<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 SEPTEMBER 30, 1996
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14824
PLEXUS CORP.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1344447
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 JEWELERS PARK DRIVE, NEENAH, WISCONSIN 54957-0156
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 722-3451
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.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 report(s)) 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 the 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]
As of December 13, 1996, 6,543,804 shares of Common Stock were outstanding, and
the aggregate market value of the shares of Common Stock (based upon the $17.75
closing sale price on that date, as reported on the NASDAQ National Market
System) held by non-affiliates (excludes shares reported as beneficially owned
by directors and officers - does not constitute an admission as to affiliate
status) was approximately $105 million.
DOCUMENTS INCORPORATED BY REFERENCE
PART OF FORM 10-K
INTO WHICH PORTIONS OF
DOCUMENT DOCUMENT ARE INCORPORATED
-------- -------------------------
Proxy Statement for 1997 Annual
Meeting of Shareholders Part III
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Plexus Corp., through its subsidiaries (together "Plexus" or the
"Company"), offers contract development, design, manufacturing and test
services primarily to original equipment manufacturers in the computer
(primarily mainframes and peripherals), medical, industrial, telecommunications
and transportation electronics industries. Plexus offers a full range of
services including product development, printed circuit board (PCB) design,
material procurement and management, PCB and higher level assembly, functional
and in-circuit testing, final system box build and distribution.
The contract manufacturing services are provided on either a turnkey
basis, where the Company procures certain or all of the materials required for
product assembly, or on a consignment basis, where the customer supplies
materials necessary for product assembly. Turnkey services include material
procurement and warehousing, in addition to manufacturing, and involve greater
resource investment then consignment services. Other than test equipment
products, the Company does not design or manufacture its own proprietary
products.
Plexus is a Wisconsin corporation incorporated in 1979. Its principle
subsidiaries are Electronic Assembly Corporation and Technology Group, Inc.
The Company's principal office is located at 55 Jewelers Park Drive, Neenah,
Wisconsin 54957-0156, and its telephone number is (414) 722-3451. The Company
has operations in Neenah, Wisconsin and Richmond, Kentucky.
ELECTRONIC PRODUCTS
GENERAL BACKGROUND. The Company's services involve the design of
electronic products and systems, the arrangement of electronic components
thereon, and the assembly and testing of such products including the
incorporation of the electronic assemblies into the final product housing. The
products designed and assembled by the Company consist primarily of electronic
components assembled on printed circuit boards and programmed to perform
specific functions. The electronic components include computer memory chips,
microprocessors, integrated circuits, resistors, capacitors, transformers, and
switches. Printed circuit boards are the basic element in the manufacture of
most electronic products and act as the interconnection platforms for various
integrated circuits and electronic components. In addition to the Company's
ability to design and manufacture complete electronic products, the Company
also has the capacity of designing and assembling printed circuitry products
and products utilizing circuit boards with multiple layers of circuitry.
The various types of electronic product services offered by the
Company are discussed below. A customer of the Company may utilize any or all
of these services. The Company charges for these services under a variety of
pricing methods that vary accordingly to the customer or type of service
involved.
PRODUCT DESIGN. The Company, primarily through its Technology Group,
Inc. subsidiary, provides product design and engineering services. These
services include software development, circuit design, printed circuit board
layout, and product housing design. The Company's design services provide
customers with a product which is capable of performing an intended function
and which can be manufactured in an efficient and economical manner.
The Company's technologies involve the design of electronic systems,
including printed circuit boards and the arrangement of electronic components
thereon, and the development and/or programming of the application software
necessary to control the functions of those components. The Company's
personnel design printed circuit boards using computer assisted design
equipment and software. This equipment permits the design of complex
multi-layered printed circuit boards which not only have wiring on the top and
bottom surfaces but also incorporate multiple inside layers of circuitry.
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The Company's design service may include initial feasibility studies,
product concept definition, development or specifications for product feature
and functions, product engineering specifications, microprocessor design,
design of circuit and custom or semi-custom computer chips, software
development, drafting, prototype production and testing, and development of
test specifications and procedures.
See "Engineering, Testing and Development."
PRODUCT MANUFACTURE. The Company, primarily through its Electronic
Assembly Corporation subsidiary, manufactures electronic products and
assemblies for use in a wide variety of industries and applications.
The Company's assembly processes involve the fabrication of products
from components manufactured to specification by others. Electronic components
such as memory chips, microprocessing units, integrated circuits, resistors,
capacitors, transformers, switches, wire and related items are purchased as
stock items from a variety of manufacturers and distributors. The Company is
not dependent upon any single supplier for such material. The Company's
printed circuit boards and certain other components are manufactured for it to
its customers' specifications. The Company believes these products would be
available from a variety of sources and that the loss of any single source of
supply would not materially affect the Company's business.
The Company's manufacturing operations include printed circuit board
assembly, testing, and final system box build into the final product housing.
While the Company has automated various aspects of many processes, the assembly
of components into electronic products remains a labor-intensive process
generally requiring a high degree of precision and dexterity in the assembly
stage and integration of quality control checks into the manufacturing
processes. The Company utilizes specially designed equipment and techniques to
maintain its ability to assemble efficiently a wide variety of electronic
products.
PRODUCT TESTING. The increasingly complex design and assembly
techniques for production of electronic products have created a need for the
Company's services in designing and assembling test equipment for electronic
assemblies. Such test equipment includes functional test fixtures for testing
printed circuit assemblies; in-circuit component measurement testers; and
intelligent burn-in chambers, which temperature cycle products under load. The
Company designs and assembles test products for testing customers' products.
The Company believes that the design and production of test equipment
is an important factor in its ability to provide products of consistent and
high quality.
SMARTHOUSE PARTNERSHIP. As a result of the poor market acceptance of
the home automation systems developed and promoted by SmartHouse, L.P.
("SmartHouse"), the Company's production and marketing of SmartHouse-related
products during fiscal 1996 was not material. Although the Company continues
to produce such items, it does not expect the SmartHouse program to provide
significant revenues in the near future. To finance certain expenditures
relating to the development and design of the SmartHouse-related products and
to reduce its potential risk, the Company had sponsored and invested in a
research and development partnership, Plexus Home Automation Limited
Partnership ("PHALP"), of which a Plexus subsidiary is general partner and
investor.
CUSTOMERS AND MARKETING
The Company performs services for a wide variety of customers ranging
from large multi-national companies to smaller companies. Because of the
variety of services it offers, its flexibility in design and manufacturing, and
its ability to timely respond to customer needs, the Company believes it is
well positioned to offer its services to customers in its market segments. For
many customers, the Company functions as both a design and production arm, thus
permitting customers to concentrate on concept development and marketing and to
avoid the expense of development of manufacturing capacity. This method
provides an economical and efficient alternative to in-house production.
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The Company markets its services primarily through its own employees.
It also employs several sales representative agencies covering selected
customer accounts. The representatives are paid commissions based upon sales.
During fiscal 1996, the Company's services were sold to approximately
104 customers. The customers include five subsidiaries or divisions of
International Business Machines Corporation ("IBM") and three subsidiaries or
divisions of General Electric Company ("GE"), all of which the Company
considers separate customers. Other than IBM and GE, no customer accounted for
as much as 10% of the Company's fiscal 1996 sales. Although sales to the
various IBM and GE subsidiaries, divisions and locations represented
approximately 26% and 13%, respectively, of the Company's total sales in fiscal
1996 (compared to 26% and 17%, respectively, in fiscal 1995 and 39% and 16%,
respectively, in fiscal 1994), orders were received from the various
independent IBM and GE production facilities, each of which contracts
independently of the others. The Company believes that its sales to different
IBM and GE locations are not dependent on sales to other locations. The
decrease in sales to GE in fiscal 1996 reflects both a decrease in actual sales
volume and reduced pricing to certain GE divisions. While the complete loss of
either IBM or GE as a customer would have a significant negative impact on the
Company, the Company does not believe the loss of all IBM or GE divisions to be
a likely possibility.
Substantially all of Plexus' business is done on a project by project
basis for its customers. Although Plexus has several projects and customers
for which it provides services on a continuing basis, the timing and nature of
particular customer projects can vary significantly from period to period.
Substantial changes in the nature or timing of these projects affect the
Company's sales and profitability from period to period.
Company also from time to time considers strategic acquisitions, joint
ventures and strategic partnerships with other companies. Under certain
circumstances, and subject to identification of appropriate candidates, the
Company believes that such transactions may provide an attractive means of
growth by providing access to additional customers and/or by adding new
capabilities, capacity or locations.
COMPETITION
The market for electronic products and services provided by the
Company is highly competitive, primarily on the basis of engineering, testing
and production capability, and the capacity for prompt delivery, quality and
price.
The capability to design in a timely manner and the capacity to
produce quality items and to assure prompt delivery are particularly important
in the electronics industry. The average product designed and assembled by the
Company has a technologically useful life of only 18 months to three years.
Through its design and production services, the Company serves as an extension
or replacement for its customers' engineering, testing and manufacturing
operations.
Competitors in the electronics design and assembly field are numerous
and range in size from several very large multi-national companies with
substantially greater resources than the Company to many smaller companies
competing only in specific aspects of the Company's business. The Company also
competes against companies which determine to manufacture items in-house rather
than contract with a third-party manufacturer. The Company estimates that it
controls less than one percent of the global market in the outsourced
electronics manufacturing services industry.
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EMPLOYEES
As of December 1, 1996, the Company employed full time approximately
2,159 persons. These employees included approximately 772 professional and
engineering employees and approximately 1,387 employees who work in assembly.
The Company also employed 336 temporary employees through various temporary
employment agencies. The Company has never experienced a work stoppage due to
a labor dispute, considers its relations with employees to be very good, and is
not a party to any labor contract. To date, the Company has not had any
difficulty fulfilling its employment needs.
PATENTS AND TRADEMARKS
The Company does not own any material patents or copyrights. The
Company owns the servicemark "Plexus".
ENGINEERING, TESTING AND DEVELOPMENT
The Company believes that its engineering, testing and development
capabilities are significant factors in the success of its business. The
Company maintains a design team of 133 employees, including 125 hardware and
software design engineers and support staff, and utilizes an integrated design
system in the Company's engineering services.
To supplement its internal capabilities, Plexus has formed a strategic
alliance with Battelle, a leading private independent research and development
organization. The Company believes that Battelle will make available to Plexus
a wide spectrum of advanced technology and innovative product development
experience, to complement the Company's capacities in electronic product
design, testing and manufacturing. In selected circumstances in which the
Company and Battelle believe use of the alliance is appropriate, the Company
believes it will be able to use this alliance to accelerate new product
introduction for its customers.
MATERIALS AND COMPONENTS
The Company does not generally fabricate the component parts which it
uses for the products which it assembles. However, the Company uses various
component parts which are manufactured by others. Important components include
integrated circuits (primarily logic and memory devices), resistors, capacitors
and printed circuit boards; these components may be either custom or standard.
The Company has numerous suppliers for these components and has generally not
experienced difficulties obtaining the components needed for its assemblies.
The industry-wide shortage of certain component parts (primarily logic and
memory devices) which negatively impacted the Company in the early part of
fiscal 1996 and prior periods has subsided. The Company currently anticipates
an adequate supply going forward.
ENVIRONMENTAL COMPLIANCE
The Company believes that it is in compliance with all federal, state
and local environmental laws, and does not anticipate any significant
expenditures in maintaining its compliance.
ITEM 2. PROPERTIES
The Company owns its headquarters, the Plexus Technology Center, in
Neenah, Wisconsin, which consists of approximately 45,000 square feet and
includes Plexus' headquarters office. The Technology Center provides office,
design and testing space for the Company.
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Three of the Company's manufacturing facilities are located at Neenah,
Wisconsin, and the fourth at Richmond, Kentucky. The facilities in the
original Neenah complex, which are owned by the Company and were built in the
period from 1980 to 1985, contain an aggregate of approximately 80,000 square
feet of assembly and office space. The two Wisconsin facilities owned by the
Company (the headquarters and the original manufacturing complex) are subject
to mortgages securing the Company's bank debt.
In 1990, the Company occupied an additional assembly facility in
Neenah, Wisconsin, with approximately 110,000 square feet of assembly and
office space, which provides additional capacity. The Company leases this
facility under a fifteen year lease.
In January 1994, the Company occupied a new surface mount assembly
facility in Neenah, Wisconsin. This facility is approximately 175,000 square
feet, and is used for manufacturing purposes. The Company leases the facility
under a twenty year lease.
In 1985, the Company opened an assembly facility with approximately
45,000 square feet of assembly and office space, which it owns in Richmond,
Kentucky.
In February 1996, the Company entered into a lease agreement with
Oneida Nation Electronics ("ONE"), corporation chartered by the Oneida tribe of
Indians of Wisconsin. Pursuant to the lease agreement, ONE has agreed to
construct and equip an approximately 110,000 square foot manufacturing facility
located in the Green Bay, Wisconsin area for the use by the Company. Based on
current construction plans, this facility is expected to be completed in the
second quarter of calendar 1997. Annual lease payments by the Company for the
building and equipment will be based on the profitability of the facility
pursuant to a formula defined in the lease agreement. There are no required
minimum lease payments. Company management believes this lease provides a
financial arrangement under which the Company's earnings would be less likely
to be negatively impacted during the start-up phase of the facility than under
conventional financing methods and capital commitments would be minimized,
although it involves a sharing of potential future profits (if any) from the
facility.
In July 1996, the Company occupied an additional office building, with
approximately 19,000 square feet of office space, in Neenah, Wisconsin. The
Company leases this office building under a ten-year lease.
The Company also uses substantial specialized equipment in its
operations. The Company leases a substantial amount of this equipment.
The Company believes that its equipment and facilities are modern,
well maintained and, together with the planned ONE facility, adequate for its
present needs. However, continued expansion of the Company's business may
require additional facility expansion in the future.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
is a party or of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1996.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table contains certain information regarding the present
executive officers of the Company, who are elected by the Board of Directors
after each annual meeting of shareholders for one-year terms or until replaced
by the Board of Directors.
<TABLE>
<CAPTION>
Present
Office
Name Age Position Held Since
---- --- -------- ----------
<S> <C> <C> <C>
Peter Strandwitz 59 Chairman, Chief Executive Office, Director 1979
John L. Nussbaum 54 President, Chief Operating Officer, 1996(1)
Director
Gerald A. Pitner 55 Executive Vice President, Director 1989
Charles C. Williams 60 Vice President 1989
Thomas B. Sabol 37 Vice President-Finance and Chief Financial 1996(2)
Officer
Joseph D. Kaufman 39 Vice President, Secretary and General 1990
Counsel
William F. Denney 63 Vice President, Treasurer and Controller 1995(3)
</TABLE>
(1) Mr. Nussbaum has served as President and a director of the Company
since 1980. Mr. Nussbaum became Chief Operating Officer in 1996.
(2) Mr. Sabol joined the Company in January 1996. From 1993 to 1995, Mr.
Sabol served as Vice President and General Auditor for Kemper
Corporation. Prior to that time, Mr. Sabol served as Business
Assurance Manager for Coopers & Lybrand, LLP.
(3) Mr. Denney has served as the Vice President and Controller of the
Company since 1990, and became Treasurer in 1995.
* * *
"SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
The statements contained in this Form 10-K which are not historical
facts (certain of which include terms such as "believe," "expect," "plan,"
"look forward to" or "anticipate") are forward looking statements that involve
risks and uncertainties, including, but not limited to, the Company's ability
to secure new customers and maintain its current customer base, the risk of
customer reductions, delays or cancellations in both on-going and new programs,
the results of cost reduction efforts, the adequate availability of components
and related parts for production, the effect of economic conditions, the impact
of technological changes and increased competition, design and manufacturing
deficiencies, and other risks detailed herein and in the Company's other
Securities and Exchange Commissions filings.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
For the years ended September 30, 1996 and 1995, the Company's Common Stock has
traded on the NASDAQ National Market System; the price information for that
period represents high and low sale prices.
The Company has not paid any cash dividends. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for a discussion of
the Company's dividend intentions.
<TABLE>
<CAPTION>
PRICE RANGE OF PRICE RANGE OF
FISCAL YEAR ENDED COMMON STOCK FISCAL YEAR ENDED COMMON STOCK
SEPTEMBER 30, 1996 HIGH LOW SEPTEMBER 30, 1995 HIGH LOW
<S> <C> <C> <C> <C> <C>
First Quarter 18 3/4 14 3/4 First Quarter 10 3/4 8 1/4
Second Quarter 17 1/4 12 1/2 Second Quarter 12 7/8 8 1/2
Third Quarter 15 1/4 11 1/4 Third Quarter 14 3/4 11 1/4
Fourth Quarter 16 13 Fourth Quarter 18 7/8 13 1/2
Year 18 3/4 11 1/4 Year 18 7/8 8 1/4
</TABLE>
On December 13, 1996, there were approximately 850 holders of record of the
Company's Common Stock, and The Company estimates that on that date there were
approximately 6,000 total beneficial owners of the Company's Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30,
(dollars in thousands, except per share amounts)
OPERATING STATEMENT DATA 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Sales $316,124 $283,134 $242,483 $159,597 $157,376
Gross profit 27,333 23,696 16,170 13,074 16,695
Operating income 13,987 12,435 7,926 6,310 9,727
Net income 7,431 6,343 3,057 2,570 5,050
Fully diluted net income per share $ 1.03 $ .88 $ .46 $ .40 $ .80
Balance Sheet Data
Working capital $ 51,425 $ 71,302 $ 62,784 $ 45,169 $ 31,370
Total assets 107,374 115,088 122,021 95,149 62,689
Long-term debt 15,372 41,734 40,691 40,064 20,461
Stockholders' equity 48,017 41,009 34,879 24,801 23,130
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISION OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Management's Discussion and Analysis of Financial Condition and Results of
Operations, with the exception of historical matters, contains forward-looking
statements (such as statements including the terms "believe," "expect,"
"anticipate" and similar concepts) which involve risks and uncertainties.
Actual results may differ materially from these statements as a result of
various factors, including those discussed herein.
GENERAL
Plexus Corp. is a contract provider of design, manufacturing and testing
services to the electronics industry. Headquartered in Neenah, Wisconsin, the
Company is the largest electronic assembly organization in the Midwest. Through
its two wholly-owned subsidiaries, Technology Group, Inc. and Electronic
Assembly Corporation, the Company offers a full range of services including
product development, printed circuit board (PCB) design, material procurement
and management, PCB and higher level assembly, functional and in-circuit
testing, final system box build and distribution. Services are provided to
original equipment manufacturers in the computer (primarily mainframe and
peripheral products), medical, industrial, telecommunications and
transportation/automotive electronics industries. The Company has operations in
Neenah, Wisconsin and Richmond, Kentucky.
The contract manufacturing services are provided on either a turnkey
basis, where the Company procures certain or all of the materials required for
product assembly, or on a consignment basis, where the customer supplies some
or occasionally all materials necessary for product assembly. Turnkey services
include material procurement and warehousing, in addition to manufacturing, and
involve greater resource investment and inventory risk management than
consignment services. Turnkey manufacturing currently represents almost all of
the Company's sales. Turnkey sales typically generate higher net sales and
higher gross profit dollars with lower gross margin percentages than
consignment sales due to the inclusion of component costs, and related mark-up,
in the Company's net sales. Variations in the Company's turnkey sales have
caused and could continue to cause the Company's gross margin to fluctuate year
to year and quarter to quarter.
Many of the industries for which the Company currently provides electronic
products are subject to rapid technological change, product obsolescence,
increased competition, and pricing pressures. These and other factors which
affect the industries the Company serves, and which affect any of the Company's
major customers in particular, could have a material adverse effect on the
Company's results of operations.
The Company has no long-term volume commitments from its customers, and
lead-times for customer orders and product-life cycles continue to contract.
Customer programs can be canceled and volume levels can be changed or delayed
at any time. The timely replacement of delayed, canceled or reduced programs
with new business cannot be assured. Because of these and other factors, there
can be no assurance that the Company's recent historical sales growth rate will
continue.
The Company's sales can be negatively impacted by component shortages.
Shortages of key electronic components which are provided directly from
customers or suppliers can cause manufacturing interruptions, customer
rescheduling issues, production downtime and production set-up and restart
inefficiencies. Allocations of components are an integral part of the
electronics industry. Shortages that occurred in the past few years including
the first half of fiscal 1996, mainly in logic and memory devices, have been
mitigated over the past six months due to a shift in the supply-demand cycle
for such components. While in general the marketplace for such components has
eased allowing greater availability, key component shortage issues can still
occur with respect to specific industries or particular components. In response
to this dynamic environment, the Company has a corporate procurement
organization whose primary purpose is to create strong supplier alliances to
assure a steady flow of components at competitive prices and mitigate
shortages. However, because of the limited number of suppliers for certain
electronic components and other supply and demand concerns, the Company can
neither eliminate component shortages nor determine the timing or impact of
such shortages on the Company's results. As a result, the Company's sales and
profitability can be affected from period to period.
Start-up costs and the management of labor and equipment efficiencies for
new programs and new customers can have an effect on the Company's gross
margins. Due to these and other factors, gross margins can be negatively
impacted early on in the life cycle of new programs. In
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addition, labor efficiency and equipment utilization rates ultimately achieved
and maintained by the Company for new and current programs impact the Company's
gross margins.
The Company operates in a highly competitive industry. The Company faces
competition from a number of electronic manufacturing services companies, some
with financial and manufacturing resources greater than the Company's. The
Company also faces competition in the form of current and prospective customers
that have the capabilities to develop and manufacture products internally. In
order to remain a viable alternative, the Company must continue to enhance its
total engineering and manufacturing technologies.
Other factors that could adversely affect forward-looking statements
include the Company's ability to maintain and expand its customer base, gross
margin pressures, the overall economic conditions affecting the electronics
industry, and other factors and risks detailed herein and in the Company's
other Securities and Exchange Commission filings.
RESULTS OF OPERATIONS
NET SALES
In fiscal 1996, net sales grew to $316 million, an increase of $33
million, or 12%, over the previous year. Net sales in fiscal 1995 were $283
million, an increase of $41 million, or 17% over fiscal 1994. The sales
increase in fiscal 1996 was due to increased orders from existing customers,
including ongoing and new programs, and the addition of new customers. However,
the increases were not as extensive as originally anticipated by Company
management due to a number of factors. First, in the first half of fiscal 1996,
the Company experienced delays in several major new programs from certain new
and existing customers, especially at its Advanced Manufacturing Facility.
These delays occurred primarily due to customer cutbacks in original forecasts,
component shortages and customer time-to-market issues caused by design changes
or other customer-specific factors. Secondly, certain ongoing programs had
volume reductions from prior years based on revised customer forecasts.
Finally, certain customers in fiscal 1996 adjusted production schedules because
of their own internal excess manufacturing capacity. This resulted in a
reduction in the Company's recent sales growth percentage. The increase in
fiscal 1995 over fiscal 1994 was due to an increased customer base and an
increase in the amount of component parts sales from its turnkey business.
While the Company experienced sales growth in fiscal 1996 across all the
industries it services, except industrial, growth was more pronounced in the
telecommunications, medical and transportation/automotive segments of the
electronics market. Sales to the industrial electronics segment were impacted
in fiscal 1996 by the timing and changeover for a new generation product from
one of the Company's top ten customers resulting in reduced sales levels from
fiscal 1995. Sales to the computer segment of the electronics market in fiscal
1996 increased over 1995. However, the percentage of overall computer segment
sales declined to 38% from 40% of total net sales due to increases in sales to
other segments of the electronics market.
The Company's two largest customers continue to be International Business
Machines Corporation (IBM) and General Electric Company (GE). Net sales to IBM
(including up to six subsidiaries or divisions) were 26%, 26%, and 39% for
fiscal 1996, 1995, and 1994, respectively. Net sales to GE (including up to
five subsidiaries or divisions) were 13%, 17%, and 16% for fiscal 1996, 1995,
and 1994, respectively. Each division or subsidiary of these customers
contracts independently of the other divisions or subsidiaries. While the
combined net sales for these two customers increased in absolute dollar amounts
in fiscal 1996 compared to fiscal 1995, the Company has continued to obtain new
business from other customers that has resulted in a reduced dependency on IBM
and GE. The decrease in sales to GE in fiscal 1996 reflects both a decrease in
actual sales volume and reduced unit pricing to certain GE divisions. In fiscal
1995, sales to IBM were reduced due to the termination of several projects
relating to IBM product lines, while GE sales increased due to programs with a
new division of GE. The Company expects that while sales from IBM and GE should
increase in dollar amounts in fiscal 1997, the percentage of total Company
sales could continue to decline.
Net sales to the Company's ten largest customers accounted for 70%, 75%,
and 80% of total revenues in fiscal 1996, 1995, and 1994, respectively. The
decline has occurred primarily due to the Company's ability to obtain new
business from other customers, thereby reducing its dependency on these
customers. The Company is still dependent upon continued sales to IBM, GE, and
its other significant customers. Any material change in orders from these or
other customers could have a material effect on the Company's results of
operations.
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The Company believes that its growth has been achieved in significant part
by its approach to partnering with customers mainly through its product design
and development services. The Company intends to continue to leverage this
aspect of its product design and development services for continued growth in
contract manufacturing revenues. In order to achieve expanded sales growth, the
Company must continue to generate additional sales from existing customers from
both current and future programs, and must successfully market to new
customers. In addition, the Company must continue to attract and retain top
quality product development engineers in order to continue to expand its design
and development services. Because of these and other factors, there can be no
assurance that the Company's historic growth rates will continue.
GROSS PROFIT
Gross profit increased by $3.6 million, or 15%, in fiscal 1996 compared to
fiscal 1995 and by $7.6 million, or 47%, during fiscal 1995 compared to fiscal
1994. The gross margin increased to 8.6% in fiscal 1996, from 8.4% in fiscal
1995. The gross margin in fiscal 1994 was 6.7%. The slight increase in gross
margin in fiscal 1996 compared to fiscal 1995 resulted from the cost-savings
initiatives commenced by the Company in the second quarter of fiscal 1996,
together with enhanced procurement management, the continued broadening of the
Company's customers base, declining material pricing and the increased
utilization of the Company's Advanced Manufacturing Facility resulting from
increased sales. These factors were mitigated by slower first half sales growth
that was unable to absorb certain increased fixed and variable manufacturing
costs that had been put in place in early fiscal 1996 in anticipation of higher
sales volumes, and increased reserves and write-offs of inventories and
accounts receivable, primarily due to improved inventory management procedures
instituted in fiscal 1996. In addition, start-up costs and manufacturing labor
inefficiencies associated with several new programs impacted negatively on
gross margins. The increase in the gross profit percentage in fiscal 1995 over
fiscal 1994 was due to the increased utilization of the Advanced Manufacturing
Facility which was opened in fiscal 1994 and more efficient use of capacity in
the Company's other manufacturing plants offset by increased key electronic
component pricing and shortages (primarily logic and memory devices).
The fiscal 1996 cost-savings initiatives included reductions in production
and administrative personnel, and equipment lease reductions. Specifically, the
Company reduced production and administrative personnel by approximately 140
since February 1, 1996, through layoffs and attrition. These reductions
amounted to an approximate 6% decrease in overall employment at the Company. In
addition to the staffing decreases, the Company reduced fixed expenses,
primarily through equipment lease reductions. Severance and related costs with
respect to staff reductions and equipment lease reductions were not material.
In the second half of fiscal 1996 the Company realized pre-tax cost savings of
approximately $1.5 million. Based on actions taken, the Company expects to
realize at least $3 million in annual cost savings, on a pre-tax basis. The
Company also implemented tighter controls over the monitoring and addition of
variable and fixed costs. The Company's ability to maintain these realigned
expense levels are dependent on a number of factors including adherence to cost
savings discipline, and increased labor and equipment efficiencies, which
cannot be assured.
During the third quarter of fiscal 1996, the Company also implemented a
flexible labor force program, which utilizes temporary employment agencies to
provide trained production personnel on an as-needed basis, within its
Wisconsin operations. This program should enable the Company to react more
rapidly to fluctuations in its labor force requirements, while converting a
portion of its fixed manufacturing costs to variable costs that can be managed
based on customer needs. While this program did result in some gross profit
improvement in fiscal 1996, until this program is fully implemented into the
management of the Company's manufacturing operations, the long-term benefits of
such a program on the Company's operations cannot be determined.
The Company's gross margin also reflects a number of other factors
including product mix, the level of start-up costs and efficiencies of new
programs, capacity utilization of surface mount and other equipment, labor
costs and efficiencies, the management of inventories, component pricing and
shortages, fluctuations and timing of customer orders, changing demand for
customers' products, pricing and competition within the electronics business.
These and other factors can cause variations in the Company's operating
results. While the Company's focus is on maintaining and expanding gross
margins, there can be no assurance that gross margins will not decrease in
future periods.
-11-
<PAGE> 13
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative (S&A) expenses increased to $13.4 million in
fiscal 1996, compared to $11.3 million in fiscal 1995, and $8.2 million in
fiscal 1994. As a percentage of sales, S&A expenses were 4.2%, 4.0% and 3.4% in
fiscal 1996, 1995, and 1994, respectively. These increases reflect the
Company's planned expansion of its sales and marketing efforts, enhancement of
its information systems to support the Company's continued growth, and increase
in its customer support function. In addition, in the fourth quarter of fiscal
1995 the Company incurred larger than normal expenditures for group health,
employee procurement, supplies and charitable donations that are not expected
to reoccur at similar levels. The Company anticipates that future S&A expenses
will increase in absolute dollars and could increase as a percentage of net
sales over the near term, as the Company continues to expand the above support
areas.
INTEREST EXPENSE
Interest expense was $1.9 million in fiscal 1996, compared to $2.5 million
in fiscal 1995, and $3.2 million in fiscal 1994. The decrease in interest
expense in fiscal 1996 was primarily due to reduced borrowings required to
support working capital, coupled with lower interest rates. The decrease in
fiscal 1995 was due to decreases in the average daily borrowings on the
Company's long-term revolving credit agreement related to working capital
requirements in the latter half of the fiscal year and decreases in interest
rates. See "Liquidity and Capital Resources."
INCOME TAXES
Income taxes increased to $4.9 million in fiscal 1996, from $3.9 million
in fiscal 1995, and $1.9 million in fiscal 1994. The Company's effective income
tax rate has remained constant at rates between 38% to 40% in fiscal 1996,
1995, and 1994. These rates approximate the blended Federal and state statutory
rate as a result of the Company's operations being located within the United
States.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were $29.2 million in fiscal 1996
compared to $4.2 million in fiscal 1995. Cash from operations was provided
primarily by decreases in accounts receivable and increases in accounts payable
and customer deposits offset by an increase in inventories. The changes in
accounts receivable and accounts payable reflect improved cash management.
Inventory increases have occurred due to increased sales volumes, purchases
required to facilitate the start-up of new programs, and customer-imposed
program reductions or delays. The Company is attempting to mitigate the impact
of customer-imposed program reductions or delays on working capital by
obtaining customer deposits for inventories carried by the Company in
situations of this nature. This resulted in a $5 million increase in customer
deposits during fiscal 1996. The Company has also further mitigated inventory
increases through improved materials management that resulted in improved
inventory turns. Inventory turnover improved to 5.6 turns as of September 30,
1996, from 4.8 turns as of September 30, 1995.
The cash generated from operating activities was utilized primarily to
reduce outstanding debt. Borrowings under the Company's long-term revolving
credit agreement have been reduced by $26.3 million to $15.2 million as of
September 30, 1996, from $41.5 million as of September 30, 1995.
In 1996, the Company's revolving credit agreement was amended and restated
resulting in a reduction in the Company's borrowing rates and reduced the
maximum borrowings to $40 million (previously $55 million). All other major
terms were unchanged from the previous agreement. The new rates range from
LIBOR plus 0.875% to LIBOR plus 2% and from prime less 1/4% to prime plus 1/4%
(previously LIBOR plus 2% to LIBOR plus 2 1/2% and prime plus 1/4% to prime plus
1/2%) depending on the Company's consolidated debt-to-worth ratio, as defined
by the Amended and Restated Credit Agreement. The Company determined to reduce
the maximum borrowings due to the reduction in need for overall outstanding
long-term debt as described above. The Company's revolving credit agreement
extends through July 1998. The Company anticipates that it will be able to
arrange an appropriate extension prior to that time.
