide
competitive advantage for its customers through improved methods of precision
in measuring, monitoring and controlling physical processes and conditions.
Examples of these markets are: robotics, factory automation, process control,
automatic test, medical instrumentation, computers, communications and digital
audio. Within these markets the Company selects specific applications in which
the Company's unique design and processing technology may make an important
contribution to its customers.
The Company spent approximately $21.9 million in 1994, $19.8 million in 1993,
and $18.1 million in 1992 for product and process development. This represents
an expenditure of approximately 11 percent of sales in each of 1994, 1993 and
1992. (See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report to Shareholders, incor-
porated by reference to Item 7 of this report.) The Company's current product
research and development efforts are focused primarily on the development of
ultra high speed and high precision data converters which use mixed signal
design techniques and topologies, and high precision signal conditioning inte-
grated circuits. The Company also continues to focus on broadening its range
of hardware and software offerings to the markets for factory data collection,
digital signal processing technology, and the use of personal (PC) and other
computer platforms in industrial control, test and laboratory environments.
BACKLOG
Burr-Brown's products are generally standard items with a relatively short
delivery cycle. The Company's backlog is usually three months or less of sales
although some portion may be scheduled for delivery four to eighteen months
into the future. Therefore, the order backlog at the end of any specific
quarter is not generally indicative of the level of sales to be expected in
succeeding quarters. It is the policy of the Company to include in backlog
only those orders that have firm scheduled delivery dates. The Company's back-
log as of December 31, 1994, 1993 and 1992 was approximately $45.5 million,
$31.4 million, and $29.6 million, respectively.
MARKETING
Burr-Brown markets its products in all the major markets in the industrialized
world through its direct sales force, independent sales representatives, and
distributors.
In approximately 45 countries and the less significant domestic markets where
the Company does not have a direct sales force, independent sales representa-
tives sell all of the Company's products. The majority of the Company's sales
people hold engineering degrees and the balance have relevant engineering
experience.
The Company markets its line of component and system products to over 22,000
customers. The largest customer accounted for approximately 3 percent of sales
in 1994. Burr-Brown products are sold to original equipment manufacturers,
systems assemblers and, to a lesser extent, manufacturing concerns which build
their own test and process control systems. The Company's components are
generally proprietary and are frequently "designed in" to its customers'
products at the product development state. Accordingly, the Company is often
a customer's sole source for a particular component. Over 40 percent of the
orders received in 1994 for analog and data conversion integrated circuits were
for products introduced within the preceding five years. Representative major
customers of the Company include Elsay Bailey Group, Hewlett-Packard Co.,
Matsushita Electric Corp. of America, Northern Telecom Inc., Siemens AG, Sony
Electronics Inc., Toshiba America Electronic Components Inc., Mitsubishi Corp.,
Alcatel Answare, Nokia Corporation Finland, Advantest Corp., NEC America Inc.,
IBM, Fujitsu Ltd., Ericsson, and Hughes Network Systems Inc.
Sales outside the United States accounted for approximately 62 percent of total
sales in 1994, 64 percent of total sales in 1993 and 61 percent of total sales
in 1992. (See the note labeled "Foreign Operations, Geographic, and Segment
Data" in "Notes to Consolidated Financial Statements" in the Company's Annual
Report to Shareholders, incorporated by reference to Item 8 of this report.) To
support its international marketing organization, the Company has established
product development centers and manufacturing facilities in Scotland and Japan.
The Company also has four product development centers at the corporate head-
quarters in Tucson.
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A large percentage of international sales are denominated in local currencies
and the Company's foreign revenues and net income are therefore subject to
currency exchange rate fluctuations. However, the Company borrows funds in
local currencies and purchases forward contracts to hedge its foreign currency
exposure. Some of the Company's products are subject to export regulations and
other international trading restrictions, but the Company has not experienced
any material difficulties from these limitations. No assurance can be given,
however, that such material difficulties will not be experienced in the future.
COMPETITION
Burr-Brown estimates that it is among the top 4 manufacturers of high perform-
ance amplifiers and data conversion integrated circuits. The Company's major
competitor in the high performance analog integrated circuits market in Analog
Devices Inc., believed to be the largest supplier of these devices. Other com-
petitors include Linear Technology Corp. and Maxim Integrated Products Inc.
With respect to a small number of products, the Company also competes with
National Semiconductor Corp., Harris Corp., Motorola Inc., Texas Instruments
Inc., Cirrus Logic Inc., Signal Processing Technologies, Datel Inc., Sipex
Corp., and Unitrode Corp.
The Company is not aware of any significant competition from foreign companies
providing analog integrated circuits, personal computer instrumentation pro-
ducts, and data collection products for the industrial and military markets;
however, there can be no assurance that foreign competitors will not enter
these markets in the future. The Company's PCM product line does compete with
several U.S. and foreign manufacturers of "digital audio" D/A converters for
use in digital compact disc stereo systems, including Analog Devices Inc.,
Cirrus Logic Inc., Asahi Kasei Micro, Sony Electronics Inc., Hitachi America
Ltd., Matsushita Electric Corp. of America, Mitsubishi Corp, and Philips
Semiconductors. While some of these competitors have greater financial and
marketing resources than Burr-Brown, none of them compete with the Company in
all of its product areas.
The Company believes that competition with respect to component products is
based primarily on design and process innovation, product performance and reli-
ability, technical service, availability of a broad range of specialized
products, standard product availability; and secondarily, on price. The Company
believes that reliable performance and service are more important than price
when the Company is the sole source of a product. Price is more of a competi-
tive factor when an equivalent product is available from other sources, as in
the case of commodity products. Burr-Brown competes with this type of product
only in limited areas.
Large semiconductor manufacturers have generally concentrated their product and
marketing efforts on high volume, relatively low priced, general purpose compo-
nents. The Company does not usually compete in these markets. Whereas most
large semiconductor companies tend to generalize a component to achieve the
broadest high volume usage possible, Burr-Brown follows a strategy of narrowly
defining its products for application markets demanding very high, difficult to
achieve performance. The Company believes that its products' high performance
requirements and relatively low unit sales volumes will continue to make it
impractical for larger semiconductor suppliers to market a broad line of
competing components.
MANUFACTURING
The Company's manufacturing technology has evolved substantially over the past
two decades. Initially, the Company manufactured its products by assembling
purchased resistors, transistors, diodes and other discrete components onto
printed circuit boards. The Company has since migrated to integrated circuits,
which required the development of semiconductor manufacturing technologies in
its Tucson wafer fabrication facility.
The Company can utilize its in-house process technology, purchase wafer process-
ing foundry services, or buy components already incorporating the necessary
technology in order to meet customer needs. It must combine relatively diverse
technologies to produce the integrated circuits necessary to meet the stringent
performance requirements of its customers. For example, some of the Company's
integrated circuit products combine high precision linear integrated circuit
wafer fabrication processing with compatible laser-trimmed thin film technology
and dielectric isolation (DI) wafer processing.
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The Company offers several bipolar, CMOS and BiCMOS processes which provide
circuits for the analog, data acquisition and PCM markets. Burr-Brown processes
have the added capability of making high quality capacitors and trimmable resis-
tors that enable the Company to manufacture high precision, cost effective
products. The following describes the various processes that Burr-Brown offers
and the market that each one addresses:
40 VOLT BIPOLAR PROCESS: This is a high voltage (40V) bipolar (+/- 15V or 36V
power supplies) used to make high voltage operational and instrumentation ampli-
fiers. High precision in these products is made possible by the capability of
ion implanted JETS and trimmable resistors. Typical products made from this
process are instrumentation amplifiers, universal active filters, isolation
amplifiers and high voltage power amplifiers.
20 VOLT BIPOLAR PROCESS: This is a lower voltage (20V) bipolar process
especially suited to data acquisition and PCM components. There are faster
circuits utilizing smaller devices with lower Rc. Trimmable resistors allow
high precision products.
DIELECTRICALLY ISOLATED BIPOLAR PROCESS: This is a dielectrically isolated
high voltage (40V) bipolar process used for low noise, high precision and low
drift. Very high performance amplifiers are built by this process where the
noise and drift characteristics are important, especially in the medical
equipment markets served.
COMPLIMENTARY BIPOLAR DIELECTRICALLY ISOLATED PROCESS: Dielectrically isolated
process with complementary NPN and PNP bipolar transistors. This process is
used to manufacture high voltage operational amplifiers, voltage-to-frequency
converters, and sample/hold circuits.
In addition to the processes at the Company's Tucson wafer fabrication facility,
foundries are used for processes not available internally. Processes currently
used include a variety of CMOS processes ranging from 3 microns to 0.6 microns
for products such as single and dual analog-to-digital and digital-to-analog
converters; a 2 micron BiCMOS process for PCM DACs and ADCs; a very high fre-
quency bipolar process used for products such as video amplifiers.
ASSEMBLY AND TEST
The Company has integrated circuit assembly operations in Tucson and Scotland.
In addition, much of the assembly demand is met by using contract assembly
companies located in Japan, Taiwan, Malaysia, Korea, Thailand and the Philip-
pines. To achieve lower cost without compromising high performance, the
Company has expanded its monolithic capability to complement multi-chip-module
assembly in its Tucson manufacturing facility.
The Company utilizes proprietary laser trimming techniques to produce high
performance bipolar integrated circuits and thin film resistors. This opera-
tion uses proprietary deposition technology and computer-controlled laser
trimming techniques to achieve the desired high precision. Depending upon the
performance requirements, integrated circuits may be packaged as single chip
products; or combined on ceramic substrates with the Company's thin film
resistors and purchased parts, such as discrete power devices, transformers
and optical diodes to form hybrid integrated circuits.
The Company's Tucson facility incorporates a computerized shop floor control
software system specifically designed to enhance the Company's ability to
effectively manage the operations.
The Company has developed and implemented a quality and productivity improve-
ment (QPI) program designed to aid in reducing waste, increasing yields,
improving communications and achieving overall high quality across all product
lines. The QPI program incorporates statistical process control (SPC) and total
quality management (TQM) techniques. The Company has maintained ISO9001
Quality Certification since 1993.
To provide better service to its European and Japanese customers, and to
achieve an improved competitive position, the Company maintains manufacturing
and product development facilities in both areas. In Europe, a manufacturing
- 9 -
<PAGE>
and product development site is located in Livingston, Scotland. This facility
designs and assembles integrated circuits for sale in Europe and for export
to other markets.
The Company's manufacturing plant in Scotland is certified to meet the
requirements of the United Kingdom's Ministry of Defense specification BS9000.
Subsequent to receiving this certification, the Company has qualified products
to the United Kingdom's specification BS9450.
In Japan, the Company's Atsugi Technical Center near Tokyo performs product
development, final product testing, quality and reliability testing for the PCM
product line for sale in Japan and export to other markets.
The principle raw materials used by the Company in the manufacture of its
monolithic integrated circuits are silicon wafers, chemicals and gases used in
processing wafers, gold wire and ceramic, metal and epoxy packages that enclose
the chip and provide the external connections for the circuit. Silicon wafers
and other raw materials may be obtained from several suppliers. From time to
time, particularly during periods of increased industry-wide demand, silicon
wafers and other materials have been in short supply. As is typical in the
industry, the Company allows for a significant period of lead time between
order and delivery of raw materials. In addition, the Company sometimes enters
into long term supplier-customer relationships with key suppliers of such
materials to mitigate problems of possible shortages.
Government regulations impose various controls on the discharge of certain
chemicals and gases into the environment that have been used in semiconductor
processing. The Company believes that its manufacturing processes conform to
present environmental regulations but there can be no assurance that future
changes in such regulations will not result in increased costs or impede operat-
ing performance. The Company is on target to eliminate the use of ozone-
depleting chemicals and gases by the end of 1995.
The Company is continuing to implement the necessary actions for the site
remediation as required under the provisions of the Consent Decree Agreement
with EPA. The cost for the implementation required in 1994 was approximately
$100,000.
HUMAN RESOURCES
At December 31, 1994, the Company employed 1928 people worldwide, including 1223
people in manufacturing and assembly, 219 people in research and development,
282 in sales and marketing and 204 in management and administration. Many of
the Company's employees are highly skilled and the Company's continued success
will depend, in part, on its ability to attract and retain such employees, who
are generally in great demand. At times, like other semiconductor manufac-
turers, the Company has had difficulty hiring engineering personnel. The Company
has never experienced a work stoppage; no employees are represented by labor
organizations, and the Company considers its employee relations to be very good.
PATENTS AND LICENSES
The Company owns 107 United States patents expiring from 1995 to 2014, and has
applications for 6 additional patents pending in the United States as well as
patents issued and pending in several other countries. Although the Company
pursues a policy of maintaining a strong patent portfolio, the Company believes
that its success depends primarily upon the experience and creative skills of
its people rather than upon the ownership of patents. As is common in the
semiconductor industry, from time to time, the Company has been notified of
claims regarding the possible infringement of patents issued to others, and
similarly, the Company has on occasion notified others of possible infringements
of its patents.
ITEM 2. PROPERTIES
The Company's major manufacturing and engineering facilities and administrative
offices are located in four company-owned buildings, aggregating 220,000 square
feet, on its 18 acre site in Tucson, Arizona. The Company also leases approx-
imately 85,000 square feet in Tucson. Approximately 25,000 square feet of this
leased space is on short term contracts of two years or less. The major single
- 10 -
<PAGE>
building lease is for 60,000 square feet and will expire in March 1997. The
aggregate current gross rental for all Tucson properties is approximately
$490,000 per year. All leases have options for renewal. The Company also owns
approximately 113 acres of land in Tucson which is being held in reserve for
future expansion.
In Filderstadt, Germany, the Company's sales office occupies 30,000 square feet
of space leased for a ten year period; this lease expires in 1999. The Company
has the option to sublease and renew this lease for three to five years. The
Company's Scottish manufacturing subsidiary leases a 32,000 square foot build-
ing on 6.65 acres in Livingston, Scotland for a 15 year period; this lease
expires in 1997. The Company also owns approximately 20 acres of land in
Livingston, Scotland. The Company's Atsugi Technical Center in Atsugi, Japan,
is a 44,500 square foot building which houses sales, product testing, and
research and development activities; the Company has a fifteen year lease of
this facility which expires in 2001.
ITEM 3. LEGAL PROCEEDINGS
The following four proceedings are the only litigation matters other than
ordinary pending litigations.
Each of these proceedings relate to the same factual situation of the release
of contaminants including Trichloroethylene (TCE) into the ground waters causing
damage to the plaintiffs.
a. BAHRS ET.AL. VERSUS HUGHES AIRCRAFT COMPANY, BURR-BROWN COMPANY, ET.AL.,
Superior Court, State of Arizona, Pima County. Filed on January 13, 1992.
The plaintiffs are charging that they and their respective properties are
damaged and they are asking for monetary damages. The Company spent the
first year discussing a stipulated dismissal which was not granted. The
Company has now requested the Superior Court to begin consideration for
dismissal.
b. YSLAVA ET.AL. VERSUS HUGHES AIRCRAFT COMPANY, U.S. District Court,
District of Arizona. Filed on September 20, 1991 against Hughes. On
September 30, 1993, Burr-Brown and other companies were identified as third
party co-defendants in a Motion to File a Third-Party Complaint.
c. LANIER VERSUS HUGHES AIRCRAFT COMPANY, U.S. District Court, District of
Arizona. Filed on August 7, 1992 against Hughes. On March 7, 1994,
Burr-Brown and other companies were identified as third party co-defendants
in a Motion to File a Third-Party Complaint.
d. ARELLANO VERSUS HUGHES AIRCRAFT COMPANY, U.S. District Court, District of
Arizona. Filed on January 9, 1995 against Hughes. Plaintiffs are asking
for medical monitoring. Burr-Brown was served as third party defendant on
March 7, 1995. The Company will issue an answer denying the allegations
as in the above cases.
Risk exposure to the defendants is not ascertainable at this time. The Company
has factual records that indicate it is an improper party to these actions.
The Company's insurer, under a reservation of rights, has agreed to the partial
payment of reasonable and necessary fees for the defense of these matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during
the quarter ended December 31, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
At December 31, 1994, there were 3 individuals designated as executive
officers by the Board of Directors. The following sets forth certain informa-
tion with regard to the executive officer of Burr-Brown who is not a Director:
- 11 -
<PAGE>
John L. Carter (age 60) joined the Company in August, 1993 as Executive Vice
President, responsible for Components Operations and was then appointed Chief
Financial Officer in July 1994. Most recently, Mr. Carter served as a consul-
tant to Burr-Brown. Before joining the Company, he served as President and
CEO of Qualtronics, Inc. From 1956 to 1987 he was with IBM in various manufac-
turing and general management positions, including General Manager of Tucson
IBM operations.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this item appears in the 1994 Annual Report to
Stockholders on page 21, which is included as Exhibit 13 to this report, and
is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears in the 1994 Annual Report to
Stockholders on page 24, which is included as Exhibit 13 to this report, and
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 21, 22
and 23 of the 1994 Annual Report to Stockholders which is included as Exhibit
13 to this report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by this item appear in
the 1994 Annual Report to Stockholders on pages 10 through 21, included as
Exhibit 13 to this report and incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding Directors and certain Executive Officers who are
also Directors appearing under the caption "Election of Directors" in the
Registrant's Proxy Statement for the 1995 Annual Meeting of Stockholders on
pages 4 and 5 is incorporated herein by reference. Information regarding
other executive officers appears in Part I of this report under the caption
"Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under the caption "Executive Compensation and Other
Information" on pages 7 through 12 of the Registrant's Proxy Statement for
the 1995 Annual Meeting of Stockholders with respect to Executive Compensation
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the caption "Principal and Management Stock-
holders" on pages 2 and 3 of the Registrant's Proxy Statement for the
1995 Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
- 12 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
a(1) Financial Statements:
The following consolidated financial statements are incorporated by
reference under Part II, Item 8, from the Registrant's 1994 Annual Report
to Stockholders.
Pages of 1994 Annual
Report to Stockholders
Incorporated by Reference
Report of Ernst & Young LLP, Independent Auditors 21
Consolidated Statements of Financial Position 11
at December 31, 1994 and 1993
Consolidated Statements of Income for the 10
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Stock- 10
holders' Equity for the years ended December
31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the 12
years ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements 13 to 20
a(2) Financial Statement Schedules: Form 10-K
For the years ended December 31, 1994, 1993 and 1992 Page
Schedule II - Valuation and Qualifying Accounts 19
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements.
- 13 -
<PAGE>
a(3) Exhibits
3.1 Restated Certificate of Incorporation of the Registrant.
Incorporated by reference to Exhibit 3.1 of the Registrant's
10-K filing for the period ended December 31, 1987.
3.2 Restated By-laws of the Registrant dated October 21, 1994,
filed herein.
4.1 Article Four of the Certificate of Incorporation of the
Registrant. (Included in Exhibit 3.1).
4.2 Rights Agreement dated July 21, 1989 between the Registrant
and Valley National Bank of Arizona, incorporated by reference
to Exhibit 4.2 of the Registrant's 10-K filing for the period
ended December 31, 1989.
9.1 Voting Trust Agreement dated October 3, 1988 among Thomas R.
Brown, Jr., individually, Sarah M. Brown Smallhouse and Mary B.
Brown and Thomas R. Brown, Jr., as Trustee under the Last Will
and Testament of Helen Mason Brown. Incorporated by reference
to Exhibit 9.1 of the Registrant's 10-K filing for the period
ended December 31, 1988. Amendment dated December 17, 1992,
whereby John S. Anderegg, Jr. was appointed Successor Trustee.
Incorporated by reference to Exhibit 9.1 of the Registrant's
10-K filing for the period ended December 31, 1993.
9.2 Voting Trust Agreement dated October 3, 1988 between Mary
Buchanan Brown and Sarah M. Brown Smallhouse as Shareholders,
and Sarah M. Brown Smallhouse, Mary Buchanan Brown and David W.
Richter as Co-trustees. Incorporated by reference to Exhibit
9.2 of the Registrant's 10-K filing for the period ended
December 31, 1988. Amendment dated December 17, 1992, whereby
John S. Anderegg, Jr. was appointed Co-trustee. Incorporated by
reference to Exhibit 9.2 of the Registrant's 10-K filing for
the period ended December 31, 1993.
9.3 Brown Management Limited Partnership Agreement dated November
11, 1988 among Thomas R. Brown, Jr., Mary B. Brown and Sarah B.
Smallhouse. Incorporated by reference to Exhibit 9.3 of the
Registrant's 10-K filing for the period ended December 31, 1988.
10.1 Agreement dated as of May 31, 1982 between Analog Devices, Inc.
and Registrant (with certain confidential information deleted).
Incorporated by reference to Exhibit 10.1 of the Registrant's
Statement #2-82045 dated February 24, 1983.
10.2 Grant offer of the Scottish Economic Planning Department dated
October 6, 1981 and acceptance letter of Registrant dated
December 15, 1981. Incorporated by reference to Exhibit 10.3 of
the Registrant's Registration Statement #2-82045 dated February
24, 1983.
10.3 Registrant's Stock Bonus Plan. Incorporated by reference to
Exhibit 10.7 of the Registrant's 10-K filing for the period
ended December 31, 1987. Amendments thereof, dated June 27,
1989. Incorporated by reference to Exhibit 10.7 of the Reg-
istrant's 10-K filing for the period ended December 31, 1989.
Amended July 23, 1993, to name John L. Carter Co-trustee.
Incorporated by reference to Exhibit 10.4 of the Registrant's
10-K filing for the period ended December 31, 1993.
10.4 Lease dated November 13, 1986 between Bay Colony Development
Company, Inc. and Registrant. Incorporated by reference to
Exhibit 10.8 of the Registrant's 10-K filing for the period
ended December 31, 1986.
10.5 Lease dated October 1, 1986 between Yugen Kaisha Kato Shoji and
Registrant. Incorporated by reference to Exhibit 10.9 of the
Registrant's 10-K filing for the period ended December 31, 1986.
- 14 -
<PAGE>
10.6 Purchase Agreement between Mr. Hermann Weinmann and Registrant.
Incorporated by reference to Exhibit 10.10 of the Registrant's
10-K filing for the period ended December 31, 1986.
10.7 Lease dated February 28, 1985 between Livingston Development
Corporation and the Registrant as amended. Incorporated by
reference to Exhibit 10.13 of the Registrant's 10-K filing for
the period ended December 31, 1984.
10.8 Grant Offer of the Livingston Development Corporation dated
September 20, 1989. Incorporated by reference to Exhibit 10.14
of the Registrant's 10-K filing for the period ended December
31, 1989.
10.9 Lease dated November 13, 1986 between Bay Colony Development and
Registrant amended August 25, 1989. Incorporated by reference
to Exhibit 10.17 of the Registrant's 10-K filing for the period
ended December 31, 1989.
10.10 Provisional Agreement of Building Lease Agreement dated June 24,
1985 between Kazuo Kato and Registrant. Incorporated by
reference to Exhibit 10.18 of the Registrant's 10-K filing for
the period ended December 31, 1985.
10.11 Lease dated June 1, 1988 between EMBE Leasing Agency Ltd. and
Registrant. Translation only incorporated by reference to
Exhibit 10.19 of the Registrant's 10-K filing for the period
ended December 31, 1988.
10.12 Stock Option Agreement dated June 26, 1984 between Intelligent
Instrumentation, Inc. and the Registrant, as amended.
Incorporated by reference to Exhibit 10.11 of the Registrant's
10-K filing for the period ended December 31, 1985.
10.13 Stock Option Agreement dated October 3, 1984 between Power
Convertibles Corporation, fka Analog Microsystems, Inc., and the
Registrant, as amended. Incorporated by reference to Exhibit
10.23 of the Registrant's 10-K filing for the period ended
December 31, 1985.
10.14 Series C Stock Purchase Agreement dated December 31, 1988
between Power Convertibles Corporation, fka Analog Micro-
systems, Inc., and the Registrant. Incorporated by reference
to Exhibit 10.24 of the Registrant's 10-K filing for the period
ended December 31, 1988.
10.15 Stock Purchase Agreement dated January 10, 1985 between
Dataforth Corporation and the Registrant. Incorporated by
reference to Exhibit 10.25 of the Registrant's 10-K filing for
the period ended December 31, 1986.
10.16 Patent License Agreement dated January 15, 1987 between Linear
Technology Corporation and Registrant. Incorporated by
reference to Exhibit 10.26 of the Registrant's 10-K filing for
the period ended December 31, 1986.
10.17 Burr-Brown Employee Retirement Plan dated January 1, 1988.
Incorporated by reference to Exhibit 10.27 of the Registrant's
10-K filing for the period ended December 31, 1988. Replaced
by the restated Burr-Brown Corporation Employee Retirement Plan
which is dated as of the January 1, 1988 date of the original
plan, filed herein.
10.18 Lease Agreement dated October 20, 1989 between the Registrant
and Kaiyo Kaium, Inc. Translation only, incorporated by
reference to Exhibit 10.31 of the Registrant's 10-K filing for
the period ended December 31, 1989.
- 15 -
<PAGE>
10.19 Lease dated October 30, 1987 between Bay Colony Development
Company, Inc. and Registrant. Incorporated by reference to
Exhibit 10.29 of the Registrant's 10-K filing for the period
ended December 31, 1990.
10.20 License Agreement dated August 27, 1990 between Gunnar Hartig
III and Burr-Brown Corporation. Incorporated by reference to
Exhibit 10.31 of the Registrant's 10-K filing for the period
ended December 31, 1990.
10.21 Consent Decree filed with the United States District Court on
March 13, 1990 between the United States of America on behalf of
the Administrator of the United States Environmental Protection
Agency (EPA) and Burr-Brown Corporation. Incorporated by
reference to Exhibit 10.32 of the Registrant's 10-K filing for
the period ended December 31, 1991.
10.22 Amendment dated January 10, 1991 to that certain Lease dated
October 30, 1987, incorporated by reference as Exhibit 10.24 of
the Registrant's 10-K filing for the period ended December 31,
1990 by and between Bay Colony Development, Inc. and Burr-Brown
Corporation. Incorporated by reference to Exhibit 10.44 of the
Registrant's 10-K filing for the period ended December 31, 1991.
10.23 Amendment dated January 21, 1992 to that certain Lease dated
October 30, 1987, incorporated by reference to Exhibit 10.24 of
the Registrant's 10-K filing for the period ended December 31,
1990 and Amendment dated January 10, 1991 by and between Bay
Colony Development, Inc. and Burr-Brown Corporation. Incor-
porated by reference to Exhibit 10.45 of the Registrant's 10-K
filing for the period ended December 31, 1991.
10.24 Master Lease Agreement dated July 31, 1992 and amended September
23, 1992 between AT&T Commercial Finance Corporation and Burr-
Brown Corporation. Incorporated by reference to Exhibit 10.37
of the Registrant's 10-K filing for the period ended December
31, 1992.
10.25 Master Lease Agreement Schedules dated July 31, 1992 and
September 23, 1992 between AT&T Commercial Finance Corporation
and Burr-Brown Corporation. Incorporated by reference to
Exhibit 10.38 of the Registrant's 10-K filing for the period
ended December 31, 1992.
10.26 Purchase Agreements dated July 31, 1992 and September 23, 1992
between AT&T Commercial Finance Corporation and Burr-Brown
Corporation. Incorporated by reference to Exhibit 10.39 of the
Registrant's 10-K filing for the period ended December 31, 1992.
10.27 Master Equipment Lease Agreement dated June 20, 1990 between
General Electric Capital Corporation, fka Ellco Leasing Corpor-
ation and Burr-Brown Corporation. Incorporated by reference to
Exhibit 10.44 of the Registrant's 10-K filing for the period
ended December 31, 1992. Amendment dated December 21, 1994,
filed herein.
10.28 Trust Agreement for Future Investment Trust dated October 12,
1993, between Burr-Brown Corporation and First Interstate Bank
of Arizona. Incorporated by reference to Exhibit 10.37 of the
Registrant's 10-K filing for the period ended December 31, 1993.
10.29 Burr-Brown Corporation amended Stock Incentive Plan dated
February 11, 1994 which replaces the Stock Incentive Plan dated
February 11, 1993, filed herein.
10.30 Future Investment Trust Plan dated July 23, 1993 replaced by the
Burr-Brown Corporation Future Investment Trust dated February
24, 1987. Incorporated by reference to Exhibit 10.39 of the
Registrant's 10-K filing for the period ended December 31, 1993.
Replaced by the Future Investment Trust Plan dated December 20,
1994, filed herein.
- 16 -
<PAGE>
10.31 Loan Agreement dated July 25, 1994 by and among Burr-Brown
Corporation, First Interstate Bank of Arizona, N.A. and Bank
One, Arizona, N.A., filed herein.
10.32 Revolving Credit Note dated July 25, 1994 between Burr-Brown
Corporation and First Interstate Bank of Arizona, N.A., filed
herein.
10.33 Revolving Credit Note dated July 25, 1994 between Burr-Brown
Corporation and Bank One, Arizona, N.A., filed herein.
10.34 Security Agreement dated July 29, 1994 between Burr-Brown
Corporation and First Interstate Bank of Arizona, N.A., filed
herein.
11. Computation of per share earnings, filed herein.
13. Portions of the Annual Report to Shareholders for the year ended
December 31, 1994 are expressly incorporated by reference to the
Annual Report Form 10-K, filed herein.
21. Subsidiaries of the Registrant, filed herein.
23.1 Consent of Ernst & Young LLP, Independent Auditors, filed herein.
24.1 Power of Attorney, filed herein.
b. No reports on Form 8-K have been filed during the fourth quarter of 1994.
- 17 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BURR-BROWN CORPORATION
______________________
Registrant
By: SYRUS P. MADAVI Date: March 17, 1995
______________________ _______________
Syrus P. Madavi
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Syrus P. Madavi, his attorney-in-fact, with the power
of substitution, for him in any and all capacities, to sign any amendments to
this Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his substi-
tute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the Requirements of the Securities and Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the Regis-
trant and in the capacities and on the dates indicated.
Name Title Date
_______ _________ ________
SYRUS P. MADAVI President and Chief March 17, 1995
___________________________ Executive Officer
Syrus P. Madavi
JOHN L. CARTER Executive Vice President March 17, 1995
___________________________ and Chief Financial Officer
John L. Carter
THOMAS R. BROWN, JR. Chairman of the Board March 17, 1995
___________________________
Thomas R. Brown, Jr.
THOMAS J. TROUP Vice Chairman of the Board March 17, 1995
___________________________
Thomas J. Troup
FRANCIS J. AGUILAR Director March 17, 1995
___________________________
Francis J. Aguilar
JOHN ANDEREGG, JR. Director March 17, 1995
___________________________
John Anderegg, Jr.
BOB J. JENKINS Director March 17, 1995
___________________________
Bob J. Jenkins
JAMES A. RIGGS Director March 17, 1995
___________________________
James A. Riggs
- 18 -
<PAGE>
<TABLE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)
<CAPTION>
Years Ended December 31, 1994, 1993 and 1992
Col. A Col. B Col. C Col. D Col. F
Additions Deductions
Balance at Charged & Currency Balance
Beginning To Costs Translation at End
Classification of Period & Expenses Effect of Period
_______________________ __________ __________ __________ __________
<S> <C> <C> <C> <C>
1994
Deducted from Asset
Account:
Product Loss Reserve $ 11,374 $ 1,883 $ (6,130) $ 7,127
Allowance for
Doubtful Accounts 807 183 (120) 870
__________ __________ __________ __________
$ 12,181 $ 2,066 $ (6,250) $ 7,997
1993
Deducted from Asset
Account:
Product Loss Reserve $ 8,805 $ 5,870 $ (3,301) (2) $ 11,374
Allowance for
Doubtful Accounts 679 375 (247) (1) 807
__________ __________ __________ __________
$ 9,484 $ 6,245 $ (3,548) $ 12,181
1992
Deducted From Asset
Account:
Product Loss Reserve $ 8,715 $ 2,704 $ (2,614) (2) $ 8,805
Allowance for
Doubtful Accounts 768 242 (331) (1) 679
__________ __________ __________ __________
$ 9,483 $ 2,946 $ (2,945) $ 9,484
<FN>
(1) Uncollectible accounts written off, net of minor recoveries.
(2) Obsolete inventory.
Note: Column E - Other is zero.
- 19 -
<PAGE>
BURR-BROWN CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(Amounts in thousands, except per share data)
<CAPTION>
Years Ended December 31,
1994 1993 1992
________ ________ ________
<S> <C> <C> <C>
PRIMARY:
Weighted average number of shares
outstanding(1) 9,544 9,543 9,570
Net effect of dilutive stock options
based on the treasury stock method
using the average market price of
Common Stock 121 41 23
________ ________ ________
Total 9,665 9,584 9,593
Net Income $ 6,465 $ 2,817 $ 998
Per Share Amount $ 0.67 $ 0.29 $ 0.10
FULLY DILUTED:
Weighted average number of shares
outstanding(1) 9,544 9,543 9,570
Net effect of dilutive stock options
based on the treasury stock method
using the end of period market price
of Common Stock, if higher than the
average market price. 255 31 41
________ ________ ________
Total 9,799 9,574 9,611
Net Income $ 6,465 $ 2,817 $ 998
Per Share Amount $ 0.66 $ 0.29 $ 0.10
<FN>
(1) Includes all shares held by the Stock Incentive Plan.
- 20 -
</TABLE>
<PAGE>
EXHIBIT 21
BURR-BROWN CORPORATION AND SUBSIDIARIES
Jurisdiction
Name of Corporation of Incorporation
____________________________________________ ________________
1. Burr-Brown International Holding Corporation Delaware
2. Burr-Brown Limited United Kingdom
3. Burr-Brown Japan Limited Japan
4. Burr-Brown International Limited United Kingdom
5. Burr-Brown International S.A. France
6. Burr-Brown International S.r.L. Italy
7. Burr-Brown International BV The Netherlands
8. Burr-Brown International GmbH Germany
9. Burr-Brown Research GesmbH Austria
10. Burr-Brown AG Switzerland
11. Burr-Brown Foreign Sales Corporation Barbados
12. Burr-Brown Europe Limited Scotland
13. Power Convertibles Corporation Arizona
(fka Analog Microsystems, Inc.)
14. PCC de Mexico S.A. de C.V. Mexico
15. Power Convertibles Ireland Limited Ireland
16. Intelligent Instrumentation, Inc. Arizona
17. Intelligent Instrumentation Japan, KK Japan
18. Intelligent Instrumentation GmbH Germany
19. Intelligent Instrumentation Limited United Kingdom
20. Intelligent Instrumentation S.r.l. Italy
21. Intelligent Instrumentation S.A. France
22. Intelligent Instrumentation, Inc. Foreign Barbados
Sales Corporation
- 21 -
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000715577
<NAME> BURR-BROWN CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993 DEC-31-1992
<PERIOD-END> DEC-31-1994 DEC-31-1993 DEC-31-1992
<EXCHANGE-RATE> 1 1 1
<CASH> 9,925 13,066 9,490
<SECURITIES> 0 0 0
<RECEIVABLES> 39,642 34,822 30,185
<ALLOWANCES> 0 0 0
<INVENTORY> 40,092 44,036 41,922
<CURRENT-ASSETS> 92,172 95,026 84,850
<PP&E> 113,968 101,049 95,946
<DEPRECIATION> 68,072 58,622 50,281
<TOTAL-ASSETS> 143,008 142,062 136,407
<CURRENT-LIABILITIES> 46,549 45,570 37,145
<BONDS> 0 0 0
<COMMON> 97 97 97
0 0 0
0 0 0
<OTHER-SE> 87,525 79,454 77,346
<TOTAL-LIABILITY-AND-EQUITY> 143,008 142,062 136,407
<SALES> 194,196 168,577 162,949
<TOTAL-REVENUES> 194,196 168,577 162,949
<CGS> 106,242 86,975 86,557
<TOTAL-COSTS> 106,242 86,975 86,557
<OTHER-EXPENSES> 77,427 73,817 69,405
<LOSS-PROVISION> 690 807 679
<INTEREST-EXPENSE> 1,725 2,338 3,825
<INCOME-PRETAX> 8,291 4,547 1,720
<INCOME-TAX> 1,826 1,730 722
<INCOME-CONTINUING> 6,465 2,817 998
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 6,465 2,817 998
<EPS-PRIMARY> .67 .29 .10
<EPS-DILUTED> .67 .29 .10
</TABLE>
BURR-BROWN CORPORATION
1994 ANNUAL REPORT
<PAGE>
CORPORATE PROFILE
Burr-Brown Corporation is a leading supplier of high performance analog and
mixed signal integrated circuits for use in data conversion and signal condi-
tioning applications throughout the world.
COMPANY FACTS
- Founded in 1956
- Corporate headquarters: Tucson, AZ
- 1825 employees
- 1000+ products
- Manufacturing and technical facilities: Tucson, Arizona; Atsugi, Japan;
Livingston, Scotland
- 6 North American direct sales offices, 126 sales representatives in 170+
locations
- International sales and distribution subsidiaries in France, Germany,
Italy, Japan, the Netherlands, Switzerland and the United Kingdom;
26 sales representatives throughout the rest of the world
- Over 200 sales and service staff worldwide
BURR-BROWN PRODUCTS
- Precision operational, instrumentation, power, and isolation amplifiers
- Data converters, D/As and A/Ds
- Optoelectronics sensor amplifiers
- High performance digital audio D/As
- General purpose analog circuit functions
BURR-BROWN MARKETS
- Industrial control and automation for factories and laboratories
- Precision test and measurement equipment
- Telecommunications systems
- Medical and scientific instrumentation
- Medical imaging
- Digital audio and multi-media
- Electronic musical instruments and professional audio equipment
- Computers and peripherals
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
_______________________________________________________________
<S> <C> <C> <C>
Net Revenues $194,196 $168,577 $162,949
Net Income $6,465 $2,817 $998
Net Bookings $204,155 $170,321 $162,369
(pie chart goes here)
<CAPTION>
SALES BY REGION
_______________
<S> <C>
Europe 30%
N. America 38%
Asia 32%
(bar chart goes here) (bar chart goes here)
<CAPTION> <CAPTION>
EARNINGS PER SHARE SALES
__________________ ___________________
<S> <C> <S> <C>
1992 $0.10 1992 $163M
1993 $0.29 1993 $169M
1994 $0.67 1994 $194M
</TABLE>
- 1 -
<PAGE>
To Our Shareholders
OVERVIEW
During 1994 significant progress was made. Our revenue grew over 15% while net
income improved 129% relative to 1993. Consequently, earnings per share
improved from $0.29 for 1993 to $0.67 for 1994. Concurrent with these financial
results, we have refocused business strategies and have realigned
organizational structures to emphasize our core competencies in developing,
manufacturing, and marketing analog and mixed signal integrated circuit
products for real-time signal processing. Accordingly, the business is better
positioned to address very attractive growth opportunities and provide increas-
ingly higher value products to our customers.
FINANCIAL PERFORMANCE
Bookings and revenues achieved record levels for the year at $204M and $194M,
which represented an improvement of 20% and 15%, respectively. Equally
encouraging, healthy growth was realized in all three major markets: Europe,
Asia, and North America. Operating profit grew to $10.5M, 35% greater than
1993, while net income improved 129% to $6.5M. The higher rate improvement in
net income compared to operating profit was primarily due to a reduction in
interest cost and a lowering of the effective tax rate from 38% to 22%. How-
ever, the gross margin percentage did show a decline of 3% in 1994, and will be
a key area of focus in 1995 as we seek to restore gross margins to historic
levels. Due to careful expense management, we held operating expenses growth
to 5%, while revenue increased 15%. Our balance sheet also continued to improve
in 1994; net inventories declined $4M, or 9%, while total assets remained
almost level. Total liabilities declined by $7M and equity increased by $8M.
MARKETS
Given our strong relationships with the customer base in industrial/process
control and test and measurement, we have re-affirmed our commitment to pro-
viding these customers with products that offer maximum performance and value.
While re-enforcing our presence in these traditional markets, we are extending
our capabilities to address selective opportunities in fast growing segments
of computing and communications markets.
In the communications markets, our high performance standard products are well
received by customers, providing continued increase in revenues. Additionally,
we have established strong relationships with key customers at the forefront of
several fast-growing emerging applications. Through these close relationships,
we have gathered insight into several communications applications and have
developed expertise in related system level architecture, enabling us to define
and develop application specific standard products (ASSPs) to meet their needs.
Consequently, our standard products coupled with ASSP products will provide us
with revenue growth and increased presence in the communications markets.
Computing markets account for an increasing share of our revenues. Many of our
signal conditioning and data converter products offer optimum specifications
for use in personal computers. Also, our digital audio products have excellent
potential for multimedia applications. Our focus and continued commitment to
offer performance and value to customers in these markets will differentiate
us from our competitors.
PRODUCT DEVELOPMENT
The cornerstone of our product development strategy is to offer practical solu-
tions to difficult real-time signal processing problems.
- 2 -
<PAGE>
During 1994 we introduced several new product families which offer customers
cost effective, practical solutions. These products include a family of low
power, high performance 12- and 16-bit CMOS analog-to-digital converters; a
complete group of operational amplifiers ideal for imaging, test & measurement
and communications applications; and three new additions to our rapidly expand-
ing line of low cost, high performance optoelectronic products for use within
precision instrumentation, scanning, and sensing applications. Moreover, many
of our newer products are now utilizing submicron fabrication processes that
enable us to provide products with system level performance and functionality.
To this end, we are increasingly coupling our signal conditioning and data
conversion capabilities with digital signal processing on a single chip.
ORGANIZATION
To transform Burr-Brown into a more competitive and responsive company, a num-
ber of organizational realignments were made during 1994. The missions and
charters of our businesses in Tucson, Scotland, and Japan have been refined to
bring a greater focus on their respective served markets. In Europe we have
largely completed the integration of six independent sales subsidiaries into a
more streamlined and collaborative sales organization aligned with worldwide
sales strategies. Consequently, our European-wide direct sales force will
focus on corporate and key customers, while our newly implemented distributor
sales channels will service our smaller customers. Other segments of Burr-
Brown including product development, marketing, and manufacturing were also
realigned to bring higher functional efficiencies. To tie the total organiza-
tion together, we have a major effort underway to re-engineer and implement
state-of-the-art information systems that will provide worldwide integration
of systems and processes. To this end, we are placing highest priority on
worldwide order entry, logistic and distribution systems designed to substan-
tially improve response time and accuracy for customer service. We plan to
fully integrate this customer management system with corporate financial plan-
ning and manufacturing systems. These efforts will reduce overlap within
Burr-Brown organizations and lead to greater efficiencies and lower costs for
sales, marketing and G & A during the next few years.
In March, Syrus P. Madavi joined the Company as President and CEO with respon-
sibilities for all worldwide operations. Mr. Madavi has more than 18 years
experience in general management, engineering, and marketing in signal
conditioning, data conversion, and mixed signal products serving the instrumen-
tation, industrial, medical, computing, and communications markets.
Mr. Madavi previously served as President of Raytheon Semiconductor Division,
Mountain View, California, a $100 million business specializing in analog and
mixed signal products. Other prior positions included Vice President and
General Manager of Honeywell Signal Processing Technologies and marketing
management at Analog Devices, Inc. He earned a bachelor of science in electri-
cal engineering and master's degree in computer science from Stevens Institute
of Technology, Hoboken, New Jersey. He also holds a master of business admin-
istration degree in finance from UCLA.
OUTLOOK
We are optimistic that 1995 will be another year of solid progress in revenue
and profitability growth, as well as further expansion of our market positions.
We will focus on improvements to gross margin as we continue to streamline
manufacturing and reduce product cost. We believe it is possible to realize
additional improvement in profitability through product cost reduction coupled
with tighter control of operating expenses. The employees of Burr-Brown can be
proud of the substantial improvements they achieved during the past year. We
are committed to achieving performance levels that will continue to increase
shareholder value and customers' satisfaction.
Syrus P. Madavi
President and CEO
Thomas R. Brown, Jr.
Chairman of the Board
- 3 -
<PAGE>
CAPITALIZING ON CORE COMPETENCIES
Burr-Brown has been a leader in the design and manufacture of precision high
performance analog and mixed signal integrated circuits since 1956. In March
of 1994, Syrus P. Madavi joined the Company as President and CEO. Under Mr.
Madavi's direction, we've examined our entire worldwide operation and sharpened
our focus to capitalize on our core competencies. Several changes have been
made to realign our capabilities for increased efficiencies and customer
responsiveness throughout the organization.
Each of the Company's business units now has its own charter and mission.
Tucson will develop and produce components for the industrial/process control,
test and instrumentation, and communications markets; Japan will continue to
design and manufacture consumer and multi-media audio parts; and Burr-Brown
Scotland will concentrate on isolation products. These units will also work
closely together to address several fast-growing emerging markets.
The sales and marketing organizations' objectives are to continually improve
relationships with customers. A major core strength has always been an in-
depth understanding of our customers and their projects. A "Corporate and Key
Accounts" program provides highly intensive sales and marketing support to
volume customers. Marketing and Sales share a renewed commitment to our
customers' profitability and success.
In Europe, a Regional Distribution Center (RDC) was established to deliver
optimum customer service. All inventory distribution and planning functions
are handled by the center--reducing corporate overhead and freight costs.
Products are sent directly from the RDC in Scotland to the customer, eliminat-
ing distribution tasks from our sales organization. Each geographic region
will have their own RDC by the end of 1996; the centers will be linked to each
factory and to each other for superior customer responsiveness.
A new world-wide on-line information system will connect all business units.
"Real-time" product information will be instantly on-line and available glo-
bally. The system has custom modules for forecasting, inventory management,
capacity planning, and financial and managerial reporting.
A new sales strategy in Europe is the addition of independent sales distribu-
tion channels. Major component distributors in every country now carry the
Burr-Brown product line. This network of distributors is "customer-focused"
to deal directly with smaller yet equally important customers. Our direct
sales force will concentrate on corporate and key accounts for increased
"design-wins" of our new products.
- 4 -
<PAGE>
"We've always had an in-depth understanding of our customers and
their projects..... We're renewing our commitment to their profit-
ability and ours."
ROBERT E. FILIAULT
Vice President of
North American Sales
- 5 -
<PAGE>
PRACTICAL SOLUTIONS TO DIFFICULT PROBLEMS
New products ensure a company's growth. Our new products provide easy-to-use,
cost-effective analog answers to specific customer needs. Dedicated develop-
ment teams of design, test, and marketing engineers work closely with manufac-
turing to introduce the key products our customers need now and in the future.
Several of this year's successful solutions are highlighted below.
ADS7800 FAMILY--a new family of 12- and 16-bit CMOS sampling analog-to-digital
converters makes it easy to excel in data acquisition, precision instrumenta-
tion, and industrial signal processing applications. This family offers
designers a low power core chip design; pin compatibility between 12- and
16-bit devices permitting accuracy upgrades with minimal board changes; and
dynamic performance is tested and guaranteed. Their combination of speed,
accuracy, and low cost gives engineers solutions for today's and tomorrow's
designs.
DDC101--is the world's most accurate 20-bit photosensor analog-to-digital
converter. Nominated by the editors of EDN magazine as one of the top innova-
tions of the year, its patented delta modulation topology was specifically
designed to accurately digitize a low level current output sensor. Replacing
an amplifier, programmable-gain amplifier, and high resolution A/D converter,
DDC101 is designed for photosensor digitization used in medical analyzers, data
acquisition systems, CT scanners, chemical analyzers and infrared pyrometry.
OPA640 SERIES--this innovative group of SpeedPLUS op amps includes one of the
world's fastest--1GHz! Ideal for medical imaging, video processing, test, and
telecommunications applications, all six new operational amplifiers deliver
exceptionally low noise and distortion, while maintaining outstanding 12-bit
settling times. Voted by EDN Asia magazine as "Product of the Year", this
series offers a new level of performance, value, and functionality for wideband
applications.
PCM1710--is a new 20-bit delta-sigma audio digital-to-analog converter with an
on-chip digital filter and output amplifier. Used in general purpose, high
volume audio applications such as portable and automotive CDs, laser disk
players, and electronic musical instruments, PCM1710 is also a designer's
choice for the newly emerging digital set-top box tuners for cable and satel-
lite TV, CD-ROM, Photo-CDs, HDTV, and digital audio broadcasting.
OPT202, OPT209, & OPT301--are three new additions to our rapidly expanding line
of low cost, high performance optoelectronic sensor amplifiers for scanning,
and detection applications. These new optoelectronic ICs integrate a large
photodiode and precision FET-input transimpedance amplifier on a single chip.
They're clearly light years ahead of the competition.
- 6 -
<PAGE>
"We provide our customers with effective solutions that make it
easy for them to increase their competitive advantage--their
success is our success."
R. MARK STITT
Linear Division Director
- 7 -
<PAGE>
FOCUSING ON THE FUTURE
Our focus is on the future. We've examined our businesses, streamlined our
processes, and reduced our expenses. To remain competitive we must have a
higher sense of urgency on all corporate levels. We've realigned several areas
to help us achieve our goals.
A vital strategy for future growth is expansion into new markets while contin-
uing to capitalize on core competencies. We plan to increase our market share
in the industrial/process control and the test and instrumentation markets by
offering optimized standard products along with targeted applications specific
standard products. Another market for expansion is communications--the plan
is to increase our presence by focusing on key market niches such as wireless
applications. Although we will aggressively enter these emerging market seg-
ments using our core capabilities, we will continue to do what we do best.....
design and manufacture precision, high performance analog and mixed signal
"standard" integrated circuits.
The operations division has several "must dos" to realize their goals. They
plan to achieve "world-class" manufacturing excellence by making the quality,
reliability, and consistency of our products a recognized strength. A reduc-
tion in assembly cycle time and improving process yields are the mandates for
1995.
Our Marketing group's mission is to think worldwide, sharpen our competitor
analysis, and most importantly, get our products designed into new systems.
Another responsibility is to provide thorough market analyses for new products
and existing product families. Also, all global marketing communications
functions are being coordinated in Tucson for increased effectiveness and
efficiencies.
The new "design-win" program driven by the market development group in conjunc-
tion with applications engineering, sales, and product planning works with
engineers globally to help them design-in the most effective device for their
project. This concentration on design-wins also provides us with market infor-
mation for future strategic planning.
The Applications Engineering team, the primary "technical trainers" of the
corporation, will coordinate technical support on a worldwide basis. A pro-
gram to train the direct and distributor sales staff, the field applications
engineers, and most importantly our customers is currently underway. They
also work with sales engineers to influence the "design-win" process by writing
articles and applications bulletins--all while maintaining a technical phone
"hot-line".
- 8 -
<PAGE>
"To outperform the competition, we must have the highest sense of urgency in
everything we do. This attitude must permeate all levels of our business."
SYRUS P. MADAVI
President and CEO
- 9 -
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
Burr-Brown Corporation and Subsidiaries--In thousands, except per-share amounts
<CAPTION>
Year Ended December 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Net sales.................................. $194,196 $168,577 $162,949
Cost of sales.............................. 106,242 86,975 86,557
--------- --------- ---------
Gross Margin............................ 87,954 81,602 76,392
Expenses:
Sales and Marketing........................ 38,954 36,985 34,613
Product development........................ 21,851 19,752 18,136
General and Administrative................. 16,622 17,080 16,659
--------- --------- ---------
77,427 73,817 69,408
--------- --------- ---------
Income from Operations.................. 10,527 7,785 6,984
Interest expense........................... 1,725 2,338 3,825
Other expense.............................. 511 900 1,439
--------- --------- ---------
Income Before Income Taxes.............. 8,291 4,547 1,720
Provision for income taxes................. 1,826 1,730 722
--------- --------- ---------
Net Income.............................. $ 6,465 $ 2,817 $ 998
Earnings per common share.................. $ 0.67 $ 0.29 $ 0.10
Shares used in per common share calculation 9,665 9,584 9,593
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Burr-Brown Corporation and Subsidiaries--In thousands
<CAPTION>
Equity
Adjustment
from
Common Stock Additional
Foreign Treasury Stock
----------------- Paid-In Retained
Currency -----------------
Shares Amount Capital Earnings
Translation Shares Amount Total
-------- -------- -------- --------
----------- -------- -------- --------
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Balance at January 1, 1992 9,648 $ 96 $25,916 $49,117
$ 3,622 63 $ (580) $78,171
Net Income 998
998
Foreign currency trans-
lation adjustment
(1,572) (1,572)
Stock options exercised 8 1 27
28
Treasury stock acquired
30 (182) (182)
-------- -------- -------- --------
----------- -------- -------- --------
Balance at December 31, 1992 9,656 97 25,943 50,115
2,050 93 (762) 77,443
Net Income 2,817
2,817
Foreign currency trans-
lation adjustment
33 33
Stock options exercised 10 70
70
Treasury stock acquired
38 (302) (302)
Affiliates' stock activity (510)
(510)
-------- -------- -------- --------
----------- -------- -------- --------
Balance at December 31, 1993 9,666 97 26,013 52,422
2,083 131 (1,064) 79,551
Net Income 6,465
6,465
Foreign currency trans-
lation adjustment
1,421 1,421
Stock options exercised 48 387
387
Treasury stock acquired
14 (157) (157)
Affiliates' stock activity (45)
(45)
-------- -------- -------- --------
----------- -------- -------- --------
Balance at December 31, 1994 9,714 $ 97 $26,400 $58,842
$ 3,504 145 $(1,221) $87,622
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
- 10 -
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
Burr-Brown Corporation and Subsidiaries--In thousands
<CAPTION>
December 31,
1994 1993
_________ _________
<S> <C> <C>
ASSETS
Cash and cash equivalents......................... $ 9,925 $ 13,066
Trade receivables................................. 39,642 34,822
Inventories....................................... 40,092 44,036
Deferred income taxes............................. 331 1,011
Other............................................. 2,182 2,091
_________ _________
Total Current Assets 92,172 95,026
Land, Buildings and Equipment
Land.............................................. 3,396 3,378
Buildings and improvements........................ 21,926 20,818
Equipment......................................... 84,133 73,570
_________ _________
109,455 97,766
Less accumulated depreciation..................... (68,072) (58,622)
Projects in progress.............................. 4,513 3,283
_________ _________
45,896 42,427
Other Assets...................................... 4,940 4,609
_________ _________
$143,008 $142,062
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable..................................... $ 16,964 $ 15,000
Accounts payable.................................. 12,747 9,064
Accrued expenses.................................. 9,277 10,706
Accrued employee compensation and payroll taxes... 4,834 4,284
Income taxes payable.............................. 1,630 3,593
Current portion of long-term debt................. 1,097 2,923
_________ _________
Total Current Liabilities 46,549 45,570
Long-Term Debt.................................... 1,839 8,802
Deferred Gain..................................... 4,116 5,612
Deferred Income Taxes............................. 1,182 1,194
Other Long-Term Liabilities....................... 1,700 1,333
Commitments and Contingencies.....................
Stockholders' Equity
Preferred stock, $.01 par value--authorized 2,000
shares; none issued and outstanding.............
Common stock, $.01 par value--authorized 20,000
shares; issued and outstanding, including
treasury shares: 1994--9,714 shares; 1993--9,666
shares.......................................... 97 97
Additional paid-in capital........................ 26,400 26,013
Retained earnings................................. 58,842 52,422
Equity adjustment from foreign currency
translation..................................... 3,504 2,083
Treasury stock; at cost: 1994--145 shares;
1993--131 shares................................ (1,221) (1,064)
_________ _________
87,622 79,551
_________ _________
$143,008 $142,062
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
- 11 -
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Burr-Brown Corporation and Subsidiaries--In thousands
<CAPTION>
Year Ended December 31,
-----------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Operating Activities
Net income.................................... $ 6,465 $ 2,817 $ 998
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and amortization............... 10,615 10,072 11,042
Amortization of deferred gain............... (1,496) (1,497) (375)
Provision for inventory reserves............ 1,883 5,870 2,704
Provision (benefit) for deferred
income taxes............................... 707 (457) (58)
Loss on sale, disposal and write-down
of equipment.............................. 463 770 497
Unrealized loss (gain) on foreign
currency transactions..................... 237 (358) 509
(Gain) loss from unconsolidated affiliates.. (92) 381 713
Changes in Operating Assets and Liabilities:
(Increase) decrease in trade receivables.... (2,484) (3,792) 1,992
(Increase) decrease in inventories.......... 3,179 (7,812) 10,771
(Increase) decrease in other assets......... 130 836 214
Increase (decrease) in accounts payable
and other liabilities..................... 316 5,953 (75)
--------- --------- ---------
Net Cash Provided by Operating Activities 19,923 12,783 28,932
Investing Activities
Purchases of land, buildings and equipment.... (12,055) (7,117) (5,356)
Proceeds from sale of equipment............... 462 208 10,614
Investment in unconsolidated affiliate........ (500)
--------- --------- ---------
Net Cash (Used In) Provided by Investing
Activities (11,593) (6,909) 4,758
Financing Activities
Proceeds from short-term and long-term
borrowings.................................. 16,366 1,919 440
Principal payments on short-term and
long-term borrowings........................ (27,339) (3,949) (27,255)
Proceeds (payments) for capital
stock activity, net......................... 185 (293) (154)
--------- --------- ----------
Net Cash Used In Financing Activities (10,788) (2,323) (26,969)
Effect of exchange rate changes on cash...... (683) 25 (497)
--------- --------- ---------
(Decrease) increase in Cash and
Cash Equivalents (3,141) 3,576 6,224
Cash and cash equivalents at
beginning of year.......................... 13,066 9,490 3,266
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 9,925 $ 13,066 $ 9,490
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
- 12 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Burr-Brown Corporation and Subsidiaries--In thousands, except per-share amounts
December 31, 1994
ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Burr-Brown Corporation and its majority owned subsidiaries
(the Company), of which all but two are wholly-owned. Investments in which
ownership is at least 20% but not over 50% are accounted for under the equity
method. Other investments are accounted for using the cost method. All signi-
ficant intercompany accounts and transactions are eliminated.
CASH EQUIVALENTS: The Company considers all short-term, liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
All cash equivalents are stated at cost which approximates market.
INVENTORIES: Inventories are valued at the lower of cost (first-in, first-out
basis) or market. The Company maintains a valuation reserve which reflects
the Company's estimate of the impact on inventories of potential obsolescence,
excess quantities, and declines in market prices.
LAND, BUILDINGS, AND EQUIPMENT: Land, buildings and equipment are stated at
cost. Depreciation on buildings and equipment is computed by the straight-
line method over the estimated useful lives ranging from three to 40 years.
DEFERRED INCOME ON SHIPMENTS TO DISTRIBUTORS: A portion of the Company's
sales are made to domestic distributors under agreements which provide for
certain price protection and limited product return privileges. As a
result, the Company defers recognition of such sales until the merchandise
is sold by the distributors. The reserve for these sales is included in
Accrued Expenses on the Consolidated Statements of Financial Position.
INCOME TAXES: Income taxes are determined utilizing the liability method.
This method gives consideration to the future tax consequences associated
with temporary differences between the carrying amounts of assets and
liabilities for financial statement purposes and the amounts used for
income tax purposes.
FOREIGN CURRENCY TRANSLATION: The financial statements of foreign subsidiaries
have been translated in accordance with Statement of Financial Accounting
Standards (SFAS) No. 52, "Foreign Currency Translation." The gains and losses
resulting from the change in exchange rates from year to year have been
reported separately as a component of stockholders' equity. Transaction gains
and losses are reflected in income currently.
FOREIGN CURRENCY FORWARD CONTRACTS: As a result of selling its products in
overseas markets, the Company is exposed to the effect of foreign exchange rate
fluctuations on the U.S. dollar value of its foreign currency receivables.
Along with natural hedges provided by foreign currency payables, the Company
has purchased foreign currency forward contracts to minimize the effect of
fluctuating foreign currencies on its receivables. The Company marks to market
both the hedges and the underlying transactions at the end of each reporting
period. The realized and unrealized gains and losses resulting from changes in
exchange rates are included in income in the period in which the changes occur.
At December 31, 1994, the Company had $7,436 in foreign exchange forward
contracts outstanding with major commercial banks. The contracts mature on
various dates in January and February 1995.
CONCENTRATION OF CREDIT RISK: Financial instruments which could potentially
subject the Company to significant concentrations of credit risk consist
principally of cash equivalents and trade receivables.
The Company maintains cash and equivalents at various financial institutions.
These financial institutions are located throughout the world and Company
policy is designed to limit exposure to any one institution. The Company's
investment strategy takes into account the relative credit standing of these
institutions.
Credit risk with respect to trade receivables is limited due to the large
number of entities comprising the Company's customer base and their dispersion
across many different industries.
EARNINGS PER SHARE: Earnings per share is based on the weighted average number
of shares of common stock outstanding during the year, plus incremental common
equivalent shares. The treasury stock method is used in computing the incre-
mental common stock equivalents which would result from exercise of outstanding
dilutive stock options based upon the average market value of common stock.
- 13 -
<PAGE>
INVENTORIES
<TABLE>
Inventories consist of the following:
<CAPTION>
December 31,
--------------------
1994 1993
--------- ---------
<S> <C> <C>
Finished goods........................................ $ 17,823 $ 22,785
Work-in-process....................................... 15,062 18,047
Raw materials......................................... 14,334 14,578
--------- ---------
47,219 55,410
Valuation reserve..................................... (7,127) (11,374)
--------- ---------
$ 40,092 $ 44,036
</TABLE>
NOTES PAYABLE
The Company has available short-term credit facilities of approximately $41,966
with $16,964 outstanding at December 31, 1994. There are no compensating
balance requirements. Approximately $38,516 of the available short-term credit
facilities are in foreign currencies and are used to support the Company's
foreign operations. Interest rates are tied to prevailing national base rates
and the weighted average rate for 1994, 1993 and 1992 were 4.1%, 5.8% and 9.9%,
respectively. These credit facilities are renewable annually at various dates.
<TABLE>
LONG-TERM DEBT
The long-term debt of the Company is as follows:
<CAPTION>
December 31,
1994 1993
--------- ---------
<S> <C> <C>
Secured senior note, repaid in 1994................... - $ 8,545
5.00% - 6.05% notes denominated in yen--various
terms and maturities................................ 653 1,729
Capitalized lease arrangements--various terms and
interest rates...................................... 2,003 974
Other................................................. 280 477
--------- ---------
2,936 11,725
Less current portion.................................. 1,097 2,923
--------- ---------
$ 1,839 $ 8,802
</TABLE>
The Company has a syndicated credit facility consisting of a $15,000 revolving
line of credit. The Company may designate a term of interest at LIBOR + 2% of
one, two, three or six months. In addition, the Company may borrow with
interest accruing at the bank's prime rate or a "bid rate" under the revolving
line of credit which expires July 1995. This syndicated facility is collater-
alized by certain accounts receivable and inventories. A quarterly commitment
fee of 1/4 percent per annum is assessed on the unused portion of the revolving
line of credit.
There are certain liquidity, debt, net worth, and debt coverage loan covenants
as well as certain capital spending restrictions under this facility. The
Company is in compliance with these covenants and restrictions as of December
31, 1994. There are no compensating balance requirements.
Under the various long-term debt agreements, the Company is obligated to pay
the following amounts for each of the next five years:
<TABLE>
<S> <C>
1995...................... $ 1,097
1996...................... 1,013
1997...................... 658
1998...................... 118
1999...................... 50
</TABLE>
Interest paid on all debt amounted to $1,988, $2,759 and $3,852 in 1994, 1993,
and 1992, respectively.
- 14 -
<PAGE>
INCOME TAXES
In 1993, the Company adopted SFAS, No. 109, "Accounting for Income Taxes",
which requires the use of the liability method of accounting for deferred
income taxes. Under the liability method, deferred tax assets and liabilities
are determined based on the differences between financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.
The Company adopted SFAS No. 109 by restating prior reported results.
Income (loss) before income taxes includes the following:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Domestic.................................. $ 5,063 $ 1,093 $ (1,498)
Foreign................................... 3,228 3,454 3,218
--------- --------- ---------
$ 8,291 $ 4,547 $ 1,720
Significant components of the provision
(benefit) for income taxes are as follows:
1994 1993 1992
--------- --------- ---------
Current:
U.S. Federal.............................. $ (141) $ 155 $ (249)
Foreign................................... 1,485 1,643 1,098
State..................................... (186) 542 (23)
--------- --------- ---------
1,158 2,340 826
Deferred:
U.S. Federal.............................. 118 (121) 102
Foreign................................... 169 (108) (176)
State..................................... 381 (381) (30)
--------- --------- ---------
668 (610) (104)
--------- --------- ---------
$ 1,826 $ 1,730 $ 722
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets at December 31, 1994 and
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Deferred tax liabilities:
Depreciation........................................ $ 1,935 $ 2,352
Other, net.......................................... 435 393
--------- ---------
Total deferred tax liabilities........................ 2,370 2,745
Deferred tax assets:
Inventory valuation reserves........................ 2,640 4,682
Tax credit carryforwards............................ 4,612 2,753
Sale leaseback...................................... 1,652 2,251
Intercompany transactions........................... 3 501
Foreign loss carryforwards.......................... 664 469
Distributor reserves................................ 719 440
Uniform capitalization.............................. 325 417
Other, net.......................................... 700 877
--------- ---------
Total deferred tax assets........................... 11,315 12,390
Valuation allowance................................... (9,796) (9,828)
--------- ---------
Net deferred tax assets............................... 1,519 2,562
--------- ---------
Net deferred tax liabilities.......................... $ 851 $ 183
</TABLE>
- 15 -
<PAGE>
A reconciliation of the U.S. statutory income tax rate to the effective tax
rate follows:
<TABLE>
<CAPTION>
Percent of Pretax Income
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Statutory rate............................. 34.0 % 34.0 % 34.0 %
Foreign taxes in excess of U.S.
statutory rate........................... 6.7 7.9 (10.0)
Foreign tax credits........................ (8.2)
State taxes................................ 2.3 3.5 (1.3)
Domestic losses not benefited.............. 29.6
Domestic temporary differences not
previously benefited..................... (18.6)
Filing effect.............................. (7.1)
Other...................................... (2.4) 0.8 (3.2)
--------- --------- ---------
Effective tax rate......................... 22.0 % 38.0 % 42.0 %
</TABLE>
Undistributed earnings of foreign subsidiaries were $11,603 at December 31,
1994. No provision for U.S. tax has been made on these undistributed earnings
as they are intended to be permanently reinvested. Substantially all tax
expense associated with the receipt of such undistributed earnings would be
offset by foreign tax credits.
At December 31, 1994, the Company has the following tax credit carryforwards:
<TABLE>
<CAPTION>
Amounts Expiration Date
--------- --------------------
<S> <C> <C>
General business credits................... $ 3,280 1997 - 2009
Minimum tax credits........................ 575 N/A
Alternative minimum foreign tax credits.... 4,085 1995 - 1999
Foreign tax credits........................ 340 1996 - 1999
Federal loss carryforward.................. 50 2009
State R&D credits.......................... 420 2009
State loss carryforwards................... 1,160 VAR
</TABLE>
No financial statement benefit has been recognized for the above credit carry-
forwards. They may be recognized in the future if sufficient domestic earnings
are generated before the expiration periods of the respective carryforwards.
Various foreign subsidiaries have net operating loss carryforwards totaling
$1,279, of which $1,126 can be carried forward indefinitely with the remainder
expiring at various dates beginning in 1997. No financial statement benefit
has been recognized for the foreign operating loss carryforwards.
Net income taxes paid amounted to $2,968, $777 and $801 in 1994, 1993 and
1992, respectively.
STOCKHOLDERS' EQUITY--Share amounts in thousands
The Company adopted an Incentive Stock Plan in 1981 which was amended and
restated in 1983. Under this plan, options were granted to key employees,
subject to certain limitations to purchase an aggregate of 938 shares of
common stock at not less than the fair market value on the date of the grant.
All options under the plan must be exercised within ten years from the date of
the grant. This plan expired in 1993 and no further options will be granted
under this plan. However, all options outstanding under this plan will conti-
nue to have full force and effect in accordance with their terms.
In 1993 the Company adopted the 1993 Stock Incentive Plan. This plan is
intended to benefit the Company by providing an incentive to certain key
employees, directors and consultants. The aggregate number of shares which may
be issued under this plan shall not exceed 1,080 shares, including 480 shares
available from the 1981 Plan. This plan is administered by a committee con-
sisting of not less than two board members appointed by the Board. The option
price per share shall be fixed by the committee, but in no event shall the
option price per share be less than the fair market value on the date of the
grant. The committee also determines the date on which granted options will
become exercisable, although all options under this plan must be exercised
within ten years from the date of grant.
- 16 -
<PAGE>
Summarized transactions under the above stock option plans are as follows:
<TABLE>
<CAPTION>
Shares Under Option
Option Price Per Share
--------- --------------------
<S> <C> <C>
Balance at January 1, 1992 356 $ 3.20 - $16.00
Granted................................... 237 4.50 - 6.75
Exercised................................. (8) 3.20 - 3.20
Canceled.................................. (132) 7.00 - 14.80
--------- --------------------
Balance at December 31, 1992 453 4.50 - 16.00
Granted................................... 85 7.00 - 7.63
Exercised................................. (10) 7.00 - 7.00
Canceled.................................. (279) 4.50 - 12.54
--------- --------------------
Balance at December 31, 1993 249 6.75 - 16.00
Granted................................... 514 6.50 - 8.75
Exercised................................. (48) 7.00 - 8.80
Canceled.................................. (50) 7.00 - 15.75
--------- --------------------
Balance at December 31, 1994 665 $ 6.50 - $16.00
</TABLE>
Stock options for 185 shares were exercisable at December 31, 1994 and 174
shares and 185 shares were exercisable at December 31, 1993 and 1992,
respectively.
During 1989, the Board of Directors declared a dividend distribution of one
common stock purchase right for each outstanding share of common stock. The
rights are exercisable only if a person or group acquires 20% or more of the
Company's common stock or announces a tender offer which would result in
ownership by a person or group of 20% or more of the common stock. At that
time, a right plus $0.475 may be exchanged for one-one hundredth share of com-
mon stock of the Company. Upon the acquisition of 40% or more of the Company's
common stock (unless at least 80% is acquired in a cash tender offer), the
holders of rights (other than the acquirer) will have the right to purchase
shares of the Company's common stock at half-price its market value. In
addition, the rights provide that upon the merger or transfer of 50% or more
of the assets or earning power of the Company to a person who has acquired at
least 20% of the common stock, the holders of rights will have the right to
purchase shares of the acquirer's common stock at half-price its market value.
The rights are subject to mandatory redemption for $0.01 per right at the
discretion of the Company's Board of Directors. All rights expire on August
9, 1999 unless extended or redeemed by the Company and do not have dividend
or voting privileges while outstanding.
FOREIGN OPERATIONS, GEOGRAPHIC AND SEGMENT DATA
The Company operates predominately in one segment, the electronic component
industry.
The consolidated financial statements include the accounts of wholly-owned
foreign subsidiaries. Transfers of inventories to these foreign subsidiaries
are negotiated based on market prices.
The following summary by operational area includes both net sales to unaffil-
iated customers and transfers between geographic areas. The United States
operations include corporate activity that benefits the Company as a whole.
- 17 -
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Net Sales:
North American Operations:
Unaffiliated customers.................. $ 73,927 $ 61,124 $ 63,689
Foreign unaffiliated customers.......... 13,858 11,353 8,621
Consolidated subsidiaries............... 77,290 69,451 54,028
--------- --------- ---------
165,075 141,928 126,338
European Operations:
Unaffiliated customers.................. 48,606 43,625 46,949
Consolidated subsidiaries............... 10,981 12,760 10,138
--------- --------- ---------
59,587 56,385 57,087
Far Eastern Operations:
Unaffiliated customers.................. 57,805 52,475 43,690
Consolidated subsidiaries............... 4,160 2,919 2,387
--------- --------- ---------
61,965 55,394 46,077
Eliminations............................ (92,431) (85,130) (66,553)
--------- --------- ---------
$194,196 $168,577 $162,949
Net Income (Loss):
North American Operations................. $ 4,568 $ 2,207 $ (3,164)
European Operations....................... 245 1,098 2,111
Far Eastern Operations.................... 1,461 923 155
Eliminations--primarily United States..... 191 (1,411) 1,896
--------- --------- ---------
$ 6,465 $ 2,817 $ 998
Identifiable Assets:
North American Operations................. $105,028 $ 99,765 $ 96,313
European Operations....................... 19,300 23,306 20,598
Far Eastern Operations.................... 32,538 29,398 26,809
Eliminations.............................. (13,858) (10,407) (7,313)
--------- --------- ---------
$143,008 $142,062 $136,407
Liabilities:
North American Operations................. $ 58,021 $ 82,257 $ 81,448
European Operations....................... 9,429 13,084 11,600
Far Eastern Operations.................... 24,455 23,476 22,095
Eliminations.............................. (36,519) (56,306) (56,179)
--------- --------- ---------
$ 55,386 $ 62,511 $ 58,964
</TABLE>
COMMITMENTS AND CONTINGENCIES
The Company is involved in three ground water claims that are still in the
early stages of the legal process. Based on investigations to date, management
does not believe the Company contributed to the alleged contamination and
therefore is of the opinion that the disposition of these claims will not
result in any material change in the Company's financial condition, results of
operations or liquidity.
In October 1992, the Company sold and leased back $10,000 of production and
manufacturing equipment, utilizing the proceeds to repay existing bank debt.
A gain of $7,483 generated by the sale transaction was deferred and is being
amortized over the five-year lease terms. The Company has purchase and lease
renewal options at future fair market values under the lease agreements. The
leases are classified as operating leases. Rentals under these leases are
$2,196 annually and are included in the future commitments table below.
Approximate aggregate future commitments under noncancelable operating leases,
primarily for equipment and office facilities, are summarized as follows:
<TABLE>
<CAPTION>
<S> <C>
1995......................................................... $5,509
1996......................................................... 5,237
1997......................................................... 3,997
1998......................................................... 1,829
1999......................................................... 1,457
Thereafter................................................... 1,873
</TABLE>
Rental expense was $6,324, $6,031 and $3,883 in 1994, 1993 and 1992,
respectively.
- 18 -
<PAGE>
EMPLOYEE BENEFIT PLANS
The Company has a defined contribution plan, the Future Investment Trust (FIT).
The FIT is a 401(k) salary deferral plan and allows eligible participating U.S.
employees to defer up to 15% of their salaries. Employee contributions are
matched by the Company at a rate of 25% of the employee's contribution up to
10% of the employee's compensation. Beginning in January 1995, the Company's
matching will be at 25% of the employee's total contribution. The Company's
contributions vest at 25% per year and become fully vested to the employee
after four years of service. Additional voluntary Company contributions may be
made to FIT participants' profit sharing accounts.
The Company has a noncontributory defined benefit pension plan which covers
all eligible U.S. employees and generally provides benefits to retired
employees based on their length of service, age, and a percentage of qualify-
ing compensation during the final years of employment. Contributions are
intended to provide not only for benefits attributed to service to date, but
also for those expected to be earned in the future. The Company's policy is
to contribute amounts sufficient to at least meet the Employee Retirement
Income Security Act's minimum funding requirements.
A summary of the components of net periodic pension expense follows:
<TABLE>
<CAPTION>
-----1994---- -----1993---- -----1992----
U.S. Foreign U.S. Foreign U.S. Foreign
Plans Plans Plans Plans Plans Plans
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Defined benefit pension plans:
Service cost--benefits earned
during the period............ $ 492 $ 334 $ 396 $ 307 $ 406 $ 262
Interest cost on projected
benefit obligation........... 608 166 540 141 575 122
Net amortization............... (363) (20) (54) (75) 165 (35)
Return on plan assets.......... 21 (43) (317) (17) (306) (38)
------ ------ ------ ------ ------ ------
Net periodic pension expense
of defined benefit plans..... 758 437 565 356 840 311
Defined contribution plan:
Nonqualified ESRP,
terminated in 1992........... 148
Matching FIT contribution...... 507 432 191
------ ------ ------ ------ ------ ------
Total contributions to
defined contributions plans.. 507 432 339
------ ------ ------ ------ ------ ------
Total employee benefit expense. $1,265 $ 437 $ 997 $ 356 $1,179 $ 311
</TABLE>
Assumptions used in computing pension expense for the defined benefit plans
were as follows:
<TABLE>
<CAPTION>
U.S. Plans Foreign Plans
---------- -------------
<S> <C> <C>
Weighted-average discount rates.................. 7.5% 5.5% - 7.0%
Rates of increase in compensation levels......... 5.0% 4.5%
Expected long-term rate of return on assets...... 8.5% 5.5% - 7.0%
</TABLE>
The U.S. Plan's weighted-average discount rates and rates of increase in com-
pensation levels were changed from 8.5% and 6.0%, respectively, in 1992.
- 19 -
<PAGE>
The following table sets forth the funded status and amounts recognized in the
consolidated statements of financial position at December 31, 1994 and 1993
for the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
------1994------- ------1993-------
U.S. Foreign U.S. Foreign
Plans Plans Plans Plans
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.............. $ 3,773 $ 1,502 $ 4,495 $ 1,092
-------- -------- -------- --------
Accumulated benefit obligation......... $ 4,294 $ 1,863 $ 5,353 $ 1,443
-------- -------- -------- --------
Projected benefit obligation for
services rendered to date............ $(7,773) $(2,747) $(7,772) $(2,265)
Plans assets at fair value............. 7,059 1,406 6,696 1,056
-------- -------- -------- --------
Excess of projected benefit obligation
over plan assets..................... (714) (1,341) (1,076) (1,209)
Unrecognized net (loss) gain........... (1,248) 190 (825) 433
Unrecognized prior service cost........ 1,550 1,787
Unrecognized net transition obligation. (47) (36)
-------- -------- -------- --------
Net pension liability.................. $ (412) $(1,198) $ (114) $ (812)
</TABLE>
U.S. plan assets consist of investments in equities, bonds and cash equiva-
lents. Foreign plan's assets consist of securities, real estate, loans and
cash equivalents.
SUMMARIZED QUARTERLY DATA (Unaudited)
The following is a summary of quarterly financial data for 1994 and 1993:
<TABLE>
<CAPTION>
------------Quarter Ended 1994------------
Apr 2, Jul 2, Oct 1, Dec 31,
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales........................ $ 47,355 $ 47,607 $49,217 $50,017
Gross margin..................... 22,874 22,810 21,177 21,093
Net income....................... 1,737 1,964 1,704 1,060
Earnings per share............... .18 .20 .18 .11
<CAPTION>
------------Quarter Ended 1993------------
Apr 3, Jul 3, Oct 2, Dec 31,
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales........................ $ 42,280 $ 42,486 $ 42,935 $ 40,876
Gross margin..................... 20,324 20,308 20,290 20,680
Net income....................... 572 796 604 845
Earnings per share............... .06 .08 .06 .09
</TABLE>
- 20 -
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Burr-Brown Corporation
We have audited the accompanying consolidated statements of financial position
of Burr-Brown Corporation and Subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mater-
ial misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Burr-Brown Cor-
poration and Subsidiaries at December 31, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Tucson, Arizona
January 23, 1995
QUARTERLY MARKET AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
1994 Close 1993 Close
Quotations Quotations
---------------- ----------------
High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
First quarter........................... $ 7 3/8 $ 5 3/4 $ 8 1/4 $ 5 3/4
Second quarter.......................... 9 7/8 6 1/4 7 7/8 6 1/2
Third quarter........................... 11 1/4 7 3/4 9 3/4 6 5/8
Fourth quarter.......................... 15 1/2 9 7/8 7 5 1/2
</TABLE>
The Company's common stock has been traded on the National Market System under
the symbol BBRC since March 1984. As of December 31, 1994, there were 1,045
stockholders of record.
The Company has never paid any cash dividends on its common stock. It is the
present policy of the Board of Directors to retain earnings to finance expan-
sion of the Company's operations, and the Company does not expect to pay
dividends in the foreseeable future.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the last three years, certain items in the
Company's Consolidated Statements of Income as a percentage of net sales,
and the percentage change of such items as compared to the preceding year.
<TABLE>
<CAPTION>
Percentage
Change in Dollars
Inc (Dec)
--------------
Percent of Net Sales 1994 1993
---------------------- Over Over
1994 1993 1992 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Sales.......................... 100 % 100 % 100 % 15 % 3 %
Cost of Sales...................... 55 52 53
------ ------ ------
Gross Margin....................... 45 48 47 8 7
Expenses:
Sales and Marketing.............. 20 22 22 5 7
Product Development.............. 11 12 11 11 9
General and Administrative....... 9 10 10 (3) 3
------ ------ ------
Total Operating Expenses........... 40 44 43 5 6
Income from Operations............. 5 5 4 35 11
Interest Expense................... 1 1 2 (26) (39)
------ ------ ------
Income Before Income Taxes......... 4 3 2 82 164
Provision for Income Taxes......... 1 1 1 6 140
------ ------ ------ ------ ------
Net Income......................... 3 % 2 % 1 % 129 % 182 %
</TABLE>
1994 COMPARED TO 1993
Order bookings were $204.2 million in 1994 compared to $170.3 million for the
previous year, an increase of 20%. Geographically, bookings have increased
over the prior year at least 18% in all three of the Company's major sales
locales, the Americas, Europe and Asia.
1994's sales of $194.2 million increased 15% when compared to $168.6 million
for 1993. This year showed both the Asian and European economies recovering,
which positively impacted the Company's sales for the year. It is estimated
that approximately 3% of the yearly increase was due to favorable currency
translation caused by the stronger Japanese Yen.
- 21 -
<PAGE>
Product margin was 45% of sales for 1994 compared to 48% in 1993. Product mar-
gins were impacted by the implementation of two of the Company's major
strategies in place in 1994: Reduce inventories worldwide and use domestic
distribution as the means to increase our domestic sales presence. To reduce
inventories our factory output decreased slightly while our sales increased.