Capital additions of $4.1 million for fiscal 1996 were primarily
concentrated in surface mount assembly equipment and management information
systems hardware and software. Included in capital additions is $1.7 million of
manufacturing equipment that was previously subject to operating leases that
were acquired by the Company in August of 1996. No similar operating lease
buyouts are anticipated at the present time. Payment for property, plant and
equipment for fiscal 1995 and 1994 was $2.1 million and $5.3 million,
respectively. Except for the Advanced Manufacturing Facility, these
acquisitions were financed from working capital. The Advanced Manufacturing
Facility was permanently financed by use of a sale and leaseback transaction in
August, 1994.
-12-
<PAGE> 14
The Company has historically utilized operating leases to fund the
majority of its manufacturing equipment needs. The Company now anticipates
utilizing operating leases primarily in situations where technical obsolescence
concerns are determined to outweigh the benefits of financing the equipment
purchase. Due to this change in strategy, the Company anticipates increased
future capital additions due to the number of operating leases expiring through
fiscal 1997 and other anticipated equipment requirements. The Company estimates
that capital expenditures for fiscal 1997 should increase to approximately
$10-$12 million which the Company expects to fund through cash flows from
operations and the revolving credit agreement.
In February 1996, the Company entered into a lease agreement with Oneida
Nation Electronics (ONE), a corporation chartered by the Oneida tribe of
Indians of Wisconsin. Pursuant to the lease agreement, ONE has agreed to
construct and equip an approximately 110,000-square-foot manufacturing facility
located in the Green Bay, Wisconsin area for use by the Company. Based on
current construction plans, this facility is expected to be completed in the
second quarter of calendar 1997. Annual lease payments by the Company for the
building and equipment will be based on the profitability of the facility
pursuant to a formula defined in the lease agreement. There are no required
minimum lease payments. Company management believes this lease provides a
financial arrangement under which the Company's earnings would be less likely
to be negatively impacted during the start-up phase of the facility than under
conventional financing methods, and capital commitments would be minimized,
although it involves a sharing of potential future profits from the facility.
The ratio of total debt-to-equity as of September 30, 1996 was 1.2 to 1
compared to 1.8 to 1 as of September 30, 1995.
The Company anticipates future increases in working capital needs in order
to facilitate growth. However, because of the dynamics of the Company's
industry, the exact timing and amount of these increases cannot be determined.
The Company believes that its credit facilities, leasing capabilities and
projected cash flows from operations will be sufficient to meet its anticipated
working capital needs and its anticipated short-term and long-term capital
requirements.
The Company has not paid dividends on its common stock, but has reinvested
its earnings to support its working capital and expansion requirements. Except
for future dividend requirements on the Series A preferred stock, the Company
intends to continue to utilize its earnings in the development and expansion of
the business and does not expect to pay cash dividends in the foreseeable
future.
NEW ACCOUNTING PRINCIPLES
The Company is required to adopt Financial Accounting Standards Board
Statement No. 123, "Accounting for Stock-Based Compensation" (the "Statement")
in 1997. The Statement allows companies to measure compensation cost in
connection with employee stock compensation plans using a fair value based
method or continue to use an intrinsic value method, which generally does not
result in compensation cost. The Company currently plans to continue using the
intrinsic value based method.
-13-
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See following "List of Financial Statements and Financial Statement
Schedules", and accompanying reports, statements and schedules, which follow
beginning on page F.1, all of which are incorporated by reference herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
-14-
<PAGE> 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information in response to this item is incorporated herein by
reference to "Election of Directors" in the Registrant's Proxy Statement for
its 1997 Annual Meeting of Shareholders ("1997 Proxy Statement") and from
"Security Ownership of Certain Beneficial Owners and Management-- Section 16(a)
Beneficial Ownership Reporting Compliance" in the 1997 Proxy Statement and
"Executive Officers of the Registrant" in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to the paragraph under "Election of
Directors --Directors' Compensation" and "Executive Compensation" in the 1997
Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to "Security Ownership of Certain
Beneficial Owners and Management" in the 1997 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
-15-
<PAGE> 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) Documents filed:
1. and 2. Financial Statements and Financial Statement
Schedules. See following List of Financial
Statements and Financial Statement Schedules, on page
F-1, which is incorporated herein by reference.
3. Exhibits. See Exhibit Index included as the last
pages of this report, which index is incorporated
herein by reference.
(b) Reports on Form 8-K.
No reports on Form 8-K filed by the Company during the last quarter of
fiscal 1996.
-16-
<PAGE> 18
PLEXUS CORP. 10-K
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
SEPTEMBER 30, 1996
CONTENTS
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
Report of Independent Accountants F-2
Consolidated Statements of Operations for the three years ended F-3
September 30, 1996, 1995 and 1994
Consolidated Balance Sheets as of September 30, 1996 and 1995 F-4
Consolidated Statements of Stockholders' Equity for the three years
ended September 30, 1996, 1995 and 1994 F-5
Consolidated Statements of Cash Flows for the three years ended
September 30, 1996, 1995 and 1994 F-6
Notes to Consolidated Financial Statements F-7 to F-11
Financial Statement Schedule:
Report of Independent Accountants F-12
Schedule II - Valuation and Qualifying Accounts F-13
</TABLE>
F-1
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS PLEXUS CORP.
We have audited the accompanying consolidated balance sheets of Plexus Corp.
and Subsidiaries as of September 30, 1996 and 1995 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended September 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Plexus Corp. and
Subsidiaries as of September 30, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1996, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
November 13, 1996
F-2
<PAGE> 20
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net sales $316,124 $283,134 $242,483
Cost of sales 288,791 259,438 226,313
- -------------------------------------------------------------------------------------------------------
Gross profit 27,333 23,696 16,170
Selling and administrative expenses 13,346 11,261 8,244
- -------------------------------------------------------------------------------------------------------
Operating income 13,987 12,435 7,926
- -------------------------------------------------------------------------------------------------------
Other income (expense):
Interest (1,924) (2,470) (3,152)
Miscellaneous 314 317 156
- -------------------------------------------------------------------------------------------------------
(1,610) (2,153) (2,996)
- -------------------------------------------------------------------------------------------------------
Income before income taxes 12,377 10,282 4,930
Income taxes 4,946 3,939 1,873
- -------------------------------------------------------------------------------------------------------
Net income $ 7,431 $ 6,343 $ 3,057
=======================================================================================================
Net income per common and common
equivalent share:
Primary $ 1.04 $ .89 $ .46
=======================================================================================================
Fully diluted $ 1.03 $ .88 $ .46
=======================================================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-3
<PAGE> 21
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND 1995
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Assets 1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,847 $ 3,569
Accounts receivable, net of allowance of $275 and $145
in 1996 and 1995, respectively 35,312 47,560
Inventories 54,386 48,966
Deferred income taxes 1,753 904
Prepaid expenses and other 1,451 1,930
- ------------------------------------------------------------------------------------------------------
Total current assets 94,749 102,929
Property, plant and equipment, net 12,423 11,829
Other 202 330
- ------------------------------------------------------------------------------------------------------
Total assets $107,374 $115,088
======================================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 63 $ 107
Accounts payable 27,758 23,279
Customer deposits 8,614 3,530
Accrued liabilities:
Salaries and wages 3,148 2,618
Other 3,741 2,093
- ------------------------------------------------------------------------------------------------------
Total current liabilities 43,324 31,627
Long-term debt 15,372 41,734
Deferred income taxes 661 718
Stockholders' equity:
Series A preferred stock, $.01 par value, $1,000 face value,
7,000 shares authorized, issued and outstanding
(aggregate liquidation preference of $7 million) 0 0
Preferred stock, $.01 par value, 4,993,000 shares authorized,
none issued or outstanding - -
Common stock, $.01 par value, 30,000,000 shares authorized,
6,501,196 and 6,491,332 issued and outstanding, respectively 65 65
Additional paid-in capital 14,253 14,160
Retained earnings 33,699 26,784
- ------------------------------------------------------------------------------------------------------
48,017 41,009
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $107,374 $115,088
======================================================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-4
<PAGE> 22
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PREFERRED STOCK COMMON STOCK PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, October 1, 1993 - $- 6,448,173 $64 $ 6,809 $17,928 $24,801
Exercise of stock options - - 12,325 1 20 - 21
Issuance of Series A
Preferred Stock 7,000 0 - - 7,000 - 7,000
Net income - - - - - 3,057 3,057
- --------------------------------------------------------------------------------------------------------------
Balances, September 30, 1994 7,000 0 6,460,498 65 13,829 20,985 34,879
Exercise of stock options - - 30,834 - 331 - 331
Net income - - - - - 6,343 6,343
Preferred stock dividends
($77.69 per share) - - - - - (544) (544)
- --------------------------------------------------------------------------------------------------------------
Balances, September 30, 1995 7,000 0 6,491,332 65 14,160 26,784 41,009
Exercise of stock options - - 9,864 - 93 - 93
Net income - - - - - 7,431 7,431
Preferred stock dividends
($73.71 per share) - - - - - (516) (516)
- --------------------------------------------------------------------------------------------------------------
Balances, September 30, 1996 7,000 $0 6,501,196 $65 $14,253 $33,699 $48,017
==============================================================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-5
<PAGE> 23
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995 1994
<S> <C> <C> <C>
Net income $ 7,431 $ 6,343 $ 3,057
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and amortization 3,653 3,237 3,103
Provision for inventories and accounts
receivable allowances 2,145 341 566
Deferred income taxes (906) 92 (156)
Changes in assets and liabilities:
Accounts receivable 12,060 (4,050) (22,374)
Inventories (7,377) 10,929 (11,158)
Prepaid expenses and other 479 1,270 (690)
Accounts payable 4,479 (13,612) 12,869
Customer deposits 5,084 29 2,627
Accrued liabilities 2,178 (333) 860
Other 17 (58) 125
- ---------------------------------------------------------------------------------------------
Cash flows provided by (used in)
operating activities 29,243 4,188 (11,171)
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment 8 19 9,104
Payments for property, plant and equipment (4,144) (2,106) (5,288)
- ---------------------------------------------------------------------------------------------
Cash flows provided by (used in)
investing activities (4,136) (2,087) 3,816
- ---------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 196,300 121,900 110,791
Payments on debt (222,706) (121,300) (110,219)
Issuance of preferred stock - - 7,000
Issuance of common stock 93 331 21
Payments of preferred stock dividends (516) (544) -
- ---------------------------------------------------------------------------------------------
Cash flows provided by (used in)
financing activities (26,829) 387 7,593
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,722) 2,488 238
Cash and cash equivalents, beginning of year 3,569 1,081 843
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 1,847 $ 3,569 $ 1,081
=============================================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
F-6
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 / / DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business: Plexus Corp. offers contract development, design,
manufacturing and test services primarily to original equipment manufacturers
in the computer (primarily mainframes and peripherals), medical, industrial,
telecommunications and transportation electronics industries. The Company
offers a full range of services including product development, printed circuit
board (PCB) design, material procurement and management, PCB and higher level
assembly, functional and in-circuit testing, final system box build and
distribution.
The contract manufacturing services are provided on either a turnkey basis,
where the Company procures certain or all of the materials required for product
assembly, or on a consignment basis, where the customer supplies materials
necessary for product assembly. Turnkey services include material procurement
and warehousing, in addition to manufacturing, and involve greater resource
investment than consignment services. The Company has operations in Neenah,
Wisconsin and Richmond, Kentucky.
Consolidation Principles: The consolidated financial statements include the
accounts of Plexus Corp. and its subsidiaries (together "the Company"). All
significant intercompany transactions have been eliminated.
Cash Equivalents: The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.
Inventories: Inventories are valued primarily at the lower of cost or market.
Cost is determined by the first-in, first-out (FIFO) method.
Property, Plant and Equipment and Depreciation: These assets are stated at
cost. Depreciation, determined on the straight-line method, is based on lives
assigned to the major classes of depreciable assets as follows:
<TABLE>
<S> <C>
Buildings and improvements 18-40 years
Machinery and equipment 3-10 years
</TABLE>
Revenue Recognition: Revenue is recognized primarily when inventory is shipped.
Revenue and profit relating to product design and development contracts (such
sales are less than 10% of total revenue) are recognized as costs are incurred
utilizing the percentage-of-completion method; any losses are recognized when
anticipated. Progress towards completion of product design and development
contracts are consistently based on units of work for labor content and cost
for component content.
Income Taxes: Deferred income taxes are provided for differences between the
bases of assets and liabilities for financial and tax reporting purposes.
Stock Options: Proceeds from the sale of newly issued common stock to employees
under the Company's stock option plan are credited to common stock to the
extent of par value and the excess to additional paid-in capital. Income tax
benefits attributable to stock options exercised are recorded as an increase in
additional paid-in capital.
Net Income Per Common and Common Equivalent Share: The computation of primary
net income per common share is based upon the weighted average number of common
shares outstanding plus the effect of common shares contingently issuable
relating to outstanding stock options using the treasury stock method (weighted
average shares were 6,632,363 in fiscal 1996, 6,583,032 in fiscal 1995 and
6,566,625 in fiscal 1994) and net income reduced for preferred stock dividends.
The computation of fully diluted net income per common share reflects
additional dilution from stock options and convertible preferred shares using
the if-converted method (weighted average shares were 7,188,214 in fiscal 1996,
7,249,286 in fiscal 1995 and 6,705,239 in fiscal 1994).
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Reclassification: Certain prior years' amounts have been reclassified to
conform to the 1996 presentation.
F-7
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 / / INVENTORIES
Inventories as of September 30, 1996 and 1995 consist of (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Assembly parts $37,941 $33,950
Work-in-process 16,281 14,782
Finished goods 164 234
---------------------------
$54,386 $48,966
===========================
</TABLE>
NOTE 3 / / PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of September 30, 1996 and 1995 consist
of (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Land, buildings and improvements $ 8,414 $ 8,395
Machinery and equipment 25,262 21,699
------------------------------
33,676 30,094
Less accumulated depreciation 21,253 18,265
------------------------------
$12,423 $11,829
==============================
</TABLE>
NOTE 4 / / DEBT
Long-term debt as of September 30, 1996 and 1995 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Revolving credit arrangement $15,200 $41,500
Other notes and obligations
with a weighted average
interest rate of 5.5% 235 341
--------------------------
15,435 41,841
Less current portion 63 107
--------------------------
$15,372 $41,734
==========================
</TABLE>
The Company's revolving credit arrangement was amended in August 1996. The
agreement provides for maximum borrowings of $40 million (previously $55
million), with all or a portion of the principal bearing interest at a
prime-based or a LIBOR-based rate as elected by the Company. These rates range
from LIBOR plus 0.875% to LIBOR plus 2% and prime less 1/4% to prime plus 1/4%
(previously LIBOR plus 2% to LIBOR plus 2 1/2% and prime plus 1/4% to prime plus
1/2%), depending on the Company's consolidated debt-to-net worth ratio, as
defined by the loan agreement. The weighted average interest rate of this
agreement was 6.5% as of September 30, 1996. The amount available under the
agreement is limited to the sum of 80% of qualified accounts receivable and the
lesser of 50% or $27.5 million of qualified inventory, and is collateralized by
accounts receivable and inventories. A commitment fee of 1/8 of 1% (previously
1/4 of 1%) per annum on the unused portion of this agreement is payable
quarterly. The agreement matures in July 1998. The revolving credit agreement,
as amended, includes covenants which require the maintenance of various
debt-to-net worth ratios.
The carrying amount of the Company's long-term debt approximates fair value.
The aggregate scheduled maturities of long-term debt in subsequent years are as
follows (in thousands):
<TABLE>
<S> <C>
1997 $ 63
1998 15,209
1999 10
2000 10
2001 11
Thereafter 132
-------
$15,435
=======
</TABLE>
Cash paid for interest in fiscal 1996, 1995 and 1994 was $2.0 million, $3.0
million and $3.2 million, respectively.
F-8
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 / / INCOME TAXES
Income tax expense (benefit) consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Currently payable:
Federal $4,983 $3,209 $1,706
State 869 638 323
------------------------
5,852 3,847 2,029
------------------------
Deferred
Federal (800) 52 (210)
State (106) 40 54
------------------------
(906) 92 (156)
------------------------
$4,946 $3,939 $1,873
========================
</TABLE>
Following is a reconciliation of the Federal statutory income tax rate to the
effective tax rates reflected in the consolidated statements of operations for
fiscal 1996, 1995 and 1994:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Federal statutory income tax rate 34.0% 34.0% 34.0%
Increase (decrease) resulting from:
State income taxes, net of
Federal income tax benefit 4.1 4.4 5.0
Other, net 1.9 (0.1) (1.0)
------------------------
Effective income tax rate 40.0% 38.3% 38.0%
========================
</TABLE>
The components of the net deferred income tax asset as of September 30,
1996 and 1995, consist of (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Inventories $ 713 $ 426
Accrued benefits 582 521
Capital losses 207 237
Other 458 371
----------------------
1,960 1,555
Less valuation allowance (207) (181)
----------------------
1,753 1,374
----------------------
Deferred tax liabilities:
Property, plant and equipment 661 997
Other - 191
----------------------
661 1,188
----------------------
Net deferred income tax asset $1,092 $ 186
======================
</TABLE>
The Company records a valuation allowance to reflect the estimated amount of
deferred tax assets which relate to the realization of capital losses.
Cash paid for income taxes in fiscal 1996, 1995 and 1994 was $5.0 million, $4.6
million and $1.4 million, respectively.
NOTE 6 / / STOCKHOLDERS' EQUITY
During 1994, the Company issued 7,000 shares of Series A Preferred Stock (the
"Preferred Shares") with a face value of $1,000 per share. Dividends are earned
on the face value of the Preferred Shares at the prime rate less 1%. Dividends
are cumulative and payable semi-annually in arrears when and as declared by the
Company's Board of Directors. At September 30, 1996, dividends of $18.125 per
share (aggregate $126,876) were in arrears on the Preferred Shares. The Company
may redeem the Preferred Shares at face value plus any accrued but unpaid
dividends, whether declared or not, with notice as defined in the agreement.
Through June 30, 2004, the Preferred Shares are convertible into common stock
at a conversion price of $12.625 per share. The Company has reserved 554,455
shares of its authorized but unissued common stock for
possible conversion.
NOTE 7 / / LEASE COMMITMENTS
The Company has a number of operating lease agreements primarily involving
manufacturing equipment, computerized design equipment and manufacturing
facilities. These leases are noncancelable and expire on various dates through
2014. Rent expense under all operating leases during fiscal 1996, 1995 and 1994
was approximately $13.5 million, $12.5 million and $10.5 million, respectively.
Renewal and purchase options are available on certain of these leases.
During 1996, the Company acquired certain manufacturing equipment that was
subject to operating leases for $1.9 million. The equipment was recorded at its
fair value which resulted in a writedown of approximately $200,000. The
equipment is being depreciated over its remaining useful life.
F-9
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future minimum annual payments on operating leases are as follows (in
thousands):
<TABLE>
<S> <C>
1997 $ 8,054
1998 4,013
1999 2,082
2000 1,968
2001 1,848
Thereafter 16,844
-------
$34,809
=======
</TABLE>
NOTE 8 / / BENEFIT PLANS
The Company has reserved 1.9 million shares of common stock for grant to
officers and key employees under employee stock option plans. The exercise
price of each option granted shall not be less than the fair market value on
the date of grant and vest over a three year period from date of grant. The
plan also authorizes the Company to grant 750,000 stock appreciation rights,
none of which have been granted. Additionally, each independent outside
director is granted 1,500 stock options each December 1 with option pricing and
vesting terms similar to the employee plans. The 100,000 shares of common stock
authorized under this plan may come from any combination of authorized but
unissued shares, treasury stock or the open market. A summary of stock option
activity follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Outstanding at beginning of year 750,705 561,377 402,877
Granted 281,700 245,000 178,000
Exercised (between $3.88 and
$13.69 per share) (9,864) (30,834) (16,500)
Lapsed (8,002) (24,838) (3,000)
------------------------------
Outstanding at end of year 1,014,539 750,705 561,377
==============================
Exercisable at end of year 530,540 349,945 252,696
==============================
Shares available for future options
at end of year 606,142 879,840 2
==============================
</TABLE>
Options outstanding as of September 30, 1996 have exercise prices ranging from
$2.54 to $17.44 per share.
The Company is required to adopt Financial Accounting Standards Board Statement
No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123) in 1997. The
Statement allows companies to measure compensation cost in connection with
employee stock compensation plans using a fair value based method or continue
to use an intrinsic value method, which generally does not result in
compensation cost. The Company currently plans to continue using the intrinsic
value-based method.
The Company's 401(k) savings plan covers all employees with one or more years
of service. The Company matches employee contributions up to 2.5% of eligible
earnings. The Company's contributions for fiscal 1996, 1995 and 1994 totaled
$828,000, $644,000 and $563,000, respectively.
In September 1996, the Company entered into nonqualified deferred compensation
agreements with certain of its officers. Under the agreements, the Company has
agreed to pay certain amounts annually for the first 15 years subsequent to
retirement or to a designated beneficiary upon death. It is management's intent
that life insurance contracts owned by the Company will fund these agreements.
Expense for these agreements totaled $29,000 in fiscal 1996.
The Company is not obligated to provide any postretirement medical or life
insurance benefits to employees.
NOTE 9 / / BUSINESS SEGMENT AND MAJOR CUSTOMERS
The Company and its subsidiaries operate in one business segment, the
production and sale of electronic products including the designing,
manufacturing, programming and testing of computerized electronic assemblies.
The following table summarizes the percentage of net sales to customers that
account for more than 10% of net sales in fiscal 1996, 1995
and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Customer A 26% 26% 39%
Customer B 13% 17% 16%
</TABLE>
Accounts receivable related to customers A and B represented 27% of the
Company's trade accounts receivable as of September 30, 1996.
F-10
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 / / QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for fiscal 1996 and 1995 consists of (in
thousands except per share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
1996 Quarter Quarter Quarter Quarter Total
<S> <C> <C> <C> <C> <C>
Net sales $71,308 $75,286 $86,066 $83,464 $316,124
Gross profit 4,673 5,176 7,923 9,561 27,333
Net income 805 839 2,604 3,183 7,431
Income per common share
Primary $ 0.11 $ 0.12 $ 0.36 $ 0.45 $ 1.04
Fully diluted 0.11 0.12 0.36 0.44 1.03
1995
Net sales $65,341 $69,380 $72,354 $76,059 $283,134
Gross profit 4,358 5,938 6,275 7,125 23,696
Net income 895 1,470 1,823 2,155 6,343
Income per common share*
Primary $ 0.13 $ 0.21 $ 0.26 $ 0.30 $ 0.89
Fully diluted 0.13 0.21 0.26 0.30 0.88
</TABLE>
(*) Income per common share is computed independently for each quarter. The
annual per share amount may not equal the sum of the quarterly amounts due to
rounding.
F-11
<PAGE> 29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Plexus Corp.
Our report on the consolidated financial statements of Plexus Corp. is included
on page F-2 of the Form 10-K. In connection with our audits of such financial
statements, we have also audited the related consolidated financial statement
schedule listed in the index on page F-1 of this Form 10-K.
In our opinion, the consolidated financial statement schedule referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
November 13, 1996
F-12
<PAGE> 30
PLEXUS CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended September 30, 1996, 1995 and 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and Deductions At End of
Descriptions of Period Expenses (A) Period
- ---------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1996:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates) $ 145 $ 188 $ 58 $ 275
Allowance for inventory obsolescence
(deducted from the asset to which it relates) 307 1,957 798 1,466
-------------- -------------- -------------- --------------
$ 452 $ 2,145 $ 856 $ 1,741
============== ============== ============== ==============
1995:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates) $ 130 $ 189 $ 174 $ 145
Allowance for inventory obsolescence
(deducted from the asset to which it relates) 735 152 580 307
-------------- -------------- -------------- --------------
$ 865 $ 341 $ 754 $ 452
============== ============== ============== ==============
1994:
Allowance for losses on accounts receivable
(deducted from the asset to which it relates $ 130 $ 7 $ 7 $ 130
Allowance for inventory obsolescence
(deducted from the asset to which it relates) 176 559 --- 735
-------------- -------------- -------------- --------------
$ 306 $ 566 $ 7 $ 865
============== ============== ============== ==============
</TABLE>
F-13
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
December 20, 1996
PLEXUS CORP. By /s/ PETER STRANDWITZ
(Registrant) ---------------------------
Peter Strandwitz, Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter Strandwitz, John L. Nussbaum and
Joseph D. Kaufman, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments to this report, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and any other regulatory authority, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirement of the Security Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.*
SIGNATURE AND TITLE
/s/ Peter Strandwitz /s/ John J. McDonough
- ------------------------------------- ------------------------------------
Peter Strandwitz, Chairman and John J. McDonough, Director
Chief Executive Officer,
and Director
/s/ John L. Nussbaum /s/ Harold R. Miller
- ------------------------------------- ------------------------------------
John L. Nussbaum, President and Harold R. Miller, Director
Chief Operating Officer, and Director
/s/ Thomas B. Sabol /s/ Gerald A. Pitner
- ------------------------------------- ------------------------------------
Thomas B. Sabol, Vice President- Gerald A. Pitner, Director
Finance and Chief Financial Officer
/s/ William F. Denney /s/ Thomas J. Prosser
- ------------------------------------- ------------------------------------
William F. Denney, Vice President, Thomas J. Prosser, Director
Treasurer and Controller
/s/ Rudolph T. Hoppe
- -------------------------------------
Rudolph T. Hoppe, Director
- ---------------
* Each of the above signatures is affixed as of December 20, 1996.
<PAGE> 32
EXHIBIT INDEX
PLEXUS CORP.
10-K FOR YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
INCORPORATED BY FILED
EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH
- ----------- ------- ------------ --------
<S> <C> <C> <C>
3(i) Restated Articles of Plexus Exhibit 3(i) to
Corp., as amended through Plexus' Quarterly
June 29, 1994 Report on Form 10-Q
for the quarter ended
June 30, 1994
("6/30/94 10-Q")
3(ii) Bylaws of Plexus Corp., as
amended through November 14, 1996 X
4.1 Restated Articles of Exhibit 3(i) to
Incorporation of Plexus Corp. 6/30/94 10-Q
10.1 Supplemental Executive Retirement
Agreements dated as of September
19, 1996**
(a) Peter Strandwitz X
(b) John Nussbaum X
10.2 Employment Agreements dated
11/15/88** with
(a) William F. Denney Exhibit 10.10(b) to
1988 10-K
(b) Joseph D. Kaufman Exhibit 10.10(c) to
1988 10-K
10.3 Employee Savings Plan and
Trust**:
(a) Plan Document X
(b) Non-Standardized Form Adoption X
Agreement
10.4 1988 Stock Option Plan, as
amended** Exhibit 12.12 to
Plexus' Annual Report
on Form 10-K for the
year ended
September 30, 1992
("1992 10-K")
</TABLE>
EI-1
<PAGE> 33
<TABLE>
<CAPTION>
INCORPORATED BY FILED
EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH
----------- ------- ------------ --------
<S> <C> <C> <C>
10.5(a) Amended and Restated Revolving Exhibit 10.17 to
Credit Agreement dated as of Plexus' Quarterly
March 18, 1996 among Firstar Bank Report on Form 10-Q
of Milwaukee, Bank One of for the quarter ended
Milwaukee, LaSalle National Bank March 31, 1996
of Chicago, and Harris Trust and ("3/31/96 10-Q")
Savings Bank, and Firstar Bank as
Agent for the Banks (the "Credit
Agreement")*
(b) Security and Guaranty Agreements
related thereto by:
(i) EAC Exhibit 10.14(b)(1)
to Plexus' Quarterly
Report on Form 10-Q
for the quarter ended
March 31, 1991
("3/3/91 10-Q")
(ii)(A) Plexus Corp. Exhibit 10.14(b)(ii)
to 3/31/91 10-Q
(B) Amendment No. 1 thereto Exhibit
dated March 1, 1992 10.5(b)(ii)(B) to
Plexus' Annual Report
on Form 10-K for the
year ended September
30, 1993 ("1993 10-
K")
(C) Amendment No. 2 thereto Exhibit
dated July 30, 1993 10.5(b)(ii)(C) to
1993 10-K
(iii) Technology Group, Inc. Exhibit 10.14(b)(iii)
to 3/31/91 10-Q
(c) Amendment No. 1 to the Credit X
Agreement dated as of August 28,
1996
10.6(a) Plexus Home Automation Limited Exhibit 10.16 to 1992
Partnership Agreement dated as of 10-K
4/1/92 among Plexus General
Partner Corp. and the Limited
Partners
(b) Amendments thereto Exhibit 10.7(b) to
1993 10-K
EI-2
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
INCORPORATED BY FILED
EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH
----------- ------- ------------ --------
<S> <C> <C>
10.7(a) Lease Agreement between Neenah Exhibit 10.8(a) to
(WI) QRS 11-31, Inc. ("QRS: 1994 10-K
11-31") and EAC, dated August 11,
1994*
(b) Bill of Sale of EAC to QRS: 11-31 Exhibit 10.8(b) to
dated August 31, 1994, together 1994 10-K
with related Seller's/Lessee's
Certificate of EAC
(c) Guaranty and Suretyship Agreement Exhibit 10.8(c) to
between Plexus Corp. and QRS: 11- 1994 10-K
31 dated August 11, 1994,
together with related Guarantor's
Certificate of Plexus Corp.
10.8 Plexus Corp. 1995 Executive Stock Exhibit 10.9 to 1994
Option Plan** 10-K
10.9 Plexus Corp. 1995 Directors' Exhibit 10.10 to 1994
Stock Option Plan** 10-K
10.10 Plexus Corp. 1995 Senior Exhibit 10.11 to 1994
Executive Incentive Compensation 10-K
Plan**
10.11 Master Lease dated October 21, Exhibit 10.12 to 1994
1994 between Plexus and Norwest 10-K
Equipment Finance*
10.12 Master Lease Agreement dated Exhibit 10.13 to 1994
August 17, 1992 between Plexus 10-K
and Capital Associates Intl.,
Inc.*
10.13 Lease Agreement dated January 31, Exhibit 10.14 to 1994
1992 between Plexus and Hewlett- 10-K
Packard Company*
10.14 Form of Lease of Personal Exhibit 10.15 to 1994
Property between EAC and M&I 10-K
First National Leasing Corp.
10.15 Lease Agreement dated Exhibit 10.16 to
February 12, 1996 between Plexus 3/31/96 10-Q
and Oneida Nation Electronics
EI-3
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
INCORPORATED BY FILED
EXHIBIT NO. EXHIBIT REFERENCE TO HEREWITH
----------- ------- ------------ --------
<S> <C> <C> <C>
10.16 Master Equipment Lease dated X
January 25, 1996 between Cargill
Leasing Corporation and Plexus
11 Statement regarding computation X
of Per Share Earnings
21 List of Subsidiaries X
23 Consent of Coopers & Lybrand X
L.L.P.
24 Power of Attorney (Signature Page
Hereto)
27 Financial Data Schedule X
</TABLE>
- ----------------------
* Excludes certain schedules and/or exhibits, which will be furnished to the
Commission upon request.
** Designates management compensatory plans or agreements.
EI-4
<PAGE> 1
EXHIBIT 3(ii)
BYLAWS
of
PLEXUS CORP.
as
Amended and Restated
by the Board of Directors
on
November 14, 1996
<PAGE> 2
ARTICLE I. OFFICES; RECORDS
1.01. Principal and Business Offices. The corporation may
have such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the business
of the corporation may require from time to time.
1.02. Registered Office and Registered Agent. The registered
office of the corporation required by the Wisconsin Business Corporation Law to
be maintained in the State of Wisconsin may be, but need not be, identical with
the principal office in the State of Wisconsin. The address of the registered
office may be changed from time to time by any officer or by the registered
agent. The office of the registered agent of the corporation shall be
identical to such registered office.
1.03. Corporate Records. The following documents and records
shall be kept at the corporation's principal office or at such other reasonable
location as may be specified by the corporation:
(a) Minutes of shareholders' and Board of
Directors' meetings and any written notices thereof.
(b) Records of actions taken by the shareholders
or directors without a meeting.
(c) Records of actions taken by committees of the
Board of Directors.
(d) Accounting records.
(e) Records of its shareholders.
(f) Current Bylaws.
(g) Written waivers of notice by shareholders or
directors (if any).
(h) Written consents by shareholders or directors
for actions without a meeting (if any).
(i) Voting trust agreements (if any).
(j) Stock transfer agreements to which the
corporation is a party or of which it has notice (if any).
-2-
<PAGE> 3
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders
shall be held on the third Wednesday of February, or on such other date and at
such time as may be fixed by or under the authority of the Board of Directors,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting is a legal holiday in the State of Wisconsin, such meeting shall be
held on the next succeeding business day. If the election of directors is not
held on the day designated herein, or fixed as herein provided, for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a meeting of the shareholders
as soon thereafter as may be convenient.
2.02. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the Chairman of the Board and Chief Executive
Officer, the President or the Board of Directors. If and as required by the
Wisconsin Business Corporation Law, a special meeting shall be called upon
written demand describing one or more purposes for which it is to be held by
holders of shares with at least 10% of the votes entitled to be cast on any
issue proposed to be considered at the meeting. The purpose or purposes of any
special meeting shall be described in the notice required by Section 2.04 of
these Bylaws.
2.03. Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Wisconsin, as the place of
meeting for any annual meeting or any special meeting. If no designation is
made, the place of meeting shall be the principal office of the corporation but
any meeting may be adjourned to reconvene at any place designated by vote of a
majority of the shares represented thereat.
2.04. Notices to Shareholders. (a) Required Notice.
Written notice stating the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten (10) days nor more than sixty (60) days before
the date of the meeting (unless a different time is provided by law or the
Articles of Incorporation), by or at the direction of the Chairman of the
Board, if there is one, the President or the Secretary, to each shareholder
entitled to vote at such meeting or, for the fundamental transactions described
in subsections (e)(1) to (4) below (for which the Wisconsin Business
Corporation Law requires that notice be given to shareholders not entitled to
vote), to all shareholders. If mailed, such notice is effective when deposited
in the United States mail, and shall be addressed to the shareholder's address
shown in the current record of shareholders of the corporation, with postage
thereon prepaid.
-3-
<PAGE> 4
At least twenty (20) days' notice shall be provided if the purpose, or one of
the purposes, of the meeting is to consider a plan of merger or share exchange
for which shareholder approval is required by law, or the sale, lease, exchange
or other disposition of all or substantially all of the corporation's property,
with or without good will, otherwise than in the usual and regular course of
business.
(b) Adjourned Meeting. Except as provided in the
next sentence, if any shareholder meeting is adjourned to a different date,
time, or place, notice need not be given of the new date, time, and place, if
the new date, time, and place is announced at the meeting before adjournment.
If a new record date for the adjourned meeting is or must be fixed, then notice
must be given pursuant to the requirements of paragraph (a) of this Section
2.04, to those persons who are shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive
notice in accordance with Article VI of these Bylaws.
(d) Contents of Notice. The notice of each
special shareholder meeting shall include a description of the purpose or
purposes for which the meeting is called. Except as otherwise provided in
subsection (e) of this Section 2.04, in the Articles of Incorporation, or in
the Wisconsin Business Corporation Law, the notice of an annual shareholder
meeting need not include a description of the purpose or purposes for which the
meeting is called.
(e) Fundamental Transactions. If a purpose of
any shareholder meeting is to consider either: (1) a proposed amendment to the
Articles of Incorporation (including any restated articles); (2) a plan of
merger or share exchange for which shareholder approval is required by law; (3)
the sale, lease, exchange or other disposition of all or substantially all of
the corporation's property, with or without good will, otherwise than in the
usual and regular course of business; (4) the dissolution of the corporation;
or (5) the removal of a director, the notice must so state and in cases (1),
(2) and (3) above must be accompanied by, respectively, a copy or summary of
the: (1) proposed articles of amendment or a copy of the restated articles
that identifies any amendment or other change; (2) proposed plan of merger or
share exchange; or (3) proposed transaction for disposition of all or
substantially all of the corporation's property. If the proposed corporate
action creates dissenters' rights, the notice must state that shareholders and
beneficial shareholders are or may be entitled to assert dissenters' rights,
and must be accompanied by a copy of Sections 180.1301 to 180.1331 of the
Wisconsin Business Corporation Law.
2.05. Fixing of Record Date. The Board of Directors may fix
in advance a date as the record date for one or more
-4-
<PAGE> 5
voting groups for any determination of shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote, or to take any
other action, such date in any case to be not more than seventy (70) days prior
to the meeting or action requiring such determination of shareholders, and may
fix the record date for determining shareholders entitled to a share dividend
or distribution. If no record date is fixed for the determination of
shareholders entitled to demand a shareholder meeting, to notice of or to vote
at a meeting of shareholders, or to consent to action without a meeting, (a)
the close of business on the day before the corporation receives the first
written demand for a shareholder meeting, (b) the close of business on the day
before the first notice of the meeting is mailed or otherwise delivered to
shareholders, or (c) the close of business on the day before the first written
consent to shareholder action without a meeting is received by the corporation,
as the case may be, shall be the record date for the determination of
shareholders. If no record date is fixed for the determination of shareholders
entitled to receive a share dividend or distribution (other than a distribution
involving a purchase, redemption or other acquisition of the corporation's
shares), the close of business on the day on which the resolution of the Board
of Directors is adopted declaring the dividend or distribution shall be the
record date. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof unless the Board of
Directors fixes a new record date and except as otherwise required by law. A
new record date must be set if a meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
2.06. Shareholder List. The officer or agent having charge
of the stock transfer books for shares of the corporation shall, before each
meeting of shareholders, make a complete record of the shareholders entitled to
notice of such meeting, arranged by class or series of shares and showing the
address of and the number of shares held by each shareholder. The shareholder
list shall be available at the meeting and may be inspected by any shareholder
or his or her agent or attorney at any time during the meeting or any
adjournment. Any shareholder or his or her agent or attorney may inspect the
shareholder list beginning two (2) business days after the notice of the
meeting is given and continuing to the date of the meeting, at the
corporation's principal office or at a place identified in the meeting notice
in the city where the meeting will be held and, subject to Section
180.1602(2)(b) 3 to 5 of the Wisconsin Business Corporation Law, may copy the
list, during regular business hours and at his or her expense, during the
period that it is available for inspection hereunder. The original stock
transfer books and nominee certificates on file with the corporation (if any)
shall be prima facie evidence as to who are the shareholders entitled to
inspect the shareholder list or to vote at any meeting of shareholders.
Failure to comply with the
-5-
<PAGE> 6
requirements of this section shall not affect the validity of any action taken
at such meeting.
2.07. Quorum and Voting Requirements. Except as otherwise
provided in the Articles of Incorporation or in the Wisconsin Business
Corporation Law, a majority of the votes entitled to be cast by shares entitled
to vote as a separate voting group on a matter, represented in person or by
proxy, shall constitute a quorum of that voting group for action on that matter
at a meeting of shareholders. If a quorum exists, action on a matter, other
than the election of directors, by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action unless a greater number of affirmative votes is required by the
Wisconsin Business Corporation Law or the Articles of Incorporation. If the
Articles of Incorporation or the Wisconsin Business Corporation Law provide for
voting by two (2) or more voting groups on a matter, action on that matter is
taken only when voted upon by each of those voting groups counted separately.
Action may be taken by one (1) voting group on a matter even though no action
is taken by another voting group entitled to vote on the matter. Once a share
is represented for any purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting, it is
considered present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting unless a new
record date is or must be set for that meeting.
2.08. Conduct of Meetings. The Chairman of the Board and
Chief Executive Officer, or if there is none, or in his or her absence, the
President, and in the President's absence, the Executive Vice President, and in
the Executive Vice President's absence, a Vice President in the order provided
under Section 4.07 of these Bylaws, and in their absence, any person chosen by
the shareholders present shall call the meeting of the shareholders to order
and shall act as chairperson of the meeting, and the Secretary shall act as
secretary of all meetings of the shareholders, but, in the absence of the
Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote in person or by proxy appointed in
writing by the shareholder or by his or her duly authorized attorney-in-fact.
All proxy appointment forms shall be filed with the Secretary or other officer
or agent of the corporation authorized to tabulate votes before or at the time
of the meeting. Unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest, a proxy
appointment may be revoked at any time. The presence of a shareholder who has
filed a proxy appointment shall not of itself constitute a revocation. No
proxy appointment
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shall be valid after eleven months from the date of its execution, unless
otherwise expressly provided in the appointment form. The Board of Directors
shall have the power and authority to make rules that are not inconsistent with
the Wisconsin Business Corporation Law as to the validity and sufficiency of
proxy appointments.
2.10. Voting of Shares. Each outstanding share shall be
entitled to one (1) vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares are
enlarged, limited or denied by the Articles of Incorporation or the Wisconsin
Business Corporation Law. Shares owned directly or indirectly by another
corporation are not entitled to vote if this corporation owns, directly or
indirectly, sufficient shares to elect a majority of the directors of such
other corporation. However, the prior sentence shall not limit the power of
the corporation to vote any shares, including its own shares, held by it in a
fiduciary capacity. Redeemable shares are not entitled to vote after notice of
redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
2.11. Prior Notice of Shareholder Nominations and/or
Proposals.
(a) Prior Notice for Annual Meetings. Except with
respect to nominations or proposals adopted or recommended by
the Board of Directors for inclusion in the corporation's
proxy statement for its annual meeting, a shareholder entitled
to vote at a meeting may nominate a person or persons for
election as directors or propose action(s) to be taken at a
meeting only if written notice of any shareholder nomination
and/or proposal to be considered for a vote at an annual
meeting of shareholders is delivered personally or mailed by
certified mail return receipt requested at least seventy (70)
days before the scheduled date of such meeting to the
Secretary of the corporation at the principal business office
of the corporation.
(b) Nominations. With respect to shareholder
nomination(s) for the election of directors, each such notice
shall set forth:
(1) the name and address of the
shareholder who intends to make the nomination(s), of
any beneficial owner of shares on whose behalf such
nomination is being made, and of the person(s) to be
nominated;
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(2) a representation that the
shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting
(including the number of shares the shareholder owns
and the length of time the shares have been held) and
that the shareholder intends to appear in person or
by proxy at the meeting to nominate the person(s)
specified in the notice;
(3) a description of all arrangements
and understandings between the shareholder or any
beneficial holder on whose behalf it holds such
shares, and their respective affiliates, of each
nominee and any other person(s), naming such
person(s), pursuant to which the nomination(s) are to
be made by the shareholder;
(4) such other information regarding
each nominee proposed by such shareholder which would
have been required to be included in the proxy
statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, whether or not
such rules are applicable, had such nominee be
nominated by the Board of Directors; and
(5) the consent of each nominee to
serve as a director of the corporation.
(c) Proposals. With respect to stockholder
proposal(s) for action to be taken at the annual meeting of
shareholders, the notice shall clearly set forth:
(1) the name and address of the
shareholder who intends to make the proposal(s);
(2) a representation that the
shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting
(including the number of shares the shareholder owns
and the length of time the shares have been held) and
that the shareholder intends to appear in person or
by proxy at the meeting to make the proposal(s)
specified in the notice;
(3) the proposal(s) and a brief
supporting statement of such proposal(s); and
(4) such other information regarding
the proposal(s) as would have been required to be
included in a proxy statement filed pursuant to the
rules of the Securities and Exchange
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Commission, whether or not such rules are applicable.
(d) Prior Notice for Special Meetings. Except with
respect to the nomination(s) or proposal(s) adopted or
recommended by the Board of Directors for inclusion in the
notice to shareholders for a special meeting of the
shareholders, a shareholder entitled to vote at a special
meeting may nominate a person or persons for election as
director(s) and/or propose action(s) to be taken at a meeting
only if written notice of any shareholder nomination(s) and/or
proposal(s) to be considered for a vote of the special meeting
is delivered personally or mailed by certified mail-return
receipt requested to the Secretary of the corporation at the
principal office of the corporation so that it is received in
a reasonable period of time before such special meeting and
only if such nomination or proposal is within the purposes
described in the notice to shareholders of the special
meeting. All of the notice requirements regarding shareholder
nominations and/or proposals applicable to annual meetings
shall also apply to nominations and/or proposals for special
meetings.
(e) Role of Chair. The chair of the meeting may
refuse to acknowledge any nomination and/or proposal of any
person made without compliance with the foregoing procedures.
This section shall not affect the corporation's rights or
responsibilities with respect to its proxies or proxy
statements for any meeting.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, its Board of Directors.
The number of directors of the corporation shall be not less than five (5) nor
more than nine (9), as determined from time to time by the Board of Directors.
3.02. Election, Removal, Tenure and Qualifications.
(a) Unless action is taken without a meeting under
Section 7.01 of these Bylaws, directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in
the election at a shareholders meeting at which a quorum is
present; i.e., the individuals with the largest number of
votes in favor of their election are elected as directors up
to the
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maximum number of directors to be chosen in the election.
Votes against a candidate are not given legal effect and are
not counted as votes cast in an election of directors. In the
event two (2) or more persons tie for the last vacancy to be
filled, a run-off vote shall be taken from among the
candidates receiving the tie vote.
(b) Each director shall hold office for the
remainder of the term for which he or she has been elected and
until the director's successor shall have been elected or
there is a decrease in the number of directors, or until his
or her prior death, resignation or removal.
(c) Any director or directors may be removed from
office by the shareholders if the number of votes cast to
remove the director exceeds the number cast not to remove him
or her, taken at a meeting of shareholders called for that
purpose, provided that the meeting notice states that the
purpose, or one of the purposes, of the meeting is removal of
the director. The removal may be made with or without cause
unless the Articles of Incorporation or these Bylaws provide
that directors may be removed only for cause. If a director
is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote
to remove that director.
(d) No person who shall have attained the age of 70
years shall be eligible for election or re-election to the
Board of Directors; provided, however, that with respect to
persons who have been elected as directors prior to the
corporation's 1997 annual meeting of shareholders, the age
"70" in the preceding clause shall be age 72; and,
notwithstanding the foregoing, such restrictions shall not
apply to any director who is also at that time a full-time
employee of the corporation. Any person attaining age 70 (or
72, as the case may be) during his or her term may continue to
serve as a director until the expiration of such term.
(e) A director may resign at any time by delivering
a written resignation to the Board of Directors, to the
Chairman and Chief Executive Officer or to the corporation
through the Secretary or otherwise.
(f) Directors need not be residents of the State of
Wisconsin or shareholders of the corporation, although the
Board of Directors may establish share ownership expectations
for persons who serve as directors.
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3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held, without other notice than this Bylaw, immediately
after the annual meeting of shareholders, and each adjourned session thereof.
The place of such regular meeting shall be the same as the place of the meeting
of shareholders which precedes it, or such other suitable place as may be
announced at such meeting of shareholders. The Board of Directors and any
committee may provide, by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional regular meetings
without other notice than such resolution.
3.04. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman and Chief
Executive Officer, the President or any two (2) directors. Special meetings of
any committee may be called by or at the request of the foregoing persons or
the chairperson of the committee. The persons calling any special meeting of
the Board of Directors or committee may fix any place, either within or without
the State of Wisconsin, as the place for holding any special meeting called by
them, and if no other place is fixed the place of meeting shall be the
principal office of the corporation in the State of Wisconsin.
3.05 Meetings By Telephone or Other Communication Technology.
(a) Any or all directors may participate in a
regular or special meeting or in a committee meeting of the
Board of Directors by, or conduct the meeting through the use
of, telephone or any other means of communication by which
either: (i) all participating directors may simultaneously
hear each other during the meeting or (ii) all communication
during the meeting is immediately transmitted to each
participating director, and each participating director is
able to immediately send messages to all other participating
directors.
(b) If a meeting will be conducted through the use
of any means described in paragraph (a), all participating
directors shall be informed that a meeting is taking place at
which official business may be transacted. A director
participating in a meeting by any means described in paragraph
(a) is deemed to be present in person at the meeting.
3.06. Notice of Meetings. Except as otherwise provided in
the Articles of Incorporation or the Wisconsin Business Corporation Law, notice
of the date, time and place of any special meeting of the Board of Directors
and of any special meeting of a committee of the Board shall be given orally,
in writing (which shall include facsimile and E-mail) to each director or
committee member at least 72 hours prior to the
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meeting, except that notice by telegram or personal delivery shall be effective
if given at least 24 hours prior to the meeting. The notice need not describe
the purpose of the meeting. Notice may be communicated in person, by
telephone, telegraph, facsimile or E-mail, or by mail or private carrier. Oral
notice is effective when communicated. Written notice is effective as follows:
If delivered in person, when received; if given by mail, when deposited,
postage prepaid, in the United States mail addressed to the director at his or
her business or home address (or such other address as the director may have
designated in writing filed with the Secretary); if given by facsimile, at the
time transmitted to a facsimile number at any address designated above; if
given by E-mail, at the time transmitted to an E-mail address provided by the
director; and if given by telegraph, when delivered to the telegraph company.
3.07. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law, a majority of the number of directors as provided in
Section 3.01 shall constitute a quorum of the Board of Directors. Except as
otherwise provided by the Wisconsin Business Corporation Law, a majority of the
number of directors appointed to serve on a committee shall constitute a quorum
of the committee.
3.08. Manner of Acting. Except as otherwise provided by the
Wisconsin Business Corporation Law or the Articles of Incorporation, the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors or any committee
thereof.
3.09. Conduct of Meetings. The Chairman and Chief Executive
Officer, or if there is none, or in his or her absence, the President, and in
the President's absence, the Executive Vice President, or in his or her
absence, a Vice President in the order provided under Section 4.07 of these
Bylaws, and in their absence, any director chosen by the directors present,
shall call meetings of the Board of Directors to order and shall chair the
meeting. The Secretary of the corporation shall act as secretary of all
meetings of the Board of Directors, but in the absence of the Secretary, the
presiding officer may appoint any assistant secretary or any director or other
person present to act as secretary of the meeting.
3.10. Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled by the shareholders or the Board of Directors. If the
directors remaining in office constitute fewer than a quorum of the Board, the
directors may fill a vacancy by the affirmative vote of a majority of all
directors remaining in office. If the vacant office was held by a director
elected by a voting group of shareholders, only the holders of shares of that
voting group may vote to fill the vacancy if it is filled by the shareholders,
and only the
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remaining directors elected by that voting group may vote to fill the vacancy
if it is filled by the directors. A vacancy that will occur at a specific
later date (because of a resignation effective at a later date or otherwise)
may be filled before the vacancy occurs, but the new director may not take
office until the vacancy occurs.
3.11. Compensation. The Board of Directors, irrespective of
any personal interest of any of its members, may fix the compensation of
directors.
3.12. Presumption of Assent. A director who is present and
is announced as present at a meeting of the Board of Directors or a committee
thereof at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless (i) the director objects at the
beginning of the meeting or promptly upon his or her arrival to holding the
meeting or transacting business at the meeting, or (ii) the director's dissent
or abstention from the action taken is entered in the minutes of the meeting,
or (iii) the director delivers his or her written dissent or abstention to the
presiding officer of the meeting before the adjournment thereof or to the
corporation immediately after the adjournment of the meeting. Such right to
dissent or abstain shall not apply to a director who voted in favor of such
action.
3.13. Committees. Unless the Articles of Incorporation
otherwise provide, the Board of Directors, by resolution adopted by the
affirmative vote of a majority of all the directors then in office, may create
one (1) or more committees, each committee to consist of two (2) or more
directors as members, which to the extent provided in the resolution as
initially adopted, and as thereafter supplemented or amended by further
resolution adopted by a like vote, may exercise the authority of the Board of
Directors, except that no committee may: (a) authorize distributions; (b)
approve or propose to shareholders action that the Wisconsin Business
Corporation Law requires be approved by shareholders; (c) fill vacancies on the
Board of Directors or any of its committees, except that the Board of Directors
may provide by resolution that any vacancies on a committee shall be filled by
the affirmative vote of a majority of the remaining committee members; (d)
amend the Articles of Incorporation; (e) adopt, amend or repeal Bylaws; (f)
approve a plan of merger not requiring shareholder approval; (g) authorize or
approve reacquisition of shares, except according to a formula or method
prescribed by the Board of Directors or (h) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of shares,
except within limits prescribed by the Board of Directors. The Board of
Directors may elect one or more of its members as alternate members of any such
committee who may take the place of any absent member or members at any meeting
of such
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committee, upon request by the Chairman and Chief Executive Officer, the
President or upon request by the chairperson of such meeting. Each such
committee shall fix its own rules (consistent with the Wisconsin Business
Corporation Law, the Articles of Incorporation and these Bylaws) governing the
conduct of its activities and shall make such reports to the Board of Directors
of its activities as the Board of Directors may request. Unless otherwise
provided by the Board of Directors in creating a committee, a committee may
employ counsel, accountants and other consultants to assist it in the exercise
of authority. The creation of a committee, delegation of authority to a
committee or action by a committee does not relieve the Board of Directors or
any of its members of any responsibility imposed on the Board of Directors or
its members by law.
ARTICLE IV. OFFICERS
4.01. Appointment. The principal officers shall include a
Chairman (or Chairperson) of the Board (and Chief Executive Officer), a
President (and Chief Operating Officer), one or more Vice Presidents (the
number and designations to be determined by the Board of Directors), a
Secretary and such other officers if any, as may be deemed necessary by the
Board of Directors, each of whom shall be appointed by the Board of Directors.
The Board of Directors may designate one of the Vice Presidents as the
Executive Vice President; and in that event all references herein to Vice
President(s) include the Executive Vice President unless the context otherwise
requires. Any two or more offices may be held by the same person.
4.02. Election; Resignation and Removal.
(a) The officers of the corporation to be elected by
the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors
held after each annual meeting of shareholders. If the
election officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may
be.
(b) An officer shall hold office until he or she
resigns, dies, is removed hereunder, or a different person is
appointed to the office. An officer may resign at any time by
delivering an appropriate written notice to the corporation.
The resignation is effective when the notice is delivered,
unless the notice specifies a later effective date and the
corporation accepts the later effective date. Any officer may
be removed by the Board of Directors with or without cause and
notwithstanding the contract rights, if any, of the person
removed. Except as
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provided in the preceding sentence, the resignation or removal
is subject to any remedies provided by any contract between
the officer and the corporation or otherwise provided by law.
Appointment shall not of itself create contract rights.
4.03. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise, shall be filled by the Board of Directors.
If a resignation is effective at a later date, the Board of Directors may fill
the vacancy before the effective date if the Board of Directors provides that
the successor may not take office until the effective date.
4.04. Chairman of the Board; Chief Executive Officer. The
Chairman of the Board and Chief Executive Officer shall be the chief executive
officer of the corporation and, subject to the control and direction of the
Board of Directors, shall in general supervise and control all of the business
and affairs of the corporation. He or she shall, when present, preside at all
meetings of the shareholders and of the Board of Directors. The Chairman shall
have authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of the corporation as he or she
shall deem necessary, to prescribe their powers, duties and compensation, and
to delegate authority to them. Such agents and employees shall hold office at
the discretion of the Chairman and Chief Executive Officer. The Chairman and
Chief Executive Officer shall have authority to sign, execute and acknowledge,
on behalf of the corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments necessary or
proper to be executed in the course of the corporation's regular business, or
which shall be authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or directed by the Board of Directors, the
Chairman may authorize the President, any Vice President or other officer or
agent of the corporation to sign, execute and acknowledge such documents or
instruments in his or her place and stead. In general he or she shall perform
all duties incident to the office of Chairman and Chief Executive Officer and
such other duties as may be prescribed by the Board of Directors from time to
time.
4.05. President; Chief Operating Officer. The President and
Chief Operating Officer shall be the chief operating officer of the
corporation, and subject to the direction of the Chairman and Chief Executive
Officer, shall be responsible for the detailed supervision and control of the
operations of this corporation and its wholly-owned subsidiaries. The officers
of the corporation (with the exception of the Chairman and Chief Executive
Officer) and the presidents and vice presidents of the corporation's
wholly-owned subsidiaries shall report directly to the President. In addition,
the president shall have authority to sign, execute and acknowledge, on behalf
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of the corporation all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments necessary or proper to
be executed in the course of the corporation's regular business, or which shall
be authorized by resolution of the Board of Directors or by the Chairman and
Chief Executive Officer; and, except as otherwise provided by law or directed
by the Board of Directors or the Chairman and Chief Executive Officer, the
President may authorize any vice president or other officer or agent of the
corporation to sign, execute and acknowledge such documents or instruments in
his place or stead. In general, he or she shall perform all the duties
incident to the office of President such other duties as may be prescribed by
the Board of Directors and the Chairman and Chief Executive Officer from time
to time. In the absence of the Chairman and Chief Executive Officer, the
President shall preside at all meetings of the shareholders and of the Board of
Directors.
4.06. Executive Vice President. The Executive Vice
President, if one be designated, shall assist the Chairman and Chief Executive
Officer and the President in the discharge of supervisory, managerial and
executive duties and functions. In the absence of the President or in the
event of his death, inability or refusal to act, the Executive Vice President
shall perform the duties of the President and when so acting shall have all the
powers and duties of the President. He shall perform such other duties as from
time to time may be assigned to him by the Board of Directors, the Chairman and
Chief Executive Officer or the President.
4.07. Vice Presidents. In the absence of the President, or
in the event of the President's death, inability or refusal to act, or in the
event for any reason it shall be impracticable for the President to act
personally, the Vice President (or in the event there be more than one Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
appointment) 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. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the corporation; and shall perform such
other duties and have such authority as from time to time may be delegated or
assigned to him or her by the Chairman and Chief Executive Officer, the
President or the Board of Directors. The execution of any instrument of the
corporation by any Vice President shall be conclusive evidence, as to third
parties, of the Vice President's authority to act in the stead of the
President.
4.08. Secretary. The Secretary shall: (a) keep (or cause to
be kept) regular minutes of all meetings of the shareholders, the Board of
Directors and any committees of the Board of Directors in one or more books
provided for that
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purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, if any, and see that the
seal of the corporation, if any, is affixed to all documents which are
authorized to be executed on behalf of the corporation under its seal; (d)
keep or arrange for the keeping of a register of the post office address of
each shareholder which shall be furnished to the Secretary by such shareholder;
(e) sign with the President, or a Vice President, certificates for shares of
the corporation, the issuance of which shall have been authorized by resolution
of the Board of Directors; (f) have general charge of the stock transfer books
of the corporation; and (g) in general perform all duties incident to the
office of Secretary and have such other duties and exercise such authority as
from time to time may be delegated or assigned to him or her by the Chairman
and Chief Executive Officer, the President or by the Board of Directors.
4.09. Treasurer. If the Board of Directors appoints a
Treasurer, the Treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation; (b) receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected by the
corporation; and (c) in general perform all of the duties incident to the
office of Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned to him or her by
the Chairman and Chief Executive Officer, the President or by the Board of
Directors.
4.10. Assistant and Acting Officers. The Board of Directors
and the Chairman and Chief Executive Officer shall have the power to appoint
any person to act as assistant to any officer, or as agent for the corporation
in the officer's stead, or to perform the duties of such officer whenever for
any reason it is impracticable for such officer to act personally, and such
assistant or acting officer or other agent so appointed by the Board of
Directors or Chairman shall have the power to perform all the duties of the
office to which that person is so appointed to be assistant, or as to which he
or she is so appointed to act, except as such power may be otherwise defined or
restricted by the Board of Directors or the Chairman and Chief Executive
Officer.
4.11. Salaries. The salaries of the principal officers shall
be fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such salary
by reason of the fact that such officer is also a director of the corporation.
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ARTICLE V. CERTIFICATES FOR SHARES AND THEIR TRANSFER
5.01. Certificates for Shares. All shares of this
corporation shall be represented by certificates. Certificates representing
shares of the corporation shall be in such form, consistent with law, as shall
be determined by the Board of Directors. At a minimum, a share certificate
shall state on its face the name of the corporation and that it is organized
under the laws of the State of Wisconsin, the name of the person to whom
issued, and the number and class of shares and the designation of the series,
if any, that the certificate represents. If the corporation is authorized to
issue different classes of shares or different series within a class, the front
or back of the certificate must contain either (a) a summary of the
designations, relative rights, preferences and limitations applicable to each
class, and the variations in the rights, preferences and limitations determined
for each series and the authority of the Board of Directors to determine
variations for future series, or (b) a conspicuous statement that the
corporation will furnish the shareholder the information described in clause
(a) on request, in writing and without charge. Such certificates shall be
signed, either manually or in facsimile, by the Chairman and Chief Executive
Officer, the President or a Vice President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except as provided
in Section 5.05.
5.02. Signature by Former Officers. If an officer or
assistant officer, who has signed or whose facsimile signature has been placed
upon any certificate for shares, has ceased to be such officer or assistant
officer before such certificate is issued, the certificate may be issued by the
corporation with the same effect as if that person were still an officer or
assistant officer at the date of its issue.
5.03. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer, and unless the corporation
has established a procedure by which a beneficial owner of shares held by a
nominee is to be recognized by the corporation as the shareholder, the
corporation may treat the registered owner of such shares as the person
exclusively entitled to vote, to receive notifications and otherwise to have
and exercise all the rights and power of an owner. The corporation may require
reasonable assurance that all transfer endorsements are genuine and effective
and in compliance with all
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regulations prescribed by or under the authority of the Board of Directors.
5.04. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of any
restriction upon the transfer of such shares imposed by the corporation or
imposed by any agreement of which the corporation has written notice.
5.05. Lost, Destroyed or Stolen Certificates. Where the
owner claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) if required by the corporation,
files with the corporation a sufficient indemnity bond, and (c) satisfies such
other reasonable requirements as may be prescribed by or under the authority of
the Board of Directors.
5.06. Consideration for Shares. The shares of the
corporation may be issued for such consideration as shall be fixed from time to
time and determined to be adequate by the Board of Directors, provided that any
shares having a par value shall not be issued for a consideration less than the
par value thereof. The consideration may consist of any tangible or intangible
property or benefit to the corporation, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the corporation. When the corporation receives the consideration for which
the Board of Directors authorized the issuance of shares, such shares shall be
deemed to be fully paid and nonassessable by the corporation.
5.07. Stock Regulations. The Board of Directors shall have
the power and authority to make all such rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
corporation, including the appointment or designation of one or more stock
transfer agents and one or more registrars.
ARTICLE VI
WAIVER OF NOTICE
6.01 Shareholder Written Waiver. A shareholder may waive any
notice required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or these Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing and signed by the shareholder entitled
to the notice, shall contain the same information that would have been required
in the notice under the Wisconsin Business Corporation
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Law except that the time and place of meeting need not be stated, and shall be
delivered to the corporation for inclusion in the corporate records.
6.02 Shareholder Waiver by Attendance. A shareholder's
attendance at a meeting, in person or by proxy, waives objection to both of the
following:
(a) Lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the
meeting or promptly upon arrival objects to holding the
meeting or transacting business at the meeting.
(b) Consideration of a particular matter at the
meeting that is not within the purpose described in the
meeting notice, unless the shareholder objects to considering
the matter when it is presented.
6.03 Director Written Waiver. A director may waive any
notice required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or the Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing, signed by the director entitled to the
notice and retained by the corporation.