This planned inventory reduction is now at a more reasonable level and in the
future should contribute to lower operating costs. The positive results of the
use of the distribution channel are just beginning to be realized as additional
design-ins are achieved. Sales through the distribution channel have increased
significantly this year as domestic distributor sales were approximately 9% and
3% of total sales in 1994 and 1993, respectively. The investment in this
strategy impacted product margin somewhat but is expected to continue to
broaden the Company's exposure and keep it competitive in target markets.
Operating expenses in 1994 increased 5%, or $3.6 million, compared to 1993.
Expenses as a percentage of sales were 40% in 1994 compared to 44% in 1993.
This reflects the Company's continuing accomplishments of controlling costs in
relation to sales. While product development expense decreased slightly as a
percentage of revenue, it had the largest dollar and percentage increase com-
pared to the prior year. The increase in product development reflects the
emphasis management has placed on developing new products and enhancing exist-
ing products.
Operating profit for the year was $10.5 million which represents a 35% increase
over the year ended 1993.
The effective tax rate for 1994 decreased to 22% from 38% in 1993. The
decrease was attributable to a shift in the mix of earnings among the different
tax jurisdictions in which the Company operates. If the favorable mix of
earnings among the different taxing jurisdictions continues in 1995, the
deferred tax asset valuation allowance may decrease in 1995 and the downward
trend in the Company's effective tax rate may also continue.
1993 COMPARED TO 1992
Bookings increased 5% from 1992's level of $162.4 million to $170.3 million.
As the Japanese economy slowly recovered, so did our business in that market.
Orders in the Far East increased $7.5 million or 16%. Depressed European
economic conditions continued into 1993 from 1992 and the Company's European
orders decreased 7% from 1992. Orders in the domestic market increased 7%
from 1992.
Net sales for 1993 increased 3% from 1992 to $168.6 million. 1993 quarterly
sales increased over the respective quarterly sales in 1992 for the first,
second and third quarters but fell 2% when compared with the fourth quarter of
1992.
Geographically, sales in the Asian market increased 23% while the European and
North American markets both decreased 4%. Fluctuating exchange rates had a
favorable impact of $2.4 million on sales in 1993 and were primarily attribu-
table to the strengthening Japanese Yen.
The Company established a domestic distributor program in 1993. Management's
goal was to increase sales by using distributors for small quantities business
and thus allow the Company's sales force to concentrate on larger customers
and new business. Reserves were established pursuant to related price pro-
tection and return provisions.
Product margin increased from 47% in 1992 to 48% in 1993. The increase in
margin was due to higher factory utilization as significant efforts were made
to lower the order backlog, shorten delivery times, and improve customer
service.
Operating expenses of $73.8 million in 1993 increased 6% from $69.4 million in
1992. Expenses in all areas increased over 1992 as a result of restoring
merit pay increases and the lifting of a temporary spending freeze in late
1992. Product design had the largest percentage increase at 9% or $1.6 mil-
lion, which reflected the Company's continued commitment to enhancing current
products and developing new products.
Sales and marketing expenses increased $2.4 million or 7% from 1992 to 1993.
Most of this increase was due to major efforts to strengthen our sales with
increased advertising, new comprehensive catalogs, field seminars and customer
visits.
Interest expense decreased 39% or $1.5 million reflecting reduced debt levels.
The effective tax rate for 1993 decreased to 38% from 42% in 1992. The
decrease was attributable to a shift in the mix of earnings among the differ-
ent tax jurisdictions in which the Company operates.
LIQUIDITY AND CAPITAL RESOURCES
During 1994, the Company generated a net cash flow from operations of $19.9
million compared to $12.8 million in 1993. Capital expenditures of $12.1
million were financed with cash flow from operations. Cash and cash equivalents
decreased $3.1 million from December 31, 1993.
The Company's cash and cash equivalents at the end of 1994 were $9.9 million
compared to $13.1 million at the end of 1993. The decrease is a result of pay-
ing down debt and investing in equipment while still generating positive cash
flows from operating activities.
Inventories, net of valuation reserve provisions, decreased $3.2 million, pri-
marily in the work-in-process and finished goods areas. The valuation reserve
also decreased significantly. The reductions were the result of efforts to
- 22 -
<PAGE>
reduce inventories by disposing of obsolete parts, depleting stock, building
for customer orders, building when the inventories are needed and closely moni-
toring levels at different locales. Management believes that adequate reserves
have been provided for potentially unsalable and excess inventories.
The Company's 1994 capital spending of $12.1 million was mainly for equipment
to support test engineering and process improvements and for implementation of
a new order entry system. The new order fulfillment system is expected to
improve customer service and support much higher sales levels. Capital invest-
ments for 1995 are expected to range between $21 million and $24 million. These
capital investments will be primarily for manufacturing equipment and informa-
tion systems, and will be financed by cash from operations and by borrowing
under existing credit lines.
The Company's current ratio decreased to 1.98 at December 31, 1994, from 2.08
at December 31, 1993. In addition to its term debt, the Company had approxi-
mately $57.0 million in credit facilities available with domestic and overseas
banks at the end of the year, of which approximately $17.0 million or 30% was
utilized. Management believes the Company has sufficient capital resources
available for the next 12 months.
The Company is a named party in three toxic tort cases. The first was filed in
Pima County Superior Court on January 13, 1992. The Company attempted informal
negotiations with the plaintiffs for dismissal that were ultimately unsuccess-
ful. On September 29, 1993, the Company then answered and denied liability for
the nuisance, trespass, negligence, strict liability, and other alleged torts.
The second and third cases filed in U.S. District Court on September 20, 1991,
and August 7, 1992, respectively, are consolidations of individual lawsuits
that sought damages for contaminating ground water which was then pumped from
public wells and consumed. Injuries are alleged to have resulted from drinking
the contaminated water and one suit is asking for future medical monitoring.
Third party complaints were filed by the original defendant against five com-
panies including Burr-Brown Corporation on September 30, 1993 and March 7,
1994, respectively. The complaints seek to have the other five companies share
in whatever damages are imposed. The Company intends to file summary judgement
motions in all cases.
After undertaking extensive hydrological investigations and consultation with
independent environmental consultants, management does not believe the Company
contributed to the alleged contamination and, therefore, is of the opinion that
the disposition of these claims will not result in any material change in the
Company's financial condition, results of operations or liquidity. However,
environmental litigation is inherently uncertain, and there can be no assurance
as to the ultimate outcome of these claims.
The impact of inflation on the Company's financial position and results of
operations has not been significant during the three year period ended December
31, 1994.
- 23 -
<PAGE>
TEN YEAR FINANCIAL SUMMARY
Burr-Brown Corporation and Subsidiaries--In thousands, except per-share amounts
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
1989 1988 1987 1986 1985
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
Net Sales................. $194,196 $168,577 $162,949 $178,626 $177,009
$169,470 $176,673 $140,484 $112,788 $ 94,503
Sales by geographic area:
Foreign................... 62 % 64 % 61 % 64 % 67 %
68 % 69 % 66 % 65 % 60 %
Domestic.................. 38 % 36 % 39 % 36 % 33 %
32 % 31 % 34 % 35 % 40 %
Increase (decrease) in
sales over prior years.. 15 % 3 % (9)% 1 % 4 %
(4)% 26 % 25 % 19 % 6 %
Gross margin % of sales... 45 % 48 % 47 % 52 % 50 %
55 % 53 % 47 % 49 % 52 %
Operating expenses % of
sales................... 40 % 44 % 43 % 55 % 44 %
43 % 40 % 40 % 41 % 39 %
Operating income (loss)
% of sales.............. 5 % 5 % 4 % (3)% 6 %
12 % 13 % 7 % 9 % 13 %
Interest expense % of
sales................... 1 % 1 % 2 % 2 % 2 %
3 % 2 % 2 % 3 % 4 %
Other income % of sales... 0 % 1 % 1 % 0 % 0 %
0 % 0 % 0 % 0 % 0 %
Net income (loss)......... $ 6,465 $ 2,817 $ 998 $(10,681)(C) $ 2,663(B)
$ 8,710 $ 11,549 $ 4,286 $ 3,736 $ 5,577(A)
Per share amount.......... $ 0.67 $ 0.29 $ 0.10 $ (1.11) $ 0.28
$ 0.90 $ 1.19 $ 0.44 $ 0.39 $ 0.58
-----------------------------------------------------------------------------
-------------------------------------------------
Income tax rate........... 22 % 38 % 42 % 13 % 43 %
44 % 43 % 40 % 45 % 37 %
-----------------------------------------------------------------------------
-------------------------------------------------
Return on sales........... 3 % 2 % 1 % (6)% 2 %
5 % 7 % 3 % 3 % 6 %
Return on average assets.. 5 % 2 % 1 % (7)% 2 %
6 % 9 % 4 % 3 % 6 %
Return on average capital
employed................ 6 % 3 % 1 % (8)% 2 %
7 % 11 % 4 % 4 % 6 %
Return on average equity.. 8 % 4 % 1 % (13)% 3 %
11 % 16 % 7 % 7 % 11 %
-----------------------------------------------------------------------------
-------------------------------------------------
Total capital employed.... $110,055 $108,495 $106,618 $134,795 $135,215
$140,975 $108,972 $108,105 $102,588 $ 92,175
% of sales................ 57 % 64 % 65 % 75 % 76 %
83 % 62 % 77 % 91 % 98 %
-----------------------------------------------------------------------------
-------------------------------------------------
Total equity.............. $ 87,622 $ 79,551 $ 77,443 $ 78,171 $ 88,832
$ 84,406 $ 76,414 $ 65,522 $ 58,290 $ 53,214
% of sales................ 45 % 47 % 48 % 44 % 50 %
50 % 43 % 47 % 52 % 56 %
Per share amount.......... $ 9.07 $ 8.30 $ 8.07 $ 8.15 $ 9.24
$ 8.73 $ 7.87 $ 6.80 $ 6.03 $ 5.57
-----------------------------------------------------------------------------
-------------------------------------------------
Total debt................ $ 19,900 $ 26,725 $ 27,100 $ 54,255 $ 43,626
$ 50,813 $ 27,953 $ 40,032 $ 41,740 $ 36,911
% of sales................ 10 % 16 % 17 % 30 % 25 %
30 % 16 % 28 % 37 % 39 %
Debt-to-equity ratio...... 0.23 0.34 0.35 0.69 0.49
0.60 0.37 0.61 0.72 0.69
-----------------------------------------------------------------------------
-------------------------------------------------
Total assets.............. $143,008 $142,062 $136,407 $158,216 $159,942
$160,864 $132,617 $121,816 $113,771 $101,391
% of sales................ 73 % 84 % 84 % 89 % 90 %
95 % 75 % 87 % 101 % 107 %
-----------------------------------------------------------------------------
-------------------------------------------------
Working capital........... $ 45,623 $ 49,456 $ 47,705 $ 53,464 $ 47,997
$ 43,070 $ 39,125 $ 39,409 $ 41,163 $ 38,986
% of sales................ 23 % 29 % 29 % 30 % 27 %
25 % 22 % 28 % 36 % 41 %
-----------------------------------------------------------------------------
-------------------------------------------------
Current ratio............. 1.98 2.08 2.28 2.24 2.20
1.94 2.02 2.16 2.66 3.06
Capital expenditures...... $ 12,055 $ 7,117 $ 5,356 $ 11,637 $ 14,053
$ 28,019 $ 21,291 $ 11,229 $ 12,009 $ 10,142
Depreciation and
amortization............ $ 10,615 $ 10,072 $ 11,042 $ 12,799 $ 11,694
$ 11,068 $ 14,063 $ 11,635 $ 9,777 $ 8,576
-----------------------------------------------------------------------------
-------------------------------------------------
Land, building and
equipment, net.......... $ 45,896 $ 42,427 $ 45,665 $ 55,188 $ 66,602
$ 67,894 $ 51,788 $ 45,610 $ 43,945 $ 40,842
% of sales................ 24 % 25 % 28 % 31 % 38 %
40 % 29 % 32 % 39 % 43 %
-----------------------------------------------------------------------------
-------------------------------------------------
Average no. of employees
during the year......... 1,825 1,547 1,566 1,740(D) 1,646
1,655 1,558 1,484 1,547 1,478
Sales per employee........ $ 106.40 $ 108.97 $ 104.05 $ 102.66 $ 107.54
$ 102.40 $ 113.40 $ 94.67 $ 72.91 $ 63.94
-----------------------------------------------------------------------------
-------------------------------------------------
Shares used to compute
earnings (loss) per
share.................. 9,665 9,584 9,593 9,593 9,611
9,668 9,704 9,636 9,667 9,559
-----------------------------------------------------------------------------
-------------------------------------------------
<FN>
(A) Net Income for 1985 included a cumulative effect of a change in accounting
principle for the costs of inventory of $809 or $0.08 per share.
(B) Net Income for 1990 included a cumulative effect of a change in accounting
principle for income taxes of $1,610 or $0.16 per share.
(C) Net loss for 1991 included a restructuring charge of $16,273.
(D) Number of employees at year end after restructuring: 1,649.
</FN>
</TABLE>
- 24 -
<PAGE>
CORPORATE INFORMATION
DIRECTORS
THOMAS R. BROWN, JR.
Chairman of the Board
Burr-Brown Corporation
SYRUS P. MADAVI
President and CEO
Burr-Brown Corporation
THOMAS J. TROUP
Vice Chairman of the Board
Burr-Brown Corporation
FRANCIS J. AGUILAR
Professor Business Administration
Harvard Business School
JOHN S. ANDEREGG, JR.
Chairman of the Board
Dynamics Research Corporation
BOB J. JENKINS
Corporate Vice President (retired)
Motorola, Inc.
JAMES A. RIGGS
Senior Vice President and Chief Financial Officer
Olin Corporation
OFFICERS AND CORPORATE MANAGEMENT
THOMAS R. BROWN, JR.
Chairman of the Board
SYRUS P. MADAVI
President and CEO
JOHN L. CARTER
Executive Vice President and CFO
ROBERT E. FILIAULT
Vice President, North American Sales
EDWARD C. HAGEN
Vice President, Environmental Control
and Community Services
TILMAN KIESS
Vice President
G. ROGER MYERS
Treasurer
MICHAEL E. PAUGH
Vice President, Quality
MICHAEL M. PAWLIK
Vice President, Marketing
ROBERT E. REYNOLDS
Vice President, Operations
JILL H. RICE
Corporate Secretary
FORM 10-K
A copy of the Company's current annual report on Form 10-K filed with the
Securities and Exchange Commission can be obtained without charge by any
stockholder upon request to:
Investor Relations Department
Burr-Brown Corporation, MS-100
P. O. Box 11400
Tucson, AZ 85734-1400
TRANSFER AGENT
Bank One, Arizona, N.A.
Corporate Trust Division
P.O. Box 71
Phoenix, AZ 85001
COMMON STOCK
NASDAQ National Market System
Ticker Symbol: BBRC
AUDITORS
Ernst & Young, LLP
Tucson, AZ
HEADQUARTERS
P.O. Box 11400
Tucson, AZ 85734-1400
(520) 746-1111
Customer Assistance: (800) 548-6132
EXHIBIT 3.2
CERTIFIED COPY OF
RESTATED BYLAWS OF
BURR-BROWN CORPORATION
I, Jill H. Rice, do hereby certify that the following is a complete, true and
correct copy of the Restated Bylaws of Burr-Brown Corporation, a corporation
duly organized and existing under the laws of the State of Delaware. I am
the keeper of the corporate seal and of the minutes and records of this
Corporation; and that the said Restated Bylaws are in full force and effect
and have not been rescinded or modified.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Tucson, State of Arizona, at such
place as may be fixed from time to time by the Board of Directors,
or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1983,
shall be held in the month of April on such date and time as shall
be designated by the Board of Directors and stated in the notice
of the meeting, at which they shall elect by a plurality vote a
Board of Directors, and transaction such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty
(60) days before the date of the meeting.
<PAGE>
Section 4. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the Chairman of the Board or the
president and shall be called by the president or secretary at the
request in writing of a majority of the Board of Directors, or at
the request in writing of stockholders owning a majority in amount
of the entire capital stock of the corporation issued and out-
standing and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten (10) nor more
than sixty (60) days before the date of the meeting, to each stock-
holder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders
for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjourn-
ment is for more than thirty days, or if after the adjournment a
- 2 -
<PAGE>
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person
or represented by proxy and voting on a certain question
(abstentions being deemed for purposes of this Section to be
non-votes) shall decide any such question brought before such
meeting, unless the question is one upon which by express provision
of the statutes, or of the certificate of incorporation, a different
vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation each
stockholder shall at every meeting of the stockholders be entitled
to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy
shall be voted on after three years from its date, unless the
proxy provides for a longer period. A proxy shall be deemed signed
if the stockholder's name is placed on the proxy (whether by manual
signature, typewriting, telegraphic transmission or otherwise) by
the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of the General
Corporation Law of Delaware.
Section 11. The stockholders of the corporation may not take action by written
consent without a meeting but must take any such actions at a duly
called annual or special meeting.
Section 12. NOTICE OF STOCKHOLDER BUSINESS. At an annual meeting of the stock-
holders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before
an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the
direction of a majority of the total number of Directors which
the Corporation would have if there were no vacancies (the
"Whole Board"), or
(c) otherwise properly be requested to be brought before the
meeting by a stockholder.
For business to be properly requested to be brought before an
annual meeting by a stockholder, the stockholder must have given
- 3 -
<PAGE>
timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the
Corporation, not less than 80 days prior to the meeting; provided,
however, that in the event that the date of the meeting is not
publicly announced by the Corporation by mail, press release or
otherwise more than 90 days prior to the meeting notice by the
stockholder to be timely must be delivered to the Secretary of the
Corporation not later than the close of business on the tenth day
following the day on which such announcement of the date of the
meeting was communicated to stockholders. A stockholder's notice
to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting.
(a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such
business at the annual meeting.
(b) the name and address of the stockholder proposing such
business,
(c) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote on such business
on the date of such notice and, if applicable, intends to
appear in person or by proxy at the meeting to introduce the
business specified in the notice;
(d) the class and number of shares of the Corporation which are
beneficially owned by the stockholder,
(e) such other information regarding each matter of business to
be proposed by such stockholder as would be required to be
included in a proxy statement file pursuant to the proxy
rules of the Securities and Exchange Commission, had the
matter been proposed, or intended to be proposed, by the Board
of Directors, and
(f) any material interest of the stockholder in such business.
Notwithstanding anything in the Bylaws to the contrary, no business
shall be conducted at an annual meeting except in accordance with
the procedures set forth in this Section of the Bylaws. The chair-
man of the annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this
Section of the Bylaws, and if he should so determine, he shall so
declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
- 4 -
<PAGE>
Section 13. NOTIFICATION OF NOMINEES. Subject to the rights of holders of any
class or series of stock having a preference over the Common Stock
as to dividends or upon liquidation, nominations for the election
of Directors may be made by the Board of Directors or a committee
appointed by the Board of Directors or by any stockholder entitled
to vote in the election of Directors generally. However, any stock-
holder entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a meeting
only if written notice of such stockholder's intent to make such
nomination or nominations has been received by the Secretary of the
Corporation not less than 80 days in advance of such meeting; pro-
vided however, that in the event that the date of the meeting was
not publicly announced by the Corporation by mail, press release or
otherwise more than 90 days prior to the meeting, notice by the
stockholder to be timely must be delivered to the Secretary of the
Corporation no later than the close of business on the tenth day
following the day on which such announcement of the date of the
meeting was communicated to stockholders. Each such notice shall
set forth:
(a) the name and address of stockholder who intends to make the
nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote for the election
of Directors on the date of such notice and intends to appear
in person or by proxy at the meeting to nominate the person or
persons specified in the notice;
(c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities
and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and
(e) the consent of each nominee to serve as a director of the
Corporation if so elected.
- 5 -
<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall not be less than three (3) nor more than nine (9). The first
board shall consist of six (6) directors. Thereafter, within the
limits above specified, the number of directors shall be determined
by resolution of the Board of Directors or by the stockholders at
the annual meeting of the stockholders except as provided in Section
2 of this Article, and each director elected shall hold office until
his or her successor is elected and qualified. Directors need not
be stockholders.
Section 2. Newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or
other cause shall be filled only by the affirmative vote of a
majority of the remaining Directors then in office, even though
less than a quorum of the Board of Directors. Any Director elected
in accordance with the preceding sentence shall hold office until
the next annual election and until such Director's successor shall
have been duly elected and qualified.
Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of
the stockholders having a right to vote as a single class may be
filled by a majority of the directors then in office, though less
than a quorum, or by a sole remaining director, and the directors
so chosen shall hold office until the next annual election and
until their successors are duly elected and qualified, unless
sooner removed.
Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provi-
sions of the certificate of incorporation, vacancies and newly
created directorships of such class or classes or series may be
filled by a majority of the directors elected by such class or
classes or series thereof then in office, or by a sole remaining
director so elected. If there are no directors in office, then
an election of directors may be held in the manner provided by
statute. If, at any time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute
less than a majority of the whole Board of Directors (as constituted
immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least
ten percent of the total number of shares at the time outstanding
having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors
then in office.
- 6 -
<PAGE>
Section 3. The business of the corporation shall be managed by or under the
direction of its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by statute or by the certificate of incorporation or by
these Bylaws directed or required to be exercised or done by the
stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold meetings, both
regular and special either within or without the State of Delaware.
Section 5. The first meeting of each newly elected Board of Directors shall be
held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting
shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In
the event of the failure of the stockholders to fix the time or
place of such first meeting of the newly elected Board of Directors,
or in the event such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time
be determined by the Board of Directors.
Section 7. Special meetings of the Board of Directors may be called by the
Chairman of the Board or the president and shall be called by the
president or secretary on the written request of two directors
unless the Board of Directors consists of only one director, in
which case special meetings shall be called by the president or
secretary on the written request of the sole director.
Notice of the time and place of special meetings shall be delivered
personally or by telephone or facsimile to each director or sent
by first-class mail or telegram, charges prepaid, addressed to each
director at that director's address as it is shown on the records
of the corporation. If the notice is mailed, it shall be deposited
in the United States mail at least five (5) days before the time of
the holding of the meeting. If the notice is delivered personally
or by telephone, facsimile or by telegram, it shall be delivered
personally or by telephone, facsimile or to the telegraph company
at least twenty-four (24) hours before the time of the holding of
the meeting. Any oral notice given personally or by telephone may
be communicated either to the director or to a person at the
- 7 -
<PAGE>
office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The
notice need not specify the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
Section 8. At all meetings of the Board of Directors, a majority of the total
number of directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. If
a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting
from time to time without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Meetings of the Board of Directors shall be presided over by the
Chairman of the Board, if any, or in his or her absence by the
president, or in their absence by a chairman chosen at the meeting.
The secretary shall act as secretary of the meeting, but in his or
her absence the chairman of the meeting may appoint any person to
act as secretary of the meeting. The chairman of any meeting shall
determine the order of business and the procedures at the meeting.
Section 10. Unless otherwise restricted by the certificate of incorporation of
these Bylaws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board of Directors
or committee thereof, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee thereof.
Section 11. Unless otherwise restricted by the certificate of incorporation or
these Bylaws, members of the Board of Directors or any committee
designated by the Board of Directors, may participate in a meeting
of the Board of Directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, by resolution passed by a majority of
the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The
Board of Directors may designate one or more directors as alternate
- 8 -
<PAGE>
members of any committee who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the
extent provided in the resolutions of the Board of Directors, shall
have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; provided, however, that
in the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting, and not disquali-
fied from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to
act at the meeting place of any such absent or disqualified member.
Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board
of Directors.
Section 13. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation or
these Bylaws, the Board of Directors shall have the authority to
fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting
of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in
any other capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like compensation for
attending committee meetings.
REMOVAL OF DIRECTORS
Section 15. Unless otherwise restricted by the certificate of incorporation or
these Bylaws, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of
shares entitled to vote for the election of such director or
directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the certificate
of incorporation or of these Bylaws, notice is required to be given
to any stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed
to such stockholder, at his address as it appears on the records of
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the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited
in the United State mail. An affidavit of the secretary or an
assistant secretary or of the transfer agent of the corporation that
the notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in
any written waiver of notice unless so required by the certificate
of incorporation or these Bylaws.
ARTICLE V
OFFICERS
Section 1. The Board of Directors shall designate certain officers of the
corporation as executive officers of the corporation, and such
executive officers shall include the Chairman of the Board, if
any, and the president, one of whom shall be designated as the
chief executive officer, the chief financial officer, and such
other officers as the Board of Directors may designate.
The Board of Directors may also create other offices of the
corporation that are not designated as executive offices and such
non-executive offices may include one or more vice presidents, a
secretary, assistant secretaries, a treasurer, a controller and
other assistants to the chief financial officer.
Section 2. The executive officers of the corporation shall be chosen by the
Board of Directors. The Board of Directors may elect from among
its members a Chairman of the Board and one or more Vice Chairmen
of the Board. The non-executive officers of the corporation may
be appointed by the Board of Directors or by the Chief Executive
Officer. Any number of offices may be held by the same person,
unless the certificate of incorporation or these Bylaws otherwise
provide.
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Section 3. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a president or chief executive
officer, a chief financial officer and such other executive officers
as the Board may elect.
Section 4. With respect to the non-executive offices established by the Board
of Directors, the Board of Directors or, if so delegated by the
Board, the chief executive officer may appoint such other non-
executive officers, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors or by the
president.
Section 5. The compensation of all the executive officers of the corporation
shall be fixed by the Board of Directors, and the salaries of all
the non-executive officers of the corporation shall be fixed by the
Board of Directors or, if so delegated by the Board, the chief
executive officer.
Section 6. The officers of the corporation shall hold office until their
successors are duly elected and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by
the affirmative vote of a majority of the Board of Directors. Any
non-executive officer appointed by the chief executive officer may
be removed at any time by such person. Any vacancy occurring in
any office of the corporation appointed by the Board of Directors
shall be filled by the Board of Directors, and any vacancy occur-
ring in any non-executive office of the corporation appointed by
the chief executive officer shall be filed by the Board of
Directors or by the chief executive officer.
THE CHAIRMAN OF THE BOARD
Section 7. The Chairman of the Board, if any, shall preside at all meetings of
the Board of Directors and of the stockholders at which he shall be
present and shall have and may exercise such powers as are, from
time to time, assigned by the Board of Directors and as may be
provided by law. The Board of Directors may designate the Chairman
of the Board as the chief executive officer of the corporation.
Section 8. In the absence of the Chairman of the Board, the Vice Chairman, if
any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. The Vice Chair-
man shall have and may exercise such powers as are, from time to
time, assigned by the Board of Directors and as may be provided by
law.
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THE PRESIDENT AND VICE-PRESIDENTS
Section 9. The president shall be the chief executive officer of the
corporation unless the Board of Directors designates the Chairman
of the Board as the chief executive officer of the corporation.
In the absence of the Chairman and Vice Chairman of the Board of
Directors, the president shall preside at all meetings of the
stockholders and the Board of Directors. The president shall have
responsibility for general and active management of the business
of the corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect.
Section 10. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other
officer or agent of the corporation.
Section 11. In the absence of the president or in the event of his inability
or refusal to act, the vice president, if any, or in the event
there be more than one vice president, the vice presidents in the
order designated by the directors, or in the absence of any
designation, then in the order of their election, shall perform the
duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president.
The vice presidents shall perform such other duties and have such
other powers as the Board of Directors or the chief executive
officer may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 12. The secretary shall attend all meetings of the Board of Directors
and all meetings of the stockholders and record all the proceedings
of the meetings of the stockholders and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties
for the standing committees when so requested by any such committee.
The secretary shall give or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of
Directors and shall perform such other duties as may be prescribed
by the Board of Directors or president, under whose supervision he
shall be. The secretary shall have custody of the corporate seal
of the corporation, and the secretary or an assistant secretary
shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The Board of Directors
may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by his signature.
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The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the
Board of Directors may direct, a book of minutes of all meetings
and actions of directors, committees of directors, and stockholders.
The minutes shall show the time and place of each meeting, whether
regular or special (and, if special, how authorized and the notice
given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corpor-
ation's transfer agent or registrar, as determined by resolution of
the Board of Directors, a share register, or a duplicate share
register, showing the names of all stockholders and their addresses,
the number and classes of shares held by each, the number and date
of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
Section 13. The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors or the
chief executive officer (or if there be no such determination, then
in the order of their election) shall, in the absence of the
secretary or in the event of his or her inability or refusal to act,
perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the
Board of Directors or the chief executive officer may from time to
time prescribe.
THE CHIEF FINANCIAL OFFICER
Section 14. The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be
open to inspection by any director.
Section 15. The chief financial officer shall deposit all money and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He
shall disburse the funds of the corporation as may be ordered by the
Board of Directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as
chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or these
Bylaws.
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Section 16. If required by the Board of Directors, the chief financial officer
shall give the corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the corpor-
ation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation.
Section 17. The treasurer, controller and the other assistants to the chief
financial officer in the order determined by the Board of Directors
or the chief executive officer (of if there be no such determina-
tions then in the order of their election) shall, in the absence of
the chief financial officer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the
chief financial officer and shall perform such other duties and
have such other powers as the Board of Directors or the chief
executive officer may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. The shares of the corporation shall be represented by certificates,
provided that the Board of Directors may provide by resolution or
resolutions that some or all of any or all classes of series of its
stock shall be uncertified shares. Any such resolution shall not
apply to shares represented by a certificate until such certificate
is surrendered to the corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock
represented by certificates and, upon request, every holder of
uncertified shares, shall be entitled to have a certificate signed
by, or in the name of the corporation by, the Chairman or Vice
Chairman of the Board, or the president or a vice president and the
chief financial officer or an assistant to the chief financial
officer, or the secretary or an assistant secretary of the corpor-
ation, representing the number of shares registered in certified
form.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consider-
ation to be paid therefor. Certificates may be issued for partly
paid shares and in such case upon the face or back of the certifi-
cates issued to represent any such partly paid shares, or upon the
books and records of the corporation in the case of uncertified
partly paid shares, the total amount of the consideration to be
paid therefore, and the amount paid thereon shall be specified.
Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the
same class, but only upon the basis of the percentage of the consi-
deration actually paid thereon.
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If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, desig-
nations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the
qualification, limitations or restrictions of such preferences and/
or rights shall be set forth in full or summarized on the face or
back of the certificate which the corporation shall issue to
represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements, there may be set
forth on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stock-
holder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limita-
tions or restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
LOST CERTIFICATES
Section 3. Except as provided in this Article VI, Section 3, no new certifi-
cates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and
cancelled at the same time. The Board of Directors may direct a
new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleges to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors
may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certi-
ficate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the
corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to
the certificate alleged to have been lost, stolen or destroyed.
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TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action
in writing without a meeting, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action.
A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to the
provisions of the certificate of incorporation, if any, may be
declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the
provisions of the certificate of incorporation.
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Section 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums
as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
directors shall think conducive to the interest of the corporation,
and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be a calendar year. The
close of the first fiscal year shall therefore be December 31,
1983, and each succeeding year shall close on December 31.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having inscribed
thereon the name of the corporation, the year of its organization
and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed of affixed or
reproduced or otherwise.
INDEMNIFICATION
Section 6. The Corporation shall indemnify its officers, and directors, to the
full extent and in the manner permitted by the General Corporation
Law of Delaware against expenses (including attorneys' fees),
judgements, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by
reason of the fact such person is or was an agent of the corpora-
tion. Expenses incurred by a director or officer of the corporation
in defending a civil or criminal action, suit or proceeding reason
of the fact that he is or was a director or officer of the corpora-
tion (or was serving at the corporation's request as a director or
officer of another corporation, partnership, joint venture, trust
or other enterprise, including, without limitation, any direct or
indirect subsidiary of the corporation) shall be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such director to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corpora-
tion as authorized by relevant sections of the General Corporation
Law of Delaware.
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The corporation shall have the power, to the extent and in the
manner permitted by the General Corporation Law of Delaware, to
indemnify each of its employees and agents (in addition to directors
and officers) against expenses (including attorneys' fees)
judgements, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the
corporation. For purposes of this Section, an "employee" or
"agent" of the corporation includes any person (i) who is or was
an employee or agent of the corporation, or (ii) who is or was
serving at the request of the corporation as an employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, including, without limitation, any direct or indirect
subsidiary of the corporation.
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the Director derived any improper
personal benefit. If the Delaware General Corporation Law is here-
after amended to authorize, with the approval of a corporation's
stockholders, further reductions in the liability of the corpora-
tion's directors for breach of fiduciary duty, then a Director of
the Corporation shall not be liable for any such breach to the
fullest extent permitted by the Delaware General Corporation Law as
so amended. Any repeal or modification of the foregoing provisions
of this Article VII, Section 6 by the stockholders of the Corpora-
tion shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corpor-
ation as a director, officer, employee or agent of another corpora-
tion, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of the General Corporation Law of
Delaware.
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BOOKS AND RECORDS
Section 7. Any stockholder or any director shall have the right to inspect the
books and records of the corporation to the full extent permitted
by, and subject to the terms and conditions of, the General Corpor-
ation Law of Delaware.
The chairman of the board, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of
this corporation, or any other person authorized by the Board of
Directors or the president or a vice president, is authorized to
vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or
corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person
directly or by any other person authorized to do so by proxy or
power of attorney duly executed by such person having the authority.
DISSOLUTION
Section 8. If it should be deemed advisable in the judgement of the Board of
Directors that the corporation should be dissolved, the Board of
Directors, after the adoption of a resolution to that effect by a
majority of the whole board at any meeting called for that purpose,
shall cause notice to be mailed to each stockholder entitled to
vote thereon of the adoption of the resolution and of a meeting of
stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corpor-
ation entitled to vote thereon votes for the proposed dissolution,
then a certificate stating that the dissolution has been authorized
in accordance with the provisions of the General Corporation Law of
Delaware and setting forth the names and residences of the directors
and officers shall be executed, acknowledged, and filed and shall
become effective in accordance with the General Corporation Law of
Delaware. Upon such certificate's becoming effective in accordance
with the General Corporation Law of Delaware, the corporation shall
be dissolved.
CUSTODIAN
Section 9. The Court of Chancery, upon application of any stockholder, may
appoint one or more persons to be custodians and, if the corporation
is insolvent, to be receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would have
expired upon qualification of their successors; or
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(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are
so divided respecting the management of the affairs of the
corporation that the required vote for action by the Board of
Directors cannot be obtained and the stockholders are unable
to terminate this division; or
(iii) the corporation has abandoned its business and has
failed within a reasonable time to take steps to dissolve,
liquidate or distribute its assets.
The custodian shall have all the powers and title of a receiver
appointed under the General Corporation Law of Delaware, but the
authority of the custodian shall be to continue the business of the
corporation and not to liquidate its affairs and distribute its
assets, except when the Court of Chancery otherwise orders and
except in cases arising under Sections 226(a)(3) or 352(a)(2) of
the General Corporation Law of Delaware.
STOCK TRANSFER AGREEMENTS
Section 10. The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more
classes of stock of the corporation to restrict the transfer of
shares of stock of the corporation of any one or more classes owned
by such stockholders in any manner not prohibited by the General
Corporation Law of Delaware.
CONSTRUCTION; DEFINITIONS
Section 11. Unless the context requires otherwise, the general provisions,
rules of construction, and definitions in the Delaware General
Corporation Law shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular
number includes the plural, the plural number includes the singular,
and the term "person" includes both a corporation and a natural
person.
ARTICLE VIII
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed or new Bylaws may
be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certifi-
cate of incorporation, at any regular meeting of the stockholders
or of the Board of Directors or at any special meeting of the
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the stockholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new Bylaws be contained
in the notice of such special meeting. If the power to adopt, amend
or repeal Bylaws is conferred upon the Board of Directors by the
certificate of incorporation, it shall not divest or limit the power
of the stockholders to adopt, amend or repeal Bylaws.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of the said corporation, this 21st day of October 1994.
Jill H. Rice, Corporate Secretary
(Seal) (Signature on file)
EXHIBIT 10.27
BURR-BROWN CORPORATION
EMPLOYEE RETIREMENT PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Date. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . 1
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Top Heavy Plan Provisions . . . . . . . . . . . . . . . . 12
2.3 Special Definitions . . . . . . . . . . . . . . . . . . . 14
2.4 Construction. . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . 16
3.1 Eligibility and Participation . . . . . . . . . . . . . . 16
3.2 Crediting of Service. . . . . . . . . . . . . . . . . . . 16
3.3 Effect of Rehiring. . . . . . . . . . . . . . . . . . . . 17
3.4 Authorized Leaves of Absence. . . . . . . . . . . . . . . 17
3.5 Employment with Affiliates. . . . . . . . . . . . . . . . 18
3.6 Termination of Participation. . . . . . . . . . . . . . . 19
3.7 Transfer to and from an Eligible Class of Employees . . . 19
3.8 Leased Employees. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV ELIGIBILITY FOR BENEFITS . . . . . . . . . . . . . . . . 20
4.1 Attainment of Normal Retirement Age . . . . . . . . . . . 20
4.2 Attainment of Early Retirement Age. . . . . . . . . . . . 20
4.3 Disability. . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Death Benefits. . . . . . . . . . . . . . . . . . . . . . 21
4.5 Other Separation From Employment. . . . . . . . . . . . . 22
ARTICLE V DETERMINATION OF BENEFITS . . . . . . . . . . . . . . . . 22
5.1 Normal Retirement Benefit . . . . . . . . . . . . . . . . 22
5.2 Early Retirement Benefit. . . . . . . . . . . . . . . . . 23
5.3 Disability Benefit. . . . . . . . . . . . . . . . . . . . 23
5.4 Death Benefit . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Surviving Spouse Annuity. . . . . . . . . . . . . . . . . 23
5.6 Special Retiree Death Benefit . . . . . . . . . . . . . . 24
5.7 Termination Benefit . . . . . . . . . . . . . . . . . . . 24
5.8 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . 25
5.9 Top Heavy Benefits. . . . . . . . . . . . . . . . . . . . 26
5.10 Cash Outs and Repayment of Distributions. . . . . . . . . 27
5.11 Other Small Benefits. . . . . . . . . . . . . . . . . . . 28
5.12 Limitation on Benefits: General Rules . . . . . . . . . . 28
5.13 Limitation on Benefits: Multiple Defined Benefit Plans. . 29
i.
<PAGE>
5.14 Limitation on Benefits: Participants in Defined
Contribution Plans. . . . . . . . . . . . . . . . . . . . 29
5.15 Limitation on Benefits of Certain Participants. . . . . . 31
5.16 Voluntary Early Retirement Program. . . . . . . . . . . . 32
5.17 No Other Benefits . . . . . . . . . . . . . . . . . . . . 33
5.18 Amendments to Vesting Schedule. . . . . . . . . . . . . . 33
5.19 Effect of Social Security Act Amendments. . . . . . . . . 34
ARTICLE VI PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . 34
6.1 Commencement of Benefits. . . . . . . . . . . . . . . . . 34
6.2 Basic Form of Benefit Payment to Participants . . . . . . 35
6.3 Payments to Married Participants. . . . . . . . . . . . . 35
6.4 Optional Methods of Distribution. . . . . . . . . . . . . 36
6.5 Explanation of Joint and Survivor Annuity and
Other Benefit Options . . . . . . . . . . . . . . . . . . 37
6.6 Benefit Elections . . . . . . . . . . . . . . . . . . . . 37
6.7 Special Distribution Requirements . . . . . . . . . . . . 38
6.8 Suspension of Benefits. . . . . . . . . . . . . . . . . . 42
6.9 Payment of Death Benefits . . . . . . . . . . . . . . . . 43
6.10 Payments to Disabled. . . . . . . . . . . . . . . . . . . 43
6.11 Direct Rollovers. . . . . . . . . . . . . . . . . . . . . 43
6.12 Underpayment or Overpayment of Benefits . . . . . . . . . 43
6.13 Unclaimed Amounts: Notice . . . . . . . . . . . . . . . . 43
ARTICLE VII INALIENABILITY OF BENEFITS. . . . . . . . . . . . . . . 44
7.1 No Assignment Permitted . . . . . . . . . . . . . . . . . 44
7.2 Qualified Domestic Relations Orders . . . . . . . . . . . 44
7.3 Early Commendment of Payments to Alternate Payees . . . . 45
7.4 Processing of Qualified Domestic Relations Orders . . . . 46
7.5 Responsibility of Altenate Payees . . . . . . . . . . . . 46
ARTICLE VIII FUNDING. . . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Contributions to the Trust Fund and Payment of Expenses . 47
8.2 Conditional Nature of Contributions . . . . . . . . . . . 47
8.3 Appointment of Actuary. . . . . . . . . . . . . . . . . . 47
ARTICLE IX ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . 48
9.1 Plan Administrator. . . . . . . . . . . . . . . . . . . . 48
9.2 Allocation of Fiduciary Responsibility. . . . . . . . . . 48
9.3 Powers of the Plan Administrator. . . . . . . . . . . . . 48
9.4 Claims. . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.5 Creation of Committee . . . . . . . . . . . . . . . . . . 50
9.6 Chairman and Secretary. . . . . . . . . . . . . . . . . . 50
9.7 Appointment of Agents . . . . . . . . . . . . . . . . . . 50
ii.
<PAGE>
9.8 Majority Vote and Execution of Instruments. . . . . . . . 50
9.9 Allocation of Responsibilities Among Committee Members. . 51
9.10 Conflict of Interest. . . . . . . . . . . . . . . . . . . 51
9.11 Other Fiduciary Capacities. . . . . . . . . . . . . . . . 51
ARTICLE X SCOPE OF RESPONSIBILITY . . . . . . . . . . . . . . . . . 51
10.1 Scope of Responsibility . . . . . . . . . . . . . . . . . 51
10.2 Bonding . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.3 Prohibition Against Certain Persons Holding Positions . . 52
ARTICLE XI AMENDMENT, MERGER AND TERMINATION. . . . . . . . . . . . 52
11.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Plan Merger or Consolidation. . . . . . . . . . . . . . . 53
11.3 Merger or Consolidation of Employer . . . . . . . . . . . 53
11.4 Discontinuance and Termination of Plan. . . . . . . . . . 53
11.5 Manner of Distribution. . . . . . . . . . . . . . . . . . 54
11.6 Limitation of Employer Liability. . . . . . . . . . . . . 55
ARTICLE XII GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . 55
12.1 Limitation of Participant's Rights. . . . . . . . . . . . 55
12.2 Exclusive Benefit . . . . . . . . . . . . . . . . . . . . 55
12.3 Uniform Administration. . . . . . . . . . . . . . . . . . 55
12.4 Heirs and Successors. . . . . . . . . . . . . . . . . . . 55
12.5 Assumption of Qualification . . . . . . . . . . . . . . . 55
iii.
<PAGE>
BURR-BROWN CORPORATION
EMPLOYEE RETIREMENT PLAN
PREAMBLE AND INTRODUCTION
BURR-BROWN CORPORATION (the "Employer") previously established the
"Burr-Brown Corporation Employee Retirement Plan" (the "Plan") effective as of
January 1, 1988. In order to assure that the Plan remains in compliance with
all requirements of the Federal income tax laws and regulations applicable to
tax-qualified retirement plans, the Plan is hereby amended and restated in its
entirety, effective as of the date set forth in Section 1.1.
ARTICLE I
EFFECTIVE DATE
1.1 Effective Date. Except as otherwise specifically provided herein,
the provisions of this restated Plan shall be effective as of the original
January 1, 1988 effective date of the Plan (the "Effective Date").
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions. When a word or phrase shall appear in this Plan with
the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be a term defined in this Section
2.1. The following words and phrases utilized in the Plan with the initial
letter capitalized shall have the meanings set forth in this Section 2.1,
unless a clearly different meaning is required by the context in which the word
or phrase is used:
(a) "Accrued Benefit"--The monthly benefit payable in the basic form
provided in Section 6.2 commencing on a Participant's Normal Retirement
Date that the Participant has earned as of any given date, determined in
accordance with Section 5.8. In no event shall the monthly Accrued Benefit
of any Participant with at least twenty (20) years of Credited Service as
of December 31, 1988 (the last day of the 1988 Plan Year) be less than the
amount of his monthly retirement accrued under the Plan as of such date.
(b) "Act"--The Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
(c) "Actuarially Equivalent"--Of equal current value when computed
on the basis of actuarial procedures, assumptions, factors and tables.
<PAGE>
Actuarially Equivalent factors are the appropriate numerical ratios
(determined on the basis of actuarial assumptions which may differ from
those used in establishing Plan costs and liabilities) which enable a
benefit that is Actuarially Equivalent to another benefit to be calculated.
Except to the extent otherwise required for lump sum distributions under
Sections 5.4, 5.5, 5.10 or 5.11, in computing Actuarially Equivalent
benefits, the Actuary shall use the following assumptions:
(1) Pre-retirement interest assumption--six percent (6%);
(2) Post-retirement interest assumption--six percent (6%);
(3) Mortality table--UP-1984, a unisex mortality table developed by
Wyatt Company.
(d) "Actuary"--A person or persons enrolled by the Joint Board of
Actuaries established pursuant to the Act, who is selected by the Employer
to make any actuarial determinations and assumptions necessary in
connection with the operation of the Plan.
(e) "Affiliate"--Any member of a "controlled group of corporation"
(within the meaning of Code Section 414(b) as modified by Code Section
415(h)) that includes the Employer as a member; any member of an
"affiliated service group" (within the meaning of Code Section 414(m)) that
includes the Employer as a member; any member of a group of trades or
businesses under common control (within the meaning of Code Section 414(c))
that includes the Employer as a member; and any other entity required to
be aggregated with the Employer pursuant to regulations issued under Code
Section 414(o).
(f) "Authorized Leave of Absence"--A leave of absence approved by the
Employer in writing or a leave of absence for service as a member of the
armed forces of the United States, provided that the Employee left the
Employer directly to enter the armed services and returns to the employ of
the Employer within the period during which his employment rights are
protected by law.
(g) "Average Monthly Earnings"--The average monthly Earnings in
effect for a Participant while he was working as an eligible Employee
during the highest paid five (5) consecutive Plan Years of his final ten
(10) Plan Years of employment (including for this purpose, the Plan Year
in which he terminates employment). In the event that the Participant was
not employed by the Employer for five (5) Plan Years, the term "Average
Monthly Earnings" shall mean the average monthly Earnings in effect during
the Participant's service as an eligible Employee with the Employer.
Notwithstanding the foregoing, the "Average Monthly Earnings" of a
Participant receiving commission income from the Employer shall not exceed
the average of the maximum base salaries payable to such Participant over
the applicable five-year period.
(h) "Board"--The Board of Directors of the Employer.
- 2 -
<PAGE>
(i) "Break in Continuous Service"--For purposes of calculating the
Continuous Service of any Employee, a period of twelve (12) consecutive
months or more commencing on the Employee's Termination Date and ending on
the next date thereafter on which the Employee renders a Hour of Service.
For purposes of calculating the Eligibility Service of any Employee under
Section 3.1, a Break in Continuous Service shall be each period of twelve
(12) consecutive months (measured initially from the date the Employee
first renders an Hour of Service and then from the start date of each Plan
Year which begins thereafter) during which the Employee is not credited
with one (1) or more Hours of Service.
(j) "Code"--The Internal Revenue Code of 1986, as amended.
(k) "Compensation"--All wages, salaries, and fees for professional
services and other amounts received for personal services actually rendered
in the course of employment with the Employer (including, but not limited
to, commissions paid salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance premiums, tips and
bonuses) plus any elective contributions made on the Employee's behalf
pursuant to salary deferral or reduction arrangements in effect under Code
Section 125, 401(k), 408(k) and 403(b) with the Employer or any Affiliate.
However, the following items shall be excluded from Compensation:
Employer contributions to a plan of deferred compensation which are
not includable in the Employee's gross income for the taxable year in
which contributed, or Employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;
Amounts realized from the exercise of non-statutory stock options or
at the time restricted stock or property held by the Employee becomes
freely transferrable or no longer subject to a substantial risk of for-
feiture;
Amounts realized from the sale, exchange or other disposition of
stock acquired under a statutory stock option; and
Other amounts which receive special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in Code Section 403(b),
whether or not the amounts are actually excludible from the gross income
of the Employee.
For purposes of this paragraph, Compensation for a Plan Year is the
Compensation actually paid or includible in the Employee's gross income during
such year. Notwithstanding the foregoing, in the event that the Plan is a Top
- 3 -
<PAGE>
Heavy Plan during a Plan Year, Compensation in excess of Two Hundred Thousand
Dollars ($200,000.00) during such Plan Year shall be disregarded for all
relevant purposes. Such Two Hundred Thousand Dollar ($200,000.00) limitation
shall be adjusted for each Plan Year commencing on or after January 1, 1988,
to take into account any cost-of-living increase adjustment for that Plan Year
allowable pursuant to the applicable Treasury regulations or rulings under Code
Section 416(d)(2) and Code Section 415(d). Notwithstanding the foregoing, for
purposes of applying the non-discrimination standards of Code Section 401(a) to
the Accrued Benefit earned by any Employee (including the family unit of a
Highly Compensated Employee, as described below) for any Plan Year within the
period commencing January 1, 1989 and ending December 31, 1993, Compensation in
excess of Two Hundred Thousand Dollars ($200,000.00) shall not be taken into
account. This latter Two Hundred Thousand Dollars ($200,000.00) limitation
shall be adjusted for each Plan Year commencing after December 31, 1988 to take
into account any cost-of-living increase adjustment for that Plan Year allow-
able pursuant to the applicable Treasury regulations or rulings under Code
Section 415(d). Notwithstanding the foregoing, for purposes of applying the
non-discrimination standards of Code Section 401(a) to the Accrued Benefit
earned by any Employee (including the family unit of a Highly Compensated
Employee, as described below) for any Plan Year commencing on or after January
1, 1994, Compensation in excess of One Hundred Fifty Thousand Dollars
($150,000.00) shall not be taken into account. If, for any calendar year after
1994, the excess (if any) of
(i) the One Hundred Fifty Thousand Dollar ($150,000.00) limitation,
increased by the cost-of-living adjustment for that calendar year,
over
(ii) the dollar limitation in effect for the Plan Year beginning in
the calendar year, is equal to or greater than $10,000,
then the One Hundred Fifty Thousand Dollar ($150,000.00) limit (as
previously adjusted under this sentence) for any Plan Year beginning in any
subsequent calendar year shall be increased by the amount of such excess,
rounded to the next lowest multiple of $10,000. The $150,000.00 limitation
shall be adjusted for increases in the cost-of-living in accordance with
Code Section 401(a)(17)(B) and the Treasury regulations thereunder; provided,
however, the base period for purposes of Code Section 401(a)(17)(B) shall be
the calendar quarter beginning October 1, 1993. For purposes of applying the
$200,000 or the $150,000 limit to Compensation of the family unit of a Highly
Compensated Employee (as defined in Section 2.2 below), the family unit will be
treated as a single employee with one Compensation and the $200,000 limit or
$150,000 limit, if applicable, will be allocated among the members of the
family unit in proportion to each member's Compensation (except for the pur-
poses of determining Compensation below the Plan's integration level). For
this purpose, a family unit is the Highly Compensated Employee, such employee's
spouse, and such employee's lineal descendants who have not attained age 19
before the close of the Plan Year.
- 4 -
<PAGE>
(l) "Continuous Service"--The service of the Employee measured in
years and completed calendar months, whether or not consecutive, based on
the period of elapsed time method in accordance with the applicable
Treasury regulations. For purposes of determining Continuous Service,
periods of employment as an Employee of an Affiliate (while such Affiliate
is an Affiliate) shall be deemed to be employment with the Employer. The
Continuous Service of each Employee shall begin on the date that Employee
first renders an Hour of Service and shall continue through his most recent
Termination Date, but there shall not be included any Continuous Break in
Service which falls within that period. In addition, the Employee may lose
credit for one or more periods of Continuous Service in accordance with the
break-in-service rules of ARTICLE III of this Plan.
(m) "Covered Compensation"--One-twelfth (1/12) of the average
(without indexing) of the taxable wage bases in effect for each calendar
year during the 35-year period ending with the last day of the calendar
year in which the Participant attains (or will attain) his Social Security
Retirement Age (as determined under Code Section 401(l)). In determining
a Participant's Covered Compensation for a Plan Year, the taxable wage base
for the current Plan Year and any subsequent Plan Year shall be assumed to
be the same as the taxable wage base in effect as of the beginning of the
Plan Year for which the determination is being made.
The Participant's Covered Compensation shall automatically be redetermined
each Plan Year in accordance with the Social Security Covered Compensation
Table for such Plan Year attached as Exhibit A to the Plan.
A Participant's Covered Compensation for any Plan Year beginning before
the start of the 35-year period applicable to such Participant will be based on
the taxable wage base in effect as of the beginning of that Plan Year. A Par-
ticipant's Covered Compensation for any Plan Year ending after such 35-year
period shall be equal to the Participant's Covered Compensation for the Plan
Year during which the Participant attains Social Security Retirement Age.
"Taxable wage base" as used in this definition means the contribution
and benefit base in effect under section 230 of the Social Security Act at
the beginning of the Plan Year.
(n) "Credited Service"--The period of Continuous Service (determined
pursuant to paragraph (l) above and the other Sections of this Plan)
completed by the Participant while he is an eligible Employee, measured in
years and completed calendar months, whether or not consecutive. A
Participant's Credited Service will be used to determine his normal
retirement benefit pursuant to Section 5.1 and his Accrued Benefit pursuant
to Section 5.8. For purposes of determining the Credited Service of any
Participant who has one or more actual periods of service with the Employer
as an eligible Employee under Section 2.1(w), any period of employment
which that Participant completed with any Affiliate shall be counted, to
the extent that employment would have been treated as Credited Service had
- 5 -
<PAGE>
the Participant been in the Employer's employ at the time. However, no
such credit shall be given for such employment with an Affiliate if the
Participant participated during that period in any other qualified defined
benefit or defined contribution plan sponsored by the Employer or the
Affiliate.
(o) "Disability" or "Disabled"--The inability to engage in any
substantial gainful activity with the Employer by reason of any medically
determinable physical or mental impairment that can be expected to result
in death or be of long-continued and indefinite duration. A Participant
shall be deemed to be Disabled only if such individual is eligible for and
is actually receiving disability benefits under Title II of the Social
Security Act.
(p) "Direct Rollover"--A payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(q) "Distributee"--An Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under
a qualified domestic relations order, as defined in Code Section 414(p),
are Distributees with regard to the interest of the spouse or former
spouse.
(r) "Early Retirement Age"--The date on which a Participant attains
the age of sixty (60) years or, if later, ten (10) years of Continuous
Service. "Early Retirement Date" is the first day of the month after the
Participant terminates employment after attaining Early Retirement Age and
before attaining Normal Retirement Age.
(s) "Earnings"--The total amount received by the Participant from the
Employer as regular salary or wages which is subject to tax under Code
Section 3402(a) during the Plan Year, including Employer-paid short term
disability pay, plus any elective contributions made on the Employee's
behalf pursuant to salary deferral or reduction arrangements in effect
under Code Section 125, 401(k), 408(k) and 403(b) with the Employer or any
Affiliate. However, the following items shall be excluded from Earnings:
overtime pay; discretionary or formula bonuses; contributions to or
benefits from any employee welfare or pension benefit plan (as those terms
are defined in the Act) except for the elective contributions specified
above; workman's compensation benefits; imputed compensation such as PS58
or Table I costs of life insurance; any deferred compensation payments; and
any other form of irregular payments. Notwithstanding the foregoing, in
the event that the Plan is a Top Heavy Plan during a Plan Year, "Earnings"
in excess of Two Hundred Thousand Dollars ($200,000.00) during such Plan
Year shall be disregarded for all relevant purposes. Such Two Hundred
Thousand Dollar ($200,000.00) limitation shall be adjusted for each Plan
Year commencing on or after January 1, 1988 to take into account any
cost-of-living increase adjustment for that Plan Year allowable pursuant
to the applicable Treasury regulations or rulings under Code Section
416(d)(2) and Code Section 415(d). Notwithstanding the foregoing, the
Accrued Benefit earned by any Employee (including the family unit of a
Highly Compensated Employee, as described below) for any Plan Year within
the period commencing January 1, 1989 and ending December 31, 1993 shall
not be based on Earnings in excess of Two Hundred Thousand Dollars
($200,000.00) This latter Two Hundred Thousand Dollar ($2000,000.00)
- 6 -
<PAGE>
limitation shall be adjusted for each Plan Year commencing after December
31, 1988 to take into account any cost-of-living increase adjustment for
that Plan Year allowable pursuant to the applicable Treasury regulations
or rulings under Code Section 401(a)(17)(B).
Notwithstanding the foregoing, the Accrued Benefit earned by any Employee
(including the family unit of a Highly Compensated Employee, as described
below) for each Plan Year commencing on or after January 1, 1994 shall not be
based on Earnings in excess of One Hundred Fifty Thousand Dollar ($150,000.00).
If, for any calendar year after 1994, the excess (if any) of:
(i) the One Hundred Fifty Thousand Dollars ($150,000.00) limitation,
increased by the cost-of-living adjustment for that calendar year,
over
(ii) the dollar limitation in effect for the Plan Year beginning in
the calendar year, is equal to or greater than $10,000,
then the One Hundred Fifty Thousand Dollar ($150,000.00) limit (as
previously adjusted under this sentence) for any Plan Year beginning in any
subsequent calendar year shall be increased by the amount of such excess,
rounded to the next lowest multiple of $10,000. The One Hundred Fifty Thousand
Dollar ($150,000.00) limitation shall be adjusted for increases in the cost of
living in accordance with Code Section 401(a)(17)(B) and the Treasury regula-
tions thereunder; provided, however, the base period for purposes of Code
Section 401(a)(17)(B) shall be the calendar quarter beginning October 1, 1993.
For purposes of applying the $200,000 or the $150,000 limit to Earnings of
the family unit of each Highly Compensated Employee, the family unit will be
treated as a single employee with one Earnings and the $200,000 limit or the
$150,000 limit, as applicable, will be allocated among the members of the
family unit in proportion to each member's Earnings (except for the purposes of
determining Earnings below the Plan's integration level). For this purpose, a
family unit is the Highly Compensated Employee such employee's spouse, and such
employee's lineal descendants who have not attained age 19 before the close of
the Plan Year.
(t) "Effective Date"--January 1, 1988, except as otherwise provided
in the Plan.
(u) "Eligible Retirement Plan"--An individual retirement account
described in Code Section 408(a), an annuity plan described in Code Section
403(a) or a qualified trust described in Code Section 401(a) that accepts
the Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to a surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
- 7 -
<PAGE>
(v) "Eligible Rollover Distribution"--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 payment (not less
frequently than annually) made for the life expectancy of the Distributee
or the joint life expectancies of the Distributee and Distributee's
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not includible in
gross income.
(w) "Employee"--Each person receiving Compensation or entitled to
Compensation for services rendered to the Employer in the legal relation-
ship of employer and employee and not in the relationship of a private
contractor (or who would be entitled to Compensation were such person not
on an Authorized Leave of Absence). The term "Employee" shall not include
(i) any individuals who are included within a unit of Employees covered by
a collective bargaining agreement for which retirement benefits were the
subject of good faith bargaining, unless such collective bargaining agree-
ment specifically provides for their participation in this Plan, (ii) any
Leased Employees, as defined in Section 3.8, or (iii) any individuals who
perform services at locations outside the United States. Employees of an
operating unit acquired by Employer after the Effective Date shall not be
"Employees" for purposes of the Plan, unless the Board designates such
employees as "Employees" for purposes of the Plan.
(x) "Employer"--Burr-Brown Corporation, and each successor in
interest to the Employer resulting from merger, consolidation, or transfer
of substantially all of its assets that elects to continue this Plan. The
term "Employer" as used herein shall include each Affiliate which has
elected by action of its board of directors, with the consent of the Board,
to adopt this Plan. Each Affiliate adopting this Plan shall be deemed to
have delegated to the Board all authority to amend or terminate the Plan
and to appoint and remove the Plan Administrator and the Trustee.
(y) "Entry Date"--Effective January 1, 1994, January 1st or July 1st.
Prior to January 1, 1994, "Entry Date" is the first day of a month.
(z) "Hours of Service"--
(1) An hour for which an Employee is directly or indirec compen-
sated or entitled to compensation by the Employer or an Affiliate
for the performance of duties. Such Hours of Service shall be
credited to the respective computation period in which the duties
were performed.
(2) An hour for which an Employee is directly or indirectly
compensated, or is entitled to compensation, by the Employer or an
Affiliate on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
- 8 -
<PAGE>
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.
No more than five hundred one (501) Hours of Service shall be credited
under this paragraph (2) for any single continuous period (whether or
not such period occurs in a single service computation period). Hours
of Service under this paragraph (2) shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor regulations
governing the computation of Hours of Service, which are incorporated
herein by this reference.
(3) An hour for which back pay (irrespective of mitigation of
damages) is either awarded or agreed to by the Employer or an Affil-
iate. The same Hours of Service shall not be credited both under
paragraph (1) or paragraph (2) above, as the case may be, and under
this paragraph (3). Hours of Service attributable to back pay credits
will be credited to the respective service computation period or
periods to which the back pay pertains, rather than to the service
computation period or periods in which the award, agreement, or pay-
ment is made.
(4) Employees shall also be credited with any additional Hours of
Service required to be credited pursuant to any Federal law other
than the Act or the Code.
(5) In lieu of determining Hours of Service under the foregoing
paragraphs, the Plan Administrator may credit an Employee with ten
(10) Hours of Service for each day for which any service must be
credited. Such crediting shall be performed on a nondiscriminatory
basis.
(aa) "Key Employee"--An Employee or former Employee who, at any time
during the Plan Year in which the "determination date" (as defined in
Section 2.2) falls or any of the four (4) preceding Plan Years, is or was:
(1) An officer of the Employer or an Affiliate whose Compensation
from the Employer and the Affiliate exceeds one hundred fifty percent
(150%) of the applicable dollar limitation of Code Section 415(c)(1)
(A), as such sum shall be adjusted for each Plan Year commencing on
or after January 1, 1988, to take into account any cost-of-living
increase adjustment for that Plan Year pursuant to the Treasury
regulations or rulings under Code Section 415(d). No more than the
lesser of fifty (50) Employees or ten percent (10%) of the aggregate
number of employees of the Employer and its Affiliates shall be con-
sidered as officers for purposes of this paragraph. The number of
officers considered to be Key Employees may be further limited in
- 9 -
<PAGE>
accordance with Code Section 416. In addition, whether a particular
Employee is an "officer" for purposes of this paragraph shall be
determined in accordance with Code Section 416 and the Treasury
regulations issued thereunder.
(2) An Employee (i) whose ownership interest in the Employer or any
Affiliate is more than 0.5% and (ii) whose ownership interest in the
Employer or any Affiliate is or was among the ten (10) largest owner-
ship interests of persons who are employed by the Employer or an
Affiliate, and (iii) whose Compensation from the Employer and any
Affiliates exceeds the applicable dollar limitation of Code Section
415(c)(1)(A) for the calendar year in which the Plan Year ends (as
such sum shall be adjusted for each Plan Year commencing on or after
January 1, 1988, to take into account any cost-of-living increase
adjustment for that Plan Year pursuant to the Treasury regulations or
rulings under Code Sections 415(d) and 416(i)(1)). For purposes of
this paragraph, if two (2) Employees have equal ownership interests,
the Employee receiving the highest Compensation shall be treated as
owning the larger interest.
(3) An Employee owning more than five percent (5%) of the issued
and outstanding shares of stock of the Employer or stock possessing
more than five percent (5%) of the total combined voting power of all
stock of the Employer.
(4) An Employee owning more than one percent (1%) of the issued and
outstanding shares of stock of the Employer or stock possessing more
than one percent (1%) of the total combined voting power of all stock
of the Employer and whose Compensation from the Employer and any
Affiliate is more than One Hundred Fifty Thousand Dollars ($150,000).
Ownership shall be determined under Code Section 318, as modified by Code
Sections 416(i)(1)(B)(iii) and 416(i)(1)(C). In addition, for any Plan Year,
the term Key Employee shall include the spouse or beneficiary of any deceased
individual who would have been considered a Key Employee if he had terminated
his employment on the date of his death.
(ab) "Normal Retirement Age"--The date on which a Participant attains
age sixty-five (65) or (if later) the earlier of the following dates: (i)
the fifth (5th) anniversary of the date on which the Participant commenced
participation in the Plan or (ii) the date he completes five (5) years of
Continuous Service.
Accordingly, the Participant's "Normal Retirement Date" shall the first
day of the month following his attainment of Normal Retirement Age.
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(ac) "Participant"--An Employee who has satisfied the eligibility
requirements specified in Section 3.1 and who is eligible to accrue
retirement benefits under the Plan.
(ad) "Pension Benefit Guaranty Corporation"--The corporation
established pursuant to Section 4002 of the Act for the purpose of
assisting in the preservation of pension benefits.
(ae) "Plan"--The Burr-Brown Corporation Employee Retirement Plan, as
set forth in this instrument, and as it may hereafter be amended.
(af) "Plan Administrator"--The individual, entity or committee
appointed to act as such pursuant to Section 9.1.
(ag) "Plan Year"--A twelve (12) month period, commencing on each
January 1 and ending on each following December 31. For purposes of Code
Section 415, the Plan Year shall be the "limitation year."
(ah) "Qualified Domestic Relations Order"--A domestic relations order
meeting the requirements specified in Section 7.2.
(ai) "Super Top Heavy Plan"--A Super Top Heavy Plan as defined in
Section 2.2.
(aj) "Termination Date"--The earlier of (1) the date on which an
Employee terminates employment with the Employer or any Affiliate by reason
of retirement, death, quit or discharge or (2) the first anniversary of the
start date of any other absence from employment with the Employer or any
Affiliate. If an Employee's employment terminates during a period of
absence, the period of absence will not be considered as part of the
Employee's period of Continuous Service or Credited Service unless the
Employee returns to employment with the Employer or an Affiliate within
twelve (12) months after the date on which he was first absent from work.
(ak) "Top Heavy Plan"--A "Top Heavy Plan" as defined in Section 2.2.
(al) "Trust Agreement"--The agreement entered into between the
Employer and the Trustee.
(am) "Trust Fund"--The fund established by the Employer pursuant to
the terms of the Trust Agreement to provide for the funding of benefits
under the Plan. The Trust Fund will be held, administered and distributed
for the exclusive benefit of the Participants and their beneficiaries.
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(an) "Trustee"--The individual, individuals or entity selected by the
Employer to act as such. The Trustee shall acknowledge acceptance of its
appointment by the execution of the Trust Agreement or, in the case of a
successor Trustee, by the execution of an appropriate written instrument.
If the Employer appoints two or more individuals or entities to act jointly
as the Trustee, the term "Trustee" shall refer collectively to all of such
individuals or entities.
2.2 Top Heavy Plan Provisions. The provisions of this Section 2.2 shall
be observed in determining the Plan's status as a Top Heavy Plan or a Super Top
Heavy Plan:
(a) General Rules. The Plan will be a Top Heavy Plan for a Plan Year
if, on the last day of the prior Plan Year or, with respect to the first
Plan Year of the Plan, the last day of such first Plan Year (hereinafter
referred to as the "determination date"), the present value of the
cumulative Accrued Benefits under the Plan for Key Employees exceeds sixty
percent (60%) of the present value of the cumulative Accrued Benefits
credited to all Participants and beneficiaries under the Plan. The Plan
will be a Super Top Heavy Plan if, on the determination date, the present
value of the cumulative Accrued Benefits under the Plan for Key Employees
exceeds ninety percent (90%) of the present value of the cumulative Accrued
Benefits credited to all Participants and beneficiaries under the Plan.
In calculating the present value of the cumulative Accrued Benefits, the
following rules will apply:
(1) The present value of the cumulative Accrued Benefit of any
Participant hereunder shall be increased by including the aggregate
distributions made with respect to such Participant under the Plan
during the five (5) year period ending as of the applicable determina-
tion date hereunder, except to the extent that the distribution is
included in calculating the present value of the Participant's
cumulative Accrued Benefit.
(2) The present value of the cumulative Accrued Benefits of any
current Employee who was formerly (but no longer is) a Key Employee
shall be disregarded. In addition, the present value of the cumula-
tive Accrued Benefits of any Participant who has not performed
services for the Employer or an Affiliate during the five (5) year
period ending on the determination date shall be disregarded.
(3) The present values of Accrued Benefits as of any determination
date shall be determined as of the most recent valuation date used
for computing Plan costs for purposes of the minimum funding require-
ments for the Plan pursuant to Code Section 412, regardless of
whether a valuation is actually performed during that Plan Year. The
Accrued Benefit of a Participant who is actively employed by the
Employer as of the valuation date shall be determined as if the
individual terminated employment as of such valuation date; provided,
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however, during the first Plan Year of the Plan, such Accrued Benefit
for a current Participant may also be valued as of the determination
date for such Plan Year. For purposes of determining the cumulative
Accrued Benefits of Employees (other than Key Employees), an Accrued
Benefit shall be determined under the method used for accrual purposes
for all plans of the Employer or Affiliates, or, if there is no such
common accrual method, then as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under Code Section
411(b)(1)(C).
(4) The actuarial factors and assumptions used in making Actuarial
Equivalency determinations shall be used in calculating the present
value of a Participant's Accrued Benefit.
(5) If an annuity contract is distributed to a Participant, the
current actuarial value of the contract will be deemed to be the
amount distributed.
(b) Aggregation of Plans. Notwithstanding anything in this Section
2.2 to the contrary, in the event that the Plan shall be determined by the
Plan Administrator (in its sole and absolute discretion, but pursuant to
the provisions of Code Section 416) to be a constituent in an "aggregation
group," this Plan shall be considered a Top Heavy Plan or a Super Top Heavy
Plan only if the "aggregation group" is a "top heavy group" or a "super top
heavy group." For such purpose, an "aggregation group" shall include the
following:
(1) each plan intended to qualify under Code Section 401(a)
sponsored by the Employer or an Affiliate in which one (1) or more Key
Employees participate;
(2) each other plan of the Employer or an Affiliate that is
considered in conjunction with a plan referred to in clause (1) in
determining whether or not the nondiscrimination and coverage require-
ments of Code Sections 401(a)(4) and 410 are met; and
(3) if the Plan Administrator, in the exercise of its discretion, so
chooses, any other such plan of the Employer or an Affiliate which,
if considered as a unit with the plans referred to in clauses (1) and
(2), satisfies the requirements of Code Section 401(a) and Code
Section 410.
A "top heavy group" for purposes of this Section 2.2 is an "aggregation
group" in which the sum of the present value of the cumulative Accrued Benefits
for Key Employees (as determined by the Plan Administrator in accordance with
the rules set forth in Section 2.2(a), above) under all "defined benefit plans"
(as defined in Code Section 414(j)) included in such group plus the aggregate
of the amounts credited to accounts of Key Employees under all "defined
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contribution plans" (as defined in Code Section 414(i)) included in such group
exceeds sixty percent (60%) of the total of such similar sum determined for all
employees and beneficiaries covered by all such plans (where such present
values are those present values applicable to those determination dates of each
plan which fall in the same calendar year). A "super top heavy" group is an
"aggregation group" for which the sum so determined for Key Employees exceeds
ninety percent (90%) of the sum so determined for all employees and benefici-
aries. Such determinations will be made in accordance with applicable Treasury
regulations under Code Section 416.
2.3 Special Definitions. The following special definitions shall also be
effect under the Plan:
(a) "Annuity Starting Date"--the first day of the first period for
which an amount is payable under this Plan as an annuity, or in the case
of a benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitle the Participant to such benefit.
(b) "Highly Compensated Employee"--a highly compensated active
Employee or a highly compensated former Employee.
A highly compensated active Employee means any Employee who performs
service for the Employer or any Affiliate during the determination year
and who, during the look-back year:
(a) received Remuneration in excess of $75,000 (as adjusted pursuant
to Code Section 415(d));
(b) received Remuneration in excess of $50,000 (as adjusted pursuant
to Code Section 415(d)) and was a member of the top-paid group for
such year; or
(c) was an officer of the Employer and received Remuneration during
such year that is greater than 50 percent of the dollar limitation in
effect under Code Section 415(b)(1)(A).
The term Highly Compensated Employee also means:
(d) Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back year"
and are among the 100 Employees who received the most Remuneration
during the determination year; and
(e) Employees who are 5 percent owners (as determined under Code
Section 416(i)(1)) of the Employer or any Affiliate at any time during
the look-back year or the determination year.
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If no officer has satisfied the Remuneration requirement of (c) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For purposes of this Section 2.3(b), the determination year shall be
the Plan Year. The look-back year shall be the twelve-month period immedi-
ately preceding the determination year. Alternatively, the Employer may,
by written instrument, elect to use the calendar year coincidental with
the current Plan Year as the look-back year in accordance with the provi-
sions of Section 1.414(q)-1T, Q&A 14(b).
A highly compensated former Employee means any Employee who separated
(or was deemed to have separated) from service prior to the determination
year, performs no service for the Employer or any Affiliate during the
determination year, and was a highly compensated active Employee for
either the separation year or any determination year ending on or after
the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a
family member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most highly
compensated Employees ranked on the basis of Remuneration paid for such
year, then the family member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated and treated as a single Highly
Compensated Employee receiving Remuneration and benefits under the Plan
equal to the sum of the individual Remuneration and benefits of the family
member and the 5 percent owner or top-ten highly compensated Employee.
For purposes of the foregoing, a family member means, with respect to any
Highly Compensated Employee, such Employee's spouse, any lineal ascendant
or descendant of such Employee and the spouses of such lineal ascendants
and descendants.
The determination of who is a Highly Compensated Employee, including
the determination of the number and identity of Employees in the top-paid
group, the top 100 Employees, the number of Employees treated as officers
and the Remuneration that is considered, will be made in accordance with
Code Section 414(q) and the Treasury regulations thereunder.
(c) "Remuneration"--the Compensation paid to the Participant for the
Plan Year, adjusted, however, to exclude any elective contributions made
on his behalf for such Plan Year pursuant to salary deferral or reduction
arrangements in effect under Code Sections 125, 401(k), 408(k) and 403(b)
with the Employer or one or more Affiliates.
(d) "Required Beginning Date"-- the first day of April following the
close of the calendar year in which the Participant attains age 70 1/2.
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(e) "Spouse"--the person to whom the Participant is married on the
relevant determination date under the Plan; provided, however, that the
person to whom the Participant may have been formerly married shall be
treated as his Spouse to the extent provided pursuant to a Qualified
Domestic Relations Order under ARTICLE VII.
2.4 Construction. The masculine gender, where appearing in the Plan,
shall include the feminine gender (and vice versa), and the singular shall
include the plural, unless the context clearly indicates to the contrary. The
term "delivered to the Plan Administrator," as used in the Plan, shall include
delivery to a person or persons designated by the Plan Administrator for the
disbursement and receipt of administrative forms. Headings and subheadings are
for the purpose of reference only and are not to be considered in the construc-
tion of this Plan. If any provision of this Plan is determined to be for any
reason invalid or unenforceable, the remaining provisions shall continue in
full force and effect. All of the provisions of this Plan shall be construed
and enforced according to the laws of the State of Arizona and shall be admin-
istered according to the laws of such state, except as otherwise required by
the Act, the Code or other Federal law. It is the intention of the Employer
that the Plan as adopted by the Employer shall constitute a qualified plan
under the provisions of Code Section 401(a) and that the Trust Fund maintained
pursuant to the Trust Agreement shall be exempt from taxation pursuant to Code
Section 501(a). This Plan shall be construed in a manner consistent with the
Employer's intention.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility and Participation. Each Employee shall become a Partici-
pant on the first Entry Date coincident with or next following the later of the
day on which he (a) attains the age of eighteen (18) years or, effective Jan-
uary 1, 1995, the age of twenty-one (21) years, or (b) completes one Year of
Eligibility Service, unless he shall leave employment with the Employer prior
to such date. For this purpose, a Year of Eligibility Service shall be the
twelve (12) month period commencing on the date the Employee is credited with
his first Hour of Service, provided he completes at least One Thousand (1,000)
Hours of Service during that twelve (12) month period; otherwise, a Year of
Eligibility Service shall be the first Plan Year commencing on or after the
date such Employee renders his first Hour of Service in which he is credited
with at least One Thousand (1,000) Hours of Service.
3.2 Crediting of Service. The following service and break-in-service
rules shall be in effect under the Plan:
(a) All periods of Continuous Service shall be taken into account,
except that the following periods of Continuous Service shall not be
credited to Employees for vesting purposes under ARTICLE V:
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<PAGE>
- Periods of Continuous Service completed prior to January 1,
1988, that would have been disregarded for vesting purposes under
the "break in service" provisions of the Plan as set forth in
Section 3.3; and
- Periods of Continuous Service excluded pursuant to Section 3.3.
(b) Should an Employee incur five (5) or more consecutive Breaks of
Continuous Service before completing one Year of Eligibility Service, then
the period of service rendered prior to the start of those Breaks of
Continuous Service shall not be taken into account for purposes of the
participation requirements of Section 3.1.
3.3 Effect of Rehiring. The years of Continuous Service credited to a
nonvested Employee prior to his incurrence of a Break in Continuous Service
shall be disregarded and that individual shall be treated as a new Employee for
purposes of this Plan upon re-employment if his Break in Continuous Service is
sixty (60) months or more. Subject to the foregoing break-in-service rule and
except as otherwise provided in Section 5.10 with respect to an Employee who
received a distribution following his prior termination of employment, should
an Employee separate from employment with the Employer and be subsequently
rehired, then that Employee shall be credited with all periods of Continuous
Service credited to him during his prior period of employment once he completes
one (1) year of Continuous Service after his return. If such an Employee
(other than a nonvested Employee whose service is disregarded pursuant to the
foregoing break-in-service rule) was a Participant or had satisfied the eligi-
bility requirements of Section 3.1 during his prior period of employment and
following his return he is otherwise eligible to participate in the Plan, then
that Employee shall commence participation in the Plan upon the later of his
date of rehire or the date on which he would have commenced participation if
his employment had not terminated.
3.4 Authorized Leaves of Absence. The following leaves of absence
provisions shall be in effect under the Plan:
(a) An Employee shall not be charged with a Break in Continuous
Service during an Authorized Leave of Absence if the Employee's Break in
Continuous Service is attributable to the Authorized Leave of Absence, and
his participation in the Plan shall not be terminated during the Authorized
Leave of Absence.
(b) An Employee who remains absent from active employment by reason
of a Maternity or Paternity Leave (as defined below) shall be deemed to
incur a Termination Date upon the earlier of (i) the date which is
twenty-four (24) months after the commencement of the Maternity or
Paternity Leave or (ii) the date on which the Employee quits, dies or
retires; provided, however, that solely for purposes of calculating
Continuous Service and applying the break-in-service rules of Section 3.3,
only the first twelve (12) months of such Maternity or Paternity Leave
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shall be taken into account as Continuous Service and the next twelve (12)
months of such Maternity or Paternity Leave shall be considered neither a
period of Continuous Service nor a Break in Continuous Service. In the
event the Maternity or Paternity Leave also constitutes an Authorized Leave
of Absence under Section 3.4(a), then the provisions of Section 3.4(a), to
the extent they provide more favorable Continuous Service credits to the
Employee than the corresponding provisions of this Section 3.4(b), shall
be controlling.
(c) For purposes of this Section 3.4, a Maternity or Paternity Leave
is any absence of the Employee, whether or not approved under Section
3.4(a), which is directly attributable to and caused by:
(i) such Employee's pregnancy,
(ii) the birth of a child of such Employee,
(iii) the placement of a child with such Employee in connection with
the Employee's adoption of such child, or
(iv) the care of such child for a period beginning with such birth
or placement.
(d) The Plan Administrator may, as a condition to the Employee's
qualification for the special benefits provided under Section 3.4(b),
require the Employee to provide written confirmation and other substan-
tiation as follows:
(1) on or before the commencement of the leave, that the absence
will qualify as a Maternity or Paternity Leave in accordance with the
criteria specified in clauses (i) through (iv) above, and
(2) on or before the completion of the leave, the number of days
for which the Maternity or Paternity Leave was in fact incurred for
one or more of the causes specified in clauses (i) through (iv) above.
3.5 Employment with Affiliates. For the purpose of computing (i) an
Employee's Hours of Service for purposes of Section 3.1 and (ii) an Employee's
period of Continuous Service, periods of employment with one or more Affiliates
of the Employer shall be taken into account to the same extent as if such
employment were rendered in an eligible Employee classification with the
Employer. In addition, individuals who have one or more periods of employment
in an eligible Employee classification with the Employer will also receive
Credited Service for any period of employment which they completed with an
Affiliate, to the extent that employment would have been treated as Credited
Service had the individual been in the Employer's employ at that time. However,
no such credit shall be given for such employment with an Affiliate if the
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Participant participated during that period in any other qualified defined
benefit or defined contribution plan sponsored by the Employer or the Affiliate.
Persons employed by a business organization that is acquired by the Employer or
by an Affiliate of the Employer shall, in the event that they become Employees,
be credited with Continuous Service hereunder for their periods of service with
such predecessor employer, to the extent required pursuant to Treasury regula-
tions under Code Section 414(a)(2).
3.6 Termination of Participation. An individual's participation in the
Plan, but not his right to the payment of benefits (if any), shall terminate
upon such individual's separation from employment with the Employer.
3.7 Transfer to and from an Eligible Class of Employees. A Participant
will automatically become ineligible to participate in the Plan as of the
effective date of a change in his employment classification with the Employer
if as a result of such change he is no longer an "Employee" as defined in
Section 2.1(w). If an employee of the Employer is not an "Employee" as defined
in Section 2.1(w) due to his employment classification, he shall participate
immediately upon becoming a member of an eligible class of "Employees" if he
has satisfied the requirements set forth in Section 3.1 and would have become
a Participant previously had he been in an eligible employment classification
with the Employer. In any event, an individual's service in an ineligible
employment classification with the Employer shall be considered in calculating
the individual's years of Continuous Service for purposes of vesting, Early
Retirement Age, early retirement benefits, early payout under Section 4.5, the
special retirement benefit under Section 5.6 or any other purposes, but such
service shall not be taken into account in the calculation of Credited Service
for purposes of determining his normal retirement benefit or his Accrued Bene-
fit. Notwithstanding the foregoing, an individual with one or more periods of
service as an eligible Employee of the Employer shall not, during any period of
service rendered as an employee of an Affiliate, be treated as employed in an
ineligible employment classification, unless he participated during that period
in any other qualified defined benefit or defined contribution plan sponsored
by the Employer or the Affiliate, but no Earnings received by such individual
while in the employ of such Affiliate or in any other ineligible employment
classification shall be taken into account in the calculation of his "Average
Monthly Earnings."
3.8 Leased Employees. For purposes of the Plan, a Leased Employee shall
be any person (other than an Employee) who pursuant to an agreement between the
Employer and the leasing organization has performed services for the Employer
on a substantially full time basis for a period of a least one year (as
determined in accordance with the applicable provisions of proposed Treasury
Regulation Section 1.414(n)-1(b)(10)), and such services are of a type histor-
ically performed by employees in the business field of the Employer. A Leased
Employee shall not be treated as an actual Employee eligible for participation
in the Plan, but he shall be treated as Employee solely for purposes of the
non-discriminatory coverage requirements of Code Section 410(b), unless:
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(i) such individual is covered by a money purchase pension plan of
the leasing organization which provides (A) a non-integrated employer
contribution rate of at least ten percent (10%) of compensation (as
defined by Code Section 415(c)(3), but including amounts contributed
pursuant to a salary reduction agreement which are excludable from
such individual's gross income under Code Section 125, 402(a) (8),
402(h) or 403(b), plus (B) immediate participation, and (C) full and
immediate vesting, and
(ii) Leased Employees do not constitute more than twenty percent
(20%) of the Employer's non-highly compensated workforce (as deter-
mined pursuant to Code Section 414(n)(5)(c)(ii)).
A Leased Employee shall, however, be entitled to service credits under the
Plan for his period of service with the Employer in accordance with the follow-
ing provisions:
- Upon completion of one year of full-time service (but subject to the
break in service provisions of proposed Treasury Regulation Section
1.414(n)-1(b)(13)), the Leased Employee shall, with respect to the period
he has performed services for the Employer, be credited with Eligibility
Service for purposes of Section 3.1 of the Plan and with Continuous Ser-
vice for all other purposes under the Plan (othe than the computation of
Credited Service). However, should such individual actually become an
Employee, then such service shall also be taken into account as Credited
Service.
- All service credit granted pursuant to these provisions shall, how-
ever, be subject to the break in service provisions of the Plan, to the
same extent as if such service were performed by the Leased Employee while
he was an actual Employee.
ARTICLE IV
ELIGIBILITY FOR BENEFITS
4.1 Attainment of Normal Retirement Age. Each Participant who shall
retire upon attaining his Normal Retirement Age shall be entitled to a non-
forfeitable normal retirement benefit as provided in Section 5.1 of the Plan,
with payments to begin as of the Participant's Normal Retirement Date. If a
Participant defers his retirement and remains in the employ of the Employer or
an Affiliate after his Normal Retirement Date, he shall continue to accrue
benefits in accordance with Section 5.1. The deferred retirement benefit
payments shall begin as of the first day of the month following his actual
retirement.
4.2 Attainment of Early Retirement Age. Any Participant whose employment
is terminated after his Early Retirement Date but prior to his Normal Retire-
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ment Date shall be entitled to a nonforfeitable early retirement benefit as
provided in Section 5.2 of the Plan. A Participant who retires on or after his
Early Retirement Date may elect in writing to receive his early retirement
benefits as of the first day of any month prior to his Normal Retirement Date.
Such election shall be made in writing on a form provided by and filed with the
Plan Administrator at least thirty (30) days prior to the date desired for
commencement of the Participant's benefits. However, if such benefit payments
commence prior to the Participant's Normal Retirement Date, the amount of those
payments shall be reduced in accordance with Section 5.2 for each month by
which the commencement date precedes such Normal Retirement Date.
4.3 Disability. Should a Participant become Disabled prior to retirement
or any other separation from employment with the Employer and have at least
five (5) years of Continuous Service as of the last day of his period of active
employment with the Employer, then that Participant shall be entitled to a
Disability benefit as provided in Section 5.3 of the Plan. A Participant's
Disability retirement benefit payments shall commence as of the first day of
the calendar month following the Participant's separation from employment due
to Disability. Disability retirement benefit payments shall not be payable for
any earlier month. In no event shall a Participant be entitled to receive
simultaneously both a Disability retirement benefit and a normal, early or
termination retirement benefit.
4.4 Death Benefits. Should a Participant with at least five (5) years of
Continuous Service die prior to retirement, Disability or any other separation
from employment, then the beneficiary of that Participant shall be entitled to
the benefits (if any) provided under Section 5.4 and Section 5.5 of the Plan.
Any death benefits payable to an nmarried Participant in accordance with Sec-
tion 5.4 shall commence as soon as possible following that Participant's death
and shall be paid in the form set forth in Section 5.4 of the Plan. Death
benefits payable with respect to a married Participant shall be payable in
accordance with the surviving spouse annuity provisions set forth in Section
5.5 of the Plan. A special death benefit shall be payable in accordance with
Section 5.6 upon the death of a retired Participant.
Each Participant shall have the right to designate, on a form supplied by
and delivered to the Plan Administrator, a beneficiary or beneficiaries to
receive benefits pursuant to this Section 4.4 in the event of his death. Each
Participant may change his beneficiary designation from time to time. Upon
receipt of such designation by the Plan Administrator, such designation or
change of designation shall become effective as of the date of the designation.
However, a beneficiary designation filed by a married Participant designating
a beneficiary other than his Spouse shall not be effective, unless the Spouse
consents to such designation in accordance with the spousal consent require-
ments of Section 6.6. There shall be no liability on the part of the Employer,
the Plan Administrator or the Trustee with respect to any payment authorized by
the Plan Administrator in accordance with the most recent valid beneficiary
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<PAGE>
designation of the Participant in its possession before receipt of a more
recent valid beneficiary designation. If no designated beneficiary is living
when benefits become payable, or if there is no validly designated beneficiary,
then the beneficiary shall be the Participant's Spouse. If there is no such
validly designated beneficiary or surviving Spouse, then the beneficiary shall
be the estate of the Participant.
4.5 Other Separation From Employment. Should the Participant separate
from employment with the Employer for any reason prior to retirement, death or
Disability, he shall be entitled to receive the termination benefit (if any)
provided under Section 5.7 commencing as of the first day of the month
following the Participant's attainment of his Normal Retirement Age. If the
Participant satisfied the Continuous Service requirement for early retirement
prior to his termination of employment, the termination benefit may commence as
of the first day of the month following the Participant's attainment of his
Early Retirement Age if the Participant elects to receive his termination
benefit as of such date. Such election shall be made in writing on a form
provided by and filed with the Plan Administrator at least thirty (30) days
prior to the date desired for commencement of th Participant's benefits. If a
Participant's termination benefit payments commence prior to his Normal Retire-
ment Date, the amount of the payments shall be reduced in the same fashion as
an early retirement benefit for each month by which the first early retirement
benefit payment precedes the Participant's Normal Retirement Date.
ARTICLE V
DETERMINATION OF BENEFITS
5.1 Normal Retirement Benefit. The normal retirement benefit to which a
Participant is entitled pursuant to Section 4.1 shall be determined as of his
retirement date. The normal retirement benefit shall be a monthly benefit for
the life of the Participant equal to the sum of the following:
(a) One-half percent (.5%) of the Participant's Average Monthly
Earnings multiplied by the years of Credited Service then credited to the
Participant; plus
(b) One-half percent (.5%) of his Average Monthly Earnings in excess
of Covered Compensation multiplied by the years of Credited Service then
credited to the Participant.
The maximum number of years of Credited Service that may be credited for
purposes of calculating a Participant's normal retirement benefit is twenty
(20). A Participant who remains employed after attaining Normal Retirement Age
shall continue to accrue normal retirement benefits pursuant to this Section
5.1, up to the twenty (20)-year maximum, and his normal retirement benefit,
payable in the basic form under Section 6.2, shall not be less than the largest
normal retirement benefit that would have been provided him under this Section
5.1 had he retired on any earlier date.
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<PAGE>
If this Plan is a Top Heavy Plan for any Plan Year, a Participant's
normal retirement benefit shall be the greater of the amount determined pur-
suant to the foregoing provisions of this Section 5.1 or the amount determined
pursuant to Section 5.9 for such Plan Year.
5.2 Early Retirement Benefit. The early retirement benefit to which a
Participant is entitled pursuant to Section 4.2 shall be a monthly benefit for
life in an amount equal to the Participant's benefit determined under Section
5.1, reduced, if the payments begin prior to the Participant's Normal Retire-
ment Date, by .00555 for each month by which the early retirement benefit
commencement date precedes the Participant's Normal Retirement Date.
5.3 Disability Benefit. The Disability benefit to which a Participant
shall be entitled pursuant to Section 4.3 shall be a monthly payment for life
in an amount equal to the Participant's benefit determined under Section 5.1
on the basis of his Credited Service prior to Disability. The Disability retire-
ment benefit payments shall commence in accordance with the provisions of
Section 4.3, and there shall be no reduction for the commencement of benefits
prior to the Participant's Normal Retirement Date. A Participant who has not
completed at least five (5) years of Continuous Service as of the last day of
his period of active employment with the Employer shall not be entitled to any
benefit under the Plan if his employment is subsequently terminated due to
Disability.
5.4 Death Benefit. Should a married Participant die prior to his Annuity
Starting Date, then his Spouse (as determined of the date of such Participant's
death) shall receive the surviving spouse annuity pursuant to Section 5.5. If
the married Participant had not attained age sixty (60) at the time of his
death, then his Spouse may elect within twelve (12) months of the Participant's
death to receive a lump sum distribution which is the Actuarial Equivalent of
the surviving spouse annuity.
Should an unmarried Participant die prior to his Annuity Starting Date but
while still employed by Employer, a lump sum death benefit shall be payable to
his designated beneficiary or beneficiaries equal in the aggregate to the Actu-
arial Equivalent of the surviving spouse annuity which would have been payable
pursuant to Section 5.5 had such Participant had a spouse of the same age.
For purposes of calculating the lump sum Actuarial Equivalent of a benefit
for purposes of this Section 5.4, the interest rate shall be the rate used by
the Pension Benefit Guaranty Corporation (as of January 1 of the year of the
distribution) for purposes of determining he present value of a lump sum distri-
bution upon plan termination. Such determination shall made in compliance with
the present value provisions of Code Section 417(e) and the Treasury regula-
tions thereunder.
5.5 Surviving Spouse Annuity. The annuity payable to the surviving
Spouse of a married Participant with at least five (5) years of Continuous
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<PAGE>
Service who dies prior to his Annuity Starting Date shall be a monthly benefit
for her life in an amount calculated as follows:
- The monthly benefit the Spouse would have received had the
Participant (1) separated from employment on the date of his death
(unless the Participant had separated from employment prior to his
death, in which case the Participant's actual date of separation from
employment shall be used), (2) survived until the date benefits become
payable to his surviving Spouse, (3) elected to retire on that date
and receive an immediate qualified joint and survivor annuity as
described in Section 6.3 and (4) died on the day after such annuity
became effective.
The monthly annuity payable to the Spouse under this Section 5.5 shall
commence as of the first day of the month in which the Participant would have
attained his Normal Retirement Date, unless the Spouse shall elect an earlier
commencement date for such annuity. In addition, the surviving Spouse of a
vested Participant who dies prior to attaining age sixty (60) may elect a lump
sum distribution in accordance with Section 5.4.
In no event may the monthly annuity payable under this Section 5.5 com-
mence earlier than the first day of the month in which the Participant would
attained age sixty (60) had he survived.
5.6 Special Retiree Death Benefit. Effective January 1, 1995, upon the
death of a Participant who retires from employment with the Employer or any
Affiliate on or after attaining age sixty (60) and completing at least ten (10)
years of Continuous Service, the Participant's designated beneficiary or ben-
eficiaries shall be paid a lump sum death benefit in the aggregate amount of
Two Thousand Five Hundred Dollars ($2,500). Such benefit provided under this
Plan shall be in lieu of the Two Thousand Five Hundred Dollar ($2,500) death
benefit the Company is otherwise required to provide directly out of its
general assets pursuant to existing contractual arrangements with one or more
current or former Participants.
5.7 Termination Benefit. The termination benefit to which a Participant
with at least five (5) years of Continuous Service is entitled pursuant to
Section 4.5 shall be equal to his Accrued Benefit. If a Participant has not
completed at least five (5) years of Continuous Service at the time of his
termination of employment with the Employer or any Affiliate, then he shall not
be entitled to receive any termination benefit under the Plan.
In the event that the Plan should become a Top Heavy Plan during a Plan
Year, the termination benefit of a Participant separating from employment
during that Plan Year shall equal his Accrued Benefit multiplied by the appro-
priate vesting percentage from the following table:
- 24 -
<PAGE>
<TABLE>
<CAPTION>
Years of Continuous Service Percent Vested
<S> <C>
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five or more 100%
</TABLE>
Except as provided in Section 5.10, a Participant's termination benefit
shall be payable in accordance with the form selected pursuant to ARTICLE VI.
Notwithstanding anything to the contrary in this Section 5.7, the Accrued
Benefit of a Participant with less than five (5) years of Continuous Service
shall, with respect to his 0% vested interest therein, be deemed distributed
upon his incurrence of a Break in Continuous Service of twelve (12) months, and
his one hundred percent (100%) unvested interest in such Accrued Benefit shall
be immediately forfeited upon such Break in Continuous Service. However,
should such Participant return to Employee status before incurring a Continuous
Break in Service of sixty (60) months or more, then his forfeited Accrued Ben-
efit shall be immediately restored.
5.8 Accrued Benefit. A Participant's Accrued Benefit shall be determined
in accordance with this Section 5.8:
(a) General Rule. A Participant's Accrued Benefit as of any given
date shall equal the Participant's estimated benefit at Normal Retirement
Age multiplied by a fraction, not exceeding one (1), the numerator of which
is the actual completed full years and months (expressed as fractions of
a year) of the Participant's Credited Service as of the determination date
and the denominator of which is the total number of completed full years
and months (expressed as fractions of year) of Credited Service that would
have been credited to such Participant had he separated from employment
on his Normal Retirement Date.
(b) Estimating Normal Retirement Benefits. The Plan Administrator
will estimate the normal retirement benefits (determined in accordance with
Section 5.1) to which each Participant will be entitled on his Normal
Retirement Date. In making its estimate, the Plan Administrator shall
assume that the Participant will continue his service with Employer to his
Normal Retirement Date and that his Average Monthly Earnings on his Normal
Retirement Date will be equal to his Average Monthly Earnings calculated
as of the day on which the Participant's Accrued Benefit is being
determined.
(c) Top Heavy Minimums. If this Plan is at any time a Top Heavy
Plan, a Participant's Accrued Benefit shall be the greater of the amount
determined pursuant to the foregoing provisions of this Section 5.8 or the
amount determined pursuant to Section 5.9.
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<PAGE>
(d) Recalculation of Accrued Benefit of Participants in Pay Status.
The Accrued Benefit of a Participant who earns additional years of Credited
Service after receiving any distribution from the Plan shall be equal to
the excess of (1) over (2):
(1) The Participant's Accrued Benefit determined under the applic-
able section of ARTICLE V on his Calculation Date (as defined herein)
based on all years of Credited Service earned during the period of
the Participant's employment; and
(2) The monthly amount which is Actuarially Equivalent to the
aggregate benefits distributed to the Participant from the Plan prior
to the Calculation Date which were paid as monthly amounts (a) for any
month prior to the Participant's Normal Retirement Date and (b) for
any month in which the Participant was an active Employee after his
Normal Retirement Date.
Notwithstanding the foregoing, such recomputed monthly benefit shall not
be less than the monthly benefit received by the Participant prior to his
Calculation Date converted to a monthly annuity for the life of the Participant
payable as of the Calculation Date. The first recomputed payment shall include
any retroactive payments due for any month within the suspension period under
Section 6.8 in which the Participant was not an active Employee. Also the
first recomputed payment shall be reduced to the extent permitted under
Department of Labor Regulations Section 2530.203 by any payment made to the
Participant which he was not entitled to receive pursuant to the suspension of
provisions in effect under Section 6.8. The recomputation under this Section
5.8 shall be made as of each Calculation Date, and such purpose the "Calcula-
tion Date" for a Participant who earns Credited Service after receiving one or
more benefit payments under ARTICLE V of the Plan will be each January 1 and
the date he subsequently terminates employment with the Employer.
5.9 Top Heavy Benefits. Should the Plan become Top Heavy Plan for any
Plan Year, then, for purposes of this ARTICLE V, the normal retirement benefit
of any Participant (other than a Key Employee) who retires on or after his
Normal Retirement Date and the Accrued Benefit of any other Participant (other
than a Key Employee), when expressed as an "annual retirement benefit," shall
not be less than the Participant's "average annual Remuneration" multiplied by
the lesser of (a) two percent (2%) multiplied by the number of the Partici-
pant's completed full years and months (expressed as fractions of a year) of
Credited Service with the Employer (as modified hereinafter), or (b) twenty
percent (20%). For purposes of this Section 5.9, a Participant's years and
months of Credited Service shall not include service performed in a Plan Year
beginning prior to January 1, 1988 or a year during which a Plan Year ended if
the Plan was not a Top Heavy Plan during that Plan Year. The "average annual
Remuneration" of a Participant is the average rate of annual Remuneration in
effect for the Participant during any five (5) consecutive Plan years in which
- 26 -
<PAGE>
such Remuneration is the greatest, excluding Plan Years ending prior to January
1, 1984 and Plan Years commencing after the last Plan Year for which the Plan
was a Top Heavy Plan. However, the annual Remuneration taken into account for
each Plan Year within the period for which the Participant's average annual
Remuneration is determined shall not, for any Plan Year beginning before
January 1, 1994, exceed $200,000.00, as adjusted by the applicable cost-of-
living increase factor (if any) in effect under Code Section 415(d) for each
Plan Year within such period. Effective for any Plan Year beginning on or
after January 1, 1994, the annual Remuneration taken into account for each Plan
Year within the period for which the Participant's average annual Remuneration
is determined shall not exceed $150,000.00, as adjusted by the applicable cost-
of-living increase factor (if any) in effect under Code Section 401(a)(17)(B)
for each Plan Year within such period. The "annual retirement benefit" is that
benefit payable annually in the form of a single life annuity (with no ancil-
lary benefits) beginning at Normal Retirement Age. If the benefit payable upon
termination of employment under the Plan is payable in a form other than a
single life annuity with no ancillary benefits beginning at Normal Retirement
Age, then the "annual retirement benefit" shall be adjusted to the form and
timing of the benefit payable under the Plan on the basis of the actuarial
factors and assumptions used for purposes of making Actuarial Equivalency
determinations.
5.10 Cash Outs and Repayment of Distributions. If the termination
benefit payable to a Participant pursuant to Section 5.7 is Actuarially
Equivalent to a lump sum distribution of Three Thousand Five Hundred Dollars
($3,500.00) or less, the Plan Administrator shall direct the Trustee to pay the
termination benefit in the form of a lump sum distribution not later than sixty
(60) days after the close of the Plan Year following the Plan Year in which the
Participant's employment terminates, subject, however, to any earlier payment
date required pursuant to the provisions of Section 6.1. No distribution may
be made pursuant to the preceding sentence after the Annuity Starting Date
unless the Participant and the Participant's spouse, if any, (or where the
Participant has died, his spouse alone) consent in writing to such distribu-
tion. For purposes of calculating the lump sum Actuarial Equivalent of a
benefit for purposes of this Section 5.10, the interest rate shall be the rate
used by the Pension Benefit Guaranty Corporation (as of January 1 of the year
of the distribution) for purposes of determining the present value of a lump
sum distribution upon plan termination. A Participant who receives a lump sum
distribution of his Accrued Benefit shall be given the opportunity to repay the
full amount of that distribution, plus interest at a rate determined under Code
Section 411(c)(2)(C), should he return to employment with the Employer or any
Affiliate. The repayment may be made at any time prior to the earlier of (a)
the end of the five (5)-year period measured from the first date on which the
Participant is subsequently reemployed by Employer or (b) the incurrence of a
Break in Continuous Service of sixty (60) months measured from the date of the
prior distribution. If a Participant does not exercise his right to repay the
prior distribution (with interest as provided above) in such a timely manner,
the years and months of Credited Service performed by the Participant prior to
the distribution shall be disregarded in calculating his normal retirement
benefit and his Accrued Benefit.
- 27 -
<PAGE>
5.11 Other Small Benefits. Notwithstanding anything in this ARTICLE V to
the contrary, in the event that the value of any benefit described in ARTICLE
V (including the surviving spouse benefit provided by Section 5.5) other than
a termination benefit shall be Actuarially Equivalent to a lump sum benefit of
Three Thousand Five Hundred Dollars ($3,500.00) or less, the Plan Administrator
shall direct immediate payment of the benefit in a single lump sum. No
distribution may be made pursuant to the preceding sentence after the Annuity
Starting Date unless the Participant and the Participant's spouse, if any, (or
where the Participant has died, his spouse alone) consent in writing to such
distribution. For purposes of calculating the lump sum Actuarial Equivalent of
a benefit for purposes of this Section, the interest rate shall be the rate
used by the Pension Benefit Guaranty Corporation (as of January 1 of the year
of the distribution) for purposes of determining the present value of a lump
sum distribution upon plan termination.
5.12 Limitation on Benefits: General Rules. Notwithstanding anything to
the contrary in this ARTICLE V, the maximum normal retirement, late retirement,
early retirement, death, Disability or termination benefit payable under this
Plan to which a Participant or former Participant is entitled shall not exceed
an amount payable in any Plan Year in the form of a straight life annuity that
shall exceed the lesser of Ninety Thousand Dollars ($90,000.00) or one hundred
percent (100%) of the Participant's average Remuneration for the three (3)
consecutive Plan Years in which the Participant's average Remuneration was the
greatest. The Ninety Thousand Dollar ($90,000.00) limitation shall be adjusted
for each Plan Year commencing on and after January 1, 1988, to take into
account any cost-of-living increase adjustment for that Plan Year allowable
pursuant to the Treasury regulations or rulings under Code Section 415(d). Any
such adjustment shall be effective only as of the first day of the Plan Year
ending within the respective calendar year for which the cost-of-living
increase adjustment is announced.
The limitations of this Section 5.12 shall be deemed to be satisfied as to
any Participant who has at no time participated in any defined contribution
plan sponsored by the Employee if the annual benefit payable to the Participant
does not exceed One Thousand Dollars ($1,000.00) multiplied by the Participant's
number of years and months (expressed as fractions of a year) of Continuous
Service (not to exceed ten (10)) with the Employer.
If benefits are payable to a Participant or former Participant in any form
of benefit other than in the form of a straight life annuity or a qualified
joint and survivor annuity, for purposes of applying the limitations of this
Section 5.12 the benefits shall be actuarially adjusted to the form of a
straight life annuity on the basis of reasonable actuarial assumptions, provided
that the interest assumption shall not be less than the greater of five percent
(5%) or the post-retirement interest rate used for purposes of making Actuarial
Equivalency determinations.
In the event that benefits become payable under this Plan to a Participant
prior to the attainment of the "social security retirement age," the Ninety
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<PAGE>
Thousand Dollar ($90,000.00) limitation referred to in the first paragraph of
this Section 5.12 (the "dollar limitation") shall be actuarially adjusted to
the equivalent of a benefit beginning at the "social security retirement age,"
itemizing an interest rate assumption not less than the greater of five percent
(5%) or the post-retirement interest rate used for purposes of making Actuarial
Equivalency determinations. The foregoing adjustment shall be made in such
manner as the Secretary of the Treasury may prescribe which is consistent with
the reduction for old-age insurance benefits commencing before the social
security retirement age under the Social Security Act. In the event that
benefits become payable under this Plan to a Participant subsequent to the
attainment of the "social security retirement age," the dollar limitation of
this Section 5.12 shall be actuarially adjusted, utilizing an interest assump-
tion not greater than the lesser of five percent (5%) or the post-retirement
interest rate used for purposes of making Actuarial Equivalency determinations,
so that it is equivalent to a benefit beginning at the "social security retire-
ment age," provided that such limitation may not exceed one hundred percent
(100%) of the Participant's average Remuneration for the three (3) consecutive
Plan Years in which the Participant's average Remuneration is the greatest.
For purposes of this paragraph, "social security retirement age" has the same
meaning as set forth in Code Section 415(b)(8).
If a Participant who becomes entitled to a benefit under the Plan is at
the time credited with less than ten (10) years of Credited Service, including
Credited Service rendered after retirement, then for the purpose of applying
the projected benefit limitations of this Section 5.12, such limitations shall
be multiplied by a fraction, the numerator of which is the completed full years
and months (expressed as fractions of a year) of Credited Service rendered by
the Participant, and the denominator of which is ten (10). If the benefits
payable to a Participant are limited hereunder, his benefits shall increase,
although not retroactively, as the maximum is increased until the Participant
reaches the level called for by the Plan.
5.13 Limitation on Benefits: Multiple Defined Benefit Plans. The
limitations of Section 5.12 with respect to any Participant who is at any time
participating in any other "defined benefit plan," as defined in Code Section
414(j), maintained by the Employer or any Affiliate shall apply as if the total
benefits payable under all such defined benefit plans in which the Participant
is participating were payable from this Plan.
5.14 Limitation on Benefits: Participants in Defined Contribution Plans.
In any case where a Participant under this Plan is also a participant in one or
more "defined contribution plans," as defined in Code Section 414(i), main-
tained by the Employer or any Affiliate, the sum of the "defined contribution
plan fraction" under such plan or plans and the "defined benefit plan fraction"
under this Plan and all other defined benefit plans shall not exceed one (1.0).
The "defined benefit plan fraction" for any Plan Year is a fraction, the
numerator of which is the projected annual benefit payable to the Participant
as of the close of the current Plan Year under all defined benefit plans
- 29 -
<PAGE>
(whether or not terminated) maintained by the Employer and the denominator of
which is the lesser of one hundred twenty-five percent (125%) of the dollar
limitation in effect for the Plan Year under Code Section 415(b) (1)(A), as
adjusted pursuant to Code Section 415(d), or one hundred forty percent (140%)
of the Participant's average Remuneration for the three (3) Plan Years during
which such Remuneration is the highest. For any Plan Year for which the Plan
is Top Heavy, the denominator of the defined benefit plan fraction will be the
lesser of one hundred percent (100%) rather than one hundred twenty-five
percent (125%) of the dollar limitation in effect for the Plan Year under Code
Section 415(b)(1)(A) or one hundred forty percent (140%) of the Participant's
average Remuneration for the three (3) Plan Years during which such Remunera-
tion is highest, unless both of the following conditions are satisfied, in
which case the defined benefit plan fraction shall be calculated as above:
(a) The Plan is not a Super Top Heavy Plan; and
(b) The contributions or benefits on behalf of all Participants
other than Key Employees meet the requirements of Code Section 416(h).
The "defined contribution plan fraction" for any Plan Year is a fraction,
the numerator of which is the sum of the annual additions to the Participant's
accounts under all the defined contribution plans (whether or not terminated)
maintained by the Employee for the current and all prior Plan Years (including
the annual additions attributable to the Participant's nondeductible employee
contributions to any defined benefit plan, whether or not terminated, main-
tained by the Employer) and the denominator of which is the sum of the "maximum
aggregate amounts" for the current and all prior Plan Years of service with the
Employer, regardless of whether a plan was maintained by the Employer during
such years. The "maximum aggregate amount" in any Plan Year is the lesser of
one hundred twenty-five percent (125%) of the dollar limitation in effect under
Code Section 415(c)(1)(A) or thirty-five percent (35%) of the Participant's
Remuneration for such year. For any Plan Year for which the Plan is a Top
Heavy Plan, the "maximum aggregate amount" is the lesser of one hundred percent
(100%) of the dollar limitation in effect under Code Section 415(c)(1)(A) or
thirty-five percent (35%) of the Participant's Remuneration for such year,
unless both of the following conditions are satisfied:
(a) The Plan is not a Super Top Heavy Plan; and
(b) The contributions or benefits on behalf of all Participants
other than Key Employees meet the requirements of Code Section 416(h).
If a Participant was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1, 1982, the
numerator of this fraction will be adjusted if the sum of this fraction and the
defined benefit plan fraction would otherwise exceed one (1.0) under the terms
of this Plan. Under the adjustment, an amount equal to the, product of (a) the
excess of the sum of the fractions over one (1.0) and (b) the denominator of
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<PAGE>
this fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the later of (a) the end of the last Plan Year beginning before
January 1, 1983 or (b) June 30, 1983. This adjustment also will be made if at
the end of the last Plan Year beginning before January 1, 1984 the sum of the
fractions exceed one (1.0) because of accruals or additions that were made
before the limitations of Code Section 415, as revised by the Tax Equity and
Fiscal Responsibility Act of 1982, became effective to any plans of the
Employer in existence on July 1, 1982.
If the sum of the defined benefit plan fraction and the defined contribu-
tion plan fraction is in excess of one (1.0), then the annual pension payable
under this Plan shall be reduced. The reduction shall be of sufficient amount
to eliminate the excess over one (1.0). The benefits payable under this Plan
shall also be reduced immediately prior to a allocation to the Participant's
accounts under the defined contribution plan or plans if such reduction is
necessary in order for the combined maximum limitation not to be exceeded.
For purposes of this Section 5.13 and the application of Code Section
415(c), the "annual addition" allocated to a Participant under any plan main-
tained by the Employer shall include the sum of the amounts described in (a),
(b) and (c) as follows:
(a) The Employer contributions allocable for a Plan Year to the
accounts of the Participant, including any amount allocable from a suspense
account maintained pursuant to such plan on account of a prior Plan Year;
amounts deemed to be Employer contributions pursuant to a cash-or-deferred
arrangement qualified under Code Section 401(k); and amounts derived from
contributions paid after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement medical benefits
allocated to a separate account of a "key employee" as defined in Code
Section 419(d)(3), under a "welfare benefit fund," as defined in Code
Section 419(e);
(b) The amount of nondeductible Employee contributions allocable
during a Plan Year to the nondeductible Employee contributions accounts of
the Participant; and
(c) Forfeitures allocable for a Plan Year to the accounts of the
Participant.
5.15 Limitation on Benefits of Certain Participants. This Section 5.15
shall apply to the twenty-five (25) Highly Compensated Employees (whether
active or former Employees) with the greatest amount of Remuneration for the
current Plan Year or any prior Plan Year. Such individuals shall be designated
as the Highest Paid Employees for purposes of this Section 5.15, and the fol-
lowing restrictions shall be applicable to such individuals:
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<PAGE>
Benefits: In the event this Plan should be terminated, the benefits
available to each individual shall be limited to benefits which are non-
discriminatory under Code Section 401(a)(4).
Distributions: The annual retirement benefit payable to each of the
Highest Paid Employees shall be restricted to an amount each year equal to
the straight life annuity which is the Actuarial Equivalent of the Accrued
Benefit and any other benefits to which each such Highest Paid Employee is
entitled under the Plan at the time of plan termination.
The term "other benefits" includes any periodic income, any withdrawal
values payable to a Highest Paid Employee during his lifetime, and any death
benefits not provided for by insurance on the life of such Highest Paid
Employee.
The foregoing restrictions on distributions shall not apply if any one of
the following requirements is satisfied:
(1) After payment to any individual within the group of the Highest Paid
Employees of all benefits to which such individual is entitled under the
Plan, the value of the assets of the Plan equal or exceed 110 percent of
the value of the Plan's current liabilities, as defined in Code Section
412(1)(7),
(2) The present value of the benefits payable under the Plan to any
individual within the group of the Highest Paid Employees is less than 1
percent of the value of the Plan's current liabilities before distribu-
tion, or
(3) The present value of the benefits payable under the Plan to any
individual within the group of the Highest Paid Employees does not exceed
$3,500.00.
5.16 Voluntary Early Retirement Program. Effective January 1, 1990,
Employees who have both satisfied the service requirements set forth in Section
3.1 and have attained age 60 by December 31, 1989 shall be eligible to partici-
pate in the Voluntary Early Retirement Program. Those Employees eligible to
participate in the Voluntary Early Retirement Program may elect to participate
in the program during the election period commencing December 1, 1989 and end-
ing December 31, 1989. An election to participate must be made no later than
December 31, 1989. An election made to participate in the program may be
revoked during December 1989, but may not be revoked after December 31, 1989.
In order to be eligible for benefits under the Voluntary Early Retirement Pro-
gram, electing Employees must cease active employment no later than March 31,
1990. Retirement benefits under the Voluntary Early Retirement Program shall
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<PAGE>
commence on the first day of the month following the last day upon which the
Employee receives any compensation, whether as an active Employee, while on
vacation or under any other circumstances. An Employee electing to participate
under the Voluntary Early Retirement Program who otherwise meets the require-
ments as set forth above shall receive a normal retirement benefit as described
in Section 5.1, with the following modifications:
(a) A participating Employee shall be eligible to receive an early
retirement benefit, as described in Section 5.2, even though he has not
been credited with ten (10) years of Continuous Service as required by
Section 2.1(r), and shall be eligible to receive a normal retirement
benefit without the reduction for early commencement of payments described
in Section 5.2.
(b) Each Employee electing to participate shall receive an addi-
tional five (5) years of Credited Service; provided, however, such Employee
may not be credited with more than twenty (20) years of Credited Service.
(c) "Average Monthly Earnings", as defined in Section 2.1(g) shall,
for purposes of the Voluntary Early Retirement Program benefit, be the
amount as described in Section 2.1(g) or the Employee's regular salary or
wages for the 1989 calendar year, whichever is greater."
5.17 No Other Benefits. There shall be no benefits under this Plan other
than as described in this ARTICLE V, and these benefits shall be payable only
in the manner described in ARTICLE VI.
5.18 Amendments to Vesting Schedule. No amendments or changes to the
Section 5.7 vesting schedule shall deprive an Employee who is a Participant on
the later of (a) the date the amendment is adopted or (b) the date the amend-
ment is effective of any nonforfeitable benefit to which he is entitled under
the Plan (determined as of such date) without regard to such amendment. If the
Section 5.7 vesting schedule 5.7 is amended, each Participant who has completed
five (5) years of Continuous Service (three (3) years of Continuous Service for
Plan Years commencing on or after January 1, 1989) and whose benefits would be
determined under such schedule shall have the right to elect, during the period
computed pursuant to this Section 5.18, to have his nonforfeitable benefit
determined without regard to such amendment; provided, however, that no elec-
tion shall be provided to any Participant whose nonforfeitable vested benefit
under the Plan, as amended, cannot at any time be less than the benefit
computed without regard to such amendment or cessation. The election period
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<PAGE>
shall commence on the date the amendment is adopted and end on the latest of
(a) sixty (60) days after adoption of the amendment, (b) sixty (60) days after
the effective date of the amendment, or (c) sixty (60) days after the
Participant is notified of the amendment in writing by the Employer or Plan
Administrator. Such election, if exercised, shall be irrevocable and shall be
available only to an Employee who is a Participant and who has completed at
least five (5) years of Continuous Service (three (3) years of Continuous Ser-
vice for Plan Years commencing on or after January 1, 1989) when the election
is made. Any change in the applicability of the top heavy vesting schedule set
forth in Section 5.7 as a result of the Plan ceasing to be a Top Heavy Plan
under Section 2.3 shall be treated as an amendment to such vesting schedule for
purposes of this Section.
5.19 Effect of Social Security Act Amendments. Benefits payable under
this Plan shall not be decreased by reason of any increase in benefit levels
payable under Title II of the Social Security Act or any increase in the "wage
base" under Title II, if any such increase takes place on or after the earlier
of (a) the date of the Participant's separation from service or (b) the date of
first receipt of benefits hereunder.
ARTICLE VI
PAYMENT OF BENEFITS
6.1 Commencement of Benefits. Payment of the benefits provided by this
Plan will commence, if practicable, at the times indicated in the appropriate
Sections of ARTICLE IV. If benefit payments are delayed for any reason (other
than for determinations of Disability), the arrearage shall be paid promptly
following the actual commencement of payments. No interest shall be due on any
delayed payments unless the Plan Administrator, in the exercise of its discre-
tion, determines that the delay was not necessary under the circumstances.
Unless an earlier starting date is elected, payment to a Participant shall
commence no later than sixty (60) days after the last to occur of (a) the last
day of the Plan Year in which the Participant attains age sixty-five (65), (b)
the last day of the Plan Year in which the Participant separates from employ-
ment with the Employer, or (c) the tenth (10th) anniversary of the last day of
the Plan Year in which the Participant commenced participation. The failure of
the Participant and his Spouse to consent to a distribution which is immedi-
ately distributable (that is, payable at any time prior to Normal Retirement
Age) shall be deemed to be an election to defer the commencement of benefit
payments in accordance with this Section 6.1. However, benefit payments must
in all events begin by the Participant's Required Beginning Date, whether or
not the Participant has ceased Employee status.
Should a Participant earn additional years of Credited Service after his
benefits under the Plan commence, then his Accrued Benefit shall be recalcu-
lated in accordance with Section 5.8(d).
The following provisions shall be in effect for the Accrued Benefit
earned by any Participant who continues in Employee status after his Required
Beginning Date:
(i) The Accrued Benefit of such Participant shall be recalculated as
of the last day of each Plan Year, beginning with the Plan Year in
which the Required Beginning Date occurs, during which the Participant
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earns an addition to his Accrued Benefit on the basis o his Credited
Service or Earnings for that Plan Year.
(ii) The amount of the additional Accrued Benefit for each such Plan
Year shall be equal to the excess of (A) the Accrued Benefit based
upon the Participant's Credited Service and Average Monthly Earnings
determined as of the recalculation date for that Plan Year under
clause (i) over (B) the Accrued Benefit earned by the Participant
through the last day of the immediately preceding Plan Year.
(iii) The additional Accrued Benefit as calculated under this Section
6.1 shall be distributable as a separate identifiable component for
which distribution must begin by the February 1 following the calendar
year in which such Accrued Benefit was earned. The distribution shall
be payable retroactive to January 1 of the distribution year.
Participants who have not terminated employment with Employer but whose
benefits commence as of the Required Beginning Date shall receive their bene-
fits in the basic form described in Section 6.2.
6.2 Basic Form of Benefit Payment to Participants. The basic form of
benefit payment to which a Participant shall be entitled under this Section 6.2
shall be a monthly annuity for the life of the Participant.
6.3 Payments to Married Participants. In the event that a Participant is
married at the time that benefits become payable to him under ARTICLE IV, the
benefit to be paid to the Participant shall be paid in the form of a joint and
survivor annuity, as described below in this Section 6.3, that is Actuarially
Equivalent to the basic form of benefit provided by Section 6.2, unless the
Participant elects to receive his payments in another benefit form described in
this ARTICLE VI after receiving the written explanation specified below. Any
election by a married Participant to receive payment of benefits in a form
other than a joint and survivor annuity shall be made in the manner provided in
Section 6.6 and shall require the consent of his Spouse.
The joint and survivor annuity payable under this Section 6.3 to a married
Participant shall consist of (i) reduced level payments to be made to the
Participant each month during the remainder of his life and (i) payments in an
amount equal to fifty percent (50%) of the clause (i) level monthly payment to
be continued to his Spouse (determined as the Annuity Starting Date for the
Participant's benefit) if such Spouse survives the Participant. In order to
compute the Actuarially Equivalent joint and survivor benefit, the Partici-
pant's monthly benefit shall be actuarially adjusted to reflect the cost of
continuing benefit payments to the surviving Spouse following the Participant's
death. Payment to the Participant shall cease with the last monthly payment
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made prior to his death, and payment to the surviving Spouse shall cease with
the last monthly payment made prior to the death of that Spouse. Payments to
a surviving Spouse shall not be terminated if such Spouse remarries.
Notwithstanding the foregoing, a surviving spouse annuity as described in
Section 5.5 shall be paid in the event a Participant receiving a Disability
benefit under Section 5.3 dies prior to age sixty-five (65). At the time
Disability benefits commence, the Participant may elect pursuant to Section 6.5
to receive the reduced joint and survivor annuity described herein commencing
upon his attainment of age sixty-five (65). If the Participant's Spouse dies
prior to his attainment of age sixty-five (65), the election is revoked. For
purposes of the Disability benefit, the Participant's Spouse is only his Spouse
at the time his Disability benefits commence.
6.4 Optional Methods of Distribution. In lieu of the basic form of
payment specified in Section 6.2 and the joint and survivor annuity described
in Section 6.3, a Participant entitled to retirement benefits pursuant to Sec-
tion 5.1 or 5.2 may elect to receive those benefits in one of the optional
forms provided under this Section 6.4 which is Actuarially Equivalent to the
basic form of payment provided under Section 6.2. The optional forms of ben-
efits are limited to the following:
(a) Level monthly payments until the Participant's death, with the
provision that if he dies within one hundred twenty (120) months after
the Annuity Starting Date, the same level payments will be continued to
his named beneficiary for the remainder of the one hundred twenty (120)
month period.
(b) Level monthly payments for the Participant's life, with the
provision that after his death such benefit shall be continued in the
same amount, as specified by the Participant, during the life of his
Spouse (determined as of the Annuity Starting Date for the Participant's
benefits). If a Participant shall elect this option and his Spouse shall
die before the Participant does, but after payment of the Participant's
benefit has commenced, the Participant shall continue to receive only the
amount of income payable to him prior to the death of the contingent
annuitant.
If the Participant elects, within the 90-day period immediately preceding
the scheduled Annuity Starting Date for his retirement benefit, any optional
form of benefit provided under (b) above, then such form shall be treated as
the Section 6.3 joint and survivor annuity for purposes of determining the
surviving spouse annuity payable under Section 5.5 should the Participant die
before the Annuity Starting Date.
Any election of an optional form of benefit under this Section 6.4 must be
a qualified election according to the provisions of Section 6.6.
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6.5 Explanation of Joint and Survivor Annuity and Other Benefit Options.
The Plan Administrator shall furnish to the Participant and his Spouse a writ-
ten explanation of the following: the terms and conditions of the Section 6.3
joint and survivor annuity, including the circumstances under which it will be
provided; the Participant's right to make, and the effect of, an election to
waive such joint and survivor annuity; the rights of the Participant's Spouse
with respect to such election; and the right to revoke an election and the
effect of such a revocation. The Plan Administrator shall furnish the written
explanation by a method reasonably calculated to reach the attention of the
Participant no less than 30 days and no more than 90 days before the Annuity
Starting Date.
After the written explanation is given, the Participant or his Spouse may
make written request for additional information. The Plan Administrator does
not need to comply with more than one such request by the Participant or his
Spouse. Upon receipt of the timely written request for additional information,
the Plan Administrator shall provide a written explanation in nontechnical lan-
guage which will explain the terms and conditions of the Section 6.3 joint and
survivor annuity and the financial effect upon the Participant's benefit (in
terms of dollars per benefit payment) of electing not to have benefits
distributed in accordance with such form. Such written explanation must be
personally delivered or mailed (first class mail, postage prepaid) to the
Participant or his Spouse within thirty (30) days after the date of the written
request.
The Plan Administrator shall also furnish to the Participant and his
Spouse a written explanation of the optional forms of retirement benefit
available under Section 6.4, including (i) the material features and relative
values of those options, in a manner that would satisfy the notice requirements
of Code Section 417(a)(3), and (ii) the right of the Participant and his Spouse
to defer distribution until the benefit is no longer immediately distributable.
The Plan Administrator shall furnish the written explanation by a method rea-
sonably calculated to reach the attention of the Participant and his Spouse no
less than 30 days and no more than 90 days before the Annuity Starting Date.
6.6 Benefit Elections. Any election of benefits made pursuant to this
ARTICLE VI shall be made in writing on forms prescribed by the Plan Adminis-
trator for that purpose. The revocation of a previously filed election shall
be made in a similar fashion. If a married Participant designates a contingent
annuitant on an election form and the contingent annuitant is not the Partici-
pant's Spouse, or if a married Participant elects to receive his benefits in
some form other than the Section 6.3 joint and survivor annuity, the designa-
tion shall be effective only if consented to in writing by the Participant's
Spouse. An election by a married Participant to receive benefit payments in a
form other than the Section 6.3 joint and survivor annuity shall also clearly
indicate that the Participant is electing to receive benefits in a form other
than the joint and survivor annuity and is thereby waiving that form of bene-
fit. Whenever an election must be consented to by the Participant's Spouse,
the consent must be in writing, must adcknowledge the effect of the election
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and the Spouse's consent thereto, and must be witnessed by a notary public. No
spousal consent shall be required if the Plan Administrator determines to its
satisfaction that the Spouse cannot be located or that there exists such other
circumstances preventing such consent that may be prescribed by applicable
Treasury regulations or rulings. The Plan Administrator may determine a Parti-
cipant's marital status in accordance with such reasonable procedures as it may
adopt from time to time.
6.7 Special Distribution Requirements. All distributions under this
ARTICLE VI shall be made in compliance with Code Section 401(a)(9), including
the minimum distribution incidental benefit requirements of section 1.401(a)
(9)-2 of the proposed Treasury regulations.
For purposes of this Section 6.7, the following definitions shall be in
effect:
(a) Applicable Life Expectancy means the Life Expectancy (or Joint
and Last Survivor Expectancy) calculated using the attained age of the
Participant (and his Designated Beneficiary for the Joint and Last Survivor
Expectancy) as of the Participant's (or the Designated Beneficiary's)
birthday in the applicable calendar year, reduced by one for each calendar
year which has elapsed since the date such Life Expectancy was last
calculated. If such Life Expectancy is being recalculated, then the
Applicable Life Expectancy shall be the Life Expectancy so recalculated.
The applicable calendar year shall be the year in which the Participant
attains age 70 1/2 or, if Life Expectancy is being recalculated, each
succeeding calendar year.
(b) Designated Beneficiary means the individual who is designated as
the beneficiary under the Plan in accordance with Code Section 401(a)(9)
and the regulations thereunder.
(c) Distribution Calendar Year means a calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains the Partici-
pant's Required Beginning Date. For distributions beginning after the
Participant's death, the first Distribution Calendar Year is the calendar
year in which distributions are required to begin pursuant to this Section
6.7.
(d) Joint and Last Survivor Expectancy means the joint and last
survivor expectancy calculated using the attained age of the Participant
(and Designated Beneficiary) as of the Participant's (and Designated
Beneficiary's) birthday in the applicable calendar year. The applicable
calendar year is the year in which the Participant attains age 70 1/2;
however, if annuity payments commence before the Participant's Required
Beginning Date, the applicable calendar year is the year such payments
commence. Joint and Last Survivor Expectancy is computed by use of the
expected return multiples in Tables V and VI of section 1.72-9 of the
Treasury regulations.
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(e) Life Expectancy means the life expectancy calculated using the
attained age of the Participant (or Designated Beneficiary) as of the
Participant's (or Designated Beneficiary's) birthday in the applicable
calendar year. The applicable calendar year shall be the year in which the
Participant attains age 70 1/2; however, if annuity payments commence
before the Required Beginning Date, the applicable calendar year shall be
the year such payments commence. Life Expectancy is computed by use of
the expected return multiples in Tables V and VI of section 1.72-9 of the
Treasury regulations. The Life Expectancy of a nonspouse Beneficiary may
not be recalculated.
The following requirements of this Section 6.7 shall take precedence over
any inconsistent provisions of this Plan:
(1) The entire interest of a Participant must be distributed or begin to
be distributed no later than the Participant's Required Beginning Date.
(2) Subject to the joint and survivor annuity requirements of Section
6.3, distributions may only be made, as of the first Distribution Calendar
Year, over one of the following periods (or combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the Life Expectancy
of the Participant, or
(d) a period certain not extending beyond the Joint and Last
Survivor Expectancy of the Participant and the Designated
Beneficiary.
(3) The amount to be distributed each year shall be determined as follows:
(a) Annuity distributions must be paid in periodic payments made
at intervals not longer than one year.
(b) The distribution period must be over a life (or lives) or
over a period certain not longer than a Life Expectancy (or
Joint and Last Survivor Expectancy) described in Section
401(a)(9)(A)(ii) or 401(a)(9)(B)(iii) of the Code, whichever
is applicable.
(c) There shall no be recalculation of Life Expectancy (or Joint
and Last Survivor Expectancy) for purposes of determining
the period certain.
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(d) Once payments have begun over a period certain, the period
certain may not be lengthened even if the period certain is
shorter than the maximum permitted.
(e) Payments must be nonincreasing or increase only as follows:
(i) with any percentage increase in a specified and generally
recognized cost-of-living index;
(ii) to the extent of the reduction to the amount of the
Participant's payments to provide for a survivor benefit
upon death, but only if the Designated Beneficiary whose
life was being used to determine the distribution period
described in subparagraph (2) above dies and the payments
continue otherwise in accordance with such subparagraph
(2) over the life of the Participant;
(iii) to provide cash refunds of employee contributions upon
the Participant's death; or
(iv) because of an increase in benefits under the Plan.
(f) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years), the amount which must be
distributed on or before the Participant's Required Beginning
Date shall be the payment which is required for one payment
interval. The second payment need not be made until the end of
the next payment interval even if that payment interval ends in
the next calendar year. Payment intervals are the period for
which payments are received, e.g., bimonthly, monthly, semi-
annually, or annually.
(4) The following additional provisions shall be applicable to annuities
purchased after December 31, 1988:
(a) Unless the Participant's Spouse is the Designated Beneficiary,
if the Participant's interest is being distributed in the form
of a period certain annuity without a life contingency, the
period certain as of the beginning of the first Distribution
Calendar Year may not exceed the applicable period determined
using the table set forth in Q&A A-5 of section 1.401(a)(9)-2 of
the proposed Treasury regulations.
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<PAGE>
(b) If the Participant's interest is being distributed in the form
of a joint and survivor annuity for the joint lives of the Parti-
cipant and a nonspouse Beneficiary, annuity payments to be made
on or after the Participant's Required Beginning Date to the
Designated Beneficiary after the Participant's death must not at
any time exceed the applicable percentage of the annuity payment
for such period that would have been payable to the Participant
using the table set forth in Q&A A-6 of section 1.401(a)(9)-2 of
the proposed Treasury regulations.
(c) If payment under an annuity which complies with paragraph (3)
above begins prior to January 1, 1989, the minimum distribution
requirements in effect as of July 27, 1987 shall apply to distri-
butions from this Plan, regardless of whether the annuity form
of payment is irrevocable. This transitional rule also applies
to deferred annuity contracts distributed to or owned by the
Employee prior to January 1, 1989, unless additional contribu-
tions are made under the Plan by the Employer with respect to
such contract.
(d) If the form of distribution is an annuity made in accordance
with this subparagraph (4), any additional benefits accruing to
the Participant after his Required Beginning Date shall be dis-
tributed as a separate and identifiable component of the annuity
beginning with the first payment interval ending in the calendar
year immediately following the calendar year in which such
amount accrues.
(5) If the Participant dies after distribution of his interest has begun
on or after his Required Beginning Date, the remaining portion of
such interest will continue to be distributed at least as rapidly as
under the method of distribution being used prior to the Partici-
pant's death. However, should distribution in the form of an annuity
irrevocably commence to the Participant before the Required Beginning
Date, then the date such annuity distribution actually commences
shall be treated as the Required Beginning Date under these distribu-
tion provisions, and following the Participant's death the annuity
payments must continue to be made at the same periodic interval for
the remainder of the annuity period.
(6) If the Participant dies before distribution of his interest begins on
his Required Beginning Date, distribution of the Participant's entire
interest shall be completed by December 31 of the calendar year
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containing the fifth anniversary of the Participant's death, except
to the extent that an election is made to receive distributions in
accordance with the followin provisions:
(a) If any portion of the Participant's interest is payable to a
Designated Beneficiary, then distributions may be made over the
life of the Designated Beneficiary or over a period certain not
greater than his Life Expectancy, with such distribution to
commence on or before December 31 of the calendar year immedi-
ately following the calendar year in which the Participant died.
(b) If the Designated Beneficiary is the Participant's surviving
Spouse, the date distributions are required to begin in accor-
dance with (a) above shall not be earlier than the later of (i)
December 31 of the calendar year immediately following the
calendar year in which the Participant died and (ii) December
31 of the calendar year in which the Participant would have
attained age 70 1/2.
(7) If the Participant has not made an election under paragraph (6) prior
to his death, then his Designated Beneficiary must elect the method
of distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin under
paragraph (6) or (ii) December 31 of the calendar year containing the
fifth anniversary of the date of the Participant's death. If the
Participant has no Designated Beneficiary, or if the Designated Bene-
ficiary does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant's
death.
(8) If the surviving Spouse dies after the Participant, but before
payments to such Spouse begin, then the provisions of paragraph (6),
with the exception of clause (b) thereof, shall be applied as if the
surviving Spouse were the Participant. For this purpose, the distri-
bution of a Spouse's interest is considered to begin on the date
distribution is required to begin to the surviving Spouse pursuant to
paragraph (6).
6.8 Suspension of Benefits. If a former Participant begins to receive
benefits under this Plan and thereafter resumes active employment with the
Employer or any Affiliate, payment of his benefits shall be suspended during
the period of such active employment in the manner provided in this Section
6.8. Should a separated Participant with a vested benefit that is not yet in
pay status resume active employment with the Employer or an Affiliate, the
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benefit suspension provision of this Section 6.8 shall be implemented in the
event such individual's benefits come into pay status during that period of
active employment.
A Participant shall be considered to have resumed active employment if he
completes at least forty (40) Hours of Service in any calendar month or
receives Earnings from the Employer or an Affiliate for Hours of Service ren-
dered on eight (8) or more days in any calendar month. The Plan Administrator
shall, by personal delivery or first class mail, notify any affected Employee
of such suspension during the first month of the suspension period and shall
provide the Employee with an explanation of the provisions of this Section 6.8
and its applicability to such Employee. Such notice shall describe the reasons
for the suspension of benefits and shall notify the Employee of his claim
rights under Section 9.4.
Upon the Participant's subsequent termination of employment, his benefits
shall be recalculated in accordance with the provisions of Section 5.8(d).
6.9 Payment of Death Benefits. Death benefits (if any) shall be paid in
accordance with Sections 5.4 and 5.5 of the Plan, subject to the distribution
requirements of Section 6.7.
6.10 Payments to Disabled. If a person entitled to any payment under the
Plan shall be under a legal disability, the Plan Administrator, in its sole and
absolute discretion, may direct the Trustee to make any such payment in any one
or more of the following ways: (a) directly to such person; (b) to his legal
guardian or conservator; or (c) to his spouse or to any other person charged
with the legal duty of his support.
6.11 Direct Rollovers. Notwithstanding any provision of this Plan to the
contrary that would otherwise limit a Distributee's election under this Plan,
a Distributee shall have the right, exercisable in accordance with the procedure
established by the Plan Administrator in compliance with Code Section 402, to
have all or any portion of an Eligible Rollover Distribution from this Plan
paid as a Direct Rollover to an Eligible Retirement Plan designated by such
Distributee.
6.12 Underpayment or Overpayment of Benefits. Should benefits be under-
paid or overpaid by reason of any misstatement or computation error, there
shall be no liability for any more than the correct benefit sums under the
Plan. Overpayments may be deducted from future payments under the Plan, and
underpayments may be added to future payments under the Plan.
A Participant or beneficiary may elect to repay in a lump sum any overpayment
in lieu of receiving reduced benefits under the Plan.
6.13 Unclaimed Amounts: Notice. Neither the Employer, the Plan
Administrator nor the Trustee shall be obliged to search for, or ascertain the
whereabouts of, any Participant or beneficiary. The Plan Administrator shall,
by certified or registered mail addressed to the Participant's or beneficiary's
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<PAGE>
last known address of record with the Plan Administrator or the Employer,
notify any Participant or beneficiary that he is entitled to a distribution
under this Plan. In the event that the Participant or beneficiary shall make
no claim for benefits or shall fail to make his correct address known, after
two (2) years the Plan Administrator may, in its sole discretion, cancel the
Participant's Accrued Benefit. In the event that the former Participant (or
beneficiary) shall subsequently make a valid claim for benefits under the Plan,
the Plan Administrator shall restore the Participant's Accrued Benefit.
ARTICLE VII
INALIENABILITY OF BENEFITS
7.1 No Assignment Permitted. No Participant or beneficiary, and no
creditor of a Participant or beneficiary, shall have any right to assign,
pledge, hypothecate, anticipate or in any way create a lien upon the Trust
Fund. All payments to be made to Participants or their beneficiaries shall be
made only upon their personal receipt or endorsement, except as provided in
Section 6.10, and no interest in the Trust Fund shall be subject to assignment
or transfer or otherwise be alienable, either by voluntary or involuntary act
or by operation of law or equity, or subject to attachment, execution, garnish-
ment, sequestration, levy or other seizure under any legal, equitable or other
process, or be liable in any way for the debts or defaults of Participants and
beneficiaries. This Section 7.1 shall not preclude arrangements for the with-
holding of taxes from benefit payments, arrangements for the recovery of
benefit overpayments, arrangements for the transfer of benefit rights to
another plan, or arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided that
such arrangement is not part of an arrangement constituting an assignment or
alienation). Additionally, this Section shall not preclude arrangements for
the distribution of the benefits of a Participant or beneficiary pursuant to
the terms and provisions of a Qualified Domestic Relations Order in accordance
with the following provisions of this ARTICLE VII.
7.2 Qualified Domestic Relations Orders. A Qualified Domestic Relations
Order is any judgment, decree, or order (including an order approving a
property settlement agreement) which relates to the provision of child support,
alimony, or marital property rights to a spouse, child, or other dependents of
a Participant and which is entered or made pursuant to the domestic relations
or community property laws of any State and which creates or recognizes the
right of an "alternate payee" to receive all or a portion of the benefits pay-
able with respect to a Participant under this Plan or assigns to an "alternate
payee" the right to receive all or a portion of such benefits. For purposes of
this ARTICLE VII, an "alternate payee" is the Spouse, former Spouse, child or
other dependent of a Participant who is recognized by a Qualified Domestic
Relations Order as having the right to receive all or a portion of the benefits
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<PAGE>
payable under the Plan with respect to the Participant. In accordance with
Code Section 414(p)e, a judgment, decree or order (hereinafter collectively
referred to as an "order") shall not be treated as a Qualified Domestic Rela-
tions Order unless it satisfies all of the following conditions:
(a) The order clearly specifies the name and last known mailing
address (if any) of the Participant and the name and last known mailing
address of each alternate payee covered by the order, the amount or
percentage of the Participant's benefits to be paid to each alternate payee
or the manner in which such amount or percentage is to be determined, and
the number of payments or period to which such order applies.
(b) The order specifically indicates that it applies to the Plan.
(c) The order does not require the Plan to provide any type or form
of benefit, or any option, not otherwise provided under the Plan, and it
does not require the Plan to provide increased benefits (determined on the
basis of actuarial value).
(d) The order does not require the payment of benefits to an
alternate payee which are required to be paid to another alternate payee
under another order previously determined to qualify as a Qualified
Domestic Relations Order.
7.3 Early Commencement of Payments to Alternate Payees. An order will not
be treated as a Qualified Domestic Relations Order and will not be honored by
the Plan Administrator or the Trustee if the order requires the Plan to provide
any type or form of benefit or any option not otherwise provided under the
Plan. An order requiring payment to an alternate payee before a Participant
has separated from employment may nonetheless qualify as a Qualified Domestic
Relations Order as long as the order does not require payment prior to the
Participant's "earliest retirement age," which is the earliest date on which
the Participant could elect to receive retirement benefits pursuant to ARTICLE
IV. If the order requires payments to commence after a Participant's earliest
retirement age but prior to a Participant's actual retirement, the amounts of
the payments must be determined as if the Participant had retired on the date
on which such payments are to begin under such order, but taking into account
only the present actuarial value of the Participant's Accrued Benefit at that
time and not taking into account the present actuarial value of any Employer
subsidy for early retirement which may at any time be provided by the Plan. The
order may call for the payment of benefits to an alternate payee in any form in
which benefits may be paid under the Plan to the Participant, other than in the
form of a joint and survivor annuity with respect to the alternate payee and
his or her spouse. For purposes of calculating the present actuarial value of
an Accrued Benefit under this Section, the actuarial factors and assumptions
used by the Plan Administrator in making Actuarial Equivalency determinations
shall be used.
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Notwithstanding the foregoing, the date on which a Qualified Domestic
Relations Order is determined to be qualified by the Plan Administrator shall
be deemed to be the Participant's "earliest retirement age" if the actuarial
present value of the benefit awarded to the Participant's spouse by the order
is less than $3,500 and the order directs that payment be made in a lump sum
once such determination is made.
7.4 Processing of Qualified Domestic Relations Orders. The Plan
Administrator shall promptly notify the Participant and any alternate payee who
may be entitled to benefits pursuant to a previously received Qualified
Domestic Relations Order of the receipt of any order which could qualify as a
Qualified Domestic Relations Order. At the same time, the Plan Administrator
shall advise the Participant and any alternate payees (including the alternate
payee designated in the order) of the provisions of this Section relating to
the determination of the qualified status of such orders. Within a reasonable
period of time after receipt of a copy of the order, the Plan Administrator
shall determine whether the order is a Qualified Domestic Relations Order and
notify the Participant and each alternate payee of its determination. The
determination of the status of an order as a Qualified Domestic Relations Order
shall be made in accordance with such uniform and nondiscriminatory rules and
procedures as may be adopted by the Plan Administrator from time to time. If
benefits are presently being paid with respect to a Participant named in an
order which may qualify as a Qualified Domestic Relations Order or if benefits
become payable after receipt of the order, the Plan Administrator shall notify
the Trustee to segregate and hold the amounts which would be payable to the
alternate payee or payees designated in the order if the order is ultimately
determined to be a Qualified Domestic Relations Order. If the Plan Administra-
tor determines that the order is a Qualified Domestic Relations Order within
eighteen (18) months after receipt of the order, the Plan Administrator shall
instruct the Trustee to pay the segregated amounts (plus any earnings thereon)
to the alternate payee specified in the Qualified Domestic Relations Order. If
within the same eighteen (18) month period the Plan Administrator determines
that the order is not a Qualified Domestic Relations Order or if the status of
the order as a Qualified Domestic Relations Order is not resolved, the Plan
Administrator shall instruct the Trustee to pay the segregated amounts (plus
any earnings thereon) to the person or persons who would have been entitled to
such amounts if the order had not been entered. If the Plan Administrator
determines that an order is a Qualified Domestic Relations Order after the
close of the eighteen (18) month period mentioned above, the determination
shall be applied prospectively only. The determination of the Plan Administra-
tor as to the status of an order as a Qualified Domestic Relations Order shall
be binding and conclusive on all interested parties, present and future, sub-
ject to the claims review provisions of Section 9.4.
7.5 Responsibility of Alternate Payees. Any person claiming to be an
alternate payee under a Qualified Domestic Relations Order shall be responsible
for supplying the Plan Administrator with a certified or otherwise authenti-
cated copy of the order and any other information or evidence that the Plan
Administrator deems necessary in order to substantiate such individual's claim
or the status of the order as a Qualified Domestic Relations Order.
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ARTICLE VIII
FUNDING
8.1 Contributions to the Trust Fund and Payment of Expenses. The Employer
shall pay the entire cost of normal benefits under the Plan, subject to the
Employer's right to terminate or amend the Plan. The Employer shall contribute
to the Trust Fund such amounts as it shall determine after consultation with
the Actuary or receipt of the Actuary's report in a manner consistent with the
objectives of the Plan and any applicable requirements of law. Forfeitures
arising under the Plan due to severance of employment before complete vesting
shall be applied to reduce the cost of the Plan and not to increase the bene-
fits otherwise payable to Participants. All expenses of the Plan shall be,
paid from the Trust Fund unless paid directly by the Employer, and the benefits
to be paid under the Plan to Participants, former Participants and their bene-
ficiaries shall be paid from the Trust Fund and not directly by the Employer.
The Employer shall not be required to make (but may make) contributions to the
Trust Fund in any amount which is greater than the amount required to be con-
tributed for the relevant Plan Year pursuant to Code Section 412. The timing
of all contributions shall be entirely discretionary with the Employer, to the
extent permitted by Code Section 412. Except as otherwise provided herein,
prior to the satisfaction of all liabilities under the Plan, Employer contribu-
tions, once made, are not refundable.
8.2 Conditional Nature of Contributions. Any contribution made to this
Plan by the Employer because of a mistake of fact shall upon request be returned
to the Employer within one (1) year after the date of the contribution. In
addition, every contribution made by the Employer is conditional on its
deductibility. If the Internal Revenue Service determines that all or part of
a contribution is not deductible, the contribution (to the extent that it is
not deductible) shall upon request be refunded to the Employer within one (1)
year after the date of the disallowance. If the Internal Revenue Service
initially determines that the Plan is not qualified under the applicable
provisions of the Code, all Employer contributions shall be returned to the
Employer. Upon the return of those contributions, the Plan shall terminate and
the Trustee and the Plan Administrator shall be discharged from all further
obligations under the Plan.
8.3 Appointment of Actuary. The Employer shall appoint the Actuary, who
shall make the necessary actuarial computations required in order to administer
the Plan. The Employer, the Plan Administrator and the Trustee may rely upon
the certification of the Actuary regarding the amount of contributions required
of the Employer, the Actuarial Equivalence of any amounts payable hereunder and
any other matters of actuarial computation necessary to carry out the provisions
of the Plan. The determination of the Actuary shall be binding and conclusive
upon all persons entitled to benefits under the Plan.
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ARTICLE IX
ADMINISTRATION
9.1 Plan Administrator. The Employer shall be the Plan Administrator,
but it may delegate its duties as such to a committee appointed in accordance
with Section 9.5.
9.2 Allocation of Fiduciary Responsibility. The Plan Administrator is
named fiduciary with respect to the administration of the Plan. It shall not
be responsible for any fiduciary functions or other duties assigned to the
Trustee pursuant to this Plan or the Trust Agreement.
9.3 Powers of the Plan Administrator. The Plan Administrator shall be
empowered to perform the administrative duties described in this Plan and shall
have all powers necessary to enable it to properly carry out such duties.
Without limiting the generality of the foregoing, the Plan Administrator shall
have the power to construe and interpret this Plan, to hear and resolve claims
relating to this Plan, and to decide all questions and disputes arising under
this Plan. The Plan Administrator shall have full power and authority to
determine the eligibility of employees to participate in the Plan, the service
(whether Continuous Service or Credited Service) to be credited to the
Employees, the status and rights of a Participant, the identity of the benefi-
ciary or beneficiaries entitled to receive any benefits payable hereunder on
account of the death of a Participant, and the amount of the benefits (if any)
to which any Participant or his Spouse or beneficiary is entitled under the
Plan. Except as is otherwise provided hereunder, the Plan Administrator shall
determine the manner and time of payment of benefits under this Plan. All
benefit disbursements by the Trustee shall be made upon the instructions of the
Plan Administrator. The decision of the Plan Administrator upon all matters
within the scope of its authority shall be binding and conclusive upon all
persons. The Plan Administrator shall file all reports and forms lawfully
required to be filed by the Plan Administrator with any governmental agency or
department, federal or state, and shall distribute any forms, reports, state-
ments or plan descriptions lawfully required to be distributed to Participants
and others by any governmental agency or department, federal or state. The
Plan Administrator shall keep itself advised with respect to the investment
of the Trust Fund and shall, not less frequently than annually, report to the
Employer regarding the investment and reinvestment of the Trust Fund. The
Plan Administrator shall have power to direct specific investments of the Trust
Fund only where such power is expressly conferred by this Plan and only to the
extent described in this Plan. All other investment duties shall be the
responsibility of the Trustee.
9.4 Claims. Should any Participant or beneficiary believe he is entitled
to a benefit from the Plan which differs from the benefit determined by the
Plan Administrator, such Participant or beneficiary may file a written claim
with the Plan Administrator. Within ninety (90) days after receipt of such
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claim (or if an extension of time for processing the claim is required, within
one hundred eighty (180) days after receipt of such claim), the Plan Adminis-
trator shall notify the claimant in writing as to whether the claim has been
granted. If the claimant has not received written notice of such decision
within the ninety (90) day period (or a one hundred eighty (180) day period, if
an extension of time is required), the claimant shall regard his claim as
denied.
Any notice of denial of a claim shall be set forth in a manner calculated
to be understood by the claimant giving:
(a) the specific reason or reasons for the denial;
(b) the specific reference to the pertinent Plan provisions on which
the denial is based;
(c) 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
(d) appropriate information as to the steps to be taken if the Parti-
cipant or beneficiary wishes to submit his claim for review.
Any claimant (or his duly authorized representative) whose claim for
benefits is denied in whole or in part may appeal to the Plan Administrator for
a full and fair review of the decision by submitting to the Plan Administrator,
within sixty (60) days after receiving from the Plan Administrator written
notice of such denial, a written statement:
(a) requesting a review by the Plan Administrator of his claim for
benefits;
(b) setting forth all of the grounds upon which the request for
review is based and any facts in support thereof; and
(c) setting forth any issues or comments which the claimant deems
pertinent to his claim.
The Plan Administrator shall act upon each such claim within sixty (60)
days after receipt of the claimant's request for review by the Plan Administra-
tor, unless special circumstances require an extension of time for processing.
If such an extension is required, written notice of the extension shall be
furnished to the claimant within the initial sixty (60) day period, and a
decision shall be rendered as soon as possible, but not later than one hundred
twenty (120) days after receipt of the initial request for review. The Plan
Administrator shall make a full and fair review of each such claim and any
written materials submitted by the claimant in connection therewith, and the
Plan Administrator may require the claimant to submit such additional facts,
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documents, or other evidence as the Plan Administrator may, in its sole discre-
tion, deem necessary or advisable in making such a review. On the basis of its
review, the Plan Administrator shall make an independent determination of the
claimant's eligibility for benefits under the Plan. The decision of the Plan
Administrator on any benefit claim shall be final and conclusive upon all
persons.
In the event the Plan Administrator denies an appeal in whole or in part,
the Plan Administrator shall give written notice of such decision to the claim-
ant, setting forth in a manner calculated to be understood by the claimant the
specific reasons for such denial and specific reference to the pertinent Plan
provisions on which the decision of the Plan Administrator was based.
To the extent permitted by law, completion of the claims procedures
described in this Section shall be a mandatory precondition that must be
complied with prior to commencement of a legal or equitable action in connec-
tion with the Plan by a person claiming rights under the Plan or by another
person claiming rights through such a person. The Plan Administrator may, in
its sole discretion, waive these procedures as a mandatory precondition to such
an action.
9.5 Creation of Committee. The Employer may appoint a committee to
perform its duties as Plan Administrator by the adoption of appropriate Board
resolutions. The committee shall consist of at least two (2) members who shall
hold office at the pleasure of the Board. The committee members shall serve
without compensation but shall be reimbursed for all expenses by the Employer.
The committee shall conduct itself in accordance with the provisions of this
ARTICLE IX. The members of the committee may resign with thirty (30) days
notice in writing to the Employer and may be removed immediately at any time by
written notice from the Board.
9.6 Chairman and Secretary. The committee shall elect a chairman from
among its members and shall select a secretary who is not required to be a
member of the committee and who may be authorized to execute any document or
documents on behalf of the committee. The secretary of the committee or his
designee shall record all acts and determinations of the committee and shall
preserve and retain custody of all such records, together with such other docu-
ments as may be necessary for the administration of this Plan or as may be
required by law.
9.7 Appointment of Agents. The committee may appoint such other agents,
who need not be members of the committee, as it may deem necessary for the
effective performance of its duties, whether ministerial or discretionary, as
the committee may deem expedient or appropriate. The compensation of any
agents who are not Employees of the Employer shall be fixed by the committee
within any limitations set by the Board.
9.8 Majority Vote and Execution of Instruments. In all matters,
questions and decisions, the action of the committee shall be determined by
a majority vote of its members. They may meet informally or take any
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ordinary action without the necessity of meeting as a group. All instruments
executed by the committee shall be executed by a majority of its members or by
any member of the committee designated to act on its behalf.
9.9 Allocation of Responsibilities Among Committee Members. The
committee may allocate responsibilities among its members or designate other
persons to act on its behalf. Any allocation or designation, however, must be
set forth in writing and must be retained in the permanent records of the
committee.
9.10 Conflict of Interest. No member of the committee who is a Partici-
pant shall take any part in any action in connection with his participation as
an individual. Such action shall be voted or decided by the remaining members
of the committee.
9.11 Other Fiduciary Capacities. The members of the committee may also
serve in any other fiduciary capacity, and, specifically, all or some members
of the committee may serve as Trustee. Notwithstanding any other provision of
this Plan, if and so long as any two (2) members of the committee also serve as
Trustee, any provision of this Plan or the Trust Agreement which requires a
direction, certification, notification, or other communication from the Plan
Administrator to the Trustee shall be inapplicable. If and so long as any two
(2) members of the committee also serve as Trustee, any action taken by either
the committee or the Trustee shall be deemed to be taken by the appropriate
party.
ARTICLE X
SCOPE OF RESPONSIBILITY
10.1 Scope of Responsibility. The Employer, the Plan Administrator, the
investment manager and the Trustee shall perform the duties respectively
assigned to them under this Plan and the Trust Agreement and shall not be
responsible for performing duties assigned to others under the terms and
provisions of this Plan or the Trust Agreement. No inference of approval or
disapproval is to be made from the inaction of any party described above or the
employee or agent of any of them with regard to the action of any other such
party. The Employer, the Plan Administrator and the Trustee shall have author-
ity to employ advisors, legal counsel, accountants and investment managers in
connection with the administration of the Trust Fund, as set forth in the Trust
Agreement. To the extent permitted by applicable law, the Employer, the Plan
Administrator and the Trustee shall not be liable for complying with the direc-
tions of any advisors, legal counsel, accountants and investment managers
appointed pursuant to this Plan or the Trust Agreement. Persons, organizations
or corporations acting in a position of any fiduciary responsibility with
respect to the Plan or the Trust Fund may serve in more than one fiduciary
capacity. To the extent permitted by law, the Employer does hereby agree to
indemnify and hold harmless its employees, officers and directors who serve in
fiduciary capacities with respect to the Plan and the Trust Agreement from all
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loss, damage, or liability, joint or several, including payment of expenses in
connection with defense against any such claim, for their acts, omissions and
conduct, and for the acts, omissions and conduct of their duly appointed
agents, which acts, omissions, or conduct constitute or are alleged to consti-
tute a breach of their fiduciary or other responsibilities under the Act or any
other law, except for those acts, omissions, or conduct resulting from their
own willful misconduct, willful failure to act, or gross negligence; provided,
however, that if any party would otherwise be entitled to indemnification here-
under in respect of any liability and such party shall be insured against loss
as a result of such liability by any insurance contract or contracts, such party
shall be entitled to indemnification hereunder only to the extent by which the
amount of such liability shall exceed the amount thereof payable under such
insurance contract or contracts.
The Employer may obtain insurance covering itself and others for breaches
of fiduciary obligations under this Plan or the Trust Agreement to the extent
permitted by law, and nothing in the Plan or the Trust Agreement shall restrict
the rights. of any person to obtain such insurance for himself in connection
with the performance of his duties under this Plan or the Trust Agreement. No
bond shall be required of the Trustee unless required by law. The Trustee, the
Plan Administrator and the Employer do not in any way guarantee the Trust Fund
from loss or depreciation. The Employer does not guarantee the payment of any
money which may be or become due to any person from the Trust Fund, and the
liability of the Plan Administrator and the Trustee to make any payment here-
under at any and all times will be limited to the then available assets of the
Trust Fund.
10.2 Bonding. The Employer shall procure bonds for every "bondable
fiduciary" in an amount not less than ten percent (10%) of the amount of funds
handled and in no event less than One Thousand Dollars ($1,000.00), except the
Employer shall not be required to procure such bonds if the person is exempted
from the bonding requirement by law or regulation or if the Secretary of Labor
exempts the Trust from the bonding requirements. The bonds shall conform to
the requirements of the Act and regulations thereunder. For purposes of this
Section 10.2, the term "bondable fiduciary" shall mean any person who handles
funds or other property of the Trust Fund.
10.3 Prohibition Against Certain Persons Holding Positions. No person
who has been convicted of a felony shall be permitted to serve as a fiduciary,
officer, trustee, custodian, counsel, agent, or employee of this Plan or as a
consultant to this Plan unless permitted under the Act and regulations there-
under. The Plan Administrator shall ascertain to the extent practical that no
violation of this Section 10.3 occurs. In any event, no person knowingly shall
permit any other person to serve in any capacity which would violate this
Section 10.3.
ARTICLE XI
AMENDMENT, MERGER AND TERMINATION
11.1 Amendment. The Employer acting through the Board shall have the
right at any time, through a written instrument duly executed and acknowledged
by an authorized officer of the Employer and delivered to the Plan Administra-
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tor and the Trustee, to modify, alter or amend this Plan, in whole or in part,
prospectively or retroactively; provided, however, that the duties and
liabilities of the Plan Administrator and the Trustee hereunder shall not be
substantially increased without their written consent; and provided further
that the amendment shall not reduce any Participant's Accrued Benefit, calcu-
lated as of the date on which the amendment is adopted, or discriminate in
favor of Highly Compensated Employees. For purposes of this paragraph, a plan
amendment which has the effect of (1) eliminating or reducing an early retire-
ment benefit or a retirement-type subsidy, or (2) eliminating an optional form
of benefit with respect to benefits attributable to service before the
amendment shall be treated as reducing accrued benefits. In the case of a
retirement-type subsidy, the preceding sentence shall apply only with respect
to a Participant who satisfies (either before or after the amendment) the pre-
amendment conditions for the subsidy. In general, a retirement-type subsidy is
a subsidy that continues after retirement, but does not include a qualified
disability benefit, a medical benefit, a social security supplement, a death
benefit (including life insurance), or a plant shutdown benefit (that does not
continue after retirement age).
If the Plan is amended by the Board after it is adopted by an Affiliate,
unless otherwise expressly provided, it shall be treated as so amended by such
Affiliate without the necessity of any action on the part of the Affiliate.
11.2 Plan Merger or Consolidation. Subject to the restrictions noted in
this Section 11.2, the Employer reserves the right to merge or consolidate this
Plan with any other plan or to direct the Trustee to transfer the assets held
in the Trust Fund and/or the liabilities of this Plan to any other plan or to
accept a transfer of assets and liabilities from any other plan. In the event
of the merger or consolidation of this Plan and the Trust Fund with any other
plan, or a transfer of assets or liabilities to or from the Trust Fund to or
from any other such plan, then each Participant shall be entitled to a benefit
(if the Plan was then terminated) immediately after such merger, consolidation
or transfer that is equal to or greater than the benefit he would have been
entitled to receive immediately before such merger, consolidation or transfer
(if this Plan had then terminated).
11.3 Merger or Consolidation of Employer. The Plan shall not be auto-
matically terminated by the Employer's acquisition by or merger into any other
employer, but the Plan shall be continued after such acquisition or merger,
provided that the successor employer agrees to continue the Plan and to become
a party to the Trust Agreement. All rights to amend, modify, suspend, or
terminate the Plan shall be transferred to the successor employer, effective as
of the date of the merger.
11.4 Discontinuance and Termination of Plan. The Employer hopes and
expects to continue the Plan indefinitely. Nevertheless, the Employer reserves
the right to suspend, terminate, or completely discontinue contributions under
the Plan. The Pension Benefit Guaranty Corporation may also terminate the Plan
in accordance with Section 4042 of the Act.
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<PAGE>
A Participant who is included in the group of Participants deemed to be
affected by complete or partial termination of the Plan shall become one hundred
percent (100%) vested in his Accrued Benefit, unless he has incurred a Break in
Continuous Service of at least twelve (12) months and has not otherwise resumed
employment with the Employer or any Affiliate. Upon complete termination of the
Plan, no further Employees shall become Participants, and no further contri-
butions shall be made to the Plan except as required by any governmental agency
to which the Plan's termination is subject.
A Participant's recourse towards satisfaction of his right to his nonfor-
feitable Accrued Benefit shall be limited to the Plan's assets and the Pension
Benefit Guaranty Corporation.
The assets of the Plan that are available to provide benefits shall be
allocated and applied as of the effective date of termination of the Plan
according to the classifications and order of precedence provided under Title
IV of the Act and under any rules, regulations, interpretations or opinions
implementing such Title IV.
None of the assets of the Plan shall be paid to the Employer at any time,
except that, after the satisfaction of all liabilities under the Plan, any
assets remaining shall be paid to the Employer. No payment shall be made to
the Employer if it would contravene any provision of law.
11.5 Manner of Distribution. Upon termination of the Plan and allocation
of assets, the Plan Administrator may, in its sole and absolute discretion,
direct the Trustee to convert the Trust Fund into cash and liquidate it by
making distributions to Participants. Alternatively, the Plan Administrator
may direct the Trustee to hold the benefits in the Trust Fund until the persons
become eligible to receive benefits pursuant to the terms and provisions of
this Plan. Should the Plan Administrator elect to continue the Trust Fund, the
Employer shall be under no liability to make any further contributions or to
pay for the maintenance of the Trust Fund pending the deferred distribution of
benefits. If the Plan is liquidated, the Plan Administrator shall instruct the
Trustee to purchase nontransferable deferred annuities for each individual
entitled to benefits, with the monthly payment provided by the annuity, the
form of the annuity, and the date on which payments will commence under the
annuity to be determined in accordance with the preceding Sections of this
Plan. In the exercise of its discretion, the Plan Administrator may allow a
Participant to receive an Actuarially Equivalent lump sum payment in lieu of an
annuity benefit. In calculating the value of any lump sum payment to be made
to a Participant, the interest rates used will be the interest rates used for
making Actuarial Equivalency determinations for purposes of this Plan, provided
that such rates shall not exceed the rates then used by the Pension Benefit
Guaranty Corporation for purposes of valuing a lump sum benefit upon plan
termination.