6.04 Director Waiver by Attendance. A director's attendance
at or participation in a meeting of the Board of Directors or any committee
thereof waives any required notice to him or her of the meeting unless the
director at the beginning of the meeting or promptly upon his or her arrival
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
ARTICLE VII
ACTION WITHOUT MEETINGS
7.01 Shareholder Action Without Meeting. Action required or
permitted by the Wisconsin Business Corporation Law to be taken at a
shareholders' meeting may be taken without a meeting by all shareholders
entitled to vote on the action. The action must be evidenced by one or more
written consents describing the action taken, signed by the shareholders
consenting thereto and delivered to the corporation for inclusion in its
corporate records. A consent hereunder has the effect of a meeting vote and
may be described as such in any document. The Wisconsin Business Corporation
Law requires that notice of the action be given to certain shareholders and
specifies the effective date thereof and the record date in respect thereto.
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7.02 Director Action Without Meeting. Unless the Articles of
Incorporation provide otherwise, action required or permitted by the Wisconsin
Business Corporation Law to be taken at a Board of Directors meeting or
committee meeting may be taken without a meeting if the action is taken by all
members of the Board or committee. The action shall be evidenced by one or
more written consents describing the action taken, signed by each director and
retained by the corporation. Action taken hereunder is effective when the last
director signs the consent, unless the consent specifies a different effective
date. A consent signed hereunder has the effect of a unanimous vote taken at a
meeting at which all directors or committee members were present, and may be
described as such in any document.
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification for Successful Defense. Within twenty
(20) days after receipt of a written request pursuant to Section 8.03, the
corporation shall indemnify a director or officer, to the extent he or she has
been successful on the merits or otherwise in the defense of a proceeding, for
all reasonable expenses incurred in the proceeding if the director or officer
was a party because he or she is a director or officer of the corporation.
8.02 Other Indemnification.
(a) In cases not included under Section 8.01, the
corporation shall indemnify a director or officer against all
liabilities and expenses incurred by the director or officer
in a proceeding to which the director or officer was a party
because he or she is a director or officer of the corporation,
unless liability was incurred because the director or officer
breached or failed to perform a duty he or she owes to the
corporation and the breach or failure to perform constitutes
any of the following:
(1) A willful failure to deal fairly with
the corporation or its shareholders in connection
with a matter in which the director or officer has a
material conflict of interest.
(2) A violation of criminal law, unless the
director or officer had reasonable cause to believe
that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was
unlawful.
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(3) A transaction from which the director or
officer derived an improper personal profit.
(4) Willful misconduct.
(b) Determination of whether indemnification is
required under this Section shall be made pursuant to Section
8.05.
(c) The termination of a proceeding by judgment,
order, settlement or conviction, or upon a plea of no contest
or an equivalent plea, does not, by itself, create a
presumption that indemnification of the director or officer is
not required under this Section.
8.03 Written Request. A director or officer who seeks
indemnification under Sections 8.01 or 8.02 shall make a written request to the
corporation.
8.04 Nonduplication. The corporation shall not indemnify a
director or officer under Sections 8.01 or 8.02 if the director or officer has
previously received indemnification or allowance of expenses from any person,
including the corporation, in connection with the same proceeding. However,
the director or officer has no duty to look to any other person for
indemnification.
8.05 Determination of Right to Indemnification.
(a) Unless otherwise provided by the Articles of
Incorporation or by written agreement between the director or
officer and the corporation, the director or officer seeking
indemnification under Section 8.02 shall select one of the
following means for determining his or her right to
indemnification:
(1) By a majority vote of a quorum of the
Board of Directors consisting of directors not at the
time parties to the same or related proceedings. If
a quorum of disinterested directors cannot be
obtained, by majority vote of a committee duly
appointed by the Board of Directors and consisting
solely of two (2) or more directors who are not at
the time parties to the same or related proceedings.
Directors who are parties to the same or related
proceedings may participate in the designation of
members of the committee.
(2) By independent legal counsel selected by
a quorum of the Board of Directors or its committee
in the manner prescribed in subsection (1) or, if
unable to obtain such a quorum or
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committee, by a majority vote of the full Board of
Directors, including directors who are parties to the
same or related proceedings.
(3) By a panel of three (3) arbitrators
consisting of one arbitrator selected by those
directors entitled under subsection (2) to select
independent legal counsel, one arbitrator selected by
the director or officer seeking indemnification and
one arbitrator selected by the two (2) arbitrators
previously selected.
(4) By an affirmative vote of shares
represented at a meeting of shareholders at which a
quorum of the voting group entitled to vote thereon
is present. Shares owned by, or voted under the
control of, persons who are at the time parties to
the same or related proceedings, whether as
plaintiffs or defendants or in any other capacity,
may not be voted in making the determination.
(5) By a court under Section 8.08.
(6) By any other method provided for in any
additional right to indemnification permitted under
Section 8.07.
(b) In any determination under (a), the burden of
proof is on the corporation to prove by clear and convincing
evidence that indemnification under Section 8.02 should not be
allowed.
(c) A written determination as to a director's or
officer's indemnification under Section 8.02 shall be
submitted to both the corporation and the director or officer
within 60 days of the selection made under (a).
(d) If it is determined that indemnification is
required under Section 8.02, the corporation shall pay all
liabilities and expenses not prohibited by Section 8.04 within
ten (10) days after receipt of the written determination under
(c). The corporation shall also pay all expenses incurred by
the director or officer in the determination process under
(a).
8.06 Advance of Expenses. Within ten (10) days after receipt
of a written request by a director or officer who is a party to a proceeding,
the corporation shall pay or reimburse his or her reasonable expenses as
incurred if the director or officer provides the corporation with all of the
following:
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(a) A written affirmation of his or her good faith
belief that he or she has not breached or failed to perform
his or her duties to the corporation.
(b) A written undertaking, executed personally or on
his or her behalf, to repay the allowance to the extent that
it is ultimately determined under Section 8.05 that
indemnification under Section 8.02 is not required and that
indemnification is not ordered by a court under Section
8.08(b)(2). The undertaking under this subsection shall be an
unlimited general obligation of the director or officer and
may be accepted without reference to his or her ability to
repay the allowance. The undertaking may be secured or
unsecured.
8.07 Nonexclusivity.
(a) Except as provided in (b), Sections 8.01,
8.02 and 8.06 do not preclude any additional right to
indemnification or allowance of expenses that a director or
officer may have under any of the following:
(1) The Articles of Incorporation.
(2) A written agreement between the director
or officer and the corporation.
(3) A resolution of the Board of Directors.
(4) A resolution, after notice, adopted by a
majority vote of all of the corporation's voting
shares then issued and outstanding.
(b) Regardless of the existence of an additional
right under (a), the corporation shall not indemnify a
director or officer, or permit a director or officer to retain
any allowance of expenses unless it is determined by or on
behalf of the corporation that the director or officer did not
breach or fail to perform a duty he or she owes to the
corporation which constitutes conduct under Section
8.02(a)(1), (2), (3) or (4). A director or officer who is a
party to the same or related proceeding for which
indemnification or an allowance of expenses is sought may not
participate in a determination under this subsection.
(c) Sections 8.01 to 8.14 do not affect the
corporation's power to pay or reimburse expenses incurred by a
director or officer in any of the following circumstances.
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(1) As a witness in a proceeding to which he
or she is not a party.
(2) As a plaintiff or petitioner in a
proceeding because he or she is or was an employee,
agent, director or officer of the corporation.
8.08 Court-Ordered Indemnification.
(a) Except as provided otherwise by written
agreement between the director or officer and the corporation,
a director or officer who is a party to a proceeding may apply
for indemnification to the court conducting the proceeding or
to another court of competent jurisdiction. Application shall
be made for an initial determination by the court under
Section 8.05(a)(5) or for review by the court of an adverse
determination under Section 8.05(a) (1), (2), (3), (4) or (6).
After receipt of an application, the court shall give any
notice it considers necessary.
(b) The court shall order indemnification if it
determines any of the following:
(1) That the director or officer is
entitled to indemnification under Sections 8.01 or
8.02.
(2) That the director or officer is
fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, regardless of
whether indemnification is required under Section
8.02.
(c) If the court determines under (b) that the
director or officer is entitled to indemnification, the
corporation shall pay the director's or officer's expenses
incurred to obtain the court-ordered indemnification.
8.09 Indemnification and Allowance of Expenses of Employees
and Agents. The corporation shall indemnify an employee of the corporation who
is not a director or officer of the corporation, to the extent that he or she
has been successful on the merits or otherwise in defense of a proceeding, for
all expenses incurred in the proceeding if the employee was a party because he
or she was an employee of the corporation. In addition, the corporation may
indemnify and allow reasonable expenses of an employee or agent who is not a
director or officer of the corporation to the extent provided by the Articles
of Incorporation or these Bylaws, by general or specific action of the Board of
Directors or by contract.
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8.10 Insurance. The corporation may purchase and maintain
insurance on behalf of an individual who is an employee, agent, director or
officer of the corporation against liability asserted against or incurred by
the individual in his or her capacity as an employee, agent, director or
officer, regardless of whether the corporation is required or authorized to
indemnify or allow expenses to the individual against the same liability under
Sections 8.01, 8.02, 8.06, 8.07 and 8.09.
8.11 Securities Law Claims.
(a) Pursuant to the public policy of the State of
Wisconsin, the corporation shall provide indemnification and
allowance of expenses and may insure for any liability
incurred in connection with a proceeding involving securities
regulation described under (b) to the extent required or
permitted under Sections 8.01 to 8.10.
(b) Sections 8.01 to 8.10 apply, to the extent
applicable to any other proceeding, to any proceeding
involving a federal or state statute, rule or regulation
regulating the offer, sale or purchase of securities,
securities brokers or dealers, or investment companies or
investment advisers.
8.12 Liberal Construction. In order for the corporation to
obtain and retain qualified directors, officers and employees, the foregoing
provisions shall be liberally administered in order to afford maximum
indemnification of directors, officers and, where Section 8.09 of these Bylaws
applies, employees. The indemnification above provided for shall be granted in
all applicable cases unless to do so would clearly contravene law, controlling
precedent or public policy.
8.13 Definitions Applicable to this Article. For purposes of
this Article:
(a) "Affiliate" shall include, without
limitation, any corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise that directly
or indirectly through one or more intermediaries, controls or
is controlled by, or is under common control with, the
corporation.
(b) "Corporation" means this corporation and any
domestic or foreign predecessor of this corporation where the
predecessor corporation's existence ceased upon the
consummation of a merger or other transaction.
(c) "Director or officer" means any of the
following:
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(1) An individual who is or was a
director or officer of this corporation.
(2) An individual who, while a director
or officer of this corporation, is or was serving at
the corporation's request as a director, officer,
partner, trustee, member of any governing or
decision-making committee, employee or agent of
another corporation or foreign corporation,
partnership, joint venture, trust or other
enterprise.
(3) An individual who, while a director
or officer of this corporation, is or was serving an
employee benefit plan because his or her duties to
the corporation also impose duties on, or otherwise
involve services by, the person to the plan or to
participants in or beneficiaries of the plan.
(4) Unless the context requires
otherwise, the estate or personal representative of a
director or officer.
For purposes of this Article, it shall be conclusively
presumed that any director or officer serving as a director,
officer, partner, trustee, member of any governing or
decision-making committee, employee or agent of an affiliate
shall be so serving at the request of the corporation.
(d) "Expenses" include fees, costs, charges,
disbursements, attorney fees and other expenses incurred in
connection with a proceeding.
(e) "Liability" includes the obligation to pay a
judgment, settlement, penalty, assessment, forfeiture or fine,
including an excise tax assessed with respect to an employee
benefit plan, and reasonable expenses.
(f) "Party" includes an individual who was or is,
or who is threatened to be made, a named defendant or
respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or
completed civil, criminal, administrative or investigative
action, suit, arbitration or other proceeding, whether formal
or informal, which involves foreign, federal, state or local
law and which is brought by or in the right of the corporation
or by any other person.
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ARTICLE IX. SEAL
The Board of Directors may provide a corporate seal which may
be circular in form and have inscribed thereon the name of the corporation and
the state of incorporation and the words "Corporate Seal."
ARTICLE X. AMENDMENTS
10.01. By Shareholders. These Bylaws may be amended or
repealed and new Bylaws may be adopted by the shareholders by the vote provided
in Section 2.07 of these Bylaws or as specifically provided below. If
authorized by the Articles of Incorporation, the shareholders may adopt or
amend a Bylaw that fixes a greater or lower quorum requirement or a greater
voting requirement for shareholders or voting groups of shareholders than
otherwise is provided in the Wisconsin Business Corporation Law. The adoption
or amendment of a Bylaw that adds, changes or deletes a greater or lower quorum
requirement or a greater voting requirement for shareholders must meet the same
quorum requirement and be adopted by the same vote and voting groups required
to take action under the quorum and voting requirement then in effect.
10.02. By Directors. Except as the Articles of Incorporation
may otherwise provide, these Bylaws may also be amended or repealed and new
Bylaws may be adopted by the Board of Directors by the vote provided in Section
3.08, but (a) no Bylaw adopted by the shareholders shall be amended, repealed
or readopted by the Board of Directors if the Bylaw so adopted so provides and
(b) a Bylaw adopted or amended by the shareholders that fixes a greater or
lower quorum requirement or a greater voting requirement for the Board of
Directors than otherwise is provided in the Wisconsin Business Corporation Law
may not be amended or repealed by the Board of Directors unless the Bylaw
expressly provides that it may be amended or repealed by a specified vote of
the Board of Directors. Action by the Board of Directors to adopt or amend a
Bylaw that changes the quorum or voting requirement for the Board of Directors
must meet the same quorum requirement and be adopted by the same vote required
to take action under the quorum and voting requirement then in effect, unless a
different voting requirement is specified as provided by the preceding
sentence. A Bylaw that fixes a greater or lower quorum requirement or a
greater voting requirement for shareholders or voting groups of shareholders
than otherwise is provided in the Wisconsin Business Corporation Law may not be
adopted, amended or repealed by the Board of Directors.
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10.03. Implied Amendments. Any action taken or authorized by
the shareholders or by the Board of Directors, which would be inconsistent with
the Bylaws then in effect but is taken or authorized by a vote that would be
sufficient to amend the Bylaws so that the Bylaws would be consistent with such
action, shall be given the same effect as though the Bylaws had been
temporarily amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
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EXHIBIT 10.1(a)
SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT
THIS AGREEMENT is made as of this 19th day of September, 1996 between PLEXUS
CORP., a Wisconsin corporation (the "Company"), and PETER STRANDWITZ (the
"Employee").
WHEREAS, the Employee is a key executive officer of the Company and the
Company wishes to continue to receive the benefit of the Employee's knowledge
and experience and is willing to offer the Employee certain deferred
composition arrangements as set forth herein as an inducement for continued
service.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 "Account" means the bookkeeping reserve account for the Employee which
shall be established by the Company solely as a device for determining the
amounts which may become payable to or on behalf of the Employee hereunder.
The Company shall keep a record in the Account of the current fair values of
all contributions and any Policy or other property or funds held therein from
time to time. Such Account shall not constitute or be treated as a trust fund
of any kind, it being expressly provided that the amounts credited to such
Account shall at all time be and remain the sole property of the Company. The
Employee shall have no proprietary rights of any nature whatsoever with respect
thereto but shall simply be an unsecured creditor of the Company, unless and
until such time as a payment under this Agreement is made to or on behalf of
the Employee.
1.2 "Annual Contribution" means the sum of $193,599.98.
1.3 "Beneficiary" means any one or more primary or secondary beneficiaries
designated in writing by the Employee on a form provided by the Company to
receive any benefits which may become payable under this Agreement on or after
the Employee's death. The Employee shall have the right to name, change or
revoke his designation of Beneficiary on a form provided by the Company. The
designation on file with the Company at the time of the Employee's death shall
be controlling. Should the Employee fail to make a valid Beneficiary
designation or leave no named Beneficiary surviving, any benefits due shall be
paid to the Employee's spouse, if living; or if not living, then to the
Employee's estate.
<PAGE> 2
1.4 "Board" means the Board of Directors of the Company.
1.5 "Cause" in connection with any termination of the Employee's employment
by the Company means (i) the willful and continued failure of the Employee to
substantially perform the duties of his position with the Company (other than
as a result of physical or mental illness or injury), after the Board has given
written notice to the Employee demanding substantial performance, which notice
specifically identifies the manner in which the Board believes the Employee has
not substantially performed such duties, (ii) commission or conviction of any
felony, misdemeanor or other offense, the circumstance of which substantially
relate to the circumstances of the Employee's job, or (iii) the willful
engaging by the Employee in illegal or gross misconduct resulting in a
demonstrably material injury to the Company. No act or failure to act on the
Employee's part shall be considered to be "willful" unless it is done, or
permitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee's action or omission was in the best interests of the
Company.
1.6 "Change of Control" with respect to the Company means the occurrence of
any one of the following events, as a result of one transaction or a series of
transaction:
(a) any "person (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding the Company, its
affiliates as of the date of this Agreement, and any qualified or
non-qualified plan maintained by the Company or its affiliates),
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated
under such Act) of securities of the Company representing more than 25%
of the combined voting power of the Company's then outstanding voting
securities;
(b) individuals who constitute a majority of the Board immediately
prior to a contested election for positions in the Board cease to
constitute a majority as a result of such contested election;
(c) the Company is combined with or acquired by (by merger, share
exchange, consolidation, tender offer or otherwise) another corporation
or business entity and a result thereof, less than 67% of the
outstanding securities of or voting power in the surviving or resulting
corporation or other business entity is owned in the aggregate by the
former shareholders of the Company;
(d) the Company sells, leases, or otherwise transfers all or
substantially all of its properties or assets
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not in the ordinary course of business to another person or entity;
(e) the Board determines in its sole and absolute discretion either that
there has been a change in control of the Company or that such change in
control is imminent; or
(f) the outstanding voting securities of the Company are no longer
listed on either the NASDAQ National Market System, the New York Stock
Exchange or the American Stock Exchange or the Company is no longer
registered under Section 12 of the Securities Exchange Act of 1934, as
amended.
1.7 "Disability" means the absence of the Employee from the Employee's
duties with the Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness or accident which
is determined to be of continued and indefinite duration and to render the
Employee unable to continue in the regular duties of his job. When used in the
context of the Employee's duties under a consulting agreement entered into
after employment has ceased, the term means such incapacity due to mental
illness or accident which is determined to be of continued and indefinite
duration and to render the former Employee unable to perform his duties under
the consulting agreement. If necessary, such determination shall be made by a
physician selected by the Employee or his legal representatives and acceptable
to the Company, with the Company's agreement as to acceptability not to be
withheld unreasonably.
1.8 "Good Reason" in connection with any termination of the Employee's
employment with the Company means any termination because of Disability, any
termination at or after attainment of age 55 and completion of 10 years of
service with the Company, or any termination at any time on or after the
occurrence of a Change of Control. The term also means in connection with any
termination by the Employee of his employment with the Company (i) the
Employee's duties and responsibilities are materially and adversely diminished
in comparison to the duties and responsibilities enjoyed by him on the date
this Agreement is signed, (ii) any reduction of the Employee's base salary
below the level in effect on the date this Agreement is signed, without the
consent of the Employee, (iii) any request by the Company that the Employee's
services be rendered primarily at a location or locations outside Winnebago
County, Wisconsin, or (iv) any material breach of this Agreement shall occur
that either is not taken by the Company in good faith or is not remedied by the
Company promptly after receipt of written notice thereof from the Employee.
The Employee may terminate his employment with the Company for Good Reason by
giving the Company written notice of termination setting forth the specific
conduct of the Company that constitutes Good Reason. Any termination of
employment
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<PAGE> 4
covered by this paragraph shall be referred to as a "Good Reason Termination."
1.9 "Policy" means any policy or policies of life insurance which the
Company may purchase on the life of the Employee and hold in the Account.
While any such Policy may be used as a device for measuring the amounts which
may become payable to or on behalf of the Employee under this Agreement, the
Company (or the trustee of any grantor Trust established by the Company) shall
be the applicant, owner and sole beneficiary of the Policy, with all rights and
all incidents of ownership. The Employee shall have no proprietary rights of
any nature whatsoever with respect to the Policy, unless and until otherwise
provided under this Agreement.
1.10 "Trust" means such grantor trust (a "rabbi trust") as the Company shall
establish to serve as a vehicle to hold any Policy or contributions held in the
Account as the Company may choose to make in connection with this Agreement,
but the Trust shall be designed so that all assets therein are subject to the
claims of the Company or any of its affiliates which have used such rabbi trust
in the event of insolvency, consistent with the provision of Revenue Procedure
92-64 issued by the Internal Revenue Service. Notwithstanding the existence of
such a rabbi trust, this Agreement shall remain an unfunded agreement, with the
Employee's rights to benefits hereunder being those of an unsecured creditor.
SECTION 2
CONTRIBUTIONS TO ACCOUNT
2.1 Contributions. The Company will credit annually to the Employee's
Account an amount equal to the Annual Contribution, starting on the date hereof
and continuing on the anniversary thereof thereafter for the next five years,
provided that the Employee is continuing in employ of the Company on each such
anniversary date or has entered into a consulting agreement with the Company in
the form attached hereto as Exhibit A and made a part hereof and continues in
the absence of Disability to comply with the terms thereof.
2.2 Credits to Account. Any amounts credited to the Employee's Account
shall be invested in a Policy which shall be held in the Trust.
2.3 Special Contribution in the Event of a Change of Control. Upon the
occurrence of a Change of Control, the Company shall, as soon as possible, but
in no event later than thirty (30) days following the Change of Control, make a
contribution to the Trust and credit the Account in a lump sum amount equal to
the present value of all Annual Contributions that would have been made under
the provisions of paragraph 2.1
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above, discounted at 5%, and the Company shall have no further contribution
obligations thereafter.
SECTION 3
PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFITS
3.1 Retirement or Termination Other Than For Cause At or After 65. Upon the
Employee's retirement or termination other than for Cause at or after
attainment of age 65, the Company shall pay the Employee fifteen (15) annual
installments, with the first installment to be made within sixty (60) days of
the date of such retirement or termination, in an annual amount equal to the
sum of the following:
(a) an amount equal to one-fifteenth (1/15) of the cash values in each
Policy as of the date the Employee retires or terminates, plus
(b) an amount equal to the increase, if any, in the cash values in each
Policy, over those in the immediately prior Policy year.
3.2 Death Before Employee has Begun Receiving Payments. Should the Employee
die while in the employ of the Company before he has begun to receive the
payments provided in under paragraph 3.1 above, the Company shall make a lump
sum payment to the Employee's Beneficiary in an amount equal to the death
proceeds then payable under each Policy.
3.3 Death After the Employee has Begun Receiving Payments. Should the
Employee die after he has begun to receive the payments provided in under
paragraph 3.1 above, but before all fifteen annual payments have been made, the
Company shall make a lump sum payment to the Employee's Beneficiary in an
amount equal to the death proceeds then payable under each Policy, minus the
total amount of annual payments previously made to the Employee.
3.4 Termination of Employment by the Company Other Than for Cause or Good
Reason Termination. Should the Company terminate the Employee's employment,
other than for Cause or death, or if a Good Reason Termination occurs, and
provided that the Employee continues in the absence of Disability to comply
with the terms of the consulting agreement attached hereto as Exhibit A and
made a part hereof, the Company shall continue to credit the Employee's
Account annually with an amount equal to the Annual Contribution for the number
of years specified in paragraph 2.1 above, just as if the Employee had remained
employed pursuant to this Agreement until the end of such period, or until the
Employee's death, if earlier. Thereafter, if the Employee survives to age 65,
the payments called for by paragraph 3.1 shall be made, just as if the Employee
had continued in the employ of the Company and had retired upon reaching age
65.
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Paragraph 3.3 shall apply should the Employee die after he has begun to receive
such payments, but before all of the same have been made. If the Employee does
not survive to age 65 but dies before he has begun to receive the payments
provided for in paragraph 3.1, paragraph 3.2 shall apply. If the Employee
fails in the absence of Disability to comply with the terms of the consulting
agreement attached as Exhibit A, the provisions of Paragraph 3.5 below shall
apply, as if the Employee had voluntarily terminated other than for Good Reason
prior to the commencement of payments under this Agreement.
3.5 Termination of Employment for Cause by the Company or By the Employee
Other Than for Good Reason. Notwithstanding any other provision of this
Agreement, should the Company terminate the Employee's employment for Cause at
any time prior to the occurrence of a Change of Control and prior to the
commencement of payments under this Agreement, the Company shall have no
obligation to make any payments whatsoever under this Agreement to or on behalf
of the Employee. Should the Employee voluntarily terminate other than for Good
Reason prior to the commencement of payments under this Agreement, the Employee
shall become entitled to receive fifteen (15) annual installment payments from
the Company, with the first installment to be made within sixty (60) days of
the date such termination, in annual amounts calculated in the same manner as
provided in paragraph 3.1 above. However, the Company in its sole discretion
may determine to accelerate such payments into a single lump sum equal to the
total of the then current fair value held in the Account and may make such
payment either in cash or in kind (including a distribution of any Policy held
in the Account), as the Company in its sole discretion determines. Paragraph
3.3 shall apply should the Employee die after he has begun to receive any
installments payments, but before all of the same have been made.
3.6 Payment of Account Under Certain Circumstances. If at any time on or
after the occurrence of a Change of Control, either the Company's Consolidated
Tangible Net Worth declines below thirty-five million dollars ($35,000,000.00)
or the ratio of the Company's Consolidated Total Debt to the Company's
Consolidated Tangible Net Worth becomes greater than 2.5 to 1, then the
Employee (or former Employee if he is no longer in the Company's employ but is
either receiving or entitled to receive payment hereunder at some future date)
shall become entitled to receive an immediate payment from the Company of an
amount equal to the total of the then current fair value held in the Account,
in full settlement of any and all obligations of the Company hereunder. The
Company may make such payment either in cash or in kind (including a
distribution of any Policy held in the Account), as the Company in its sole
discretion determines. For purposes of this paragraph, the Company's
"Consolidated Tangible Net Worth" means the excess, if any, of all consolidated
assets of the Company and all subsidiaries (excluding goodwill patents,
trademarks, tradenames, copyrights and other assets properly
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<PAGE> 7
classified as intangible assets) over all consolidated liabilities of the
Company and all subsidiaries determined in accordance with generally accepted
accounting principles; and the Company's "Consolidated Total Debt" means the
total of all consolidated liabilities of the Company and all subsidiaries which
would appear as liabilities on a consolidated balance sheet of the Company and
all subsidiaries in accordance with generally accepted accounting principles.
3.7 Payment of Account on Company Breach. Should the Company fail to make
any payments when due hereunder to the Employee or his Beneficiary or otherwise
materially breach any provision of this Agreement and such failure or breach
continue for a period of ten (10) days after written notice and demand for
payment or cure by the Employee (or Beneficiary, as the case may be) is
received by the Company, then the Employee (or Beneficiary) shall become
entitled, without prejudice to any other right or remedy the Employee (or
Beneficiary) may have for breach of this Agreement, to receive an immediate
payment from the Company of an amount equal to the total of the then current
fair value held in the Account. The Company, may make such payment either in
cash or in kind (including a distribution of any Policy held in Account), as
the Company in its sole discretion determines.
SECTION 4
CLAIMS PROCEDURE
4.1 Claim Review. If the Employee or his Beneficiary (a "Claimant") is
denied all or a portion of a benefit under this Agreement, he or she may file a
written claim for benefits with the Company. The Company shall review the
claim and notify the Claimant of the Company's decision within sixty (60) days
of receipt of such claim, unless the Claimant receives written notice prior to
the end of the sixty (60) day period stating that special circumstances require
an extension of the time for decision. The Company's decision shall be in
writing, sent by mail to the Claimant's last known address, and if a denial of
the claim, must contain the specific reasons for the denial, reference to
pertinent provisions of this Agreement on which the denial is based, a
designation of any additional material necessary to perfect the claim, and an
explanation of the claim review procedure.
4.2 Appeal Procedure to the Board. A Claimant is entitled to request a
review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within sixty
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(60) days after receipt of a request for review (provided that, in special
circumstances the Board may extend the time for decision by not more than sixty
(60) days upon written notice to the Claimant.) The Board's review decision
shall contain specific reasons for the decision and reference to the pertinent
provisions of this Agreement.
4.3 Attorney's Fees. The Company agrees to pay, as incurred, to the fullest
extent permitted by law, all legal fees and expenses that the Employee may
reasonably incur as a result of any contest (regardless of the outcome) by the
Company, the Employee or others of the validity or enforceability of, or
liability under, or otherwise involving any provision of this Agreement.
SECTION 5
MISCELLANEOUS
5.1 Non-Assignability. This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not be assignable by
the Employee otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns and shall also be enforceable by the Employee's
legal representatives.
5.2 Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
5.3 Taxes. No later than the date as of which an amount first becomes
includible in the income of the Employee for purposes of employment or income
taxes, the Employee agrees to pay to the Company, or make satisfactory
arrangements with the Company regarding the payment of any federal, state or
other taxes of any kind required to be withheld with respect to such amount.
5.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin, without reference to
principles of conflict of laws, to the extent preempted by federal law. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified
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except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
5.5 Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee: Peter Strandwitz
2655 Oakridge Road
Neenah, WI 54956
If to the Company: Plexus Corp.
Attn: Corporate Secretary
55 Jewelers Park Drive
Neenah, WI 54957-0156
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
5.6 Construction. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be held
invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law. Nothing contained in this Agreement shall give the
Employee the right to be retained in the employment of the Company or affect
the right of the Company to dismiss the Employee.
5.7 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
paragraph 5.7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by the Employee with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest
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<PAGE> 10
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph 5.7 (c), all determinations
required to be made under this paragraph 5.7, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
such certified public accounting firm as may be designated by the Employee (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Employee within 15 business days of the receipt of notice
from the Employee that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to this paragraph 5.7, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee, it shall furnish
the Employee with a written opinion that failure to report the Excise Tax on
the Employee's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to paragraph 5.7 (c) and the Employee thereafter is required
to make payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such a claim is
due). If the Company notifies the Employee in writing prior to the expiration
of such period that it desires to contest such claim, the Employee shall:
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<PAGE> 11
(i) Give the Company any information reasonably requested by the
Company relating to such claim,
(ii) Take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) Cooperate with the Company in good faith in order to effectively
contest such claim, and
(iv) Permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this paragraph 5.7 (c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Employee to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis
and shall indemnify and hold the Employee harmless, on an after-tax basis, from
any Excise Tax or income tax including interest or penalties with respect to
any imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to paragraph 5.7 (c), the Employee becomes entitled to receive
any refund with respect to such claim, the Employee shall (subject to the
Company's
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<PAGE> 12
complying with the requirements of paragraph 5.7 (c) ) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Employee
of an amount advanced by the Company pursuant to paragraph 5.7 (c), a
determination is made that the Employee shall not be entitled to any refund
with respect to such claim and the Company does not notify the Employee in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
5.8 Amendment; Entire Agreement. This Agreement may be amended by a written
instrument signed by both parties. This Agreement contains the entire
agreement between the parties on the subjects covered and replaces all prior
writings, proposals, specifications or other oral or written materials relating
thereto.
IN WITNESS WHEREOF, the Employee has signed this Agreement and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
signed, all as of the date first set forth above.
/S/ PETER STRANDWITZ
------------------------------
PETER STRANDWITZ
PLEXUS CORP.
BY: /S/ JOS. D. KAUFMAN
-------------------------------
ATTEST: /S/ JULIE GENSKE
-------------------------------
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<PAGE> 1
EXHIBIT 10.1(b)
SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT
THIS AGREEMENT is made as of this 19th day of September, 1996 between PLEXUS
CORP., a Wisconsin corporation (the "Company"), and JOHN NUSSBAUM (the
"Employee").