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Notwithstanding anything herein to the contrary, the Employer and the Plan
Administrator shall not instruct the Trustee to liquidate the Trust Fund prior
to the approval of the termination by the Pension Benefit Guaranty Corporation.
11.6 Limitation of Employer Liability. The adoption of this Plan is
strictly a voluntary undertaking on the part of the Employer and shall not be
deemed to constitute a contract between the Employer and any Employee or Parti-
cipant or to be consideration for, an inducement to, or a condition of the
employment of any Employee. A Participant, Employee or beneficiary shall not
have any right to retirement or other benefits except to the extent provided
herein, and, if the Plan is terminated, such individuals shall be entitled to
receive only that portion of the Trust Fund properly allocated to them pursuant
to Section 11.5. If the Plan is terminated, the Employer shall not be required
to make any additional contributions to fund the benefits called for by the
Plan. After the allocations called for by Section 11.5, the Employer shall be
relieved of all further liability to any Participant, Employee or beneficiary.
ARTICLE XII
GENERAL PROVISIONS
12.1 Limitation on Participant's Rights. Participation in the Plan shall
not give any Employee the right to be retained in the Employer's employ or any
right or interest in the Trust Fund other than as herein provided. The Employer
reserves the right to dismiss any Employee at any time and for any reason, with
or without cause.
12.2 Exclusive Benefit. Except as otherwise provided herein or in the
Trust Agreement, it shall be impossible for any part of the Trust Fund to be
used for or diverted to purposes other than for the exclusive benefit of
Participants and their beneficiaries, except that payment of taxes and adminis-
tration expenses may be made from the Trust Fund as provided in the Trust
Agreement.
12.3 Uniform Administration. Whenever in the administration of the Plan
any action is required by the Plan Administrator, such action shall be uniform
in nature as applied to all persons similarly situated, and no such action
shall be taken which will discriminate in favor of Highly Compensated Employees.
12.4 Heirs and Successors. All of the provisions of this Plan shall be
binding upon all persons who shall be entitled to any benefits hereunder, and
their heirs and legal representatives.
12.5 Assumption of Qualification. Unless and until advised to the
contrary, the Trustee may assume that the Plan is a qualified pension plan
under the provisions of the Code relating to such plans, and that the Trust
Fund is entitled to exemption from income tax under such provisions.
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IN WITNESS WHEREOF, the Employer has caused this amended and restated
Plan to be executed by its duly authorized representative on this 23rd day
of December, 1994.
BURR-BROWN CORPORATION
By: JOHN L. CARTER (Signature on file)
Title: Executive VP and CFO
<PAGE>
BURR-BROWN CORPORATION
EMPLOYEE RETIREMENT PLAN
PLAN AMENDMENT
The Burr-Brown Corporation Employee Retirement Plan, as restated in its
entirety effective January 1, 1988 (the "Plan"), is hereby amended, effective
as of January 1, 1995, as set forth below. All capitalized terms in this Plan
Amendment shall, unless specifically defined herein, have the meanings assigned
to such terms in the Plan.
1. The following interest rate and mortality shall be used to calculate
the Present Value of each Participant's Accrued Benefit for purposes of deter-
mining whether wuch Present Value exceeds Three Thousand Five Hundred Dollars
($3,500.00) and calculating the amount payable upon any lump sum distribution
with respect to an Accrued Benefit under the Plan:
Interest Rate: the annual yield for thirty (30)-year Treasury
constant maturities, as reported in Federal Reserve Statistical Release
G.13 and H.15, for the calendar month preceding the first day of the Plan
Year in which the Present Value is to be determined or in which the lump
sum distribution is to be made.
Mortality Table: the 1983 Group Annuity Mortality Table for
Males.
In no event, however, shall the Present Value of any Participant's
Accrued Benefit calculated on the basis of such interest rate and mortality
table be less than the minimum present value required under Section 417(e)
of the Internal Revenue Code, as amended by the Retirement Protection Act
of 1994 (RPA).
2. This Plan Amendment shall be in effect for all lump sum distributions
made under the Plan on or after January 1, 1995. Pursuant to the provisions of
Section 767 of the Retirement Protection Act of 1994, the Present Value method
of calculation prescribed by this Plan Amendment shall not be deemed to
constitute a reduction in the Accured Benefit of any Participant which would
otherwise be prohibited by Section 411(d)(6) of the Internal Revenue Code.
Accordingly, the Present Value of each Participant's Accrued Benefit as
determined under the Plan immediately prior to the effective date of the Plan
Amendment shall not be preserved.
3. Except as modified in this Plan Amendment, all the terms and
conditions of the Plan shall continue in effect.
IN WITNESS WHEREOF, Burr-Brown Corporation has caused this instrument to
be executed on its behalf by its duly authorized officer on this 23rd day of
December, 1994.
BURR-BROWN CORPORATION
By: John L. Carter (signature on file)
Executive VP and CFO
EXHIBIT 10.27
LEASE AMENDMENT
THIS LEASE AMENDMENT dated as of December 21, 1994 ("Amendment") amends
Schedule No. 001 ("Schedule") to the Master Lease Agreement dated as of June
20, 1990 ("Agreement"), such Schedule and Agreement, as the same may have been
heretofore amended or otherwise modified, are hereinafter collectively referred
to as the ("Lease") between GENERAL ELECTRIC CAPITAL CORPORATION ("Lessor") and
BURR-BROWN CORPORATION ("Lessee"). Capitalized terms not defined herein shall
have the meanings assigned to them in the Lease.
W I T N E S S E T H
___________________
WHEREAS, the term of the Lease is presently scheduled to expire on June 19,
1995 ("Primary Term Expiration Date"); and
WHEREAS, Lessee desires to amend certain terms of the Lease pursuant to the
terms set forth herein; and
WHEREAS, Lessor is willing to consent to such amendment pursuant to the
terms set forth herein;
NOW, THEREFORE, in consideration of the above premises and the mutual
promises contained herein, as well as other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Commencing on December 21, 1994 the Primary Term Expiration Date shall be
amended to be January 19, 1998, thereby increasing the remaining Lease Term to
thirty six (36) months ("New Term") on and subject to the same terms and
conditions as set forth in the Lease, except as otherwise expressly provided
herein:
(a) During the New Term, Lessee hereby agrees to pay to Lessor rent in
the total principal sum of One Million Two Hundred Eighty Eight Thousand
Six Hundred Twenty Three and 88/100 Dollars ($1,288,623.88), with interest
thereon, from the date upon which the New Term commences through and
including the last day of the New Term, as a fixed interest rate of eight
and 96/100 percent (8.96%), to be paid in thirty six (36) consecutive
monthly installments of principal and interest of Forty Thousand Nine
Hundred Fifty Four and 20/100 Dollars ($40,954.20) (each a "Periodic
Installment") and a final installment equal to the GPO Amount (as that term
is described below). The Periodic Installments have been calculated on the
basis of a 360 day year of twelve thirty-day months. Each Periodic
Installment may, at the option of the Lessor, be Calculated and applied on
the assumption that such installment would be made on its due date. The
first Periodic Installment shall be due and payable on January 20, 1995 and
the following Periodic Installments shall be payable on the same day of
each month thereafter throughout the New Term.
(b) During the New Term, the Stipulated Loss Value and Termination Value
of the Renewal Equipment as of the applicable calculation date shall be
equal to (i) the sum of (A) all then remaining Periodic Installment
payments (which would have come due over the balance of the New Term
without any termination thereof), and (B) the GPO Amount (set forth
hereinbelow), (ii) discounted to its then present value using a discount
rate equal to the one year U.S. Treasury Constant Maturity rate in effect
as of the date on which the Lease either terminates or the Casualty occurs,
as published in the Federal Reserve Statistical Release H.15 (519).
Furthermore, in connection with any default or other termination
<PAGE>
of the Lease prior to the scheduled expiration of the New Term, any
surplus net proceeds received by Lessor from the sale, release or other
disposition of the Equipment after satisfaction of all amounts payable
by Lessee under the Lease shall be remitted to Lessee (except to the
extent as may be otherwise required by applicable law).
(c) Upon expiration of the New Term, Lessee shall purchase for cash
consideration all (but not less than all) of the Equipment for an amount
equal to One Dollar ($1.00) (the "GPO Amount"), plus all applicable
sales, use and other taxes thereon, ON AN "AS IS, WHERE IS" BASIS WITHOUT
RECOURSE TO, OR WARRANTY BY, LESSOR OF ANY KIND, NATURE OR DESCRIPTION
WHATSOEVER. All other purchase options or renewal options are hereby
deleted in their entirety.
(d) In order to secure payment and performance of Lessee's obligations
hereunder, Lessee hereby grants Lessor a security interest in (i) the
Equipment and in all goods that are or may hereafter become accessions
thereto, and (ii) all proceeds of such property, including but not
limited to insurance proceeds.
(e) Any provisions of the Lease relating to Early Termination, Purchase
Option or Terminal Rent Adjustment Clause shall be deleted in their
entirety.
2. Lessee hereby represents and warrants that all of the representations and
warranties included in the Lease (except as set forth in Article XV(b) of the
Lease) are true and correct as of the date first above written.
3. Except as expressly modified herein, all terms and provisions of the
Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute and deliver this Amendment as of the date first
above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION BURR-BROWN CORPORATION
By: ____________________________ By: _____________________________
(Signature on File) (Signature on File)
Title: Portfolio Manager Title: EVP & CFO
EXHIBIT 10.29
BURR-BROWN CORPORATION
1993 STOCK INCENTIVE PLAN
(As Amended and Restated through February 28, 1994)
PREAMBLE
The BURR-BROWN CORPORATION previously adopted the Burr-Brown Research
Corporation Incentive Stock Plan of 1981 that was amended and restated in 1983.
That plan shall be referred to as the "Original Plan." The Burr-Brown Corpora-
tion 1993 Stock Incentive Plan ("Plan") shall serve as the successor to the
Original Plan and will become effective as provided in Section 7 of this
Article One. On February 11, 1994, the Plan was amended and restated to (i)
impose a limitation on the maximum number of shares for which any one partici-
pant in the Plan may be granted Stock Options and direct Stock issuances over
the remaining term of the Plan and (ii) establish an Automatic Option Grant
Program for the non-employee members of the Board.
ARTICLE ONE
GENERAL
1. Definitions. As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the contrary:
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 "Change in Control" shall mean a change in ownership or control of
the Company effected through either of the following transactions:
1.2.1 any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is con-
trolled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pur-
suant to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders
to accept; or
1.2.2 there is a change in the composition of the Board over
a period of twenty-four (24) consecutive months or less such that
a majority of the Board members (rounded up to the next whole
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number) ceases, by reason of one or more proxy contests for the
election of Board members, to be comprised of individuals who
either (A) have been Board members continuously since the beginning
of such period or (B) have been elected or nominated for election
as Board members during such period by at least a majority of the
Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board.
1.3 "Code" shall mean the Internal Revenue Code of 1986.
1.4 "Committee" shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan.
1.5 "Company" shall mean Burr-Brown Corporation, a Delaware corporation.
1.6 "Corporate Transaction" shall mean any of the following stockholder-
approved transactions to which the Company is a party:
1.6.1 a merger, consolidation or other reorganization in
which the Company is not the surviving entity, except for a trans-
action the principal purpose of which is to change the state in
which the Company is incorporated,
1.6.2 the sale, transfer or other disposition of all or sub-
stantially all of the assets of the Company in complete liquidation
or dissolution of the Company, or
1.6.3 any reverse merger in which the Company is the surviv-
ing entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding securities are transferred to a person or persons dif-
ferent from those who held such securities immediately prior to
such merger.
1.7 "Fair Market Value" shall mean the closing selling price per share
of Stock on the date in questions, as reported by the National Association of
Securities Dealers on the NASDAQ National Market. If there is no such reported
price on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
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1.8 "Hostile Take-Over" shall mean a change in ownership of the Company
effected through the following transaction:
(i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is con-
trolled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pur-
suant to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders
to accept, and
(ii) more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer are accepted from holders
other than the officers and directors of the Company subject to the
short-swing profit restrictions of section 16 of the 1934 Act.
1.9 "Option" shall mean an option to purchase Stock granted pursuant to
the provisions of the Discretionary Option Grant or Automatic Option Grant
Program.
1.10 "Optionee" shall mean any person to whom an Option is granted pur-
suant to the Discretionary Option Grant or Automatic Option Grant Program.
1.11 "Original Plan" shall mean the Burr-Brown Research Corporation
Incentive Stock Plan of 1981, as amended and restated in 1983.
1.12 "Participant" shall mean an employee or consultant to whom Stock is
issued pursuant to the provisions of the Stock Issuance Program.
1.13 "Plan" shall mean the Burr-Brown Corporation 1993 Stock Incentive
Plan.
1.14 "Service" shall mean the performance of services on a periodic basis
to the Company (or any Subsidiary corporation) in the capacity of an employee,
a non-employee member of the board of directors or an independent consultant or
advisor, except to the extent otherwise specifically provided in the applicable
Option or Stock issuance agreement executed pursuant to the provisions of the
Plan.
1.15 "Stock" shall mean the Common Stock of the Company.
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1.16 "Subsidiary" or "Subsidiaries" shall mean any corporation, the major-
ity of the outstanding capital stock of which is owned, directly or indirectly,
by the Company.
1.17 "Take-Over Price" shall mean the greater of (a) the Fair Market Value
per share of Stock subject to an outstanding Option on the date that Option is
surrendered to the Company in connection with a Hostile Take-Over. However, if
the surrendered Option is an incentive stock option under Federal tax laws, the
Take-Over Price shall not exceed the clause (a) price per share.
2. Purpose. This Plan is intended to benefit the Company by providing
an incentive to and encouraging Stock ownership by key employees (including
officers), non-employee members of the Board and consultants of the Company and
its members and consultants the opportunity to acquire a proprietary interest
in the Company's success; and by encouraging such individuals to remain in the
service of the Company or its Subsidiaries.
3. Structure of the Plan.
3.1 Stock Programs. The Plan shall be divided into three (3) separate
components:
- The Discretionary Option Grant Program, under which eligible
individuals may, at the discretion of the Committee, be granted
Options to purchase shares of Stock in accordance with the provi-
sions of Article Two.
- The Stock Issuance Program, under which eligible individuals
may be issued shares of Stock directly, through the immediate pur-
chase of such shares at a price not less than eighty-five percent
(85%) of their Fair Market Value at the time of issuance, as a bonus
tied to the performance of services or the Company's attainment of
financial objectives, without any cash payment required of the
recipient.
- The Automatic Option Grant Program, under which each non-
employee Board member shall automatically receive a special Option
grant to purchase shares of Stock in accordance with the provisions
of Article Four.
3.2 General Provisions. Unless the context clearly indicates otherwise,
the provisions of Articles One and Five shall apply to the Discretionary Option
Grant, Stock Issuance and Automatic Option Grant Programs and shall accordingly
govern the interests of all individuals under the Plan.
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4. Administration.
4.1 The Discretionary Option Grant and Stock Issuance Programs under the
Plan shall be administered by the Committee. The Committee shall initially
have the same membership as the Board's Compensation Committee. No member of
the Committee shall be, at the time of exercise of discretion in administering
this Plan or within one (1) year prior thereto, a person eligible for partici-
pation in the Plan or any other plan of the Company or any of its Subsidiaries,
other than pursuant to the Automatic Option Grant Program. Members of the
Committee shall serve for such term as the Board may determine and shall be
subject to removal by the Board at any time. The Committee shall have full
authority, subject to the express provisions of the Plan, to administer the
Discretionary Option Grant and Stock Issuance Programs, including authority to
interpret and construe any provision of such programs and to adopt such rules
and regulations as it may deem necessary or appropriate. Decisions of the
Committee shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program or any outstanding Option
grant or Stock issuance hereunder. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Discretionary Option Grant or Stock Issuance Program or any Option grant
or Stock issuance under it.
5. Option Grants and Stock Issuances.
5.1 The persons eligible to participate in the Discretionary Option Grant
Program under Article Two and the Stock Issuance Program under Article Three
are as follows:
- officers and other key employees of the Company (or its parent
or subsidiary corporations, whether now existing or subsequently
established) who render services which contribute to the management,
growth and financial success of the Company (or such parent or sub-
sidiary corporation); and
- those consultants or other independent contractors who provide
valuable services to the Company (or its parent or subsidiary cor-
porations).
5.2 Non-employee Board members shall NOT be eligible to participate in
the Discretionary Option Grant or Stock Issuance Program or in any other stock
option, stock purchase, stock bonus, or other stock plan of the Company (or its
parent or subsidiary corporations) other than the Automatic Option Grant
Program under Article Four.
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5.3 The Committee shall have full authority to determine, (i) with
respect to the Option grants made under the Discretionary Option Grant Program,
which eligible individuals are to receive Option grants, the number of shares
to be covered by each such grant, the status of the granted Option as either an
incentive stock option meeting the requirements of Code Sections 421 and 422
("Incentive Option") or a nonstatutory option not intended to meet such
requirements ("Nonstatutory Option"), the time or times at which each granted
Option is to become exercisable and the maximum term for which the Option may
remain outstanding; and (ii) with respect to Stock issuances under the Stock
Issuance Program, which eligible individuals are to be selected for participa-
tion, the number of shares to be issued to each selected individual, the
vesting schedule (if any) to be applicable to the issued shares and the consi-
deration to be paid for such shares.
6. Stock
6.1 Stock Available. The Stock to be issued under this Plan, may be
either authorized but unissued shares or shares issued and thereafter
reacquired by the Company. The aggregate number of shares of Stock which may
be issued pursuant to this Plan shall not exceed at any time 1,077,973 shares,
subject to adjustment from time to time as provided in paragraph 6.3 below.
Such authorized share reserve is comprised of (i) the number of shares which
remained available for issuance under the Original Plan as of the Effective
Date, including the shares of Stock subject to the outstanding options under
the Original Plan incorporated into this Plan and any other shares which would
have been available for future option grant under the Original Plan (estimated
to be 477,973 shares in the aggregate), plus (ii) an additional increase of
600,000 shares of Stock. All issuances of Stock under the Plan, including any
shares of Stock issued upon the exercise of options incorporated into the Plan
from the Original Plan, shall reduce on a one-for-one basis the number of
shares of Stock available for subsequent issuance under the Plan. Should any
Option or any portion thereof be terminated or canceled for any reason without
being exercised or surrendered in accordance with Section 4 or Article Two or
Section 3 of Article Four, the shares subject to the portion of the Option not
so exercised or surrendered shall be available for subsequent Option grants or
Stock issuances under this Plan. Shares subject to an Option or portion there-
of surrendered in accordance with Section 4 of Article Two shall not be avail-
able for subsequent Option grants or Stock issuances under the Plan. If the
Option price for any Options granted under the Plan is paid with shares of
Stock or if any shares of Stock otherwise issuable under the Plan are withheld
by the Company in satisfaction of the income and employment tax liability
incurred in connection with any Optionee's or Participant's acquisition of
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<PAGE>
Stock hereunder, then the number of shares of Stock available for subsequent
issuance shall be reduced by the gross number of shares for which the Option
is exercised or in which the Participant vests, and not by the net number of
shares actually issued to the Optionee or the Participant.
6.2 In no event may the aggregate number of shares of Stock for which
any one individual participating in the Plan may be granted Options and direct
Stock issuances exceed 600,000 shares in the aggregate over the term of the
Plan. For purposes of such limitation, no Option grants or direct Stock
issuances made prior to January 1, 1994 shall be taken into account.
6.3 Corporate Reorganization. In the event that any change is made to
the securities issuable under the Plan (whether by reason of merger, consoli-
dation, reorganization, recapitalization, Stock dividend, Stock split,
combination of shares, exchange of shares or other change in capitalization)
then, subject to the provisions of Section 2 or Article Two, Section 2 of
Article Three and Section 3 of Article Four, the Committee may make appropriate
adjustments in the maximum number and/or kind of securities for which Option
grants and direct Stock issuances may be made to any one participant in the
aggregate after December 31, 1993 and the number and/or kind of securities for
which automatic Option grants are to be subsequently made per non-employee
Board member under the Automatic Option Grant program in order to reflect the
effect of such change upon the Company's capital structure, and may make appro-
priate adjustments to the number and/or kind of securities and Option price of
the securities subject to each outstanding Option to prevent the dilution of
benefits thereunder. The adjustments determined by the Committee shall be
final, binding and conclusive.
6.4 Excess Grants and Issuances. Options to purchase shares of Stock may
be granted and shares of Stock may be issued under the Plan which are in both
instances in excess of the number of shares then available for issuance under
the Plan, provided any excess shares actually issued under the Plan are held in
escrow until the Company's stockholders approve an amendment sufficiently
increasing the number of shares of Stock available for issuance under the Plan.
If such stockholder approval is not obtained within twelve (12) months after
the date the initial excess issuances are made, whether as Option grants or
direct Stock issuances, then (I) any unexercised Options representing such
excess shall terminate and cease to be exercisable and (II) the Company shall
promptly refund to the Optionees and Participants the Option or purchase price
paid for any excess shares issued under the Plan and held in escrow, together
with interest (at the applicable Short Term Federal Rate) for the period the
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shares were held in escrow, and such shares shall thereupon be automatically
cancelled and cease to be outstanding.
6.5 Restrictions. Shares issued under the Discretionary Option Grant or
Stock Issuance Program may be subject to such restrictions on transfer, repur-
chase rights or other restrictions as shall be determined by the Committee.
7. Effective Date and Term of Plan.
7.1 Effective Date. The Discretionary Option Grant and Stock Issuance
Programs under the Plan were adopted by the Board on February 11, 1994, and the
date of such adoption accordingly constitutes the Effective Date for those two
programs and the Plan. The Automatic Option Grant Program under the Plan was
adopted by the Board on February 11, 1994 and shall become effective upon
approval by the stockholders at the 1994 Annual Meeting to be held on April 22,
1994. The date of such stockholder approval shall accordingly constitute the
Effective Date of the Automatic Option Grant Program.
7.2 Term of Plan. Unless sooner terminated in accordance with Section
2 of Article Two, Section 2 of Article Three, Section 3 of Article Four or by
the Board, the Plan shall terminate on the earlier of:
(i) the tenth (10th) anniversary of the Effective Date of the Plan;
or
(ii) the date on which all shares available for issuance under the
Plan shall have been issued or their availability cancelled pursuant
to the surrender of Options granted hereunder.
If the date of termination is determined under (i) above, the Options and
unvested Stock issuances outstanding on such date shall continue to have force
and effect in accordance with the provisions of the instruments evidencing such
Options and Stock issuances.
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<PAGE>
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
1. Terms and Conditions of Options. Options granted pursuant to this
Discretionary Option Grant Program shall be authorized by the Committee and
may be either Incentive Options or Nonstatutory Options. The granted Options
shall be evidenced by instruments in such form and including such terms and
conditions as the Committee shall from time to time approve; provided, however,
that each such instrument shall comply with the following terms and conditions:
1.1 Option Price.
1.1.1 The Option price per share shall be fixed by the
Committee, but in no event shall the Option price per share be less than
the Fair Market Value of a share of the optioned Stock on the date of the
Option grant.
1.1.2 Subject to the provisions of Section 1 of Article Five, the
Option price shall become immediately due and payable upon exercise of the
Option and shall be payable in one of the alternative forms specified
below:
1.1.2.1 Full payment in United States dollars in cash or cash
equivalents;
1.1.2.2 Full payment in shares of Stock valued at Fair Market
Value on the date the Option is exercised and held for the requisite
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes;
1.1.2.3 A combination of shares of Stock valued at Fair
Market Value on the date the Option is exercised and held for the requi-
site period necessary to avoid a charge to the Company's earnings for
financial reporting purposes, and cash or cash equivalents, equal in the
aggregate to the Option price;
1.1.2.4 Full payment through a broker-dealer sale and remit-
tance procedure pursuant to which the Optionee (I) shall provide irrevocable
written instructions to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Option price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Company in connection with such purchase and (II) shall provide written
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directives to the Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction; or
1.1.2.5 Such other lawful consideration as the Committee shall
determine.
1.2 Manner of Exercise of Options. Each Option granted under the Discre-
tionary Option Grant Program shall be exercisable at such time or times and
during such period as shall be determined by the Committee and set forth in the
instrument evidencing such Option. However, no Option may be exercised after
the expiration of ten (10) years from the date such Option is granted. During
the lifetime of the Optionee, the Option, together with any related Stock
appreciation right, shall be exercisable only by the Optionee and shall not be
assignable or transferable by the Optionee other than a transfer of the Option
by will or by the laws of descent and distribution following the Optionee's
death. Options may be exercised by written notice to the Company in such terms
as the Committee shall specify.
1.3 Stockholder Rights. An Option holder shall have none of the rights
of a stockholder with respect to any shares issuable under the Plan until such
individual shall have been issued a stock certificate for the shares.
1.4 Dollar Limitation. The aggregate Fair Market Value (determined as
of the respective date or dates of grant) of the Stock for which one or more
Options granted to any employee after December 31, 1986 under this Plan (or
any other option plan of the Company or its parent or Subsidiary corporations)
may for the first time become exercisable as incentive stock options under the
Federal tax laws during any one calendar year shall not exceed the sum of One
Hundred Thousand Dollars ($100,000). To the extent the employee holds two (2)
or more such Options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such Options
as incentive stock options under the Federal tax laws shall be applied on the
basis of the order in which such Options are granted. Should the number of
shares of Stock for which any Incentive Option first becomes exercisable in any
calendar year exceed the applicable One Hundred Thousand Dollar ($100,000)
limitation, then the Option may nevertheless be exercised in that calendar year
for the excess number of shares as a nonstatutory option under the Federal tax
laws.
1.5 Termination of Service.
1.5.1 Except to the extent otherwise provided in paragraph 1.5.4
below, the following provisions shall govern the exercise period applicable to
any outstanding Options under this Discretionary Option Grant Program held by
the Optionee at the time of cessation of Service or death.
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<PAGE>
- Should the Optionee cease to remain in Service for any reason
other than death or permanent disability, then the period during
which each outstanding Option held by such Optionee is to remain
exercisable shall be limited to the three (3)-month period following
the date of such cessation of Service. However, the Committee shall
have the discretion to provide for a longer post-Service exercise
period (not to exceed the expiration date of the maximum Option term)
in the event the Optionee ceases Service by reason of retirement at
or after attainment of age sixty-five (65).
- In the event such Service terminates by reason of permanent
disability (as defined in Code Section 22(e)(3)) or should the
Optionee die while holding one or more outstanding Options, then the
period during which each such Option is to remain exercisable shall
be limited to the twelve (12)-month period following the date of the
Optionee's cessation of Service or death. During the limited exer-
cise period following the Optionee's death, the Option may be
exercised by the personal representative of the Optionee's estate or
by the person or persons to whom the Option is transferred pursuant
to the Optionee's will or in accordance with the laws of descent and
distribution.
- Under no circumstances, however, shall any such Option be
exercisable after the specified expiration date of the Option term.
1.5.2 During the post-Service exercise period, the Option may
not be exercised for more than the number of shares of Stock in which the
Optionee is vested at the time of cessation of Service. Upon the expiration
of such post-Service exercise period or (if earlier) upon the expiration of
the Option term, the Option shall terminate and cease to be outstanding for
any vested shares for which the Option has not been exercised. However, each
Option shall immediately terminate and cease to be outstanding, at the time of
the Optionee's cessation of Service with respect to any optioned shares for
which such Option is not otherwise at that time exercisable or in which the
Optionee is not otherwise at that time vested.
1.5.3 Should (i) the Optionee's Service be terminated for miscon-
duct (including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (ii) the Optionee make any unauthorized use or dis-
closure of confidential information or trade secrets of the Company or its
Subsidiaries, then in any such event all outstanding Options held by the
Optionee under this Discretionary Option Grant Program shall terminate
immediately and cease to be outstanding.
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1.5.4 The Committee shall have full power and authority to
extend the period of time for which the Option is to remain exercisable
following the Optionee's cessation of Service or death from the limited post-
Service exercise period specified in the instrument evidencing such grant to
such greater period of time as the Committee shall deem appropriate under the
circumstances. In no event, however, shall such Option be exercisable after
the specified expiration date of the Option term.
1.5.5 The Committee shall have complete discretion, exercisable
either at the time the Option is granted or at any time the Option remains out-
standing, to permit one or more Options granted under this Discretionary Option
Grant program to be exercised not only for the number of shares for which each
such Option is exercisable at the time of the Optionee's cessation of Service
but also for one or more subsequent installments of purchasable shares for
which the Option would otherwise have become exercisable had such cessation of
Service not occurred.
2. Corporate Transactions/Changes in Control.
2.1 Option Acceleration. Each Option which is outstanding under this
Discretionary Option Grant Program at the time of a Corporate Transaction shall
automatically accelerate so that each such Option shall, immediately prior to
the specified effective date for such Corporate Transaction, become fully
exercisable with respect to the total number of shares of Stock at the time
subject to such Option and may be exercised for all or any portion of such
shares. However, an outstanding Option under this Discretionary Option Grant
Program shall not so accelerate if and to the extent: (i) such Option is, in
connection with the Corporate Transaction, either to be assumed by the succes-
sor corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such Option is to be replaced with a cash incentive program of
the successor corporation which preserves the option spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such Option, or (iii)
the acceleration of such Option is subject to other limitations imposed by the
Committee at the time of the Option grant. The determination of option
comparability under clause (i) above shall be made by the Committee and its
determination shall be final, binding and conclusive. The Committee shall
also have full power and authority to grant Options under the Plan which are
to automatically accelerate in whole or in part upon the termination of the
Optionee's Service following a Corporate Transaction, whether or not those
Options are otherwise to be assumed or replaced in connection with the consum-
mation of such Corporate Transaction.
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<PAGE>
2.2 Termination of Options. Immediately following the consummation of
the Corporate Transaction, all outstanding Options under this Discretionary
Option Grant Program shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or its parent company.
2.3 Option Adjustments. Each outstanding Option under this Discretionary
Option Grant program which is assumed in connection with the Corporate Trans-
action or is otherwise to continue in effect shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply and pertain to the
number and kind of securities which would have been issued to the Option
holder, in consummation of such Corporate Transaction, had such person exer-
cised the Option immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the Option price payable per share, PROVIDED
the aggregate Option price payable for such securities shall remain the same.
In addition, the class and kind of securities available for issuance under the
Plan on both an aggregate and per participant basis following the consummation
of the Corporate Transaction shall be appropriately adjusted.
2.4 Change in Control. The Committee shall have the discretionary
authority, exercisable either in advance of any actually-anticipated Change in
Control or at the time of an actual Change in Control, to provide for the auto-
matic acceleration of outstanding Options under this Discretionary Option Grant
program upon the occurrence of the Change in Control. The Committee shall also
have full power and authority to condition any such Option acceleration upon
the subsequent termination of the Optionee's Service within a specified period
following the Change in Control.
2.5 Option Continuation. Any Options accelerated in connection with the
Change in Control shall remain fully exercisable until the expiration or sooner
termination of the Option term or the surrender of such Option in accordance
with Section 4 of this Article Two.
2.6 ISO Limitation. The exercisability as incentive stock options under
the Federal tax laws of any Options accelerated under this Section 2 in connec-
tion with a Corporate Transaction or Change in Control shall remain subject to
the dollar limitation of paragraph 1.4 of this Article Two.
2.7 Right to Modify Corporate Structure. The grant of Options under this
Plan shall in no way effect the right of the Company to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all or any part of its
business or assets.
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3. Cancellation and New Grant of Options. The Committee shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Option holders, the cancellation of any or all outstanding Options
under this Discretionary Option Grant Program and to grant in substitution
therefore new Options under the Plan covering the same or different number and
kind of shares of Stock, but having an Option price per share not less than the
Fair Market Value of the Optioned Stock on the new grant date.
4. Surrender of Options for Cash or Stock.
4.1 Surrender Right. One or more Optionees may be granted the right,
exercisable upon such terms and conditions as the Committee may establish, to
surrender all or part of an unexercised Option under this Discretionary Option
Grant Program in exchange for a distribution from the Company in an amount
equal to the excess of (i) the Fair Market Value (on the Option surrender date)
of the number of shares in which the Optionee is at the time vested under the
surrendered Option (or surrendered portion thereof) over (ii) the aggregate
Option price payable for such vested shares.
4.2 Approval. No such Option surrender shall be effective unless it is
approved by the Committee. If the surrender is so approved, then the distribu-
tion to which the Optionee shall accordingly become entitled under this Section
4 may be made in shares of Stock valued at Fair Market Value on the Option sur-
render date, in cash or partly in shares and partly in cash, as the Committee
shall in its sole discretion deem appropriate.
4.3 Limited Rights. One or more officers of the Company subject to the
short-swing profit restrictions of the Federal securities laws may, in the
Committee's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding Options under this Discretionary Option Grant
Program. Upon the occurrence of a Hostile Take-Over, each such officer holding
one or more Options with such a limited stock appreciation right in effect for
at least six (6) months shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over) to surrender each such
Option to the Company, to the extent the Option is at the time exercisable for
vested shares of Stock. In return for the surrendered Option, the officer
shall be entitled to a cash distribution from the Company in an amount equal to
the excess of (i) the Take-Over price of the shares of Stock which are at the
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<PAGE>
time vested under each surrendered Option (or surrendered portion) over (ii)
the aggregate Option price payable for such vested shares. Such cash distribu-
tion shall be paid within five (5) days following the Option surrender date.
Neither the approval of the Committee nor the consent of the Board shall be
required in connection with such Option surrender and cash distribution. The
balance of the Option (if any) shall continue in full force and effect in
accordance with the instrument evidencing such grant.
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<PAGE>
ARTICLE THREE
STOCK ISSUANCE PROGRAM
1. Terms and Conditions of Direct Stock Issuances. Stock may be issued
under this Stock Issuance Program, either through direct and immediate pur-
chases without any intervening Option grants or as unvested shares issued upon
the exercise of immediately exercisable Options granted under Article Two. The
issued shares shall be evidenced by a Stock Issuance Agreement ("Issuance
Agreement") that complies with the following terms and conditions:
1.1 Consideration
1.1.1 Stock drawn from the Company's authorized but unissued
shares of Stock ("Newly Issued Shares") shall be issued for one or more of the
following items of consideration which the Committee may deem appropriate in
each individual instance:
(i) cash or cash equivalents (such as a personal check or
bank draft) paid the Company;
(ii) a promissory note payable to the Company's order in one
or more installments, which may be subject to cancellation in
whole or in part upon terms and conditions established by the
Committee; or
(iii) past services rendered to the Company or any Subsidiary.
1.1.2 Newly Issued Shares must be issued for consideration with
a value not less than one-hundred percent (100%) of the Fair Market Value of
such shares at the time of issuance.
1.1.3 Shares of Stock reacquired by the Company and held as
treasury shares ("Treasury Shares") may be issued for such consideration
(including one or more of the items of consideration specified in paragraph
1.1.1 of this Article Three) as the Committee may deem appropriate. Treasury
Shares may, in lieu of any cash consideration, be issued subject to such
vesting requirements tied to the Participant's period of future Service or the
Company's attainment of specified performance objectives as the Committee may
establish at the time of issuance.
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<PAGE>
1.2 Vesting Provisions.
1.2.1 The issued Stock may, in the absolute discretion of the
Committee, be fully and immediately vested upon issuance or may vest in one
or more installments over the Participant's period of Service. The elements
of the vesting schedule applicable to any unvested shares of Stock, namely:
(i) the Service period to be completed by the Participant or the
performance objectives to be achieved by the Company,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse between
installments, and
(iv) the effect which death, disability or other event designated
by the Committee is to have upon the vesting schedule,
shall be determined by the Committee and incorporated into the Issuance Agree-
ment executed by the Company and the Participant at the time such unvested
shares are issued.
1.3 Stockholder Rights. The Participant shall have full stockholder
rights with respect to any shares of Stock issued to him or her under this
Stock Issuance program, whether or not his or her interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares. Any new,
additional or different shares of Stock or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right
to receive with respect to his or her unvested shares by reason of any Stock
dividend, Stock split, reclassification of Stock or other similar change in the
Company's capital structure or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Committee shall deem
appropriate.
1.4 Termination of Service.
1.4.1 Should the Participant cease to remain in Service while
holding one or more unvested shares of Stock, then those shares shall be
immediately surrendered to the Company for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
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purchase-money promissory note), the Company shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the participant
attributable to such surrendered shares. The surrendered shares may, at the
Committee's discretion, be retained by the Company as Treasury Shares or may be
retired to authorized but unissued share status.
1.4.2 The Committee may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Stock (or other
assets attributable thereto) which would otherwise occur upon the non-
completion of the vesting schedule applicable to such shares. Such waiver shall
result in the immediate vesting of the Participant's interest in the shares of
Stock as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant's cessation of Service or the attain-
ment or non-attainment of the applicable performance objectives.
2. Corporate Transactions/Changes in Control.
2.1 All unvested shares of Stock outstanding under this Stock Issuance
Program shall immediately vest in full upon the occurrence of a Corporate
Transaction, except to the extent the Committee imposes limitations in the
Issuance Agreement which preclude such accelerated vesting upon the subsequent
termination of the Participant's Service within a specified period following
the Change in Control.
3. Transfer Restrictions/Share Escrow.
3.1 Unvested shares may, in the Committee's discretion, be held in escrow
by the Company until the Participant's interest in such shares vests or may be
issued directly to the Participant with restrictive legends on the certificates
evidencing such unvested shares.
3.2 The Participant shall have no right to transfer any unvested shares
of Stock issued to him or her under this Stock Issuance Program. For purposes
of this restriction, the term "transfer" shall include (without limitation) any
sales, pledge, assignment, encumbrance, gift or other disposition of such
shares, whether voluntary or involuntary. Upon any such attempted transfer,
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<PAGE>
the unvested shares shall immediately be cancelled, and neither the Participant
nor the proposed transferee shall have any rights with respect to those shares.
However, the Participant shall have the right to make a gift of unvested shares
acquired under this Stock Issuance Program to his or her spouse or issue,
including adopted children, or to a trust established for such spouse or issue,
provided the donee of such shares delivers to the Company a written agreement
to be bound by all the provisions of the Plan and the Issuance Agreement appli-
cable to the gifted shares.
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<PAGE>
ARTICLE FOUR
AUTOMATIC OPTION GRANT PROGRAM
1. Eligibility.
1.1 Eligible Optionees. The individuals eligible to receive automatic
Option grants pursuant to the provisions of this Article Four shall be limited
to (i) those individuals who are serving as non-employee Board members on the
date of the 1994 Annual Stockholders meeting and (ii) those individuals who are
first elected or appointed as non-employee Board members on or after the date
of such Annual Meeting, whether through appointment by the Board or election by
the Company's stockholders. Any non-employee Board member eligible to partici-
pate in the Automatic Option Grant Program pursuant to the foregoing criteria
shall be designated an Eligible Director for purposes of this Article Four.
1.2. Limitation. Except for the Option grants to be made pursuant to the
provisions of this Automatic Option Grant Program, non-employee Board members
shall NOT be eligible to receive any additional Option grants or Stock issu-
ances under this Plan or any other stock plan of the Company (or its parent or
subsidiaries).
2. Terms and Conditions of Automatic Option Grants.
2.1 Grant Dates. Option grants shall be made under this Article Four on
the dates specified below:
2.1.1 Each individual who is serving as an Eligible Director on
the date of the 1994 Annual Stockholders Meeting will automatically be granted,
on such date, a Nonstatutory Option to purchase 10,000 shares of Stock upon the
terms and conditions of this Article Four.
2.1.2 Each individual who first become an Eligible Director on or
after the date of the 1994 Annual meeting, whether through election by the
Company's stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a Nonstatutory
Option to purchase 10,000 shares of Stock upon the terms and conditions of this
Article Four.
2.2 The number of shares for which the automatic Option grants are to be
made to Eligible Directors shall be subject to periodic adjustment pursuant to
the applicable provisions of paragraph 6.3 of Article One.
2.3 Option Price. The Option price per share of Stock of each automatic
Option grant made under this Article Four shall be equal to one hundred percent
(100%) of the Fair Market Value per share of Stock on the automatic grant date.
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<PAGE>
2.4 Option Term. Each automatic Option grant under this Article Four
shall have a maximum term of ten (10) years measured from the automatic grant
date.
2.5 Exercisability/Vesting. Each automatic Option grant shall be immedi-
ately exercisable for any or all of the optioned shares. However, any shares
purchased under the Option shall be subject to repurchase by the Company, at
the Option price paid per share, upon the Optionee's cessation of Board service
prior to vesting in those shares in accordance with the schedule below:
2.5.1 Each automatic Option grant shall vest, and the Company's
repurchase right shall lapse, in a series of five (5) equal and successive
annual installments over the Optionee's period of continued Service as a Board
member, with the first such installment to vest upon Optionee's completion of
one (1) year of Board service measured from the automatic grant date.
2.5.2 Vesting of the optioned shares shall be subject to accel-
eration as provided in paragraph 2.8.3 and Section 3 of this Article Four. In
no event shall any additional optioned shares vest after the Optionee's cessa-
tion of Board service, except as otherwise specifically provided pursuant to
paragraph 2.8.3 of this Article Four.
2.6 Payment. The Option price shall be payable in one of the alternative
forms specified in paragraph 1.1.2 of Article Two. To the extent the Option is
exercised for any unvested shares, the Optionee must execute and deliver to the
Company a Stock issuance agreement for those unvested shares which provides the
Company with the right to repurchase, at the Option price paid per share, any
unvested shares held by the Optionee at the time of cessation of Board service
and which precludes the sale, transfer or other disposition of any shares
purchased under the Option, to the extent those shares are subject to the
Company's repurchase right.
2.7 Non-Transferability. During the lifetime of the Optionee, the
automatic Option grant, together with the limited Stock appreciation right
pertaining to such Option, shall be exercisable only by the Optionee and shall
not be assignable or transferable other than a transfer of the Option effected
by will or by the laws of descent and distribution following the Optionee's
death.
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<PAGE>
2.8 Termination of Board Service.
2.8.1 Should the Optionee cease service as a Board member for
any reason other than death or permanent disability, while holding any auto-
matic Option grant under this Article Four, then such individual shall have a
six (6)-month period following the date of such cessation of Board service in
which to exercise that Option for any or all of the optioned shares in which
the Optionee is vested at the time of such cessation of Board service. How-
ever, the Option shall immediately terminate and cease to remain outstanding,
at the time of such cessation of Board service, with respect to any optioned
shares in which the Optionee is not otherwise at that time vested under that
Option.
2.8.2 Should the Optionee die within six (6) months after cessa-
tion of Board service, then any automatic Option grant held by the Optionee at
the time of death may subsequently be exercised, for any or all of the optioned
shares in which the Optionee is vested at the time of his or her cessation of
Board service (less any optioned shares subsequently purchased by the Optionee
prior to death), by the personal representative of the Optionee's estate or by
the person or persons to whom the Option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and distribution.
The right to exercise each such Option shall lapse upon the expiration of the
twelve (12)-month period measured from the date of the Optionee's death.
2.8.3 Should the Optionee die or become permanently disabled (as
defined in Code Section 22(e)(3)) while serving as a Board member, then the
shares of Stock at the time subject to any automatic Option grant held by the
Optionee shall immediately vest in full (and the Company's repurchase right
with respect to such shares shall terminate), and the Optionee (or the repre-
sentative of the Optionee's estate or the person or persons to whom the Option
is transferred upon the Optionee's death) shall have a twelve (12)-month period
following the date of the Optionee's cessation of Board service in which to
exercise such Option for any or all of those vested shares of Stock.
2.8.4 In no event shall any automatic Option grant under this
Article Four remain exercisable after the expiration date of the ten (10)-year
Option term. Upon the expiration of the applicable post-Service exercise
period under paragraphs 2.8.1 through 2.8.3 above or (if earlier) upon the
expiration of the ten (10)-year Option term, the automatic Option grant shall
terminate and cease to remain outstanding for any optioned shares in which the
Optionee was vested at the time of his or her cessation of Board Service but
for which such Option was not otherwise exercised.
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<PAGE>
2.9 Stockholder Rights. The holder of an automatic Option grant under
this Article Four shall have none of the rights of a stockholder with respect
to any shares subject to that Option until such individual shall have exercised
the Option and paid the Option price for the purchased shares.
2.10 Remaining Terms. The remaining terms and conditions of each auto-
matic Option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A to the Plan.
3. Corporate Transactions/Changes in Control/Hostile Take-Overs.
3.1 In the event of any Corporate Transaction, the shares of Stock at the
time subject to each outstanding Option under this Article Four but not other-
wise vested shall automatically vest in full, and the Company's repurchase
right with respect to those shares shall terminate, so that each such Option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the shares of Stock at the
time subject to that Option and may be exercised for all or any portion of such
shares as fully vested shares of Stock. Immediately following the consummation
of the Corporate Transaction, all automatic Option grants under this Article
Four shall terminate and cease to remain outstanding.
3.2 In connection with any Change in Control, the shares of Stock at the
time subject to each outstanding Option under this Article Four but not other-
wise vested shall automatically vest in full, and the Company's repurchase
right with respect to those shares shall terminate, so that each such Option
shall, immediately prior to the occurrence of such Change in Control, become
fully exercisable for all of the shares of Stock at the time subject to that
Option and may be exercised for all or any portion of such shares as fully
vested shares of Stock. Each such Option shall remain so exercisable until
the expiration or sooner termination of the Option term.
3.3 Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Company any Option held
by him or her under this Article Four for a period of at least six (6) months.
The Optionee shall in return be entitled to a cash distribution from the
Company in an amount equal to the excess of (i) the Take-Over Price of the
shares of Stock at the time subject to the surrendered Option (whether or not
the Optionee is otherwise at the time vested in those shares) over (ii) the
aggregate Option price payable for such shares. Such cash distribution shall
be paid within five (5) days following the surrender of the Option to the
Company. Neither the approval of the Committee nor the consent of the Board
shall be required in connection with such Option surrender and cash distribu-
tion. The shares of Stock subject to each Option surrendered in connection
with the Hostile Take-Over shall NOT be available for subsequent issuance under
the Plan.
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<PAGE>
3.4 The automatic Option grants outstanding under this Article Four shall
in no way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
4. Amendment of the Automatic Grant Provisions. The provisions of this
Automatic Option Grant Program, together with the automatic Option grants
outstanding under this Article Four, may not be amended at intervals more
frequently than once every six (6) months, other than to the extent necessary
to comply with applicable Federal income tax laws and regulations.
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<PAGE>
ARTICLE FIVE
MISCELLANEOUS
1. Installment Payments, Loans and Guarantees of Loans.
1.1 The Committee may, in its discretion, assist any Optionee or
Participant (other than an Optionee or Participant who is a non-employee
member of the Board) in the exercise of one or more Options granted to such
Optionee or the purchase of one or more shares of Stock issued to such Parti-
cipant under the Plan, including the satisfaction of any Federal, state and
local income and employment tax obligations arising therefrom, by (i) author-
izing the extension of a loan from the Company to such Optionee or Participant,
(ii) permitting the Optionee or Participant to pay the Option price or purchase
price for the purchased Stock in installments over a period of years or (iii)
authorizing a guarantee by the Company of a third-party loan to the Optionee or
Participant. The terms of any loan, installment method of payment or guarantee
(including the interest rate and terms of repayment) shall be upon such terms
as the Committee specifies in the applicable Option or issuance Agreement or
otherwise deems appropriate under the circumstances. Loans, installment pay-
ments and guarantees may be granted with or without security or collateral.
However, the maximum credit available to the Optionee or Participant may not
exceed the Option or purchase price of the acquired shares (less the par value
of such shares) plus any Federal, state and local income and employment tax
liability incurred by the Optionee or Participant in connection with the
acquisition of such shares.
1.2 The Committee may, in its absolute discretion, determine that one
or more loans extended under this financial assistance program shall be subject
to forgiveness by the Company in whole or in part upon such terms and condi-
tions as the Committee may deem appropriate.
2. Amendment of the Plan. The Board shall have complete and exclusive
power and authority to amend or modify the Plan, and the Committee may amend or
modify the terms of any outstanding Options or unvested Stock issuances under
the Plan in any or all aspects whatsoever not inconsistent with the terms of
the Plan. However, (i) no such amendment or modification shall adversely
affect rights and obligations with respect to Options at the time outstanding
under the Plan, nor adversely affect the rights of any Participant with respect
to Stock issued under the Plan prior to such action, unless the Optionee or
Participant consents to such amendment, and (ii) any amendment made to the
Automatic Option Grant Program (or any Options outstanding thereunder) shall be
in compliance with the limitation of Section 4 of Article Four. In addition,
the Board shall not, without the approval of the Company's stockholders, amend
the Plan to:
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<PAGE>
(i) materially increase the maximum number of shares issuable
under the Plan or the number of shares for which Options may be
granted to Eligible Directors under the Automatic Option Grant Pro-
gram or the maximum number of shares for which any one individual
participating in the Plan may be granted Options and direct Stock
issuances in the aggregate after December 31, 1993, except for per-
missible adjustments under paragraph 6.3 of Article One;
(ii) materially increase the benefits accruing to individuals who
participate in the Plan; or
(iii) materially modify the eligibility requirements for the grant
of Options or the issuance of Stock under the Plan.
3. Use of Proceeds. Any cash proceeds received by the Company from the
sale of shares pursuant to Option grants or direct Stock issuances under the
Plan shall be used for general corporate business.
4. Withholding.
4.1 The Company's obligation to deliver shares of Stock upon the exercise
of Options for such shares or upon the direct issuance or vesting of such
shares under the Plan shall be subject to the satisfaction of all applicable
Federal, state and local income and employment tax withholding requirements.
4.2 The Committee may, in its discretion and in accordance with the
provisions of this Section 4 and such supplemental rules as the Committee may
from time to time adopt (including applicable safe-harbor provisions of SEC
Rule 16b-3), provide any or all holders of Nonstatutory Options (other than the
automatic Option grants made pursuant to Article Four of the Plan) or unvested
shares under the Stock Issuance Program with the right to use shares of Stock
in satisfaction of all or part of the Federal, state and local income and
employment tax liabilities incurred by such holders in connection with the
exercise of their Options or the vesting of their shares (the "Taxes"). Such
right may be provided to any such holder in either or both of the following
formats:
4.2.1 Stock Withholding. The holder of the Nonstatutory Option
or unvested shares may be provided with the election to have the Company with-
hold, from the shares of Stock otherwise issuable upon the exercise of such
Nonstatutory Option or the vesting of such shares, a portion of those shares
with an aggregate Fair Market Value equal to the percentage of the applicable
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
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<PAGE>
4.2.2 Stock Delivery. The Committee may, in its discretion,
provide the holder of the Nonstatutory Option or the unvested shares with the
election to deliver to the Company, at the time the Nonstatutory Option is
exercised or the shares vest, one or more shares of Stock already held by such
individual with an aggregate Fair Market Value equal to the percentage of the
Taxes incurred in connection with such Option exercise or share vesting (not
to exceed one hundred percent (100%)) designated by the holder.
5. Regulatory Approvals. The implementation of the Plan, the granting
of any Option hereunder and the issuance of Stock upon the exercise or sur-
render of any such Option or as a direct issuance under the Plan shall be
subject to the Company's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the Options granted
under it and the Stock issued pursuant to it.
6. No Employment Rights. Nothing in the Plan shall confer upon the
Optionee or the Participant any right to continue in the Service of the Company
(or any Subsidiary employing or retaining such Optionee or Participant) for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any such Subsidiary) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
the Service of the Optionee or Participant at any time for any reason whatso-
ever, with or without cause.
7. Certain Outstanding Options.
7.1 Each Option granted under the Company's Original Plan or the 1980
Burr-Brown Research Corporation Executive Stock Plan which was outstanding on
the Effective Date of this Plan was incorporated into this Plan and treated as
an outstanding Option under this Plan, but each such Option continues to be
governed solely by the terms and conditions of the instrument evidencing such
grant, and nothing in this Plan shall be deemed to affect or otherwise modify
the rights or obligations of the holders of such Options with respect to their
acquisition of shares of Stock thereunder.
7.2 One or more provisions of this Plan, including the Option/vesting
acceleration provisions applicable in the event of a Corporate Transaction or
Change in Control or the limited surrender rights exercisable in the event of
a Hostile Take-Over, may, in the Committee's discretion, be extended to one or
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<PAGE>
more Options which were outstanding under the Company's Original Plan or the
1980 Burr-Brown Research Corporation Executive Stock Plan on the Effective Date
of this Plan but which do not otherwise provide for such benefits.
IN WITNESS WHEREOF, the February 28, 1994 Restatement of the BURR-BROWN
CORPORATION 1993 STOCK INCENTIVE PLAN is hereby declared effective and is
executed as of February 28, 1994 on behalf of the Company by its hereunto duly
authorized officer.
BURR-BROWN CORPORATION
By: THOMAS R. BROWN, JR.
(Signature on File)
Title: Chairman of the Board
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EXHIBIT 10.30
BURR-BROWN CORPORATION
FUTURE INVESTMENT TRUST
Originally Effective January 1, 1966
Most Recent Restatement Effective January 1, 1987
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 "Account". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 "Accrued Benefit". . . . . . . . . . . . . . . . . . . . . 2
1.3 "Accumulated Profits". . . . . . . . . . . . . . . . . . . 2
1.4 "Act". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Affiliated Company" . . . . . . . . . . . . . . . . . . . 2
1.6 "Beneficiary". . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Board". . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Committee". . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Company". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 "Company Matching Contributions" . . . . . . . . . . . . . 2
1.12 "Company Matching Contributions Account" . . . . . . . . . 3
1.13 "Company Profit Sharing Contributions" . . . . . . . . . . 3
1.14 "Company Profit Sharing Contributions Account" . . . . . . 3
1.15 "Company Stock". . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Compensation" . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Current Profits". . . . . . . . . . . . . . . . . . . . . 4
1.18 "Direct Rollover". . . . . . . . . . . . . . . . . . . . . 4
1.19 "Distributee". . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Effective Date" . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Eligibility Computation Period" . . . . . . . . . . . . . 4
1.22 "Eligible Earnings". . . . . . . . . . . . . . . . . . . . 4
1.23 "Eligible Employee". . . . . . . . . . . . . . . . . . . . 5
1.24 "Eligible Retirement Plan" . . . . . . . . . . . . . . . . 5
1.25 "Eligible Rollover Distribution" . . . . . . . . . . . . . 5
1.26 "Employee" . . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 "Employee Deferral Contributions". . . . . . . . . . . . . 6
1.28 "Employee Deferral Contributions Account". . . . . . . . . 6
1.29 "Financial Hardship" . . . . . . . . . . . . . . . . . . . 6
1.30 "Five Percent (5%) Owner". . . . . . . . . . . . . . . . . 6
1.31 "Fixed Income Investment Sub-Account". . . . . . . . . . . 6
1.32 "Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 "Funding Agent". . . . . . . . . . . . . . . . . . . . . . 6
1.34 "Highly Compensated Employee". . . . . . . . . . . . . . . 6
1.35 "Hour of Service". . . . . . . . . . . . . . . . . . . . . 7
1.36 "Investment Manager" . . . . . . . . . . . . . . . . . . . 7
1.37 "1986 Profit Sharing Account". . . . . . . . . . . . . . . 8
1.38 "Normal Retirement Age". . . . . . . . . . . . . . . . . . 8
1.39 "Normal Retirement Date" . . . . . . . . . . . . . . . . . 8
1.40 "Participant". . . . . . . . . . . . . . . . . . . . . . . 8
1.41 "Period of Severance". . . . . . . . . . . . . . . . . . . 8
1.42 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.43 "Plan Administrator" . . . . . . . . . . . . . . . . . . . 8
1.44 "Plan Year". . . . . . . . . . . . . . . . . . . . . . . . 8
1.45 "Rollover Account" . . . . . . . . . . . . . . . . . . . . 8
1.46 "Rollover Contribution". . . . . . . . . . . . . . . . . . 8
<PAGE>
1.47 "Service". . . . . . . . . . . . . . . . . . . . . . . . . 8
1.48 "Severance Date" . . . . . . . . . . . . . . . . . . . . . 8
1.49 "Spouse" . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.50 "Stock Bonus Account". . . . . . . . . . . . . . . . . . . 8
1.51 "Top Paid Group" . . . . . . . . . . . . . . . . . . . . . 8
1.52 "Total Disability" . . . . . . . . . . . . . . . . . . . . 9
1.53 "Total Distribution" . . . . . . . . . . . . . . . . . . . 9
1.54 "Trust Agreement". . . . . . . . . . . . . . . . . . . . . 9
1.55 "Trustee". . . . . . . . . . . . . . . . . . . . . . . . . 9
1.56 "Valuation Date" . . . . . . . . . . . . . . . . . . . . . 9
1.57 "Variable Income Investment Sub-Account" . . . . . . . . . 9
1.58 "Vesting Service". . . . . . . . . . . . . . . . . . . . . 9
1.59 Additional Terms . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II SERVICE DEFINITIONS. . . . . . . . . . . . . . . . . . . 11
2.1 Hour of Service. . . . . . . . . . . . . . . . . . . . . . 11
2.2 Service. . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Severance Date . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Period of Severance. . . . . . . . . . . . . . . . . . . . 13
2.5 Vesting Service. . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III EMPLOYEES ENTITLED TO PARTICIPATE . . . . . . . . . . . 14
3.1 Eligibility to Participate . . . . . . . . . . . . . . . . 14
3.2 Election to Participate in Employee Deferral
Contributions Portion of Plan. . . . . . . . . . . . . . . 14
3.3 Leased Employees . . . . . . . . . . . . . . . . . . . . . 14
3.4 Effect of Rehiring . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 16
4.1 Employee Deferral Contributions. . . . . . . . . . . . . . 16
4.2 Changes in Contribution Rates. . . . . . . . . . . . . . . 16
4.3 Suspension of Contributions. . . . . . . . . . . . . . . . 16
4.4 Company Matching Contributions . . . . . . . . . . . . . . 16
4.5 Profit Sharing Contributions . . . . . . . . . . . . . . . 16
4.6 Rollover Contributions . . . . . . . . . . . . . . . . . . 17
4.7 General Limitations on Company and Employee Deferral
Contributions. . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Special Definitions. . . . . . . . . . . . . . . . . . . . 17
4.9 Limitation on Annual Addition. . . . . . . . . . . . . . . 19
4.10 Remedial Action. . . . . . . . . . . . . . . . . . . . . . 19
4.11 Reallocation of Forfeitures. . . . . . . . . . . . . . . . 20
4.12 Time Period for Payment of Company Contributions . . . . . 20
ARTICLE V SPECIAL RULES GOVERNING EMPLOYEE DEFERRAL CONTRIBUTIONS AND
COMPANY MATCHING CONTRIBUTIONS. . . . . . . . . . . . . . . . . 21
5.1 Limitations on Employee Deferral Contributions of
Highly Compensated Employees . . . . . . . . . . . . . . . 21
5.2 Excess Contributions . . . . . . . . . . . . . . . . . . . 21
5.3 Limitations on Allocation of Matching Contributions to
Accounts of Highly Compensated Employees . . . . . . . . . 23
5.4 Aggregate Limitations. . . . . . . . . . . . . . . . . . . 24
5.5 Remedial Action. . . . . . . . . . . . . . . . . . . . . . 25
5.6 Limitations on Employee Deferral Contributions . . . . . . 26
ii.
<PAGE>
ARTICLE VI SPECIAL PROVISIONS FOR STOCK BONUS ACCOUNTS. . . . . . . 28
6.1 Special Requirements for Stock Bonus Accounts. . . . . . . 28
6.2 Put Option Requirements. . . . . . . . . . . . . . . . . . 29
ARTICLE VII INVESTMENT FUNDS AND INVESTMENT OF CONTRIBUTIONS. . . . 30
7.1 Investment Funds . . . . . . . . . . . . . . . . . . . . . 30
7.2 Investment Elections . . . . . . . . . . . . . . . . . . . 30
7.3 Changes in Investment Elections. . . . . . . . . . . . . . 30
7.4 Transfers Between Funds. . . . . . . . . . . . . . . . . . 30
7.5 Restrictions on Insiders . . . . . . . . . . . . . . . . . 30
ARTICLE VIII INDIVIDUAL ACCOUNTS. . . . . . . . . . . . . . . . . . 31
8.1 Accounts for Participants. . . . . . . . . . . . . . . . . 31
8.2 Valuation of Accounts. . . . . . . . . . . . . . . . . . . 31
8.3 Rollover Accounts. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX VESTING. . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Vesting in the Employee Deferral Contributions Account,
the 1986 Profit Sharing Account, the Stock Bonus Account
and the Rollover Account . . . . . . . . . . . . . . . . . 33
9.2 Vesting in Company Matching Contributions Account and
the Company Profit Sharing Contributions Account . . . . . 33
9.3 Determination of Vested Interest in the Company Profit
Sharing Contributions Account and Company Matching
Contributions Account in the Event of a Severance Date . . 33
9.4 Restoration of Forfeiture. . . . . . . . . . . . . . . . . 33
9.5 Amendments to Vesting Schedule . . . . . . . . . . . . . . 34
ARTICLE X WITHDRAWALS DURING EMPLOYMENT . . . . . . . . . . . . . . 35
10.1 In-Service Withdrawals . . . . . . . . . . . . . . . . . . 35
10.2 Withdrawal Rules . . . . . . . . . . . . . . . . . . . . . 35
10.3 Withdrawal of Company Matching Contributions. Effective
January 1, 1993, a Participant may no longer withdraw
funds from his Company Matching Contributions Accounts.
ARTICLE XI DISTRIBUTION UPON TERMINATION OF EMPLOYMENT. . . . . . . 37
11.1 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.2 Payments Upon Termination of Employment. . . . . . . . . . 37
11.3 Forfeiture of Non-vested Benefits. . . . . . . . . . . . . 37
11.4 Timing of Distributions. . . . . . . . . . . . . . . . . . 37
11.5 Forms and Timing of Distributions from Stock Bonus
Account. . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.6 Participant Payment Election Regarding Stock Bonus
Account. . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.7 Unclaimed Amounts; Notices . . . . . . . . . . . . . . . . 40
11.8 Direct Rollovers . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XII LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.1 Loan Applications. . . . . . . . . . . . . . . . . . . . . 41
12.2 Loan Terms . . . . . . . . . . . . . . . . . . . . . . . . 41
12.3 Offset Rights. . . . . . . . . . . . . . . . . . . . . . . 42
12.4 Liquidation of Account . . . . . . . . . . . . . . . . . . 42
12.5 Earmarked Investment . . . . . . . . . . . . . . . . . . . 42
iii.
<PAGE>
ARTICLE XIII FIDUCIARY. . . . . . . . . . . . . . . . . . . . . . . 44
13.1 Plan Administrator . . . . . . . . . . . . . . . . . . . . 44
13.2 Named Fiduciary. . . . . . . . . . . . . . . . . . . . . . 44
13.3 Employment of Advisors . . . . . . . . . . . . . . . . . . 44
13.4 Multiple Fiduciary Capacities. . . . . . . . . . . . . . . 44
13.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIV ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . 45
14.1 The Committee. . . . . . . . . . . . . . . . . . . . . . . 45
14.2 Powers and Duties of the Committee . . . . . . . . . . . . 45
14.3 Delegation of Responsibility by the Committee. . . . . . . 45
14.4 Investment Direction by Plan Administrator . . . . . . . . 46
14.5 The Investment Manager . . . . . . . . . . . . . . . . . . 46
14.6 Appointment of a Trustee . . . . . . . . . . . . . . . . . 46
14.7 Funding Policy . . . . . . . . . . . . . . . . . . . . . . 47
14.8 Compensation of Investment Manager and Trustees. . . . . . 47
14.9 Facility of Benefit Payment. . . . . . . . . . . . . . . . 47
14.10Claims and Appeals . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XV RIGHTS OF PARTICIPANTS . . . . . . . . . . . . . . . . . 49
15.1 Limitations on Rights of Participants. . . . . . . . . . . 49
15.2 Prohibition Against Assignment or Alienation of Benefits . 49
ARTICLE XVI AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . 50
16.1 Amendment of the Plan. . . . . . . . . . . . . . . . . . . 50
ARTICLE XVII TERMINATION OF THE PLAN. . . . . . . . . . . . . . . . 51
17.1 Termination of the Plan. . . . . . . . . . . . . . . . . . 51
17.2 Effect of Discontinuance . . . . . . . . . . . . . . . . . 51
17.3 Effect of Termination. . . . . . . . . . . . . . . . . . . 51
17.4 Plan Transfers or Mergers. . . . . . . . . . . . . . . . . 51
17.5 Corporate Changes. . . . . . . . . . . . . . . . . . . . . 52
17.6 Determination of Partial Termination . . . . . . . . . . . 52
ARTICLE XVIII TOP-HEAVY PLAN PROVISIONS . . . . . . . . . . . . . . 53
18.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 53
18.2 Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . 55
18.3 General Rules. . . . . . . . . . . . . . . . . . . . . . . 55
18.4 Vesting Provisions . . . . . . . . . . . . . . . . . . . . 56
18.5 Minimum Contribution Provisions. . . . . . . . . . . . . . 56
18.6 Coordination of Plans. . . . . . . . . . . . . . . . . . . 56
18.7 Limitation of Contributions. . . . . . . . . . . . . . . . 56
ARTICLE XIX QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . . . . . . 58
19.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 58
19.2 Notification . . . . . . . . . . . . . . . . . . . . . . . 58
19.3 Procedures . . . . . . . . . . . . . . . . . . . . . . . . 59
19.4 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XX MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . 60
20.1 Plan Interpretation. . . . . . . . . . . . . . . . . . . . 60
iv.
<PAGE>
20.2 Consents by Board and Committees . . . . . . . . . . . . . 60
20.3 Return of Contributions. . . . . . . . . . . . . . . . . . 60
20.4 Plan Expenses. . . . . . . . . . . . . . . . . . . . . . . 60
20.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . 61
20.6 Conditional Establishment. . . . . . . . . . . . . . . . . 61
20.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 61
ADDENDUM SPECIAL TERMINATION PROVISIONS. . . . . . . . . . . . . . . 62
v.
<PAGE>
BURR-BROWN CORPORATION
FUTURE INVESTMENT TRUST
INTRODUCTION
Effective as of January 1, 1966, the Burr-Brown Corporation Future
Investment Trust (the "Plan") was implemented by the BURR-BROWN CORPORATION
(the "Company") to provide retirement benefits to United States based
Employees. Effective as of January 1, 1987, the Plan was amended and restated
in its entirety to incorporate the changes in applicable federal law. The Plan
was amended on several occasions thereafter. This Restatement of the Plan,
effective as of January 1, 1987 except as otherwise noted, is intended to bring
the Plan into compliance with current laws, including The Tax Reform Act of
1986, The Omnibus Budget Reconciliation Act of 1987, the Technical and Miscel-
laneous Revenue Act of 1988, the Omnibus Budget Reconciliation Act of 1989, the
Unemployment Compensation Amendments of 1992 and the Omnibus Budget Reconcilia-
tion Act of 1993.
The primary purpose of the Plan as hereby amended and restated is to
enable participating employees of the Company to accumulate retirement savings
on a pre-tax basis and to accumulate capital for their future economic secur-
ity. Consequently, participating employees may from time to time receive a
profit sharing contribution, if the Company determines there to be sufficient
profitability, will be able to defer compensation under the Plan pursuant to
Section 401(k) of the Internal Revenue Code and will receive a matching
contribution out of Company profits. The allocations from profit sharing
contributions, the employee pre-tax contributions and matching contributions
will be invested as participating employees direct within the scope of the
investments available under the Plan. The Plan will also continue to hold the
Company stock which was previously held in the Burr-Brown Corporation Stock
Bonus Plan and was transferred to the Plan when the Stock Bonus Plan merged
into this Plan effective as of July 1, 1989.
The Plan, as hereby amended and restated, is intended to constitute a
qualified profit sharing plan which meets the requirements of Sections 401(a),
401(k) and 501(a) of the Internal Revenue Code.
<PAGE>
ARTICLE I
DEFINITIONS
Definitions. When used in this Plan, the following terms shall have the
meanings set forth below unless a different meaning is plainly required by the
context:
1.1 "Account" shall mean a Participant's Employee Deferral Contributions
Account, Company Matching Contributions Account, Company Profit Sharing Contri-
butions Account, the 1986 Profit Sharing Account, the Stock Bonus Account and
the Rollover Account as described in Section 8.3. Where more than one Account
of any type has been established for a Participant or Beneficiary, reference to
"Account" shall include each Account of that type except where the context
clearly indicates to the contrary.
1.2 "Accrued Benefit" shall mean the balance in a Participant's Accounts.
1.3 "Accumulated Profits" shall mean the retained earnings of the Company
as reported on its audited financial statements.
1.4 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as may be amended from time to time.
1.5 "Affiliated Company" shall mean (a) the Company, (b) any other
corporation which is a member of a controlled group of corporations which
includes the Company, as determined in accordance with the ownership rules of
Section 1563 of the Code, without regard, however, to subsection (a)(4) or (e)
(3)(C) of such Section 1563, (c) any other employer entity which is under
common control with the Company, as determined in accordance with Regulations
issued under Section 414(c) of the Code, (d) any affiliated service group, as
determined under Section 414(m) of the Code, or (e) any other entity required
to be aggregated with the Company pursuant to Regulations issued under Section
414(o) of the Code. For purposes of the limitation on benefits set forth in
Article IV, the determination of whether a corporation is an Affiliated Company
will be made only after substituting the phrase "more than fifty percent (50%)"
for the phrase "at least eighty percent (80%)" each place the latter phrase
appears in Section 1563(a)(1) of the Code.
1.6 "Beneficiary" shall mean any individual, trust or other recipient
named by a Participant to receive benefits payable hereunder upon his death.
In the case of a Participant who has a Spouse, such Spouse must be the Partici-
pant's Beneficiary hereunder, except as may otherwise be provided in Section
11.1.
1.7 "Board" shall mean the board of directors of Burr-Brown Corporation.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.9 "Committee" shall mean the committee appointed by the Board pursuant
to Section 14.1 which shall have such duties and responsibilities as are speci-
fically allocated to it under Article XIV.
1.10 "Company" shall mean Burr-Brown Corporation, and each successor in
interest to the Company resulting from merger, consolidation, or transfer of
substantially all of its assets which shall by appropriate action adopt the
Plan.
1.11 "Company Matching Contributions" shall mean the Company contributions
described in Section 4.4.
- 2 -
<PAGE>
1.12 "Company Matching Contributions Account" shall mean the record of
money and assets derived from the Company Matching Contributions as described
in Section 4.4 and held by the Trustee for the benefit of a Participant or
Beneficiary pursuant to the provisions of the Plan.
1.13 "Company Profit Sharing Contributions" shall mean the Company contri-
butions described in Section 4.5.
1.14 "Company Profit Sharing Contributions Account" shall mean the record
of money and assets derived from Company Profit Sharing Contributions described
in Section 4.5 and held by the Trustee for the benefit of a Participant or
Beneficiary pursuant to the provisions of the Plan.
1.15 "Company Stock" shall mean common stock issued by Burr-Brown Corpora-
tion, as described in Section 6.1.
1.16 "Compensation" shall mean: (1) all current compensation, wages and
earnings paid to a Participant during the Plan Year, whether in cash or pro-
perty, for services performed while an Employee, but only to the extent such
compensation, wages and earnings constitute wages within the meaning of Section
3401(a) of the Code which are reportable on Form W-2 or other compensation for
which the Participant must be furnished a written statement under Section 6041
(d) or 6051(a)(3) of the Code, plus (2) any Employee Deferral Contributions
made on the Participant's behalf under this Plan, and (3) any other elective
pre-tax contributions made on the Participant's behalf pursuant to salary
deferral or reduction arrangements maintained by one or more Affiliated Com-
panies under Sections 125, 401(k), 408(k) and 403(b) of the Code. Not more
than Two Hundred Thousand Dollars ($200,000.00) of Compensation shall be taken
into account per Employee for any Plan Year beginning after December 31, 1988
and before January 1, 1994, subject to cost-of-living adjustments authorized
from time to time by the Secretary. In addition to any other applicable
limitations set forth in the Plan and notwithstanding any other provisions of
the Plan to the contrary, for Plan Years beginning on or after January 1, 1994,
the annual dollar amount of Compensation taken into account under the Plan per
Employee shall not exceed One Hundred Fifty Thousand Dollars ($150,000.00), as
adjusted from time to time 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 shall apply to any period (not exceeding twelve (12)
months) over which Compensation is to be determined (the "determination
period") beginning in such calendar year. Should the determination period
consist of less than twelve (12) months, then the annual Compensation limit
shall be multiplied by a fraction, the numerator of which is the number of
months in the determination period and the denominator of which is twelve (12).
For Plan Years beginning on or after January 1, 1994, any reference in the Plan
to the limitation under Section 401(a)(17) of the Code shall mean the annual
Compensation limit set forth above.
Compensation shall be relevant for certain designated purposes under the
Plan. Included among such purposes are: (1) the identification of Highly
Compensated Employees and (2) the determination of whether the Employee Defer-
ral Contributions, Company Matching Contributions and Company Profit Sharing
Contributions under the Plan discriminate in favor of such Highly Compensated
Employees. The following additional rules shall be applicable in determining
Compensation for these subparagraphs (1) and (2) specified purposes:
(a) Each Highly Compensated Employee who is either a Five Percent (5%)
Owner or among the ten (10) highest-paid individuals on the basis of his own
Compensation shall, together with his spouse, any lineal ascendant or descen-
dant of such Employee and the spouses of such lineal ascendants or descendants,
be treated as a single Employee under the Plan, and the Compensation of such
single Employee shall be deemed to include the Compensation of such Highly
Compensated Employee and his spouse, any lineal ascendant or descendant of such
Employee and the spouses of lineal ascendants or descendants.
(b) In applying the annual Compensation limit above, any Highly Compen-
sated Employee who is either a Five Percent (5%) Owner or among the ten (10)
- 3 -
<PAGE>
highest-paid individuals on the basis of his own Compensation shall, together
with his spouse and any lineal descendants who have not attained age nineteen
(19) by the close of the Plan Year in question, be treated as a single Employee
under the Plan.
1.17 "Current Profits" shall mean the consolidated pre-tax profit reported
on the Company's audited income statement for its current fiscal year, deter-
mined in accordance with generally accepted accounting principles and methods
consistently applied, prior to any reduction for Company Matching Contributions
under Section 4.4 and Company Profit Sharing Contributions under Section 4.5.
1.18 "Direct Rollover" shall mean a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.19 "Distributee" shall mean an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code,
are Distributees with regard to the interest of the spouse or former spouse.
1.20 "Effective Date" shall mean January 1, 1987, except as otherwise
provided herein.
1.21 "Eligibility Computation Period" shall mean the twelve (12) consecu-
tive month period beginning on the first date on which the Employee is credited
with an Hour of Service and on each succeeding anniversary thereof.
1.22 "Eligible Earnings" shall mean (1) all payments made to any Eligible
Employee for services rendered to the Company, including bonuses, overtime pay,
commissions, (2) the Employee Deferral Contributions made on behalf of such
Eligible Employee for the Plan Year, (3) any elective pre-tax contributions
made on such Eligible Employee's behalf during the Plan Year pursuant to salary
deferral or reduction arrangements maintained by an Affiliated Company under
Section 125 or 408(k) of the Code, and (4) any special bonus or incentive-type
payments. In no event, however, shall more than Two Hundred Thousand Dollars
($200,000.00) of Eligible Earnings be taken into account per Employee for any
Plan Year beginning after December 31, 1988 and before January 1, 1994, or One
Hundred Fifty Thousand Dollars ($150,000.00) for Plan Years beginning on or
after January 1, 1994, as adjusted from time to time for increases in the cost-
of-living in accordance with Section 401(a)(17) of the Code.
Eligible Earnings shall not include (1) any remuneration paid to the
Employee prior to such Employee's commencement of participation in this Plan,
(2) any salary continuation payments made to an individual no longer in active
Employee status, when such individual is not expected to resume active Employee
status following the end of the salary continuation period, (3) any remunera-
tion paid in the form of reimbursed moving and relocation expenses or home
mortgage differential payments or any income reportable by reason of automobile
allowances provided by one or more Affiliated Companies, (4) any income
realized upon exercise of non-qualified stock options or upon disqualifying
dispositions of stock acquired under incentive stock options, (5) any income
recognized by the Employee under Section 79 of the Code by reason of group-term
life insurance coverage in excess of Fifty Thousand Dollars ($50,000.00), or
(6) any Affiliated Company contributions (other than the elective pre-tax
contributions described in the preceding paragraph) made to any pension, profit
sharing, stock bonus, group insurance or other employee welfare plan now or
hereafter adopted.
The following additional rules shall be applicable in determining an
individual's Eligible Earnings under the Plan:
(a) Each Highly Compensated Employee who is either a Five Percent (5%)
Owner or among the ten (10) highest-paid individuals on the basis of Compensa-
tion (as determined under Section 1.17) shall, together with his spouse and any
lineal descendants who have not attained age nineteen (19) by the close of the
- 4 -
<PAGE>
Plan Year in question, be treated as a single Employee unit under the Plan, and
the Eligible Earnings of such single Employee unit shall be deemed to include
the Eligible Earnings of such Highly Compensated Employee and his spouse and
lineal descendants who have not attained age nineteen (19) by the close of such
Plan Year.
(b) Not more than Two Hundred Thousand Dollars ($200,000.00) of Eligible
Earnings shall be taken into account per Employee for any Plan Year beginning
after December 31, 1988 and before January 1, 1994, subject to cost-of-living
adjustments authorized from time to time by the Secretary. In addition to any
other applicable limitations set forth in the Plan and notwithstanding any
other provisions of the Plan to the contrary, for Plan Years beginning on or
after January 1, 1994, the annual dollar amount of Eligible Earnings taken into
account under the Plan per Employee shall not exceed the limitation under Sec-
tion 401(a)(17) of the Code.
(c) The Eligible Earnings determined for any single Employee unit pur-
suant to subparagraphs (a) and (b) above shall be applied in the calculation of
(i) the aggregate amount of Employee Deferral Contributions (expressed as a
percentage of such Eligible Earnings) which the members of such Employee unit
may elect to be made on their behalf under the Plan and (ii) the aggregate
amount of Company Matching Contributions and Company Profit Sharing Contribu-
tions which are to be allocated to such members in accordance with Sections 4.4
and 4.5. The aggregate amount so calculated for each subparagraph (i) and (ii)
item shall be allocated among the members of the Employee unit in proportion to
their share of the Eligible Earnings taken into account for that unit. Each
member's share of such Eligible Earnings shall be in direct proportion to the
dollar amount of his individual Eligible Earnings prior to imposition of the
subparagraph (b) limitation above.
1.23 "Eligible Employee" shall mean each and every Employee of the Com-
pany. However, there shall be excluded from the class of Eligible Employees
for all purposes under the Plan:
(a) any Employee whose terms and conditions of employment are estab-
lished under a collective bargaining agreement pursuant to which
retirement benefits have been the subject of good-faith bargaining;
(b) any Employee who is a non-resident alien with no earned income
(within the meaning of Section 911(b) of the Code) from the Company which
constitutes income from sources within the United States (within the
meaning of Section 861(a)(3) of the Code);
(c) any Employee who is a member of a group or class of Employees
which the Board determines, pursuant to a policy which does not discrimi-
nate in favor of Highly Compensated Employees, not to include as Eligible
Employees under the Plan; or
(d) any Employee who has separated from active employment with the
Company by reason of Total Disability.
1.24 "Eligible Retirement Plan" shall mean an individual retirement
account described in Section 408(a) of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to a
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.25 "Eligible Rollover Distribution" shall mean 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 payment (not less frequently than
annually) made for the life expectancy of the Distributee or the joint life
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<PAGE>
expectancies of the Distributee and Distributee's Beneficiary or for a speci-
fied period of ten (10) 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.
1.26 "Employee" shall mean (a) any person who is employed by an Affiliated
Company to render personal services and whose earnings constitute wages under
Section 3121(a) of the Code, and (b) any individual who performs services for
an Affiliated Company if such individual is required to be treated as a Leased
Employee under Section 3.3.
1.27 "Employee Deferral Contributions" shall mean the employee-directed
Company contribution described in Section 4.1.
1.28 "Employee Deferral Contributions Account" shall mean the record of
money and assets derived from Employee Deferral Contributions as described in
Section 4.1 and held by the Trustee for the benefit of a Participant or Bene-
ficiary pursuant to the provisions of the Plan.
1.29 "Financial Hardship" shall mean an immediate and heavy financial need
of a Participant as set forth in Section 10.2(d).
1.30 "Five Percent (5%) Owner" shall mean:
(a) If the Affiliated Company is a corporation, any person who owns (or
is considered as owning within the meaning of Section 318 of the Code)
more than five percent (5%) of the outstanding stock of that corporation
or stock possessing more than five percent (5%) of the total combined
voting power of all stock of that corporation, or
(b) If the Affiliated Company is not a corporation, any person who owns
more than five percent (5%) of the capital or profits interest in that
entity.
For purposes of applying Section 318 of the Code to this Section 1.31,
subparagraph (C) of Section 318(a)(2) shall be applied by substituting "five
percent (5%)" for "fifty percent (50%)," and in the case the Affiliated Company
is not a corporation, ownership in such entity shall be determined in accor-
dance with Applicable Treasury regulations.
1.31 "Fixed Income Investment Sub-Account" shall mean a sub-account which
invests in separate investment funds composed primarily of debt obligations,
such as mortgages and bonds, providing a fixed rate of investment return.
1.32 "Fund" shall mean all sums of money and other property, together with
all earnings, income and increments thereon, attributable to the Plan and held
by the Trustee under the terms of the Trust Agreement.
1.33 "Funding Agent" shall mean any legal reserve life insurance company
or trustee selected by the Company to receive the Plan contributions and to pay
the benefits under and in accordance with the terms of the Plan.
1.34 "Highly Compensated Employee" shall mean any "Highly Compensated
Active Employee" or a "Highly Compensated Former Employee."
A "Highly Compensated Active Employee" shall mean any Employee who
performs service for the Employer or any Affiliated Company during the deter-
mination year and who, during the look-back year:
(a) was at any time a Five Percent (5%) Owner;
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(b) received annual Compensation in excess of $75,000 (as adjusted
for cost-of-living increases) from the Company or an Affiliated Company;
(c) received annual Compensation in excess of $50,000 (as adjusted for
cost-of-living increases) from the Company or an Affiliated Company and
was a member of the Top Paid Group of Employees during the same Plan Year;
or
(d) was at any time an officer of an Affiliated Company and received
Compensation greater than fifty percent (50%) of the limitation amount in
effect under Section 415(b)(1)(A) of the Code for such Plan Year.
For purposes of determining which Employees are "Highly Compensated
Employees," an Employee who was not described in subparagraphs (b), (c) or (d)
during the look-back year shall not be a Highly Compensated Employee for the
determination year under subparagraphs (b), (c) or (d) unless such Employee is
also among the one hundred (100) Employees who have earned the highest Compen-
sation with an Affiliated Company during such determination year. Notwith-
standing the foregoing, an individual who was a Highly Compensated Employee for
a look-back year due to the foregoing definition shall remain a Highly Compen-
sated Employee for the determination year. For purposes of this definition,
individuals who are nonresident aliens and who receive no earned income (as
defined in Section 911(d) of the Code) from the Company constituting income
from sources within the United States (as defined in Section 861(a)(3) of the
Code) shall not be considered as Employees.
In no event shall the number of officers to be treated as "Highly
Compensated Employees" under paragraph (c) above exceed fifty (50) Employees
(or if less, the greater of three (3) Employees or ten percent (10%) of all
Employees). Notwithstanding the foregoing, if no officer of the Company has
Compensation sufficient to be treated as "Highly Compensated Employee," the
highest paid officer of the Company for such Plan Year shall be treated as a
"Highly Compensated Employee." For purposes of applying the ten percent (10%)
limit, Employees excluded under Subsection 1.50(d) below shall be disregarded.
A "Highly Compensated Former Employee" shall mean any Employee who
separated (or was deemed to have separated) from service prior to the determin-
ation year, performs no service for the Employer or any Affiliated Company
during the determination year, and was a Highly Compensated Active Employee for
either the separation year or any determination year ending on or after the
Employee's fifty-fifth (55th) birthday.
For purposes of this paragraph, the determination year shall be the Plan
Year. The look-back year shall be the twelve (12)-month period immediately
preceding the determination year. Alternatively, the Employer may, by written
instrument, elect to use the calendar year coincidental with the current Plan
Year as the look-back year in accordance with the provisions of Income Tax
Regulation section 1.414(q)-1T, Q&A-14(b).
Family members of Highly Compensated Employees who qualify as Highly
Compensated Employees during either the determination year or look-back year
due to being Five Percent (5%) Owners or who are one of the top ten (10) Highly
Compensated Employees ranked on the basis of Compensation shall, along with
such Highly Compensated Employee, be treated as a single Highly Compensated
Employee, and their Compensation and amounts contributed on their behalf shall
be aggregated. For this purpose, a "family member" of a Highly Compensated
Employee shall include a spouse, a lineal ascendant or descendant, or a spouse
of such lineal ascendant or descendant of the Highly Compensated Employee.
1.35 "Hour of Service" shall have the meaning assigned to such term in
Section 2.1.
1.36 "Investment Manager" shall mean a person or persons who is an invest-
ment adviser registered under the Investment Advisers Act of 1940, a bank as
defined in such Act or an insurance company qualified to manage, acquire or
dispose of any Plan assets under the laws of more than one state.
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1.37 "1986 Profit Sharing Account" shall mean the Account established for
Participants who participated in the Plan prior to 1987.
1.38 "Normal Retirement Age" shall mean the time at which a Participant
attains age 65.
1.39 "Normal Retirement Date" shall mean the first day of the month
coincident with or next following the date in which the Employee attains Normal
Retirement Age.
1.40 "Participant" shall mean each Eligible Employee who participates in
the Plan pursuant to Section 3.1.
1.41 "Period of Severance" shall have the meaning assigned to it in
Section 2.4.
1.42 "Plan" shall mean the Amended and Restated Burr-Brown Corporation
Future Investment Trust, as set forth in this instrument, and as the same may
be amended from time to time.
1.43 "Plan Administrator" shall mean the Company.
1.44 "Plan Year" shall be the period commencing on each December 31st and
ending on December 30th of the following year; provided, however, there will be
a short Plan Year consisting of a single day, December 31, 1993, and there-
after, commencing January 1, 1994, it shall be the period commencing on each
January 1st and ending on the following December 31st. The Plan Year will be
the limitation year for purposes of Section 415 of the Code.
1.45 "Rollover Account" shall mean the record of money and assets derived
from a Rollover Contribution and held in the Fund for the benefit of an
Employee, Participant or Beneficiary pursuant to the provisions of the Plan.
1.46 "Rollover Contribution" shall mean funds which represent (a) all or
a portion of the assets credited to such Employee's account under any other
defined contribution plan satisfying the applicable qualification requirements
of Section 401(a) of the Code, whether such assets are held by a trustee,
insurance company, custodian or otherwise, or (b) the assets of any individual
retirement account established as a rollover account under Section 402(a)(5) of
the Code for a qualified plan distribution previously made to such person and
credited solely with amounts eligible for rollover to this Plan in accordance
with Section 408(d)(3)(ii) of the Code.
1.47 "Service" shall have the meaning assigned to it in Section 2.2.
1.48 "Severance Date" shall have the meaning assigned to it in Section
2.3.
1.49 "Spouse" shall mean a Participant's wife or husband who was lawfully
married to the Participant immediately prior to the Participant's date of
death. Notwithstanding the foregoing, a former spouse shall be treated as a
Spouse to the extent provided under a qualified domestic relations order as
described in Section 414(p) of the Code.
1.50 "Stock Bonus Account" shall mean the Account originally maintained
for a Participant, under the Company's Stock Bonus Plan and transferred to this
Plan as of July 1, 1989.
1.51 "Top Paid Group" shall mean all Employees who are in the top twenty
percent (20%) of the Employees of an Affiliated Company when ranked on the
basis of Compensation paid during the Plan Year. The following Employees may
be excluded for purposes of determining the total number of Employees to be
included in the Top Paid Group:
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<PAGE>
(a) Employees who have not completed six (6) months of service;
(b) Employees who normally work less than seventeen and one-half (17 1/2)
hours per week;
(c) Employees who normally work during not more than six (6) months a
year; and
(d) Employees who have not attained the age of twenty-one (21) years.
1.52 "Total Disability" shall mean a physical or mental condition which,
in the judgment of the Committee based upon competent medical evidence satis-
factory to the Committee, totally and permanently prevents the Participant from
engaging in any substantial gainful employment with the Company, provided such
Total Disability (a) did not arise while engaged in or as a result of having
engaged in a felonious or criminal act or enterprise, or (b) did not result
from service in the Armed Forces of the United States of America or of any
state thereof under circumstances entitling the Participant to a veteran's
disability pension. In determining whether a Participant is wholly or perma-
nently prevented from engaging in any substantial gainful employment with the
Company, there shall be excepted from consideration work performed pursuant to
a medically recommended plan for rehabilitation. The Committee will consider
a
Participant to have a Total Disability if he incurs the permanent loss or loss
of use of a member or function of the body.
1.53 "Total Distribution" shall mean a distribution to a Participant or a
Participant's beneficiary, within one (1) taxable year of such recipient, of
the entire balance to the credit of the Participant's Stock Bonus Account under
the Plan.
1.54 "Trust Agreement" shall mean the trust agreement or agreements
executed in connection with this Plan to provide for the administration and
investment of the Fund. The Trust Agreement shall constitute a part of the
Plan.
1.55 "Trustee" shall mean the trustee or trustees appointed under the
Trust Agreement.
1.56 "Valuation Date" shall mean March 31, June 30, September 30 or
December 31 of each Plan Year.
1.57 "Variable Income Investment Sub-Account" shall mean a sub-account
which invests in a separate investment fund under which the value of the
deposits to such account will vary (decrease or increase) to reflect investment
income and market value changes. Any one or any combination of the following
types of securities may be available:
(a) Common stocks,
(b) Bonds, and
(c) Cash and cash equivalents.
1.58 "Vesting Service" shall have the meaning assigned to it in Section
2.5.
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<PAGE>
1.59 Additional Terms. The following terms shall have the meanings
assigned to them in the specific sections of the Plan indicated:
<TABLE>
<CAPTION>
Term Section
<S> <C>
"Actual Deferral Percentage" 5.1(a)(1)
"Annual Additions" 4.8(a)
"Contribution Percentage" 5.3(a)(1)
"Defined Benefit Plan Fraction" 4.8(b)
"Defined Contribution Plan Fraction" 4.8(c)
"Determination Date" 18.1(a)
"Excess Aggregate Contributions" 5.2(a)(2)
"Excess Amount" 4.8(d)
"Excess Combined Contributions" 5.5(b)
"Excess Contributions" 5.1(a)(2)
"Highest Average Remuneration" 4.8(e)
"Key Employee" 18.1(b)
"Leased Employee" 3.3
"Limitation Year" 4.8(f)
"Maximum Permissible Amount" 4.8(g)
"Non-Key Employees" 18.1(c)
"Permissive Aggregation Group" 18.1(d)
"Projected Annual Benefit" 4.8(h)
"Remuneration" 4.8(i), 18.1(f)
"Required Aggregation Group" 18.1(e)
"Top-Heavy Contribution" 18.1(g), 18.3
"Top-Heavy Valuation Date" 18.1(i)
"Top-Heavy Ratio" 18.1(h)
</TABLE>
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<PAGE>
ARTICLE II
SERVICE DEFINITIONS
2.1 Hour of Service. The term "Hour of Service" shall mean: (a) an hour
for which an Employee is paid or entitled to payment by an Affiliated Company
for the performance of duties, (b) an hour for which an Employee is paid or
entitled to payment by an Affiliated Company for a period during which no
duties are performed (whether or not the employment relationship has termin-
ated) on account of vacation, holiday, illness, incapacity (including Total
Disability), layoff, jury duty, military duty or leave of absence, and (c) an
hour (to the extent not already credited under subparagraph (a) or (b) above)
for which back pay for the Employee is awarded or agreed to by an Affiliated
Company, irrespective of mitigation of damages. However, any hour for which an
Employee is directly or indirectly paid under a plan maintained by an
Affiliated Company solely to comply with applicable worker's compensation,
unemployment compensation or disability insurance laws or solely to reimburse
the Employee for medical or medically-related expenses incurred by the Employee
shall not be counted as an Hour of Service.
2.2 Service. The term "Service" shall mean the Participant's period or
periods of employment with the Company or any other Affiliated Company. Each
such period shall begin with the date on which the Employee first renders one
(1) Hour of Service for the Company or an Affiliated Company and end with the
first Severance Date thereafter which marks the start of a Period of Severance
of twelve (12) consecutive months or more. Any Period of Severance of less
than twelve (12) consecutive months shall be included within the Participant's
period of Service. Accordingly, the overall Service of the Participant shall
be comprised of the period of employment (whether or not continuous) commencing
on the date on which he first renders one (1) Hour of Service for the Company
or an Affiliated Company and ending with his final Severance Date, but there
shall be excluded from Service any intervening Period of Severance of twelve
(12) consecutive months or more. In addition, the following special rules
shall be applicable to the determination of the Participant's overall period of
Service:
(a) If any pension or profit-sharing plan maintained by a corporation,
partnership, proprietorship or other business entity which becomes a partici-
pating Company or is merged into, consolidated with, or all or a substantial
part of the assets of which are acquired by, any participating Company is
deemed under Section 414(a)(1) of the Code and the applicable Regulations to be
a "predecessor plan" to this Plan, then Service shall include, for each parti-
cipant in such predecessor plan, all periods of employment rendered by such
person prior to the acquisition or affiliation which are required to be taken
into account for eligibility and vesting purposes under the predecessor plan.
(b) To the extent subparagraph (a) is not otherwise applicable, Service
shall include, for each employee of a corporation, partnership, proprietorship
or other business entity which is merged into, consolidated with, or all or a
substantial part of the assets of which are acquired by, any participating Com-
pany, such periods of employment rendered by such person to the predecessor
employer prior to the acquisition or affiliation as the Committee shall deem
appropriate; provided such determination shall not discriminate in favor of
Highly Compensated Employees.
(c) The Participant's overall period of Service shall be divided into one
(1) or more months of Service on the basis that each thirty (30) days of Ser-
vice (whether or not completed consecutively) equals one (1) full month of
Service, and for every twelve (12) months of Service (as so calculated)
rendered by the Participant, he shall be credited with one (1) full year of
Service.
2.3 Severance Date.
(a) The term "Severance Date" shall mean the earlier of (1) the date on
which the Employee quits, dies, retires or is discharged, or (2) the date which
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is twelve (12) months after the commencement date of any other absence from
employment with the Company or an Affiliated Company; provided, however, that
layoffs, approved leaves of absence and Maternity and Paternity Leaves shall be
governed by the specific provisions of subparagraphs (b), (c) and (d).
(b) An Employee who is absent from active employment by reason of a
leave of absence approved by the Affiliated Company employing him shall not
incur a Severance Date during the period of the leave, provided such Employee
returns to active employment with the Affiliated Company within thirty (30)
days after the expiration date of the period for which such leave of absence is
authorized or (if applicable) prior to the expiration date of any longer period
of time for which the reemployment rights of the Employee are protected by law.
Leaves of absence may be approved, in accordance with a uniform and non-
discriminatory policy, for reasons of health, governmental service, military
duty or other purpose. Except as otherwise provided in Section 2.2(a), should
the Employee fail to return to active employment with an Affiliated Company
within the applicable time period following the termination of the leave, then
such Employee shall (unless such failure is occasioned by reason of retirement,
death or Total Disability) be deemed to have incurred a Severance Date as of
the earliest of (1) the date which is twelve (12) months after the commencement
of such leave of absence, (2) the date on which the authorized period of such
leave expires, or (3) the date on which the Employee quits or is discharged. If
the Employee fails to return to active employment within the applicable time
period by reason of his death, Total Disability or retirement, then such
Employee shall be deemed to have incurred a Severance Date as of the date of
his death, Total Disability or retirement.
(c) An Employee who remains absent from active employment by reason of a
Maternity or Paternity Leave (as defined below) shall be deemed to incur a
Severance Date upon the earlier of (1) the date which is twenty-four (24)
months after the commencement of the Maternity or Paternity Leave, or (2) the
date on which the Employee quits, dies or retires; provided, however, that
solely for purposes of calculating Vesting Service under Section 9.3, only the
first twelve (12) months of such Maternity or Paternity Leave shall be taken
into account as Service and the next twelve (12) months of such Maternity or
Paternity Leave shall be considered neither a period of Service nor a Period of
Severance. In the event the Maternity or Paternity Leave also constitutes an
approved leave of absence under Section 2.3(b), then the provisions of Section
2.3(b), to the extent they provide more favorable Service credits to the
Employee than the corresponding provisions of this Section 2.3(c), shall be
controlling.
For purposes of this Section 2.3(c), a Maternity or Paternity Leave is any
absence of the Employee, whether or not approved under Section 2.3(b), which is
directly attributable to and caused by any one of the following:
(1) such Employee's pregnancy,
(2) the birth of a child of such Employee,
(3) the placement of a child with such Employee in connection with the
Employee's adoption of such child, or
(4) the care of such child for a period beginning with such birth or
placement.
The Committee may, as a condition to the Employee's qualification for the
special benefits provided under this Section 2.3(c), require the Employee to
provide written confirmation and other substantiation as follows:
(i) on or before the commencement of the leave, that the absence
will qualify as a Maternity or Paternity Leave in accordance with
the criteria specified in subparagraphs (1) through (4) above, and
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<PAGE>
(ii) on or before the completion of the leave, the number of days
for which the Maternity or Paternity Leave was in fact incurred for
one or more of the causes specified in subparagraphs (1) through (4)
above.
(d) An Employee who is absent from active employment by reason of a
temporary layoff shall not incur a Severance Date during the period of such
layoff, provided such Employee returns to active employment with an Affiliated
Company within thirty (30) days after the date the Employee is recalled to
employment. If the Employee fails to return to active employment prior to the
expiration of such thirty (30) day period or if the Employee is not recalled to
employment within twelve (12) months after the commencement date of the layoff,
then such Employee shall be deemed to have incurred a Severance Date as of the
earliest of (1) the date which is twelve (12) months after the commencement
date of the layoff, (2) the date of the recall, or (3) the date the Employee
quits, dies, retires or is discharged.
2.4 Period of Severance. The term "Period of Severance" shall mean the
period commencing with the Employee's Severance Date and ending with the date
on which such Employee next performs one (1) Hour of Service.
2.5 Vesting Service. The term "Vesting Service" shall mean the
Employee's overall period of Service measured from the date he first completes
one (1) Hour of Service under Section 2.1 (including Service rendered prior to
the Effective Date) and ending with his final Severance Date; provided, how-
ever, that there shall not be included within such Vesting Service any
Period(s) of Severance of twelve (12) consecutive months or more. The
Employee's period of Vesting Service shall be divided into one (1) or more
months of Vesting Service on the basis that each thirty (30) days of Vesting
Service (whether or not completed consecutively) equals one (1) full month of
Vesting Service, and for each twelve (12) months of Vesting Service (as so
calculated) rendered by the Employee, he shall be credited with one year of
Vesting Service. However, all Vesting Service credited under the Plan shall be
subject to the rules set forth in this Article II, Section 3.4 and Section 9.4.
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ARTICLE III
EMPLOYEES ENTITLED TO PARTICIPATE
3.1 Eligibility to Participate. Each Eligible Employee who is a Partici-
pant in the Plan as of December 31, 1992 will continue to be a Participant in
the Plan as of January 1, 1993. Each other Eligible Employee in the employ of
a Participating Company on or after January 1, 1993 shall be eligible to become
a Participant coincident with the date he completes an Hour of Service.
3.2 Election to Participate in Employee Deferral Contributions Portion of
Plan. An Eligible Employee may become a Participant pursuant to Section 3.1
for purposes of Sections 4.1 and 4.4 once he has executed and delivered to the
Committee an election form prescribed by the Company: (a) specifying his chosen
rate of Employee Deferral Contributions, (b) authorizing the Company to reduce
his Eligible Earnings by the amount of such contributions, (c) making invest-
ment elections as described in Article VII, and (d) designating one or more
Beneficiaries under the Plan. No Employee shall become a Participant in the
Plan for purposes of Sections 4.1 and 4.4 of the Plan until he has completed
all of the above requirements.
3.3 Leased Employees. Any Leased Employee shall be treated as an Employee
(but not an Eligible Employee) of the Affiliated Company which is the recipient
of his services. However, any contributions or benefits provided by the leas-
ing organization, to the extent attributable to services performed for the
Affiliated Company, shall be treated as provided by such recipient Affiliated
Company.
For purposes of this Section 3.3, "Leased Employee" shall mean any person
(other than an actual Employee of an Affiliated Company) who has, pursuant to
any agreement between the recipient Affiliated Company and any other person
(the "leasing organization"), performed services for the recipient Affiliated
Company (or the recipient Affiliated Company and any related entity determined
in accordance with Section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one (1) year, and such services are of a type
historically performed by employees in the business field of the recipient
Affiliated Company (or such related entity). Upon completion of such year of
service, the Leased Employee shall be treated as an Employee (but not as an
Eligible Employee) for all purposes of the Plan, and his period of Service
shall include the entire period for which the Leased Employee has performed
services for the recipient Affiliated Company.
In no event, however, shall a Leased Employee be treated as an Employee if
(a) such Leased Employee is covered by a money purchase pension plan providing
(1) a nonintegrated employer contribution rate of at least ten percent (10%) of
Compensation, (2) immediate participation, and (3) full and immediate vesting;
and (b) the total number of Leased Employees does not constitute more than
twenty percent (20%) of the non-Highly Compensated work force.
3.4 Effect of Rehiring. Should an Employee incur a Severance Date and
thereafter return to Service, the following special rules shall be in effect
for determining the date which the Employee is first eligible to participate in
the Plan following his return:
(a) Should such Employee incur a Period of Severance of sixty (60) months
or more prior to his completion of at least twelve (12) months of Service, then
such Employee shall, upon resumption of Service, be treated as a new Employee
for eligibility and vesting purposes (as described in Article II and Section
9.4), and he shall be eligible to participate in the Plan coincident with the
date that he next renders an Hour of Service.
(b) Should such Employee incur a Period of Severance of twelve (12)
consecutive months or more but less than sixty (60) months, then such Employee
shall retain his prior Service credits for eligibility and vesting purposes (as
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described in Article II and Section 9.4), but the applicable date for purposes
of accruing future Service credits upon his resumption of Service shall be
adjusted to the first day following such Period of Severance on which the
Employee next renders an Hour of Service. Such Employee shall be eligible to
participate in the Plan coincident with the date that he next renders an Hour
of Service.
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<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.1 Employee Deferral Contributions. The Company intends to continue
the Plan indefinitely and to contribute to the Fund hereunder each Plan Year
pursuant to the provisions of this Article IV. Subject to the special rules
set forth in this Article IV, each Participant may designate any Employee
Deferral Contributions rate by which his Eligible Earnings are to be reduced
from one percent (1%) to ten percent (10%) (fifteen percent (15%) for Partici-
pants who are not Highly Compensated Employees), in increments of whole per-
centage points (subject to Section 5.6). The Employee Deferral Contributions
shall be determined by multiplying the Participant's Eligible Earnings earned
during a payroll period by his designated Employee Deferral Contributions rate.
The rate designated by the Participant shall remain in force until the Partici-
pant changes or suspends such rate pursuant to Section 4.2 or 4.3. Contribu-
tions under this Section 4.1 shall be made by means of Eligible Earnings
reductions and the amounts so deducted shall be paid as soon as administra-
tively feasible to the Fund by the Company and shall be credited to the
Employee Deferral Contributions Accounts of Participants. Effective January 1,
1993, a Participant may not designate any back pay award as an Employee Defer-
ral Contribution.
4.2 Changes in Contribution Rates. A Participant's Employee Deferral
Contributions rate will remain in effect, notwithstanding any change in
Eligible Earnings, until the Participant elects to change such rate. A
Participant may elect to change his Employee Deferral Contributions rate four
(4) times during any Plan Year. The change in Employee Deferral Contributions
rate will be effective as soon as administratively practicable after a written
election is received by the Committee. No change can be made in an Employee
Deferral Contributions rate unless and until a prior change has been in effect
for at least thirty (30) days.
4.3 Suspension of Contributions. A Participant may elect to suspend all
contributions to the Plan as of any payroll date, if no less than thirty (30)
business days prior to such payroll date, the Committee has received written
notice of his suspension of contributions. A Participant who has suspended his
contributions may not resume making contributions until the first payroll
period beginning at least three (3) months after the date of suspension. Once
eligible to resume contributions, a Participant may resume contributions as
soon as administratively feasible following the date the Participant delivers
his written election to resume contributions to the Committee following the
suspension period.
4.4 Company Matching Contributions. The Company will make Matching Con-
tributions to the Trustee out of its Current Profits, and these contributions
shall be credited to the Company Matching Contributions Account on behalf of
each Participant. The amount of the Company Matching Contributions made by the
Company for any Plan Year on behalf of a Participant shall be equal to twenty-
five percent (25%) of the Employee Deferral Contributions actually made here-
under on behalf of the Participant, to the extent those Employee Deferral
Contributions do not exceed ten percent (10%) of the Participant's Eligible
Earnings for that Plan Year. However, the maximum aggregate Company Matching
Contribution which is to be made on behalf of all Participants for any Plan
Year shall not exceed ten percent (10%) of the Company's Current Profits for
that Plan Year. In the event this latter limitation were to be exceeded, the
rate of Company Matching Contributions to be in effect for each Participant for
the Plan Year shall be reduced, unless the Board in its sole discretion author-
izes an aggregate Company Matching Contribution for that Plan Year in excess of
ten percent (10%) of the Current Profits. Company Matching Contributions shall
be made no later than the last day prescribed by law for filing the Company's
federal income tax return for such Plan Year, including extension thereof.
Company Matching Contributions shall be allocated to the Company Matching
Contributions Account on the basis of the percentage match in effect for the
Participant's Employee Deferral Contributions.
4.5 Profit Sharing Contributions. The Board may in its sole discretion
make an additional Company Profit Sharing Contribution for any Plan Year out of
its Accumulated Profits. In the event the Company shall make a Company Profit
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Sharing Contribution to the Trust, such contribution shall be allocated as of
the year-end Valuation Date for that Plan Year among the Company Profit Sharing
Accounts of each Participant who is an Eligible Employee as of such Valuation
Date, in the same proportion that such Participant's Eligible Earnings for the
Plan Year bears to the total Eligible Earnings of all eligible Participants for
such Plan Year. Such contribution may be made in cash, securities and/or
property, at the discretion of the Company.
4.6 Rollover Contributions. Upon the Company's request, the Committee
may permit an Employee to contribute to the Plan a Rollover Contribution, pro-
vided the Committee is satisfied that the amount to be rolled over to the Plan
constitutes a Rollover Contribution under federal tax law and as permitted
under Section 8.3. The Employee's request shall set forth the amount of cash
to be contributed as the Rollover Contribution and such contribution shall be
credited to the Employee's Rollover Account in accordance with Article VIII.
4.7 General Limitations on Company and Employee Deferral Contributions.
In no event shall the amount of the Employee Deferral Contributions, Company
Profit Sharing Contributions and Company Matching Contributions made to this
Plan for any Plan Year exceed the lesser of:
(a) The maximum amount allowable as a deduction in computing the
Company's taxable income for that Plan Year for federal income tax pur-
poses under Section 404 of the Code.
(b) The aggregate amount of the Employee Deferral Contributions, Company
Profit Sharing Contributions and Company Matching Contributions that may
be allocated to Accounts of Participants under the provisions of Articles
IV and V.
4.8 Special Definitions.
(a) "Annual Additions" shall mean the sum of the following amounts
credited to a Participant's Accounts for the Limitation Year:
(1) Employee Deferral Contributions;
(2) Company Matching Contributions;
(3) Company Profit Sharing Contributions; and
(4) Forfeitures, if any.
For this purpose, any excess amount applied under Section 4.10 in the
Limitation Year to reduce Company contributions will be considered Annual
Additions for such Limitation Year, but any Rollover Contributions contributed
to the Plan shall not be considered.
Affiliated Company contributions and any forfeitures allocated to the
Participant's accounts under any other defined contribution plans to which one
or more Affiliated Companies contribute are treated as Annual Additions.
Amounts allocated to an individual medical account as defined in Section 415(l)
(2) of the Code, which is part of a defined benefit plan maintained by the
Affiliated Company are treated as Annual Additions to a defined contribution
plan. Also, amounts derived from contributions paid or accrued after December
31, 1985, in taxable years ending after such date, that are attributable to
post-retirement medical benefits allocated to the separate account of the
Participant as a Key Employee (as defined in Section 18.1(b)) under a welfare
benefit fund (as defined in Section 419(e) of the Code), maintained by the
Affiliated Company, are treated as Annual Additions to a defined contribution
plan. Finally, the amount of any after-tax contributions made by the Partici-
pant to any other defined contribution plan of the Affiliated Companies for the
Limitation Year shall be treated as an Annual Addition.
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<PAGE>
(b) "Defined Benefit Plan Fraction" shall mean for any Plan Year a frac-
tion the numerator of which is the projected annual benefit of the Participant
(determined as of the close of the Limitation Year), under all defined benefit
plans (whether or not terminated) maintained by the Affiliated Companies, and
the denominator of which is the lesser of (i) the product of the maximum
benefit allowable under Section 415(b) of the Code for such Limitation Year
times 1.25, or (ii) the product of 1.4 times the maximum amount of Remuneration
which may be taken into account under Section 415(b)(1)(B) of the Code with
respect to such Limitation Year.
(c) "Defined Contribution Plan Fraction" shall mean for any Limitation
Year a fraction the numerator of which is the sum of the Annual Additions to
the Participant's accounts under this Plan and all other defined contribution
plans (whether or not terminated) maintained by the Affiliated Companies in
such Limitation Year and for all prior Limitation Years, and the Annual Addi-
tions attributable to all welfare benefit funds, as defined in Section 419(e)
of the Code, maintained by the Company, and the denominator of which is the
lesser of (i) the product of the maximum amount of Annual Additions which could
have been made under Section 415(c) of the Code for such Limitation Year and
for each prior year of service with the Company (regardless of whether a
defined contribution plan as defined in Section 414(i) of the Code was in exis-
tence during those years) times 1.25, or (ii) the product of 1.4 times the sum
of the maximum amount of Remuneration which may be taken into account under
Section 415(c)(1)(B) of the Code for such Participant for such Limitation Year
and for each prior year of service with the Company.
(d) "Excess Amount" shall mean the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(e) "Highest Average Remuneration" shall mean the average Remuneration
for the three (3) consecutive calendar years during which a Participant was an
active participant in a plan which produces the highest average.
(f) "Limitation Year" shall mean with respect to the Company, the Plan
Year. The Company may elect to change to a different twelve (12) month period,
change in the Limitation Year shall be a change to a twelve (12) month period
commencing with any day within the then current Limitation Year.
(g) "Maximum Permissible Amount" shall mean the lesser of (1) Thirty
Thousand Dollars ($30,000) or, if greater, one-fourth of the dollar limitation
under Section 415(b)(1)(A) of the Code (as adjusted for each Limitation Year
commencing after December 31, 1988, to take into account any cost-of-living
increase adjustment for that Limitation Year allowable pursuant to the appli-
cable Treasury regulations or rulings under Section 415(d) of the Code; any
such adjustment shall be effective only as of January 1 of the Limitation Year
ending within the respective calendar year for which the cost-of-living
increase adjustment is announced, or (2) twenty-five percent (25%) of the
Participant's Remuneration for the Limitation Year, provided, however, the
limitation under subparagraph (i) shall not apply to any contribution for
medical benefits (within the meaning of Section 419A(f)(2) of the Code) after
separation from service which is treated as an Annual Addition. If a short
Limitation Year is created because of an amendment changing the Limitation Year
to a different twelve (12) consecutive month period, the Maximum Permissible
Amount shall not exceed Thirty Thousand Dollars ($30,000) multiplied by the
following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(h) "Projected Annual Benefit" shall mean the annual retirement benefit
(adjusted to an actuarially equivalent straight light annuity if such benefit
is expressed in a form other than a straight life annuity or qualified joint
and survivor annuity) to which the Participant would be entitled under the
terms of the defined benefit plan of the Affiliated Company, assuming:
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<PAGE>
(1) the Participant will continue employment until normal retire-
ment age under that plan (or current age, if later), and
(2) the Participant's Remuneration for the current Limitation Year
and all other relevant factors used to determine benefits under that
plan will remain constant for all future Limitation Years.
(i) "Remuneration" shall mean the Compensation paid to the Participant
for the Limitation Year, adjusted, however, to exclude the following items for
such Limitation Year: (1) any Employee Deferral Contributions made on such
individual's behalf under this Plan; and (2) any other elective contributions
made on his behalf pursuant to salary deferral or reduction arrangements main-
tained by one or more Affiliated Companies under Sections 125, 401(k), 408(k)
and 403(b) of the Code.
4.9 Limitation on Annual Addition. The total Annual Addition to a
Participant's Accounts under this Plan and any other defined contribution plans
to which one or more Affiliated Companies contributes shall not for any Limita-
tion Year exceed the Maximum Permissible Amount.
4.10 Remedial Action. If the Annual Addition with respect to the Accounts
of any Participant under this Plan and any other defined contribution plans to
which one or more Affiliated Companies contributes would for any Limitation
Year exceed the limitations imposed by Section 4.9, then the following reduc-
tions to such Annual Addition shall be made, in the order indicated and to the
extent necessary to eliminate such excess:
(a) First, the Participant's after-tax employee contributions under any
other defined contribution plans to which one or more Affiliated Companies
contributes shall be refunded.
(b) Then, any Employee Deferral Contributions made on the Participant's
behalf for the Plan Year coincident with such Limitation Year which were not
entitled to a Company Matching Contribution under Section 4.4 shall be distri-
buted to the Participant as a current cash payment, subject to applicable
withholding taxes.
(c) Next, any Employee Deferral Contributions made on the Participant's
behalf for the Plan Year coincident with such Limitation Year which were
entitled to a Company Matching Contribution under Section 4.4 shall be distri-
buted to the Participant as a current cash payment, subject to applicable
withholding taxes, and no Company Matching Contributions shall be made with
respect to the distributed Employee Deferral Contributions. Accordingly, the
Company Matching Contributions for such Plan Year are to be reduced as follows:
(1) To the extent Company Matching Contributions have not already
been made under the Plan on the Participant's behalf, the reduction shall be
effected by making an appropriate reduction in the aggregate amount of Company
Matching Contributions required for such Plan Year to take into account the
distributed Employee Deferral Contributions no longer eligible for a match
under Section 4.4.
(2) To the extent Company Matching Contributions have already been
allocated to the Participant's Company Matching Contributions Account for the
Plan Year coincident with such Limitation Year, such Company Matching Contri-
butions (to the extent attributable to the distributed Employee Deferral
Contributions) shall be withdrawn from the Account and reapplied to the satis-
faction of any Company Matching Contributions still to be made on behalf of
other Participants for such Plan Year. Any Company Matching Contributions
withdrawn from the Company Matching Contributions Account and not so reapplied
shall be held unallocated in a suspense account and shall be used to reduce the
Company Matching Contributions required to be made for each succeeding Plan
Year until the suspense account is reduced to zero (0). No profits or losses
attributable to the assets of the Fund shall be allocated to the suspense
account, nor shall any contributions to the Plan (other than Employee Deferral
Contributions) be made by the Company while there is an outstanding balance in
19
<PAGE>
such suspense account. Upon the termination of the Plan, any outstanding
balance in the suspense account shall revert to the Company.
(3) Then, the Participant's allocable share of forfeitures under this
Plan shall be subject to disposition in accordance with the provisions of
Section 4.11.
(4) Then, the Participant's share of the Company Profit Sharing Contri-
butions (if any) for the Plan Year coincident with such Limitation Year shall
be reduced. The reduction shall be effected by (i) assuming, for purposes of
the Section 4.5 allocation for such Plan Year, that the Participant's Eligible
Earnings for the Plan Year is at a sufficiently reduced level to avoid an
allocation of the Company Profit Sharing Contributions for such Plan Year which
would otherwise be in excess of the applicable Section 4.9 limitation and (ii)
making an appropriate reduction in the aggregate Company Profit Sharing Contri-
butions for such Plan Year. Such reduction shall have no effect upon any other
eligible Participant's allocable share of the Company Profit Sharing Contribu-
tions for such Plan Year.
(5) Finally, the Participant's allocable share of employer contributions
and forfeitures under any other defined contribution plans to which one or more
Affiliated Companies contributes shall be subject to reduction or other dispo-
sition in accordance with the applicable provisions of such other plans.
4.11 Reallocation of Forfeitures. Should a Participant's allocable share
of forfeitures for the Limitation Year exceed the amount which may be allocated
to his Accounts in accordance with Section 4.9, then such excess shall be
allocated and reallocated, as of the close of that Limitation Year, to the
Company Profit Sharing Contribution Accounts of all other eligible Participants
in accordance with Section 4.5, to the extent such allocation or reallocation
will not cause the Section 4.9 limits to be exceeded in such Limitation Year.
Any amount not so allocated as of the close of such Limitation Year shall be
credited to a suspense account and shall be allocated, as of the close of each
succeeding Limitation Year, to the Company Profit Sharing Contributions
Accounts of all eligible Participants pursuant to Section 4.5, to the extent
the allocation will not cause the Section 4.9 limits to be exceeded in any such
Limitation Year. The Company shall not, for any Plan Year (other than the Plan
Year in which the excess forfeitures arise), make any Company Matching
Contributions, Company Profit Sharing Contributions or Employee Deferral
Contributions if there is an outstanding balance in the suspense account as of
the close of the Limitation Year coincident with such Plan Year. Under no
circumstances shall the suspense account participate in the periodic allocation
of earnings, gains and losses of the Fund pursuant to Section 8.2.
4.12 Time Period for Payment of Company Contributions. The Company
contributions for any Plan Year shall be determined and paid to the Trustee
not later than the time prescribed by law, including any extensions thereof,
for filing of the Company's federal income tax return for such year.
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<PAGE>
ARTICLE V
SPECIAL RULES GOVERNING EMPLOYEE DEFERRAL
CONTRIBUTIONS AND COMPANY MATCHING CONTRIBUTIONS
5.1 Limitations on Employee Deferral Contributions of Highly Compensated
Employees.
(a) Definitions. For purposes of this Article V, the following defini-
tions shall apply:
(1) "Actual Deferral Percentage" shall mean the average of the
ratios (calculated separately for each Eligible Employee) of (i) the
amount of Employee Deferral Contributions actually payable to the
Fund under the Plan on behalf of each such Eligible Employee for such
Plan Year to (ii) such Eligible Employee's Compensation for such Plan
Year; provided, however, the Actual Deferral Percentages of an
Eligible Employee who is a Highly Compensated Employee participating
in two (2) or more plans described in Section 401(k) of the Code
maintained by the Affiliated Company shall be calculated in accor-
dance with Section 401(k)(3)(A) of the Code.
(2) "Excess Contributions" shall mean the excess of (i) the
aggregate amount of Employee Deferral Contributions contributed to
the Fund on behalf of Highly Compensated Employees for the Plan Year,
over (ii) the maximum amount of Employee Deferral Contributions
permitted under the limitations of Section 5.1(b).
(b) Any other provision of the Plan to the contrary notwithstanding, the
average of the Actual Deferral Percentage for Highly Compensated Employees
for a Plan Year must bear such a relationship to the average of the Actual
Deferral Percentage for all other Eligible Employees for such Plan Year so
that at least one of the following two (2) tests is satisfied:
(1) The average of the Actual Deferral Percentage for the group of
Highly Compensated Employees is not more than the average of the
Actual Deferral Percentage of all other Eligible Employees multiplied
by 1.25; or
(2) The excess of the average of the Actual Deferral Percentage for
the group of Highly Compensated Employees over that of all other
Eligible Employees is not more than two (2) percentage points,
provided the average of the Actual Deferral Percentage for the group
of Highly Compensated Employees is not more than the average of the
Actual Deferral Percentage of all other Eligible Employees multiplied
by two (2).
(c) The Committee shall determine from time to time whether the Employee
Deferral Contributions made or to be made in any Plan Year on behalf of
Highly Compensated Employees might cause the Plan to fail to comply with
the foregoing limitations. If the Committee determines that such a
failure might occur, the Committee may in its sole discretion reduce the
maximum percentage of Eligible Earnings that may be elected as Employee
Deferral Contributions under the Plan by Highly Compensated Employees or,
if necessary to effect such compliance, may cause a distribution of Excess
Contributions as provided in Section 5.2. Each determination by the
Committee shall be made in its sole judgment and shall be conclusive.
5.2 Excess Contributions.
(a) If the Employee Deferral Contributions otherwise applicable to the
Employee Deferral Contributions Accounts of Participants for the Plan Year
would not satisfy one of the requirements of Section 5.1(b), then either or
both of the remedial actions set forth below shall be taken:
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<PAGE>
(1) The Committee may, in its sole discretion, at any time during
the Plan Year, reduce the Employee Deferral Contributions of one or more
Participants who are among the group of Highly Compensated Employees to the
maximum deferral percentage permissible for such Participant(s) without contra-
vention of the requirement that the aggregate Employee Deferral Contributions
made on behalf of all Participants who are Highly Compensated Employees satisfy
one of the deferral percentage tests of Section 5.1(b).
(2) The Excess Contributions (and any income allocable to such
contributions) made for the Plan Year on behalf of Participants who are among
the group of Highly Compensated Employees shall be distributed to them as a
current cash payment, subject to all applicable withholding taxes, prior to the
close of the Plan Year subsequent to the Plan Year in which the requirements of
Section 5.1(b) have not been met. (In order for the Company to avoid an excise
tax under Section 4979 of the Code, such distribution would have to be made
within two and one-half (2 1/2) months after the close of the Plan Year.) In
order to determine that amount of Excess Contributions and the Highly Compen-
sated Employees to whom the Excess Contributions are to be distributed, the
Employee Deferral Contributions of Highly Compensated Employees shall be
reduced in order of the Actual Deferral Percentages beginning with those Highly
Compensated Employees with the highest Actual Deferral Percentages until such
reduced percentage equals the greater of (i) the Actual Deferral Percentage
required in order to allow the Actual Deferral Percentage for all Highly
Compensated Employees to satisfy the limitation of Section 5.1(b) or (ii) the
Actual Deferral Percentage of the Highly Compensated Employee with the next
highest percentage; then, the process shall be repeated in the order of the
Actual Deferral Percentages for the Highly Compensated Employees, beginning
with the Employee with the next highest percentage until the limitation of
Section 5.1(b) is satisfied for the aggregate Employee Deferral Contributions
made on behalf of all Highly Compensated Employees.
(b) Any distribution required pursuant to Section 5.2(a) shall be
effected in compliance with the following procedures:
(1) The amount of Excess Contributions to be distributed with
respect to a Plan Year shall be reduced by the excess Employee Deferral Contri-
butions previously distributed to the Highly Compensated Employee pursuant to
Section 5.5 for the calendar year coincident with the same Plan Year.
(2) The distribution to the affected Highly Compensated Employees
shall be made in proportion to their share of Excess Contributions for the Plan
Year.
(3) Income for the Plan Year for which the Excess Contributions
were made shall be distributed with the Excess Contributions. Income allocable
to such Excess Contributions shall be calculated by multiplying (i) the income
allocable to the Participant's Employee Deferral Contributions Account for the
Plan Year for which the Excess Contribution are made by (ii) a fraction the
numerator of which is the Excess Contribution made on the Participant's behalf
for the Plan Year and the denominator of which is the balance credited to the
Participant's Employee Deferral Contributions Account on the last day of such
Plan Year, decreased by the earnings and increased by the losses allocable to
such Account for such Plan Year.
(4) The Excess Contribution together with the income allocable
thereto, shall at the time of such distribution be deducted from the Partici-
pant's Employee Deferral Contributions Account.
(5) Should the Actual Deferral Percentage of a Highly Compensated
Employee be determined on the basis of the Compensation and Employee Deferral
Contributions of such individual and his family members pursuant to Section
1.35, then the excess Employee Deferral Contributions of such Highly Compen-
sated Employee shall be determined and distributed as follows: first, the
excess Employee Deferral Contributions attributable to the family group shall
be determined by adding together the Employee Deferral Contributions and the
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<PAGE>
Compensation, respectively, of all family members whose Employee Deferral
Contributions and Compensation are taken into account in calculating the Actual
Deferral Percentage of such Highly Compensated Employee; and then the excess
Employee Deferral Contributions so determined shall be allocated among those
family members in proportion to the Employee Deferral Contributions of each
family member and distributed to them in accordance with such allocation.
5.3 Limitations on Allocation of Matching Contributions to Accounts of
Highly Compensated Employees.
(a) Definitions. For purposes of this Section 5.3, the following
definitions shall apply:
(1) "Contribution Percentage" shall mean the average of the ratios
(calculated separately for Highly Compensated Employees and for all other
Eligible Employees) of (i) the Company Matching Contributions payable to the
Fund under the Plan on behalf of each such Highly Compensated Employee or each
of the other Eligible Employees for such Plan Year (plus, at the election of
the Company and to the extent allowed by applicable Treasury regulations, the
Employee Deferral Contributions made on behalf of the Highly Compensated
Employees or the other Eligible Employees for the Plan Year) to (ii) the
Compensation of the Highly Compensated Employees or the other Eligible
Employees for such Plan Year, provided, however, the Contribution Percentage of
an Eligible Employee who is a Highly Compensated Employee participating in two
(2) or more plans maintained by an Affiliated Company shall be calculated in
accordance with Section 401(m)(2)(B) of the Code. The Contribution Percentage
for the family unit of a Highly Compensated Employee which is subject to the
aggregation rules set forth in Section 1.35 shall be the Contribution Percent-
age determined by combining the Company Matching Contributions and Compensation
of all eligible family members. The Company Matching Contributions and Compen-
sation of all family members are disregarded in determining the actual Contri-
bution Percentages for the group of Employees who are not Highly Compensated
Employees.
(2) "Excess Aggregate Contributions" shall mean the excess of (i)
the amount of Company Matching Contributions (and Employee Deferral Contribu-
tions taken into account in computing the Contribution Percentage) actually
made on behalf of Highly Compensated Employees for the Plan Year over (ii) the
maximum amount of such contributions permitted under the limitations of Section
5.3(b). The Excess Aggregate Contributions of Highly Compensated Employees
whose Contribution Percentage is determined under the family aggregation rules
described in Section 5.2(b)(5) shall be determined first by reducing the
Contribution Percentage in accordance with the "leveling" method described
below and then allocating the Excess Aggregate Contributions determined thereby
among the family members in proportion to the Company Matching Contributions
made on behalf of each family member who has been combined under the family
aggregation rule. Under the "leveling" method, the Contribution Percentage of
a Highly Compensated Employee with the highest actual Contribution Percentages
is reduced to the extent required to:
(i) enable the Plan to satisfy the percentage test set forth in
Section 5.1(b); or
(ii) cause such Highly Compensated Employee's Contribution
Percentage to equal the Contribution Percentage of the Highly
Compensated Employee with the next highest Contribution Percentage.
This leveling process must be repeated until the Plan satisfies the percentage
tests set forth in Section 5.1(b).
(b) Any other provision of the Plan to the contrary notwithstanding, the
average of the Contributing Percentages for Highly Compensated Employees for a
Plan Year shall not exceed the greater of:
(1) One hundred twenty-five percent (125%) of the Contribution
Percentage for all other Eligible Employees; or
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<PAGE>
(2) The lesser of two hundred percent (200%) of the Contribution
Percentage for all other Eligible Employees, or such Contribution Percentage
for all other Eligible Employees plus two (2) percentage points.
The Committee shall determine from time to time whether the Excess
Aggregate Contributions made or to be made in any calendar year on behalf of
Highly Compensated Employees might cause the Plan to fail to comply with the
foregoing limitations. If the Committee determines that such a failure might
occur, the Committee may reduce the percentage of Employee Deferral Contribu-
tions by Highly Compensated Employees that will be matched by the Company
pursuant to Section 4.4, or the Committee may take remedial action under Sec-
tion 5.3(c). Each determination by the Committee shall be made in its sole
judgment and shall be conclusive. In determining the amount of the Excess
Aggregate Contributions, such determination shall be made only after deter-
mination of the excess elective deferral under Section 5.6 and Section 402(g)
of the Code and the determination of Excess Contributions under Section 5.1
and Section 401(k) of the Code.
(c) Remedial Action Through Interaction with Section 5.1(b).
(1) In the event that one or more dollars of Employee Deferral
Contributions are distributed to a Participant as an Excess Contribution under
Section 5.2 or as an excess elective deferral under Section 5.6, then the
Participant shall not be entitled to any Company Matching Contributions on the
Employee Deferral Contributions so distributed. Accordingly, any Company
Matching Contributions which may have previously been made upon the distributed
Employee Deferral Contributions shall be deducted from the Participant's Com-
pany Matching Contributions Account and shall be applied to fund any future
Company Matching Contributions required pursuant to the provisions of Section
4.4.
(2) By reason of such interaction between the distribution of
excess Employee Deferral Contributions and excess dollar deferrals and the
deduction of the Company Matching Contributions thereon from the Participant's
Company Matching Contributions Account, compliance with the Section 5.1(b)
limitations of the Plan applicable to the Participant's Employee Deferral
Contributions shall automatically assure compliance with the Section 5.3(b)
limitations of the Plan applicable to the Company Matching Contributions which
may be allocated for the Plan Year to the Company Matching Contributions
Accounts of Participants who are among the group of Highly Compensated
Employees. However, should the Contribution Percentage of any Highly Compen-
sated Employee who participates in both this Plan and any other plan maintained
by one or more Affiliated Companies to which after-tax employee contributions
or matching employer contributions are made for the same Plan Year exceed the
applicable limitation of Section 5.3(b), then the remedial action provided
under such other plan shall be taken, in addition to the action required under
this Plan, to assure that the Contribution Percentage for such Highly Compen-
sated Employee does not cause the Section 5.3(b) limitation to be exceeded for
such Plan Year.
(3) The income allocable to any Company Matching Contributions
which are deducted from the Company Matching Contributions Account of a Highly
Compensated Employee pursuant to the remedial provisions of this Section 5.3(c)
shall be calculated as follows: the income allocable to any such deducted
Company Matching Contributions for the Plan Year for which such Company Match-
ing Contributions are made shall be calculated by multiplying the income
allocable to the Company Matching Contributions Account for the Plan Year for
which the deducted Company Matching Contributions are made shall be multiplied
by a fraction the numerator of which is the Company Matching Contributions to
be deducted from such Account and the denominator of which is the balance
credited to such Account on the last day of such Plan Year, decreased by the
earnings and increased by the losses allocable to such Account for the Plan
Year.
5.4 Aggregate Limitations. The Employee Deferral Contributions and the
Company Matching Contributions for the Plan Year allocable to the Accounts of
Participants who are among the group of Highly Compensated Employees must on an
aggregate basis satisfy one of the following alternative tests:
- 24 -
(a) The sum of the Actual Deferral Percentage (as defined in Section 5.1
(a)(i)) and the Contribution Percentage (as defined in Section 5.3(a)(1)) for
the group of Highly Compensated Employees must not for such Plan Year exceed
the sum of (i) the product of 1.25 and the greater of (I) the Actual Deferral
Percentage for the group of non-Highly Compensated Employees or (II) the Con-
tribution Percentage for the group of non-Highly Compensated Employees and (ii)
two percentage points plus the lesser of the percentage determined under clause
(I) or (II) above, but in no event may the amount determined under this item
(ii) exceed 200% of the lesser of the clause (I) or (II) percentage above.
(b) The sum of the Actual Deferral Percentage and the Contribution
Percentage for the group of Highly Compensated Employees must not for such Plan
Year exceed the sum of (i) the product of 1.25 and the lesser of (I) the actual
deferral percentage for the group of non-Highly Compensated Employees or (II)
the Contribution Percentage for the group of non-Highly Compensated Employees
and (ii) two percentage points plus the greater of the percentage determined
under clause (I) or (II) above, but in no event may the amount determined under
this item (ii) exceed 200% of the greater of the clause (I) or (II) percentage
above.
5.5 Remedial Action. If the Company Matching Contributions and Employee
Deferral Contributions otherwise allocable for the Plan Year to the Accounts of
Highly Compensated Employees would not when combined satisfy one of the aggre-
gate percentage tests specified in Section 5.4, then the following provisions
shall become applicable:
(a) Within two and one-half (2 1/2) months after the close of the Plan
Year, the Excess Combined Contributions made for such Plan Year on behalf of
one or more Participants who are among the group of Highly Compensated
Employees, together with any income allocable to such Excess Combined Contri-
butions, shall be reduced to zero (0), first through the deduction and distri-
bution from the Employee Deferral Contributions Accounts of such Participants
of any Employee Deferral Contributions (together with the income allocable
thereto) for such Plan Year which are not otherwise entitled to any Company
Matching Contributions for that Plan Year, and then through the simultaneous
(1) deduction and distribution from their Employee Deferral Contributions
Accounts of a portion of their Employee Deferral Contributions (together with
the income allocable thereto) for such Plan Year which are entitled to a Com-
pany Matching Contribution for that Plan Year and (2) deduction from their
Company Matching Contributions Accounts of the Company Matching Contributions
(together with the income allocable thereto) made on those deducted and distri-
buted Employee Deferral Contributions.
(b) The term "Excess Combined Contributions" shall mean for each Highly
Compensated Employee the amount by which the (i) Company Matching Contributions
and the Employee Deferral Contributions (expressed as a percentage of taxable
Compensation) actually credited for the Plan Year to his Accounts, determined
after any remedial actions required by Sections 5.2(a) and 5.2(c) have been
taken, exceeds (ii) the maximum combined percentage permissible for such
individual without contravention of the requirement that the combined Company
Matching Contributions and Employee Deferral Contributions satisfy the aggre-
gate percentage test of Section 5.4. The clause (ii) percentage applicable to
each Highly Compensated Employee shall be determined in accordance with the
following process: first, the combined percentage for the Highly Compensated
Employee with the highest such percentage shall be reduced until such reduced
percentage equals the greater of (I) the combined percentage required in order
to allow the combined Company Matching Contributions and Employee Deferral
Contributions on behalf of all Highly Compensated Employees to satisfy the
limitations of Section 5.4 or (II) the combined percentage of the Highly
Compensated Employee with the next highest percentage; then, the process shall
be repeated in the order of the combined percentage for the Highly Compensated
Employees, beginning with the Employee with the next highest percentage, until
the limitation of Section 5.4 is satisfied for the combined Company Matching
Contributions and Employee Deferral Contributions made on behalf of all Highly
Compensated Employees.
(c) Remedial action under subparagraph (a) above shall be effected with
respect to the Highly Compensated Employees in proportion to their Excess Com-
bined Contributions for the Plan Year.
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<PAGE>
(d) The income allocable to any Employee Deferral Contributions deducted
from the Participant's Employee Deferral Contributions Account pursuant to
paragraph (a) above and the income allocable to any Company Matching Contribu-
tions deducted from his Company Matching Contributions Account shall be deter-
mined in accordance with the same income allocation procedures in effect under
Sections 5.3(c)(3) and 5.6, respectively, and shall be deducted from the
Employee Deferral Contributions Account and Company Matching Contributions
Account concurrently with the remedial paragraph (a) action.
(e) Any Company Matching Contributions deducted from the Participant's
Company Matching Contributions Account pursuant to the provisions of this
Article V shall nevertheless be treated as an Annual Addition under Section 4.8
for the Limitation Year for which such Company Matching Contributions are made.
All such Company Matching Contributions deducted from the Company Matching
Contributions Accounts of Participants pursuant to this Article V shall be
applied to the satisfaction of future Company Matching Contributions.
5.6 Limitations on Employee Deferral Contributions.
(a) In no event shall the Company contribute on behalf of any Participant
for the Participant's taxable year Employee Deferral Contributions which when
added together with similar contributions under all plans maintained by the
Company exceed $7,000, as indexed below, (or the "Section 402(g) limit"). If
at any point during the taxable year, it becomes apparent that a Participant's
Employee Deferral Contributions will exceed the $7,000 limit, as indexed, the
Participant's deferral election will be reduced by unilateral action of the
Committee, and a flat dollar amount will be contributed to the Participant's
Employee Deferral Contributions Account each pay period for the remainder of
the taxable year so that the Participant's aggregate Employee Deferral Contri-
butions for the taxable year shall not exceed the $7,000 limit, as indexed. The
flat dollar amount will be expressed in a fraction the numerator of which is
the difference between the balance of the Employee Deferral Contributions
Account and the maximum $7,000 limit, as indexed, and the denominator of which
is the number of pay periods left in the taxable year. If, however, there is
still an excess dollar deferral at the end of the taxable year, the excess
Employee Deferral Contributions (together with any income thereon) shall be
paid to such Participant as a current cash payment.
(b) In the event the sum of (i) the Employee Deferral Contributions made
during the Participant's taxable year by the Company on behalf of the Employee
under this Plan and by any other employer on the Participant's behalf to other
plans complying with Section 401(k) of the Code, (ii) the contributions made by
any other employer during such taxable year on behalf of the Employee to the
extent not includable as income under Section 402(h)(1)(B) of the Code, and (c)
the contributions made by any other employer on behalf of the Employee during
the tax year to purchase an annuity contract complying with the provisions of
Section 403(b) of the Code by reason of a salary reduction agreement (as
defined under Section 3121(a)(5)(D) of the Code), exceeds the $7,000 limit, as
indexed below, then all or a portion of such excess may be distributed to the
Employee by April 15th of the year following the close of the taxable year dur-
ing which the excess elective deferral was made in any amount up to the total
excess (plus income allocable to the excess), provided that no later than March
1 of such year, or such earlier date as the Committee may elect in its sole
discretion, the Participant has notified the Committee of the portion of the
excess Employee Deferral Contributions to be distributed from the Plan.
Notwithstanding the provisions of this Section 5.6, any excess elective
deferrals described hereunder shall be considered for purposes of determining
Excess Contributions under the discrimination rules of this Article V, unless
otherwise provided by the applicable Treasury rules or regulations. Any excess
Employee Deferral Contributions made under the Plan which are not distributed
by April 15th after the tax year in which such excess occurred shall be subject
to the distribution restrictions applicable to the Employee Deferral Contribu-
tions.
(c) Notwithstanding the foregoing, the $7,000 threshold shall be adjusted
for each Plan Year commencing on or after January 1, 1988 to take into account
any cost-of-living increase adjustment for that Plan Year allowable pursuant to
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<PAGE>
the applicable Treasury regulations or rulings under Sections 402(g)(5) and 415
(d) of the Code. The income allocable to the excess Employee Deferral Contri-
butions shall be calculated by multiplying (1) the income allocable to the
Participant's Employee Deferral Contributions Account for the taxable year for
which the excess Employee Deferral Contributions are made, by (2) a fraction
the numerator of which is the excess Employee Deferral Contribution made on the
Participant's behalf for such taxable year and the denominator of which is the
balance credited to the Employee Deferral Contributions Account of such Parti-
cipant on the last day of the taxable year, decreased by the earnings and
increased by the losses allocable to such Account for the year.
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<PAGE>
ARTICLE VI
SPECIAL PROVISIONS FOR STOCK BONUS ACCOUNTS
6.1 Special Requirements for Stock Bonus Accounts.
(a) In General. This Section 6.1 shall apply to Stock Bonus Account and
shall not eliminate any form of distribution otherwise available under the Plan
or the commencement date of that distribution.
(b) Investment Directives. Each Stock Bonus Account shall remain
invested in Company Stock.
(c) Time of Distribution. Notwithstanding any other provision of the
Plan other than such provisions as require the consent of the Participant and
the Participant's Spouse to a distribution with a present value in excess of
$3,500, a Participant may elect to have his Stock Bonus Account distributed as
follows:
(1) If the Participant incurs a Severance Date by reason of the
attainment of Normal Retirement Age, death or Total Disability, the distribu-
tion of his Stock Bonus Account balance will begin not later than one (1) year
after the close of the Plan Year in which such event occurs, unless the Parti-
cipant elects otherwise under the Plan.
(2) If the Participant incurs a Severance Date for any other
reason, and is not reemployed by the Company at the end of the fifth (5th) Plan
Year following the Plan Year of such separation from service, distribution of
the Participant's Stock Bonus Account balance shall begin not later than one
(1) year after the close of the fifth (5th) Plan Year following the Plan Year
in which the Participant separated from service, unless the Participant elects
otherwise under the Plan.
(3) If the Participant separates from service for a reason other
than those described in paragraph (1) above and is employed by the Company as
of the last day of the fifth (5th) Plan Year following the Plan Year of such
separation from service, any distribution to the Participant prior to his sub-
sequent separation from service shall be made in accordance with terms of the
Plan other than this Section 6.1.
For purposes of this Section 6.1, Common Stock shall not include any employer
securities acquired with the proceeds of a loan described in Section 404(a)(9)
of the Code until the close of the Plan Year in which such loan is repaid in
full.
(d) Period for Payment. Distributions required under Section 6.1 shall
be made in substantially equal annual payments over a period of five (5) years,
unless the Participant elects otherwise under the Plan. In no event shall such
distribution period exceed the period permitted under Section 401(a)(9) of the
Code. Notwithstanding the foregoing provisions of this Section 6.1(c), if the
vested balance of a Participant's Stock Bonus Account is in excess of $500,000
(multiplied by the adjustment factor in effect pursuant to Section 409(o)(2) of
the Code) as of the date distribution is required to begin under Section 6.1
(b), then the distributions required under this Section 6.1 shall be made in
substantially equal annual payments over a period not longer than five (5)
years plus an additional one (1) year (up to an additional five (5) years) for
each $100,000 increment, or fraction of such increment, by which the value of
the Participant's Stock Bonus Account exceeds $500,000, unless the Participant
elects otherwise under the Plan. In no event shall such distribution period
exceed the period permitted under Section 401(a)(9) of the Code.
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<PAGE>
6.2 Put Option Requirements.
(a) In General. This Section 6.2 shall apply to distributions of
employer securities which were acquired by the Burr-Brown Corporation Stock
Bonus Plan, in the event Company Stock is not readily tradable on an estab-
lished security market and shall not eliminate any other form of distribution
available under the Plan on the commencement date for that distribution.
(b) Put Option Payment. Notwithstanding any other provisions of the
Plan, the Plan shall provide the Participant with a put option that complies
with the requirements of Section 409(h) of the Code. Such put option shall
provide that if the Participant exercises such put option, the Company, or the
Plan, if the Plan so elects, shall repurchase the distributed Company Stock as
follows:
(1) If the distribution constitutes a Total Distribution, payment
of the fair market value of the repurchased Company Stock shall be made in five
(5) substantially equal annual payments. The first installment shall be paid
no later than thirty (30) days after the Participant exercises the put option.
The Plan will pay a reasonable rate of interest and provide adequate security
on amounts not paid after thirty (30) days.
(2) If the distribution does not constitute a Total Distribution,
the Plan shall pay the Participant an amount equal to the fair market value of
the repurchased Company Stock no later than thirty (30) days after the Partici-
pant exercises the put option.
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<PAGE>
ARTICLE VII
INVESTMENT FUNDS AND INVESTMENT OF CONTRIBUTIONS
7.1 Investment Funds. A Participant may choose a Fixed Income Investment
Sub-Account or one or more Variable Income Investment Sub-Accounts.
7.2 Investment Elections. Each Participant shall make an investment
election which will apply to the investment of his Accounts in one or more
of the various available investment funds. Separate investment elections with
respect to a Participant's different Accounts may not be made. All investment
choices by the Participant shall be made pursuant to rules and procedures
established by the Committee.
7.3 Changes in Investment Elections. A Participant may elect to change
his investment election with respect to future contributions made for him pur-
suant to the rules and procedures established by the Committee.
7.4 Transfers Between Funds. A Participant may transfer amounts between
his Investment Sub-Accounts at any time by notifying the Committee.
Such transfer will be made on the date specified, subject to any restrictions
pursuant to rules and procedures established by the Committee.
7.5 Restrictions on Insiders. Each Participant who is at the time an
officer or director of Burr-Brown Corporation subject to the short-swing profit
restrictions of the Federal securities laws ("Section 16 Insider") may only
effect investment directives with respect to the acquisition or disposition of
shares of Company Stock under the Plan in accordance with the following provi-
sions:
(a) Should the Section 16 Insider elect to have his Employee Deferral
Contributions invested in whole or in part in shares of Company Stock on an on-
going basis as such contributions are made to the Plan, then the Section 16
Insider (as well as any other Participant) will have the right, upon proper
notice to the Committee, to discontinue such investment at any time. However,
the Section 16 Insider must, for a period of at least six (6) months there-
after, cease any further purchases or acquisitions of Company Stock under the
Plan, whether through a reinvestment of the existing balance credited to his
Accounts or through any new Employee Deferral Contributions made to the Plan.
(b) Directives by a Section 16 Insider to invest his Accounts in whole or
in part in Company Stock or to liquidate one or more shares of Company Stock at
the time held in his Accounts may only be given by such Section 16 Insider dur-
ing one of the quarterly window periods beginning on the third (3rd) business
day following the release to the public of the Company's quarterly or annual
financial statements and ending on the twelfth (12th) business day following
such public release. In no event, however, may such investment directive with
respect to Company Stock be given within six (6) months after the end of the
last such window period in which the Participant issued a previous investment
directive with respect to Company Stock.
(c) Should the Section 16 Insider direct the liquidation of any Company
Stock at the time held in his Account, then such individual may not, for a per-
iod of at least six (6) months thereafter, purchase or acquire any additional
Company Stock under the Plan, whether through a reinvestment of the existing
balance credited to his Account or through any new Employee Deferral Contribu-
tions made to the Plan. Accordingly, any on-going election by such Section 16
Insider to have his Employee Deferral Contributions applied to the purchase of
Company Stock must be suspended for at least six (6) months following the
investment directive to liquidate any Company Stock held in his Account.
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<PAGE>
ARTICLE VIII
INDIVIDUAL ACCOUNTS
8.1 Accounts for Participants. The following Accounts may be established
under the Plan for a Participant:
(a) An Employee Deferral Contributions Account shall be established for
each Participant. Employee Deferral Contributions directed by a Participant
shall be allocated to the Participant's Employee Deferral Contributions Account.
(b) A Company Profit Sharing Account shall be established for each
Participant. Company Profit Sharing Contributions for a Participant shall be
allocated to the Participant's Company Profit Sharing Contributions Account in
accordance with Section 4.5.
(c) A Company Matching Contributions Account shall be established for
each Participant. Company Matching Contributions for a Participant shall be
allocated to the Participant's Company Matching Contributions Account.
(d) A 1986 Profit Sharing Account shall be established for each Partici-
pant who participated in the Plan prior to 1987.
(e) A Rollover Account shall be established, as provided in Section 4.6.
(f) A Stock Bonus Account shall be established for each Participant who
had an account in the Burr-Brown Corporation Stock Bonus Plan which was merged
into this Plan effective July 1, 1989.
Accounts shall be for bookkeeping purposes only, and, except as may be other-
wise necessary with respect to one of the Accounts, the establishment of
Accounts shall not require any segregation of the Fund's assets.
8.2 Valuation of Accounts. As of each Valuation Date, the value of each
Account shall be adjusted to reflect the effect of distributions, withdrawals,
transfers, income, realized and unrealized profit and losses, contributions and
all other transactions with respect to the Fund since the immediately preceding
Valuation Date in accordance with a method adopted by the Committee which is
consistently followed and uniformly applied. For purposes of this Section 8.2,
the value of an Account will be the fair market value as of the applicable Valu-
ation Date. A Participant's Account may be subject to charges and expenses
involved in administering the Plan pursuant to Section 19.4. Any of such
charges and expenses may instead be paid by the Company, at the Company's sole
election.
8.3 Rollover Accounts. With the consent of the Committee, which shall be
granted in its sole discretion and only if it is certain that the amount to be
transferred constitutes a Rollover Contribution, an Employee may transfer to
the Fund an amount that constitutes a Rollover Contribution. Notwithstanding
any provisions of the Plan to the contrary, the following shall apply with
respect to a Rollover Contribution:
(a) A Rollover Account shall be established for each Employee who makes
a
Rollover Contribution. Commencing on the date the Rollover Contribution is
transferred to the Fund, the Rollover Account shall share in the earnings or
losses of the Fund for such Plan Year in the manner described in Section 8.2.
(b) A Rollover Account shall be treated in all respects the same as all
other Accounts except that no Company contributions shall ever be added to a
Rollover Account.
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<PAGE>
(c) An Employee shall be treated the same as a Participant hereunder from
the time of the transfer (but shall not actually be a Participant until satis-
fying the requirements of Article III, and shall be eligible for an allocation
of Employee Deferral Contributions hereunder only upon satisfying all require-
ments of the Plan as though this Section were not a part hereof).
(d) A Rollover Contribution shall not be accepted by the Committee if it
is a direct or indirect transfer of any assets of any qualified plan under Sec-
tion 401(a) of the Code which is required to provide annuity distributions to
terminating participants pursuant to the provisions described in Section 401(a)
(11)(B)(iii)(III) of the Code.
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<PAGE>
ARTICLE IX
VESTING
9.1 Vesting in the Employee Deferral Contributions Account, the 1986
Profit Sharing Account, the Stock Bonus Account and the Rollover Account. An
Employee's interest in his Employee Deferral Contributions Account, 1986 Profit
Sharing Account, Stock Bonus Account and Rollover Account herein shall be fully
vested at all times.
9.2 Vesting in Company Matching Contributions Account and the Company
Profit Sharing Contributions Account. The Participant's interest in his
Company Profit Sharing Contributions Account and Company Matching Contributions
Account shall become fully vested at the earliest of the following dates:
(a) The date of the Participant's death while an Employee of an Affili-
ated Company,
(b) The date the Participant incurs a Total Disability,
(c) The Participant's attainment of Normal Retirement Age,
(d) The date of termination of this Plan, or
(e) The date the Participant completes four (4) years of Vesting Service.
9.3 Determination of Vested Interest in the Company Profit Sharing
Contributions Account and Company Matching Contributions Account in the Event
of a Severance Date. Prior to the date that the Participant's nonforfeitable
interest in his Company Profit Sharing Contributions Account and Company Match-
ing Contributions Account becomes fully vested pursuant to Section 9.2, his
nonforfeitable interest in those Accounts shall be the appropriate percentage
under the following table:
<TABLE>
<CAPTION>
Years of Vesting Nonforfeitable
Service Percentage
<S> <C>
less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
Any amounts credited to the Company Profit Sharing Contributions Account or
Company Matching Contributions Account in which the Participant is not vested
may be forfeited in accordance with Sections 9.4 and 11.3. In the event the
Participant's unvested benefits are not otherwise earlier forfeited, such non-
vested benefits shall in all events be completely forfeited upon his incurrence
of a Period of Severance of sixty (60) months or more.
9.4 Restoration of Forfeiture. If a Participant incurs a Severance Date
and thereby ceases to be an Employee prior to the time he is one hundred per-
cent (100%) vested in his Company Matching Contributions Account and/or Company
Profit Sharing Contributions Account and he receives a distribution of his
entire vested interest in his Company Matching Contributions Account, or Com-
pany Profit Sharing Contributions Account pursuant to Section 11.4 prior to
sustaining a Period of Severance of sixty (60) months or more, the entire
unvested amount credited to the Participant's applicable Accounts shall be
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<PAGE>
forfeited and reallocated in accordance with the provisions of Section 11.3 as
of the year-end Valuation Date coincident with or immediately following such
distribution. If such Participant shall become an Employee prior to sustaining
a Period of Severance of sixty (60) months or more, such individual shall
resume participation in the Plan in accordance with Section 3.4, and an amount
equal to the amount forfeited from each Account in connection with his prior
distribution shall be restored to that Account, provided he repays in full the
amount distributed from that Account on or before the earlier of the fifth
(5th) anniversary of the date of his resumption of Employee status or his
incurrence of a Period of Severance of sixty (60) months or more. Forfeitures
for the year of restoration will be used to restore such amounts. In the event
there are not sufficient forfeitures, the Company will make a special contribu-
tion to complete the restoration. Under no circumstances shall Service
rendered by a Participant who has previously incurred a Period of Severance of
sixty (60) months or more, be taken into account in determining the percentage
to which the Participant is vested in that portion of his Company Profit Shar-
ing Contributions Account or Company Matching Contributions Account (including
allocated forfeitures) attributable to contributions made prior to such Period
of Severance of sixty (60) months or more.
9.5 Amendments to Vesting Schedule. No amendments to the vesting provi-
sions set forth in Sections 9.1 through 9.3 shall deprive an Employee who is a
Participant on the later of (a) the date the amendment is adopted, or (b) the
date the amendment is effective, of any nonforfeitable benefit to which he is
entitled under the Plan (determined as of such date) without regard to such
amendment. If the vesting provisions designated in Sections 9.1 through 9.3
are amended, each Participant whose benefits would be determined under such
schedule and who has completed three (3) years of Vesting Service shall have
the right to elect, during the period computed pursuant to this Section 9.5, to
have his nonforfeitable benefit determined without regard to such amendment;
provided, however, that no election shall be provided to any Participant whose
nonforfeitable percentage under the schedule, as amended, cannot at any time be
less than the percentage computed without regard to such amendment. The elec-
tion period shall commence on the date the amendment is adopted and end on the
latest of: (a) sixty (60) days after adoption of the amendment, (b) sixty (60)
days after the effective date of the amendment, or (c) sixty (60) days after
the Participant is notified of the amendment in writing by the Company or
Committee. Such election, if exercised, shall be irrevocable, and shall be
available only to an Employee who is a Participant when the election is made.
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<PAGE>
ARTICLE X
WITHDRAWALS DURING EMPLOYMENT
10.1 In-Service Withdrawals. Subject to the limitation of Section 10.2,
a Participant who has incurred a Financial Hardship, as hereinafter described
in Section 10.2, may withdraw all or a portion of the value of his Employee
Deferral Contributions Account or Rollover Account.
10.2 Withdrawal Rules. Withdrawals pursuant to Section 10.1 shall be
permitted subject to the following rules:
(a) Withdrawals shall be made by filing a written request with the
Committee on such form as the Committee may prescribe. Withdrawals shall take
effect as of the date a written request is approved by the Committee, and pay-
ment of the amount to be withdrawn shall be made as soon as practicable there-
after.
(b) All withdrawals shall be paid in a lump sum.
(c) All withdrawals shall first be made from a Participant's Rollover
Account and then from his Employee Deferral Contributions Account.
(d) The Committee shall approve a distribution from the Fund to a
Participant due to Financial Hardship only in the event such distribution
is necessary to meet the Financial Hardship of the Participant.
(1) There is a Financial Hardship only if the reason for the
distribution would be to pay one of the following expenses:
(i) Medical expenses (as described in Section 213(d) of the
Code) of the Participant, the Participant's spouse or depen-
dents;
(ii) Costs directly related to the purchase (excluding mortgage
payments) of the principal residence of the Participant;
(iii) Tuition and related educational fees for the next twelve
(12) months of post-secondary education for the Participant,
the Participant's spouse or dependents; or
(iv) Expenses necessary to prevent the eviction from, or
foreclosure on the mortgage of, the principal residence of the
Participant.
(2) If there is a Financial Hardship under subparagraph (1) above,
distribution will be considered necessary to satisfy the Financial Hardship if
made subject to the following requirements:
(i) The amount distributed must not exceed the amount needed
(which may include amounts necessary to pay income taxes and
penalties resulting from the distribution).
(ii) The Participant must have obtained all distributions and
nontaxable loans available under this Plan and any other quali-
fied plan maintained by the Company or any other Affiliated
Company.
(iii) If the Participant withdraws amounts from his Employee
Deferral Contributions Account, he will be suspended from making elective
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<PAGE>
and after-tax contributions to this Plan or any other qualified plan of the
Company or any other Affiliated Company for a period of at least twelve (12)
months following the receipt of the distribution.
(iv) For purposes of Section 4.4, if the Participant withdraws
from his Employee Deferral Contributions Account, the Section 5.6 limitation on
Employee Deferral Contributions for the year subsequent to the year of the
distribution shall be reduced by the total amount of Employee Deferral Contri-
butions made by the Participant during the year of the distribution.
(e) If a Participant's Account subject to a withdrawal is invested in
more than one investment fund, the withdrawal shall be made from such fund or
funds as elected by the Participant. In the absence of such election, the
withdrawal shall be made pro-rata from each such fund.
(f) Distributions from the Employee Deferral Contributions Account of a
Participant on account of Financial Hardship shall not exceed the Employee
Deferral Contributions made on behalf of the Participant; the income allocable
to the Participant's Employee Deferral Contributions Account shall not be
included in the distributable amount.
10.3 Withdrawal of Company Matching Contributions. Effective January 1,
1993, a Participant may no longer withdraw funds from his Company Matching
Contributions Accounts.
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<PAGE>
ARTICLE XI
DISTRIBUTION UPON TERMINATION OF EMPLOYMENT
11.1 Death. Upon the death of the Participant while in Employee status,
a
distribution of the deceased Participant's Accrued Benefit shall be made to his
Beneficiary in Company Stock, to the extent the Participant's Accounts are
invested in Company Stock and the balance in cash; provided, however, the Bene-
ficiary may elect to receive the cash equivalent of the Company Stock held in
all Accounts except the Stock Bonus Account. The Participant shall have the
unrestricted right to designate one or more Beneficiaries to receive the death
benefits to which he is entitled hereunder, and to change any such designation.
However, if an individual other than the Participant's Spouse is named as
Beneficiary, then the Spouse must consent in writing to the Participant's
designation of such other Beneficiary, and such consent form must be witnessed
by a notary public or a member of the Committee and must acknowledge the effect
such designation will have upon the benefits otherwise payable to the Spouse
under the Plan.
Each such Beneficiary designation shall be evidenced by a written instrument
filed with the Committee. If such designation is not on file with the Committee
at the time of the death of the Participant, or if for any reason in the sole
discretion of the Committee such designation is defective, then the Partici-
pant's Spouse, if living, his children, if living, or his estate, in that order
of preference, shall be conclusively deemed to be the Beneficiary designated to
receive such benefit. Notwithstanding this spousal consent requirement, if the
Participant establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, the Beneficiary designation shall be valid without spousal
consent. Any spousal consent necessary under this provision shall be valid
only with respect to the Spouse who signs the consent. Should the Participant
designate a person other than (or in addition to) his Spouse as Beneficiary and
not obtain the spousal consent to such designation required under this Section
11.1, then any benefits payable under the Plan upon the Participant's death
shall be paid entirely to the Participant's surviving Spouse.
11.2 Payments Upon Termination of Employment. Upon a Participant's
termination of Employee status, the Participant's nonforfeitable interest in
his Accounts, determined in accordance with Article IX, shall be distributed in
Company Stock, to the extent the Participant's Accounts are invested in Company
Stock and the balance in cash; provided, however, the Participant may elect to
receive the cash equivalent of the Company Stock held in all Accounts except
the Stock Bonus Account. If such Participant shall die prior to full payment
of his nonforfeitable interest under the Plan, payment shall be made to his
Beneficiary in accordance with Section 11.1.
11.3 Forfeiture of Non-vested Benefits. The non-vested portion of each of
the Participant's Accounts shall be forfeited as of the Valuation Date as of
which the Participant receives his distribution under Section 11.2. The non-
vested portion of any amounts credited to him but not yet allocated to his
Accounts as of the Valuation Date shall also be forfeited.
Forfeitures shall be applied first to restore Accounts of rehired Employees
pursuant to Section 9.4 and then to reduce future Company contributions.
11.4 Timing of Distributions.
(a) The Accrued Benefit to which a Participant or his Beneficiary becomes
entitled in accordance with this Article XI shall be paid in a lump sum at such
time as the Participant elects in his written election to the Committee. If the
Participant's vested Account balances have always been equal to or less than
$3,500, the Committee shall have the right to direct the Trustee to distribute
the vested Account balances to the Participant in a lump sum as soon as practi-
cable after the Valuation Date ending after his Severance Date. In the case of
death or retirement on or after the Normal Retirement Date, the lump sum pay-
ment of the vested Account balances shall be made as soon as practicable after
the Valuation Date ending after the Severance Date. In all other cases, the
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Committee may not immediately distribute benefits without the Participant's
consent. The term "immediately distribute" shall mean the distribution is made
prior to Normal Retirement Age. If the Participant's aggregate vested Account
balances exceeds $3,500, no distribution shall be made to the Participant prior
to his attainment of Normal Retirement Age, unless the Participant's written
consent to any earlier distribution is obtained not more than ninety (90) days
prior to the distribution date. A Participant's failure to so consent shall be
deemed to be an election to defer commencement of any benefit distribution.
Until such time as the amounts in the Participant's Accounts are paid to him or
his Beneficiary, the amounts in his Accounts shall remain deposited in the
Participant's appropriate investment funds and shall continue to share in the
investment earnings and losses of those funds. Distributions of all Accounts
other than Company Stock distributed from the Stock Bonus Account shall be made
in lump sum distribution.
(b) Not less than thirty (30) days nor more than ninety (90) days prior
to the date specified for distribution the Participant shall be provided with
written information relating to his right to defer such distribution in accor-
dance with the guidelines of this Section 11.4. After incurring a Severance
Date as described in Sections 11.1 and 11.2, determination of the value of the
Participant's distribution shall be made as of the Valuation Date immediately
preceding the date on which the Participant takes distribution. However, such
distribution may commence less than thirty (30) days after the written informa-
tion is provided to such Participant (provided that Sections 401(a)(11) and 417
of the Code do not apply), if the Committee (1) clearly informs the Participant
that he has the right to a period of at least thirty (30) days after receiving
such information to consider whether or not to elect a distribution (and, if
applicable, a particular distribution option); and (2) the Participant, after
receiving such information, affirmatively elects a distribution.
(c) Notwithstanding anything in this Section 11.4 or in Section 11.5 to
the contrary, unless the Participant otherwise agrees, the distribution of the
Participant's Accounts shall commence no later than sixty (60) days after the
close of the Plan Year in which the Participant attains age 65, or in which
occurs the tenth (10th) anniversary of the year in which the Participant com-
menced participation in the Plan, or in which the Participant terminates his
employment with the Company, whichever occurs last. However, the benefits
payable to a Participant under this Section 11.4 or Section 11.5 shall in all
events commence no later than April 1 of the year following the calendar year
in which he attains age 70 1/2.