WHEREAS, the Employee is a key executive officer of the Company and the
Company wishes to continue to receive the benefit of the Employee's knowledge
and experience and is willing to offer the Employee certain deferred
composition arrangements as set forth herein as an inducement for continued
service.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 "Account" means the bookkeeping reserve account for the Employee which
shall be established by the Company solely as a device for determining the
amounts which may become payable to or on behalf of the Employee hereunder.
The Company shall keep a record in the Account of the current fair values of
all contributions and any Policy or other property or funds held therein from
time to time. Such Account shall not constitute or be treated as a trust fund
of any kind, it being expressly provided that the amounts credited to such
Account shall at all time be and remain the sole property of the Company. The
Employee shall have no proprietary rights of any nature whatsoever with respect
thereto but shall simply be an unsecured creditor of the Company, unless and
until such time as a payment under this Agreement is made to or on behalf of
the Employee.
1.2 "Annual Contribution" means the sum of $90,920.49.
1.3 "Beneficiary" means any one or more primary or secondary beneficiaries
designated in writing by the Employee on a form provided by the Company to
receive any benefits which may become payable under this Agreement on or after
the Employee's death. The Employee shall have the right to name, change or
revoke his designation of Beneficiary on a form provided by the Company. The
designation on file with the Company at the time of the Employee's death shall
be controlling. Should the Employee fail to make a valid Beneficiary
designation or leave no named Beneficiary surviving, any benefits due shall be
paid to the Employee's spouse, if living; or if not living, then to the
Employee's estate.
1.4 "Board" means the Board of Directors of the Company.
<PAGE> 2
1.5 "Cause" in connection with any termination of the Employee's employment
by the Company means (i) the willful and continued failure of the Employee to
substantially perform the duties of his position with the Company (other than
as a result of physical or mental illness or injury), after the Board has given
written notice to the Employee demanding substantial performance, which notice
specifically identifies the manner in which the Board believes the Employee has
not substantially performed such duties, (ii) commission or conviction of any
felony, misdemeanor or other offense, the circumstance of which substantially
relate to the circumstances of the Employee's job, or (iii) the willful
engaging by the Employee in illegal or gross misconduct resulting in a
demonstrably material injury to the Company. No act or failure to act on the
Employee's part shall be considered to be "willful" unless it is done, or
permitted to be done, by the Employee in bad faith or without reasonable belief
that the Employee's action or omission was in the best interests of the
Company.
1.6 "Change of Control" with respect to the Company means the occurrence of
any one of the following events, as a result of one transaction or a series of
transaction:
(a) any "person (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding the Company, its
affiliates as of the date of this Agreement, and any qualified or
non-qualified plan maintained by the Company or its affiliates), becomes
the "beneficial owner" (as defined in Rule 13d-3 promulgated under such
Act) of securities of the Company representing more than 25% of the
combined voting power of the Company's then outstanding voting
securities;
(b) individuals who constitute a majority of the Board immediately
prior to a contested election for positions in the Board cease to
constitute a majority as a result of such contested election;
(c) the Company is combined with or acquired by (by merger, share
exchange, consolidation, tender offer or otherwise) another corporation
or business entity and a result thereof, less than 67% of the
outstanding securities of or voting power in the surviving or resulting
corporation or other business entity is owned in the aggregate by the
former shareholders of the Company;
(d) the Company sells, leases, or otherwise transfers all or
substantially all of its properties or assets not in the ordinary
course of business to another person or entity;
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<PAGE> 3
(e) the Board determines in its sole and absolute discretion either that
there has been a change in control of the Company or that such change in
control is imminent; or
(f) the outstanding voting securities of the Company are no longer
listed on either the NASDAQ National Market System, the New York Stock
Exchange or the American Stock Exchange or the Company is no longer
registered under Section 12 of the Securities Exchange Act of 1934, as
amended.
1.7 "Disability" means the absence of the Employee from the Employee's
duties with the Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness or accident which
is determined to be of continued and indefinite duration and to render the
Employee unable to continue in the regular duties of his job. When used in the
context of the Employee's duties under a consulting agreement entered into
after employment has ceased, the term means such incapacity due to mental
illness or accident which is determined to be of continued and indefinite
duration and to render the former Employee unable to perform his duties under
the consulting agreement. If necessary, such determination shall be made by a
physician selected by the Employee or his legal representatives and acceptable
to the Company, with the Company's agreement as to acceptability not to be
withheld unreasonably.
1.8 "Good Reason" in connection with any termination of the Employee's
employment with the Company means any termination because of Disability, any
termination at or after attainment of age 55 and completion of 10 years of
service with the Company, or any termination at any time on or after the
occurrence of a Change of Control. The term also means in connection with any
termination by the Employee of his employment with the Company (i) the
Employee's duties and responsibilities are materially and adversely diminished
in comparison to the duties and responsibilities enjoyed by him on the date
this Agreement is signed, (ii) any reduction of the Employee's base salary
below the level in effect on the date this Agreement is signed, without the
consent of the Employee, (iii) any request by the Company that the Employee's
services be rendered primarily at a location or locations outside Winnebago
County, Wisconsin, or (iv) any material breach of this Agreement shall occur
that either is not taken by the Company in good faith or is not remedied by the
Company promptly after receipt of written notice thereof from the Employee.
The Employee may terminate his employment with the Company for Good Reason by
giving the Company written notice of termination setting forth the specific
conduct of the Company that constitutes Good Reason. Any termination of
employment covered by this paragraph shall be referred to as a "Good Reason
Termination."
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1.9 "Policy" means any policy or policies of life insurance which the
Company may purchase on the life of the Employee and hold in the Account.
While any such Policy may be used as a device for measuring the amounts which
may become payable to or on behalf of the Employee under this Agreement, the
Company (or the trustee of any grantor Trust established by the Company) shall
be the applicant, owner and sole beneficiary of the Policy, with all rights and
all incidents of ownership. The Employee shall have no proprietary rights of
any nature whatsoever with respect to the Policy, unless and until otherwise
provided under this Agreement.
1.10 "Trust" means such grantor trust (a "rabbi trust") as the Company shall
establish to serve as a vehicle to hold any Policy or contributions held in the
Account as the Company may choose to make in connection with this Agreement,
but the Trust shall be designed so that all assets therein are subject to the
claims of the Company or any of its affiliates which have used such rabbi trust
in the event of insolvency, consistent with the provision of Revenue Procedure
92-64 issued by the Internal Revenue Service. Notwithstanding the existence of
such a rabbi trust, this Agreement shall remain an unfunded agreement, with the
Employee's rights to benefits hereunder being those of an unsecured creditor.
SECTION 2
CONTRIBUTIONS TO ACCOUNT
2.1 Contributions. The Company will credit annually to the Employee's
Account an amount equal to the Annual Contribution, starting on the date hereof
and continuing on the anniversary thereof thereafter for the next ten years,
provided that the Employee is continuing in employ of the Company on each such
anniversary date or has entered into a consulting agreement with the Company in
the form attached hereto as Exhibit A and made a part hereof and continues in
the absence of to comply with the terms thereof.
2.2 Credits to Account. Any amounts credited to the Employee's Account
shall be invested in a Policy which shall be held in the Trust.
2.3 Special Contribution in the Event of a Change of Control. Upon the
occurrence of a Change of Control, the Company shall, as soon as possible, but
in no event later than thirty (30) days following the Change of Control, make a
contribution to the Trust and credit the Account in a lump sum amount equal to
the present value of all Annual Contributions that would have been made under
the provisions of paragraph 2.1 above, discounted at 5%, and the Company shall
have no further contribution obligations thereafter.
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SECTION 3
PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFITS
3.1 Retirement or Termination Other Than For Cause At or After 65. Upon the
Employee's retirement or termination other than for Cause at or after
attainment of age 65, the Company shall pay the Employee fifteen (15) annual
installments, with the first installment to be made within sixty (60) days of
the date of such retirement or termination, in an annual amount equal to the
sum of the following:
(a) an amount equal to one-fifteenth (1/15) of the cash values in each
Policy as of the date the Employee retires or terminates, plus
(b) an amount equal to the increase, if any, in the cash values in each
Policy, over those in the immediately prior Policy year.
3.2 Death Before Employee has Begun Receiving Payments. Should the Employee
die while in the employ of the Company before he has begun to receive the
payments provided in under paragraph 3.1 above, the Company shall make a lump
sum payment to the Employee's Beneficiary in an amount equal to the death
proceeds then payable under each Policy.
3.3 Death After the Employee has Begun Receiving Payments. Should the
Employee die after he has begun to receive the payments provided in under
paragraph 3.1 above, but before all fifteen annual payments have been made, the
Company shall make a lump sum payment to the Employee's Beneficiary in an
amount equal to the death proceeds then payable under each Policy, minus the
total amount of annual payments previously made to the Employee.
3.4 Termination of Employment by the Company Other Than for Cause or Good
Reason Termination. Should the Company terminate the Employee's employment,
other than for Cause or death, or if a Good Reason Termination occurs, and
provided that the Employee continues in the absence of Disability to comply
with the terms of the consulting agreement attached hereto as Exhibit A and
made a part hereof, the Company shall continue to credit the Employee's
Account annually with an amount equal to the Annual Contribution for the number
of years specified in paragraph 2.1 above, just as if the Employee had remained
employed pursuant to this Agreement until the end of such period, or until the
Employee's death, if earlier. Thereafter, if the Employee survives to age 65,
the payments called for by paragraph 3.1 shall be made, just as if the Employee
had continued in the employ of the Company and had retired upon reaching age
65. Paragraph 3.3 shall apply should the Employee die after he has begun to
receive such payments, but before all of the same have been made. If the
Employee does not survive to age 65 but dies before he has begun to receive the
payments provided for in
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paragraph 3.1, paragraph 3.2 shall apply. If the Employee fails in the absence
of Disability to comply with the terms of the consulting agreement attached as
Exhibit A, the provisions of Paragraph 3.5 below shall apply, as if the
Employee had voluntarily terminated other than for Good Reason prior to the
commencement of payments under this Agreement.
3.5 Termination of Employment for Cause by the Company or By the Employee
Other Than for Good Reason. Notwithstanding any other provision of this
Agreement, should the Company terminate the Employee's employment for Cause at
any time prior to the occurrence of a Change of Control and prior to the
commencement of payments under this Agreement, the Company shall have no
obligation to make any payments whatsoever under this Agreement to or on behalf
of the Employee. Should the Employee voluntarily terminate other than for Good
Reason prior to the commencement of payments under this Agreement, the Employee
shall become entitled to receive fifteen (15) annual installment payments from
the Company, with the first installment to be made within sixty (60) days of
the date such termination, in annual amounts calculated in the same manner as
provided in paragraph 3.1 above. However, the Company in its sole discretion
may determine to accelerate such payments into a single lump sum equal to the
total of the then current fair value held in the Account and may make such
payment either in cash or in kind (including a distribution of any Policy held
in the Account), as the Company in its sole discretion determines. Paragraph
3.3 shall apply should the Employee die after he has begun to receive any
installments payments, but before all of the same have been made.
3.6 Payment of Account Under Certain Circumstances. If at any time on or
after the occurrence of a Change of Control, either the Company's Consolidated
Tangible Net Worth declines below thirty-five million dollars ($35,000,000.00)
or the ratio of the Company's Consolidated Total Debt to the Company's
Consolidated Tangible Net Worth becomes greater than 2.5 to 1, then the
Employee (or former Employee if he is no longer in the Company's employ but is
either receiving or entitled to receive payment hereunder at some future date)
shall become entitled to receive an immediate payment from the Company of an
amount equal to the total of the then current fair value held in the Account,
in full settlement of any and all obligations of the Company hereunder. The
Company may make such payment either in cash or in kind (including a
distribution of any Policy held in the Account), as the Company in its sole
discretion determines. For purposes of this paragraph, the Company's
"Consolidated Tangible Net Worth" means the excess, if any, of all consolidated
assets of the Company and all subsidiaries (excluding goodwill patents,
trademarks, tradenames, copyrights and other assets properly classified as
intangible assets) over all consolidated liabilities of the Company and all
subsidiaries determined in accordance with generally accepted accounting
principles; and the Company's "Consolidated Total Debt" means the total of all
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<PAGE> 7
consolidated liabilities of the Company and all subsidiaries which would appear
as liabilities on a consolidated balance sheet of the Company and all
subsidiaries in accordance with generally accepted accounting principles.
3.7 Payment of Account on Company Breach. Should the Company fail to make
any payments when due hereunder to the Employee or his Beneficiary or otherwise
materially breach any provision of this Agreement and such failure or breach
continue for a period of ten (10) days after written notice and demand for
payment or cure by the Employee (or Beneficiary, as the case may be) is
received by the Company, then the Employee (or Beneficiary) shall become
entitled, without prejudice to any other right or remedy the Employee (or
Beneficiary) may have for breach of this Agreement, to receive an immediate
payment from the Company of an amount equal to the total of the then current
fair value held in the Account. The Company, may make such payment either in
cash or in kind (including a distribution of any Policy held in Account), as
the Company in its sole discretion determines.
SECTION 4
CLAIMS PROCEDURE
4.1 Claim Review. If the Employee or his Beneficiary (a "Claimant") is
denied all or a portion of a benefit under this Agreement, he or she may file a
written claim for benefits with the Company. The Company shall review the
claim and notify the Claimant of the Company's decision within sixty (60) days
of receipt of such claim, unless the Claimant receives written notice prior to
the end of the sixty (60) day period stating that special circumstances require
an extension of the time for decision. The Company's decision shall be in
writing, sent by mail to the Claimant's last known address, and if a denial of
the claim, must contain the specific reasons for the denial, reference to
pertinent provisions of this Agreement on which the denial is based, a
designation of any additional material necessary to perfect the claim, and an
explanation of the claim review procedure.
4.2 Appeal Procedure to the Board. A Claimant is entitled to request a
review of any denial by the full Board by written request to the Chair of the
Board within 60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively denied.
The Board shall afford the Claimant the opportunity to review all pertinent
documents and submit issues and comments in writing and shall render a review
decision in writing, all within sixty (60) days after receipt of a request for
review (provided that, in special circumstances the Board may extend the time
for decision by not more than sixty (60) days upon written notice to the
Claimant.) The Board's review decision shall contain
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<PAGE> 8
specific reasons for the decision and reference to the pertinent provisions of
this Agreement.
4.3 Attorney's Fees. The Company agrees to pay, as incurred, to the fullest
extent permitted by law, all legal fees and expenses that the Employee may
reasonably incur as a result of any contest (regardless of the outcome) by the
Company, the Employee or others of the validity or enforceability of, or
liability under, or otherwise involving any provision of this Agreement.
SECTION 5
MISCELLANEOUS
5.1 Non-Assignability. This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not be assignable by
the Employee otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns and shall also be enforceable by the Employee's
legal representatives.
5.2 Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
5.3 Taxes. No later than the date as of which an amount first becomes
includible in the income of the Employee for purposes of employment or income
taxes, the Employee agrees to pay to the Company, or make satisfactory
arrangements with the Company regarding the payment of any federal, state or
other taxes of any kind required to be withheld with respect to such amount.
5.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin, without reference to
principles of conflict of laws, to the extent preempted by federal law. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified except by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.
5.5 Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by hand
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<PAGE> 9
delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Employee: John Nussbaum
3532 Grand Meadow Drive
Appleton, WI 54915
If to the Company: Plexus Corp.
Attn: Corporate Secretary
55 Jewelers Park Drive
Neenah, WI 54957-0156
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be effective
when actually received by the addressee.
5.6 Construction. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. If any provision of this Agreement shall be held
invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law. Nothing contained in this Agreement shall give the
Employee the right to be retained in the employment of the Company or affect
the right of the Company to dismiss the Employee.
5.7 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
paragraph 5.7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by the Employee with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
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<PAGE> 10
(b) Subject to the provisions of paragraph 5.7 (c), all determinations
required to be made under this paragraph 5.7, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
such certified public accounting firm as may be designated by the Employee (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Employee within 15 business days of the receipt of notice
from the Employee that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to this paragraph 5.7, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Employee, it shall furnish
the Employee with a written opinion that failure to report the Excise Tax on
the Employee's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to paragraph 5.7 (c) and the Employee thereafter is required
to make payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such a claim is
due). If the Company notifies the Employee in writing prior to the expiration
of such period that it desires to contest such claim, the Employee shall:
(i) Give the Company any information reasonably requested by the Company
relating to such claim,
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<PAGE> 11
(ii) Take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(iii) Cooperate with the Company in good faith in order to effectively
contest such claim, and
(iv) Permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this paragraph 5.7 (c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Employee to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Employee, on an interest-free basis
and shall indemnify and hold the Employee harmless, on an after-tax basis, from
any Excise Tax or income tax including interest or penalties with respect to
any imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to paragraph 5.7 (c), the Employee becomes entitled to receive
any refund with respect to such claim, the Employee shall (subject to the
Company's complying with the requirements of paragraph 5.7 (c) ) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount
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<PAGE> 12
advanced by the Company pursuant to paragraph 5.7 (c), a determination is made
that the Employee shall not be entitled to any refund with respect to such
claim and the Company does not notify the Employee in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
5.8 Amendment; Entire Agreement. This Agreement may be amended by a written
instrument signed by both parties. This Agreement contains the entire
agreement between the parties on the subjects covered and replaces all prior
writings, proposals, specifications or other oral or written materials relating
thereto.
IN WITNESS WHEREOF, the Employee has signed this Agreement and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
signed, all as of the date first set forth above.
/S/ JOHN NUSSBAUM
--------------------------
JOHN NUSSBAUM
PLEXUS CORP.
BY: /S/ JOS. D. KAUFMAN
---------------------------
ATTEST: /S/ JULIE GENSKE
---------------------------
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<PAGE> 1
EXHIBIT 10.3(a)
GODWINS BOOKE & DICKENSON
PROTOTYPE PROFIT SHARING
AND
EMPLOYEE SAVINGS PLAN AND TRUST
PLAN DOCUMENT
SECTION 1. DEFINITIONS
As used in the plan, including this Section 1, references to
one gender shall include the other and, unless otherwise indicated by the
context:
1.1 "ACCOUNT" shall mean the aggregate of the separate
accounts maintained by the Committee with respect to each participant. To the
extent applicable, the separate accounts so maintained shall include the
following:
(i) the elective deferral account described in Section
2.1.6;
(ii) the qualified non-elective contribution account
described in Section 2.1.6;
(iii) the employee after-tax contribution account described
in Section 2.2.3;
(iv) the matching contribution account described in
Section 2.3.3;
(v) the qualified matching contribution account described
in Section 2.3.3;
(vi) the discretionary Employer contribution account
described in Section 2.4;
(vii) the deductible contribution account described in
Section 2.5;
(viii) the mandatory contribution account described in
Section 2.6;
(ix) the direct transfer account described in Section 18;
and
(x) the rollover account described in Section 19.
1.2 "ACCRUED BENEFIT" shall mean with respect to each
participant the balance in his account (including all of the separate accounts
described in Section 1.1) as of the applicable adjustment date following
adjustment thereof as provided in Section 7.
1.3 "ACTUAL DEFERRAL PERCENTAGE" or "ADP" shall mean with
respect to a participant for a plan year, the average of the ratio (calculated
to the nearest one-hundredth of a percentage point) of (i) the amount of
Employer contributions actually paid over to the trust on behalf of such
participant for the plan year (other than elective deferrals distributed to the
participant pursuant to Section 23.1.4) to (ii) the participant's testing
compensation for such plan year. Employer contributions on behalf of any
participant shall include: (a) any elective deferrals made pursuant to the
participant's deferral election (including excess elective deferrals of highly
compensated participants), but excluding (1) excess elective deferrals of
non-highly compensated participants that arise solely from elective deferrals
made under the plan or plans of the Employer and (2) elective deferrals that
are taken into account in the ACP test (provided the ADP test is satisfied both
with and without exclusion of these elective deferrals); and (b) at the
election of the Employer, qualified non-elective contributions and qualified
<PAGE> 2
matching contributions. The ADP of an employee who is eligible to make
elective deferrals under the plan but fails to do so, and who does not receive
an allocation of any qualified non-elective contributions or qualified matching
contributions that are taken into account in the ADP test, shall be zero. The
ADP of a specified group of participants for a plan year shall be the average
(expressed as a percentage and calculated to the nearest one-hundredth of a
percentage point) of the ADPs calculated separately for each participant in
such group. For purposes of determining the ADP of a participant who is a five
percent owner or one of the ten most highly compensated employees, the elective
deferrals and testing compensation of such participant shall include the
elective deferrals and testing compensation for the plan year of family members
(as defined in Section 1.33.6). The determination and treatment of the ADP of
any participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
1.4 "ADJUSTMENT DATE" shall mean the last day of each
plan year (the "year-end adjustment date"), and such other days during a plan
year as shall be designated in the Adoption Agreement. If the Employer shall
designate daily adjustment dates under the Adoption Agreement, adjustments to
the accounts of participants shall be made on each day securities are traded on
a national stock exchange, except regularly scheduled holidays of the Sponsor
or Trustee.
1.5 "ADOPTION AGREEMENT" shall mean the written agreement
pursuant to which the Employer adopts the plan, which agreement shall be
between the Employer and the Trustee. The Adoption Agreement is a part of the
plan as applied to the Employer and is expressly incorporated herein by
reference.
1.6 "AFFILIATED EMPLOYER" shall mean (i) any corporation
which is a member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes the Employer; (ii) any trade or business
(whether or not incorporated) that is under common control (as defined in
Section 414(c) of the Code) with the Employer; (iii) any organization (whether
or not incorporated) which is a member of an affiliated service group (as
defined in Section 414(m) of the Code) which includes the Employer; and (iv)
any other entity required to be aggregated with the Employer pursuant to
regulations prescribed by the Secretary of the Treasury under Section 414(o) of
the Code.
1.7 "AGGREGATE LIMIT" shall mean the sum of (i) 125% of
the greater of the ADP of the non-highly compensated participants for the plan
year or the ACP of the non-highly compensated participants under the plan
subject to Section 401(m) of the Code for the plan year beginning with or
within the plan year of the cash or deferred arrangement, as described in
Section 401(k) of the Code ("CODA"), and (ii) the lesser of 200% or two plus
the lesser of such ADP or ACP. "Lesser" is substituted for "greater" in "(i)",
above, and "greater" is substituted for "lesser" after "two plus the" in "(ii)"
if such substitutions would result in a larger aggregate limit.
1.8 "AVERAGE CONTRIBUTION PERCENTAGE" or "ACP" shall
mean, for a specified group of participants for a plan year, the average of the
contribution percentages of the eligible participants in such group (calculated
separately for each participant in such group to the nearest one-hundredth of a
percentage point).
1.9 "BOARD" shall mean the Board of Directors of the
Employer if the Employer is a corporation. If the Employer is an
unincorporated employer, "Board" shall mean the Employer.
1.10 A "BREAK IN SERVICE" shall mean, with respect to an
employee, the following:
1.10.1 If the Employer shall not designate the elapsed time
method of crediting hours of service in the Adoption Agreement, the
computation period in which the employee shall not have completed more
than 500 hours of service. Such period shall be the plan year unless
otherwise specifically provided in Section 1.14.1.
1.10.2 If the Employer shall designate the elapsed time
method of crediting hours of service in the Adoption Agreement, a
break in service shall mean a period of severance of at least
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<PAGE> 3
12-consecutive months. Solely for purposes of determining whether a
break in service has occurred, in the case of an employee who is
absent from work for maternity or paternity reasons, the
12-consecutive month period beginning on the first anniversary of the
first date of such absence shall not constitute a break in service.
For purposes of this Section 1.10.2, an absence from work for
maternity or paternity reasons shall have the same meaning as set
forth in Section 1.34.5.
1.11 "CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations issued thereunder.
1.12 "COMMITTEE" shall mean the administrative committee
provided for in Section 10.
1.13 "COMPENSATION" shall mean, for purposes of allocating
contributions and forfeitures under the plan, compensation as that term is
designated by the Employer in the Adoption Agreement. For any self-employed
individual covered under the plan, "compensation" shall mean earned income, as
defined in Section 1.18. Compensation shall include only that compensation
which is actually paid to the participant during the determination period (as
described in this Section 1.13).
1.13.1 Except as otherwise provided in the plan, the
determination period shall be the period elected by the Employer in
the Adoption Agreement. If the Employer makes no election, the
determination period shall be the plan year. If the determination
year is the plan year, compensation shall be measured only during the
portion of the plan year during which the employee is eligible to
participate in the plan, provided that if such information is not
readily available, compensation for the entire plan year shall be
used.
1.13.2 Notwithstanding the foregoing, if elected by the
Employer in the Adoption Agreement, compensation shall include any
amount which is contributed by the Employer pursuant to a salary
reduction agreement and which is not includable in the gross income of
the employee under Section 125, 402(e)(3), 402(h), or 403(b) of the
Code.
1.13.3 In additional to other applicable limitations set forth
in the Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1, 1989 and
before January 1, 1994, the annual Compensation of each Employee taken
into account under this Plan for any such Plan Year shall not exceed
$200,000, as adjusted for increases in the cost of living pursuant to
Code Section 401(a)(17). For Plan Years beginning on or after January
1, 1994, the annual Compensation of each Employee taken into account
under the Plan shall not exceed the OBRA '93 annual compensation
limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner of the Internal Revenue for increases in
the cost of living in accordance with Code Section 401(a)(17)(B). The
cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the annual
compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the
denominator of which is 12.
1.13.4 For Plan Years beginning on or after January 1, 1994,
any reference in this Plan to the limitation under Code Section
401(a)(17) shall mean the OBRA '93 annual compensation limit set forth
in the preceding paragraph. If Compensation for any prior
determination period is taken into account in determining an
Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
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<PAGE> 4
1.13.5 In determining the Compensation of a Participant for
purposes of the above Compensation limitation, the family aggregation
rules of Code Section 414(q)(6) shall apply, except in applying such
rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of
the application of this paragraph, the Compensation limitation applies
to a family aggregation unit, the limitation shall be prorated among
the affected individuals in proportion to each such affected
individual's Compensation as determined under this Section prior to
the application of this limitation, or in accordance with any other
method permitted by the Commissioner of Internal Revenue.
1.14 "COMPUTATION PERIOD" shall mean a 12-consecutive
month period, as follows:
1.14.1 For purposes of plan participation, the computation
period initially shall be the 12-consecutive month period beginning on
the date an employee first completes an hour of service. Thereafter,
the computation period shall be the plan year, beginning with the plan
year containing the first anniversary of the date the employee first
completes an hour of service, regardless of whether the employee is
entitled to be credited with 1,000 hours of service during the initial
12-month period.
1.14.2 For purposes of determining years of service, the
computation period shall be the plan year (and the 12-consecutive
month period which is substantially the same as the plan year for
periods prior to the effective date of the plan), unless otherwise
specifically provided herein.
1.15 "CONTRIBUTION PERCENTAGE" shall mean with respect to
a participant for a plan year the ratio (expressed as a percentage and
calculated to the nearest one-hundredth of a percentage point) of the
participant's contribution percentage amounts to the participant's testing
compensation for the plan year. Pursuant to regulations issued by the
Secretary of the Treasury, the Committee may elect to take into account
elective deferrals made on behalf of any participant to any qualified plan
maintained by the Employer for purposes of determining the contribution
percentage of such participant. For purposes of determining the contribution
percentage of a participant who is a five percent owner or one of the ten most
highly compensated employees, the contribution percentage amounts (including
elective deferrals if taken into account for purposes of determining the
contribution percentage) and testing compensation of such participant shall
include the contribution percentage amounts (including elective deferrals, if
applicable) and testing compensation for the plan year of family members (as
defined in Section 1.33.6). Family members with respect to highly compensated
participants shall be disregarded as separate employees in determining the
contribution percentage both for non-highly compensated participants and highly
compensated participants. The determination and treatment of the contribution
percentage of any participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
1.16 "CONTRIBUTION PERCENTAGE AMOUNTS" shall mean the sum
of the employee after-tax contributions, matching contributions, and qualified
matching contributions (to the extent not taken into account (including excess
contributions recharacterized as employee after-tax contributions) for purposes
of the ADP test) made under the plan on behalf of the participant for the plan
year. An excess contribution that is recharacterized is taken into account in
the Plan Year in which the excess contribution is includable in the employee's
gross income. Such contribution percentage amounts shall not include (i)
employee after-tax contributions that are returned to the participant pursuant
to Section 23.1.4, or (ii) matching contributions that are forfeited either to
correct excess aggregate contributions or because the contributions to which
they relate are excess deferrals, excess contributions, or excess aggregate
contributions. The Employer may include qualified non-elective contributions
in the contribution percentage amounts. The Employer also may elect to use
elective deferrals in the contribution percentage amounts so long as the ADP
test is met before the elective deferrals are used in the ACP test and
continues to be met following the exclusion of those elective deferrals that
are used to meet the ACP test. Notwithstanding the foregoing, elective
deferrals distributed to a participant pursuant to the provisions of Section
23.1.4 may not be taken into account for purposes of determining the
contribution percentage amount of such
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<PAGE> 5
participant.
1.17 "DISABILITY" shall mean the permanent and total
inability of a participant to perform his regular duties with the Employer, or
any other duties the Employer is willing to assign him. The determination of
the existence or nonexistence of disability shall be made by the Committee in a
nondiscriminatory manner pursuant to a medical examination by a medical doctor
selected or approved by the Committee.
1.18 "EARNED INCOME" shall mean the net earnings from
self-employment in the trade or business with respect to which the plan is
established for which personal services of the individual are a material
income-producing factor. Net earnings will be determined without regard to
items not included in gross income and the deductions allocable to such items.
Net earnings are reduced by contributions by the Employer to a qualified plan
to the extent deductible by the Employer under Section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by Section 164(f) of the Code for taxable years beginning after
December 31, 1989.
1.19 "EFFECTIVE DATE OF THE PLAN" shall mean the date that
the plan becomes effective with respect to the Employer, as specified by the
Employer in the Adoption Agreement.
1.20 "ELECTIVE DEFERRALS" shall mean contributions made to
the plan during the plan year by the Employer, at the election of the
participant, in lieu of cash compensation and shall include contributions that
are made pursuant to a salary reduction agreement or other deferral mechanism.
Such contributions must be nonforfeitable when made and distributable only as
specified in Section 3.8. With respect to any taxable year, a participant's
elective deferral is the sum of all Employer contributions made on behalf of
such participant pursuant to an election to defer under any qualified CODA, any
simplified employee pension that includes a cash or deferred arrangement as
described in Section 402(h)(1)(B), any eligible deferred compensation plan
under Section 457, any plan as described under Section 501(c)(18), and any
employer contributions made on the behalf of a participant for the purchase of
an annuity contract under Section 403(b) pursuant to a salary reduction
agreement. Elective deferrals shall not include any deferrals properly
distributed as excess annual additions.
1.21 "ELIGIBLE EMPLOYEE" shall mean each employee of the
Employer; provided, that if the plan is not a standardized form plan, "eligible
employee" shall mean each employee of the Employer except those excluded
pursuant to the Adoption Agreement.
1.22 "ELIGIBLE PARTICIPANT" shall mean, for purposes of
the ACP test, any employee of the Employer who is eligible to make an employee
after-tax contribution, or an elective deferral (if the Employer takes such
contributions into account in the calculation of the contribution percentage),
or to receive a matching contribution (including forfeitures) or a qualified
matching contribution. If an employee after-tax contribution or an elective
deferral is required as a condition of participation in the plan, any employee
who would be a participant in the plan if such employee made such a
contribution shall be treated as an eligible participant on behalf of whom no
employee after-tax contributions or elective deferrals are made.
1.23 "EMPLOYEE" shall mean, except as otherwise provided
in this Section 1.23, an individual in the service of the Employer if the
relationship between him and the Employer is the legal relationship of employer
and employee. In determining who is an employee for the purposes of this plan,
the following special provisions shall apply:
1.23.1 Except as provided in Section 23.5.6 and the Adoption
Agreement, all employees of an affiliated employer shall be treated as
employees of the Employer.