11.5 Forms and Timing of Distributions from Stock Bonus Account.
(a) Subject to the terms of Article VI, after a Participant incurs a
Severance Date described in Sections 11.1 and 11.2, determination of the value
of the Participant's distribution from his Stock Bonus Account shall be made as
of the Valuation Date immediately preceding the date on which the Participant
takes distribution. If the vested balance of the Participant's entire Stock
Bonus Account has always been equal to or less than $3,500, the Committee shall
have the right to direct the Trustee to distribute the vested Stock Bonus
Account balance to the Participant in the form of a lump sum distribution as
soon as practicable after the Valuation Date ending after the Severance Date.
In the case of death or retirement on or after the Normal Retirement Date, pay-
ment shall commence as soon as practicable after the Valuation Date ending
after the Severance Date. In all other cases, the Committee may not immediately
distribute benefits without the Participant's consent, subject to Section 11.4.
The term "immediately distribute" shall mean the distribution is made prior to
Normal Retirement Age. If consent is required, the Participant must consent to
the timing of the distribution. A Participant's failure to so consent shall be
deemed to be an election to defer commencement of any benefit distribution.
Until such time as the amounts in the Participant's Account is paid to him or
his Beneficiary, the amounts in his Stock Bonus Account shall remain deposited
in such Account.
(b) If distribution from the Participant's Stock Bonus Account is made in
installments pursuant to the provisions of Article VI and such installment
distribution is not completed by the Required Beginning Date (which, for pur-
poses of this Section, shall mean April 1 of the calendar year following the
calendar year in which the Employee attains age 70 1/2), or if the Participant
has not otherwise begin to receive the distribution of his Accounts under the
Plan prior to such Required Beginning Date, then the unpaid balance credited to
the Stock Bonus Account or all Accounts, as the case may be, on the Required
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Beginning Date shall be distributed in accordance with the proposed Treasury
regulations under Section 401(a)(9) of the Code, including the minimum distri-
bution incidental benefit requirements of section 1.401(a)(9)-2 of such regula-
tions. Accordingly, in determining the minimum amount to be distributed to
such Participant in each calendar year following the calendar year in which the
Participant attains age 70 1/2, the minimum distribution rules of Section 401(a)
(9) of the Code and the proposed Treasury regulations thereunder shall apply as
follows and shall supersede any other distribution provisions to the contrary
in the Plan:
(1) The minimum amount distributed each calendar year must not be
less than the quotient obtained by dividing the adjusted vested balance of the
Participant's Stock Bonus Account or all Accounts, as the case may be, as
valued in accordance with subparagraph (2) below by the applicable life expec-
tancy in effect for the Participant, reduced by one (1) for each calendar year
which elapses since the date such life expectancy is last calculated in accord-
ance with subparagraph (3) below.
(2) The adjusted vested balance of each applicable Account for the
first minimum distribution year (the calendar year in which the Participant
attains age 70 1/2) shall be the value of such Account as of the last Valuation
Date in the calendar year immediately preceding the start of such distribution
year. The adjusted vested balance of such Account for the second minimum
distribution year shall be the value of that Account as of the last Valuation
Date in the calendar year immediately preceding the start of such distribution
year, reduced by the amount of the required distribution for the first minimum
distribution year, to the extent paid to the Participant in the second distri-
bution year on or before the Required Beginning Date. The adjusted vested
balance of the Account for each succeeding minimum distribution year shall be
the value of such Stock Bonus Account as of the last Valuation Date in the
calendar year immediately preceding the start of that distribution year. The
value of the Account will in all instances be increased for any participating
Company contributions or forfeitures allocated to, or reduced by any distribu-
tions or withdrawals made from, the Account after the applicable Valuation Date
and prior to the start of the minimum distribution year to which such Valuation
Date relates.
(3) The applicable life expectancy shall be the life expectancy of
the Participant and shall be calculated on the basis of his attained age on his
birthday in the calendar year in which he attains age 70 1/2. The return
multiples in Tables V and VI of Section 1.72-9 of the Treasury regulations
shall be utilized in the determination of the applicable life expectancy
period. The life expectancy of the Participant shall not be recalculated
during the minimum distribution period.
(4) The first calendar year for which a minimum distribution shall
be required under this Section 11.5(b) shall be the calendar year in which the
Participant attains age 70 1/2, and such distribution shall be made no later
than the Required Beginning Date. Each subsequent minimum distribution shall be
made no later than the last day of the calendar year for which such distribu-
tion is required, with the first such subsequent distribution to be made no
later than December 31 of the calendar year immediately following the calendar
year in which the Participant attains age 70 1/2.
(5) Should the minimum distributions required under this Section
11.5(b) commence prior to the date on which the Participant ceases Employee
status, then the unpaid vested balance credited to the Participant's Stock
Bonus Account at the time of his subsequent cessation of Employee status for
any reason (including death) shall be distributed over the shorter of the
following two periods: (i) the balance of the minimum distribution period in
effect for the Participant or (ii) the installment distribution period in
effect for that Account under Article VI; for all other Accounts, the distri-
bution will be made in the form of lump sum payment under Section 11.4(a). In
no event may the distribution in any calendar year within the applicable period
be less than the minimum distribution required for such calendar year in accor-
dance with the preceding provisions of this Section 11.5(c). In addition, the
Participant (or the designated Beneficiary of a deceased Participant) may, at
any time following such cessation of Employee status, request an immediate lump
sum distribution of the unpaid vested balance of the Stock Bonus Account.
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11.6 Participant Payment Election Regarding Stock Bonus Account. A
Participant must receive the distribution of his Stock Bonus Account in shares
of Company Stock; provided, however, any fractional shares of Company Stock
shall be distributed in cash. Distribution of the Stock Bonus Account shall be
made in accordance with the provisions of Article VI and Section 11.5.
11.7 Unclaimed Amounts; Notices. Neither the Company, the Committee nor
the Trustee shall be obliged to search for, or ascertain the whereabouts of,
any Participant or Beneficiary. The Committee, by certified or registered mail
addressed to the Participant's or Beneficiary's last known address of record
with the Committee or the Company, shall notify any Participant or Beneficiary
that he is entitled to a distribution under the Plan. In the event that the
Participant or Beneficiary shall make no claim for benefits or shall fail to
make his correct address known, the Committee may direct the Trustee to segre-
gate the Participant's Accounts in interest-bearing deposits with a federally
insured institution, and the Committee and the Trustee shall have no other
investment responsibility with regard to such benefits. After so segregating
such benefits, the Committee shall notify the Social Security Administration of
the Participant's or Beneficiary's failure to claim the distribution to which
he is entitled. The Committee shall request the Social Security Administration
to notify the Participant or Beneficiary in accordance with any procedures it
has established for this purpose. The segregated deposits shall be entitled
to all income they earn and shall bear all expense or loss they incur.
11.8 Direct Rollovers. Notwithstanding any provision of this Plan to the
contrary that would otherwise limit a Distributee's election under this Plan,
a
Distributee shall have the right, exercisable in accordance with the procedure
established by the Committee in compliance with Section 402 of the Code, to
have all or any portion of an Eligible Rollover Distribution from this Plan
paid as a Direct Rollover to an Eligible Retirement Plan designated by such
Distributee.
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ARTICLE XII
LOANS
12.1 Loan Applications. Except as provided below, each Participant or
other "party in interest" (as defined in Section 3(14) of the Act) who has an
interest in the outstanding balance of any Employee Deferral Contributions
Account and Rollover Account may submit a written application to the Committee
for a loan from the Plan in an amount not in excess of the maximum amount
allowable under Section 12.2. The Committee shall act on each loan application
in a uniform and non-discriminatory manner. The Committee shall not reject any
application on the basis of the applicant's age or sex but may make distinc-
tions on the basis of the applicant's creditworthiness and financial need.
12.2 Loan Terms. Upon approval of any application under Section 12.1,
the Committee shall direct the Trustee to make a loan to the applicant in
accordance with the following provisions:
(a) The minimum amount an individual may borrow is $1,000, or such
smaller amount as the Committee shall establish from time to time.
(b) The maximum amount of the loan shall not (when added to the out-
standing balance of all other loans ("Plan Loans") made to the applicant under
this Plan or any other defined benefit or defined contribution plan to which
any Affiliated Company contributes) exceed the lesser of:
(1) $50,000 (less the excess of (i) the highest principal amount in
the aggregate outstanding under any other Plan Loans to the applicant
during the immediately preceding twelve (12) months over (ii) the
aggregate principal amount outstanding under such Plan Loans on the
date such loan is made); or
(2) fifty percent (50%) of the vested balance credited to the
Employee Deferral Contributions Account, Rollover Account, Company
Matching Contributions Account, Company Profit Sharing Contributions
Account and 1986 Profit Sharing Account at the time the loan is made
(as determined pursuant to the valuation provisions of Section 8.2).
In no event, however, shall the amount loaned to the applicant exceed one
hundred percent (100%) of the balance credited to the Employee Deferral Contri-
butions Account and Rollover Account at the time the loan is made, less any
earmarked investments credited to such Account under Section 12.5.
(c) The cost of processing the loan application may be deducted from the
Employee Deferral Contributions Account and/or the Rollover Account or may be
withheld from the amount borrowed, at the discretion of the Committee.
(d) The loan shall be evidenced by the applicant's promissory note in the
amount of the loan, made payable to the order of the Trustee.
(e) The loan shall have a fixed term not in excess of five (5) years (or
fifteen (15) years if the proceeds of the loan to a Participant are applied to
the acquisition of real estate which is to serve as his primary residence),
subject to acceleration upon the occurrence of (1) the applicant's failure to
pay any installment of principal or interest when due, (2) the applicant's
qualification for an immediate distribution from the Plan or, if the applicant
is a Participant, his cessation of Employee status, (3) the filing of
bankruptcy proceedings by or against the applicant, the assignment of the
applicant's assets for the benefit of his creditors or the appointment of a
receiver for the applicant's assets, or any other similar event of acceleration
specified in the promissory note.
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<PAGE>
(f) The loan shall bear a market rate of interest, payable at least
annually. Such market rate shall be determined on the basis of the interest
rates charged for similar-purpose loans by banks and other reputable financial
institutions selected by the Committee as representative lenders.
(g) The loan shall be adequately secured through the conveyance to the
Fund of a security interest in fifty percent (50%) of the applicant's right,
title and interest in and to all Accounts under the Plan.
(h) The loan shall be repayable through level amortization payments over
the term of the loan. Such payments shall be effected through periodic payroll
deductions from the applicant's salary and other cash earnings each payroll
period the loan is outstanding; provided, however, if payroll deductions are
impossible (e.g., the applicant is on an unpaid leave of absence) the loan
shall be repayable in periodic cash installments payable at least quarterly.
(i) The remaining terms and conditions of the loan and related documenta-
tion shall be established by the Committee.
(j) The provisions of this Article XII and loans made hereunder shall be
interpreted and construed so as to prevent any such loan from being treated as
a taxable distribution under Section 72(p) of the Code.
12.3 Offset Rights. If the borrower is the Participant, then no distribu-
tions shall be effected from his Accounts at any time after his cessation of
Employee status, unless and until all loans under this Article XII, including
interest thereon, have been repaid in full. Should any other person become
entitled to a distribution under the Plan at a time when one or more Article
XII loans to such person remain outstanding, then the unpaid balance of such
loans shall become immediately due and payable, up to an amount equal to the
amount to be distributed to him under the Plan. The Trustee shall, accordingly,
collect such accelerated indebtedness by withholding it from and offsetting it
against the amount to be distributed. To the extent any Qualified Domestic
Relations Order requires payment to an Alternate Payee at a time when a loan is
outstanding to the Participant from whose Account the Qualified Domestic Rela-
tions Order requires payment, the terms of such Order shall control.
12.4 Liquidation of Account. The proceeds for each loan under the Plan
shall be taken directly from the Employee Deferral Contributions Account and/or
the Rollover Account, as applicable, in which the applicant has an interest by
liquidating one or more of the investments at the time held in such Account(s).
The applicant shall accordingly provide the Committee with investment direc-
tives specifying which of the applicant's investments under the Plan are to be
liquidated in order to provide the loan proceeds. The Committee shall promptly
direct the Trustee to liquidate one or more investments held in the Account(s)
in accordance with the applicant's instructions. In the absence of such
instructions from the applicant, the loan proceeds shall be obtained by liqui-
dating a portion of each investment held in the Account(s), with the amount so
liquidated to be in the same proportion as the market value of each such invest-
ment bears to the total market value of all investments held in the Account(s).
12.5 Earmarked Investment. All notes evidencing Article XII loans from
the Employee Deferral Contributions Account and/or the Rollover Account, as
applicable, shall constitute an earmarked investment of the applicable
Account(s). Accordingly, each of such Account(s) shall at the time the loan is
made be divided into two (2) subaccounts. Subaccount One shall be credited
with the note and shall not share in the investment gains or losses of the Fund
under Article VIII. Subaccount Two shall be credited with that portion of the
Account which is not loaned to the applicant (including payments of interest
and principal made on the note) and shall be periodically adjusted under
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Section 8.2 for its allocable share of the investment gains and losses of the
Fund. To the extent the Employee Deferral Contributions Account and/or the
Rollover Account, as applicable, has an earmarked investment under this Section
12.5, then all Employee Deferral Contributions and/or Rollover Contributions
thereafter allocated to such Account shall be credited to Subaccount Two, where
they shall remain until they become the subject of a subsequent loan under this
Article XII.
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ARTICLE XIII
FIDUCIARY
13.1 Plan Administrator. The Company shall be the Plan Administrator,
but it may delegate its duties as such to a committee appointed in accordance
with Article XIV.
13.2 Named Fiduciary. The Plan Administrator shall be a "named fiduciary"
of the Plan with authority to manage and control Plan assets and to select the
Investment Manager.
13.3 Employment of Advisors. A "named fiduciary," and any "fiduciary"
named by a "named fiduciary," may employ one or more persons to render advice
with regard to any responsibility of such "named fiduciary" or "fiduciary"
under the Plan.
13.4 Multiple Fiduciary Capacities. Any "named fiduciary" and any other
"fiduciary" may serve in more than one fiduciary capacity with respect to the
Plan.
13.5 Indemnification. The Company shall maintain and keep in force such
insurance as the Plan Administrator shall determine to insure and protect the
Company's directors, officers, employees and any appropriately authorized
delegates or appointees of them against any and all claims, damages, liability,
loss, cost or expense (including attorney's fees) arising out of or resulting
from (including failure to act with respect to) any responsibility, duty,
function or activity of any such person in relation to the Plan (or Trust if
applicable), including without limitation, the members of the Board, the Com-
mittee, the members of the Committee, and directors, officers and employees of
the Company performing responsibilities, duties, functions, and/or actions at
the direction or under the authority of any of the foregoing.
In lieu of and/or as a supplement and in addition to the insurance
referred to in the foregoing sentence, the Company shall indemnify and hold
harmless its directors, officers and employees against any and all claims,
damages, liability, loss, cost or expense arising in connection with (including
failure to act with respect to) any responsibility, duty, function or activity
of any such person in relation to the Plan (or Trust, if applicable) including
without limitation the members of the Board, the Committee, the members of the
Committee, and directors, officers and employees of the Company performing
responsibilities, duties, functions and/or actions at the direction or under
the authority of any of the foregoing; provided, however, that no such indemni-
fication shall extend to any matter as to which it shall have been adjudged by
any court of competent jurisdiction that such person has acted in bad faith or
was guilty of gross negligence in the performance of his duties unless such
court shall, in view of all the circumstances of the case, determine that such
person is fairly and reasonably entitled to indemnification.
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ARTICLE XIV
ADMINISTRATION
14.1 The Committee.
(a) The Plan Administrator shall appoint a Committee, consisting of at
least two (2) members, to be known as the "Committee" which shall serve at the
pleasure of the Plan Administrator. Unless the Plan Administrator otherwise
provides, any members of the Committee who is a director or Employee of the
Company at the time of his appointment will be considered to have resigned from
the Committee when no longer a director or Employee. At least one (1) member
of the Committee shall be an officer of the Company.
(b) All of the reasonable expenses of the Committee shall be paid from
the Fund, unless paid directly by the Company. Directors and Employees shall
receive no compensation for their services rendered to or as members of the
Committee.
(c) The 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. The Committee may authorize in writing any person to
execute any document or documents on its behalf, and any interested person,
upon receipt of notice of such authorization directed to it, may thereafter
accept and rely upon any document executed by such authorized person until the
Committee shall deliver to such interested person a written revocation of such
authorization.
(d) A member of the Committee who is also a Participant shall not vote or
act upon any matter relating specifically to himself.
14.2 Powers and Duties of the Committee. The Committee shall be empowered
to perform the administrative duties described in this Plan and shall have all
powers necessary to enable it to properly carry out such duties. Without
limiting the generality of the foregoing, the Committee shall have the power to
construe and interpret this Plan, to hear and resolve claims relating to this
Plan, and to decide all questions and disputes arising under this Plan. The
Committee shall have full power and authority to determine the eligibility of
employees to participate in the Plan, the service to be credited to the
Employees, the status and rights of a Participant, the identity of the benefi-
ciary or beneficiaries entitled to receive any benefits payable hereunder on
account of the death of a Participant, and the amount of the benefits (if any)
to which any Participant or his Spouse or beneficiary is entitled under the
Plan. Except as is otherwise provided hereunder, the Committee shall determine
the manner and time of payment of benefits under this Plan. All benefit
disbursements by the Trustee shall be made upon the instructions of the Com-
mittee. The decision of the Committee upon all matters within the scope of its
authority shall be binding and conclusive upon all persons. The Committee shall
file all reports and forms lawfully required to be filed by the Committee with
any governmental agency or department, federal or state, and shall distribute
any forms, reports, statements or plan descriptions lawfully required to be
distributed to Participants and others by any governmental agency or depart-
ment, federal or state. The Committee shall keep itself advised with respect
to the investment of the Fund and shall, not less frequently than annually,
report to the Employer regarding the investment and reinvestment of the Fund.
The Committee shall have power to direct specific investments of the Fund only
where such power is expressly conferred by this Plan and only to the extent
described in this Plan. All other investment duties shall be the responsibil-
ity of the Trustee.
14.3 Delegation of Responsibility by the Committee. The Committee may
designate persons, including persons other than "named fiduciaries," to carry
out the responsibilities of the Committee provided for hereunder. The Committee
shall not be liable for any act or omission of a person so designated.
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14.4 Investment Direction by Plan Administrator.
(a) The Board may authorize in writing any person to execute any
document or documents on its behalf, and any interested person, upon receipt of
notice of such authorization directed to it, may thereafter accept and rely
upon any document executed by such authorized person until the Company shall
deliver to such interested person a written revocation of such authorization.
(b) The Board shall have power to establish the funding policy of the
Plan pursuant to Section 14.7 and make and deal with any investment of the Fund
in any manner consistent with the Plan which they deem advisable.
(c) The Board shall have all the rights, powers, duties and obligations
regarding investment of Plan assets granted or imposed upon it elsewhere in the
Plan.
(d) The Board shall exercise its responsibilities hereunder in a uniform
and nondiscriminatory manner.
(e) The Board shall designate a representative to enter into one or more
contracts with a Funding Agent under which the Funding Agent establishes and
makes available separate investment funds to which the Participants may direct
the investment of their Accounts. Any such contract(s) may provide for the
contributions thereunder to be held in the Funding Agent's general account or
in one or more of its commingled separate accounts.
(f) The Committee shall make recommendation to the Board with regard to
the exercise of the Board's powers described in subparagraphs (a) through (e).
14.5 The Investment Manager. The Board may, by an instrument in writing,
appoint one or more persons (each of which is hereinafter referred to as an
"Investment Manager") as adviser to the Board in respect of investments and
may, subject to any restrictions upon investment imposed upon the Board by any
regulation prescribed by the Secretary relating to the qualified status of the
Fund as tax exempt, or by the Act, delegate to an Investment Manager from time
to time, the power to manager, acquire and dispose of any Plan assets. Each
person so appointed shall be an Investment Adviser registered under the Invest-
ment Advisers Act of 1940, a bank as defined in that Act, or any insurance
company qualified to manage, acquire, or dispose of any asset of the Plan under
the laws of more than one state. Each Investment Manager shall acknowledge in
writing that he is a "fiduciary" with respect to the Plan. The Board shall
enter into an agreement with each Investment Manager specifying the duties and
compensation of such Investment Manager and the other terms and conditions
under which such Investment Manager shall be retained. The Board shall not be
liable for following the advice of any Investment Manager, with respect to any
duties delegated to any Investment Manager.
14.6 Appointment of a Trustee. The Board may, by an instrument in
writing, appoint one or more persons to serve as Trustee (each of which is
herein referred to as a "Trustee") of all or a portion of the Future Investment
Trust and the Stock Bonus Trust. Each Trustee shall be subject to direction by
the Company or an Investment Manager and shall have no discretion with respect
to management and control of Plan assets, except, to the extent that the
instrument appointing such Trustee provides that such Trustee shall have power
to manage and control Plan assets. Each Trustee shall accept its appointment
by an instrument in writing. The Company shall enter into an agreement with
each Trustee specifying the duties and compensation of such Trustees and the
other terms and conditions under which such Trustees shall serve. Neither the
Company nor the Board shall be liable for any act or omission of any Trustee
with respect to any duties delegated to such Trustee. The Board may, at any
time, terminate the appointment of any Trustee.
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<PAGE>
14.7 Funding Policy. The funding policy of the Plan shall be as follows:
(a) Subject to Article VII, Company contributions allocated to the Fund
shall be invested in a manner consistent with the investment objectives deter-
mined by the Board. The Board shall communicate its investment objectives and
funding policy to the Funding Agent as to the Fund and/or to other Investment
Managers.
(b) The Board shall review at least annually the funding policy and
investment objectives of the Plan after reviewing the recommendations of the
Committee and shall communicate any revision in such objectives to the
Funding Agent as to the Fund and/or to other Investment Managers.
14.8 Compensation of Investment Manager and Trustees. Each Investment
Manager and each Trustee, if any, shall be paid such reasonable compensation,
in addition to their expenses, as shall from time to time be agreed upon by the
Company and each Trustee and each Investment Manager, as the case may be.
14.9 Facility of Benefit Payment. Whenever, in the Committee's opinion,
a person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to
be unable to manage his financial affairs, the Committee may direct the Trustee
to make payments to such person or to his legal representative or to a relative
or friend of such person for his benefit, or to direct the Trustee to apply the
payment for the benefit of such person in such manner as the Committee consi-
ders advisable. Any payment of a benefit in accordance with the provisions of
this Section 14.9 shall be a complete discharge of any liability for the making
of such payment under the provision of the Plan.
14.10 Claims and Appeals.
(a) Claims Procedure. Should any Participant or Beneficiary believe he
is entitled to a benefit from the Plan which differs from the benefit deter-
mined by the Committee, such Participant or Beneficiary may file a written
claim with the Committee. Within ninety (90) days after receipt of such claim
(or if an extension of time for processing the claim is required, within one
hundred eighty (180) days after receipt of such claim), the Committee shall
notify the claimant in writing as to whether the claim has been granted. If the
claimant has not received written notice of such decision within the ninety
(90) day period (or a one hundred eighty (180) day period, if an extension of
time is required), the claimant shall, for the purpose of subparagraph (b),
regard his claim as denied.
Any notice of denial of a claim shall be set forth in a manner calculated
to be understood by the claimant giving:
(1) the specific reason or reasons for the denial;
(2) the specific reference to the 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) appropriate information as to the steps to be taken if the
Participant or Beneficiary wishes to submit his claim for review.
(b) Review Procedure. Any claimant (or his duly authorized represen-
tative) whose claim for benefits is denied in whole or in part may appeal to
the Committee for a full and fair review of the decision by submitting to the
Committee, within sixty (60) days after receiving from the Committee written
notice of such denial (as set forth in subparagraph (a)), a written statement:
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(i) Requesting a review by the Committee of his claim for benefits;
(ii) Setting forth all of the grounds upon which the request for
review is based and any facts in support thereof; and
(iii) Setting forth any issues or comments which the claimant deems
pertinent to his claim.
(c) Timing of Response on Review. The Committee shall act upon each
such claim within sixty (60) days after receipt of the claimant's request for
review by the Committee, unless special circumstances require an extension of
time for processing. If such an extension is required, written notice of the
extension shall be furnished to the claimant within the initial sixty (60) day
period, and a decision shall be rendered as soon as possible, but not later
than one hundred twenty (120) days after receipt of the initial request for
review. The Committee shall make a full and fair review of each such claim and
any written materials submitted by the claimant in connection therewith, and
the Committee may require the claimant to submit such additional facts, docu-
ments, or other evidence as the Committee may, in its sole discretion, deem
necessary or advisable in making such a review. On the basis of its review,
the Committee shall make an independent determination of the claimant's eligi-
bility for benefits under the Plan. The decision of the Committee on any
benefit claim shall be final and conclusive upon all persons.
(d) Denial of Appeal. In the event the Committee denies an appeal in
whole or in part, the Committee shall give written notice of such decision to
the claimant, setting forth in a manner calculated to be understood by the
claimant the specific reasons for such denial and specific reference to the
pertinent Plan provisions on which the decision of the Committee was based.
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ARTICLE XV
RIGHTS OF PARTICIPANTS
15.1 Limitations on Rights of Participants. The adoption and maintenance
of this Plan shall not be construed as creating any contract of employment
between the Company and any Employee. The Company shall have the right in all
respects to deal with its Employees, their hiring, discharge, compensation and
conditions of employment as though this Plan did not exist. No Employee shall
have any right to question the action of the Company or the Board in terminat-
ing Company liability to contribute to this Plan or in terminating this Plan in
its entirety. Each Participant shall have the right only to see the record of
the accounts with respect to his own participation, and shall have no right to
inquire as to accounts with respect to other persons.
The sole rights of a Participant under this Plan shall be to have this Plan
administered according to its provisions, to receive whatever benefits he is
entitled to receive hereunder, and to name the Beneficiary to receive any death
benefits to which such person may be entitled in accordance with the terms of
this Plan.
15.2 Prohibition Against Assignment or Alienation of Benefits. No benefit,
right or interest of any kind of any Participant in this Plan may be assigned,
transferred, pledged, mortgaged or otherwise alienated or anticipated, nor
shall any such benefit, right or interest be subject to garnishment, attach-
ment, execution or levy of any kind, or any other legal process, whether by
virtue of bankruptcy, insolvency or other operation of law (other than (a)
Federal tax levies and executions on Federal tax judgments, (b) payments made
from the Accounts of a Participant in satisfaction of the rights of alternate
payees pursuant to a Qualified Domestic Relations Order under Article XIX) or
(c) the enforcement of any security interests or offset rights applicable to
Employee Deferral Contributions Account and Rollover Account of a Participant
pursuant to the loan provisions of Article XII).
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<PAGE>
ARTICLE XVI
AMENDMENT OF THE PLAN
16.1 Amendment of the Plan. The Company acting through the Board shall
have the right at any time, through a written instrument duly executed and
acknowledged by an authorized officer of the Company to modify, alter, or amend
this Plan, in whole or in part, prospectively or retroactively, to any extent
and in any manner as it shall deem advisable. Upon delivery of the instrument
of amendment to each participating Affiliated Company and the Trustee, the
amendment shall become effective in accordance with its terms as to all Parti-
cipants and all other persons having or claiming any interest under the Plan.
However, no such amendment shall operate to (a) cause any part of the Fund to
revert to or be recoverable by any Affiliated Company or to be used for, or
diverted to, purposes other than the exclusive benefit of Participants and
their Beneficiaries; (b) reduce the then outstanding balances in the Accounts
of Participants; or (c) cause or effect any discrimination in favor of Highly
Compensated Employees; or (d) substantially increase the duties of the Commit-
tee and Trustee hereunder without their written consent.
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<PAGE>
ARTICLE XVII
TERMINATION OF THE PLAN
17.1 Termination of the Plan. The Company intends to make contributions
to the Plan indefinitely, but it is under no obligation or liability whatsoever
to continue its contributions to the Plan or to maintain the Plan for any given
length of time. The Company may, in its sole discretion, discontinue contribu-
tions at any time without liability whatsoever for such action. In addition,
the Board may, at any given time terminate the Plan in whole or in part.
17.2 Effect of Discontinuance. In the event the Board decides to
discontinue further contributions to the Plan, the duties of the Committee
shall continue as before, and the provisions of the Plan (other than the
provisions relating to contributions by the Company) shall remain in force
with respect to the Employee/Participants of the Company. The Fund shall also
remain in existence, and all the provisions of the Fund (other than provisions
relating to contributions by the Company) shall continue in effect. Any
unallocated balance in the Section 4.10 suspense account at the close of the
Plan Year in which the discontinuance of contributions occurs shall be allo-
cated (to the extent permissible) to the Company Profit Sharing Contributions
Account of each Participant in Employee status at the end of the Plan Year of
discontinuance, with such allocation to be in proportion to the Eligible Earn-
ings paid to each such Participant for such Plan Year. Any other unallocated
funds existing at the date of discontinuance (other than any Employee Deferral
Contributions, Company Matching Contributions, Company Profit Sharing Contri-
butions, and forfeitures), shall be allocated to all Accounts outstanding on
such date in accordance with Section 8.2. If the Company completely discon-
tinues all contributions to the Plan, then all amounts credited to the Accounts
of Participants in accordance with the provisions of this Section 17.2 shall
become fully vested and non-forfeitable.
17.3 Effect of Termination. If the Plan is terminated completely or if
there is a partial termination of the Plan with respect to the Employees of the
Company, all amounts credited to the Accounts of affected Participants shall
immediately vest in full and become non-forfeitable, and in no event shall any
part of the Fund revert to or revest in the Affiliated Company, except as here-
in provided. The Committee shall, in accordance with Section 8.2, value the
assets of the Fund and the individual Accounts of all affected Participants as
of the date of termination and, after satisfying current obligations of the
Plan and setting aside funds for anticipated future obligations of the Fund,
including (but not limited to) the Trustee's compensation and expenses, shall
(in accordance with Section 8.2) allocate to all Accounts outstanding on the
date of termination the net increase or decrease in the fair market value of
the Fund since the immediately preceding Valuation Date (excluding, however,
any Employee Deferral Contributions, Company Profit Sharing Contributions and
Company Matching Contributions, and forfeitures for the Plan Year of termina-
tion, which are to be allocated in accordance with Article IV). Any unallocated
balance in the Section 4.10 suspense account at the date of termination with
shall be allocated (to the extent permissible under Section 4.10) to the
Accounts of all Participants who continue in Employee status through the end of
the Plan Year of termination, with such allocation to be in proportion to the
Eligible Earnings paid to each such Participant for such Plan Year. Upon a
complete termination of the Plan, any remaining balance in the Section 4.10
suspense account shall be returned to the Company.
The Trustee shall pay to each Participant for whom the termination is
effective (or his Beneficiary) the net value of his Accounts in accordance
with the written directives of the Committee. However, should the Company not
dissolve or cease all operations as of the date of Plan termination, then the
Employee Deferral Contributions Accounts of each such Participant shall not be
distributed pursuant to the provisions of this Section 17.3, but shall continue
to be held in trust for subsequent distribution in accordance with Article XI,
unless no other successor defined contribution plan is established and the
Participant consents to the immediate lump sum distribution of his Accounts.
17.4 Plan Transfers or Mergers. The merger or consolidation with, or
transfer of the allocable portion of the assets and liabilities of the Fund
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<PAGE>
to, any other qualified retirement plan, trust or fund shall be permitted only
if the benefit each Participant would receive if the Plan were terminated
immediately after such merger, consolidation or transfer would be at least as
great as the benefit he would have received had this Plan been terminated
immediately before the date of merger, consolidation or transfer.
17.5 Corporate Changes. The Plan shall not be automatically terminated by
the Company's acquisition by or merger into any other company, trade or busi-
ness, but the Plan may be continued after such merger, provided the successor
employer agrees to continue the Plan with respect to Participants employed by
the Company. All rights to amend, modify, suspend or terminate the Plan with
respect to Participants employed by the Company shall be transferred to the
successor employer, effective as of the date of the merger or acquisition.
17.6 Determination of Partial Termination. For purposes of this Article
XVII, a partial termination of the Plan shall be deemed to occur only if there
is a determination, either made or agreed to by the Committee or the Company,
or made by the Internal Revenue Service and upheld by a decision of a court of
final jurisdiction, that a particular event or transaction which has transpired
(including the sale or transfer of all or substantially all of the assets of
the Affiliated Company or the cessation of operations at one or more of its
facilities) constitutes a partial termination within the meaning of Section 411
(d)(3)(A) of the Code.
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<PAGE>
ARTICLE XVIII
TOP-HEAVY PLAN PROVISIONS
18.1 Definitions. For purposes of this Article XVIII, the following
terms shall have the meanings indicated:
(a) "Determination Date" shall mean for any Plan Year the last day of the
immediately preceding Plan Year, except for the initial Plan Year it shall be
the last day of such initial Plan Year.
(b) "Key Employee" shall mean for any Plan Year any Employee or former
Employee (or Beneficiary of any deceased Employee) who is (as of the Determin-
ation Date for such Plan Year), or who was at any time during any of the four
(4) Plan Years ended immediately prior to the Plan Year in which such Deter-
mination Date occurs:
(1) an officer of an Affiliated Company who received aggregate
annual Compensation (for the same Plan Year he was such an officer)
which was in excess of fifty percent (50%) of the maximum dollar
limitation in effect for such Plan Year under Section 415(b)(1)(A) of
the Code,
(2) one of the ten (10) Employees owning (actually or construc-
tively under Section 318 of the Code) the largest percentage interest
in any Affiliated Company, provided such individual owns more than a
one half percent (1/2%) interest in such Affiliated Company and his
aggregate Compensation for the same Plan Year is greater than the
maximum dollar limitation in effect for such Plan Year under Section
415(c)(1)(A) of the Code,
(3) a Five Percent (5%) owner of any Affiliated Company, or
(4) a one percent (1%) owner of any Affiliated Company who received
aggregate annual Compensation for the same Plan Year in excess of
$150,000.00.
The determination of Key Employee status shall be made pursuant to the criteria
set forth in Section 416(i) of the Code and the Regulations issued thereunder.
Ownership interests shall be determined in accordance with the attribution
rules of Section 318 of the Code.
If the number of officers which would otherwise be taken into account
under subparagraph (1) for any Plan Year exceeds ten percent (10%) of the total
number of Employees of all the Affiliated Companies, then the number of such
officers actually qualifying as Key Employees under subparagraph (1) for such
Plan Year shall be limited to that number of officers, not in excess of ten
percent (10%) of such total number of Employees, selected from the group of all
Employees determined to be officers at any time during the five (5) Plan Year
period ending with the Determination Date for the current Plan Year, who
received the highest annual Compensation for any Plan Year (during such five
(5) year period) for which they were officers.
For purposes of subparagraph (2) above, should two (2) Employees own the
same percentage interest in one or more Affiliated Companies, then the Employee
having the greater aggregate annual Compensation for the Plan Year shall be
deemed to own the larger percentage interest.
(c) "Non-Key-Employee" shall mean any Employee who is not a Key Employee
and shall include any Employee who is a former Key Employee.
(d) "Permissive Aggregation Group" shall mean a group of plans consisting
of the Required Aggregation Group plus any other plan of the Affiliated
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<PAGE>
Companies which, when considered together with the Required Aggregation Group,
would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the
Code.
(e) "Required Aggregation Group" shall mean a group of plans consisting
of (1) this Plan and any other qualified plan of one or more Affiliated
Companies (including a simplified employee pension plan) in which at least one
Key Employee participates and (2) any other qualified plan of the Affiliated
Companies which enables any plan described in subparagraph (1) above to meet
the requirements of Sections 401(a)(4) and 410 of the Code.
(f) "Remuneration" shall have the meaning assigned to such term in Sec-
tion 4.8(i) and shall be applied on an aggregate basis as if all the Affiliated
Companies were a single employer entity paying such Remuneration.
(g) "Top-Heavy Contribution" shall have the meaning assigned to such
term in Section 18.3.
(h) "Top-Heavy Ratio" shall mean that fraction the numerator of which is
the sum of the account balances of all Key Employees under this Plan (and, if
this Plan is part of a Required Aggregation Group or a Permissive Aggregation
Group, the sum of (1) the account balances of all Key Employees under all other
defined contribution plans (within such Required or Permissive Aggregation
Group) maintained by one or more Affiliated Companies, and (2) the present
value of the accrued benefits of all Key Employees under all defined benefit
plans (within such Required or Permissive Aggregation Group) maintained by one
or more Affiliated Companies), and the denominator of which is the sum of the
account balances of all Participants under this Plan (and, if this Plan is part
of a Required Aggregation Group or a Permissive Aggregation Group, the sum of
(1) the account balances of all Participants under all other defined contribu-
tion plans (within such Required or Permissive Aggregation Group) maintained by
one or more Affiliated Companies, and (2) the present value of the accrued
benefits of all Participants under all defined benefit plans (within such
Required or Permissive Aggregation Group) maintained by one or more Affiliated
Companies.
In determining the Top-Heavy Ratio, the following rules shall apply:
(1) The value of such account balances and the present value of
such accrued benefits shall be determined as of the most recent Top-Heavy
Valuation Date within the twelve (12) month period ending on the Determination
Date. Each account balance so determined shall be adjusted for (a) the amount
of any contributions made after such Top-Heavy Valuation Date but on or before
the Determination Date or, with respect to defined contribution plans subject
to Section 412 of the Code, (b) the amount of any contributions to be allocated
as of a date on or before the Determination Date though not yet required to be
actually contributed. Except as otherwise provided in subparagraph (2) below
or in the Regulations issued under Section 416(g)(3) of the Code, the value of
each such account balance or accrued benefit shall also include all distribu-
tions made from such account or made with respect to such accrued benefit
during the five (5) Plan Year period ending on the Determination Date. The
present value of each accrued benefit under a defined benefit plan shall be
determined as if the individual ceased Employee status as of the Top-Heavy
Valuation Date and shall be calculated in accordance with the actuarial assump-
tions in effect for such purpose under the defined benefit plan under which
such benefit is payable. The accrued benefit of an Employee other than a Key
Employee shall be determined under the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by one or more
Affiliated Companies or if there is no such method, as if such benefit accrued
not more rapidly than the slowest accrual rate permitted under Section 411(b)
(1)(C) of the Code.
(2) Should there be effected a transfer from one qualified plan to
another (by rollover or plan-to-plan transfer) which is (a) incident to a plan
merger or consolidation or incident to a plan division, (b) made between two
plans maintained by the same employer (as determined pursuant to the aggrega-
tion rules of Section 414(b), (c) or (m) of the Code) or (c) otherwise not
- 54 -
<PAGE>
initiated by the Employee, then the Participant's accrued benefit or account
balance under the transferee plan shall include any amount attributable to such
transfer which is received or accepted by such plan on or before the Determina-
tion Date, and the transferor plan shall not be required to include such amount
in the Participant's accrued benefit or account balance as of such Determina-
tion Date or any date thereafter. With respect to any rollover or plan-to-plan
transfer not otherwise described in the preceding sentence, the Participant's
accrued benefit or account balance under the transferor plan shall include any
amount distributed or transferred by such plan, and the transferee plan shall
not be required to include, as part of the Participant's accrued benefit or
account balance, any amount attributable to the assets received in such trans-
fer if accepted after December 31, 1983, but such transferee plan shall be
required to include the assets received in such transfer in the calculation of
the Participant's accrued benefit or account balance if such assets were
accepted prior to January 1, 1984.
(3) No accrued benefit or account balance of a Participant or
Beneficiary shall be taken into account for purposes of calculating the Top-
Heavy Ratio if the Participant has not been an Employee during the five (5)
Plan Year period ending with the Determination Date for a particular Plan Year,
and no accrued benefit or account balance of a Participant or Beneficiary shall
be taken into account for purposes of calculating the Top-Heavy Ratio if the
Participant ceases to be a Key Employee.
(4) When two or more plans constitute a Required Aggregation Group
or a Permissive Aggregation Group, the present value of the accrued benefits or
the value of the account balances (as adjusted for distributions to Key
Employees and all Employees for the relevant five (5) Plan Year period) shall
be determined separately for each plan on the basis of the determination date
in effect for that plan. The plans are then to be aggregated by adding
together the results obtained for each plan as of the determination date
falling within the same calendar year as the determination dates for all the
other aggregated plans.
(5) The calculation of the Top-Heavy Ratio shall be made in
accordance with Section 416 of the Code and the Regulations issued thereunder.
(i) "Top-Heavy Valuation Date" shall mean the Valuation Date coin-
cident with or immediately preceding the Determination Date.
18.2 Top-Heavy Status. This Plan shall be considered "Top-Heavy" with
respect to any Plan Year if, as of the Determination Date for such Plan Year,
any of the following conditions exists:
(a) The Top-Heavy Ratio for this Plan exceeds sixty percent (60%) and
this Plan is not a part of any Required Aggregation Group;
(b) This Plan is part of a Required Aggregation Group but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggrega-
tion Group exceeds sixty percent (60%); or
(c) This Plan is part of a Required Aggregation Group and also part of
one or more Permissive Aggregation Groups and the Top-Heavy Ratio for each
Permissive Aggregation Group exceeds sixty percent (60%).
18.3 General Rules. For any Plan Year for which the Plan is "Top- Heavy"
as set forth in Section 18.2, any other provision of this Plan to the contrary
notwithstanding, this Plan shall be subject to the following provisions:
(a) The vesting provisions of Section 18.4;
(b) The minimum contribution provisions of Section 18.5; and
(c) The limitation on contribution provisions of Section 18.6.
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<PAGE>
18.4 Vesting Provisions. Each Participant who has completed an Hour of
Service during any Plan Year in which the Plan is Top-Heavy shall have his
nonforfeitable right to his Company Matching Contributions Account and Company
Profit Sharing Contributions Account be determined as of the last day of such
Plan Year as follows, unless the Plan's vesting provisions otherwise provide
the Participant with a vested balance of a greater amount:
<TABLE>
<CONTENTS>
Years of Vesting Service Percentage Vested
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
18.5 Minimum Contribution Provisions. Subject to Section 18.7, each
Participant who (a) is a Non-Key Employee (as defined in Section 18.1(c)
below) and (ii) is employed on the last day of the Plan Year, even if such
individual has failed to complete 1,000 Hours of Service during such Plan Year,
shall be entitled to have Employee Deferral Contributions equal to an amount of
the lesser of (a) three percent (3%) of the Participant's Remuneration, or (b)
the percentage of Remuneration represented by the aggregate amount of Employee
Deferral Contributions, Company Matching Contributions, Company Profit Sharing
Contributions and forfeitures under this Plan and all other employer contribu-
tions and forfeitures under any other defined contribution plans to which one
or more Affiliated Companies contributions which are allocated for such Plan
Year to the Accounts of the Key Employees for whom such aggregate percentage is
the highest for such Plan Year, taking into account only the first One Hundred
Fifty Thousand Dollars ($150,000) subject to future cost of living increases
under Section 401(a)(17) of the Code.
If Company Matching Contributions under this Plan are utilized to satisfy
such minimum Top-Heavy Contribution, then the Company Matching Contributions
for such Plan Year must satisfy the non-discrimination standards of Section 401
(a) of the Code without regard to Section 401(m) of the Code. Accordingly, the
contribution percentage test of Section 7.1 shall not be applicable to such
Company Matching Contributions.
The Top-Heavy Contributions shall be paid to the Trustee as soon as
possible after the end of the Plan Year for which such contributions are made,
but in any event within the time limits prescribed under applicable state and
federal tax laws for the current deductibility thereof.
The Committee shall maintain a Top-Heavy Contribution Account for each
Participant which shall be credited with all Top-Heavy Contributions made on
the Participant's behalf pursuant to the provisions of this Section 18.5.
Such Account shall be adjusted periodically to reflect the Participant's share
of the earnings, gain and losses of the Fund attributable to the Top-Heavy
Contributions credited to the Account. Each Participant shall vest in his Top-
Heavy Contribution Account in accordance with this Article XVIII.
18.6 Coordination of Plans. In the event that both this Plan and the
Burr-Brown Corporation Employee Retirement Income Plan (or any other defined
benefit plan maintained by the Company) are deemed top-heavy for the same Plan
Year, each Employee covered under both plans who receives the defined benefit
minimum under the defined benefit plan shall not be entitled to any minimum
contribution under this Plan for such Plan Year.
18.7 Limitation of Contributions. In the event that the Company also
maintains a defined benefit plan on behalf of Participants in this Plan, one of
the two following provisions shall apply:
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<PAGE>
(a) If for the Plan Year this Plan would not continue to be a Top-Heavy
Plan (as determined in accordance with Section 18.2 below) if "ninety percent
(90%)" were substituted for sixty percent (60%)," then Section 18.5 shall apply
for such Plan Year as if amended so that the "four percent (4%)" were substi-
tuted for "three percent (3%)" therein.
(b) If for the Plan Year this Plan would continue to be a Top-Heavy Plan
(as determined in accordance with Section 18.2 below) if "ninety percent (90%)"
were substituted for "sixty percent (60%)," then the denominator of both the
defined contribution plan fraction and the defined benefit plan fraction shall
be calculated for the Plan Year by substituting "1.0" for "1.25" in each place
such figure appears under Section 415 of the Code, except with respect to any
individual for whom there are no Company contributions allocated for any
accruals for such individual under the defined benefit plan.
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ARTICLE XIX
QUALIFIED DOMESTIC RELATIONS ORDERS
19.1 Definitions. For purposes of this Article XIX, the following
definitions shall apply:
(a) "Alternate Payee" shall mean any spouse, former spouse, child or
other dependent of a Participant for whom a Domestic Relations Order specifies
the right to receive all or a portion of the benefits otherwise payable under
the Plan to such Participant.
(b) "Domestic Relations Order" shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable state domestic relations laws
(including community property laws), child support, alimony payments or marital
property rights to an Alternate Payee.
(c) "Earliest Retirement Age" shall mean, with respect to any Partici-
pant, the earlier of (1) the date on which the Participant is entitled to a
distribution from the Plan or (2) the later of (i) the date the Participant
will attain age fifty (50) or (ii) the earliest date the Participant would be
entitled to a distribution of benefits under the Plan were he to cease
Employee status.
(d) "Qualified Domestic Relations Order" shall mean any Domestic
Relations Order which satisfies the following three (3) requirements:
(1) such Order establishes (or otherwise recognizes the existence
of) the right of an Alternate Payee to receive all or a portion of
the benefits otherwise payable under the Plan to a Participant;
(2) such Order specifies (i) the name and last known mailing
address of the Participant, (ii) the name and mailing address of each
Alternate Payee covered by such Order, (iii) the amount or percentage
of the Participant's benefits under the Plan payable to each such
Alternate Payee or the manner in which such amount or percentage is
to be calculated, and (iv) the number of payments or the duration of
the pay-out period to which the Order applies; and
(3) such Order does not require the Plan to (i) provide any type
or form of benefit or option not otherwise available under the Plan,
(ii) provide increased benefits under the Plan or (iii) pay benefits
to an Alternate Payee which are required to be paid to another Alter-
nate Payee pursuant to any Qualified Domestic Relations Orders
previously issued to the Plan.
A Domestic Relations Order shall not be considered to be in violation of
the requirement of clause (i) of subparagraph (3) above merely because such
Order requires the payment of benefits to an Alternate Payee on or after the
date the Participant attains the Earliest Retirement Age, whether or not such
Participant actually ceases Employee status on or before such date. Accord-
ingly, such payments shall be made as if the Participant ceased Employee status
on the date on which benefits are to enter pay status under the Order.
19.2 Notification. Upon receipt of a Domestic Relations Order, the
Committee shall promptly notify the affected Participant and the Alternate
Payee of the receipt of such Order and the procedures established by the
Committee for determining whether such Order satisfies the requirements for
recognition as a Qualified Domestic Relations Order. Such notice shall also
advise the Alternate Payee of his right to designate a representative to
receive communications from the Committee concerning the disposition of the
Domestic Relations Order. Within a reasonable time after providing such
notification, the Committee shall, pursuant to such procedures, determine
whether or not the Order is a Qualified Domestic Relations Order and shall
notify the Participant and each Alternate Payee (or his representative) of such
determination.
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<PAGE>
19.3 Procedures. The Committee shall establish reasonable procedures for
determining the qualified status of Domestic Relations Orders and for effecting
distributions pursuant to all such Orders which are determined to be Qualified
Domestic Relations Orders. Such procedures shall be reviewed periodically by
the Committee to determine whether they remain reasonable and efficient and
comply with applicable requirements of the Act, the Code and Treasury regula-
tions issued thereunder.
19.4 Payment.
(a) During the period in which the qualified status of a Domestic
Relations Order is being determined, the Committee shall defer the payment of
all Plan benefits affecting the Participant which are in dispute and shall
segregate, in a separate Account maintained under the Plan, all amounts which
would otherwise be payable to the Alternate Payee during such period were the
Order determined to be a Qualified Domestic Relations Order.
(b) If the Committee determines, within eighteen (18) months after the
date the first payment to the Alternate Payee would otherwise be required
pursuant to the terms of the Order, that such Order is a Qualified Domestic
Relations Order, then the Committee shall authorize the payment of the entire
balance of the segregated Account (including any earnings thereon) to the
person or persons entitled thereto. Such payment shall be made in any form in
which benefits under the Plan may be distributed to Participants or their
Beneficiaries.
(c) If the Committee determines, within such eighteen (18)-month period
under paragraph (b) above, that such Order is not a Qualified Domestic Rela-
tions Order, or if the qualified status of such Order cannot be determined
prior to the expiration of such eighteen (18)-month period, then the Committee
shall authorize the payment of the segregated Account (including any earnings
thereon) to the person or persons who would have been entitled to the amounts
credited to such Account had the Order not been issued. If such person is the
Participant, then the Account shall remain part of the Fund and shall not be
distributed until the Participant becomes entitled to benefits under the Plan
in accordance with the provisions of Article X or XI. Should there be a subse-
quent determination that the Order is in fact a Qualified Domestic Relations
Order, then such determination shall be applied on a prospective basis only.
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<PAGE>
ARTICLE XX
MISCELLANEOUS PROVISIONS
20.1 Plan Interpretation. It is intended that this Plan meet all
requirements for profit-sharing plan qualification under the Code and that it
comply with the Act, as amended from time to time. If any provision of this
Plan is subject to more than one interpretation, such ambiguity shall be
resolved in favor of that interpretation which is consistent with this Plan
being a qualified Plan within the meaning of Sections 401(a), 401(k) and 501(a)
of the Code and in compliance with the Act, as amended or replaced by an appli-
cable law of like intent and purpose.
20.2 Consents by Board and Committees. All consents of the Board and
of the Committee herein may be granted or withheld in the sole and absolute
discretion of such parties and, if granted, may be granted on such terms and
conditions as the Board or the Committee, as the case may be, in its sole and
absolute discretion, determines. Neither the Board nor the Committee, in
granting or withholding such consents, or in making such determinations, or in
taking any other actions in connection with the administration of the Plan and
the Fund, shall discriminate in favor of Employees who are "Highly Compensated
Employees".
20.3 Return of Contributions. Assets held in the Fund must be held for
the exclusive benefit of the Participants and their Beneficiaries, and such
assets may never revert to or inure to the benefit of the Company except under
the following conditions:
(a) Each contribution made under this Plan is hereby made expressly
conditional upon the current deductibility of such contribution under Section
404 of the Code. Accordingly, to the extent the Internal Revenue Service shall
deny a deduction for any such contribution made by the Company, the amount of
the contribution for which no deduction is allowed shall be returned to the
Company within one (1) year after such disallowance.
(b) If, within one (1) year after making a contribution to the Plan, the
Company or the Committee certifies that such contribution was made under mis-
take of fact, the Trustee shall upon the direction of the Committee before the
expiration of such year return such contribution to the Company.
(c) Any forfeitures remaining in the Section 4.10 suspense account upon
the complete termination of the Plan shall be returned by the Trustee to the
Company.
If the contributions to be refunded under subparagraph (a) or (b) are
Employee Deferral Contributions, then such contributions, together with the
earnings thereon, shall not be refunded to the Company but shall be paid as a
direct cash bonus to the Participants on whose behalf such Employee Deferral
Contributions were made. Such payment shall be subject to the satisfaction of
all applicable Federal and state tax withholding requirements.
20.4 Plan Expenses. All expenses incident to the operation of the Plan
and the Fund, including, but not limited to, administrative expenses, the
compensation of any Trustee(s), Investment Manger(s), attorneys who are not
employees of the Company, advisors, actuaries, fiduciaries, record keepers and
such other persons providing technical and clerical assistance as may be
required, shall be paid out of or reimbursed by the Fund, except to the extent
that the Company may elect to pay part or all thereof directly or to the extent
prohibited by law. Expenses that are allocable to a particular investment fund
will be charged against that fund. Nonallocable expenses will be charged
ratably to all funds based on the aggregate value of each fund as of the
immediately preceding Valuation Date. All expenses of administration may be
charged proportionately against the amount outstanding to the credit of each
Participant's Account, unless paid by the Company.
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<PAGE>
20.5 Applicable Law. The Plan shall be construed and its validity
determined according to the laws of the State of Arizona, to the extent such
laws are not preempted by federal law. In case any provision of the Plan shall
be held illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if said illegal and invalid provision had never been inserted
herein. All controversies, disputes and claims arising hereunder shall be
submitted to the United States District Court for the District of Arizona after
exhausting the claims procedure provided in Section 14.10, except as otherwise
provided in any agreement entered into with the Trustee.
20.6 Conditional Establishment. The Plan is hereby amended and restated
on the express condition that it will be considered by the Internal Revenue
Service as qualifying under Section 401(a) of the Code. In the event the
Internal Revenue Service determines that the Plan as so amended and restated
does not qualify under the Code, the Plan will be of no effect, and all Company
contributions made by the Company, together with any earnings, will be returned
to the Company within one (1) year after the date of the adverse Internal
Revenue Service determination. All Employee Deferral Contributions made by the
Company, together with the earnings thereon, shall be paid directly to the
Participants on whose behalf such contributions were made, and such payment
shall be subject to the satisfaction of all applicable Federal and State tax
withholding requirements. The Board, however, may (but shall not be required
to do so) make any retroactive amendments to the Plan which the Internal
Revenue Service may require as a condition for its determination that the Plan
as established qualifies under Section 401(a) of the Code.
20.7 Headings. The titles to sections and headings of this Plan are for
convenience of reference, and in case of any conflict the text of the Plan,
rather than such titles and headings, shall control.
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<PAGE>
ADDENDUM
SPECIAL TERMINATION PROVISIONS
A. Stock Bonus Accounts of Lanpoint Employees. Effective on or
about July 1, 1994, the Company will spin off its Lanpoint Division and the
employees thereof to an Affiliated Company, Intelligent Instrumentation, Inc.
("I3"). An employee of Lanpoint Division prior to the spin off who directly
transfers to I3 without any intervening period of employment ("Lanpoint
Employee") shall have the following options with regard to his Stock Bonus
Account:
(1) Option 1: a Lanpoint Employee can elect to retain his Stock
Bonus Account in the Plan;
(2) Option 2: a Lanpoint Employee can elect to take an in-service
distribution of all of the Company Stock allocated to his Stock
Bonus Account; or
(3) Option 3: a Lanpoint Employee can elect to have his Stock Bonus
Account liquidated and have the cash transferred to the Section
401(k) plan of I3 and thereby waive any right to receive Company
Stock upon subsequent termination of employment with an Affil-
iated Company.
B. Vesting of Accounts of Lanpoint Employees. The Accounts of an
employee of I3 who was a Lanpoint Employee (as defined in paragraph A) shall be
fully vested in such Accounts as of the date of transfer of such Lanpoint
Employee.
C. Transfer of Accounts of Lanpoint Employees. The Accounts
(other than the Stock Bonus Account) of a Lanpoint Employee (as defined in
paragraph A) shall be transferred to the Section 401(k) plan of I3 on or about
September 30, 1994. The Stock Bonus Account shall be transferred on or before
March 31, 1995.
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<PAGE>
IN WITNESS WHEREOF, the Plan has been adopted on the 23rd day of
December, 1994.
BURR-BROWN CORPORATION
By: John L. Carter (Signature on file)
Its Executive Vice President and CFO
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EXHIBIT 10.31
LOAN AGREEMENT
by and among
FIRST INTERSTATE BANK OF ARIZONA, N.A.
and
BANK ONE, ARIZONA, NA
as the "Banks"
and
BURR-BROWN CORPORATION
as the "Borrower"
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. RECITALS.................................................. 1
SECTION 2. DEFINITIONS............................................... 1
2.1 Definitions................................................... 1
2.2 Accounting Terms.............................................. 2
SECTION 3. THE REVOLVING CREDIT FACILITY............................. 2
3.1 Revolving Loan Commitments.................................... 2
3.2 Manner of Borrowing........................................... 3
(a) Request for Advance........................................ 3
(b) Notice Irrevocable......................................... 3
(c) Funding.................................................... 3
3.3 Apportionment of the Revolving Credit Loans................... 4
3.4 Selection of the Applicable Interest Rate..................... 4
3.5 Commitment Fees; Facility Fees; Agent's Fees.................. 6
(a) Commitment Fees............................................ 6
(b) Facility Fee............................................... 6
(c) Agent's Fees............................................... 6
3.6 Reduction of Revolving Credit Commitments..................... 6
(a) Reduction.................................................. 6
(b) Effect..................................................... 6
3.7 The Revolving Credit Notes.................................... 7
3.8 Principal Payment and Prepayment on the Revolving Credit Loans 7
(a) Mandatory Payments......................................... 7
(b) Optional Prepayments....................................... 7
3.9 Payment of Interest Under the Revolving Credit Loans.......... 8
<PAGE>
SECTION 4. THE TERM LOANS............................................ 8
4.1 The Term Loan Commitments..................................... 8
4.2 Use of Term Loans/Term Notes.................................. 8
4.3 Notice and Funding............................................ 8
4.4 Apportionment of the Term Loans............................... 9
4.5 Selection of the Applicable Interest Rate..................... 9
4.6 Payment of Interest Under the Term Loans...................... 10
4.7 Principal Repayment........................................... 10
4.8 Prepayment.................................................... 10
SECTION 5. GENERAL PAYMENT TERMS..................................... 11
5.1 Payments...................................................... 11
5.2 Computations.................................................. 11
5.3 Setoff........................................................ 11
5.4 Increased Capital Requirements................................ 11
5.5 Special Provisions for LIBO Rate Advances..................... 12
(a) Inadequacy of Eurodollar Pricing......................... 12
(b) Illegality............................................... 12
(c) Increased Costs for LIBO Rate Advances................... 13
5.6 Indemnity for Consequential Loss.............................. 13
SECTION 6. CONDITIONS PRECEDENT...................................... 14
6.1 Conditions.................................................... 14
6.2 Advances of the Loans......................................... 16
(a) No Defaults.............................................. 16
(b) Compliance with Agreement................................ 16
(c) No Material Adverse Change............................... 17
(d) Representations and Warranties........................... 17
(e) Bankruptcy Proceedings................................... 17
6.3 Special Condition for Funding the Term Loans.................. 17
SECTION 7. REPRESENTATIONS AND WARRANTIES............................ 17
7.1 Corporate Existence and Power................................. 17
7.2 Corporate and Governmental Authorization; Contravention....... 17
7.3 Enforceability................................................ 18
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<PAGE>
7.4 Litigation.................................................... 18
7.5 Compliance with ERISA......................................... 18
7.6 Taxes......................................................... 18
7.7 Subsidiaries.................................................. 18
7.8 No Default.................................................... 19
7.9 Use of Proceeds; Margin Stock................................. 19
7.10 No Financing of Certain Corporate Takeovers................... 19
7.11 Compliance with Law........................................... 19
7.12 Financial Condition........................................... 19
7.13 No Liens...................................................... 20
7.14 Material Agreements........................................... 20
7.15 Principal Office.............................................. 20
7.16 Full Disclosure............................................... 20
7.17 Representations and Warranties................................ 20
7.18 Survival of Representations, Etc.............................. 20
SECTION 8. AFFIRMATIVE COVENANTS...................................... 21
8.1 Financial Statements, Reports and Documents................... 21
(a) Quarterly Statements....................................... 21
(b) Annual Statements.......................................... 21
(c) Financial Projections...................................... 21
(d) SEC and Other Reports...................................... 22
(e) Compliance Certificate..................................... 22
(f) Notice of Other Events..................................... 22
(g) Other Information.......................................... 23
8.2 Payments of Taxes and Other Indebtedness...................... 23
8.3 Insurance and Maintenance of Properties....................... 23
8.4 Corporate Existence........................................... 23
8.5 Use of Proceeds............................................... 24
8.6 Books and Records; Access..................................... 24
8.7 Compliance with Laws.......................................... 24
8.8 Authorizations and Approvals.................................. 24
8.9 Further Assurances............................................ 24
SECTION 9. NEGATIVE COVENANTS......................................... 25
9.1 Sales of Stock and Indebtedness of Subsidiaries............... 25
9.2 Merger and Sale of Assets..................................... 25
9.3 Limitation on Net Worth....................................... 26
9.4 Quick Ratio................................................... 26
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<PAGE>
9.5 Total Debt Limitation......................................... 26
9.6 Restriction on Liens.......................................... 26
9.7 Debt Service Ratio............................................ 26
9.8 Capital Expenditures.......................................... 26
9.9 Lines of Business............................................. 27
9.10 Certain Transfers of Property................................. 27
SECTION 10. DEFAULTS................................................... 27
10.1 Events of Default.............................................. 27
10.2 Remedies Upon Event of Default................................. 30
SECTION 11. THE AGENT.................................................. 31
11.1 Appointment and Authorization.................................. 31
11.2 Note Holders................................................... 31
11.3 Consultation With Counsel...................................... 31
11.4 Documents...................................................... 31
11.5 Agent and Affiliates........................................... 31
11.6 Action by Agent................................................ 31
11.7 Credit Analysis................................................ 32
11.8 Notices of Event of Default etc................................ 32
11.9 Indemnification................................................ 32
11.10 Payments....................................................... 33
11.11 Sharing of Payments............................................ 33
11.12 Forwarding of Information to Banks............................. 34
11.13 Successor Agent................................................ 34
SECTION 12.MISCELLANEOUS................................................ 34
12.1 Entirety....................................................... 34
12.2 Notices........................................................ 34
12.3 Expenses; Indemnification...................................... 35
12.4 Confidentiality................................................ 35
12.5 Amendments, Waivers, Etc....................................... 35
12.6 Assignments and Participations; Transferees.................... 36
12.7 Invalid Provisions............................................. 37
12.8 Headings....................................................... 37
12.9 No Third Party Beneficiary..................................... 37
12.10 Multiple Counterparts.......................................... 38
12.11 Governing Law.................................................. 38
12.12 Arbitration.................................................... 38
-iv-
<PAGE>
(a) Binding Arbitration........................................ 38
(b) Governing Rules............................................ 38
(c) No Waiver, Preservation of Remedies, Multiple Parties...... 39
(d) Arbitrator Powers and Qualifications; Awards............... 39
(e) Miscellaneous.............................................. 40
12.13 Choice of Forum; Consent to Service of Process; Jurisdiction;
Waiver of Jury Trial........................................ 40
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<PAGE>
LOAN AGREEMENT
______________
THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into as of
July 25, 1994, by and among BURR-BROWN CORPORATION, a Delaware corporation (the
"Borrower"), FIRST INTERSTATE BANK OF ARIZONA, N.A. ("First Interstate"), and
BANK ONE, ARIZONA, NA ("Bank One") (First Interstate, Bank One and any other
lender who becomes a party hereto under subsection 12.6 being herein referred
to collectively as the "Banks" and individually as a "Bank"), and FIRST INTER-
STATE BANK OF ARIZONA, N.A., as agent for the Banks (in such capacity, together
with any successor agent appointed hereunder, the "Agent").
SECTION 1. RECITALS
1.1 Borrower, First Interstate and Bank One (then known as "Valley Bank
of Arizona") are all of the parties to a Loan Agreement dated as of October 19,
1992, pursuant to which the Banks provided Borrower with a revolving credit
facility in the maximum principal amount of $20,000,000.00 (the "Existing Loan
Facility").
1.2 Borrower has applied to the Banks for a revolving credit facility in
the maximum principal amount of $15,000,000.00 to replace the Existing Loan
Facility and to provide funds to be used for Borrower's general corporate and
working capital purposes.
1.3 Borrower has also applied to the Banks for single-advance term loans
in the aggregate principal amount of $8,500,000.00 for the purpose of refinan-
cing, in whole or in part, amounts heretofore advanced by Borrower to pay in
full and satisfy its indebtedness to The Prudential Insurance Company of America
("Prudential"), its successors, and assigns, pursuant to the Prudential Note
Agreement and the 11.75% senior promissory notes due April 15, 1996 (the "Senior
Prudential Notes") payable to Prudential thereunder.
1.4 The Banks are willing to provide the requested revolving credit
facility and the term loans to Borrower, each upon the terms and subject to the
conditions hereinafter set forth.
Accordingly, the parties agree as follows:
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Although terms may also be defined elsewhere in this
Agreement, capitalized terms used herein (unless the context requires otherwise)
shall have the meanings set forth in Annex I attached hereto and incorporated
herein by this reference and shall be equally applicable to both the singular
and the plural forms of the terms therein defined. References to "Loan Agree-
ment," "this Agreement," "herein," "hereof," "hereunder," or other like words
mean this Loan Agreement as amended, supplemented, restated or otherwise
modified and in effect from time to time.
2.2 ACCOUNTING TERMS. Except as expressly provided to the contrary here-
in, all accounting terms shall be interpreted and all accounting determinations
shall be made in accordance with GAAP. To the extent any change in GAAP affects
any computation or determination required to be made pursuant to this Loan
Agreement, such computation or determination shall be made as if such change in
GAAP had not occurred unless Borrower and each Bank agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
SECTION 3. THE REVOLVING CREDIT FACILITY.
3.1 REVOLVING LOAN COMMITMENTS. Upon the terms and subject to the condi-
tions of this Loan agreement, during the period beginning on the Closing Date
and ending on the Termination Date (the "Revolving Period"), each Bank agrees,
severally but not jointly, to lend to Borrower, at such times as Borrower shall
request, on a revolving basis in one or more Advances (the aggregate Advances
by a Bank are herein referred to as that Bank's "Revolving Credit Loan") an
amount equal to that Bank's Pro Rata Share of the total amount (the "Requested
Amount") requested by the Borrower in each Request For Borrowing, up to an
aggregate principal amount at any time outstanding equal to such Bank's Revol-
ving Credit Commitment Amount as set forth opposite its name on Schedule 3.1
hereto. During the Revolving Period, within the limits of this subsection 3.1,
Borrower may borrow, repay and reborrow subject to the following limitations:
(a) no Advance shall be in an amount less than $100,000.00 or integral multiples
thereof; (b) no Bank shall be obligated under any circumstances to fund an
Advance of its Revolving Credit Loan (i) in excess of that Bank's Revolving
Credit Loan to exceed that Bank's Revolving Credit Commitment Amount; and (c)
the aggregate principal amount of Revolving Credit Loans at any time outstanding
shall not exceed Fifteen Million and No/100 Dollars ($15,000,000.00).
The Banks shall not be obligated to make any Advance if, after giving
effect thereto, any of the foregoing limitations would be exceeded. The failure
of any one or more of the Banks to make an Advance of its Revolving Credit Loan
in accordance with its Revolving Credit Commitment shall not relieve the other
Banks of their several obligations hereunder, but no Bank shall be liable with
respect to the obligation of any other Bank hereunder or be obligated in any
event to make any Advance that would cause the outstanding principal amount of
its Revolving Credit Loan to exceed its Revolving Credit Commitment Account.
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<PAGE>
3.2 MANNER OF BORROWING.
(a) REQUEST FOR ADVANCE. Borrower shall give the Agent notice of
each request for Advances from the Banks (a "Request for Advance"), and
each such request shall specify the Requested Amount, which shall be the
aggregate of all requested Advances. Each Advance shall constitute a
Borrowing, and accordingly, each Request for Advance shall also set forth
all information required to be specified in a Notice of Interest Rate
Designation. Each Request for Advance shall be made by an Authorized
Person and may be in writing (including telex and telecopy) or oral, con-
firmed promptly in writing. Each Request for Advance shall be received by
the Agent.
(i) If the Applicable Interest Rate for the Advance is to be the
Prime Rate or the LIBO Rate--not later than 11:00 a.m. (Phoenix,
Arizona time) on the requested date of the Advance; and
(ii) If the Applicable Interest Rate for the Advance is to be the
Bid Rate--not later than 10:00 a.m. (Phoenix, Arizona time) on the
requested date of such Advance.
(b) NOTICE IRREVOCABLE. Each Request for Advance shall be irrevo-
cable and binding on Borrower upon receipt thereof by the Agent; PROVIDED
that each such Request for Advance at the Bid Rate shall become irrevocable
and binding in the manner and at the time that the Notice of Interest Rate
Designation with respect thereto becomes irrevocable and binding upon
Borrower in accordance with subsection 3.4 below. Borrower shall indemnify
each Bank against any cost, loss or expense incurred by any Bank as a
result of Borrower's failure to fulfill, on or before the date specified
for an Advance in any Request for Advance, the Conditions to such Advance
set forth herein, including any cost, loss or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
a Bank to fund such Advance when such Advance, as a result of such failure,
is not made on the date so specified. A Bank requesting payment under this
subsection 3.2(b) shall provide Borrower with a written calculation itemiz-
ing in reasonable detail the components of such payment.
(c) FUNDING. After receiving a Request for Advance in the manner
provided herein, the Agent shall promptly notify each Bank by telephone
(confirmed promptly in writing), telefacsimile or cable of the terms of
such notice and such Bank's Pro Rata Share of the Requested Amount. Each
Bank shall, before 1:00 p.m. (Phoenix, Arizona time) on the date an Advance
is requested as specified in a Request for Advance, deposit with the Agent
-3-
<PAGE>
such Bank's Pro Rata Share of the Requested Amount in immediately available
funds. Upon fulfillment of all applicable conditions set forth herein and
after receipt by the Agent of such funds, the Agent shall pay or deliver
all funds so received to the order of Borrower at the principal office of
the Agent. The failure of any Bank to make any Advance required to be made
by it hereunder shall not relieve any other Bank of its obligation to make
its Advance hereunder. If any Bank fails to provide its Pro Rata Share of
the Requested Amount and if all conditions to such Advance have apparently
been satisfied, the Agent will make available to Borrower the funds
received by it from the other Banks. Neither the Agent nor any Bank shall
be responsible for the performance by any other Bank of its obligations
hereunder.
Unless the Agent shall have received notice from a Bank prior to the
date of any Advance that such Bank will not make available to the Agent
such Bank's Pro Rata Share of the Requested Amount, the Agent may assume
that such Bank has made such amount available to the Agent on the date of
such Advance in accordance with this subsection 3.2(c) and the Agent may,
in reliance upon such assumption, make available a corresponding amount to
or on behalf of Borrower on such date. If and to the extent any Bank shall
not have so made its Pro Rata Share of the Requested Amount available to
the Agent (the "Principal Shortfall Amount"), Borrower agrees to repay the
Principal Shortfall Amount to the Agent forth with on demand, together with
interest thereon for each day from (and including) the date such amount is
made available to or on behalf of Borrower to (but excluding) the date such
amount is repaid to the agent, at the rate per annum equal to the rate
otherwise applicable to the Advance in question.
3.3 APPORTIONMENT OF THE REVOLVING CREDIT LOANS. The outstanding principal
amount of each Revolving Credit Loan shall consist of, as Borrower shall from
time to time elect (subject to the terms and conditions of this Agreement), one
or more Borrowings with respect to which interest shall accrue under interest
rate options determined pursuant to subsection 3.4 below, provided that no
Borrowing shall be created or permitted to continue in an amount less than
$100,000.00 (the "Minimum Amount Limitation").
3.4 SELECTION OF THE APPLICABLE INTEREST RATE. Subject to the terms and
conditions set forth herein, Borrower may elect to have any one of the Prime
Rate, the LIBO Rate and the Bid Rate apply to the calculation of the interest
accruing with respect to the outstanding principal amount of a Borrowing, pro-
vided that one and only one interest rate option shall apply to the outstanding
principal balance of each Borrowing at any given time. Each interest rate duly
selected by Borrower shall be the "Applicable Interest Rate" for the designated
Borrowing.
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<PAGE>
For each such interest option designation (each an "Interest Rate Desig-
nation"), an Authorized Person shall give the Agent written (including by
telefacsimile) or oral notice confirmed promptly in writing (a "Notice of
Interest Rate Designation") (a) specifying the effective date of such Interest
Rate Designation (the "Designation Date"), (b) specifying whether the Applicable
Interest Rate is to be the Prime Rate or the LIBO Rate or, alternatively,
requesting that the Banks each quote a Bid Rate to be the Applicable Interest
Rate, and (c) specifying the applicable Interest Period IF the Applicable
Interest Rate is to be the LIBO Rate or a Bid Rate; PROVIDED that Borrower shall
not specify the LIBO Rate or request that the Banks quote a Bid Rate in any
Notice of Interest Rate Designation if, at the time of the giving of said
notice, any Default shall have occurred and be continuing.
Each Notice of Interest Rate Designation designating the Prime Rate or the
LIBO Rate as the Applicable Interest Rate shall be irrevocable and effective
upon receipt thereof by the Agent, and the Agent shall promptly after its
receipt of a Notice of Interest Rate Designation deliver a copy thereof (orally,
by teletransmission or by personal delivery) to each Bank. The interest rate
specified in each such notice shall be the Applicable Interest Rate with respect
to the Borrowing that is the subject matter thereof (and, if the Applicable
Interest Rate is the LIBO Rate, such Applicable Interest Rate shall be in effect
for the Interest Period specified therein).
After receiving a Notice of Interest Rate Designation requesting that the
Banks quote a Bid Rate to be the Applicable Interest Rate (a "Bid Rate Notice")
in the manner provided herein, the Agent shall promptly notify each Bank by
telephone or teletransmission and each Bank may, but shall have no obligation
to, quote Borrower (orally or in writing) a proposed interest rate (the "Bid
Rate") by communicating such quote to the Agent not later than 11:00 a.m.
(Phoenix, Arizona time) and the Agent shall promptly communicate such quote to
Borrower. Each Bid Rate Notice shall be irrevocable and effective shall be the
Applicable Interest Rate with respect to the Advance that is the subject matter
thereof for the Interest Period specified therein, commencing on the Designation
Date specified therein. With respect to each Bid Rate Notice that does not
become irrevocable and effective, (a) if the respective Borrowing is an Advance,
then Borrower shall designate in writing, prior to the Bid Rate Acceptance Time,
whether the Prime Rate or the LIBO Rate shall apply (and, if the latter,
specifying the Interest Period therefor).
If at any time Borrower shall fail to duly designate the Applicable
Interest Rate for any Borrowing, then Borrower shall be deemed to have duly
designated the prime Rate to be the Applicable Interest Rate therefor. Notwith-
standing the foregoing, while any Default shall be continuing the Applicable
Interest Rate for all Revolving Credit Loans shall be the Prime Rate, Commencing
-5-
<PAGE>
with respect to each such Revolving Credit Loan on the first day after the end
of the respective Interest Period in effect after the date of such Default.
3.5 COMMITMENT FEES; FACILITY FEES; AGENT'S FEES.
(a) COMMITMENT FEES. In addition to payments provided for elsewhere
herein, Borrower shall pay to each Bank a commitment fee of one-fourth of
one percent (0.25%) on the average daily amount of such Bank's Revolving
Credit Commitment that was unused during the calendar quarter (or portion
thereof). Such commitment fee shall be accrued through the last day of
each calendar quarter and the Termination Date and be due and payable
quarterly on the fifteenth day of the next succeeding calendar quarter and
on the Termination Date.
(b) FACILITY FEE. In addition to payments provided for elsewhere
herein, the Borrower shall pay through the Agent to each Bank a facility
fee in an amount equal to one-eighth on one percent (0.125%) of the princi-
pal amount of each Advance by such Bank for which the Applicable Interest
Rate is the Bid Rate. The Facility Fee with respect to each such Advance
shall be due and payable on the last day of the Interest Period applicable
thereto.
(c) AGENT'S FEES. Borrower shall pay to the Agent the "Agency Fee"
specified in that certain letter agreement between Borrower and the Agent
of even date herewith.
3.6 REDUCTION OF REVOLVING CREDIT COMMITMENTS.
(a) REDUCTION. Borrower shall have the right at any time upon at
least seven days' prior written notice to the Agent to reduce the aggregate
amount of the Revolving Credit Commitment; PROVIDED, that the amount of
each such reduction shall be in a minimum aggregate amount of $1,000,000
or an integral aggregate multiple of $500,000 in excess thereof, that no
such reduction shall reduce the amount of any Bank's Revolving Credit
Commitment to less than the unpaid principal balance of such Bank's Revol-
ving Credit Loan, and that no such reduction shall reduce the aggregate
amount of the Revolving Credit Commitments to less than the sum of the
unpaid principal balances of the Revolving Credit Loans. The Agent shall
promptly notify each Bank of any such notice of reduction received from the
Borrower.
(b) EFFECT. Borrower may specify which Revolving Credit Commitments
are to be reduced; absent such specification, any reduction in the aggre-
gate amount of the Revolving Credit Commitments shall reduce each Bank's
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<PAGE>
Revolving Credit Commitment Amount by its Pro Rata Share of the aggregate
amount of such reduction. Revolving Credit Commitments that have been
terminated or reduced may not be reinstated without the mutual prior
written consent of the Borrower and all Banks.
3.7 THE REVOLVING CREDIT NOTES. Revolving Credit Loans made by each Bank
shall be evidenced by Borrower's promissory note in the form of Exhibit A
attached hereto (each a "Revolving Credit Note") which shall be dated the date
hereof and shall be made payable to the order of such Bank in an amount equal
to such Bank's Revolving Credit Commitment Amount. The aggregate amount of the
Advances made by a Bank under its Revolving Credit Note less all repayments of
principal thereof shall be the principal amount owing and unpaid on such Revol-
ving Credit Note and the respective Revolving Credit Loan. The principal amount
of each Revolving Credit Loan made by a Bank and all principal payments and
prepayments thereof may be noted by such Bank on a schedule attached to its
Revolving Credit Note and shall be entered by such Bank on its ledgers and
computer records; PROVIDED, that the failure of any Bank to make such notations
or entries shall not affect the principal amount owing and unpaid on its
Revolving Credit Note. The entries made by a Bank on its ledgers and computer
records and any notations made by such Bank on any such schedule annexed to its
Revolving Credit Note shall be presumed to be accurate until the contrary is
established. Borrower shall confirm in writing to the Agent each Advance and
the Agent shall promptly deliver a copy of each such confirmation to each Bank.
Each Bank shall notify the Agent (who shall promptly notify the Borrower) of any
discrepancy between the Borrower's written confirmation and such Bank's ledgers
and records.
3.8 PRINCIPAL PAYMENT AND PREPAYMENT ON THE REVOLVING CREDIT LOANS.
Borrower shall pay the principal of the Revolving Credit Notes as follows:
(a) MANDATORY PAYMENTS. The entire principal amount of each Bid Rate
Borrowing shall be due and payable on the last Business Day of the Interest
Period applicable thereto. The entire unpaid principal balance of each
Bank's Revolving Credit Loan, together with accrued but unpaid interest
thereon, shall be due and payable on the Termination Date.
(b) OPTIONAL PREPAYMENTS. Borrower shall have the right to prepay
the outstanding principal balances of the Revolving Credit Loans in whole
or in part at any time and from time to time, each such principal prepay-
ment to be paid to the Agent and distributed to the Banks pursuant to
subsection 11.10 herein; PROVIDED, HOWEVER, that, unless permitted under
subsection 5.5(b), Borrower may not prepay any principal portion of any
Borrowing that bears interest at the LIBO Rate or the Bid Rate on a day
other than the last day of the Interest Period applicable thereto unless
Borrower shall have given Agent thirty (30) days prior, written notice of
Borrower's intent to do so.
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3.9 PAYMENT OF INTEREST UNDER THE REVOLVING CREDIT LOANS.
The principal amount of each Borrowing outstanding under the Revolving
Credit Loans shall bear interest at the respective Applicable Interest Rate in
effect from day to day until paid in full. If the Applicable Interest Rate is
the LIBO Rate or the Bid Rate, all accrued interest shall be due and payable on
the last day of the corresponding Interest Period unless the Interest Period is
longer than ninety (90) days with respect to the Bid Rate of three (3) months
with respect to the LIBO Rate, in which event interest accrued through the end
of each calendar quarter shall be payable on the first Business Day of the next
calendar quarter and all interest accrued after such calendar quarter shall be
due and payable on the last day of such Interest Period. If the Applicable
Interest Rate is the Prime Rate, accrued interest through the end of each
calendar month shall be payable on the first Business Day of the next calendar
month. All past due principal of, and interest on, each Revolving Credit Loan
(or any portion thereof) shall bear interest until paid at the Default Rate. All
payments of interest on the Revolving Credit Loan shall be made to the Agent as
provided in subsection 5.1 and distributed to the Banks pursuant to subsection
11.10 herein.
SECTION 4. THE TERM LOANS.
4.1 THE TERM LOAN COMMITMENTS. Upon the terms and subject to the condi-
tions of this Loan Agreement, each Bank agrees to loan to or for the benefit of
Borrower, and Borrower agrees to draw upon and borrow in a single advance, in
the manner and upon the terms, provisions and conditions contained in this Loan
Agreement, an amount (each constituting that Bank's "Term Loan") equal to that
Bank's Pro Rata Share of the total amount requested by Borrower, up to a maximum
aggregate for all Banks of Eight Million Five Hundred Thousand and No/100
Dollars ($8,500,000.00) and further limited, as to the obligation of each Bank
to lend, to such Bank's Term Loan Commitment Amount as set forth opposite its
name on Schedule 4.1 hereto.
4.2 USE OF TERM LOANS/TERM NOTES. The Term Loans shall be evidenced by
Borrower's promissory notes, each in the form of Exhibit B attached hereto (each
a "Term Note" and collectively, the "Term Notes"), which notes each shall be
dated as of the Closing Date and made payable to the order of each Bank in the
amount of proceeds advanced by that Bank pursuant to subsection 4.3 below.
4.3 NOTICE AND FUNDING. Subject to the terms and conditions set forth in
this Agreement, each Bank shall advance the proceeds of its Term Loan to or for
the benefit of Borrower in a single advance on the Closing Date, provided that
the Banks shall have no obligation to make any advance of funds of the Term
Loans unless and until all conditions and requirements of this Loan Agreement
are fully satisfied.
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Borrower shall give Agent not less than one (1) Business Day prior notice
of the date upon which Borrower requests funding of the Term Loans and the
aggregate amount thereof, and shall provide Agent with a Notice of interest Rate
Designation for each Borrowing initially to be outstanding under each Term Loan,
as more fully specified in Sections 4.4 and 4.5, below. After receiving such
notice, the Agent shall promptly notify each Bank by telephone (confirmed
promptly in writing), telefacsimile or cable of the terms of such notice and
such Bank's Pro Rata Share of the requested amount.
Borrower shall indemnify each Bank against any cost, loss or expense
incurred by any Bank as a result of Borrower's failure to fulfill, on or before
the date so specified for the advance of the Term Loans, all conditions prece-
dent set forth herein to the advance thereof, including any cost, loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by a Bank to fund the amount so requested when, as a result
of such failure, the amount is not advanced. A Bank requesting payment under
this subsection 4.3 shall provide Borrower with a written calculation itemizing
in reasonable detail the components of such payment.
Each Bank shall, before 1:00 p.m. (Phoenix, Arizona time) on the date of
the requested funding of the Term Loans, deposit with the Agent in immediately
available funds such Bank's Pro Rata Share of the total amount requested. Upon
the fulfillment of all applicable conditions set forth herein and after receipt
by the Agent of such funds, the Agent shall pay or deliver all funds so received
to the order of Borrower at the principal office of the Agent. The failure of
any Bank to advance its Term Loan amount shall not relieve any other Bank of its
obligation to advance its Term Loan Amount. If any Bank fails to provide its
Pro Rata Share of the aggregate amount requested, and if all conditions to the
advance of the Term Loans have apparently been satisfied, the Agent will make
available to Borrower the funds received by it from the other Banks. Neither
the Agent nor any Bank shall be responsible for the performance by any other
Bank of its obligations hereunder.
4.4 APPORTIONMENT OF THE TERM LOANS. The outstanding principal amount of
each Term Loan shall consist of, as Borrower shall from time to time elect
(subject to the terms and conditions of this Loan Agreement), one or more
Borrowings with respect to which interest shall accrue under interest rate
options determined pursuant to subsection 4.5 below, subject to the Minimum
Amount Limitation.
4.5 SELECTION OF THE APPLICABLE INTEREST RATE. Subject to the terms and
conditions set forth herein, Borrower may elect among the LIBO Rates for the
available Interest Periods (one, two, three or six months) to determine the
Applicable Interest Rate for each Borrowing under the Term Loans during the
Interest Period so selected. For each such Interest Rate Designation, an
Authorized Person shall give Agent a Notice of Interest Rate Designation (a)
specifying the Designation Date, and (b) specifying the applicable Interest
Period. Each such Notice of Interest Rate Designation shall be irrevocable and
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effective upon receipt thereof by Agent. If Borrower shall fail to duly select
an Interest Period for any such Borrowing, Borrower shall be deemed to have
selected an Interest Period of one (1) month. Notwithstanding the foregoing,
while any Default shall be continuing the Applicable Interest Rate for all
Borrowings under the Term Loan shall be the Prime Rate, commencing with respect
to each such Borrowing on the first day after the end of the respective Interest
Period in effect as of the date of such Default. Further, Borrower shall
designate Borrowings and Interest Periods under the Term Loans such that the
principal repayments provided in subsection 4.7 herein may be made without
prepaying any Borrowing prior to the end of its Interest Period.
4.6 PAYMENT OF INTEREST UNDER THE TERM LOANS. The principal amount of
each Borrowing outstanding under the Term Loans shall bear interest at the
respective Applicable Interest Rate in effect from day to day until paid in
full. For each Borrowing, all accrued and unpaid interest shall be due and
payable on the last day of each corresponding Interest Period and, if the
Interest Period exceeds three (3) months, interest accrued to the end of each
calendar quarter shall be due and payable on the first Business Day of the next
calendar quarter; PROVIDED, HOWEVER, that notwithstanding the foregoing: (i)
while any Default shall be continuing, all accrued and unpaid interest shall be
due and payable with respect to each Borrowing at the end of it respective
Interest Period and also on the first Business Day of each calendar quarter, and
(ii) all accrued and unpaid interest shall be due and payable in full on the
last Business Day in June 1996 (the "Term Loan Maturity Date"). All past due
principal of, and interest on, the Term Loans shall bear interest until paid at
the Default Rate. All payments of interest on the Term Loans shall be made to
the Agent as provided in subsection 5.1 and distributed to the Banks pursuant
to subsection 11.10 herein.
4.7 PRINCIPAL REPAYMENT. In addition to the interest payments provided in
subsection 4.4 above, the principal of the Term Loans shall be repaid in eight
(8) quarterly installments, one due and payable on the last Business Day of each
of the first eight (8) calendar quarters that begin after the Closing Date. The
first four (4) such installments shall be in the amount of $812,500.00 each and
the last four shall be in the amount of $1,312,500.00 each. However, notwith-
standing any other provision of this Agreement, the entire unpaid principal
balance, all accrued and unpaid interest and all other amounts (if any) payable
in connection with the Term Loan, if not earlier due and payable, shall be due
and payable in full on that last Business Day in June of 1996.
4.8 PREPAYMENT. Borrower may prepay the Term Loans in full or in part at
any time without penalty; PROVIDED, HOWEVER, that Borrower may not prepay any
principal portion of the Term Loans on a day other than the last day of an
Interest Period unless Borrower shall have given Agent thirty (30) days prior,
written notice of Borrower's intent to do so, and PROVIDED FURTHER that Borrower
shall contemporaneously pay all interest accrued with respect to the principal
amount prepaid. All prepayments received by Banks for application to the Term
Loans shall be applied first to the payment of accrued and unpaid interest with
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respect to the principal amount to be prepaid and then to the prepayment of
installments of principal in the inverse order of maturity.
SECTION 5. GENERAL PAYMENT TERMS
5.1 PAYMENTS.
(a) All payments and prepayments by the Borrower of principal of and
interest on the Revolving Credit Notes and all fees, expenses and other
Obligations payable to the Agent or the Banks in connection with the
Revolving Credit Loans shall be made in Dollars or immediately available
funds to the Agent not later than 2:00 p.m. (Phoenix, Arizona time) on the
dates called for under this Agreement, at the main office of the Agent in
Phoenix. Funds received after such hour shall be deemed to have been
received by the Agent on the next Business Day.
(b) All payments and prepayments by the Borrower of principal of and
interest on the Term Notes and all fees, expenses and other Obligations
payable to Banks in connection with the Term Loans shall be made in Dollars
or immediately available funds to Agent not later than 2:00 p.m. (Phoenix,
Arizona time) on the dates called for under this Agreement, at the main
office of Agent in Phoenix. Funds received after such hour shall be deemed
to have been received by Agent on the next Business Day.
(c) Any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day, and
interest shall accrue at the Applicable Interest Rate during such
extension.
5.2 COMPUTATIONS. Commitment fees, facility fees and interest on each
Note shall be computed on the basis of actual days elapsed and a year of 360
days.
5.3 SETOFF. Whenever an Event of Default shall have occurred and be
continuing, the Borrower hereby irrevocably authorizes each Bank to set off the
Obligations owed to such Bank against all deposits and credits of Borrower with,
and any and all claims of Borrower against, such Bank, excluding deposits of
Borrower with such Bank which Borrower holds in escrow or in trust for the
benefit of third parties, whether or not the Obligations owed to such Bank, or
any part thereof, shall be then due.
5.4 INCREASED CAPITAL REQUIREMENTS. In the event that, as a result of any
Regulatory Change, compliance by any Bank with any applicable law or govern-
mental rule, requirement, regulation, guideline or order (whether or not having
the force of law) has or would have the effect of reducing the rate of return
on the capital of the Bank or any institution controlling the Bank as a conse-
quence of or with reference to the Bank's Revolving Credit Commitment or amounts
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outstanding under the Notes payable to the order of such Bank to a level below
that which the Bank or such other corporation could have achieved but for such
change or compliance (taking into consideration the policies of the Bank or such
other corporation with respect to capital), then from time to time Borrower
shall pay to such Bank such additional amount or amounts as will compensate the
Bank for such reduction. Such Bank shall deliver to Borrower a written certifi-
cate which states the additional amount(s) due and payable, showing in reason-
able detail the calculation of such amount and provide evidence to substantiate
the Bank's claim for such amount(s).
5.5 SPECIAL PROVISIONS FOR LIBO RATE ADVANCES.
(a) INADEQUACY OF EURODOLLAR PRICING. If with respect to an Interest
Period to which the LIBO Rate is to apply, any Bank determines that, by
reason of circumstances affecting the eurodollar market generally, adequate
and fair means do not exist for ascertaining an Interbank Offered Rate, the
Bank shall forthwith give notice thereof to Borrower, whereupon until such
Bank notifies Borrower that the circumstances giving rise to such suspen-
sion no longer exist, (i) with respect to the Revolving Credit Loans, the
obligation of such Bank to make an Advance for which the Applicable
Interest Rate is the LIBO Rate shall be suspended and (ii) with respect to
the Term Loans, interest shall accrue on the principal balance outstanding
under the Term Notes at the Prime Rate.
(b) ILLEGALITY. If, after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable authority charges with the interpre-
tation or administration thereof, or compliance by the Banks with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable authority, shall make it unlawful or
impossible for a Bank to make, maintain or fund Eurocurrency Liabilities
(as defined in Regulation D, or under any similar or successor regulation),
the Bank shall forthwith give notice thereof to Borrower. With respect to
the Revolving Credit Loans, upon receipt of such notice, Borrower shall
either (i) repay in full and without penalty the then outstanding principal
amount of all Advances as to which the Applicable Interest Rate is the LIBO
Rate, together with accrued interest thereon, or (ii) elect that the Appli-
cable Interest Rate with respect to such Advances shall be the Prime Rate
either (a) from and after the last day of the then current Interest Period
if the Banks may lawfully continue to maintain and fund such Advances at
the LIBO Rate to such day or (b) immediately if the Bank may not lawfully
continue to fund and maintain such Advances at the LIBO Rate to such day.
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With respect to the Term Loans, from and after receipt of such notice,
interest shall accrue on the principal balance outstanding under the Term
Notes at the Prime Rate.
(c) INCREASED COSTS FOR LIBO RATE ADVANCES. Upon notice from the
Agent, the Borrower shall promptly reimburse each Bank for any increase in
such Bank's costs, which costs shall include but not be limited to taxes
(other than taxes imposed on the overall net income of the Bank), fees,
charges, and/or reserve requirements due to:
(i) any law, regulation or the interpretation thereof by any
governmental or other authority (whether or not having the force of
law);
(ii) the application of any existing law, regulation or the
interpretation thereof by any governmental or other authority (whether
or not having the force of law);
(iii) compliance by the Bank with any request or directive
(whether or not having the force of law) of any monetary or fiscal
agency or authority;
(iv) violations by the Borrower of the terms of this Loan
Agreement; or
(v) any other circumstances relating to the interbank euro-
dollar market.
The amount of such costs shall be determined solely by the Bank based upon the
assumption that the Bank funded one hundred percent (100%) of each LIBO Rate
Advance in the London interbank eurodollar market for that LIBO Rate Advance.
In attributing the Bank's general costs relating to its eurocurrency operations
to any transaction under this Loan Agreement, or averaging any costs over a
period of time, the Bank may use any reasonable attribution and/or averaging
methods which it deems appropriate and practical.
5.6 INDEMNITY FOR CONSEQUENTIAL LOSS. The Borrower shall indemnify each
Bank, upon demand, against any Consequential Loss (defined below) which such
Bank shall sustain or incur with respect to payment of all or any portion of a
LIBO Rate Advance on any day prior to the last day of its respective Interest
Period. "Consequential Loss" shall mean an amount computed as follows:
(a) If the principal amount so repaid is less than $50,000, the
Consequential Loss shall be conclusively presumed to be one percent (1%)
of the principal amount repaid.
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(b) If the principal amount so repaid is $50,000 or more, then Conse-
quential Loss shall be the difference (if a positive amount) between (i)
the interest that but for the repayment would have accrued on the repaid
amount from (but excluding) the date of repayment to (and including) the
last day of the respective Interest Period and (ii) interest on the same
amount for the same period at a rate of interest per annum equal to the
LIBO Rate determined on the Business Day prior to the date of repayment for
an Interest Period equal in length to the Interest Period of the Borrowing
being repaid (whether repaid in whole or in part).
SECTION 6. CONDITIONS PRECEDENT.
6.1 CONDITIONS. The several obligations of the Banks to make the initial
Advances under the Revolving Credit Loans and the obligation of the Banks to
fund the Term Loans are subject to the prior satisfaction of each and all of the
following conditions:
(a) The following documents, certificates and opinions, each in form
and substance satisfactory to the Banks and their counsel, shall have been
delivered to the Agent:
(i) REVOLVING CREDIT NOTES. The duly completed and executed
Revolving Credit Notes;
(ii) TERM NOTES. The duly completed and executed Term Notes.
(iii) SECURITY DOCUMENTS. Each of the Security Documents, duly
executed by the parties thereto, together with such financing
statements or other instruments as may be required by the Security
Documents or under law or requested by the Agent to create and perfect
the security interests granted under the Security Documents;
(iv) FINANCING STATEMENTS. Completed responses to requests for
information or other evidence satisfactory to the Banks that the
financing statements and other instruments delivered to the Agent pur-
suant to Section 6.1(a)(iv) have been filed in all appropriate filing
offices and that such filed financing statements perfect a first
priority security in favor of the Agent in the property described
therein;
(v) OFFICERS' CERTIFICATE. A certificate dated as of the
Closing Date and signed by a duly authorized officer of Borrower,
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stating that (to the best knowledge and belief of such officer, after
reasonable and due investigation and review of matters pertinent to
the subject matter of such certificate): (i) all of the representa-
tions and warranties contained in Section 7 hereof and int he other
Loan Documents are true and correct as of the date of the certificate;
and (ii) no event or condition has occurred and is continuing which
constitutes a Default or an Event of Default;
(vi) RESOLUTIONS OF BORROWER. Resolutions of Borrower approv-
ing the execution, delivery and performance of this Loan Agreement,
the Revolving Credit Notes, the Term Notes, the other Loan Documents
and the transactions contemplated herein and therein, duly adopted by
Borrower's Board of Directors and accompanied by a certificate of the
Secretary of Borrower dated the date of this Loan Agreement and
stating that such resolutions are true and correct, have not been
altered or repealed and are in full force and effect;
(vii) INCUMBENCY CERTIFICATE. (A) A signed certificate of the
Secretary of Borrower dated the date of this Loan Agreement and
certifying the name(s) of the officer(s) of Borrower duly authorized
to sign each of the Loan Documents and the other documents and (B) a
certificate or letter executed by the President and Chief Executive
Officer and dated the date of this Loan Agreement, certifying the
names of the officers or other employees of Borrower duly authorized
to sign notices or certificates to be delivered pursuant to the Loan
Documents by Borrower, and which shall designate the "Authorized
Persons," together with the true signatures of each such Authorized
Person. Unless otherwise stated thereon, each individual named on
such certificate shall be an "Authorized Person," and the Bank may
conclusively rely on such certificates until the Bank shall receive
a further certificate of the respective Secretary or other writing
satisfactory to the Agent canceling or amending the prior certificate
and submitting the signatures of the individuals named in such further
certificate;
(viii) CERTIFICATES. A recently dated certificate of existence
and good standing (or other similar instruments) for Borrower issued
by the Secretary of State of the state of incorporation and of the
State of Arizona;
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(ix) CHARTER AND BYLAWS. A copy of the certificate of incor-
poration of Borrower, and all amendments thereto, and a copy of the
bylaws of Borrower, and all amendments thereto, all certified by the
Secretary of Borrower as being true, correct and complete as of the
date of this Loan Agreement;
(x) LEGAL OPINION OF BORROWER'S COUNSEL. A favorable legal
opinion of counsel to Borrower addressed to the Banks, as to the
matters set forth on Exhibit C hereto;
(xi) RESOLUTIONS AND CERTIFICATES OF CERTAIN SUBSIDIARIES.
With respect to each Subsidiary that is a party to any of the Security
Documents: (A) resolutions of such Subsidiary approving the execution,
performance and delivery of the Security Documents executed by such
Person and the transactions contemplated therein, duly adopted by the
Board of Directors of such Subsidiary and accompanied by a certificate
of the Secretary of such Subsidiary stating that such resolutions are
true and correct, have not been altered or repealed and are in full
force and effect; and (B) a signed certificate of the Secretary of
such Subsidiary certifying the name(s) of the officer(s) of such
Person authorized to sign each of the Security Documents to be
delivered by such person, together with the true signature of each
such officer; and
(xii) ADDITIONAL INFORMATION. Such other information and
documents as may reasonably be required by the Agent or any Bank.
6.2 ADVANCES OF THE LOANS. The obligations of the Banks to make each
Advance under the Revolving Credit Loans (including the initial Advance) and the
obligation of the Banks to fund the Term Loans are subject to each and all of
the following additional conditions:
(a) NO DEFAULTS. As of the date of the making of such Advance, no
Default shall have occurred and be continuing or exist upon making of the
requested Advance, unless the same shall have been waived in writing by all
of the Banks.
(b) COMPLIANCE WITH AGREEMENT. Borrower shall have performed and
complied with all agreements and conditions contained herein which are
required to be performed or complied with by Borrower before or on the date
of the requested Advance.
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(c) NO MATERIAL ADVERSE CHANGE. No Material Adverse Event shall have
occurred and no occurrence or event which is likely to have a material
adverse effect on the rights and remedies of the Agent, for the benefit of
the Banks, shall have occurred.
(d) REPRESENTATIONS AND WARRANTIES. All the representations and
warranties set forth in Section 7 hereof shall be true and correct in all
respects on the date of this Agreement or the date of the Advance, as
appropriate, as though made on and as of that date.
(e) BANKRUPTCY PROCEEDINGS. No proceeding or case under the United
States Bankruptcy Code shall have been commenced by or against Borrower or
any Significant Subsidiary.
6.3 SPECIAL CONDITION FOR FUNDING THE TERM LOANS. The obligation of the
Banks to fund the Term Loans shall be subject to the further condition that the
Banks shall have received from Prudential and from the custodian of any appli-
cable official records such evidences and agreements relating to the payment in
full and satisfaction of the Senior Prudential Notes and the release and termin-
ation of all liens and security interests granted in connection therewith as the
Banks shall reasonably require.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
To induce the Banks to enter into this Loan Agreement and to make the
Revolving Credit Loans and to fund the Term Loans hereunder, Borrower represents
and warrants to the Banks that:
7.1 CORPORATE EXISTENCE AND POWER. Borrower and each Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and proposed to be conducted, to enter
into each Loan Document to which it is a party and to carry out the transactions
contemplated hereby and thereby.
7.2 CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION. The execu-
tion, delivery and performance by Borrower of the Loan Document to which it is
a party (including the issuance, delivery and payment of the Notes) and the
execution, delivery and performance of each Loan Document to which any Subsi-
diary is a party, are within the corporate power of each such party, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any Governmental Authority and neither the execu-
tion and delivery thereof nor the consummation of the transactions contemplated
thereby nor compliance by Borrower or any Subsidiary with any, nor Borrower's
or any Subsidiary's performance of all, of the terms and provisions of the Loan
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Documents will contravene any Law applicable to Borrower or conflict with,
result in any breach of, or constitute any default under, the respective cor-
porate charter or bylaws (both as amended to date) or conflict with, result in
any breach of, or constitute default under, or result in the creation of a Lien
under, or require one consent of any trustee or creditor pursuant to, any
material indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, bank loan or credit agreement to which Borrower or any Signifi-
cant Subsidiary is a party or by which it or its assets are bound.
7.3 ENFORCEABILITY. This Loan Agreement has been duly executed and
delivered by Borrower, and this Loan Agreement and each other Loan Document to
which Borrower or any Subsidiary is or will be a party, upon execution and
delivery thereby, will constitute the legal, valid and binding obligations
thereof, enforceable in accordance with the respective terms of such Loan Docu-
ments, except as limited by bankruptcy, insolvency or other laws or equitable
principles of general application relating to the enforcement of creditors'
rights.
7.4 LITIGATION. There is no action, suit, proceeding or arbitration
pending, or to the knowledge of Borrower threatened, against or affecting
Borrower or any Subsidiary before any court or arbitrator or any governmental
body, agency or official, except as disclosed by Borrower on Schedule 7.4
hereto, and none of the matters listed on such schedule would, if adversely
determined, have a material and adverse effect on the Borrower's ability to
perform its obligations under the Loan Documents.
7.5 COMPLIANCE WITH ERISA. Borrower and each member of the Controlled
Group have fulfilled their known obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC or a Plan under Title IV
of ERISA.
7.6 TAXES. As of the date of this Loan Agreement, United States Federal
income tax returns of Borrower and the Subsidiaries with respect to which such
income tax returns are required to be filed have been filed through the fiscal
year ended December 31, 1992 and audited through the fiscal year ended December
31, 1992. Borrower and the Subsidiaries have filed all United States Federal
income tax returns and all other material tax returns which are required to be
filed by them and have paid all taxes and assessments payable by it which have
become due, other than those not yet delinquent. No material tax Liens have
been filed and, to Borrower's knowledge, no material claims or assessments are
being asserted or will be asserted with respect to any such taxes or other
charges.
7.7 SUBSIDIARIES. Borrower's Subsidiaries, including its Significant
Subsidiaries, are correctly identified on Schedule 7.7 hereto. The consolidated
financial statements of Borrower do not reflect the properties or operations of
any business association other than Borrower and the Subsidiaries.
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7.8 NO DEFAULT. No event or condition has occurred and is continuing that
constitutes a Default, except such as has been waived in writing by all of the
Banks.
7.9 USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Revolving Credit
Loans and the Term Loans will be used by Borrower solely for the purposes
specified in the recitals of this Loan Agreement. None of such proceeds will
be used for the purpose of purchasing or carrying any "margin stock" as defined
in Regulation U, Regulation X or Regulation G, or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
a "margin stock" or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of such Regulation U, X or G.
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stocks. Neither Borrower nor any Person acting
on behalf of Borrower has taken or will take any action which might cause this
Loan Agreement or the Notes to violate Regulations U, X or G or any other
regulations of the Board of Governors of the federal Reserve System or to
violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. Borrower and the Subsidiaries own no "margin stock."
7.10 NO FINANCING OF CERTAIN CORPORATE TAKEOVERS. No proceeds of the Loans
will be used to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, including particularly
(but without limitation) Sections 13(d) and 14(d) thereof.
7.11 COMPLIANCE WITH LAW. Borrower and the Subsidiaries are in substantial
compliance with all material domestic Laws that are applicable to Borrower or
any Subsidiary, or its or their Properties. Borrower does not know, or have
reason to know, that Borrower or any Subsidiary is not in substantial compliance
with all material foreign Laws that are applicable to Borrower or any Subsidi-
ary, or its or their Properties.
7.12 FINANCIAL CONDITION. Borrower has delivered to the Banks copies of
the consolidated balance sheet of Borrower and the Subsidiaries as of December
31 each of 1993, 1992 and 1991, and has delivered to the Bank the related
consolidated statements of operations and cash flows for the fiscal year ended
on each such date, certified by Borrower's independent certified public
accountants, and the interim consolidated balance sheet of Borrower and the
Subsidiaries as at March 31, 1994, and the related consolidated statement of
operations and cash flows for the three-month period then ended; all such
financial statements are complete and correct and fairly present the financial
condition of Borrower and its consolidated Subsidiaries as of the respective
dates and have been prepared in accordance with GAAP applied on a basis
consistent with that of prior periods; and since the date of the consolidated
financial statements of Borrower most recently delivered to the Banks hereunder,
there has been no material adverse change in the condition (financial or other-
wise), business or operations of the Borrower or any Subsidiary which, in
accordance with GAAP, would be required to be reflected in the consolidated
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financial statements of Borrower next scheduled to be prepared. There are no
liabilities of Borrower or any Subsidiary, fixed or contingent, which are
material but are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course since the date
of such financial statements.
7.13 NO LIENS. Except for the Permitted Liens, all of the Property of
Borrower and the Subsidiaries is free and clear of all Liens and other adverse
claims of any nature, and such Persons have good and marketable title to their
respective Property.
7.14 MATERIAL AGREEMENTS. Except as set forth on Schedule 7.14, neither
Borrower nor, to the best of Borrower's knowledge, any Subsidiary is in default
in any material respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other material agreement or obligation to which
it is a party or by which any of its Properties is bound, and no condition
exists which, with the giving of notice or the lapse of time or both, would
institute such a default.
7.15 PRINCIPAL OFFICE. The principal office, chief executive office and
principal place of business of Borrower is at 6730 South Tucson Boulevard,
Tucson, Arizona. Borrower maintains its principal records and books at such
address.
7.16 FULL DISCLOSURE. There is no material fact that Borrower has not
disclosed to the Banks that could have a material and adverse effect on the
properties, business, prospects or condition (financial or otherwise) of
Borrower and the Subsidiaries, taken as whole. Neither the financial statements
referenced in subsection 7.12 hereof, nor any certificate or statement delivered
herewith or heretofore by Borrower to Agent or any Bank in connection with
negotiations of this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary to keep the statements contained
herein or therein from being misleading.
7.17 REPRESENTATIONS AND WARRANTIES. Each Request for Advance shall
constitute, without the necessity of containing a specific written statement,
a representation and warranty by Borrower that no Default exists and that all
representations and warranties contained in this Section 7 are true and correct
on and as of the date the requested Advance is to be made, except such as has
been waived in writing by all of the Banks.
7.18 SURVIVAL OF REPRESENTATIONS, ETC. Except as otherwise provided
herein, all agreements, representations and warranties made herein shall survive
the execution and delivery of this Agreement, the making of the Loans and the
execution and delivery of the Notes, PROVIDED, HOWEVER, that upon payment in
full of all of Borrower's obligations hereunder (including, without limitation,
all principal, interest and any other costs and fees payable hereunder), or upon
expiration by its terms, this Agreement and all agreements, representations and
warranties made herein shall terminate. Any investigation at any time made by
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or on behalf of the Agent or any Bank shall not diminish the Agent's or such
Bank's right to rely on the representations and warranties by Borrower herein.
SECTION 8.AFFIRMATIVE COVENANTS.
So long as any Revolving Credit Commitment is in effect and thereafter so
long as any Obligation shall remain unpaid, the Borrower covenants that, unless
the Required Banks shall otherwise consent in writing, it will perform all the
covenants set forth in this Section 8:
8.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. The Borrower shall
deliver to each Bank each of the following:
(a) QUARTERLY STATEMENTS. As soon as available, and in any event
within forty-five (45) days after the end of each quarterly fiscal period
(except the last) of each fiscal year of Borrower, copies of the consoli-
dated balance sheet of Borrower as of the end of such fiscal period, and
consolidated statements of income and cash flows of Borrower for that
quarterly fiscal period and for the portion of the fiscal year ending with
such period, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable
detail and fairly stated, subject to year-end audit and adjustments;
(b) ANNUAL STATEMENTS. As soon as available and in any event
within ninety (90) days after the close of each fiscal year of Borrower,
copies of the consolidated balance sheet of Borrower as of the close of
such fiscal year and consolidated statements of income, retained earnings
and cash flows of Borrower for such fiscal year, in each case setting forth
in comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon (which shall not
be qualified by reason of any limitation imposed by Borrower) of an
independent public accountant of recognized national standing selected by
Borrower to the effect that such financial statements have been prepared
in accordance with GAAP consistently maintained and applied (except for
changes in which such accountants concur) and that the examination of such
accounts in connection with such financial statements has been made in
accordance with generally accepted auditing standards and, accordingly,
includes such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) FINANCIAL PROJECTIONS. Within forty-five (45) days after each
request by Agent (which requests, absent the continuance of a Default shall
not be made more frequently than once in each period of ninety consecutive
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days), and in any event within ninety (90) days after the close of each
fiscal year of Borrower, copies of all plans, budgets, reports, memoranda
and other documents (collectively, the "Financial Projections") that
accurately and completely reflect, in reasonable detail, Borrower's
anticipated income, cash flow, expenditures, retained income and financial
position (i) for next succeeding fiscal quarter if a single quarterly
Financial Projection has been requested by Agent, or for the next
succeeding four fiscal quarters.
(d) SEC AND OTHER REPORTS. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by Borrower to stockholders generally, any order issued by any Govern-
mental Authority in any proceeding to which Borrower is a party that are
likely to have a material and adverse effect on the financial condition,
operations or prospects of Borrower and the Subsidiaries taken as a whole
and, if any of the following filings are made, each regular or periodic
report, registration statement or prospectus filed by Borrower with any
securities exchange or the Securities and Exchange Commission or any
successor agency;
(e) COMPLIANCE CERTIFICATE. Simultaneously with the financial
statements referred to in subsections 8.1(a) and 8.1(b) hereof, a certifi-
cate executed by the treasurer, chief financial officer, chief executive
officer or chief operating officer of Borrower, stating that a review of
the activities of the Borrower during such fiscal quarter or year has been
made under his supervision, that the Borrower, to the best of his knowledge
after due diligence, has observed, performed and fulfilled its obligations
and covenants contained herein and that no Default or Event of Default has
occurred or, if any Default or Event of Default shall have occurred,
specifying the nature and status thereof, and stating that all financial
statements of the Borrower delivered to the Bank during the respective
period pursuant to subsection 8.1(a) and (b) hereof are fairly stated and
have been prepared in accordance with GAAP, subject only to normal year end
audit adjustments, and setting forth a computation in reasonable detail as
of the end of the period covered by such statements, of compliance with
Sections 9.3, 9.4, 9.5, 9.7 and 9.8 hereof;
(f) NOTICE OF OTHER EVENTS. Within five Business Days after their
occurrence, notice of each of the following events:
(i) the commencement of any action, suit, proceeding or
arbitration against the Borrower or any of its Significant
Subsidiaries, or any material development in any action, suit,
proceeding or arbItration pending against the Borrower or any
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of its Significant Subsidiaries, (A) in which the aggregate
uninsured amount claimed is more than $250,000, (B) which
would, if decided in a manner adverse to the Borrower or any
of its Significant Subsidiaries, constitute a Material Adverse
Event or (C) which relates to this Loan Agreement or any other
Loan Document;
(ii) any Default or Event of Default; and
(iii) notice of any other Material Adverse Event; and
(g) OTHER INFORMATION. Such other information concerning the
business, Properties and financial condition of the Borrower as any Bank
shall, reasonably request.
8.2 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrower shall, and shall
cause each Subsidiary to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all Taxes levied or imposed upon
it or upon its income, profits or properties and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien upon
its Property; provided that neither Borrower nor any Subsidiary shall be
required to pay or discharge or cause to be paid or discharged any such Tax
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being
maintained (to the extent such reserves are required by GAAP).
8.3 INSURANCE AND MAINTENANCE OF PROPERTIES. Borrower shall, and shall
cause each Subsidiary to, maintain workmen's compensation insurance, liability
insurance and insurance on its and its Subsidiaries' Property and business,
whether now owned or hereafter acquired, in such manner and to such extent as
is customary in business enterprises in the same or similar businesses, and will
cause all Property used or useful in the conduct of such businesses to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals and replacements thereof, all as in the judgment of the respective
corporate officials duly charged with oversight of such matters may be necessary
so that the business carried on in connection therewith may be properly
conducted at all times; provided that nothing herein shall prevent Borrower or
any Subsidiary from discontinuing the operation and maintenance of any of its
Property if such discontinuance is, in the judgment of the board of directors
of such corporation, desirable in the conduct of its business and is not
disadvantageous in any material respect to any Bank.
8.4 CORPORATE EXISTENCE. Subject to subsections 9.1 and 9.2, Borrower
shall, and shall cause each Subsidiary to, do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
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rights and franchises; provided that Borrower shall not be required to preserve
the corporate existence of any of the Subsidiaries or any right or franchise if
the board of directors of Borrower shall determine that the preservation thereof
is no longer desirable in the conduct of the business of Borrower or such
Subsidiary unless the loss thereof is disadvantageous in any material respect
to any Bank. Borrower shall timely notify the Bank of all additions to and
changes in corporate identity of the Subsidiaries from that identified on
Schedule 7.7 hereto.
8.5 USE OF PROCEEDS. The proceeds of the Revolving Credit Loans shall be
used for general corporate purposes, including working capital for Borrower and
the Subsidiaries. The proceeds of the Term Loans shall be used to refinance,
in whole or in part, amounts heretofore advanced by Borrower to fully pay and
satisfy its indebtedness to Prudential under the Prudential Note Agreement and
the Senior Prudential Notes. None of such proceeds shall be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock," within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System. Borrower shall not
engage principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any such margin stock
within the meaning of such Regulation U.
8.6 BOOKS AND RECORDS; ACCESS. Borrower will, and will cause each of its
Subsidiaries to, permit any Person designated by any Bank in writing, at such
Bank's expense, to visit and inspect any of the properties, corporate books and
financial records of the Borrower and discuss its affairs and finances with the
principal officers of the Borrower and its independent public accountants, all
at such times as any Bank may reasonably request. Borrower shall, and shall
cause each of the Subsidiaries to, maintain complete and accurate books and
records of its transactions in accordance with good accounting and business
practices so as to permit the preparation of financial reports in accordance
with GAAP.
8.7 COMPLIANCE WITH LAWS. Borrower shall comply with all applicable Laws
and all final, nonappealable orders of any Governmental Authority applicable to
it or any of its Property, business operations or transactions, a breach of
which could have a material and adverse effect on the financial condition,
operations or prospects of Borrower and the Subsidiaries taken as a whole.
8.8 AUTHORIZATIONS AND APPROVALS. Borrower shall, and shall cause each
Subsidiary to, promptly obtain, from time to time at its own expense, all such
governmental licenses, authorizations, consents, permits and approvals as may
be required to enable it to comply with its obligations hereunder and under the
other Loan Documents and to operate its businesses as presently or hereafter
duly conducted.
8.9 FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, take all such further actions and execute all such further
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documents and instruments as the Agent may at any time reasonably determine in
its sole discretion to be necessary or advisable to further carry out and
consummate the transactions contemplated by the Loan Documents and to perfect
or protect the Liens of the Agent granted under any Loan Document.
SECTION 9.NEGATIVE COVENANTS.
So long as any Revolving Credit Commitment is in effect and thereafter so
long as any Obligation remains unpaid, the Borrower covenants that, unless the
Required Banks shall otherwise consent in writing:
9.1 SALES OF STOCK AND INDEBTEDNESS OF SUBSIDIARIES. Except as provided
in subsection 9.2, Borrower shall not, and shall not permit any Subsidiary to,
sell or otherwise dispose of, or part with control of, any shares of stock
(except directors' qualifying shares) or Indebtedness of any Subsidiary, except
to Borrower or another Subsidiary, and except that all shares of stock and
Indebtedness of any Subsidiary at the time owned by or owed to Borrower and any
Subsidiary may be sold as an entirety to any Person for a consideration which
represents fair value (as determined in good faith by the Board of Directors of
Borrower) at the time of such sale, subject to the 5% aggregate limitation and
other provisions of subsection 9.2, and provided that, at the time of such sale,
such Subsidiary shall not own, directly or indirectly, any shares of stock or
Indebtedness of any other Subsidiary or of Borrower (unless all of the shares
of stock and Indebtedness of such other Subsidiary owned, directly or
indirectly, by Borrower and all Subsidiaries are simultaneously being sold as
permitted by this subsection 9.1).
9.2 MERGER AND SALE OF ASSETS. Without the prior, written consent of
Required Banks, Borrower shall not, and shall not permit any Subsidiary, to
merge with or into or consolidate with any other corporation or sell, lease or
transfer or otherwise dispose of Property that, in accumulation with Property
transferred as described in subsection 9.10 hereof (but without duplication),
constitutes more than 7% of the Consolidated Total Assets of Borrower and the
Subsidiaries, on a cumulative basis during the period from July 1, 1994 through
the Termination Date, and thereafter until all Obligations are paid in full, to
any Person, except that, subject to the provisions of the Security Documents:
(a) any Subsidiary may merge with Borrower (provided that
Borrower shall be the continuing or surviving corporation) or with any one
or more other Subsidiaries,
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to Borrower or another Subsidiary,
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(c) any Subsidiary may be sold or all or substantially all of its
assets may otherwise be disposed of, subject to the conditions specified
in subsection 9.1, and
(d) Borrower may merge with any other corporation, provided that
(i) Borrower shall be the continuing or surviving corporation, (ii)
immediately after and giving effect to such merger, no Default or Event of
Default shall exist and Borrower shall be in full compliance with each
covenant herein contained and (iii) on the effective date of such merger
Borrower shall deliver to the Bank an officer's certificate and, if
reasonably requested by the Bank, an opinion of counsel acceptable to the
Bank, each to the foregoing effect.
9.3 LIMITATION ON NET WORTH. Borrower will not permit its Consolidated
Tangible Net Worth to be less than $77,500,00.00 plus fifty percent (50%) of
positive Consolidated Net Income for each fiscal quarter commencing with the
quarter ended June 30, 1994.
9.4 QUICK RATIO. Borrower will not permit the ratio of Borrower's
Consolidated Cash and Consolidated Accounts Receivable to Consolidated Current
Liabilities, as of the last day of any fiscal quarter, to be less than 0.8 to
1.
9.5 TOTAL DEBT LIMITATION. Borrower shall not permit the ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth, as of the
last day of any fiscal quarter, to exceed 0.90 to 1.0.
9.6 RESTRICTION ON LIENS. Borrower shall not, and shall not permit any
Subsidiary to offer a pledge of any of its assets to third parties nor create,
assume or suffer to exist any Lien of any kind on or with respect to any of its
property or assets, whether now owned or hereafter acquired, except for
Permitted Liens.
9.7 DEBT SERVICE RATIO. The Borrower shall not permit the Debt Service
Ratio to be less than 1.75 to 1 as of the last day of any fiscal quarter of
Borrower.
9.8 CAPITAL EXPENDITURES. The Borrower will not, and will not permit any
of its Subsidiaries to, make any Capital Expenditures at any time during any
fiscal year unless, after giving effect to such Capital Expenditure, the
aggregate amount of all Capital Expenditures does not exceed eleven percent
(11%) of Borrower's gross revenue from sales (net of returns and adjustments)
for the preceding fiscal year as reflected on the annual statements delivered
to Banks pursuant to subsection 8.1(b) of this Agreement (on the Borrower's
balance sheet for the annual year ending December 31, 1993, such gross revenue
is reflected on the line labelled "Net Sales").
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9.9 LINES OF BUSINESS. Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, engage in any business other than those
generally similar to those in which it and its Subsidiaries are engaged on the
date hereof.
9.10 CERTAIN TRANSFERS OF PROPERTY. Without the prior, written consent of
Required Banks, Borrower shall not transfer, directly or indirectly, any of its
Property to any Subsidiary other than in exchange for the contemporaneous
receipt of the fair market value thereof in money or readily marketable Property
(excluding equity securities and debt instruments) and except for Property that,
in accumulation with Property of Borrower and the Subsidiaries sold, leased,
transferred or otherwise disposed of to any Person (but without duplication),
does not exceed 7% of the Consolidated Total Assets of Borrower and the
Subsidiaries, on a cumulative basis during the period from July 1, 1994 through
the Termination Date, and thereafter until all Obligations are paid in full.
With respect to such transfers of Property of Borrower of book value in excess
of $500,000.00, the determination of the contemporaneous receipt by Borrower of
fair market value for purposes of the exception stated in the preceding sentence
shall be made in good faith by Borrower's board of directors and a written copy
of such determination, certified as true, complete and current by the Secretary
of Borrower, shall be delivered to Agent prior to the effective date of such
transfer.
SECTION 10. DEFAULTS.
10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events or conditions shall constitute an "Event of Default" under this Loan
Agreement:
(a) Borrower shall fail to pay (i) any principal or interest under
any Note, or any fees or other payment required pursuant to subsection 3.5,
within three (3) Business Days after the date on which such payment is due,
or (ii) any other payment required hereunder or under any other Loan Docu-
ment when due and such failure to pay such other payment shall continue for
more than ten (10) Business Days after receipt of notice of such failure;
(b) Borrower or any Subsidiary shall fail to comply with any agree-
ment, covenant, condition, provision or term contained in subsections 8.4,
8.9 or Section 9 hereof;
(c) Borrower shall fail to comply with any other agreement, covenant,
condition, provision or term contained in this Loan Agreement (other than
those set forth in subsection 10.1(b) hereinabove) or contained in any
Security Document and such failure is not remedied within 30 days after the
Agent has given Borrower notice of the occurrence thereof;
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(d) Any representation, warranty, certification or statement made
by Borrower in this Loan Agreement or in any certificate, financial state-
ment or other document delivered pursuant to or in connection with any Loan
Document shall be incorrect in any material respect when made;
(e) Borrower or any Subsidiary defaults (whether as primary obligor
or as guarantor or other surety) in any payment of principal of or premium
or interest on any Indebtedness other than the Notes beyond any period of
grace provided with respect thereto, or Borrower or any Subsidiary fails
to perform or observe any other agreement, term or condition contained in
any agreement under which any such obligation is created (or any other
event thereunder or under any such agreement occurs and is continuing) and
the effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause such obligation to become due (or to be repurchased
by the Borrower or any Subsidiary) prior to any stated maturity, provided
that the aggregate amount of all Indebtedness or other obligations as to
which such a payment default shall occur and be continuing or such a fail-
ure or other event causing or permitting acceleration (or resale to
Borrower or any Subsidiary) shall occur and be continuing exceeds
$1,000,000.00); or
(f) (i) The security interest granted to the Agent under any of the
Security Documents ceases to be a valid and perfected first priority
security interest on any basis other than those expressly provided in the
Security Documents for delay of attachment and release of attachment, (ii)
or Borrower challenges the validity or enforceability of any of the
Security Documents, or (iii) or any of the Security Documents ceases to be
a legally binding and enforceable agreement or the benefits thereof cease
in any material respect to be available to the Agent or to the Banks.
(g) Borrower, any Significant Subsidiary or any other Subsidiary that
is a party to any Security Document shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
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(h) An involuntary case or other proceeding shall be commenced
against Borrower, any Significant Subsidiary or any other Subsidiary that
is a party to any Security Document seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involun-
tary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against
Borrower, any Significant Subsidiary or any other Subsidiary that is a
party to any Security Document under the federal bankruptcy laws as now or
hereafter in effect;
(i) Borrower or any member of the Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess of $250,000.00
which it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate unfunded vested liabilities in excess of $250,000.00 shall be
filed under Title IV of ERISA by the Borrower, any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate or
to cause a trustee to be appointed to administer any such Plan or Plans or
a proceeding shall be instituted by a fiduciary of any such Plan or Plans
against Borrower or any member of the Controlled Group to enforce Section
515 of ERISA and such proceeding shall remain undismissed and unstayed for
a period of 60 days; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated;
(j) Any final judgment(s) (excluding those the enforcement of which
is suspended pending appeal) for the payment of money in excess of the sum
of $1,000,000.00 in the aggregate (other than any judgment covered by
insurance where coverage has been acknowledged by the insurer) shall be
rendered against Borrower or any Subsidiary and such judgment or judgments
shall not be satisfied or discharged at least ten (10) days prior to the
date on which any of its assets could be lawfully sold to satisfy such
judgment;
(k) Any levy or execution upon, or judicial seizure of, any Property
of Borrower or any Subsidiary that has a fair market value in excess of
$1,000,000.00 that is not bonded or released within thirty (30) days;
(l) Any one or more of the Loan Documents shall, except solely by
any action or inaction of the Agent or any Bank, cease to be legal, valid,
binding agreements enforceable against Borrower or against any Subsidiary
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that is a party to any Security Document in accordance with the respective
terms thereof, or shall in any way be terminated or become or be declared
ineffective or inoperative, so as to deny the Banks the substantial
benefits contemplated by such Loan Document or Loan Documents;
(m) The insolvency of Borrower; or the execution by Borrower of
any assignment for the benefit of creditors; or the failure of Borrower to
pay its debts as they mature; or if Borrower is generally not paying its
debts as they mature;
(n) The liquidation, termination or dissolution of Borrower or any
Subsidiary that is a party to any Security Document; or
(o) Borrower incurs a net loss in its business operations in any two
consecutive fiscal quarters as reflected in the financial statements
delivered to Banks pursuant to Subsections 9.1(a) or 9.1(b) of this
Agreement.
(p) The occurrence of any event of default under any document or
instrument given by Borrower in connection with any other Indebtedness of
Borrower to any Bank.
10.2 REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall have
occurred and be continuing, then the Required Banks, at their sole option, may
do any one or more of the following, all of which shall be deemed cumulative,
and not alternative remedies: (i) declare the Revolving Credit Commitments
terminated, whereupon the Revolving Credit Commitments shall be terminated, (ii)
declare the Obligations to be forthwith due and payable, whereupon the Obliga-
tions shall immediately become due and payable, in each case without present-
ment, demand, protest or other notice of any kind, all of which are hereby
expressly waived, anything in this Agreement or in any other Loan Document to
the contrary notwithstanding, (iii) declare that interest shall accrue on the
principal amount of the Obligations at the Default Rate, whereupon interest
shall so accrue notwithstanding any contrary provision of this Agreement, and
all accrued and unpaid interest shall be compounded with principal monthly, as
of the end of each month, and (iv) direct the Agent to attempt to enforce the
Agent's rights for the benefit of Banks under any one or more of the Loan Docu-
ments; provided, however, that if any Event of Default specified in subsections
10.1(f) or (g) shall occur, the Revolving Credit Commitments shall automatically
terminate, the Obligations shall automatically become due and payable, and
interest thereafter shall automatically accrue on the principal amount of the
Obligation at the Default Rate, compounded monthly as aforesaid.
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SECTION 11. THE AGENT.
11.1 APPOINTMENT AND AUTHORIZATION. Each Bank appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for its
or their own gross negligence or willful misconduct; provided, however, that the
Agent shall be protected in acting or refraining from acting upon the instruc-
tion of the Required Banks; and provided, further, that the Agent shall not be
required to take any action that exposes it to personal liability or is contrary
to any Loan Document, other agreement or applicable law. The Agent shall act
as an independent contractor in performing its obligations as Agent hereunder
and under the other Loan Documents and nothing herein contained shall be deemed
to create a fiduciary relationship among or between the Agent, the Borrower or
the Banks.
11.2 NOTE HOLDERS. The Agent may treat the payee of any Note as the holder
thereof until written notice of transfer shall have been filed with it signed
by such payee and in form satisfactory to the Agent.
11.3 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel
selected by it and shall not be liable for any action taken or suffered in good
faith by it in accordance with the advice of such counsel.
11.4 DOCUMENTS. The Agent shall not be under a duty to examine into or
pass upon the validity, effectiveness, genuineness or value of the Notes, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or thereunder, makes no representation or warranty to any Bank and shall
not be responsible for any representations, warranties or statements made in
connection with this Agreement or any other Loan Document, and shall be entitled
to assume that this Agreement and the other Loan Documents are valid, effective
and genuine and what they purport to be.
11.5 AGENT AND AFFILIATES. With respect to its Revolving Credit Commitment
and the Loans made by it in its capacity as a Bank, First Interstate shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Bank and may exercise the same as though it were not the Agent, and
First Interstate and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Borrower or any Subsidiary of
Borrower as if it were not the Agent.
11.6 ACTION BY AGENT. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may
be vested in it by, or with respect to taking or refraining from taking any
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action or actions which it may be able to take under or in respect of, this
Agreement and the Loan Documents. The Agent shall incur no liability under or
in respect of this Agreement or any of the Loan Documents by acting upon any
notice, consent, certificate, warranty or other paper or instrument believed
by it to be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be necessary or
desirable in the premises.
11.7 CREDIT ANALYSIS. Each Bank has made, and shall continue to make,
its own independent investigation or evaluation of the operations, business,
property and condition, financial and otherwise, of the Borrower, in connection
with the making of its respective Revolving Credit Commitment and Term
Commitment, and each has made its own appraisal of the creditworthiness of the
Borrower. Except as explicitly provided herein, the Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect to such operations, business,
property, condition or creditworthiness, whether such information comes into its
possession on or before the first Event of Default or at any time thereafter.
11.8 NOTICES OF EVENT OF DEFAULT ETC. In the event that any Bank shall
have acquired actual knowledge of any Default or Event of Default, such Bank
shall promptly give notice thereof to the Agent. The Agent shall, promptly upon
receipt of any such notice provide a copy thereof to the other Banks. Upon
receipt from any Bank of a request that the Agent give notice to the Borrower
of the occurrence of a Default or Event of Default under subsection 10.2, the
Agent shall promptly forward such request to the other Banks and will take such
action and assert such rights under this Agreement and the other Loan Documents
as the Required Banks shall direct in writing.
11.9 INDEMNIFICATION. Each Bank agrees to indemnity the Agent to the
extent not reimbursed by the Borrower), ratably according to its Pro Rata Share,
from and against any and all liabilities, obligations, losses, damages, penal-
ties, actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
the Agent in any way relating to or arising out of this Agreement or the Loan
Documents or any action taken or omitted by the Agent under this Agreement or
the Loan Documents; provided, that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank agrees to reimburse the Agent promptly upon demand for its Pro Rata Share
(determined under clause (d) of the definition thereof) of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and the other Loan Documents, to the extent that the Agent is not reimbursed
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for such expenses by the Borrower; provided, that no Bank shall be liable for
any portion of any such expenses resulting from the Agent's gross negligence or
willful misconduct.
11.10 PAYMENTS.
(a) Except as provided in subsection (b) immediately below, all
payments made by Borrower with respect to the Obligations shall be applied
to the payment of fees and interest due and payable on the Loans, and shall
be applied to the payment or prepayment of principal outstanding on the
Loans, in each case as Borrower shall direct in accordance with the
provisions of this Agreement, provided that all payments of principal or
interest made with respect to the Revolving Credit Loans or the Term Loans
shall be applied to the payment of interest and principal outstanding under
such Loans in accordance with each Bank's respective Pro Rata Share of
either the Revolving Credit Loans or the Term Loans, as applicable. Agent
shall forthwith distribute to each Bank that Bank's Pro Rata Share of
interest or principal paid by Borrower on or before the Termination Date
with respect to the Loans.
(b) After the Termination Date, if any unpaid balance of principal
remains on the Revolving Credit Loans, the outstanding principal amount of
each Bank's Term Loan shall be deemed to be consolidated with the outstand-
ing principal balance of that Bank's Revolving Credit Loan for purposes of
calculating each Bank's composite Pro Rata Share of the outstanding prin-
cipal amounts of the Loans, and all payments received by Agent with respect
to the Obligation shall be distributed forthwith by Agent in accordance
with each Bank's Pro Rata Share of the aggregate outstanding principal
amount of the Loans (except that payments under subsections 5.4 and 5.5
herein shall be distributed exclusively to the respective Bank).
(c) All distributions made by Agent to any Bank shall be made in the
currency and funds received by Agent and shall be made on the date actually
received if received prior to 2:00 p.m., otherwise on the next Business
Day.
11.11 SHARING OF PAYMENTS. If any Bank shall receive and retain any pay-
ment on or after the Termination Date, whether by setoff, application of deposit
balance or security, or otherwise, in respect of the Obligations in excess of
such Bank's Pro Rata Share of all payments of the Obligations occurring on or
after the Termination Date, then such Bank shall purchase from the other Banks
(for cash and at face value and without recourse) such participation in the
Obligations held by them as shall be necessary to cause such excess payment to
be shared ratably as aforesaid with each of them; provided, that if such excess
payment or part thereof is thereafter recovered from such purchasing Bank, the
related purchases from the other Banks shall be rescinded ratably and the pur-
chase price restored as to the portion of such excess payment so recovered, but
without interest. Each Bank agrees to exercise any and all rights of setoff,
counterclaim or bankers' lien first fully against the Obligations and partici-
pations therein held by such Bank, and only then to any other indebtedness of
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the Borrower to such Bank. The treatment of payments under this subsection
11.11 shall not apply to any fees payable to the Agent under subsection 3.5(c).
11.12 FORWARDING OF INFORMATION TO BANKS. The Agent shall forward to the
Banks copies of all notices, financial reports and other communications received
from the Borrower hereunder.
11.13 SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower. The Required Banks may remove the
Agent at any time with or without cause by notifying the Agent and the Borrower.
In addition, Banks with an aggregate Pro Rata Share exceeding 50% may, following
the occurrence and during the continuance of a Default, remove the Agent. Upon
any such resignation or removal, the Required Banks or, in the case of a removal
pursuant to the preceding sentence, the removing Banks shall have the right to
appoint a successor Agent reasonably acceptable to the Borrower. If no successor
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of its resignation
or the removal of the Agent, then the retiring Agent may, on behalf of the
Banks, appoint an Agent, which shall be a Bank or a commercial bank organized
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $100,000,000 and which shall
be reasonably acceptable to the Borrower. Upon the acceptance of any appoint-
ment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this subsection
11.13 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was acting as Agent under this Agreement and any other Loan
Document.
SECTION 12. MISCELLANEOUS.
12.1 Entirety. The Loan Documents embody the entire agreement between the
parties and supersede all prior agreements and understandings, including, with-
out limitation, the Existing Facilities, relating to the subject matter hereof
and thereof.
12.2 NOTICES. Except as otherwise specifically provided for herein, all
notices and other communications provided for herein shall be in writing
(including telefacsimile communication) and, unless otherwise required herein
or by law, shall be teletransmitted, mailed (certified or registered mail,
return receipt requested) or delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages hereof, or, as to
any party, at such other address as shall be designated by such party in a
notice to the other parties. All notices and other communications hereunder
shall be effective when transmitted by telecopier, delivered or, in the case of
a mailed notice or notice sent by overnight courier, upon receipt thereof as
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conclusively evidenced by the signed receipt therefor, in each case given or
addressed as aforesaid except that notices to the Agent under the provisions of
Section 3 shall not be effective until received by the Agent.
12.3 EXPENSES; INDEMNIFICATION. The Borrower agrees to pay on demand: (a)
the reasonable fees and expenses of Streich Lang, P.A., special counsel to the
Agent, in connection with the negotiation, preparation, approval, execution and
delivery of the Loan Documents, (b) the reasonable fees and expenses of counsel
for the Agent in connection with any amendment, modification or waiver of any
of the terms of any Loan Document and (c) in any applicable case in which the
Agent or a Bank or both is the prevailing party (and if the concept of prevail-
ing party is not applicable, then in every case), all reasonable costs and
expenses of the Agent and each Bank (including reasonable counsels' fees) in
connection with the enforcement through legal proceedings of this Agreement,
the Notes and the other Loan Documents.
The Borrower hereby agrees to indemnify the Banks and their directors,
officers, agents and employees from and hold each of them harmless against any
and all losses, liabilities, claims, damages or expenses incurred by any of them
arising out of or by reason of any investigation, litigation or other proceed-
ings related to any use made or proposed to be made by the Borrower of the
proceeds of the Revolving Credit Loans or the operations of the Borrower's
business, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation, litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified).
12.4 CONFIDENTIALITY. Any information which the Agent or any Bank receives
from the Borrower shall not be disclosed to any Person other than the Agent and
the Banks, if such information is not otherwise in the public domain, other than
(a) to its independent accountants, financial advisors or consultants and legal
counsel, (b) pursuant to statutory or regulatory requirements, (c) pursuant to
any mandatory court order or (d) to any participant in or assignee of, or pros-
pective participant in or assignee of, this Agreement or any Note. With respect
to those Persons set forth in (a) and (d) hereinabove, all such Persons shall
agree to be bound by the terms of this subsection or be under a professional
obligation to do so. The Agent agrees to give Borrower notice of any subpoena,
court or governmental order or other legal process served upon the Agent and
involving Borrower unless such notice is prohibited by the issuer of such
process or by its terms. The provisions of this subsection shall survive the
repayment of all Obligations hereunder and/or the termination of this Loan
Agreement.
12.5 AMENDMENTS, WAIVERS, ETC. Any provision of this Agreement or any
other Loan Document may be amended or modified only by an instrument or
instruments in writing signed by the Required Banks and the Borrower; PROVIDED,
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that no amendment, waiver or consent shall: (a) unless in writing and signed by
all of the Banks holding Revolving Credit Notes; (i) reduce the amount of the
principal of, or the amount of or rate of interest on, any Revolving Credit
Note, (ii) postpone any date fixed for any payment of principal of, or interest
on, the Revolving Credit Loans or (iii) release or subordinate any of the
"Collateral" (as defined in the Security Agreement) or amend any of the terms
of the Security Agreement; and (b) unless in writing and signed by all of the
Banks, (i) reduce the amount or postpone the date fixed for payment of any fees
or other amounts payable hereunder, (ii) amend the definition of "Pro Rata
Share" or "Required Banks", or (iii) amend this subsection 12.5; PROVIDED,
FURTHER, that, in addition to the foregoing requirements, (A) no amendment,
waiver or consent shall, unless in writing and signed by the Agent in addition
to the requisite Banks indicated above to take such action, affect the rights
or duties of the Agent under this Agreement, and (B) no amendment may increase
any Bank's Revolving Credit Commitment Amount unless it is in writing and signed
by such Bank. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be in writing and signed by the requi-
site Banks indicated above and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.
12.6 ASSIGNMENTS AND PARTICIPATIONS; TRANSFEREES. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign its rights or
obligations hereunder, under any Note or under any other Loan Document without
the prior written consent of all of the Banks. Each Bank may at any time grant
participations in any portion of its Notes and Revolving Credit Commitment, and
each Bank may at any time sell, assign, transfer or otherwise dispose of any
portion of its Revolving Credit Commitment (each such grant of a participation
or interest so sold, assigned, transferred or disposed of being herein called
a "Transferred Interest") to (a) banks chartered under the laws of the United
States or any State thereof or (b) other lenders or mutual funds, in the case
of either clause (a) or (b) reasonably acceptable to Borrower ("Transferees")
PROVIDED THAT, with regard to any such sale, assignment, transfer or other
disposition, the aggregate amount of the Revolving Credit Commitment being sold,
assigned, transferred or disposed of shall in no event be less than $5,000,000,
and PROVIDED THAT, following such sale, assignment, transfer or disposition, the
transferring Bank shall continue to be obligated under its Revolving Credit
Commitment in an aggregate amount of not less than $5,000,000. In addition,
each Bank may pledge any portion of its Notes for security purposes to any
Federal Reserve Bank. If any Bank makes any assignment to a Transferee, then
upon notice to the Agent such Transferee, to the extent of such assignment
(unless otherwise provided therein), shall become a "Bank" hereunder and shall
have all the rights and obligations of such Bank hereunder, and the transferring
Bank shall be released from its duties and obligations under this Agreement to
the extent of such assignment. The Borrower agrees to issue new Notes to the
transferring Bank and/or Transferee following any such transfer that has the
effect of making the Transferee a "Bank" under this Agreement, to reflect the
transfer of the Transferred Interest to the Transferee. Without in any way
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limiting the rights of Transferees hereunder, the Borrower agrees that each
Transferee shall be entitled to the benefits of subsections 5.4 and 5.5 to the
extent of its Transferred Interest as if it were the "Bank" holding Revolving
Credit Loans in an aggregate amount equal to such Transferred Interest, and that
each Transferee may exercise any and all rights of banker's lien, setoff and
counterclaim available pursuant to law with respect to its Transferred Interest
as fully as if such Transferee were a direct lender to the Borrower. Notwith-
standing the sale by any Bank of any participation hereunder, (i) no participant
shall be deemed to be or have the rights and obligations of a Bank hereunder
except as provided in the preceding sentence and (ii) such Bank shall not in
connection with selling any such participation condition such Bank's rights in
connection with consenting to amendments or granting waivers concerning any
matter under any Loan Document upon obtaining the consent of such participant
other than on matters relating to (A) any reduction in the amount of any
principal of, or the amount of or rate of interest on, any Note or Loan in which
such participation is sold, (B) any postponement of the date fixed for any pay-
ment or principal of or interest on any Note or Loan, or the termination of any
Revolving Credit Commitment, in which such participation is sold, or (C) the
release or subordination of any material portion of any collateral other than
pursuant to the terms of any Loan Document. Each such participant shall enter
into an agreement with the transferring Bank under which such Transferee agrees
to benefit under the Security Agreement.
12.7 INVALID PROVISIONS. If any provision of any Loan Document is held to
be illegal, invalid or unenforceable under present or future laws during the
term of this Loan Agreement, such provision shall be fully severable; such Loan
Document shall be construed and enforced as if such illegal, invalid or unenfor-
ceable provision had never comprised a part of such Loan Document; and the
remaining provisions of such Loan Document shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance from such Loan Document. Furthermore, in lieu of each such
illegal, invalid or unenforceable provision there shall be added as part of such
Loan Document a provision mutually agreeable to Borrower, the Agent and the
Banks as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
12.8 HEADINGS. Section and subsection headings are for convenience of
reference only and shall in no way affect the interpretation of this Loan
Agreement.
12.9 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits
of this Loan Agreement to inure to any third party, nor shall this Loan
Agreement be construed to make or render the Agent or any Bank liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Notes,
or in any other Loan Document, or any conduct or course of conduct by any or all
of the parties hereto, before or after signing this Loan Agreement or any of
the other Loan Documents, neither this Agreement nor any other Loan Document
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shall be construed as creating any right, claim or cause of action against the
Agent, any Bank, or any of their respective officers, directors, agents or
employees, in favor of any materialman, supplier, contractor, subcontractor,
purchaser or lessee of any property owned by Borrower, nor to any other person
or entity other than Borrower.
12.10 MULTIPLE COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
agreement.
12.11 GOVERNING LAW. This Loan Agreement has been prepared, is being
executed and delivered, and is intended to be performed in the State of Arizona.
The substantive laws of the State of Arizona and the applicable federal laws of
the United States of America shall govern the validity, construction, enforce-
ment and interpretation of this Loan Agreement and all of the other Loan
Documents without regard to Arizona principles of conflict of laws.
12.12 ARBITRATION.
(a) BINDING ARBITRATION. Upon the demand of Borrower or Required
Banks, whether made before the institution of any judicial proceeding or
not more than 60 days after service of a complaint, third party complaint,
cross-claim or counterclaim or any answer thereto or any amendment to any
of the above, any Dispute (as defined below) shall be resolved by binding
arbitration in accordance with the terms of this arbitration clause. A
"Dispute" shall include any action, dispute, claim, or controversy of any
kind, whether founded in contract, tort, statutory or common law, equity,
or otherwise, now existing or hereafter occurring between the parties
arising out of, pertaining to or in connection with this Agreement or any
Loan Document. The parties understand that by this Agreement they have
decided that the Disputes may be submitted to arbitration rather than being
decided through litigation in court before a judge or jury and that once
decided by an arbitrator the claims involved cannot be brought, filed or
pursued in court.
(b) GOVERNING RULES. Arbitrations conducted pursuant to this
Agreement, including selection of arbitrators, shall be administered by the
American Arbitration Association ("Administrator") pursuant to the Commer-
cial Arbitration rules of the Administrator. Arbitrations conducted
pursuant to the terms hereof shall be governed by the provisions of the
Federal Arbitration Act (Title 9 of the United States Code), and to the
extent the foregoing are inapplicable, unenforceable or invalid, the laws
of the State of Arizona. Judgment upon any award rendered hereunder may
be entered in any court having jurisdiction; provided, however, that
nothing contained herein shall be deemed to be a waiver by any party that
is a Bank of the protections afforded to it under 12 U.S.C. Section 91 or
similar governing state law. Any party who fails to submit to binding
arbitration following a lawful demand by the opposing party shall bear all
costs and expenses, including reasonable attorney's fees, incurred by the
opposing party in compelling arbitration of any Dispute.
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(c) NO WAIVER, PRESERVATION OF REMEDIES, MULTIPLE PARTIES. No pro-
vision of, nor the exercise of any rights under, this arbitration clause
shall limit the right of any party to (1) foreclose against any real or
personal property collateral or other security, (2) exercise self-help
remedies (including repossession and setoff rights) or (3) obtain provi-
sional or ancillary remedies such as injunctive relief, sequestration,
attachment, replevin, garnishment, or the appointment of a receiver from
a court having jurisdiction. Such rights can be exercised at any time
except to the extent such action is contrary to a final award or decision
in any arbitration proceeding. The institution and maintenance of an
action as described above shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the Dispute to arbitration, nor
render inapplicable the compulsory arbitration provisions hereof. Any
claim or Dispute related to exercise of any self-help, auxiliary or other
exercise of rights under this section (c) shall be a Dispute hereunder.
(d) ARBITRATOR POWERS AND QUALIFICATIONS; AWARDS. Arbitrator(s)
shall resolve all Disputes in accordance with the applicable substantive
law. Arbitrator(s) may make an award of attorneys' fees and expenses if
permitted by law or the agreement of the parties. All statutes of limit-
ation applicable to any Dispute shall apply to any proceeding in accordance
with this arbitration clause. Any arbitrator selected to act as the only
arbitrator in a Dispute shall be required to be a practicing attorney with
not less than 10 years practice in commercial law in the State of Arizona.
With respect to a Dispute in which the claims or amounts in controversy do
not exceed five hundred thousand dollars ($500,000), a single arbitrator
shall be chosen and shall resolve the Dispute. In such case the arbitrator
shall have authority to render an award up to but not to exceed five hun-
dred thousand dollars ($500,000) including all damages of any kind whatso-
ever, costs, fees and expenses. Submission to a single arbitrator shall
be a waiver of all parties' claims to recover more than five hundred
thousand dollars ($500,000). A Dispute involving claims or amounts in
controversy exceeding five hundred thousand dollars ($500,000) shall be
decided by a majority vote of a panel of three arbitrators ("Arbitration
Panel"). An Arbitration Panel shall be composed of one arbitrator who
would be qualified to sit as a single arbitrator in a Dispute decided by
one arbitrator, one who has at least ten years experience in commercial
lending and one who has at least ten years experience in the semiconductor
industry. Arbitrator(s) may, in the exercise of their discretion, at the
written request of a party in any Dispute, (1) consolidate in a single
proceeding any multiple party claims that are substantially identical and
all claims arising out of a single loan or series of loans including
claims by or against borrower(s) guarantors, sureties and or owners of
collateral if different from the borrower, and (2) administer multiple
arbitration claims as class actions in accordance with Rule 23 of the
Federal Rules of Civil Procedure. The arbitrator(s) shall be empowered to
resolve any dispute regarding the terms of this Agreement or the arbitra-
bility of any Dispute or any claim that all or any part (including this
provision) is void or voidable but shall have no power to change or alter
the terms of this Agreement. The award of the arbitrator(s) shall be in
writing and shall specify the factual and legal basis for the award.
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(e) MISCELLANEOUS. To the maximum extent practicable, the Adminis-
trator, the Arbitrator(s) and the parties shall take any action necessary
to require that an arbitration proceeding hereunder be concluded within 180
days of the filing of the Dispute with the Administrator. The Arbitrator(s)
shall be empowered to impose sanctions for any party's failure to proceed
within the times established herein. Arbitration proceedings hereunder
shall be conducted in Arizona at a location determined by the Administra-
tor. In any such proceeding a party shall state as a counterclaim any
claim which arises out of the transaction or occurrence or is in any way
related to the Documents which does not require the presence of a third
party which could not be joined as a party in the proceeding. The provi-
sions of this arbitration clause shall survive any termination, amendment,
or expiration of the Loan Documents and repayment in full of sums owed to
Banks by Borrower unless the parties otherwise expressly agree in writing.
Each party agrees to keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information required in the ordin-
ary course of business of the parties or as required by applicable law or
regulation.
12.13 CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS; JURISDICTION; WAIVER
OF JURY TRIAL. Any suit, action or proceeding against Borrower with respect to
this Loan Agreement, the Revolving Credit Notes, the Term Notes or any judgment
entered by any court in respect thereof, may be brought in any of the courts of
the State of Arizona, County of Maricopa or Pima County, or in the United States
courts located in the State of Arizona as the Agent in its sole discretion may
elect, and Borrower hereby submits to the nonexclusive jurisdiction of such
courts for the purpose of any such suit, action or proceeding. Borrower hereby
irrevocably waives any objections which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Loan Agreement, the Notes or any other Loan Document brought in any of the
courts located in the State of Arizona, County of Maricopa or Pima. BORROWER,
AGENT AND BANKS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTER-CLAIM (WHETHER BASED UPON CONTRACT, TORT OR
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OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCU-
MENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
BURR-BROWN CORPORATION
By JOHN L. CARTER
Its Executive VP and CFO
Addresses for Notices:
BURR-BROWN CORPORATION
6730 South Tucson Boulevard
Tucson, Arizona 85706
Telephone: (602) 746-1111
Telefacsimile: (602) 746-7752
Attention: Chief Financial Officer
FIRST INTERSTATE BANK OF ARIZONA, N.A.
By Paul C. Hornung
Its Vice President
Addresses for Notices:
FIRST INTERSTATE BANK OF ARIZONA,
N.A.
Corporate Banking Division #741
100 West Washington
Phoenix, Arizona 85003
Telephone: (602) 528-6634
Telefacsimile No: (602) 229-4409
Attention: Mr. Paul C. Hornung
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BANK ONE, ARIZONA, NA
By James A. Warner
Its Vice President
Addresses for Notices:
BANK ONE, ARIZONA, NA
U.S. Corporate Banking Division, #A714
241 North Central
Phoenix, Arizona 85004
Telephone: (602) 221-2490
Telefacsimile No: (602) 221-2632
Attention: Mr. James A. Warner
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SCHEDULE 3.1
REVOLVING CREDIT COMMITMENT AMOUNTS
FIRST INTERSTATE BANK OF ARIZONA, N.A. $7,500,000.00
BANK ONE, ARIZONA, NA $7,500,000.00
<PAGE>
SCHEDULE 4.1
TERM LOAN COMMITMENT AMOUNTS
FIRST INTERSTATE BANK OF ARIZONA, N.A $5,100,000.00
BANK ONE, ARIZONA, NA $3,400,000.00
<PAGE>
SCHEDULE 7.4
PENDING LITIGATION OF BORROWER
A. BAHRS ET.AL. VERSUS HUGHES AIRCRAFT COMPANY, BURR-BROWN COMPANY, ET.AL.,
Superior Court State of Arizona, Pima County. Filed on January 13, 1992.
This case is a tort complaint charging that the Company released contami-
nants including Trichloroethylene (TCE) which went into the ground waters.
The plaintiffs are charging that they and their respective properties are
damaged and they are asking for monetary damages. The Company spent the
first year discussing a stipulated dismissal. The Company has now requested
the Superior Court to begin consideration for dismissal. The Company's
insurer, under a reservation of rights, has agreed to the payment of rea-
sonable and necessary fees for the defense of this matter.
B. YSLAVA ET.AL. VERSUS HUGHES AIRCRAFT COMPANY, U.S. District Court, District
of Arizona. Filed on September 20, 1991. This is a sister case where
other plaintiffs allege that Hughes' discharge of toxic waste into the
ground water that the plaintiffs drank has personally damaged them in an
unspecified amount. On September 30, 1993, Burr-Brown and other companies
were identified as third party co-defendants in a Motion to File a Third-
Party Complaint. The Company's insurer, under a reservation of rights, has
agreed to the payment of reasonable and necessary fees for the defense of
this matter.
C. LANIER VERSUS HUGHES AIRCRAFT COMPANY. U.S. District Court, District of
Arizona. Filed on August 7, 1992. This is a sister case to the YSLAVA
case where other plaintiffs allege that Hughes' discharge of toxic waste
into the ground water the plaintiffs drank has personally damaged them in
an unspecified amount. On March 7, 1994, Burr-Brown and other companies
were identified as third party co-defendants in a Motion to File a Third-
Party Complaint.
D. MINT VS. BURR-BROWN. This State Superior Court case was filed by an affil-
iated company of Burr-Brown. MiNT alleges that Burr-Brown did not purchase
all of its requirement for Data Collection Communication Division products
between October, 1988 through September, 1991. As a result, Burr-Brown is
charged with breaching the Assembly Agreement. MiNT is asking for damages
but has presently not stated an amount. Liability in this case is remote,
however maximum exposure is estimated at $100,000.00. Trial has been set
for August 25, 1994.
E. ALAN CRAWFORD ASSOCIATES VS. BURR-BROWN. This is an Ontario, Canada court
case filed 13 January 1994 by an independent stocking representative of
Burr-Brown. Alan Crawford Associates alleges that it was damaged in the
amount of $500,000 for wrongful termination of the business relationship.
Burr-Brown has notified its insurance carrier of the claim as a matter of
form but no coverage is existing under any of the Company's policies. ACA
and Burr-Brown have been discussing a possible settlement and therefore no
discovery or hearings have been set.
F. UNITRODE VS. BURR-BROWN. Unitrode is a competitor of Burr-Brown in the
single computer system integrator, SCSI, terminator chip market. On 11
July 1994 Unitrode filed a patent infringement claim in the Boston, Massa-
chusetts U.S. District Court. They have asked for compensatory damages of
an unspecified amount in accordance with 35 USCA Section 284. Burr-Brown
is not able to make an assessment of possible liability because such
matters are decided through a finding of the Court after hearing. The
Company has informed its insurance carrier of the claim, but as of this
time no statement of coverage has been issued.
<PAGE>
SCHEDULE 7.7
BORROWER'S SUBSIDIARIES
(a) Burr-Brown International Holding Corporation, Delaware
(b) Burr-Brown Limited, Scotland, United Kingdom
(c) Burr-Brown International Limited, United Kingdom
(d) Burr-Brown Japan Limited, Japan
(e) Burr-Brown International S.A., France
(f) Burr-Brown International S.R.L., Italy
(g) Burr-Brown International B.V., the Netherlands
(h) Burr-Brown International, GmbH, Germany
(i) Burr-Brown Research, GesmbH, Austria
(j) Burr-Brown, A.G., Switzerland
(k) Burr-Brown Foreign Sales Corporation, Barbados
(l) Power Convertibles Corporation, Arizona
(m) Intelligent Instrumentation, Inc., Arizona
<PAGE>
SCHEDULE 7.14
CONTRACTS OF BORROWER/SUBSIDIARIES
WHICH ARE IN DEFAULT
None.
<PAGE>
ANNEX I
TO
LOAN AGREEMENT
("LOAN AGREEMENT" or "AGREEMENT")
among
BURR-BROWN CORPORATION ("BORROWER"),
and
FIRST INTERSTATE BANK OF ARIZONA, N.A. and
BANK ONE, ARIZONA, NA
(collectively the "Banks" and individually a "Bank"),
and FIRST INTERSTATE BANK OF ARIZONA, N.A.,
as agent for the Banks (in such capacity, the "Agent")
The following terms, as used in the Loan Agreement, have the meanings
assigned to them in this Annex I (which is incorporated into and constitutes a
part of the Loan Agreement for all purposes thereof):
"ADVANCE" means a disbursement of proceeds of the Revolving Credit Loans
by the a Bank to the Borrower.
"APPLICABLE INTEREST RATE" means, with respect to any Borrowing, the Prime
Rate, the LIBO Rate or the Bid Rate, as from time to time selected by Borrower
as applicable to such Borrowing pursuant to subsections 3.2, 3.3, 3.4, 4.4 and
4.5 of the Loan Agreement.
"AUTHORIZED PERSON" means the officers or other employees of Borrower from
time to time duly certified to the Banks by appropriate corporate action as
authorized to request Advances, apportion Borrowings and make designations of
the Applicable Interest Rates.
"BID RATE": See subsection 3.4.
"BID RATE ACCEPTANCE TIME": See subsection 3.4.
"BID RATE BORROWING" means any Borrowing which accrues interest at the Bid
Rate.
"BID RATE NOTICE": See subsection 3.4.
"BORROWING" means a portion of the proceeds of any one of the Loans
designated by Borrower pursuant to Section 3.3 or Section 4.4 of the Loan
<PAGE>
Agreement. In addition, until or unless reapportioned by Borrower pursuant to
Section 3.3, each Advance shall constitute a separate Borrowing.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which commercial banking institutions are authorized or obligated to be closed
in Phoenix, Arizona, and, with respect to Advances on which the LIBO Rate is the
Applicable Interest Rate, a day on which deposit transactions in dollars are
carried on in the London interbank eurodollar market.
"CAPITAL EXPENDITURES" means, for any specified period, the aggregate for
all gross expenditures during such period for any assets, or for improvements,
replacements, substitutions or additions therefor or thereto, which are capi-
talized on the consolidated balance sheet of the Borrower, including the balance
sheet amount of any Capital Leases incurred during such period.
"CAPITAL LEASE" means any obligation to pay rent and other amounts under
a lease of (or other agreement conveying the right to use) Property which
obligation is required to be classified and accounted for as a capital lease on
a balance sheet of the lessee in accordance with GAAP, and for the purposes
hereof the amount of each obligation shall be the capitalized amount thereof,
determined in accordance with GAAP.
"CLOSING DATE" means the date upon which all of the conditions precedent
set forth in Section 6 of the Loan Agreement have been fully satisfied and
fully-executed copies of the Loan Documents have been delivered to and accepted
by Agent.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSEQUENTIAL LOSS": See subsection 5.6.
"CONSOLIDATED ACCOUNTS RECEIVABLE" means all receivables that, in
accordance with GAAP, are classified as receivables on a consolidated balance
sheet of Borrower and the Subsidiaries.
"CONSOLIDATED CASH" means the sum of (a) cash on hand or on deposit in
banks, (b) readily marketable securities issued by the United States, (c)
readily marketable commercial paper rated "A-1" by Standard & Poor's Corporation
(or similar rating by any other agency that rates commercial paper), and (d)
certificates of deposit or banker's acceptances issued by commercial banks or
recognized standing operating in the United States.
"CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES" means,
at any time, all assets and liabilities, respectively, that should in accordance
with GAAP be classified as current assets and current liabilities, respectively,
on a consolidated balance sheet of Borrower and the Subsidiaries.
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<PAGE>
"CONSOLIDATED NET INCOME" means, with respect to any period, consolidated
net earnings (after income taxes) of Borrower and the Subsidiaries for such
period, determined in accordance with GAAP, but excluding (i) any gain or loss
arising from the sale of capital assets, (ii) any gain arising from any write-up
of assets (other than the write-up of current assets as a result of realignment
of currencies), (iii) earnings of any other Person, substantially all of the
assets of which have been acquired by Borrower or a Subsidiary in any manner,
to the extent that such earnings were realized by such other Person prior to the
date of such acquisition, (iv) net earnings of any Person (other than a Subsid-
iary) in which Borrower or a Subsidiary has an ownership interest, unless such
earnings have been actually received by Borrower or such Subsidiary in the form
of cash distributions, (v) any deferred credit representing the excess of equity
in any Subsidiary at the date of acquisition over the cost of the investment in
such Subsidiary, and (vi) any gain arising from the acquisition of any securi-
ties of Borrower or a Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date, the total stock-
holder's equity (including capital stock, additional paid in capital and
retained earnings after deducting treasury stock) which would appear on a
consolidated balance sheet of Borrower and the Subsidiaries prepared as of such
date in accordance with GAAP, less the aggregate book value of Intangible Assets
shown on such balance sheet.
"CONSOLIDATED TOTAL ASSETS" means, at any date, all assets of Borrower and
its Subsidiaries that would appear as such on a consolidated balance sheet of
Borrower and its Subsidiaries prepared as of that date in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, at any date, all liabilities of
Borrower and the Subsidiaries that would appear as such on a consolidated
balance sheet of Borrower and the Subsidiaries prepared as of that date in
accordance with GAAP.
"CONTROLLED GROUP" means, severally and collectively, the members of the
group controlling, controlled by and/or in common control of Borrower, within
the meaning of Section 4001(b) of ERISA.
"DEBT SERVICE RATIO" means the result of the following calculation,
expressed as a percentage, as at the end of any fiscal quarter of Borrower:
(a) the sum of Borrower's Consolidated Net Income, depreciation
expense, amortization of intangibles expense, and measured over the
preceding four fiscal quarters of Borrower; divided by
(b) the sum of interest expense, as measured over the preceding
four fiscal quarters of Borrower plus the current maturities of long-term
indebtedness as of the end of the given fiscal quarter.
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<PAGE>
All calculations and amounts shall be determined in accordance with GAAP.
"Interest expense," as used hereinabove, shall include all gross interest
expense amounts incurred by Borrower and the Subsidiaries.
"DEFAULT" means an Event of Default or an event which, upon the giving of
notice or the lapse of time or both, would constitute an Event of Default.
"DEFAULT RATE" shall mean the rate per annum equal to the Prime Rate plus
three percent (3%) per annum, changing in conformity with each change in the
Prime Rate.
"DESIGNATION DATE": See subsection 3.4.
"DOLLARS" and the sign "$" each means lawful money of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all rules and regulations issued pursuant thereto.
"EURODOLLAR BUSINESS DAY" means a Business Day on which dealings in Dollars
are carried out in the London interbank market.
"EVENT OF DEFAULT" has the meaning specified in Section 10 of the Loan
Agreement.