1.23.2 All leased employees deemed to be employees of the
Employer or an affiliated employer as provided in Section 414(n) or
414(o) of the Code and the regulations thereunder shall be treated as
employees of the Employer.
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<PAGE> 6
1.23.3 All employees included in a unit of employees covered
by a collective bargaining agreement, if retirement benefits were the
subject of good faith bargaining, shall not be treated as employees of
the Employer, unless representatives of the bargaining unit and the
Employer mutually agree to the inclusion of members of such bargaining
unit in the plan.
1.23.4 All employees who are nonresident aliens and who
receive no earned income (within the meaning of Section 911(d)(2) of
the Code) from the Employer which constitutes income from sources
within the United States (within the meaning of Section 861(a)(3) of
the Code) shall not be treated as employees of the Employer.
See Sections 1.21 and 1.40 for provisions governing eligibility of an employee
to become a participant in the plan. See Section 1.6 for definition of an
affiliated employer.
1.24 "EMPLOYEE AFTER-TAX CONTRIBUTION" shall mean any
contribution made to the plan by or on behalf of a participant that is included
in the participant's gross income in the year in which made.
1.25 "EMPLOYER" shall mean each employer entering into an
Adoption Agreement. All references herein to the "Employer" shall be applied
to each such Employer as if the plan were solely the plan of that Employer.
The Employer entering into an Adoption Agreement together with the Trustee may
be a corporation, or a partnership or sole proprietorship (herein, an
"unincorporated employer"). If the plan is a standardized form plan, each
affiliated employer must become a party to the plan by entering into the
Adoption Agreement together with the Trustee. If the plan is not a
standardized form plan, each affiliated employer may become a party to the
plan, if desired, by entering into the Adoption Agreement together with the
Trustee. With respect to each affiliated employer which becomes a party to the
plan, the following special provisions shall apply:
1.25.1 As used in the plan, unless otherwise indicated by
the context, the term "Employer" shall mean collectively all
employer-parties to the plan.
1.25.2 The plan shall be applied as a single plan with
respect to all employer-parties as if there were only one
employer-party, and service for purposes of the plan shall be
interchangeable among employer-parties to the plan and shall not be
deemed to be interrupted by the transfer at anytime of an employee
from the service of one employer-party to the plan to the service of
another employer-party.
1.25.3 Notwithstanding anything to the contrary, there shall
be a single Committee with respect to all employer-parties to the
plan, which shall be the Committee designated under the Adoption
Agreement.
1.25.4 If this plan is adopted by two or more affiliated
employers, one Employer shall be designated as the "sponsoring
Employer," and shall be authorized to amend the Adoption Agreement on
behalf of itself and all affiliated employers, subject to Section
11.1.2 of the plan.
1.26 "EMPLOYER STOCK" shall mean shares of any class of
stock issued by the Employer or any other corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Code) which includes the Employer.
1.27 "EMPLOYMENT COMMENCEMENT DATE" shall mean the date on
which an employee first completes an hour of service.
1.28 "ENTRY DATE" shall mean the date designated by the
Employer in the Adoption Agreement on which an eligible employee shall enter
the plan and become a participant.
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1.29 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended (including amendments of the Code affected
thereby), and the rules and regulations issued thereunder.
1.30 "EXCESS AGGREGATE CONTRIBUTIONS" shall mean, with
respect to any plan year, the excess of: (i) the aggregate contribution
percentage amounts which are taken into account in computing the numerator of
the contribution percentage and are actually made on behalf of highly
compensated employees for such plan year, over (ii) the maximum contribution
percentage amounts permitted by the ACP test (determined in accordance with
Section 1.401(m)-1(e)(2) of the Income Tax Regulations by reducing
contributions made on behalf of highly compensated employees in order of their
contribution percentages, beginning with the highest of such percentages).
1.31 "EXCESS CONTRIBUTIONS" shall mean, with respect to
any plan year, the excess of: (i) the aggregate amount of the Employer
contributions which are actually taken into account in computing the ADP of
highly compensated participants for such plan year and are actually made on
behalf of highly compensated employees for such plan year, over (ii) the
maximum amount of such contributions permitted under the ADP test (determined
in accordance with Section 1.401(k)-1(f)(2) of the Income Tax Regulations by
reducing contributions made on behalf of highly compensated participants in
order of their ADPs, beginning with the highest of such percentages).
1.32 "EXCESS ELECTIVE DEFERRALS" shall mean those elective
deferrals that are includable in a participant's gross income under Section
402(g) of the Code to the extent such elective deferrals exceed the dollar
limitation under Section 402(g) of the Code.
1.33 "HIGHLY COMPENSATED PARTICIPANT" shall mean any
participant who is a highly compensated employee. A "non-highly compensated
participant" shall mean any participant who is neither a highly compensated
participant nor a family member (within the meaning of Section 1.33.6) of a
highly compensated participant. Any individual who has been a highly
compensated participant but who has ceased to be a participant for any reason
shall be treated as a highly compensated participant if he is a former employee
within the meaning of Section 1.33.7. A "highly compensated employee" shall
mean any employee who, during the determination year (as defined in Section
1.33.3) or the look-back year (as defined in Section 1.33.3):
(i) was at any time a five percent owner (as defined in
Section 416(i)(1)(iii) of the Code);
(ii) received compensation from the Employer and
affiliated employers in excess of $75,000 (adjusted pursuant to
Section 415(d) of the Code);
(iii) received compensation from the Employer and
affiliated employers in excess of $50,000 (adjusted pursuant to
Section 415(d) of the Code) and was in the top-paid group of employees
for such year; or
(iv) was at any time an officer and received compensation
greater than 50% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such year. No more than 50 employees
(or, if lesser, the greater of three employees or ten percent of the
employees) shall be treated as officers. If for any year no officer
of the Employer receives compensation greater than 50% of the dollar
limitation in effect for such year, the highest paid officer of the
Employer for such year shall be treated as a highly compensated
employee.
For purposes of this Section 1.33, the following special provisions shall
apply:
1.33.1 If the Employer at all times during the plan year
maintains significant business activities (and employs employees in
such activities) in at least two significantly separate geographic
areas and satisfies such other conditions as the Secretary of the
Treasury may
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prescribe, the Committee may elect to apply a simplified definition of
highly compensated participant under the plan by substituting
"$50,000" for "$75,000" in paragraph (ii) above, and disregarding
paragraph (iii) above.
1.33.2 Notwithstanding the provisions of Section 1.23, the
term "employee" shall mean an individual in the service of the
Employer if the relationship between him and the Employer is the legal
relationship of employer and employee.
1.33.3 The determination year shall be the plan year. The
look-back year shall be the 12-month period immediately preceding the
determination year. The Committee may elect to make the look-back
year calculation for a determination year on the basis of the calendar
year ending with or within the applicable determination year.
1.33.4 An employee not described in paragraph (ii), (iii),
or (iv) above for the look-back year (without regard to this Section
1.33.4) shall not be treated as described in paragraph (ii), (iii) or
(iv) in the current plan year unless he is one of the 100 employees
paid the greatest compensation during the current plan year.
1.33.5 An employee who performs services for the Employer
any time during the year is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20% of the
employees when ranked on the basis of compensation paid during such
year. For purposes of determining the number of employees in the
top-paid group (but not for identifying the particular employees in
the top-paid group), the following employees shall be excluded:
(i) employees who have not completed six months
of service;
(ii) employees who normally work less than 17 1/2
hours per week;
(iii) employees who normally work not more than six
months during any year;
(iv) employees who have not attained age 21;
(v) employees who are included in a unit of
employees covered by a bona fide collective bargaining
agreement with the Employer; and
(vi) employees who are nonresident aliens and who
receive no earned income (within the meaning of Section
911(d)(2) of the Code) from the Employer which constitutes
income from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
The Committee may elect to apply paragraph (i), (ii), (iii), or (iv)
of this Section 1.33.5 by substituting a shorter period of service,
smaller number of hours or months, or lower age for that specified in
such subparagraphs.
1.33.6 If any individual is a member of the family of a five
percent owner or of a highly compensated employee who is one of the
ten most highly compensated employees during the plan year, then (i)
such individual shall not be considered a separate employee, and (ii)
any compensation paid to such individual (and any contribution or
benefit on behalf of such individual) shall be treated as if it were
paid to (or on behalf of) the five percent owner or highly compensated
employee. For purposes of this Section 1.33.6, the term "family" or
"family member"
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<PAGE> 9
means, with respect to any employee, such employee's spouse and lineal
ascendants or descendants and the spouses of lineal ascendants or
descendants.
1.33.7 A former employee shall be treated as a highly
compensated employee if he was a highly compensated employee when he
separated from service, or at any time after attaining age 55.
The determination of who is a highly compensated employee, including any
calendar year calculation election and any determination of the number and
identity of employees in the top-paid group, the 100 employees paid the
greatest compensation, the number of employees treated as officers, and the
compensation considered for purposes of this Section 1.33, shall be made in
accordance with Section 414(q) of the Code and the regulations thereunder.
1.34 "HOUR OF SERVICE" shall mean the following:
1.34.1 Each hour for which an employee is paid or entitled
to payment by the Employer or an affiliated employer for the
performance of service. Each such hour shall be credited to the
employee for the computation period (as defined in Section 1.14) in
which the service is performed.
1.34.2 Each hour for which an employee is paid, or entitled
to payment, by the Employer or an affiliated employer on account of a
period of time during which no service is performed, irrespective of
whether the employment relationship has terminated, such as vacation,
holiday, illness, incapacity (including disability), lay-off, jury
duty, military duty, or leave of absence. Each such hour shall be
credited to the employee for the computation period in which no duties
are performed. In applying this Section 1.34.2, the following
provisions shall apply for periods in which an employee is not
actually in service:
(i) The number of hours to be credited with
respect to any single continuous period (whether or not such
period occurs in a single computation period for which hours
are credited) shall be the lesser of: (a) 501 hours, or (b)
the number of hours for which the employee is paid with
respect to such single continuous period; provided, that in
determining whether an employee has incurred a break in
service, the provisions of this paragraph (i) shall not limit
the number of hours to be credited to such employee on account
of a leave of absence;
(ii) No hours shall be credited with respect to
payments made to the employee for the purpose of complying
with applicable worker's compensation, unemployment
compensation or disability insurance laws, or payments solely
to reimburse an employee for medical or medically related
expenses incurred by the employee; and
(iii) An amount paid to an employee by the Employer
or an affiliated employer indirectly, such as by a trust,
fund, or insurer to which the Employer makes contributions or
pays premiums, shall be deemed to be paid by the Employer.
1.34.3 Each hour (to the extent not included in Section
1.34.1 or 1.34.2) for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Employer or an
affiliated employer. Each such hour shall be credited to the employee
for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement, or payment is made.
1.34.4 Each hour for which an employee is not actually in
service but is required to be given credit for service under any law
of the United States. Each such hour shall be credited to the
employee for the computation period for which the employee is required
to be given credit for service.
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1.34.5 Notwithstanding the foregoing provisions of this
Section 1.34, solely for the purpose of determining whether an
employee has incurred a break in service for participation and vesting
purposes in a computation period, the following special provisions
shall apply:
(i) In addition to hours for which an employee is
entitled to credit under the preceding paragraphs of this
Section 1.34, such employee shall also receive credit for each
hour with respect to the period that he is on a leave of
absence approved by the Employer for which he is not paid or
entitled to payment.
(ii) An employee who is absent from work for
maternity or paternity reasons shall receive credit for the
hours of service which would otherwise have been credited to
such employee but for such absence, or in any case in which
such hours cannot be determined, eight hours of service per
day of such absence. For purposes of this paragraph (ii), an
absence from work for maternity or paternity reasons means an
absence (a) by reason of the pregnancy of the employee, (b) by
reason of a birth of a child of the employee, (c) by reason of
the placement of a child with the employee in connection with
the adoption of such child by such employee, or (d) for
purposes of caring for such child for a period beginning
immediately following such birth or placement. The hours of
service credited under this paragraph (ii) shall be credited
with respect to the computation period used in determining
years of service and breaks in service in which the absence
begins, if the crediting is necessary to prevent a break in
service in that period; in all other cases, such hours of
service shall be credited in the following computation period.
No more than 501 hours of service are required to be credited
for maternity or paternity reasons. No credit shall be given
under this Section 1.34.5 unless the employee furnishes to the
Committee such timely information as the Committee reasonably
may require to establish that the absence is for a reason
described in this Section 1.34.5 and the number of days for
which there was such an absence.
1.34.6 Notwithstanding the foregoing, if the Employer shall
elect the elapsed time method of crediting hours of service under the
Adoption Agreement, an hour of service shall mean each hour for which
an employee is paid, or entitled to payment, by the Employer for the
performance of duties for the Employer.
Hours of service for all employees shall be determined on the basis of actual
hours worked or such equivalency as may be designated by the Employer in the
Adoption Agreement. The provisions of this Section 1.34 shall be applied in
accordance with the provisions of Section 1.52 of the plan and United States
Department of Labor Regulations Sections 2530.200b-2(b) and (c) (which
provisions are incorporated herein by reference). The method used for
determining hours of service shall be as elected by the Employer in the
Adoption Agreement.
1.35 "LEASED EMPLOYEE" shall mean any individual, other
than an employee of the Employer or an affiliated employer (the "recipient
employer"), who, pursuant to an agreement between the recipient employer and
any other person (the "leasing organization") has performed services for the
recipient employer (or the recipient employer and related persons determined in
accordance with Section 414(n) of the Code) on a substantially full-time basis
for a period of at least one year, and such services are of a type historically
performed by employment in the business field of the recipient employer.
Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer. A leased
employee shall not be considered an employee of the recipient employer if: (i)
such individual is covered by a money purchase pension plan providing: (a) a
nonintegrated employer contribution rate of at least ten percent of
compensation, as defined in Section 23.5.2 of the Code, but including
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amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Section 125, 402(e)(3),
402(h), or 403(b) of the Code, (b) immediate participation, and (c) full and
immediate vesting; and (ii) leased employees do not constitute more than 20% of
the recipient employer's non-highly compensated work force, as defined in
Section 414(n)(5)(C)(ii) of the Code.
1.36 "MATCHING CONTRIBUTION" shall mean an Employer
contribution made to this or any other defined contribution plan maintained by
the Employer on behalf of a participant on account of an employee after-tax
contribution made by such participant, or on account of a participant's
elective deferrals.
1.37 "NET PROFIT" shall mean the current or accumulated
earnings of the Employer as determined according to generally accepted
accounting principles and practices by the accountant of the Employer, subject
to the following adjustments: (i) gains or losses arising from the sale or
other disposition of fixed or capital assets of the Employer shall be excluded;
(ii) taxes based upon income shall not be deducted; and (iii) contributions of
the Employer under this plan or any other defined contribution plan maintained
by the Employer shall not be deducted; provided, that by so specifying in the
Adoption Agreement the Employer may exclude from "net profit" a stated base
amount, or a specified return on the net worth of the Employer.
1.38 "NORMAL RETIREMENT AGE" of a participant shall mean
the age specified in the Adoption Agreement. The "normal retirement date" of a
participant shall mean the date he attains his normal retirement age.
1.39 "OWNER-EMPLOYEE" shall mean an individual who is a
sole proprietor, or who is a partner owning more than ten percent of either the
capital interest or profits interest in a partnership. If this plan provides
contributions or benefits for one or more owner-employees who control both the
business for which this plan is established and one or more other trades or
businesses, this plan and the plan established for such other trades or
businesses must, when looked at as a single plan, satisfy Sections 401(a) and
(d) of the Code for the employees of this and all other trades or businesses.
If the plan provides contributions or benefits for one or more owner-employees
who control one or more other trades or businesses, the employees of the other
trades or businesses must be included in a plan which satisfies Sections 401(a)
and (d) of the Code and which provides contributions and benefits not less
favorable than provided for owner-employees under this plan. If an individual
is covered as an owner-employee under the plans of two or more trades or
businesses which are not controlled and the individual controls a trade or
business, then the contributions or benefits of the employees under the plan of
the trades or businesses which are controlled must be as favorable as those
provided for him under the most favorable plan of the trade or business which
is not controlled. For purposes of the preceding provisions of this Section
1.39, an owner-employee, or two or more owner-employees, will be considered to
control a trade or business if the owner-employee, or two or more
owner-employees together: (i) own the entire interest in an unincorporated
trade or business, or (ii) in the case of a partnership, own more than 50% of
either the capital interest or the profits interest in the partnership. For
purposes of the preceding sentence, an owner-employee, or two or more
owner-employees, shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such owner-employee,
or such two or more owner-employees, are considered to control within the
meaning of the preceding sentence.
1.40 "PARTICIPANT" shall mean with respect to any plan
year an eligible employee who has entered the plan and any former employee who
has an accrued benefit which is not wholly forfeitable for the plan year
pursuant to Section 5. An eligible employee or former employee on the
effective date of the plan who was a participant in a prior plan (as specified
in Section 17) immediately preceding such effective date shall automatically be
a participant in this plan as of such effective date. An eligible employee who
was not such a participant in a prior plan and has not otherwise entered the
plan shall enter the plan and become a participant in accordance with the
provisions elected in the Adoption Agreement. For purposes of determining
eligibility to participate, the following special provisions shall apply to the
extent applicable:
1.40.1 An eligible employee who is not in service on the
date he is eligible to enter the plan shall not enter the plan until
he reenters service as an eligible employee, whereupon he shall
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immediately enter the plan.
1.40.2 If an employee incurs a one year break in service
before satisfying the plan's requirements for eligibility to
participate, service before such break will not be taken into account
for eligibility purposes.
1.40.3 In the case of a participant who does not have any
nonforfeitable right to his accrued benefit attributable to elective
deferrals, matching contributions, or discretionary Employer
contributions, years of service before a period of consecutive one
year breaks in service will not be taken into account in computing
eligibility service if the number of consecutive one year breaks in
service in such period equals or exceeds the greater of five or the
aggregate number of his years of service. Such aggregate number of
years of service will not include any years of service disregarded
under the preceding sentence by reason of prior breaks in service. If
a participant's years of service are disregarded pursuant to this
Section 1.40.3, such participant will be treated as a new employee for
eligibility purposes. If such participant's years of service are not
disregarded pursuant to this Section 1.40.3, he shall continue to
participate in the plan if such breaks in service were not accompanied
by a termination of service, or, if the participant had terminated
service, he shall reenter the plan immediately upon his return to
service.
1.40.4 A participant who terminates service shall reenter
the plan immediately upon his return to service if such participant
has a nonforfeitable right to any portion of his accrued benefit
attributable to elective deferrals, matching contributions, or
discretionary Employer contributions, at the time of such termination
of service.
1.40.5 In the event a participant shall lose his status as
an eligible employee, but shall not incur a break in service, such
employee shall reenter the plan immediately upon his return to such
eligible class. If such employee incurs a break in service, his
eligibility to reenter the plan shall be determined pursuant to this
Section 1.40. In the event an employee who is not a member of the
eligible class of employees becomes a member of such eligible class,
such employee shall enter the plan immediately if he has satisfied the
participation requirements designated by the Employer in the Adoption
Agreement and would have previously entered the plan had he been in
the eligible class.
1.40.6 Notwithstanding the foregoing, if the Employer shall
designate the elapsed time method of crediting hours of service under
the Adoption Agreement, an eligible employee who otherwise has not
entered the plan shall enter the plan and become a participant as of
the entry date designated by the Employer in the Adoption Agreement
coincident with or next following the completion of a period or
periods of service which when aggregated equal at least 365 days,
provided he is in service on such entry date. For the purpose of
applying the foregoing provisions of this Section 1.40.6, the
following provisions shall apply: (i) an eligible employee who has
incurred a severance from service date on or before the date he is
eligible to enter the plan and later reenters service before he incurs
a break in service shall enter the plan on the date that he reenters
service as an eligible employee; (ii) an eligible employee who is
absent from service on the date he is eligible to enter the plan and
later reenters service before he incurs a severance from service date,
shall enter the plan effective as of the first entry date that
occurred during his period of absence; and (iii) a participant who has
incurred a break in service and later reenters service shall reenter
the plan as of the date he reenters service as an eligible employee.
1.41 A "PERIOD OF SERVICE" shall mean a continuous period
of time during which the employee is in service with the Employer. A period of
service shall begin on the employee's employment commencement date or
reemployment commencement date, whichever is applicable, and shall end on the
date of the employee's
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severance from service. Notwithstanding the foregoing, a period of severance
of less than 12-consecutive months shall be included in an employee's period of
service.
1.42 A "PERIOD OF SEVERANCE" shall mean a continuous
period of time during which the employee is not in service with the Employer.
A period of severance shall begin on the employee's severance from service date
and shall end on the date on which the employee again completes or is credited
with an hour of service.
1.43 "PLAN" shall mean the Godwins Booke & Dickenson
Prototype Profit Sharing and Employee Savings Plan and Trust as herein set out
or as duly amended. The name of the plan as applied to the Employer shall be
as set forth in the Adoption Agreement. The plan is intended to be a profit
sharing plan, and to permit the Employer to elect under the Adoption Agreement
to include a CODA.
1.44 "PLAN ADMINISTRATOR" shall mean the person (or
persons) or entity designated by the Employer in the Adoption Agreement to
serve as plan administrator, and any successors thereto.
1.45 "PLAN YEAR" shall mean the 12-consecutive month
period ending with the last day of the month specified by the Employer in the
Adoption Agreement.
1.46 "QUALIFIED MATCHING CONTRIBUTIONS" shall mean any
contributions that are (i) made to the plan by the Employer for the plan year
and allocated to a participant's account by reason of elective deferrals or
employee after-tax contributions, (ii) nonforfeitable when made, and (ii)
distributable only as specified in Section 3.8.
1.47 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" shall mean
contributions (other than matching contributions or qualified matching
contributions) that are (i) made by the Employer and allocated to a
participant's account that the participant may not elect to currently receive
in cash, (ii) nonforfeitable when made, and (iii) distributable only as
specified in Section 3.8.
1.48 "REEMPLOYMENT COMMENCEMENT DATE" shall mean the first
date, following a break in service, on which an employee completes an hour of
service.
1.49 "RETIRE" or "RETIREMENT" shall mean retirement within
the meaning of Section 3.1, 3.2, 3.3, or 3.5.
1.50 "SALARY REDUCTION AGREEMENT" shall mean the written
agreement entered into by a participant pursuant to the provisions of Section
2.1.
1.51 "SELF-EMPLOYED INDIVIDUAL" shall mean an individual
who has earned income for the taxable year, or an individual who would have had
earned income but for the fact that the trade or business had no net profit for
the taxable year.
1.52 "SERVICE" shall mean employment by the Employer as an
employee. In determining service, all employees of an affiliated employer and
individuals deemed to be employees for purposes of the plan under Section
414(n) or 414(o) of the Code and the regulations thereunder shall be deemed to
be in the service of the Employer. For purposes of this Section 1.52, the
following special provisions shall apply:
1.52.1 Nothing in this Section 1.52 shall be construed as
including as a participant an individual who is in the service of an
affiliated employer which is not a party to the plan. See Section
1.25 for requirement that each affiliated employer must become a party
to a standardized form plan.
1.52.2 Unless otherwise elected by the Employer in the
Adoption Agreement, service
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with an employer prior to becoming an affiliated employer shall be
disregarded for all purposes of the plan.
1.52.3 In any case in which the Employer maintains the plan
of a predecessor employer, service with such predecessor employer
shall be treated as service with the Employer.
1.53 "SEVERANCE FROM SERVICE DATE" shall mean, with
respect to an employee, the earlier of (i) the date he quits, is discharged,
retires, or dies; or (ii) the first anniversary of the date he is absent from
service (with or without pay) for any other reason (including but not limited
to vacation, holiday, sickness, disability, leave of absence, and layoff).
1.54 "SHAREHOLDER-EMPLOYEE" shall mean an individual
owning (or considered as owning within the meaning of Section 318(a)(1) of the
Code) more than five percent of the outstanding stock of the Employer if, with
respect to any taxable year of the Employer, the Employer is an S Corporation
within the meaning of Section 1361(a) of the Code.
1.55 "SPONSOR" shall mean Godwins Booke & Dickenson, which
has caused the plan to be established.
1.56 "SPOUSE" or "SURVIVING SPOUSE" shall mean, except as
otherwise provided in the plan, the legally married spouse or surviving spouse
of a participant; provided that a former spouse shall be treated as the spouse
or surviving spouse to the extent provided under a qualified domestic relations
order described in Section 414(p) of the Code.
1.57 "STANDARDIZED FORM PLAN" shall mean a regional
prototype plan which satisfies the requirements of Section 4.11 of Revenue
Procedure 89-13. This plan is a standardized form plan if so designated in the
Adoption Agreement.
1.58 "TAXABLE WAGE BASE" shall mean the maximum amount of
earnings which may be considered wages for a year under Section 3121(a)(1) of
the Code, as in effect as of the first day of the plan year.
1.59 "TESTING COMPENSATION" shall mean any of the
definitions of compensation which are set forth in Section 23.5.2, as
designated by the Committee. If elected by the Committee, each such definition
of compensation may be modified to include any amounts excludable from the
employee's gross income under Section 125, 402(e)(3), 402(h), or 403(b) of the
Code. The amount of testing compensation with respect to any participant shall
include his testing compensation for the entire plan year or, if elected by the
Committee, that portion of the plan year in which the employee was eligible to
participate in the plan. Notwithstanding the above, a participant's testing
compensation shall be subject to the annual compensation limitation set forth
in Section 1.13.3.
1.60 "TRUST" or "TRUST FUND" shall mean the assets of the
plan and trust held by the Trustee.
1.61 "TRUSTEE" shall mean the person (or persons) or
entity designated by the Employer in the Adoption Agreement to serve as
trustee, and any successors thereto.
1.62 A "YEAR OF SERVICE" shall mean 1,000 or more hours of
service during a computation period.
1.62.1 Notwithstanding the foregoing provisions of this
Section 1.62, with respect to service prior to the computation date
(as defined in this Section 1.62.1), a year of service shall mean
uninterrupted service for a full plan year. Service prior to the
computation date shall be taken into account only with respect to
employees in service on such date, and with respect to each such
employee only to the extent of full plan years of uninterrupted
service preceding such date
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(or his normal retirement age, if earlier). For this purpose, the
"computation date" shall mean the later of (i) the first day of the
plan year beginning in 1976, or (ii) the effective date of the plan
(or, if the Employer was a party to a prior plan within the meaning of
Section 17, the effective date of the prior plan).
1.62.2 Notwithstanding any provision of this Section 1.62 to
the contrary, if the Employer shall designate the elapsed time method
of crediting hours of service in the Adoption Agreement, the number of
whole years of the employee's period or periods of service shall be
subject to the following special provisions:
(i) All periods of service of the employee shall
be aggregated (including nonsuccessive periods of service),
and 365 days shall be deemed to equal a whole year of service.
Following such aggregation, any fractional year shall be
disregarded.
(ii) To the extent not otherwise included in the
employee's period or periods of service, the time during which
an employee is on a leave of absence approved by the Employer
shall be included in determining his years of service.
1.62.3 Years of service shall include any period for which
an employee would have been a leased employee but for the requirement
that a leased employee perform service for the Employer, or the
Employer and related persons determined in accordance with Section
414(n)(6) of the Code, on a substantially full-time basis for a period
of a least one year.
SECTION 2. CONTRIBUTIONS TO THE TRUST AND ALLOCATION
THEREOF
2.1 ELECTIVE DEFERRALS
If elected by the Employer in the Adoption Agreement,
a CODA, which satisfies the requirements of Section 401(k) of the Code, shall
apply and be a part of the plan.
2.1.1 Administrative rules governing salary reduction
agreements:
(i) To the extent provided in the Adoption
Agreement, a participant may elect to make elective deferrals
under this plan by executing and delivering to the Committee a
salary reduction agreement in accordance with such rules and
procedures as are adopted by the Committee from time to time.
Elective deferrals shall be made through payroll deduction
pursuant to the participant's salary reduction agreement. A
participant may elect to commence elective deferrals as of any
entry date, and such election shall remain in effect until
modified or terminated. A participant shall be afforded a
reasonable period at such times as shall be specified by the
Employer in the Adoption Agreement to modify the amount or
frequency of his elective deferrals. A participant may
terminate his election to make elective deferrals at any time
to be effective on the first day of the next full payroll
period. If not sooner terminated, a participant's salary
reduction agreement shall terminate automatically as of the
last day of the payroll period in which the participant shall
terminate his service with the Employer.
(ii) The Committee may amend or revoke a salary
reduction agreement with a participant at any time if the
Committee determines that such amendment or revocation is
necessary to ensure that the annual additions (as defined in
Section 23.5.1) to the account of a participant do not exceed
the annual addition limitations (described in Section 23.1.1)
for such participant or
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<PAGE> 16
that the requirements of Section 2.1.4 are met for such plan
year.
2.1.2 Maximum amount of elective deferrals: A
participant's elective deferrals are subject to any limitations
imposed in the Adoption Agreement and any further limitations under
the plan. No participant shall be permitted to make elective
deferrals under this plan during any taxable year of the participant
in excess of the dollar limitation contained in Section 402(g) of the
Code in effect at the beginning of such taxable year.
2.1.3 Distribution of excess elective deferrals:
(i) Notwithstanding any other provisions of the
plan, excess elective deferrals, plus any income and minus any
loss allocable thereto, shall be distributed no later than
each April 15 to participants to whose accounts excess
elective deferrals were allocated for the preceding taxable
year and who claim excess elective deferrals for such taxable
year. Excess elective deferrals shall be treated as annual
additions under the plan, unless such amounts are distributed
no later than April 15 following the close of the
participant's taxable year. The participant's claim under
this Section 2.1.3 shall be in writing; shall be submitted to
the plan administrator not later than March 1; shall specify
the amount of the participant's excess elective deferrals for
the preceding taxable year; and shall be accompanied by the
participant's written statement that if such amounts are not
distributed, such excess elective deferrals, when added to
amounts deferred under other plans or arrangements described
in Section 401(k), 408(k), or 403(b) of the Code, will exceed
the limit imposed on the participant by Section 402(g) of the
Code for the taxable year in which the deferral occurred. A
participant is deemed to notify the plan administrator of any
excess elective deferrals that arise by taking into account
only those elective deferrals made to this plan and any other
plan of the Employer. The amount of a Participant's excess
elective deferrals that must be distributed for a taxable year
pursuant to this Section shall be reduced by any Excess
Contributions previously distributed or recharacterized with
respect to the Participant for the Plan year beginning with or
within such taxable year.
(ii) Excess elective deferrals shall be adjusted
for income or loss up to the date of distribution, provided
that the Committee may disregard income or loss allocable to
the period between the end of the taxable year and the date
such excess elective deferrals are distributed (the "gap
period") in determining income or loss. The amount of income
or loss allocable to a participant's excess elective deferrals
for a taxable year shall be determined under one of the
following methods selected by the Committee:
(a) General method: The income or loss
allocable to a participant's excess elective
deferrals for a taxable year shall be determined by
multiplying the income or loss allocable to the
participant's elective deferral account for the
taxable year (and the gap period, if so elected by
the Committee) by a fraction, the numerator of which
is the participant's excess elective deferrals for
the taxable year and the denominator is the sum of:
(I) the participant's elective deferral account
balance as of the beginning of the taxable year, plus
(II) the participant's elective deferrals for the
taxable year (and the gap period, if so elected by
the Committee);
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<PAGE> 17
(b) Safe harbor method: The income or
loss allocable to a participant's excess elective
deferrals for a taxable year shall be determined by
adding (I) the amount determined in paragraph (a)
above with respect to the participant for the taxable
year (without regard to the gap period), plus (II)
the amount determined by multiplying ten percent of
the amount determined under "(I)" above by the number
of whole calendar months in the gap period, counting
the month of distribution if distribution occurs
after the 15th of such month; or
(c) Other alternative methods: The
income or loss allocable to a participant's excess
elective deferrals for a taxable year (and the gap
period, if so elected by the Committee) may be
determined by applying any reasonable method selected
by the Committee, provided such method is used
consistently for all participants and for all
corrective distributions under the plan for the
taxable year, and is used by the plan for allocating
income or loss to participants' accounts.