"EXISTING LOAN FACILITY": See subsection 1.1.
"GAAP" means generally accepted accounting principles and practices
consistently applied as in effect within the United States from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board, or any successor board or organization. All
accounting terms not otherwise defined in the Loan Agreement shall have the
meaning assigned to such terms in accordance with GAAP.
"GOVERNMENTAL AUTHORITY" means any government (or any political subdivision
or jurisdiction thereof), court, bureau, agency or other governmental authority
having jurisdiction over Borrower or a Subsidiary or any of its or their
business, operations or Properties.
"INDEBTEDNESS" means, with respect to any Person at any time, without
duplication, all indebtedness, obligations and liabilities of such Person which,
in accordance with GAAP, consistently applied, should be classified as liabil-
ities on an unconsolidated balance sheet of such Person, but in any event shall
include: (a) all obligations for borrowed money, including interest or fees of
any nature related to the borrowing of money accrued but unpaid, (b) all obliga-
tions under letters of credit, bills of exchange or bankers acceptances, (c) all
obligations representing the deferred purchase price of Property or services,
(d) all obligations, whether or not assumed by or with recourse to such Person,
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<PAGE>
secured by Liens upon, or payable out of the proceeds of or production from,
asset owned by such Person, (e) all rental obligations under Capital Leases, and
(f) any contract, agreement or understanding pursuant to which such Person
guarantees, or in effect guarantees, any Indebtedness of another Person, whether
directly or indirectly.
"INTANGIBLE ASSETS" of any Person shall mean those assets of such Person
that are (i) deferred assets, other than prepaid insurance and prepaid taxes;
(ii) patents, copyrights, trademarks, tradenames, franchises, goodwill, experi-
mental expenses and other similar assets which would be classified as intangible
assets on a balance sheet of such Person, prepared in accordance with GAAP; and
(iii) unamortized debt discount and expense.
"INTERBANK OFFERED RATE" means, with respect to an Interest Period, the
prevailing rate of interest per annum at which deposits in immediately available
funds in Dollars are offered at approximately 11:00 a.m., London time, two (2)
Eurodollar Business Days prior to the first day of such Interest Period by major
financial institutions active in the London interbank eurodollar market to first
class banks in the London interbank eurodollar market for delivery on the first
day of such Interest Period, such deposits being for a period of time equal or
comparable to such Interest Period and in an amount comparable to the principal
amount of the applicable Advance, as such prevailing rate of interest is deter-
mined by the Agent at such time from reasonably available sources. The Agent
shall attempt to notify Borrower of its determination of the Interbank Offered
Rate as soon as practicable following such determination. Each determination
of the Interbank Offered Rate by the Agent, in the absence of manifest error,
shall be conclusive and binding.
"INTEREST PERIOD" means, with respect to the LIBO Rate, a period commencing
on a Designation Date and ending, with respect to the LIBO Rate, one, two, three
or six months thereafter and, with respect to the Bid Rate, some number of days
thereafter not to exceed thirty (30), in each case as Borrower shall specify in
the applicable Notice of Interest Rate Designation; provided, however, that any
Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day, and no Interest Period
shall extend beyond, with respect to the Revolving Credit Loans, the Termination
Date, or with respect to the Term Loan, the Term Loan Maturity Date.
"INTEREST RATE DESIGNATION": See subsection 3.4.
"LAWS" means all ordinances, statutes, rules, regulations, orders, injunc-
tions, writs, or decrees or any Governmental Authority.
"LIBO RATE," with respect to any Interest Period, means the sum of (a) the
Interbank Offered Rate for that Interest Period plus (b) 2.0%.
"LIEN" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale, title retention arrangement, claim, charge, or
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<PAGE>
any other interest in property designed to secure or procure payment of any
obligation or liability, whether arising by agreement or under any statute or
law or otherwise, and whether voluntarily or involuntarily created.
"LOAN DOCUMENTS" means the Loan Agreement, the Revolving Credit Notes
(including any renewals, extensions and refundings thereof), the Term Notes
(including any renewals and extensions thereof), the Security Documents and all
other agreements, instruments, certificates or other documents executed and
delivered pursuant to or in connection therewith, as the same may be supple-
mented, amended or otherwise amended from time to time.
"LOAN" and "LOANS" mean, severally and collectively, the Term Loans and the
Revolving Credit Loans.
"MATERIAL ADVERSE EVENT" means any occurrence of whatsoever nature
(including, without limitation, any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) which materially
adversely affects the present or reasonably foreseeable prospective financial
condition or operations of the Borrower or any Significant Subsidiary or
materially impairs the ability of the Borrower to perform its obligations under
the Loan Documents.
"MINIMUM AMOUNT LIMITATION": See subsection 3.3.
"NOTE" and "NOTES" mean the Revolving Credit Notes and the Term Notes,
severally and collectively.
"NOTICE OF INTEREST RATE DESIGNATION": See subsection 3.4.
"OBLIGATIONS" means all obligations of the Borrower to the Agent or any of
the Banks now existing or hereafter existing under any Loan Document, whether
for principal, interest, fees, expenses, indemnification or otherwise.
"PBGC" means the Pension Benefit Guaranty Corporation created by Section
4002(a) of ERISA, or any Governmental Authority succeeding to the functions
thereof.
"PERMITTED LIENS" means (a) Liens granted to the Agent to secure Borrower's
obligations under the Loan Agreement or under any other Loan Document, (b) Liens
described on Exhibit D to the Loan Agreement, (c) Liens to secure Indebtedness
of Borrower or any Subsidiary that are taken or retained by the seller of all
of the Property subject to that Lien to secure all or part of the purchase price
thereof, which Liens shall include, but not be limited to, interests of such
seller pursuant to title retention agreements, conditional sale contracts or
Capital Leases, (d) Liens in any Property existing (whether or not assumed) at
the time, after the date of the Loan Agreement, that such Property was acquired
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<PAGE>
by Borrower or any Subsidiary, (e) pledges or deposits made to secure payment
of Workers' Compensation, unemployment insurance, pensions or social security
programs, (f) construction Liens on new or existing facilities of Borrower for
which material or labor bonds are in force or Liens imposed by mandatory provi-
sions of Law such as for materialmen's, mechanics', warehousemen's and other
similar Liens arising in the ordinary course of business securing indebtedness
whose payment is not yet due, (g) Liens for Taxes imposed on a Person or upon
such Person's income or profits or property, if the same are not yet due and
payable or if the same are being contested in good faith and as to which ade-
quate reserves have been provided by such Person, (h) good faith deposits in
connection with tenders, leases, real estate bids or contracts (other than
contracts involving the borrowing of money), pledges or deposits to secure
public or statutory obligations, deposits to secure (or in lieu of) surety,
stay, appeal or customs bonds and deposits to secure the payment of taxes,
assessments, customs duties or other similar charges or deposits or bonds to
secure performance of governmental contracts, or (i) encumbrances consisting of
zoning restrictions, easements, or other similar restrictions on the use of real
property, provided that such do not impair the use or value of such property for
the uses intended, and none of which is violated by existing or proposed
structures or land use.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or govern-
ment or any agency or political subdivision thereof.
"PLAN" means (a) with respect to Borrower, any plan described in Section
4021(a) of ERISA and not excluded pursuant to Section 4021(b) thereof, under
which Borrower or any Subsidiary has contributed, and (b) with respect to any
other Person, any employee benefit plan or other plan established or maintained
by such Person for the benefit of such Person's employees and to which Title IV
of ERISA applies.
"PRIME RATE" means the rate of interest designated by First Interstate as
its "prime rate" and publicly announced by First Interstate from time to time,
which may be a rate at, above or below that at which First Interstate lends to
other Persons. Each change in the Prime Rate shall become effective without
prior notice to Borrower automatically as of the opening of business on the date
of such public announcement of a change in the Prime Rate.
"PRO RATA SHARE" means, with respect to each Bank, in each case expressed
as a percentage:
(a) as such term pertains to such Bank's obligation to make Revolving
Credit Loans, the fraction which its Revolving Credit Commitment Amount is of
the aggregate of all Revolving Credit Commitment Amounts,
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<PAGE>
(b) as such term pertains to such Bank's obligation to make Term Loans,
the fraction which its Term Loan Commitment Amount is of the aggregate of all
Term Loan Commitment Amounts,
(c) as such term pertains to such Bank's right to receive payment of
principal of its outstanding Bid Rate Advances, the fraction which the amount
of the aggregate unpaid principal balance of its Bid Rate Advances is to the
aggregate unpaid principal balance of all Bid Rate Advances,
(d) as such term pertains to such Bank's right to receive payment of
interest on its outstanding Revolving Credit Loans, the fraction which the out-
standing amount of interest owed on or with respect to the outstanding principal
balance of such Bank's Revolving Credit Loan is of the aggregate outstanding
amount of interest owed on or with respect to the aggregate unpaid principal
balance of all Revolving Credit Loans,
(e) as such term pertains to such Bank's right to receive payment of
principal of its outstanding Revolving Credit Loan, the fraction which the
amount of the unpaid principal balance of its Revolving Credit Loan is of the
aggregate unpaid principal balance of all Revolving Credit Loans,
(f) as such term pertains to such Bank's right to receive payment of
interest on its outstanding Term Loan, the fraction which the outstanding amount
of interest owed on or with respect to the outstanding principal balance of such
Bank's Term Loan is of the aggregate outstanding amount of interest owed on or
with respect to the aggregate unpaid principal balance of all Term Loans.
(g) as such term pertains to such Bank's right to receive payment of
principal of its outstanding Term Loan, the fraction which the amount of the
unpaid principal balance of its Term Loan is of the aggregate unpaid principal
balance of all Term Loans,
(h) as such term pertains to such Bank's right to receive commitment fees
under subsection 5.1(a) of the Loan Agreement, the fraction which such Bank's
Revolving Credit Commitment Amount is of the sum of all Revolving Credit
Commitment Amounts, and
(i) as such term pertains to such Bank's obligations under subsection 11.9
of the Loan Agreement, and for all other purposes, the fraction which the sum
of the unpaid principal balance of its outstanding Loans is to the sum of the
aggregate unpaid principal of all outstanding Loans or, if no Loans are out-
standing, the fraction which such Bank's Revolving Credit Commitment Amount is
of the sum of all Revolving Credit Commitment Amounts.
"PROPERTY" means all types of real, personal, tangible, intangible or mixed
property.
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<PAGE>
"PRUDENTIAL NOTE AGREEMENT" means the Amended and Restated Note Agreement,
dated as of October 19, 1992, between Borrower and The Prudential Insurance
Company of America, relating to the Borrower's issuance and sale of $20 million
original principal amount of its 9.57% Senior Notes due April 15, 1996, and
providing, inter alia, for the prepayment by Borrower in connection with the
closing thereof, of $10 million principal amount of said Senior Notes and change
in the interest rate to 11.57% of the Senior Notes remaining outstanding.
"REGULATION G" means Regulation G of the Board of Governors of the Federal
Reserve System 12 C.F.R. Part 207 or any other regulation hereafter promulgated
by said Board to replace the prior Regulation G and having substantially the
same function, and any regulations, interpretation or ruling thereunder.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, or any other regulation hereafter promul-
gated by said Board to replace the prior Regulation U and having substantially
the same function, and any regulations, interpretations or rulings thereunder.
"REGULATION X" means Regulation X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 224, or any other regulation hereafter promul-
gated by said Board to replace the prior Regulation X and having substantially
the same function, and any regulations, interpretations or rulings thereunder.
"REGULATORY CHANGE" means any change after the date of the Loan Agreement
in United States federal, state or foreign laws or regulations or the adoption
or making after such date of any interpretations, directives or requests apply-
ing to a class of banks including the Banks under any United States federal,
state or foreign Laws (whether or not having the force of law) by any governmen-
tal or monetary authority charged with interpretation or administration thereof.
"REPORTABLE EVENT" means, any event set forth in Section 4043(b) of ERISA
or the regulations thereunder, a withdrawal from a Plan described in Section
4063 of ERISA or a cessation of operations described in Section 4062(e) of
ERISA.
"REQUEST FOR ADVANCE": See subsection 3.2.
"REQUIRED BANKS" means all of the Banks.
"REVOLVING CREDIT COMMITMENT" means, as to any Bank, the obligation of such
Bank to make Revolving Credit Loans pursuant to subsection 3.1.
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<PAGE>
"REVOLVING CREDIT COMMITMENT AMOUNT" means, as to any Bank, the amount set
forth opposite such Bank's name as its "Revolving Credit Commitment" on Schedule
3.1 to the Loan Agreement.
"REVOLVING CREDIT LOAN" means the outstanding balance of Advances made by
a Bank to the Borrower pursuant to subsection 3.1, consisting of one or more
Borrowings.
"REVOLVING CREDIT NOTE(S)": See subsection 3.7.
"REVOLVING PERIOD": See subsection 3.1.
"SECURITY PERIOD" means the security agreement(s) in the form of Exhibit
E to the Loan Agreement, executed and unconditionally delivered by Borrower and
each of its Significant Subsidiaries, as the same may be amended, supplemented
or otherwise modified from time to time, and all other agreements, instruments,
certificates or other documents (including, without limitation, financing state-
ments), executed and delivered pursuant to or in connection therewith.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary whose tangible net worth (as
calculated in accordance with GAAP) is equal to or greater than ten percent
(10%) of Consolidated Tangible Net Worth at the time of any determination.
"SUBSIDIARY" means any corporation of which the Borrower owns or controls,
directly or indirectly, more than fifty percent (50%) of the outstanding stock
having by its terms ordinary voting power to elect a majority of the Board of
Directors of the corporation.
"TAXES" means taxes, assessments, levies, imposts, deductions, charges or
withholdings or whatsoever kind or nature, and all liabilities with respect
thereto.
"TERM LOAN" means the outstanding balance of the amount advanced by a Bank
on the Closing Date to the Borrower pursuant to subsection 4.1, consisting of
one or more Borrowings.
"TERM LOAN COMMITMENT AMOUNT" means, as to any Bank, the obligation of such
Bank to make its Term Loan pursuant to subsection 4.1.
"TERM LOAN MATURITY DATE" means the last Business Day in June of 1996.
"TERM NOTE(S)": See subsection 4.2.
"TERMINATION DATE" means the earlier of the following: (a) the Business Day
immediately preceding the date that is 365 calendar days after the date of the
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Loan Agreement; or (b) the date on which the Revolving Credit Commitment is
terminated pursuant to subsection 10.2.
"TRANSFEREES": See subsection 12.6.
"TRANSFERRED INTEREST": See subsection 12.6.
"OTHER DEFINITIONAL PROVISIONS". All terms defined in the Loan Agreement
shall have the above-defined meanings when used in any other Loan Document. The
words "hereof," "herein," "hereunder" and similar terms when used in the Loan
Agreement shall refer to the Loan Agreement as a whole and not to any particular
provision of the Loan Agreement. Defined terms used in the singular shall import
the plural and vice versa. The word "including" shall not import any limitation
of the preceding general description to or by the listed specific terms which
follow. References to "Section," "section" and "subsection" are, unless the
context otherwise requires or otherwise specified, to sections and subsections
of the Loan Agreement.
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EXHIBIT A
TO
LOAN AGREEMENT
REVOLVING CREDIT NOTE
$____________________ __________________, 1994
Phoenix, Arizona
FOR VALUE RECEIVED, BURR-BROWN CORPORATION, a Delaware corporation (herein-
after called "Maker"), hereby promises to pay to the order of _________________
(the "Bank") at the main office of First Interstate Bank of Arizona, N.A., at
100 West Washington, Phoenix, Arizona 85003 (Attention: Corporate Banking
Division, #741), in Dollars in immediately available funds, the principal sum
of _____________________________________ DOLLARS ($______________) or the
aggregate unpaid principal amount of all Advances (as such term and each other
capitalized term used herein are defined in the Loan Agreement hereinafter
referred to) made by the Bank pursuant to the Loan Agreement, whichever is less,
and to pay interest in like funds from the date hereof on the unpaid balance
thereof at the rates of interest per annum and at the times specified in the
Loan Agreement.
Principal hereof shall be payable in the amounts and at the times set forth
in the Loan Agreement.
This note is one of the Revolving Credit Notes referred to in that certain
Loan Agreement dated of even date herewith among Maker, the banks party thereto
(together with any Banks that subsequently become parties thereto, the "Banks")
and First Interstate Bank of Arizona, N.A., as agent for the Banks (as the same
may be amended, modified or restated from time to time, the "Loan Agreement").
All of the terms, conditions and covenants of the Loan Agreement are expressly
made a part of this Note by reference in the same manner and with the same
effect as if set forth herein at length and any holder of this Note is entitled
to the benefits of and remedies provided in the Loan Agreement and any other
agreements by and between Maker and Bank. Reference is made to the Loan Agree-
ment for the maturity, payment, prepayment and acceleration of the indebtedness
evidenced hereby.
<PAGE>
After maturity, including maturity upon acceleration, all unpaid amounts
of this Note shall bear interest at that rate that is three percent (3%) above
the Prime Rate. Maker agrees to pay all collection expenses, including reason-
able attorneys' fees and court costs, incurred in the collection or enforcement
of all or any part of this Note in which the holder hereof is the prevailing
party. In the event of any court proceedings, court costs and attorneys' fees
shall be set by the court and not by jury and shall be included in any judgment
obtained by the holder hereof.
Failure of the holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise same in the event of any subsequent default,
or in the event of continuance of any existing default after demand for strict
performance hereof.
This Note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of the payee hereof, and any subsequent holders of
this Note, and their successors and assigns.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized corporate agent as of the day and year first above written.
BURR-BROWN CORPORATION,
a Delaware corporation
By
Its
Maker's Tax Identification
Number: 86-0445468
-2-
<PAGE>
EXHIBIT B
TO
LOAN AGREEMENT
TERM NOTE
$______________ __________________, 1994
Phoenix, Arizona
FOR VALUE RECEIVED, BURR-BROWN CORPORATION, a Delaware corporation (herein-
after called "Maker"), hereby promises to pay to the order of __________________
(the "Bank"), at the main office of First Interstate Bank of Arizona, N.A., at
100 West Washington, Phoenix, Arizona 85003 (Attention: Corporate Banking
Division, #741), in Dollars in immediately available funds, the principal sum
of ___________________________ DOLLARS ($________________), and to pay interest
in like funds from the date hereof on the unpaid balance thereof at the rates
of interest per annum and at the times specified in the Loan Agreement.
Principal hereof shall be payable and prepayable in the amounts and at the
times set forth in the Loan Agreement.
This note is one of the Term Note referred to in that certain Loan Agree-
ment dated of even date herewith among Maker, the banks party thereto (together
with any Lenders that subsequently become parties thereto, the "Banks") and
First Interstate Bank of Arizona, N.A., as agent for the Banks (as the same may
be amended, modified or restated from time to time, the "Loan Agreement"). All
of the terms, conditions and covenants of the Loan Agreement are expressly made
a part of this Note by reference in the same manner and with the same effect as
if set forth herein at length and any holder of this Note is entitled to the
benefits of and remedies provided in the Loan Agreement and any other agreements
by and between Maker and Bank. Reference is made to the Loan Agreement for the
maturity, payment, prepayment and acceleration of the indebtedness evidenced
hereby.
After maturity, including maturity upon acceleration, all unpaid amounts
of this Note shall bear interest at that rate that is three percent (3%) above
the Prime Rate. Maker agrees to pay all collection expenses, including reason-
able attorneys' fees and court costs, incurred in the collection or enforcement
of all or any part of this Note in which the holder hereof is the prevailing
party. In the event of any court proceedings, court costs and attorneys' fees
<PAGE>
shall be set by the court and not by jury and shall be included in any judgment
obtained by the holder hereof.
Failure of the holder to exercise any option hereunder shall not constitute
a waiver of the right to exercise same in the event of any subsequent default,
or in the event of continuance of any existing default after demand for strict
performance hereof.
This Note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of the payee hereof, and any subsequent holders of
this Note, and their successors and assigns.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized corporate agent as of the day and year first above written.
BURR-BROWN CORPORATION,
a Delaware corporation
By
Its
Maker's Tax Identification Number: 86-0445468
-2-
<PAGE>
EXHIBIT C
TO
LOAN AGREEMENT
MATTERS TO BE COVERED BY THE LEGAL OPINION OF
BORROWER'S COUNSEL
1. The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has all corporate
power and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
2. Each Subsidiary identified in Schedule 7.7 of the Loan Agreement is
a corporation duly incorporated, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, and has all corporate power
and all material governmental licenses, authorizations, consents and approvals
to carry on its business as now conducted.
3. The execution, delivery and performance by the Borrower of the Loan
Documents are within Borrower's corporate power, have been duly authorized by
all necessary corporate action, and require no action by or in respect of, or
filing with, any Governmental Authority and neither the execution and delivery
thereof nor the consummation of the transactions contemplated thereby nor com-
pliance by the Borrower with any, nor the Borrower's performance of all, of the
terms and provisions of the Loan Documents will contravene any Law applicable
to it or conflict with, result in any breach of, or constitute any default
under, its certificate of incorporation or by-laws (both as amended to date) or
conflict with, result in any breach of, or constitute default under, or result
in the creation of a Lien under, or require the consent of any trustee or
creditor pursuant to, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, bank loan or credit agreement to which the
Borrower is a party or by which it or its assets are bound, known to us.
4. Each Loan Document has been duly authorized and delivered by the
Borrower, and is the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency or other laws or
equitable principles of general application relating to the enforcement of
creditors' rights.
5. To the best knowledge of such counsel after due inquiry, there are no
actions, suits or proceedings pending or threatened in any court or before any
regulatory commission, board or other administrative or other governmental
<PAGE>
entity against or affecting the Borrower which could reasonably be expected to
have a material adverse effect on its ability to enter into or perform its
obligations under any of the Loan Documents or on the condition (financial or
otherwise), operations, business or prospects of the Borrower, except those
described in the Borrower's report on Form 10-K for its most recently completed
fiscal year ended December 31 delivered to the Banks.
6. No consent, approval, waiver, license or authorization or other action
by or filing with any governmental authority is required in connection with the
execution and delivery by the Borrower of any Loan Documents to which it is a
party except for those which have already been obtained and are in full force
and effect.
7. The Borrower is not an "investment company" nor a company "controlled"
by an "investment company", within the meaning of the Investment Company Action
of 1940, as amended.
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<PAGE>
EXHIBIT D
TO
LOAN AGREEMENT
PERMITTED LIENS
Financing Statements filed with the Arizona Secretary of State as follows:
FILING DATE FILE NUMBER SECURED PARTY
___________ ___________ ___________________________
02-05-88 517397 Hewlett-Packard Co.
02-05-88 517398 Hewlett-Packard Co.
02-05-88 517399 Hewlett-Packard Co.
02-05-88 517401 Hewlett-Packard Co.
03-10-88 521727 Airnetics Engineering
03-21-88 522939 Dana Commercial Credit
02-09-89 564331 Hewlett-Packard Co.
04-17-89 572805 Hewlett-Packard Co.
07-11-90 628294 Ellco leasing Corporation
07-11-90 628295 Ellco Leasing Corporation
09-05-91 678173 Hewlett-Packard Co.
10-23-91 683136 Airnetics Engineering
01-15-92 691754 Xerox Corporation
01-15-92 691755 Xerox Corporation
01-15-92 691757 Xerox Corporation
01-15-92 691758 Xerox Corporation
09-03-92 716920 AT&T Commercial Finance
09-03-92 716921 AT&T Commercial Finance
09-17-92 718302 AT&T Commercial Finance (1)
02-04-91 91019122 Orix Credit Alliance Inc.
04-25-94 783970 Amplicon, Inc. (2)
08-05-88 540820 Norwest Bank Arizona, NA (3)
--------------
(1) Any liens arising out of the AT&T Documents, as defined in the Loan
Agreement
(2) Power Convertibles Corporation as debtor, Venture of Burr-Brown
Corporation
(3) Power Convertibles Corporation as debtor, Venture of Burr-Brown
Corporation
<PAGE>
EXHIBIT E
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into as
of this _____ day of _____________, 1994, by BURR-BROWN CORPORATION, a Delaware
corporation, and its subsidiaries identified on the signature page(s) hereof
(hereinafter severally and collectively called "Debtor"), whose common chief
executive office is located at 6730 South Tucson Boulevard, Tucson, Arizona
85706, in favor of FIRST INTERSTATE BANK OF ARIZONA, N.A. ("First Interstate"),
as agent for the benefit of the "Banks" (as defined below) (First Interstate,
acting in the capacity of agent for the Banks, or any successor agent duly
appointed under the provisions of the Loan Agreement described below, is herein
called the "Agent"). First Interstate's mailing address is 100 West Washington,
Corporate Banking Division #741, Phoenix, Arizona 85003, and is an address to
which inquiries regarding the security interests created under this Agreement
may be sent.
RECITALS
The Debtor, the banks party thereto (together with any lenders that subse-
quently become parties thereto, the "Banks") and the Agent (in its capacity as
agent under the Loan Agreement referred to hereinafter) have entered into a Loan
Agreement dated as of ____________, 1994 (as the same may be amended or modified
from time to time, the "Loan Agreement"), providing for a revolving credit
facility pursuant to which the Banks may make certain loans to the Debtor.
AGREEMENT
NOW, THEREFORE, in consideration of the benefits accruing to the Debtor
from the transactions described above, the receipt and sufficiency of which are
hereby acknowledged, the Debtor hereby makes the following representations and
warranties and agrees as follows:
1. DEFINITIONS.
Except as otherwise defined herein, capitalized terms used herein shall
have the respective meanings set forth or referred to in Annex "I" to the Loan
Agreement.
2. SECURITY INTEREST.
2.1 As security for the due and punctual payment of the Obligations, but
subject to Section 2.2 below, Debtor hereby assigns to Agent, for the benefit
of the Banks, and hereby creates in and grants to the Agent, for the benefit of
<PAGE>
the Banks, a continuing security interest (hereinafter the foregoing security
assignment and grant of security interests are severally and collectively called
the "Security Interest") in all of the property described below in, to or under
which the Debtor now has or hereafter acquires any right, title or interest,
whether present, future or contingent, and in the Debtor's expectancy to acquire
such property (all of such property, property rights and interests herein
severally and collectively called the "Collateral"):
(a) All accounts, general intangibles (excluding trademarks,
patents and all other intellectual property rights), instruments, documents
and chattel paper now existing or hereafter arising or acquired from time
to time in the course of the Debtor's business as now or hereafter con-
ducted, including all accounts receivable, notes, drafts, lease agreements
and security agreements, and all goods, if any, represented thereby;
(b) All inventory now owned or hereafter arising or acquired,
including all goods held for sale or lease in the Debtor's business, as now
or hereafter conducted, and all materials, work in process and finished
goods used or to be consumed in the Debtor's business (whether or not the
Debtor holds legal title thereto or whether any such inventory is repre-
sented by warehouse receipts or bills of lading or has been or may be
placed in transit or delivered to a public warehouse) (collectively, the
"Inventory");
(c) All rights as unpaid seller or lienor that arise in connection
with any of the foregoing, including the rights of replevin, reclamation
and toppage in transit, and the right to sue or file mechanics' or mater-
ialmen's liens in the name of Debtor or otherwise for the unpaid balances
due thereunder;
(d) All policies or certificates of insurance covering any of the
Collateral, all contracts, agreements or rights of indemnification,
guaranty or surety relating to any of the Collateral, and all claims,
awards, loss payments, proceeds and premium refunds that may become payable
with respect to any such policies, certificates, contracts, agreements or
rights;
(e) All ledger cards, invoices, delivery receipts, worksheets,
books of accounts, statements, correspondence, customer lists, files,
journals, ledgers and records in any form, written or otherwise, related
to any of the Collateral;
(f) All claims for loss or damage to or in connection with any of
the Collateral, all other claims in any form for the payment of money
relating to or arising in connection with the Collateral;
(g) All accessions to any of the Collateral;
-2-
<PAGE>
(h) All products and proceeds of the Collateral, in any form,
including all proceeds received, due or to become due from any sale,
exchange or other disposition of any of the Collateral, whether such
proceeds are cash or noncash in nature or are represented by checks,
drafts, notes or other instruments for the payment of money; and
(i) All property that is now or at any time hereafter may be in
the Agent's possession or control in any capacity, including without
limitation all money owed or that becomes owed to Debtor and all money
deposited for the account of Debtor.
The Debtor will from time to time, whenever a Default exists, upon
request of the Agent, endorse and deliver to the Agent any draft, check,
note or other writing that evidences a right to the payment of money which
constitutes Collateral.
The Security Interest is granted as security only, and shall not subject the
Agent or any Bank to, or transfer or in any respect affect or modify, any
obligation or liability of the Debtor with respect to any of the Collateral or
any transaction which gave rise thereto.
2.2 Notwithstanding the provisions of Section 2.1 above and Section 3.9
below, the Security Interest shall not attach to the Collateral (and conse-
quently shall not be perfected) until and unless a Default shall have occurred.
Upon the occurrence of a Default, however, the Security Interest shall automat-
ically attach to each and every item of Collateral without any requirement for
action by any Person.
2.3 In the event that the Security Interest shall have attached pursuant
to Section 2.2 hereinabove, and thereafter all Defaults at any time existing
shall have been cured PRIOR to either (i) the earlier of the Termination Date
or the date of the exercise by Required Banks of their right to declare the
Revolving Credit Commitments terminated under subsection 10.1 of the Loan Agree-
ment or (ii) the earlier of the Term Loan Maturity Date or the exercise of the
right of Banks to declare the Term Loans immediately due and payable under sub-
section 10.1 of the Loan Agreement, then within three (3) Business Days after
Agent's actual receipt of Debtor's written request therefor, Agent (on behalf
of the Banks) shall issue to Debtor a written release of the attachment of the
Security Interest to the Collateral. Such release shall evidence only that the
Security Interest is no longer attached to the Collateral, and shall not other-
wise affect the grant of the Security Interest under Section 2.1 hereinabove or
any other provision of this Security Agreement.
2.4 Within three (3) Business Days after actual receipt of a written
request therefor from Debtor, Agent shall issue a statement to Debtor or as
Debtor shall direct confirming whether or not, as of the date of the statement,
-3-
<PAGE>
the Security Interest has attached to the Collateral. Such statement shall be
in a form from time to time reasonably satisfactory to Debtor and Agent.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Debtor hereby represents, warrants and agrees that:
3.1 Debtor is, and will at all times be, the lawful owner (but, with
respect to Inventory, not necessarily the titleholder) of the Collateral which
is and at all times shall be free of all security interests or other encum-
brances except the Security Interest and any Liens to which the Agent has con-
sented in writing, and no financing statement covering the Collateral is filed
or recorded in any public office other than any which may have been filed on
behalf of the Agent. Debtor has full legal right to grant the Security Interest
in the Collateral.
3.2 Each account, chattel paper or general intangible included in the
Collateral is genuine and enforceable in accordance with its terms against the
party named therein who is obligated to pay the same (herein called "Obligor")
and the security interests that are part of each item of chattel paper included
in the Collateral are valid, first and prior perfected security interests. The
amount that Debtor has represented to the Banks as owing by each Obligor is the
amount actually and unconditionally owing by that Obligor, without deduction
except for normal cash discounts where applicable; no Obligor has any defense,
set-off, claim or counterclaim against Debtor that can be asserted against the
Agent or the Banks whether in any proceeding to enforce the Security Interest
or otherwise.
3.3 All portions of the Debtor's Inventory held on the date hereof in
the United States by the Debtor are located at one of the locations shown with
respect to the Debtor on Annex A. The Debtor agrees that all portions of the
Debtor's Inventory now held or subsequently acquired by the Debtor and which are
held in the United States shall be kept at (or at the time of Debtor's acquisi-
tion thereof shall be in transit to) one or more of the locations shown on Annex
A or such new location as the Debtor may hereafter establish, provided that
Debtor shall give written notice to the Agent within thirty (30) days after the
establishment of each such new location, identifying the full street address and
county of such location, and provided further that each such notice shall cons-
titute a modification of said Annex A.
3.4 Debtor shall not sell, transfer, assign or otherwise dispose of any
Collateral or any interest therein (except as permitted herein) without obtain-
ing the prior written consent of the Agent and, unless the Agent shall otherwise
agree in writing, shall keep the Collateral free of all security interests or
other encumbrances except the Security Interest. The Debtor will not sell or
offer to sell or otherwise assign, transfer or dispose of any of the Collateral
or any interest therein, except the Debtor may sell Inventory in the ordinary
-4-
<PAGE>
course of its business, and may otherwise deal with its property as and to the
extent permitted under the Loan Agreement.
3.5 The Debtor will at all times have and maintain insurance with
respect to the Collateral in accordance with the terms and conditions of the
Loan Agreement. All such insurance policies covering losses to the Collateral
shall name the Agent as a loss payee and shall be payable to the Agent for the
benefit of the Banks as its and their interests may appear. All policies of
insurance shall provide for a minimum of thirty (30) days' written notice to the
Agent prior to any cancellation, modification or non-renewal hereof. The Debtor
shall furnish the Agent with certificates or other evidence satisfactory to the
Agent of compliance with the foregoing insurance provisions.
3.6 The chief executive office of the Debtor is located at 6730 South
Tucson Boulevard, Tucson, Arizona 85706. All accounts (including, without
limitation, accounts receivable) of the Debtor are, and will continue to be,
maintained at, and controlled and directed from, the location of the chief
executive office of the Debtor. Debtor shall give the Agent at least 30 days'
prior written notice of any change in the location of: (i) Debtor's chief
executive office; (ii) the Collateral or any part thereof, if moved to a
location other than as listed on Annex "A" hereto; or (iii) Debtor's records
concerning the Collateral.
3.7 The Agent or any persons designated by it may inspect the Collateral
and the books and records of the Debtor relating to the Collateral at reasonable
times and may enter into any premises where the Collateral is or may be located.
Debtor shall keep records concerning the Collateral in accordance with generally
accepted accounting principles. The Agent, or persons designated by it, shall
have free and complete access to Debtor's records relating to the Collateral and
shall have the right to make extracts therefrom or copies thereof. Upon request
of the Agent from time to time, Debtor shall submit up-to-date schedules of the
items comprising the Collateral in such detail as the Agent may require and
shall deliver to the Agent confirming specific assignments of all accounts,
instruments, documents and chattel paper included in the Collateral.
3.8 Debtor, at its cost and expense, shall protect and defend this
Agreement, all of the rights of the Agent hereunder, and the Collateral against
all claims and demands of other parties, including without limitation defenses,
set-offs, claims and counterclaims asserted by any Obligor against Debtor and/or
the Agent. Debtor shall pay all claims and charges that in the commercially
reasonable opinion of the Agent are likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interest. Debtor shall promptly notify
the Agent of any levy, distraint or other seizure by legal process or otherwise
of any part of the Collateral and of any threatened or filed claims or proceed-
ings that are likely in any way materially to affect or impair the terms of this
Agreement.
3.9 Subject to Section 2.2 hereof, the Security Interest at all times
shall be perfected (unless perfection may be had only by actual possession) and
-5-
<PAGE>
shall be prior to any other interests in the Collateral, other than the Per-
mitted Liens. Upon and at all times during the continuance of any Default,
Debtor shall act and perform as necessary and shall execute and file all
security agreements, financing statements, continuation statements and other
documents reasonably requested by the Agent to establish, maintain and continue
the perfected Security Interest. Debtor, on demand, shall promptly pay all
costs and expenses of filing and recording, including the costs of any searches,
deemed necessary by the Agent from time to time to establish and determine the
validity and the continuing priority of the Security Interest from the time it
shall attach to the Collateral pursuant to Section 2. herein until (and unless)
it is released pursuant to Section 2.3 herein.
3.10 All rights, powers and remedies granted the Agent herein, or other-
wise available to the Agent, are for the sole benefit and protection of the
Agent and the Banks, and the Agent may exercise any such right, power or remedy
at its option and in its sole and absolute discretion without any obligation to
do so, subject to the terms of the Loan Agreement, as applicable. In addition,
if under the terms hereof, the Agent is given two or more alternative courses
of action, the Agent (as between Agent and Debtor) may elect any alternative or
combination of alternatives at its option and in its sole and absolute discre-
tion. All amounts paid, suffered or incurred by the Agent in exercising any
authority granted herein, including reasonable attorneys' fees, shall be added
to the Obligations, shall be secured by the Security Interest, shall bear
interest at the highest rate payable on any of the Obligations until paid, and
shall be due and payable by Debtor to the Agent immediately upon demand.
4. NOTIFICATION AND PAYMENTS; COLLECTION OF COLLATERAL; USE OF COLLATERAL BY
DEBTOR.
4.1 The Agent, after the occurrence of any Event of Default, and without
notice to Debtor except as specified in the next following sentence, may notify
any or all Obligors of the existence of the Security Interest and may direct the
Obligors to make all payments on the Collateral to the Agent. Agent shall give
notice to borrower of its election to exercise its rights under the preceding
sentence contemporaneously with the issuance of the first such notice to any
Obligor. Until the Agent has notified the Obligors to remit payments directly
to it, Debtor, at Debtor's own cost and expense, shall collect or cause to be
collected the accounts and moneys due under the accounts, documents, instruments
and general intangibles or pursuant to the terms of the chattel paper which are
part of the Collateral. The Agent shall not be liable or responsible for any
embezzlement, conversion, negligence or default by Debtor or Debtor's agents
with respect to such collections; all agents used in such collections shall be
agents of Debtor and not agents of the Agent. Unless the Agent notifies Debtor
in writing that it waives one or more of the requirements set forth in this
sentence, at all times after the occurrence of an Event of Default any payments
or other proceeds of Collateral received by Debtor, before or after notification
to Obligors, shall be held by Debtor in trust for the Agent, for the benefit of
the Banks, in the same for in which received, properly endorsed, shall not be
-6-
<PAGE>
commingled with any assets of Debtor and shall be remitted to the Agent, for the
benefit of the Banks.
4.2 The Agent, after the occurrence of an Event of Default and without
notice to Debtor, may demand, collect and sue on the Collateral (either in
Debtor's or the Agent's name), enforce, compromise, settle or discharge the
Collateral and endorse Debtor's name on any instruments, documents, or chattel
paper included in or pertaining to the Collateral; Debtor hereby absolutely and
irrevocably constitutes and appoints the Agent its attorney-in-fact, with full
power of substitution, for all such purposes.
4.3 Until the occurrence of an Event of Default, Debtor may: (i) use,
consume and sell any inventory included in the Collateral in any lawful manner
in the ordinary course of Debtor's business provided that all sales shall be at
commercially reasonable prices; and (ii) subject to paragraphs 3.1 and 3.2
above, retain possession of any other Collateral and use it in any lawful manner
not inconsistent with this Agreement.
5. COLLATERAL IN THE POSSESSION OF SECURED PARTY.
5.1 The Agent shall use such reasonable care in handling, preserving and
protecting the Collateral in its possession as it uses in handling similar
property for its own account. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as the Debtor requests in
writing, but failure of the Agent to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of the
Agent to preserve or protect any rights with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such Collat-
eral not so requested by the Debtor, shall be deemed a failure to exercise rea-
sonable care in the custody or preservation of such Collateral. The Agent shall
also be deemed to have exercised reasonable care in the custody and preservation
of any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Agent accords its own property of like
kind. The Agent, however, shall have no liability for the loss, destruction or
disappearance of any Collateral unless there is affirmative proof of a lack of
due care; the lack of due care shall not be implied solely by virtue of any
loss, destruction or disappearance.
5.2 Debtor shall be solely responsible for taking any and all actions
to preserve rights against all Obligors; the Agent shall not be obligated to
take any such actions whether or not the Collateral is in its possession. Debtor
waives presentment and protest with respect to any instrument included in the
Collateral on which Debtor is in any way liable and waives notice of any action
taken by the Agent with respect to any instrument, document or chattel paper
included in any Collateral that is in the possession of the Agent.
-7-
<PAGE>
6. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
If an Event of Default shall have occurred and be continuing and not been
waived by the Agent in writing, the Agent shall have the right to exercise, for
the benefit of the Banks, any and all rights and remedies available to it under
the Uniform Commercial Code as in effect in the State of Arizona and any other
applicable law to the fullest extent permitted thereby. Without limiting the
foregoing, upon the occurrence of an Event of Default and during the continuance
thereof, the Agent (acting in good faith and in a commercially reasonable
manner) may exercise any of the following rights and remedies: (i) the right,
in the name of the Debtor or otherwise, to demand, collect, receive and receipt
for payment of any or all of the Collateral or to compound, compromise, settle
and give acquittance for, prosecute or discontinue any suits or proceedings in
respect of any or all of the Collateral; (ii) the right to require the Debtor
to, and the Debtor hereby agrees that it will at its expense and upon request
of the Agent forthwith, assemble all or part of the Collateral as directed by
the Agent and make it available to the Agent at a place to be designated by the
Agent that is reasonably convenient to both the Agent and the Debtor; (iii)
without notice except as specified below, the right to sell the Collateral or
any part thereof in one or more parcels at public or private sale. at any of
the Agent's offices or elsewhere, for cash, on credit, or for future delivery,
and upon such other terms as the Agent may reasonably believe are commercially
reasonable; (iv) the right to occupy any premises owned or leased by the Debtor
where the Collateral or any part thereof or any books and records relating
thereto is assembled for a reasonable period in order to effectuate the Agent's
rights and remedies hereunder or under law, without obligation to compensate the
Debtor for such occupation; (v) the right to take any action which the Agent may
reasonably deem necessary or desirable in order to realize on the Collateral,
including, without limitation, the power to endorse in the name of the Debtor
without recourse to the Debtor any checks, drafts, notes or other instruments
or documents received in payment of or on account of the Collateral; and (vi)
the right to exercise any and all rights and remedies of the Debtor under or in
connection with the Collateral.
6.1 Any demand or notice of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the Uniform Commercial
Code or otherwise, shall be deemed to be commercially reasonable and effective
if such demand or notice is given to the Debtor at least five (5) Business Days
prior to such sale, disposition or other intended action, in the manner provided
herein for the giving of notices.
6.2 Debtor shall pay all costs and expenses, including without limit-
ation costs of Uniform Commercial Code searches, court costs and reasonable
attorneys' fees, incurred by the Agent in enforcing payment and performance of
the Obligations or in exercising the rights and remedies of the Agent hereunder.
All such costs and expenses shall be secured by this Security Agreement and by
all deeds of trust and other lien and security documents securing the Obliga-
tions. In the event of any court proceedings, court costs and attorneys' fees
-8-
<PAGE>
shall be set by the court and not by jury and shall be included in any judgment
obtained by the Agent.
6.3 No failure on the part of the Agent to exercise any of its rights
hereunder arising upon any Event of Default shall be construed to prejudice its
rights hereunder upon the occurrence of any other or subsequent Event of
Default. No delay on the part of the Agent in exercising any such rights shall
be construed to preclude it from the exercise thereof at any time during the
continuance of that Event of Default. The Agent may enforce any one or more
rights or remedies hereunder successively or concurrently. By accepting payment
or performance of any of the Obligations or any part thereof after its due date,
the Agent shall not thereby waive either its right to require prompt payment or
performance when due of the remainder of the Obligations or any part thereof or
its right to consider the failure to so pay or perform an Event of Default.
6.4 Any proceeds of any disposition of any of the Collateral, including
without limitation the appropriation or application of any and all balances,
credits, deposits, accounts or moneys received by the Agent shall be applied by
the Agent to the payment and/or prepayment of the Obligations in accordance with
the provisions of the Loan Agreement.
The balance (if any) of such proceeds shall be paid to the Debtor, its
successors or assigns, or as a court of competent jurisdiction may direct, pro-
vided, that if such proceeds are not sufficient to satisfy the Obligations in
full, the Debtor shall remain liable to the Agent and the Banks for any
deficiency.
7. MISCELLANEOUS PROVISIONS.
7.1 All notices, requests and demands required or permitted to be given
hereunder shall or relating hereto shall be given to the parties at their res-
pective addresses set forth in the Loan Agreement. All notices, requests and
demands given or made in accordance with the provisions of this Security Agree-
ment or any other statement, instrument or transaction contemplated hereby or
relating hereto shall be given by one or more of the means specified for the
giving of notices the Loan Agreement and, upon being so given, shall be deemed
to have been given as of the earliest time specified in the Loan Agreement for
the means so used.
7.2 This Security Agreement shall be binding and inure to the benefit
of the Debtor and the Agent and their respective successors and assigns, except
that the Debtor may not assign or transfer any of its rights or obligation under
this Security Agreement without the prior written consent of the Banks.
7.3 No failure on the part of the Agent to exercise, and no delay in
exercising, any remedy, right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
-9-
<PAGE>
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege, and no waiver what-
ever shall be valid unless in writing signed by the Agent and the Debtor and
then only to the extent specifically set forth in such writing.
7.4 All remedies, rights, power and privileges, either under this
Security Agreement, the other Loan Documents, by law or otherwise, afforded the
Agent or any Lender shall be cumulative and not be exclusive of any remedies,
rights, power and privileges provided by law and shall be available until the
Obligations have been paid in full in lawful money of the United States of
America. All such remedies may be exercised in any order of priority.
7.5 This Security Agreement shall terminate when all of the Obligations
shall have been paid in full and the Revolving Credit Commitments shall have
been terminated ("Full Satisfaction") at which time the Agent shall reassign,
release and/or deliver to the Debtor the Collateral and proceeds thereof in
which the Agent shall have an interest hereunder. Upon request of the Debtor
after Full Satisfaction, the Agent shall execute and deliver termination state-
ments to the Debtor for filing in each office in which a financing statement has
been filed by the Agent, all without recourse to or warranty by the Agent or the
Banks and at the cost and expense of the Debtor; PROVIDED, HOWEVER, that this
Security Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is rescinded or
must otherwise be returned by the Agent or any Lender or any other Person upon
the insolvency, bankruptcy, or reorganization of the Debtor or otherwise, all
as though such payment had not been made.
7.6 All representations, warranties and covenants made by the Debtor to
the Agent or the Banks in connection with this Security Agreement shall survive
the execution and delivery of this Security Agreement. All statements contained
in any certificate or other instrument delivered to the Agent or the Banks
pursuant to this Security Agreement shall be deemed representations, warranties
and covenants hereunder of the Debtor.
7.7 All reports, schedules, assignments, certificates and other items
delivered to the Agent or the Banks pursuant to this Security Agreement or any
other statement, instrument or transaction contemplated thereby or relating
thereto and all endorsements in connection therewith, shall be executed by an
authorized representative of the Debtor and shall be in form and substance
satisfactory to the Agent.
7.8 Section headings in this Security Agreement are for convenience in
reference only, and shall not govern the interpretation of any of the provisions
of this Security Agreement.
7.9 This Security Agreement may be executed in any number of counter-
parts, all of which taken together shall constitute one and the same instrument
and either of the parties hereto may execute this Security Agreement by signing
any such counterpart.
-10-
<PAGE>
7.10 Governing Law; Construction; Consent to Jurisdiction; Waiver of
Trial by Jury:
(a) This Security Agreement shall be construed in accordance with
and governed by the law of the State of Arizona, without giving effect to
the choice of law provisions thereof but giving effect to federal laws
applicable to national banks.
(b) Whenever possible, each provision of this Security Agreement and
any other statement, instrument or transaction contemplated thereby or
relating thereto shall be interpreted in such manner as to be effective and
valid under such applicable law, but, if any provision of this Security
Agreement or any other statement, instrument or transaction contemplated
thereby or relating thereto shall be held to be prohibited or invalid under
such applicable law, such provision call be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Security Agreement or
any other statement, instrument or transaction contemplated thereby or
relating thereto and shall not affect the enforceability of such provision
in any other jurisdiction. In the event of any conflict within, between
or among the provisions of this Security Agreement or any other statement,
instrument or transaction contemplated thereby or relating thereto those
provisions giving the Agent the greater right shall govern.
(c) Any suit, action or proceeding against Debtor with respect to
this Security Agreement or any judgment entered by any court in respect
thereof, may be brought in any of the courts of the State of Arizona,
County of Maricopa or Pima County, or in the United States courts located
in the State of Arizona as the Agent in its sole discretion may elect, and
Debtor hereby submits to the nonexclusive jurisdiction of such courts for
the purpose of any such suit, action or proceeding. Debtor hereby
irrevocably waives any objections which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to this Security Agreement brought in any of the courts located
in the State of Arizona, County of Maricopa or Pima County. DEBTOR AND THE
AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHER-
-11-
<PAGE>
WISE) ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOf, the parties hereto have caused this Security Agreement
to be executed as of the date first above written.
BURR-BROWN CORPORATION, a Delaware
corporation
By
Its
THE ATTACHED "SUBSIDIARIES
SIGNATURE PAGE" IS BY THIS
REFERENCE INCORPORATED HEREIN AS
IF FULLY SET FORTH AT THIS POINT
Severally and collectively, "Debtor"
FIRST INTERSTATE BANK OF ARIZONA,
N.A., as Agent
By
Its
-12-
<PAGE>
SUBSIDIARIES SIGNATURE PAGE
[THIS PAGE INTENTIONALLY LEFT BLANK]
-13-
<PAGE>
ANNEX A
TO
SECURITY AGREEMENT
SCHEDULE OF INVENTORY LOCATIONS
ARIZONA:
Burr-Brown Corporation
6730 South Tucson Boulevard
Tucson, Arizona 85706
CALIFORNIA:
Emanuelle Equipment
214 Commercial Street
Sunnyvale, California 94086
Semiconductor Technology
3045 Alfred Street
Santa Clara, California 94086
Disco Hi-Tech America Inc.
3395 Woodward Avenue
Santa Clara, California 95054
WISCONSIN:
Specialty Coating, Inc.
100 Deposition Drive
Clear Lake, Wisconsin 54005
-14-
EXHIBIT 10.32
REVOLVING CREDIT NOTE
$7,500,000.00 July 25, 1994
Phoenix, Arizona
FOR VALUE RECEIVED, BURR-BROWN CORPORATION, a Delaware corporation
(hereinafter called "Maker"), hereby promises to pay to the order of FIRST
INTERSTATE BANK OF ARIZONA, N.A. (the "Bank"), at the main office of First
Interstate Bank of Arizona, N.A., at 100 West Washington, Phoenix, Arizona
85003 (Attention: Corporate Banking Division, #741), in Dollars in
immediately available funds, the principal sum of SEVEN MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($7,500,000.00) or the aggregate unpaid principal
amount of all Advances (as such term and each other capitalized term used
herein are defined in the Loan Agreement hereinafter referred to) made by the
Bank pursuant to the Loan Agreement, whichever is less, and to pay interest
in like funds from the date hereof on the unpaid balance thereof at the rates
of interest per annum and at the times specified in the Loan Agreement.
Principal hereof shall be payable in the amounts and at the times set
forth in the Loan Agreement.
This note is one of the Revolving Credit Notes referred to in that
certain Loan Agreement dated July 25, 1994, among Maker, the banks party
thereto (together with any Banks that subsequently become parties thereto,
the "Banks") and First Interstate Bank of Arizona, N.A., as agent for the
Banks (as the same may be amended, modified or restated from time to time,
the "Loan Agreement"). All of the terms, conditions and covenants of the
Loan Agreement are expressly made a part of this Note by reference in the
same manner and with the same effect as if set forth herein at length and any
holder of this Note is entitled to the benefits of and remedies provided in
the Loan Agreement and any other agreements by and between Maker and Bank.
Reference is made to the Loan Agreement for the maturity, payment, prepayment
and acceleration of the indebtedness evidenced hereby.
After maturity, including maturity upon acceleration, all unpaid amounts
of this Note shall bear interest at that rate that is three percent (3%)
above the Prime Rate. Maker agrees to pay all collection expenses, including
reasonable attorneys' fees and court costs, incurred in the collection or
enforcement of all or any part of this Note in which the holder hereof is the
prevailing party. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by jury and shall be
included in any judgment obtained by the holder hereof.
<PAGE>
Failure of the holder to exercise any option hereunder shall not consti-
tute a waiver of the right to exercise same in the event of any subsequent
default, or in the event of continuance of any existing default after demand
for strict performance hereof.
This Note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of the payee hereof, and any subsequent holders
of this Note, and their successors and assigns.
This Note shall be governed by and construed according to the laws of
the State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its
duly authorized corporate agent as of the day and year first above written.
BURR-BROWN CORPORATION
a Delaware corporation
By: John L. Carter (signature on file)
Its Executive VP and CFO
Maker's Tax Identification Number: 86-0445468
EXHIBIT 10.33
REVOLVING CREDIT NOTE
$7,500,000.00 July 25, 1994
Phoenix, Arizona
FOR VALUE RECEIVED, BURR-BROWN CORPORATION, a Delaware corporation
(hereinafter called "Maker"), hereby promises to pay to the order of BANK ONE,
ARIZONA, NA (the "Bank"), at the main office of First Interstate Bank of
Arizona, N.A., at 100 West Washington, Phoenix, Arizona 85003 (Attention:
Corporate Banking Division, #741), in Dollars in immediately available funds,
the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($7,500,000.00) or the aggregate unpaid principal amount of all Advances (as
such term and each other capitalized term used herein are defined in the Loan
Agreement hereinafter referred to) made by the Bank pursuant to the Loan
Agreement, whichever is less, and to pay interest in like funds from the date
hereof on the unpaid balance thereof at the rates of interest per annum and
at the times specified in the Loan Agreement.
Principal hereof shall be payable in the amounts and at the times set
forth in the Loan Agreement.
This note is one of the Revolving Credit Notes referred to in that
certain Loan Agreement dated July 25, 1994, among Maker, the banks party
thereto (together with any Banks that subsequently become parties thereto, the
"Banks") and First Interstate Bank of Arizona, N.A., as agent for the Banks
(as the same may be amended, modified or restated from time to time, the "Loan
Agreement"). All of the terms, conditions and covenants of the Loan Agreement
are expressly made a part of this Note by reference in the same manner and
with the same effect as if set forth herein at length and any holder of this
Note is entitled to the benefits of and remedies provided in the Loan
Agreement and any other agreements by and between Maker and Bank. Reference
is made to the Loan Agreement for the maturity, payment, prepayment and
acceleration of the indebtedness evidenced hereby.
After maturity, including maturity upon acceleration, all unpaid amounts
of this Note shall bear interest at that rate that is three percent (3%) above
the Prime Rate. Maker agrees to pay all collection expenses, including
reasonable attorneys' fees and court costs, incurred in the collection or
enforcement of all or any part of this Note in which the holder hereof is the
prevailing party. In the event of any court proceedings, court costs and
attorneys' fees shall be set by the court and not by jury and shall be
included in any judgment obtained by the holder hereof.
<PAGE>
Failure of the holder to exercise any option hereunder shall not consti-
tute a waiver of the right to exercise same in the event of any subsequent
default, or in the event of continuance of any existing default after demand
for strict performance hereof.
This Note is entitled to the benefit of the Security Agreement and the
other Loan Documents.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of the payee hereof, and any subsequent holders of
this Note, and their successors and assigns.
This Note shall be governed by and construed according to the laws of the
State of Arizona.
IN WITNESS WHEREOF, Maker has caused this Note to be executed by its duly
authorized corporate agent as of the day and year first above written.
BURR-BROWN CORPORATION
a Delaware corporation
By: John L. Carter (signature on file)
Its Executive Vice President and CFO
Maker's Tax Identification Number: 86-0445468
EXHIBIT 10.34
SECURITY AGREEMENT
__________________
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into as
of this 29th day of July, 1994, by BURR-BROWN CORPORATION, a Delaware corpor-
ation, and its subsidiaries identified on the signature page(s) hereof
(hereinafter severally and collectively called "Debtor"), whose common chief
executive office is located at 6730 South Tucson Boulevard, Tucson, Arizona
85706, in favor of FIRST INTERSTATE BANK OF ARIZONA, N.A. ("First Inter-
state"), as agent for the benefit of the "Banks" (as defined below) (First
Interstate, acting in the capacity of agent for the Banks, or any successor
agent duly appointed under the provisions of the Loan Agreement described
below, is herein called the "Agent"). First Interstate's mailing address is
100 West Washington, Corporate Banking Division #741, Phoenix, Arizona 85003,
and is an address to which inquiries regarding the security interests created
under this Agreement may be sent.
RECITALS
The Debtor, the banks party thereto (together with any lenders that
subsequently become parties thereto, the "Banks") and the Agent (in its
capacity as agent under the Loan Agreement referred to hereinafter) have
entered into a Loan Agreement dated as of July 25, 1994 (as the same may be
amended or modified from time to time, the "Loan Agreement"), providing for
a revolving credit facility pursuant to which the Banks may make certain
loans to the Debtor.
AGREEMENT
NOW, THEREFORE, in consideration of the benefits accruing to the Debtor
from the transactions described above, the receipt and sufficiency of which
are hereby acknowledged, the Debtor hereby makes the following representa-
tions and warranties and agrees as follows:
1. DEFINITIONS.
Except as otherwise defined herein, capitalized terms used herein shall
have the respective meanings set forth or referred to in Annex "I" to the
Loan Agreement.
2. SECURITY INTEREST.
2.1 As security for the due and punctual payment of the Obligations,
but subject to Section 2.2 below, Debtor hereby assigns to Agent, for the
benefit of the Banks, and hereby creates in and grants to the Agent, for the
benefit of the Banks, a continuing security interest (hereinafter the fore-
going security assignment and grant of security interests are severally and
<PAGE>
collectively called the "Security Interest") in all of the property described
below in, to or under which the Debtor now has or hereafter acquires any
right, title or interest, whether present, future or contingent, and in the
Debtor's expectancy to acquire such property (all of such property, property
rights and interests herein severally and collectively called the
"Collateral"):
(a) All accounts, general intangibles (excluding trademarks,
patents and all other intellectual property rights), instruments,
documents and chattel paper now existing or hereafter arising or
acquired from time to time in the course of the Debtor's business as now
or hereafter conducted, including all accounts receivable, notes,
drafts, lease agreements and security agreements, and all goods, if any,
represented thereby;
(b) All inventory now owned or hereafter arising or acquired,
including all goods held for sale or lease in the Debtor's business, as
now or hereafter conducted, and all materials, work in process and
finished goods used or to be consumed in the Debtor's business (whether
or not the Debtor holds legal title thereto or whether any such
inventory is represented by warehouse receipts or bills of lading or has
been or may be placed in transit or delivered to a public warehouse)
(collectively, the "Inventory"):
(c) All rights as unpaid seller or lienor that arise in connection
with any of the foregoing, including the rights of replevin, reclamation
and stoppage in transit, and the right to sue or file mechanics' or
materialmen's liens in the name of Debtor or otherwise for the unpaid
balances due thereunder:
(d) All policies or certificates of insurance covering any of the
Collateral, all contracts, agreements or rights of indemnification,
guaranty or surety relating to any of the Collateral, and all claims,
awards, loss payments, proceeds and premium refunds that may become
payable with respect to any such policies, certificates, contracts,
agreements or rights;
(e) All ledger cards, invoices, delivery receipts, worksheets,
books of accounts, statements, correspondence, customer lists, files,
journals, ledgers and records in any form, written or otherwise, related
to any of the Collateral;
(f) All claims for loss or damage to or in connection with any of
the Collateral, all other claims in any form for the payment of money
relating to or arising in connection with the Collateral;
(g) All accessions to any of the Collateral;
- 2 -
<PAGE>
(h) All products and proceeds of the Collateral in any form,
including all proceeds received, due or to become due from any sale,
exchange or other disposition of any of the Collateral, whether such
proceeds are cash or noncash in nature or are represented by checks,
drafts, notes or other instruments for the payment of money; and
(i) All property that is now or at any time hereafter may be in
the Agent's possession or control in any capacity, including without
limitation all money owed or that becomes owed to Debtor and all money
deposited for the account of Debtor.
The Debtor will from time to time, whenever a Default exists, upon
request of the Agent, endorse and deliver to the Agent any draft, check,
note or other writing that evidences a right to the payment of money
which constitutes Collateral.
The Security Interest is granted as security only, and shall not subject the
Agent or any Bank to, or transfer or in any respect affect or modify, any
obligation or liability of the Debtor with respect to any of the Collateral
or any transaction which gave rise thereto.
2.2 Notwithstanding the provisions of Section 2.1 above and Section 3.9
below, the Security Interest shall not attach to the Collateral (and conse-
quently shall not be perfected) until and unless a Default shall have
occurred. Upon the occurrence of a Default, however, the Security Interest
shall automatically attach to each and every item of Collateral without any
requirement for action by any Person.
2.3 In the event that the Security Interest shall have attached
pursuant to Section 2.2 hereinabove, and thereafter all Defaults at any time
existing shall have been cured PRIOR TO either (i) the earlier of the
Termination Date or the date of the exercise by Required Banks of their right
to declare the Revolving Credit Commitments terminated under subsection 10.1
of the Loan Agreement or (ii) the earlier of the Term Loan Maturity Date or
the exercise of the right of Banks to declare the Term Loans immediately due
and payable under subsection 10.1 of the Loan Agreement, then within three
(3) Business Days after Agent's actual receipt of Debtor's written request
therefor, Agent (on behalf of the Banks) shall issue to Debtor a written
release of the attachment of the Security Interest to the Collateral, and
shall not otherwise affect the grant of the Security Interest under Section
2.1 hereinabove or any other provision of this Security Agreement.
2.4 Within three (3) Business Days after actual receipt of a written
request therefor from Debtor, Agent shall issue a statement to Debtor or as
Debtor shall direct confirming whether or not, as of the date of the state-
ment, the Security Interest has attached to the Collateral. Such statement
shall be in a form from time to time reasonably satisfactory to Debtor and
Agent.
- 3 -
<PAGE>
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
Debtor hereby represents, warrants and agrees that:
3.1 Debtor is, and will at all times be, the lawful owner (but, with
respect to Inventory, not necessarily the titleholder) of the Collateral
which is and at all times shall be free of all security interests or other
encumbrances except the Security Interest and any Liens to which the Agent
has consented in writing, and no financing statement covering the Collateral
is filed or recorded in any public office other than any which may have been
filed on behalf of the Agent. Debtor has full legal right to grant the
Security Interest in the Collateral.
3.2 Each account, chattel paper or general intangible included in the
Collateral is genuine and enforceable in accordance with its terms against
the party named therein who is obligated to pay the same (herein called
"Obligor") and the security interests that are part of each item of chattel
paper included in the Collateral are valid, first and prior perfected
security interests. The amount that Debtor has represented to the Banks as
owing by each Obligor is the amount actually and unconditionally owing by
that Obligor, without deduction except for normal cash discounts where
applicable; no Obligor has any defense, set-off, claim or counterclaim
against Debtor that can be asserted against the Agent or the Banks whether
in any proceeding to enforce the Security Interest or otherwise.
3.3 All portions of the Debtor's Inventory held on the date hereof in
the United States by the Debtor are located at one of the locations shown
with respect to the Debtor on Annex A. The Debtor agrees that all portions
of the Debtor's Inventory now held or subsequently acquired by the Debtor and
which are held in the United States shall be kept at (or at the time of
Debtor's acquisition thereof shall be in transit to) one or more of the
locations shown on Annex A or such new location as the Debtor may hereafter
establish, provided that Debtor shall give written notice to the Agent within
thirty (30) days after the establishment of each such new location,
identifying the full street address and county of such location, and provided
further that each such notice shall constitute a modification of said Annex
A.
3.4 Debtor shall not sell, transfer, assign or otherwise dispose of any
Collateral or any interest therein (except as permitted herein) without
obtaining the prior written consent of the Agent and, unless the Agent shall
otherwise agree in writing, shall keep the Collateral free of all security
interests or other encumbrances except the Security Interest. The Debtor
will not sell of offer to sell or otherwise assign, transfer or dispose of
any of the Collateral or any interest, except the Debtor may sell Inventory
in the ordinary course of its business, and may otherwise deal with its
property as and to the extent permitted under the Loan Agreement.
- 4 -
<PAGE>
3.5 The Debtor will at all times have and maintain insurance with
respect to the Collateral in accordance with the terms and conditions of the
Loan Agreement. All such insurance policies covering losses to the
Collateral shall name the Agent as a loss payee and shall be payable to the
Agent for the benefit of the Banks as its and their interests may appear.
All policies of insurance shall provide for a minimum of thirty (30) days'
written notice to the Agent prior to any cancellation, modification or non-
renewal hereof. The Debtor shall furnish the Agent with certificates or
other evidence satisfactory to the Agent of compliance with the foregoing
insurance provisions.
3.6 The chief executive office of the Debtor is located at 6730 South
Tucson Boulevard, Tucson, Arizona 85706. All accounts (including, without
limitation, accounts receivable) of the Debtor are, and will continue to be,
maintained at, and controlled and directed from, the location of the chief
executive office of the Debtor. Debtor shall give the Agent at least 30
days' prior written notice of any change in the location of: (i) Debtor's
chief executive office; (ii) the Collateral or any part thereof, it moved to
a location other than as listed on Annex "A" hereto; to (iii) Debtor's
records concerning the Collateral.
3.7 The Agent or any persons designated by it may inspect the
Collateral and the books and records of the Debtor relating to the Collateral
at reasonable times and may enter into any premises where the Collateral is
or may be located. Debtor shall keep records concerning the Collateral in
accordance with generally accepted accounting principles. The Agent, or
persons designated by it, shall have free and complete access to Debtor's
records relating to the Collateral and shall have the right to make extracts
therefrom or copies thereof. Upon request of the Agent from time to time,
Debtor shall submit up-to-date schedules of the items comprising the
Collateral in such detail as the Agent may require and shall deliver to the
Agent confirming specific assignments of all accounts, instruments, documents
and chattel paper included in the Collateral.
3.8 Debtor, at its cost and expense, shall protect and defend this
Agreement, all of the rights of the Agent hereunder, and the Collateral
against all claims and demands of other parties, including without limitation
defenses, set-offs, claims and counterclaims asserted by any Obligor against
Debtor and/or the Agent. Debtor shall pay all claims and charges that in the
commercially reasonable opinion of the Agent are likely to prejudice, imperil
or otherwise affect the Collateral or the Security Interest. Debtor shall
promptly notify the Agent of any levy, distraint or other seizure by legal
process or otherwise of any part of the Collateral and of any threatened or
filed claims or proceedings that are likely in any way materially to affect
or impair the terms of this Agreement.
3.9 Subject to Section 2.2 hereof, the Security Interest at all times
shall be perfected (unless perfection may be had only by actual possession)
and shall be prior to any other interests in the Collateral, other than the
Permitted Liens. Upon and at all times during the continuance of any
Default, Debtor shall act and perform as necessary and shall execute and file
all security agreements, financing statements, continuation statements and
- 5 -
<PAGE>
other documents reasonably requested by the Agent to establish, maintain and
continue the perfected Security Interest. Debtor, on demand, shall promptly
pay all costs and expenses of filing and recording, including the costs of
any searches, deemed necessary by the Agent from time to time to establish
and determine the validity and the continuing priority of the Security
Interest from the time it shall attach to the Collateral pursuant to Section
2.2 herein until (and unless) it is released pursuant to Section 2.3 herein.
3.10 All rights, powers and remedies granted the Agent herein, or other-
wise available to the Agent, are for the sole benefit and protection of the
Agent and the Banks, and the Agent may exercise any such right, power or
remedy at its option and in its sole and absolute discretion without any
obligation to do so, subject to the terms of the Loan Agreement, as appli-
cable. In addition, if under the terms hereof, the Agent is given two or
more alternative courses of action, the Agent (as between Agent and Debtor)
may elect any alternative or combination of alternatives at its option and
in its sole and absolute discretion. All amounts paid, suffered or incurred
by the Agent in exercising any authority granted herein, including reasonable
attorneys' fees, shall be added to the Obligations, shall be secured by the
Security Interest, shall bear interest at the highest rate payable on any of
the Obligations until paid, and shall be due and payable by Debtor to the
Agent immediately upon demand.
4. NOTIFICATION AND PAYMENTS; COLLECTION OF COLLATERAL; USE OF COLLATERAL
BY DEBTOR.
4.1 The Agent, after the occurrence of any event of Default, and with-
out notice to Debtor except as specified in the next following sentence, may
notify any or all Obligors of the existence of the Security Interest and may
direct the Obligors to make all payments on the Collateral to the Agent.
Agent shall give notice to borrower of its election to exercise its rights
under the preceding sentence contemporaneously with the issuance of first
such notice to any Obligor. Until the Agent has notified the Obligors to
remit payments directly to it, Debtor, at Debtor's own cost and expense,
shall collect or cause to be collected the accounts and moneys due under the
accounts, documents, instruments and general intangibles or pursuant to the
terms of the chattel paper which are part of the Collateral. The agent shall
not be liable or responsible for any embezzlement, conversion, negligence or
default by Debtor or Debtor's agents with respect to such collections; all
agents used in such collections shall be agents of Debtor and not agents of
the Agent. Unless the Agent notifies Debtor in writing that it waives one
or more of the requirements set forth in this sentence, at all times after
the occurrence of an Event of Default any payments or other proceeds of
Collateral received by Debtor, before or after notification to Obligors,
shall be held by Debtor in trust for the Agent, for the benefit of the Banks,
in the same for in which received, properly endorsed, shall not be commingled
with any assets of Debtor and shall be remitted to the Agent, for the benefit
of the Banks.
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<PAGE>
4.2 The Agent, after the occurrence of an Event of Default and without
notice to Debtor, may demand, collect and sue on the Collateral (either in
Debtor's or the Agent's name), enforce, compromise, settle or discharge the
Collateral and endorse Debtor's name on any instruments, documents, or
chattel paper included in or pertaining to the Collateral; Debtor hereby
absolutely and irrevocably constitutes and appoints the Agent its attorney-
in-fact, with full power of substitution, for all such purposes.
4.3 Until the occurrence of an Event of Default, Debtor may: (i) use,
consume and sell any inventory included in the Collateral in any lawful
manner in the ordinary course of Debtor's business provided that all sales
shall be at commercially reasonable prices; and (ii) subject to paragraphs
3.1 and 3.2 above, retain possession of any other Collateral and use it in
any lawful manner not inconsistent with this Agreement.
5. COLLATERAL IN THE POSSESSION OF SECURED PARTY.
5.1 The Agent shall use such reasonable care in handling, preserving
and protecting the Collateral in its possession as it uses in handling
similar property for its own account. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as the
Debtor requests in writing, but failure of the Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care,
and no failure of the Agent to preserve or protect any rights with respect
to such Collateral against prior parties, or to do any act with respect to
the preservation of such Collateral not so requested by the Debtor, shall be
deemed a failure to exercise reasonable care in the custody or preservation
of such Collateral. The Agent shall also be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to
that which the Agent accords its own property of like kind. The Agent,
however, shall have no liability for the loss, destruction or disappearance
of any Collateral unless there is affirmative proof of a lack of due care;
the lack of due care shall not be implied solely by virtue of any loss,
destruction or disappearance.
5.2 Debtor shall be solely responsible for taking any and all actions
to preserve rights against all Obligors; the Agent shall not be obligated to
take any such actions whether or not the Collateral is in its possession.
Debtor waives presentment and protest with respect to any instrument included
in the Collateral on which Debtor is in any way liable and waives notice of
any action taken by the Agent with respect to any instrument, document or
chattel paper included in any Collateral that is in the possession of the
Agent.
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<PAGE>
6. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
If an Event of Default shall have occurred and be continuing and not
been waived by the Agent in writing, the Agent shall have the right to
exercise, for the benefit of the Banks, any and all rights and remedies
available to it under the Uniform Commercial Code as in effect in the State
of Arizona and any other applicable law to the fullest extent permitted
thereby. Without limiting the foregoing, upon the occurrence of an Event of
Default and during the continuance thereof, the Agent, acting in good faith
and in a commercially reasonable manner) may exercise any of the following
rights and remedies: (i) the right, in the name of the Debtor or otherwise,
to demand, collect, receive and receipt for payment of any or all of the
Collateral or to compound, compromise, settle and give acquittance for,
prosecute or discontinue any suits or proceedings in respect of any or all
of the Collateral; (ii) the right to require the Debtor to, and the Debtor
hereby agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the Agent
and make it available to the Agent at a place to be designated by the Agent
that is reasonably convenient to both the Agent and the Debtor; (iii) without
notice except as specified below, the right to sell the Collateral or any
part thereof in one or more parcels at public or private sale at any of the
Agent's offices or elsewhere, for cash, on credit, or for future delivery,
and upon such other terms as the Agent may reasonably believe are commer-
cially reasonable; (iv) the right to occupy any premises owned or leased by
the Debtor where the Collateral or any part thereof or any books and records
relating thereto is assembled for a reasonable period in order to effectuate
the Agent's rights and remedies hereunder or under law, without obligation
to compensate the Debtor for such occupation; (v) the right to take any
action which the Agent may reasonably deem necessary or desirable in order
to realize on the Collateral, including, without limitation, the power to
endorse in the name of the Debtor without recourse to the Debtor any checks,
drafts, notes or other instruments or documents received in payment of or on
account of the Collateral; and (vi) the right to exercise any and all rights
and remedies of the Debtor under or in connection with the Collateral.
6.1 Any demand or notice of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the Uniform Commer-
cial Code or otherwise, shall be deemed to be commercially reasonable and
effective if such demand or notice is given to the Debtor at least five (5)
Business Days prior to such sale, disposition or other intended action, in
the manner provided herein for the giving of notices.
6.2 Debtor shall pay all costs and expenses, including without
limitation costs of Uniform Commercial Code searches, court costs and
reasonable attorneys' fees, incurred by the Agent in enforcing payment and
performance of the Obligations or in exercising the rights and remedies of
the Agent hereunder. All such costs and expenses shall be secured by this
Security Agreement and by all deeds of trust and other lien and security
documents securing the Obligations. In the event of any court proceedings,
court costs and attorneys' fees shall be set by the court and not by jury and
shall be included in any judgment obtained by the Agent.
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<PAGE>
6.3 No failure on the part of the Agent to exercise any of its rights
hereunder arising upon any Event of Default shall be construed to prejudice
its rights hereunder upon the occurrence of any other or subsequent Event of
Default. No delay on the part of the Agent in exercising any such rights
shall be construed to preclude it from the exercise thereof an any time
during the continuance of that Event of Default. The Agent may enforce any
one or more rights or remedies hereunder successively or concurrently. By
accepting payment or performance of any of the Obligations or any part
thereof after its due date, the Agent shall not thereby waive either its
right to require prompt payments or performance when due of the remainder of
the Obligations or any part thereof or its right to consider the failure to
so pay or perform an Event of Default.
6.4 Any proceeds of any disposition of any of the Collateral, including
without limitation the appropriation or application of any and all balances,
credits, deposits, accounts or moneys received by the Agent shall be applied
by the Agent to the payment and/or prepayment of the Obligations in accor-
dance with the provisions of the Loan Agreement.
The balance (if any) of such proceeds shall be paid to the Debtor, its
successors or assigns, or as a court of competent jurisdiction may direct,
PROVIDED, that if such proceeds are not sufficient to satisfy the Obligations
in full, the Debtor shall remain liable to the Agent and the Banks for any
deficiency.
7. MISCELLANEOUS PROVISIONS.
7.1 All notices, requests and demands required or permitted to be given
hereunder shall or relating hereto shall be given to the parties at their
respective addresses set forth in the Loan Agreement. All notices, requests
and demands given or made in accordance with the provisions of this Security
Agreement or any other statement, instrument or transaction contemplated
hereby or relating hereto shall be given by one or more of the means
specified for the giving of notices the Loan Agreement and, upon being so
given, shall be deemed to have been given as of the earliest time specified
in the Loan Agreement for the means so used.
7.2 This Security Agreement shall be binding and inure to the benefit
of the Debtor and the Agent and their respective successors and assigns,
except that the Debtor may not assign or transfer any of its rights or obli-
gation under this Security Agreement without the prior written consent of the
Banks.
7.3 No failure on the part of the Agent to exercise, and no delay in
exercising, any remedy, right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right,
remedy power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege, and
no waiver whatever shall be valid unless in writing signed by the Agent and
the Debtor and then only to the extent specifically set forth in such
writing.
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<PAGE>
7.4 All remedies, rights, power and privileges, either under this
Security Agreement, the other Loan Documents, by law or otherwise, afforded
the Agent or any Lender shall be cumulative and not be exclusive of any
remedies, rights, power and privileges provided by law and shall be available
until the Obligations have been paid in full in lawful money in the United
States of America. All such remedies may be exercised in any order of
priority.
7.5 This Security Agreement shall terminate when all of the Obliga-
tions shall have bee paid in full and the Revolving Credit Commitments shall
have been terminated ("Full Satisfaction") at which time the Agent shall
reassign, release and/or deliver to the Debtor the Collateral and proceeds
thereof in which the Agent shall have an interest hereunder. Upon request
of the Debtor after Full Satisfaction, the Agent shall execute and deliver
termination statements to the Debtor for filing in each office in which a
financing statement has been filed by the Agent, all without recourse to or
warranty by the Agent or the Banks and at the cost and expense of the Debtor;
PROVIDED, HOWEVER, that this Security Agreement shall continue to be effec-
tive or be reinstated, as the case may be, if an any time any payment of any
of the Obligations is rescinded or must otherwise be returned by the Agent
or any lender or any other person upon the insolvency, bankruptcy, or
reorganization of the Debtor or otherwise, all as though such payment had not
been made.
7.6 All representations, warranties and covenants made by the Debtor
to the Agent or the Banks in connection with this Security Agreement shall
survive the execution and delivery of this Security Agreement. All state-
ments contained in any certificate or other instrument delivered to the Agent
or the Banks pursuant to this Security Agreement shall be deemed representa-
tions, warranties and covenants hereunder of the Debtor.
7.7 All reports, schedules, assignments, certificates and other items
delivered to the Agent or the Banks pursuant to this Security Agreement or
any other statement, instrument or transaction contemplated thereby or
relating thereto and all endorsements in connection therewith, shall be
executed by an authorized representative of the Debtor and shall be in form
and substance satisfactory to the Agent.
7.8 Section headings in this Security Agreement are for convenience in
reference only, and shall not govern the interpretation of any of the
provisions of this Security Agreement.
7.9 This Security Agreement may be executed in any number of counter-
parts, all of which taken together shall constitute one and the same instru-
ment and either of the parties hereto may execute this Security Agreement by
signing any such counterpart.
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<PAGE>
7.10 Governing Law; Construction; Consent to Jurisdiction; Waiver of
Trial by Jury:
(a) This Security Agreement shall be construed in accordance with
and governed by the law of the State of Arizona, without giving effect
to the choice of law provisions thereof but giving effect to federal
laws applicable to national banks.
(b) Whenever possible, each provision of this Security Agreement
and any other statement, instrument or transaction contemplated thereby
or relating thereto shall be interpreted in such manner as to be
effective and valid under such applicable law, but, if any provision of
this Security Agreement or any other statement, instrument or transac-
tion contemplated thereby or relating thereto shall be held to be
prohibited or invalid under such applicable law, such provision can be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Security Agreement or any other statement, instru-
ment or transaction contemplated thereby or relating thereto and shall
not affect the enforceability of such provision in any other jurisdic-
tion. In the event of any conflict within, between or among the
provisions of this Security Agreement or any other statement, instru-
ment or transaction contemplated thereby or relating thereto those
provisions giving the Agent the greater right shall govern.
(c) Any suit, action or proceeding against Debtor with respect to
this Security Agreement or any judgment entered by any court in respect
thereof, may be brought in any of the courts of the State of Arizona,
County of Maricopa or Pima County, or in the United States courts
located in the State of Arizona as the Agent in its sole discretion may
elect, and Debtor hereby submits to the nonexclusive jurisdiction of
such courts for the purpose of any suit, action or proceeding. Debtor
hereby irrevocably waives any objections which it may now or hereafter
have to the laying of venue of any suite, action or proceeding arising
out of or relating to this Security Agreement brought in any of the
courts located in the State of Arizona, County of Maricopa or Pima
County. DEBTOR AND THE AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agree-
ment to be executed as of the date first above written.
BURR-BROWN CORPORATION
a Delaware corporation
By: John L. Carter (signature on file)
Its Executive Vice President & CFO
THE ATTACHED "SUBSIDIARIES SIGNATURE PAGE" IS
BY THIS REFERENCE INCORPORATED HEREIN AS IF
FULLY SET FORTH AT THIS POINT
Severally and collectively, "Debtor"
FIRST INTERSTATE BANK OF ARIZONA, N.A. as Agent
By: (signature on file)
Its Vice President
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<PAGE>
SUBSIDIARIES SIGNATURE PAGE
[THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
Annex A
to
Security Agreement
Schedule of Inventory Locations
_______________________________
ARIZONA:
Burr-Brown Corporation
6730 South Tucson Boulevard
Tucson, Arizona 85706
CALIFORNIA:
Emanuell Equipment
214 Commercial Street
Sunnyvale, California 94086
Semiconductor Technology
3045 Alfred Street
Santa Clara, California 94086
Disco Hi-Tech America Inc.
3395 Woodward Avenue
Santa Clara, California 95054
WISCONSIN:
Specialty Coating, Inc.
100 Deposition Drive
Clear Lake, Wisconsin 54005
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EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Burr-Brown Corporation of our report dated January 23, 1995, included in the
1994 Annual Report to Stockholders of Burr-Brown Corporation.
Our audits also included the financial statement schedule of Burr-Brown Corpora-
tion listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when con-
sidered in relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 33-65866) pertaining to the Burr-Brown Corporation Stock Incen-
tive Plan and in the Registration Statement (Form S-8, No. 33-12185) pertaining
to the Burr-Brown Corporation Future Investment Trust of our report dated
January 23, 1995, with respect to the consolidated financial statements incor-
porated herein by reference, and our report included in the preceding paragraph
with respect to the financial statement schedules included in this Annual Report
(Form 10-K) of Burr-Brown Corporation.
Ernst & Young LLP
Tucson, Arizona
March 21, 1995