Notwithstanding the above, the determination of income or loss
attributable to a participant's excess elective deferrals
shall be made in all respects in accordance with Section
1.402(g)-1(e)(5) of the Income Tax Regulations.
2.1.4 Limitations on elective deferrals:
(i) Actual deferral percentage: With respect to
any plan year beginning on or after January 1, 1987, the ADP
for the group of highly compensated participants for each plan
year shall bear to the ADP for the group of all non-highly
compensated participants for the same plan year a relationship
that satisfies either of the following tests:
(a) The ADP for the group of highly
compensated participants for the plan year is not
more than the ADP for the group of non-highly
compensated participants for the same plan year
multiplied by 1.25; or
(b) The ADP for the group of highly
compensated participants for the plan year is not
more than the ADP for the group of non-highly
compensated participants for the same plan year
multiplied by 2.0, and the excess of the ADP for the
group of highly compensated participants over that of
all non-highly compensated participants is not more
than two percentage points (or such lesser amount as
the Secretary of the Treasury shall prescribe by
regulation to prevent the multiple use of this
alternative limitation with respect to any highly
compensated participant).
(ii) Special rules for calculating the ADP:
(a) The ADP for any highly compensated
participant for the plan year who is eligible to have
elective deferrals (and qualified non-elective
contributions or qualified
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<PAGE> 18
matching contributions, or both, if treated as
elective deferrals for purposes of the ADP test)
allocated to his account under two or more
arrangements described in Section 401(k) of the Code
that are maintained by the Employer shall be
determined as if such elective deferrals (and if
applicable, qualified matching contributions or
qualified non-elective contributions or both) were
made under a single arrangement. If a highly
compensated employee participates in two or more cash
or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as
a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if
mandatorily disaggregated under regulations under
Section 401(k) of the Code.
(b) In the event that this plan
satisfies the requirements of Sections 401(k),
401(a)(4), or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of
the Code only if aggregated with this plan, then the
ADP test shall be applied by determining the actual
deferral percentages of employees as if all such
plans were a single plan. For plan years beginning
after December 31, 1989, plans may be aggregated in
order to satisfy Section 401(k) of the Code only if
they have the same plan year.
(c) For purposes of determining the ADP
test, elective deferrals, qualified non-elective
contributions, and qualified matching contributions
must be made before the last day of the 12-month
period immediately following the plan year to which
such contributions relate.
(d) The Employer shall maintain records
sufficient to demonstrate satisfaction of the ADP
test and the amount of qualified non-elective
contributions or qualified matching contributions, or
both, used in such test.
(e) Notwithstanding anything to the
contrary in the plan, the determination and treatment
of elective deferrals and the ADP of any participant
shall satisfy Section 1.401(k)-1(b) of the Income Tax
Regulations and such other requirements as may be
prescribed by the Secretary of the Treasury.
(iii) Distribution of excess contributions:
(a) Notwithstanding any other
provisions of the plan and except as otherwise
provided in Section 2.1.4(iii)(e), excess
contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than
the last day of each plan year to participants to
whose accounts such excess contributions were
allocated for the preceding plan year. If such
excess amounts are distributed
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more than two and one-half months after the last day
of the plan year in which such excess amounts arose,
a ten percent excise tax will be imposed on the
Employer with respect to such amounts. Such
distributions shall be made to highly compensated
participants on the basis of the respective portions
of the excess contributions attributable to each of
such employees. Excess contributions of participants
who are subject to the family member aggregation
rules shall be allocated among the family members in
proportion to the elective deferrals (and amounts
treated as elective deferrals) of each family member
that is combined to determine the combined ADP.
(b) Excess contributions (including the
amounts recharacterized as employee after-tax
contributions) shall be treated as annual additions
under the plan.
(c) The amount of a Participant's Excess
Contributions to be distributed or recharacterized
pursuant to this Section for a Plan Year shall be
reduced by any Excess Elective Deferrals previously
distributed to the Participant for the Participant's
taxable year ending with or within such Plan Year.
(d) Determination of income or loss:
Excess contributions shall be adjusted for income or
loss up to the date of distribution, provided that
the Committee may disregard income or loss allocable
to the period between the end of the plan year and
the date such excess contributions are distributed
(the "gap period") in determining income or loss.
The income or loss allocable to a participant's
excess contributions for a plan year shall be
determined under one of the following methods
selected by the Committee:
(I) General method: The income or
loss allocable to a participant's excess
contributions for a plan year shall be
determined by multiplying the income or loss
allocable to the participant's account
attributable to elective deferrals (and
qualified non-elective contributions and/or
qualified matching contributions, if any of
such contributions are included in the ADP
test) for the plan year (and the gap period,
if so elected by the Committee) by a
fraction. The numerator of such fraction is
the participant's excess contributions for
the plan year and the denominator is the sum
of: (A) the balance of the participant's
account attributable to elective deferrals
(and qualified non-elective contributions
and/or qualified matching contributions, if
any of such contributions are
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<PAGE> 20
included in the ADP test) as of the beginning
of the plan year, plus (B) the participant's
elective deferrals (and qualified
non-elective contributions and/or qualified
matching contributions, if any of such
contributions are included in the ADP test)
for the plan year (and the gap period, if so
elected by the Committee);
(II) Safe harbor method: The income
or loss allocable to a participant's excess
contributions for a plan year shall be
determined by adding (A) the amount
determined in subparagraph (I) above with
respect to the participant for the plan year
(without regard to the gap period), plus (B)
the amount determined by multiplying ten
percent of the amount determined under "(A)"
above by the number of whole calendar months
in the gap period, counting the month of
distribution if distribution occurs after the
15th of such month; or
(III) Other alternative methods: The
income or loss allocable to a participant's
excess contributions for a plan year (and the
gap period, if so elected by the Committee)
may be determined by applying any reasonable
method for computing the income or loss
allocable to excess contributions, provided
such method is used consistently for all
participants and for all corrective
distributions under the plan for the plan
year, and is used by the plan for allocating
income or loss to participants' accounts.
Notwithstanding the above, the determination of
income or loss attributable to a participant's excess
contributions shall be made in all respects in
accordance with Section 1.401(k)-1(f)(4) of the
Income Tax Regulations.
(d) Accounting for excess contributions:
Unless otherwise prescribed by the Committee, amounts
distributed under Section 2.1.4(iii) shall first be
treated as distributions from the participant's
elective deferral account and qualified matching
contribution account (if applicable) in proportion to
the participant's elective deferrals and qualified
matching contributions (to the extent used in the ADP
test) for the plan year. Excess contributions shall
be distributed from the participant's qualified
non-elective contribution account only to the extent
that such excess contributions exceed the balance in
the participant's elective deferral account and
qualified
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<PAGE> 21
matching contribution account.
(e) Recharacterization: If the Employer
elects in the Adoption Agreement to allow employee
after-tax contributions, the Employer may treat a
participant's excess contributions (without
adjustment for income or loss allocable thereto) as
an amount distributed to the participant and then
contributed by the participant to the plan.
Recharacterized amounts will remain allocated to a
participant's elective deferral account, together
with any earnings allocated to such recharacterized
amounts, and will continue to be subject to the same
distribution requirements as elective deferrals.
Amounts may not be recharacterized by a highly
compensated participant to the extent that such
amounts in combination with other employee after-tax
contributions made by that employee would exceed any
stated limit under the plan for employee after-tax
contributions. Recharacterization must occur no
later than two and one-half months after the last day
of the plan year in which such excess contributions
arose and is deemed to occur no earlier than the date
the last highly compensated participant is informed
in writing of the amount recharacterized and the
consequences thereof. Recharacterized amounts will
be taxable to the participant for the participant's
taxable year in which the participant would have
received them in cash.
2.1.5 Qualified non-elective contributions: In lieu of
distributing or recharacterizing excess contributions as provided in
Section 2.1.4 above, the Employer shall be authorized to make such
qualified non-elective contributions on behalf of those employees
designated in the Adoption Agreement as shall be needed to satisfy the
ADP test described in Section 2.1.4(i) of the plan or the ACP test
described in Section 2.3.6(i) of the plan, or both, pursuant to the
Income Tax Regulations. Qualified non-elective contributions may be
treated as elective deferrals under the ADP test only if the
conditions described in Section 1.401(k)-1(b)(5) of the Income Tax
Regulations are satisfied.
2.1.6 Separate accounts: The Committee shall maintain a
separate account, designated as the participant's "elective deferral
account," with respect to that portion of the participant's accrued
benefit that is attributable to elective deferrals. The Committee
shall maintain a separate account, designated as the participant's
"qualified non-elective contribution account," with respect to that
portion of the participant's accrued benefit that is attributable to
qualified non-elective contributions. Each separate account shall be
credited with the applicable contributions, earnings and losses,
distributions, and other adjustments in the manner provided in Section
7.
2.1.7 Vesting: A participant's elective deferral account
and qualified non-elective contribution account shall be
nonforfeitable at all times.
2.1.8 Allocation of elective deferral and qualified
non-elective contributions: The Employer shall contribute and
allocate to each participant's elective deferral account on each
adjustment date an amount equal to the amount of the participant's
elective deferrals made pursuant to his salary reduction agreement
since the preceding adjustment date. Qualified non-elective
contributions shall be allocated to the accounts of those employees
designated in the Adoption Agreement in the manner elected by the
Employer in the Adoption Agreement. Under no circumstances may
elective deferrals be contributed and allocated to the trust under the
plan
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<PAGE> 22
later than 30 days after the close of the plan year for which the
contributions are deemed to be made, or such other time as provided in
applicable Income Tax Regulations. Qualified non-elective
contributions must actually be paid to the trust no later than the end
of the 12-month period immediately following the plan year with
respect to which the contribution is allocated.
2.2 EMPLOYEE AFTER-TAX CONTRIBUTIONS
2.2.1 Employee after-tax contributions: If the Employer so
specifies in the Adoption Agreement, each participant may at his
option make employee after-tax contributions to the plan in the form
of cash through payroll deduction, subject to such limitations and
requirements as shall be determined by the Committee. The Employer
shall deliver such contributions to the Trustee as soon as practicable
following each payroll date, along with a designation of the
participants to whose employee after-tax contribution accounts the
contributions are to be credited and such other information as the
Trustee shall reasonably require. Employee after-tax contributions
made with respect to plan years beginning on and after January 1, 1987
must comply with the average contribution percentage test described in
Section 401(m) of the Code.
2.2.2 Administrative rules governing employee after-tax
contributions:
(i) A participant may elect to commence employee
after-tax contributions as of any entry date specified by the
Employer in the Adoption Agreement. A participant's election
to commence employee after-tax contributions shall remain in
effect until modified or terminated. A participant shall be
afforded a reasonable period at such times as shall be
specified by the Employer in the Adoption Agreement to modify
the amount or frequency of his employee after-tax
contributions. A participant may terminate his election to
make employee after-tax contributions at any time to be
effective on the first day of the next full payroll period.
If not sooner terminated, a participant's election to make
employee after-tax contributions shall terminate automatically
as of the last day of the payroll period in which the
participant shall terminate his service with the Employer.
(ii) The Committee may amend or revoke a
participant's election to make employee after-tax
contributions at any time if the Committee determines that
such amendment or revocation is necessary to ensure that the
annual additions (as defined in Section 23.5.1) to the account
of a participant do not exceed the annual addition limitations
(described in Section 23.1.1) for such participant or that the
requirements of Section 2.3.6 are met for such plan year.
2.2.3 Separate accounts: The Committee shall maintain a
separate account, designated as the participant's "employee after-tax
contribution account," with respect to that portion of a participant's
accrued benefit that is attributable to his employee after-tax
contributions. The employee after-tax contribution account of a
participant shall be credited with the participant's employee
after-tax contributions, earnings and losses, distributions, and
adjustments in the manner provided in Section 7. In no event shall
any forfeiture under the plan be allocated to the participant's
employee after-tax contribution account.
2.2.4 Vesting: The employee after-tax contribution account
of each participant shall be nonforfeitable at all times.
2.3 MATCHING CONTRIBUTIONS
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2.3.1 Matching contributions: If elected by the Employer
in the Adoption Agreement, the Employer shall make matching
contributions to the plan in cash and/or shares of Employer stock, if
the Employer shall elect in the Adoption Agreement to permit plan
assets to be invested in Employer stock. The amount of such matching
contributions shall be calculated by reference to the participant's
elective deferrals and/or employee after-tax contributions as
specified by the Employer in the Adoption Agreement.
2.3.2 Qualified matching contributions: The Employer shall
be authorized to make such qualified matching contributions to the
accounts of those employees designated in the Adoption Agreement as
shall be needed to satisfy the ADP test described in Section 2.1.4 of
the plan. The amount of such qualified matching contributions to be
taken into account for the ADP test shall be determined each plan year
by the Employer. Qualified matching contributions may be treated as
elective deferrals under the ADP test only if the conditions described
in Section 1.401(k)-1(b)(5) of the Income Tax Regulations are
satisfied.
2.3.3 Separate accounts: The Committee shall maintain a
separate account, designated as the participant's "matching
contribution account," with respect to that portion of a participant's
accrued benefit that is attributable to matching contributions. If
all matching contributions made by the Employer do not satisfy the
requirements of qualified matching contributions, then the Committee
shall maintain a separate account, designated as the participant's
"qualified matching contribution account," with respect to that
portion of the participant's accrued benefit that is attributable to
qualified matching contributions. Each separate account shall be
credited with the applicable contributions, earnings and losses,
distributions, and other adjustments in the manner provided in Section
7.
2.3.4 Vesting: Matching contributions shall be vested in
accordance with the Employer's election in the Adoption Agreement. In
any event, matching contributions shall be nonforfeitable upon the
occurrence of an event described in Section 5.1. A participant's
qualified matching contribution account shall be nonforfeitable at all
times.
2.3.5 Forfeitures of matching contributions: Forfeitures
of matching contributions other than excess aggregate contributions
shall be made in accordance with the forfeiture provisions elected by
the Employer in the Adoption Agreement. Notwithstanding any provision
in the plan to the contrary, if all or part of a participant's
elective deferrals or employee after-tax contributions is treated as
an excess elective deferral, an excess contribution, or an excess
aggregate contribution, any matching contribution made with respect to
such elective deferral or employee after-tax contribution, as
appropriate, adjusted for income and losses allocable thereto, and
which is not distributed or forfeited in order to enable the plan to
comply with the ACP test in Section 2.3.6, shall be forfeited by the
participant on or before the March 15 next following the end of the
plan year for which the matching contribution was made (the
"forfeiture date"). The income or loss allocable to the forfeited
matching contribution for the plan year of such matching contribution
shall be determined in the same manner as for excess aggregate
contributions under Section 2.3.6.
2.3.6 Limitations on matching contributions and employee
after-tax contributions:
(i) Average contribution percentage: With
respect to any plan year beginning on or after January 1,
1987, the ACP for the group of highly compensated participants
for each plan year shall bear to the ACP for the group of all
non-highly compensated participants for the same plan year a
relationship that satisfies either of the following tests:
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<PAGE> 24
(a) The ACP for the group of highly
compensated participants for the plan year is not
more than the ACP for the group of all non-highly
compensated participants for the same plan year
multiplied by 1.25; or
(b) The ACP for the group of highly
compensated participants for the plan year is not
more than the ACP for the group of all non-highly
compensated participants for the plan year multiplied
by 2.0, and the excess of the ACP for highly
compensated participants over that of all non-highly
compensated participants is not more than two
percentage points (or such lesser amount as the
Secretary of the Treasury shall prescribe by
regulations to prevent the multiple use of this
alternative limitation with respect to any highly
compensated participant).
(ii) Special rules for calculating the ACP:
(a) The following rules shall be applied
to prevent the multiple use of the alternative
limitation (as defined Section 1.402(m)-2 of the
Income Tax Regulations) with respect to any plan
year. If one or more highly compensated participants
participate in both a CODA and a plan subject to the
ACP test maintained by the Employer, and the sum of
the ADP and ACP of those highly compensated employees
subject to either or both tests exceeds the aggregate
limit, then the ACP of those highly compensated
participants who also participate in a CODA will be
reduced (beginning with the highly compensated
employee whose ACP is the highest) so that the limit
is not exceeded. The amount by which each highly
compensated participant's contribution percentage
amount is reduced shall be treated as an excess
aggregate contribution. The ADP and ACP of the
highly compensated participants are determined after
any corrections required to meet the ADP and ACP
tests. Multiple use of the alternative limitation
does not occur if both the ADP and ACP of the highly
compensated participants do not exceed 1.25
multiplied by the ADP and ACP of the group of
non-highly compensated participants.
(b) For purposes of this Section 2.3.6,
the contribution percentage for any highly
compensated participant who is eligible to have
contribution percentage amounts allocated to his
account under two or more plans described in Section
401(a) of the Code, or arrangements described in
Section 401(k) of the Code, that are maintained by
the Employer, shall be determined as if the total of
such contribution percentage amounts was made under
each plan. If a highly compensated employee
participates in two or more cash or deferred
arrangements that have different plan years, all cash
or deferred arrangements ending with or within the
same calendar year shall be treated as the same
arrangement. Notwithstanding the foregoing, certain
plans shall be treated as
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<PAGE> 25
separate if mandatorily disaggregated under
regulations under Section 401(m) of the Code.
(c) In the event that this plan
satisfies the requirements of Section 401(m),
401(a)(4), or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other
plans satisfy the requirements of such Sections of
the Code only if aggregated with this plan, then the
ACP test shall be applied by determining the
contribution percentages of participants as if all
such plans were a single plan. For plan years
beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the
Code only if they have the same plan year.
(d) For purposes of the ACP test,
employee after-tax contributions are considered to
have been made in the plan year in which contributed
to the trust. Matching contributions and qualified
non-elective contributions will be considered made
for a plan year if made no later than the end of the
12-month period beginning on the day after the close
of the plan year.
(e) The Sponsor shall maintain records
that enable it (i) to monitor the Employer's
compliance with the requirements of Section 401(m) of
the Code, (ii) to perform the ACP test for the
Employer for the plan year, and (iii) to notify the
Employer if it is required to correct any excess
aggregate contributions.
(f) Notwithstanding anything to the
contrary in the plan, the determination and treatment
of employee after-tax contributions and matching
contributions and the contribution percentage of any
participant shall satisfy Section 1.401(m)-1(b) of
the Income Tax Regulations and such other
requirements as may be prescribed by the Secretary of
the Treasury.
(iii) Distribution of excess aggregate
contributions:
(a) General rule: Notwithstanding any
other provision of this plan, excess aggregate
contributions, plus any income and minus any loss
allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed no
later than the last day of each plan year to
participants to whose accounts such excess aggregate
contributions were allocated for the preceding plan
year. Excess aggregate contributions of participants
who are subject to the family member aggregation
rules shall be allocated among the family members in
proportion to the contribution percentage amount of
each family member that is combined to determine the
combined ACP. If such excess aggregate contributions
are distributed more than two and one-half months
after the last day of the plan year in which such
excess amounts arose, a ten percent excise tax will
be
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imposed on the Employer maintaining the plan with
respect to those amounts. Excess aggregate
contributions shall be treated as annual additions
under the plan. The distribution (or forfeiture, if
applicable) of excess aggregate contributions shall
be made on the basis of the respective portions of
such amounts attributable to each highly compensated
employee.
(b) Determination of income or loss:
Excess aggregate contributions shall be adjusted for
income or loss up to the date of distribution,
provided that the Committee may disregard income or
loss allocable to the period between the end of the
plan year and the date such excess aggregate
contributions are distributed in determining income
or loss (the "gap period"). The income or loss
allocable to a participant's excess aggregate
contributions for a plan year shall be determined
under one of the following methods selected by the
Committee:
(I) General method: The income or
loss allocable to a participant's excess
aggregate contributions for a plan year shall
be determined by multiplying the income or
loss allocable to the participant's account
attributable to contribution percentage
amounts for the plan year (and the gap
period, if so elected by the Committee) by a
fraction. The numerator of such fraction is
the participant's excess aggregate
contributions for the plan year and the
denominator is the sum of: (A) the balance
of the participant's account attributable to
the contribution percentage amounts as of the
beginning of the plan year, plus (B) the
participant's contribution percentage amounts
for the plan year (and the gap period, if so
elected by the Committee);
(II) Safe harbor method: The income
or loss allocable to a participant's excess
aggregate contribution for a plan year shall
be determined by adding (A) the amount
determined in subparagraph (I) above with
respect to the participant for the plan year
(without regard to the gap period), plus (B)
the amount determined by multiplying ten
percent of the amount determined under "(A)"
above by the number of whole calendar months
in the gap period, counting the month of
distribution if distribution occurs after the
15th of such month; or
(III) Other alternative methods:
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The income or loss allocable to a
participant's excess aggregate contribution
for a plan year (and the gap period, if so
elected by the Committee) may be determined
by applying any reasonable method for
computing the income or loss allocable to
excess aggregate contributions, provided such
method is used consistently for all
participants and for all corrective
distributions under the plan for the plan
year, and is used by the plan for allocating
income or loss to participants' accounts.
Notwithstanding the above, the determination of
income or loss attributable to a participant's excess
aggregate contributions shall be made in all respects
in accordance with Section 1.401(m)-1(e)(3) of the
Income Tax Regulations.
(c) Treatment of forfeitures of excess
aggregate contributions: Forfeitures of excess
aggregate contributions shall be treated in the same
manner as elected by the Employer in the Adoption
Agreement with respect to forfeitures of matching
contributions, except that if such forfeitures are
reallocated, they shall only be reallocated among the
accounts of non-highly compensated participants.
Amounts forfeited by highly compensated participants
under this Section 2.3 shall be treated as annual
additions under the plan.
(d) Accounting for excess aggregate
contributions: Unless otherwise prescribed by the
Committee, excess aggregate contributions shall be
forfeited, if forfeitable, or distributed on a pro
rata basis from the participant's employee after-tax
contribution account, matching contribution account,
and qualified matching contribution account (and, if
applicable, the participant's qualified non-elective
contribution account or elective deferral account, or
both).
(e) Order of determination: The
determination of the excess aggregate contributions
shall be made after first determining the excess
elective deferrals, and then determining the excess
contributions under the plan.
2.4. DISCRETIONARY EMPLOYER CONTRIBUTIONS
The Employer shall contribute to the trust for the taxable year of the Employer
that ends with or within the plan year such amount as provided in the Adoption
Agreement. Discretionary Employer contributions may be made in cash and/or
shares of Employer stock, if the Employer shall elect in the Adoption Agreement
to permit plan assets to be invested in Employer stock. The Committee shall
maintain a separate account, designated as the participant's "discretionary
Employer contribution account," with respect to that portion of the
participant's accrued benefit that is attributable to discretionary Employer
contributions under the plan. Subject to the provisions of Sections 22 and 23,
any discretionary Employer contribution shall be allocated as of each
adjustment date as specified by the Employer in the Adoption Agreement. The
discretionary Employer contribution account shall be vested in accordance with
the Employer's election in the Adoption Agreement, and adjusted as of each
adjustment
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date in accordance with the provisions of Section 7.
2.5 VOLUNTARY DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
A participant may not make voluntary deductible employee contributions to the
plan with respect to his taxable years beginning after December 31, 1986. The
Committee shall maintain a separate account, designated as the participant's
"deductible contribution account," with respect to each participant who had
made such voluntary deductible employee contributions under a predecessor plan
prior to January 1, 1987. The deductible contribution account of each
participant shall be nonforfeitable and shall be adjusted as of each adjustment
date in accordance with the provisions of Section 7. In no event shall any
forfeiture under the plan be allocated to the participant's deductible
contribution account. Assets in the participant's deductible contribution
account may be commingled for investment with other funds of the trust.
2.6 MANDATORY EMPLOYEE CONTRIBUTIONS
A participant shall not be required to make contributions to the trust for any
plan year beginning on or after the effective date of the plan. The Committee
shall maintain a separate account, designated as the participant's "mandatory
contribution account," with respect to each participant having made mandatory
contributions under a predecessor plan. The mandatory contribution account of
each participant shall be nonforfeitable and shall be adjusted as of each
adjustment date in accordance with the provisions of Section 7. In no event
shall any forfeiture under the plan be allocated to the participant's mandatory
contribution account. Assets in the participant's mandatory contribution
account may be commingled for investment with other funds of the trust.
2.7 MAXIMUM CONTRIBUTION PERMITTED
In no event shall the total contribution made under this Section 2 for any plan
year exceed the maximum amount deductible for federal income tax purposes by
the Employer for the taxable year. Each contribution to the plan shall be made
conditional upon being deductible under Section 404 of the Code and upon the
plan being qualified under Section 401(a) of the Code for the plan year for
which such contribution is made.
2.8 REQUIREMENT OF CURRENT OR ACCUMULATED NET PROFITS
Elective deferrals, qualified non-elective contributions, matching
contributions, and qualified matching contributions shall be made by the
Employer to the plan without regard to the current or accumulated net profits
of the Employer. If elected by the Employer in the Adoption Agreement,
discretionary Employer contributions may be made pursuant to Section 2.4
without regard to the current or accumulated net profits of the Employer.
SECTION 3. RETIREMENT; TERMINATION OF
SERVICE; DEATH; ENTRY OF QUALIFIED DOMESTIC RELATIONS
ORDER
3.1 NORMAL RETIREMENT
A participant who is in service may retire from service at his normal
retirement date.
3.2 EARLY RETIREMENT
If so specified by the Employer in the Adoption Agreement, and subject to the
requirements for early retirement set forth therein, a participant may elect
early retirement effective as of any adjustment date prior to his normal
retirement date by filing written notice with the Committee on or before such
adjustment date. Such election shall be irrevocable when filed.
3.3 DELAYED RETIREMENT
If a participant shall remain in service following his normal retirement date,
his retirement date shall be the date he shall actually retire. During the
period that such participant remains in service pursuant to this Section 3.3,
he shall continue to participate for and including each plan year in which he
meets the requirements therefor. If an employee not otherwise a participant
becomes eligible to enter the plan following his normal retirement date, the
provisions of this Section 3.3 shall apply in determining his retirement date.
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3.4 DEATH
If a participant dies, his vested accrued benefit shall be paid to his
beneficiary pursuant to the provisions of Section 4.2.
3.5 DISABILITY
If a participant suffers disability while in service, he may elect to retire as
of any adjustment date following the establishment of his disability by filing
written notice with the Committee on or before such adjustment date. Such
election shall be irrevocable when filed.
3.6 TERMINATION OF SERVICE
The following provisions shall apply in the event a participant terminates
service before he is eligible to retire under the plan:
3.6.1 Distribution election: Such participant may elect to
receive a distribution of his vested accrued benefit as of the
termination adjustment date specified in the Adoption Agreement, or to
defer such distribution until a later date provided in this Section
3.6. The Committee shall notify the participant of his rights under
this Section 3.6.1 at least 30 days, but in no event more than 90
days, prior to the termination adjustment date. Such notification
shall include a general description of the material features and an
explanation of the relative values of the optional forms of benefit
available under the plan. The participant's election shall be
submitted in writing to the Committee on or before the participant's
termination adjustment date. Such election shall be irrevocable when
filed, except that the election shall be disregarded if the
participant is in service when benefit payments are to commence. If
the participant elects to receive a distribution of his vested accrued
benefit as of the termination adjustment date, the manner of
distribution shall be determined under Section 4.1 as if the
termination adjustment date were the normal retirement date of the
participant. The Committee shall advise each participant that the
taxable portion of his distribution may be subject to mandatory 20%
federal income tax withholding, unless the participant elects to make
a direct transfer of the taxable portion of such distribution to
another qualified retirement plan or individual retirement arrangement
in accordance with Section 19.2. In addition, if a distribution is
made to a participant pursuant to Section 4.1 before he attains age
55, the Committee shall advise him that the taxable portion of the
distribution may be subject to an additional ten percent income tax.
3.6.2 Deferred distribution election: If the participant
has elected not to receive his vested accrued benefit pursuant to
Section 3.6.1, he may elect to receive his vested accrued benefit as
of the adjustment date coincident with or next following the date on
which he satisfies the age requirement for early retirement (the
"early retirement adjustment date"). This Section 3.6.2 shall only
apply if the plan permits early retirement and the participant has
satisfied any service requirement but not the age requirement therefor
at the time of his termination from service. The Committee shall
notify such participant of his rights under this Section 3.6.2, and
the participant shall make the election provided in this Section
3.6.2, at the time and in the manner described in Section 3.6.1,
treating for this purpose the early retirement adjustment date as if
it were the termination adjustment date.
3.6.3 Distribution in the absence of an election: If the
vested accrued benefit of the participant is not distributed pursuant
to Section 3.6.1, it shall be held under the plan for future payment
until the first to occur of: (i) his death; (ii) his election to
receive his vested accrued benefit as of his early retirement
adjustment date pursuant to Section 3.6.2; or (iii) the later of his
normal retirement age or age 62, whereupon it shall be distributed to
him or his beneficiary, as the case may be, in the manner provided in
Section 4. If elected by the Employer in the Adoption Agreement, the
amount of the vested accrued benefit which shall be held for the
participant under this Section 3.6.3 shall be set aside in a special
account (the "deferred payment account"). The
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Trustee shall segregate the deferred payment account from the general
assets of the trust as of the participant's termination adjustment
date. The deferred payment account shall be invested by the Trustee
in short-term, interest-bearing securities or certificates which may
be readily converted to cash without penalty, and which provide for
maximum safety of principal (the "conservative investments"). The
deferred payment account shall be subject to adjustment as of each
adjustment date in the manner specified in the applicable provisions
of Section 7, treating for this purpose the assets in which the
deferred payment account are invested as if they composed the entire
trust fund. If a deferred payment account is established pursuant to
this Section 3.6.3 and the Trustee maintains directed investment funds
(as defined in Section 8.1.1), in lieu of investing the deferred
payment account in the conservative investments, at the direction of
the Committee the deferred payment account may be invested by the
Trustee in the most conservative directed investment fund as
designated by the Committee and adjusted in the manner provided in
Section 8.1.2. Notwithstanding the foregoing, if the Employer has
authorized participant directed investments under the plan, only that
portion of the terminated participant's vested accrued benefit which
is not credited to his directed separate accounts (as defined in
Section 8.1) as of his termination adjustment date, if any, shall be
transferred to a deferred payment account and invested in the manner
provided in this Section 3.6.3. If elected by the Employer in the
Adoption Agreement, such terminated participant may be permitted to
continue to direct the investment of his directed separate accounts in
accordance with Section 8, until his vested accrued benefit is paid to
him or his beneficiary in full as provided in this Section 3.6.3. If
a participant is not permitted to direct the investment of his
directed separate accounts following his termination of service, the
amounts credited to the participant's directed separate accounts will
be transferred as of his termination adjustment date to the most
conservative directed investment fund designated by the Committee.
3.7 CASH-OUT DISTRIBUTIONS
Notwithstanding any other provision of the plan, if the vested accrued benefit
of a participant does not exceed $3,500 as of the adjustment date coincident
with or next following the date of his termination of service for any reason,
including death, and such vested accrued benefit has never exceeded $3,500 as
of the date of any prior distribution under the plan, then his vested accrued
benefit shall be automatically paid in a lump sum as soon as administratively
feasible after such adjustment date to the person entitled thereto without
regard to any election made by the participant and without the consent of the
participant or the participant's spouse. For purposes of this Section 3.7, if
the value of a participant's vested accrued benefit is zero, the participant
shall be deemed to have received distribution of such vested accrued benefit.
The Committee shall advise each participant that the taxable portion of his
cash-out distribution may be subject to mandatory 20% federal income tax
withholding, unless the participant elects to make a direct transfer of the
taxable portion of such distribution to another qualified retirement plan or
individual retirement arrangement in accordance with Section 19.2. In
addition, if a distribution is made to a participant before he attains age 59
1/2, the Committee shall advise him that the taxable portion of the
distribution may be subject to an additional ten percent income tax.
3.8 LIMITATIONS ON CERTAIN DISTRIBUTIONS
Except as provided in the Adoption Agreement, elective deferrals, qualified
non-elective contributions, qualified matching contributions, and income
allocable thereto are not distributable to the participant, or the
participant's beneficiary, earlier than upon separation from service, death, or
disability of the participant.
3.9 ENTRY OF A QUALIFIED DOMESTIC RELATIONS ORDER
If the participant's accrued benefit becomes subject to a qualified domestic
relations order within the meaning of Section 414(p) of the Code, the alternate
payee's benefit shall be paid pursuant to the provisions of Section 4.5.
SECTION 4. PAYMENT OF BENEFITS
4.1 DISTRIBUTION OF ACCRUED BENEFITS
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Subject to the provisions of Section 9 relating to the distribution of Employer
stock, the following provisions of this Section 4 shall apply to any
distribution of a participant's accrued benefit under the plan:
4.1.1 Payment of benefits following retirement: A
participant may elect to have the value of his vested accrued benefit
determined as of the close of business of the plan on the adjustment
date coincident with or next following the date he retires pursuant to
Section 3.1, 3.2, 3.3, or 3.5, or as of such later adjustment date as
he may elect pursuant to Section 4.1.2, and to have such amount paid
to him, or applied for his benefit, in one of the following options,
as designated by the Employer in the Adoption Agreement:
(i) Term certain: Subject to the provisions of
Section 4.1.2, payment of the vested accrued benefit to him in
approximately equal monthly installments over a whole number
of years not exceeding the life expectancy of the participant
or the joint life expectancy of the participant and his
designated beneficiary, provided that, if this plan is not an
amendment of a prior plan and is not the transferee of assets
from another plan maintained by the Employer, the maximum
number of years over which installment distributions will be
made under the plan shall be ten.
(ii) Lump sum: Payment of the vested accrued
benefit to him in a single lump sum.
4.1.2 Special distribution rules: In applying the
foregoing provisions of Section 4.1.1, the following special
provisions shall apply:
(i) Any election of a distribution option
described in Section 4.1.1 shall be made in writing on a form
to be provided by the Committee and filed with the Committee
on or before the adjustment date as of which payment is to
commence. Such election shall be irrevocable on or after such
adjustment date (except as otherwise provided in paragraph (v)
of this Section 4.1.2). If a participant shall fail to
designate one of the distribution options described in Section
4.1.1, his vested accrued benefit shall be paid to him in a
single lump sum.
(ii) Any distribution made pursuant to Section
4.1.1 shall commence as soon as practicable following the
adjustment date as of which the participant's vested accrued
benefit is determined. A participant must be informed of his
right to defer the commencement of the distribution of his
vested accrued benefit to any adjustment date following his
retirement. Prior to any adjustment date elected by a
participant, such participant may elect to defer commencement
thereof to a subsequent adjustment date. Such election shall
be filed in writing with the Committee prior to the adjustment
date as of which his benefit would otherwise commence. Such
election may be revoked or changed as of any adjustment date
between the date filed and the adjustment date to which the
vested accrued benefit is deferred by filing a written
revocation or change with the Committee prior to the
adjustment date as of which the revocation or change is to be
effective. If a participant shall fail to designate an
adjustment date as of which the distribution of his vested
accrued benefit shall begin, he shall be deemed to have
elected to defer such distribution until the adjustment date
coincident with or immediately following the later of (a) his
attainment of his normal retirement age or (b) his termination
of service. Notwithstanding any such election (or deemed
election) to defer the distribution of his vested accrued
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benefit, a participant's vested accrued benefit must be
distributed, or begin to be distributed, no later than his
required beginning date (as defined in Section 4.4.6) in one
of the distribution options described in Section 4.1.1, as
elected by the participant.
(iii) Unless a participant shall elect to defer the
commencement of payment of his vested accrued benefit, such
payment must commence within 60 days following the last
adjustment date for the plan year in which occurs the latest
of: (a) the participant's attainment of age 65 (or normal
retirement age, if earlier); (b) the tenth anniversary of the
year in which the participant commenced participation in the
plan; or (c) the participant's retirement or termination of
service for any other reason. In the event that, within the
applicable 60-day period, the amount of the payment to
commence cannot be determined or the recipient thereof cannot
be located after a reasonable effort has been made to locate
him, payments retroactive to the close of such 60-day period
shall be made within 60 days after the amount has been
determined or the recipient has been located, whichever shall
be applicable. Notwithstanding the foregoing, the failure of
a participant to elect to receive a distribution under
Sections 3.6.1 or 3.6.2 shall be deemed to be an election to
defer commencement of payment sufficient to satisfy the
requirements of this paragraph (iii).
(iv) If a participant's vested accrued benefit is
to be distributed pursuant to the term certain option
described in Section 4.1.1(i), each annual distribution made
pursuant to such option must satisfy the following
requirements:
(a) The amount required to be
distributed for each calendar year, beginning with
the first distribution calendar year (as defined in
Section 4.4.3), must at least equal the quotient
obtained by dividing the participant's benefit (as
defined in Section 4.4.5) by the applicable life
expectancy (as defined in Section 4.4.1).
(b) For calendar years beginning before
January 1, 1989, if the participant's spouse is not
the designated beneficiary (as defined in Section
4.4.2), the term certain option elected must assure
that at least 50% of the present value of the amount
available for distribution is paid within the life
expectancy of the participant.
(c) For calendar years beginning after
December 31, 1988, the amount to be distributed each
year, beginning with the distribution for the first
distribution calendar year shall not be less than the
quotient obtained by dividing the participant's
benefit by the lesser of the applicable life
expectancy or, if the participant's spouse is not the
designated beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of
Section 1.401(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the participant
shall be distributed using the applicable life
expectancy determined for purposes of subparagraph
(a) above as the relevant divisor without regard to
Section 1.401(a)(9)-2 of the
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Income Tax Regulations.
(d) The minimum distribution required
for the participant's first distribution calendar
year must be made on or before the participant's
required beginning date. The minimum distributions
for other calendar years, including the minimum
distributions for the distribution calendar year in
which the participant's required beginning date
occurs, must be made on or before December 31 of that
distribution calendar year.
(v) Upon a written direction to the Committee
prior to any adjustment date by a participant who is receiving
benefit payments pursuant to the term certain option described
in Section 4.1.1(i), the participant may direct that the
balance of the participant's vested accrued benefit be paid in
a single lump sum payment as of the adjustment date such
written direction becomes effective. If a participant marries
or remarries following the adjustment date as of which
payments commenced under Section 4.1.1(i), his "spouse" for
purposes of Section 4.2 shall mean the spouse on such
adjustment date.
(vi) Notwithstanding the foregoing provisions of
this Section 4.1, if a participant who is receiving benefit
payments pursuant to the term certain option described in
Section 4.1.1(i) shall reenter service prior to his normal
retirement date, such payments shall cease during the period
that he is in service. When he subsequently retires, dies, or
otherwise terminates service, his then vested accrued benefit
shall be payable to or with respect to him pursuant to the
applicable provisions of the plan; provided, however, that
payments must recommence no later than the participant's
required beginning date.
4.2 PAYMENT OF DEATH BENEFITS
4.2.1 Payment of death benefits restricted to lump sums:
This Section 4.2.1 shall only apply if this plan is (i) a newly
adopted plan, or (ii) an amendment of a prior plan of the Employer or
the transferee of assets from another plan maintained by the Employer
that did not permit the distribution of death benefits in any form
other than a single lump sum. Upon the death of a participant before
or after the distribution of his vested accrued benefit has begun, the
value of the remaining portion of such benefit shall be determined as
of the adjustment date coincident with or next following the date of
the participant's death, and such amount shall be distributed to his
designated beneficiary (as defined in Section 4.2.2(iii)) in a single
lump sum as soon as practicable following such adjustment date.
4.2.2. Payment of death benefits for amended plans: This
Section 4.2.2 shall apply if this plan amends a prior plan of the
Employer or is the transferee of assets from another plan maintained
by the Employer and either such prior or transferee plan permitted the
distribution of death benefits in forms other than a single lump sum.
Upon the death of the participant, the following provisions shall
apply:
(i) If the participant dies after distribution of
his vested accrued benefit has begun, the remaining portion of
such benefit shall be distributed to his designated
beneficiary at least as rapidly as under the method of
distribution in effect at his death. Should the beneficiary
die before receiving all the payments due him, any remaining
payment shall continue to the recipient determined in
accordance with Section 4.2.2(iii).
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(ii) If the participant dies before distribution
of his vested accrued benefit begins, the participant's vested
accrued benefit must be distributed no later than December 31
of the calendar year in which occurs the fifth anniversary of
the participant's death, except to the extent that an election
is made to receive distributions under (a) or (b), as follows:
(a) If any portion of the participant's
vested accrued benefit is payable to a designated
beneficiary, distributions may be made in
substantially equal installments over the life or
over a term certain not greater than the life
expectancy of the designated beneficiary commencing
on or before December 31 of the calendar year
immediately 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 accordance
with (a) above shall not be before the later of
December 31 of the calendar year immediately
following the calendar year in which the participant
died, or December 31 of the calendar year in which
the participant would have attained age 70 1/2.
If the surviving spouse dies before payments begin, subsequent
distributions shall be made pursuant to this paragraph (ii)
(except for subparagraph (b) hereof) as if the spouse had been
the participant.
(iii) A participant's beneficiary shall be his
surviving spouse, if any; provided, that if he has no
surviving spouse or files a qualified election with the
Committee, the participant may designate another beneficiary
(which may include more than one person, natural or otherwise,
and more than one contingent beneficiary). A "qualified
election" means a beneficiary designation by the participant
on a form provided by the Committee, which contains a consent
and acknowledgment of the effect of such consent executed by
the participant's spouse and witnessed by a representative of
the Committee or a notary public. Consent of the spouse shall
not be required if the spouse cannot be located or other
circumstances exist which excuse obtaining spousal consent
under applicable law or regulations. A participant's
qualified election may be revoked at any time by action of the
participant alone, in which case the participant's spouse
shall be the beneficiary. Any other change in beneficiary
must be made pursuant to a new qualified election. If a
participant fails to designate a beneficiary (other than his
surviving spouse), the death benefit shall be payable to the
participant's estate. If a beneficiary is receiving or
entitled to receive payments from the trust fund and dies
before receiving all payments due him, any remaining payments
shall be made to the contingent beneficiary, or, if there is
no contingent beneficiary, to the estate of the beneficiary.
Any beneficiary may disclaim part or all of any benefit to
which he is entitled by filing a written disclaimer with the
Committee at least ten days before payment of such benefit is
to commence, in a form which shall be satisfactory to the
Committee and irrevocable when filed. Any benefit disclaimed
shall be payable as if the beneficiary who filed the
disclaimer had died on the date of such filing.
(iv) The vested accrued benefit of the participant
shall be payable
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in the manner provided in Section 4.1 (treating the
beneficiary for this purpose as the participant), as elected
by the participant before his death in writing to the
Committee or, if the participant shall not have made such
election, as elected by the beneficiary in writing to the
Committee no later than the first to occur of: (a) December
31 of the calendar year in which distributions are required to
commence under paragraph (b) above, or (b) December 31 of the
calendar year in which occurs the fifth anniversary of the
participant's death. If the participant has no designated
beneficiary or if the designated beneficiary fails to elect a
method of distribution, distribution of the participant's
vested accrued benefit must be completed by December 31 of the
calendar year in which occurs the fifth anniversary of the
participant's death.
(v) For purposes of this Section 4.2.2, any
amount paid to a child of the participant shall be treated as
if it had been paid to the surviving spouse if the amount
becomes payable to the surviving spouse when the child reaches
the age of majority.
(vi) Upon a written direction to the Committee
prior to any adjustment date by a beneficiary who is receiving
benefit payments pursuant to the term certain option described
in Section 4.1.1(i), the designated beneficiary may direct
that an alternative method of payment of the balance of the
participant's vested accrued benefit be made, commencing with
the first payment following such adjustment date; provided,
that distribution of such balance under any alternative method
of payment must be completed at least as rapidly as under the
method of payment in effect prior to such adjustment date.
(vii) For purposes of this Section 4.2.2,
distribution of a participant's vested accrued benefit is
considered to begin on the participant's required beginning
date (or if the last sentence of paragraph (b) above is
applicable, the date distribution is required to begin to the
surviving spouse pursuant to paragraph (ii)(b) above).
4.3 TRANSITIONAL RULE FOR REQUIRED DISTRIBUTIONS
Notwithstanding any other requirements of this Section 4, distribution on
behalf of any participant, including a five percent owner in a top-heavy plan,
may be made in accordance with the following requirements (regardless of when
such distribution commences):
4.3.1 The distribution is one which would not have
disqualified the plan under Section 401(a)(9) of the Code as in effect
prior to amendment by the Deficit Reduction Act of 1984 ("DEFRA").
4.3.2 The distribution is in accordance with a method of
distribution designated in a written instrument signed by the
participant whose interest in the trust is being distributed or, if
the participant is deceased, by a beneficiary of such participant
prior to January 1, 1984.
4.3.3 The participant had an accrued benefit under the plan
as of December 31, 1983.
4.3.4 The method of distribution designated by the
participant or the beneficiary specifies the time at which
distribution will commence, the period over which distributions will
be made, and in the case of any distribution upon the participant's
death, the beneficiaries of the participant listed in order of
priority.
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4.3.5 A distribution upon death will not be covered by this
Section 4.3 unless the information in the designation contains the
required information described above with respect to the distributions
to be made upon the death of the participant. For any distribution
which commences before January 1, 1984, but continues after December
31, 1983, the participant, or the beneficiary, to whom such
distribution is being made, will be presumed to have designated the
method of distribution under which the distribution is being made if
the method of distribution was specified in writing and the
distribution satisfies the requirements in Sections 4.3.1 and 4.3.4
above. If a designation made pursuant to this Section 4.3 is revoked,
any subsequent distribution must satisfy the requirements of Section
401(a)(9) of the Code and the regulations thereunder. If a
designation is revoked subsequent to the date distributions are
required to begin, the trust must distribute by the end of the
calendar year in which the revocation occurs the total amount not yet
distributed to satisfy Section 401(a)(9) of the Code and the
regulations thereunder, but for the Section 242(b)(2) election.
4.3.6 For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution incidental
benefit requirements in Section 1.401(a)(9)-2 of the Income Tax
Regulations. Any change in the designation will be considered to be a
revocation of the designation. However, the mere substitution or
addition of another beneficiary (one not named in the designation)
under the designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not
directly or indirectly alter the period over which distributions are
to be made under the designation. In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in
Q&A J-2 and Q&A J-3 of Sections 1.401(a)(9)-2 of the Income Tax
Regulations shall apply.
4.4 DEFINITIONS APPLICABLE TO PLAN DISTRIBUTIONS
The following definitions shall apply for purposes of Section 4:
4.4.1 "Applicable life expectancy" shall mean the life
expectancy (or joint and last survivor 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 reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. The
Employer shall specify in the Adoption Agreement whether the life
expectancy of a designated beneficiary will be used to determine
distributions under this Section 4. If life expectancy is being
recalculated, the applicable life expectancy shall be the life
expectancy as so recalculated. The applicable calendar year shall be
the first distribution calendar year, and, if life expectancy is being
recalculated, each succeeding calendar year.
4.4.2 "Designated beneficiary" shall mean the individual
who is designated as the beneficiary under the plan in accordance with
Section 401(a)(9) of the Code and the Income Tax Regulations
thereunder.
4.4.3 "Distribution calendar year" shall mean 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 participant'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 Section 4.2 above.
4.4.4 "Life expectancy" shall mean life expectancy and
joint and last survivor expectancy as computed by use of the expected
return multiples in Tables V and VI of Section 1.72-9 of the Income
Tax Regulations. Unless otherwise elected by the participant (or
spouse, in the case of distributions described in Section 4.2.2(b)(ii)
above) by the time distributions are required to begin,
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life expectancies shall be recalculated annually. Such election shall
be irrevocable as to the participant (or spouse) and shall apply to
all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
4.4.5 "Participant's benefit" shall mean his accrued
benefit as of the last adjustment date in the calendar year
immediately preceding the distribution calendar year ("valuation
calendar year") increased by the amount of any contributions or
forfeitures allocated to the accrued benefit as of dates in the
valuation calendar year after the adjustment date and decreased by
distributions made in the valuation calendar year after the adjustment
date. Notwithstanding the foregoing, if any portion of the minimum
distribution for the first distribution calendar year is made in the
second distribution calendar year on or before the required beginning
date, the amount of the minimum distribution made in the second
distribution calendar year shall be treated as if it had been made in
the first distribution calendar year.
4.4.6 "Required beginning date" shall generally mean the
first day of April of the calendar year following the calendar year in
which the participant attains age 70 1/2. Notwithstanding the
foregoing, the following special provisions shall apply:
(i) The required beginning date of a participant
who attains age 70 1/2 before January 1, 1988, shall be
determined in accordance with (a) or (b) below:
(a) The required beginning date of a
participant who is not a five percent owner is the
first day of April of the calendar year following the
calendar year in which the later of retirement or
attainment of age 70 1/2 occurs. The required
beginning date of a participant who is not a five
percent owner who attains age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April
1, 1990.
(b) The required beginning date of a
participant who is a five percent owner during any
year beginning after December 31, 1979 is the first
day of April following the later of: (1) the
calendar year in which the participant attains age 70
1/2, or (2) the earlier of the calendar year with or
within which ends the plan year in which the
participant becomes a five percent owner, or the
calendar year in which the participant retires.
(ii) A participant is treated as a five percent
owner for purposes of this Section 4.4.6 if such participant
is a five percent owner as defined in Section 416(i) of the
Code (determined in accordance with Section 416 but without
regard to whether the plan is top-heavy) at any time during
the plan year ending with or within the calendar year in which
such owner attains age 66 1/2 or any subsequent plan year.
(iii) Once distributions have begun to a five
percent owner under this Section 4.4.6, they must continue
even if the participant ceases to be a five percent owner in a
subsequent year.
All distributions under this Section 4 shall be determined and made in
accordance with Section 401(a)(9) of the Code and the Income Tax Regulations
thereunder, including the minimum distribution incidental benefit
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requirement of Section 1.401(a)(9)-2 of the Income Tax Regulations, which are
incorporated herein by reference.
4.5 DISTRIBUTIONS TO ALTERNATE PAYEES
If the participant's accrued benefit under the plan shall become subject to any
"domestic relations order" which (i) is a "qualified domestic relations order"
within the meaning of Section 414(p) of the Code, and (ii) requires the
immediate distribution in a single lump sum of the entire portion of the
participant's accrued benefit required to be segregated for the benefit of an
alternate payee, then the entire interest of such alternate payee shall be
distributed in a single lump sum as soon as practicable following the
adjustment date coinciding with or immediately following the Committee's
notification to the participant and the alternate payee that the domestic
relations order is qualified under Section 414(p) of the Code. Such
distribution to an alternate payee shall be made even if the participant has
not separated from the service of the Employer. Any other distribution
pursuant to a qualified domestic relations order shall not be made earlier than
the participant's termination of service, or his attainment of age 50, if
earlier, and only in a manner permitted under Section 4.1. For purposes of
this Section 4.5, "alternate payee" shall mean any spouse, former spouse,
child, or other dependent of the participant who is recognized by a domestic
relations order as having a right to receive all or a portion of the accrued
benefit payable under the plan with respect to such participant.
4.6 INTERIM PAYMENTS
At the request of a participant or his designated beneficiary, the Committee
may in a nondiscriminatory manner cause one or more interim payments to be made
to such participant or beneficiary, as the case may be, between the date the
participant shall retire, or the date of death of the participant, and the
adjustment date as of which retirement or death benefits would ordinarily be
paid or commence to be paid; provided, that in no event shall the aggregate of
such interim payments exceed 50% of the vested accrued benefit of such
participant as of the close of business of the plan on the adjustment date next
preceding the date he shall retire or die. This Section 4.6 shall not apply if
the Employer has designated daily adjustment dates in the Adoption Agreement.
4.7 CONTINUED SHARE IN PROFITS OR LOSSES OF TRUST FUND
If all or any part of the accrued benefit of any individual is being paid to
him from the trust in installments, or is being held in the trust for future
payment to him, his account shall continue to be adjusted as provided in
Section 7. With respect to an individual who is receiving installment payments
from the trust, the amount of the installment payments shall be adjusted as of
each adjustment date to reflect the adjusted amount in his account (or deferred
payment account as the case may be) as of such adjustment date.
Notwithstanding the above, no adjustment for earnings or losses shall be made
to the amount of any lump sum or individual installment distribution under the
plan between the adjustment date as of which the distribution is valued and the
actual date of such distribution.
4.8 MEDIUM OF DISTRIBUTIONS
All distributions from the plan shall be made in cash or units as allowed by
the investment fund established within the trust or in which plan assets are
invested, except, if elected by the Employer in the Adoption Agreement, amounts
invested in Employer stock and allocated to a participant's separate account
may be distributed in whole shares of Employer stock, with a cash adjustment
for any fractional share.
4.9 DAILY ADJUSTMENT DATES
Notwithstanding any provision in this Section 4 to the contrary, if daily
adjustment dates are designated by the Employer in the Adoption Agreement, the
value of the participant's vested accrued benefit for purposes of any
distribution made pursuant to this Section 4 shall be determined as of the
adjustment date such distribution is actually processed.
SECTION 5. VESTING
5.1 VESTING UPON THE OCCURRENCE OF CERTAIN EVENTS
Notwithstanding the vesting schedule elected by the Employer in the Adoption
Agreement and subject to the provisions of Section 5.3, the matching
contribution account and discretionary Employer contribution account of
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each participant shall be nonforfeitable immediately following the first to
occur of:
5.1.1 Completion by the participant of his first hour of
service on or after attainment of his normal retirement age;
5.1.2 Retirement of the participant under Section 3,
including early retirement, if permitted, and disability retirement;
5.1.3 Death of the participant while in service;
5.1.4 Termination or partial termination of the plan by the
Employer;
5.1.5 Termination by the Employer of contributions to the
plan, or a suspension or reduction of such contributions which amounts
in effect to a termination of contributions; and
5.1.6 A final determination of disqualification of the plan
at any time following initial determination by the Internal Revenue
Service that the plan is qualified.
5.2 SERVICE REQUIREMENT FOR VESTING
A participant whose matching contribution account or discretionary Employer
contribution account is subject to forfeiture, as provided in Section 5.1 and
5.3, shall be vested in all or a percentage of such matching contribution
account and/or discretionary Employer contribution account based upon the
number of his years of service at the time such vested percentage is
determined, as specified by the Employer in the Adoption Agreement. For
purposes of determining the vested percentage of a participant in his matching
contribution account and discretionary Employer account, the following special
provisions shall apply:
5.2.1 All years of service shall be taken into account
except as otherwise elected by the Employer in the Adoption Agreement.
5.2.2 With respect to any participant who shall have had a
prior break in service:
(i) If a participant shall have a break in
service following the computation date (as defined in Section
1.62) and shall not have any vested interest in his accrued
benefit (excluding for this purpose that portion of his
accrued benefit that is attributable to his employee after-tax
contributions) at the time of such break in service, and the
period of consecutive one year breaks in service equals or
exceeds the greater of (a) five, or (b) the aggregate number
of years of service before such period, all years of such
service prior to such period shall be disregarded. For the
purpose of determining years of service prior to such period,
there shall be excluded any years of service previously
disregarded under this paragraph (i).
(ii) No years of service following five
consecutive one year breaks in service shall be taken into
account in determining the vested percentage of his matching
contribution account or discretionary Employer contribution
account with respect to his service prior to such break.
5.2.3 In the event the Employer shall amend the provisions
of the plan for determining the vested percentages of participants, or
if the plan is deemed amended by an automatic change to or from a
top-heavy vesting schedule as provided in Section 22.2.2, each
participant with at least three years of service with the Employer may
elect, within a reasonable period after the adoption of the amendment,
to have his vested percentage determined without regard to such
amendment.
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For participants who do not have at least one hour of service in any
plan year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "five years of service" for "three
years of service" where such language appears. The period during
which the election may be made shall commence with the date the
amendment is adopted or deemed to be made and shall end on the latest
of: (i) 60 days after the amendment is adopted; (ii) 60 days after
the amendment becomes effective; or (iii) 60 days after the
participant is issued written notice of the amendment by the Employer
or the Committee.
5.3 FORFEITURE OF NON-VESTED BENEFITS
A participant whose matching contribution account or discretionary Employer
contribution account is subject to forfeiture shall forfeit the portion of such
account or accounts, as appropriate, which is not vested for the plan year in
which first occurs the following: (i) he shall have five consecutive one year
breaks in service, (ii) he shall terminate service and die following such
termination and prior to having a break in service, or (iii) he shall terminate
service and receive or be deemed to receive a distribution pursuant to Section
3.6 or 3.7 (regardless of whether he had incurred a break in service). The
portion of his matching contribution account or discretionary Employer
contribution account so forfeited shall be used first to restore any previously
forfeited account in accordance with the provisions of this Section, and then
shall be treated as provided in the Adoption Agreement. No forfeitures will
occur solely as a result of an employee's withdrawal of employee after-tax
contributions. Notwithstanding the foregoing provisions of this Section 5.3,
if the participant receives a distribution pursuant to Section 3.6 or 3.7 and
subsequently reenters service, the participant's matching contribution account
and discretionary Employer contribution account shall be restored to the
balance that existed in such accounts as of the distribution date if the
participant repays to the trust the full amount of the distribution
attributable to the matching contribution account and discretionary Employer
contribution account before the earlier of (i) five years after the participant
first reenters service or (ii) the last day of the plan year in which the
participant incurs his fifth consecutive one year break in service following
the distribution date. If a participant is deemed to receive a distribution
pursuant to Section 3.7, his matching contribution account and discretionary
Employer contribution account shall be restored to the balance that existed in
such accounts as of the deemed distribution date if the participant reenters
the service of the Employer before the last day of the plan year in which the
participant incurs his fifth consecutive one year break in service following
the deemed distribution date. In either case, such amount shall be restored
not later than the last adjustment date for the plan year in which the
participant reenters service, and shall be taken first from available
forfeitures of any matching contributions or discretionary Employer
contributions, as appropriate. If such forfeitures are insufficient for this
purpose, such amount shall be contributed by the Employer to the Trustee on or
before such date.
SECTION 6. IN-SERVICE WITHDRAWALS AND LOANS
6.1 WITHDRAWAL OF MATCHING CONTRIBUTIONS
AND DISCRETIONARY EMPLOYER CONTRIBUTIONS
If elected by the Employer in the Adoption Agreement with respect to a
participant's matching contribution account and/or discretionary Employer
contribution account, a participant in the service of the Employer who is
eligible to make a withdrawal in accordance with the Employer's election in the
Adoption Agreement may at his option make one or more withdrawals from his
matching contribution account and/or discretionary Employer contribution
account subject to the following provisions:
6.1.1 Except as provided in Section 6.1.2, no withdrawal
hereunder shall exceed the vested amount in the matching contribution
account or discretionary Employer contribution account of the
participant, as appropriate, as of the adjustment date next preceding
the date of the withdrawal.
6.1.2 For purposes of this Section 6.1, if daily adjustment
dates are designated by the Employer in the Adoption Agreement, no
withdrawal shall exceed the percentage specified by the Employer in
the Adoption Agreement of the vested amount in the matching
contribution account
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or discretionary Employer contribution account of the participant, as
appropriate, determined on the date the withdrawal request is actually
processed.
6.1.3 The maximum number of withdrawals that may be
requested by a participant during a plan year shall not exceed the
number designated by the Employer in the Adoption Agreement.
6.1.4 Application for a withdrawal shall be made by the
participant in writing on a form approved by the Committee and filed
with the Committee.
6.1.5 If any portion of a participant's matching
contribution account or discretionary Employer contribution account,
as appropriate, is distributed to him at a time when he has a
nonforfeitable right to less than 100% of the applicable account(s),
at any subsequent relevant time the participant's nonforfeitable
portion of his matching contribution account or discretionary Employer
contribution account shall not be less than an amount ("X") determined
by the following formula: X = P (AB + D) - D. For purposes of
applying the formula: P is the nonforfeitable percentage at the
relevant time; AB is the account balance in the participant's matching
contribution account or discretionary Employer contribution account at
the relevant time; D is the amount of the distribution, and the
relevant time is the time under the plan at which the nonforfeitable
percentage of such account balance cannot increase.
6.1.6 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of the withdrawal requests for matching contributions
and discretionary Employer contributions, including, but not limited
to, permitting such withdrawals only on account of financial hardship
(as defined in Section 6.3).
6.2 WITHDRAWAL OF EMPLOYEE AFTER-TAX CONTRIBUTIONS
If elected by the Employer in the Adoption Agreement, a participant may at his
option make a withdrawal from his employee after-tax contribution account
during a plan year subject to the following provisions:
6.2.1 No withdrawal hereunder shall exceed the amount in
the employee after-tax contribution account of the participant as of
the adjustment date next preceding the date of the withdrawal.
6.2.2 For purposes of this Section 6.2, if daily adjustment
dates are designated by the Employer in the Adoption Agreement, no
withdrawal shall exceed the percentage specified by the Employer in
the Adoption Agreement of the amount in the employee after-tax
contribution account of the participant determined on the date the
withdrawal request is actually processed.
6.2.3 A participant may not withdraw any portion of an
employee after-tax contribution made during a plan year if a matching
contribution is allocable to the participant's account with respect to
such employee after-tax contribution for such plan year.
6.2.4 The maximum number of withdrawals that may be
requested by a participant during a plan year shall not exceed the
number designated by the Employer in the Adoption Agreement.
6.2.5 Application for a withdrawal shall be made by the
participant in writing on a form approved by the Committee and filed
with the Committee.
6.2.6 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of the withdrawal requests for
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employee after-tax contributions.
6.3 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS
If elected by the Employer in the Adoption Agreement, a participant may at his
option make a withdrawal from his rollover account during a plan year subject
to the following provisions:
6.3.1 No withdrawal hereunder shall exceed the amount in
the rollover account of the participant as of the adjustment date next
preceding the date of the withdrawal.
6.3.2 For purposes of this Section 6.3, if daily adjustment
dates are designated by the Employer in the Adoption Agreement, no
withdrawal shall exceed the percentage specified by the Employer in
the Adoption Agreement of the amount in the rollover account of the
participant determined on the date the withdrawal request is actually
processed.
6.3.3 The maximum number of withdrawals that may be
requested by a participant during a plan year shall not exceed the
number designated by the Employer in the Adoption Agreement.
6.3.4 Application for a withdrawal shall be made by the
participant in writing on a form approved by the Committee and filed
with the Committee.
6.3.5 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of the withdrawal requests for rollover contributions.
6.4 DISTRIBUTIONS ON OR AFTER ATTAINMENT OF AGE 59 1/2
If elected by the Employer in the Adoption Agreement, a participant who has
attained age 59 1/2 may at his option make a withdrawal of all or any portion
of his vested interest in all of his amounts, subject to the following
provisions:
6.4.1 No withdrawal shall exceed the vested amount in the
accounts of the participant as of the adjustment date next preceding
the date of the withdrawal.
6.4.2 For purposes of this Section 6.4, if daily adjustment
dates are designated by the Employer in the Adoption Agreement, no
withdrawal shall exceed the percentage specified by the Employer in
the Adoption Agreement of the vested amount in the account if the
participant determined on the date the withdrawal request is actually
processed.
6.4.3 The maximum number of withdrawals that may be
requested by a participant shall not exceed the number designated by
the Employer in the Adoption Agreement.
6.4.4 Application for a withdrawal may be made by the
participant in writing on a form approved by the Committee and filed
with the Committee.
6.4.5 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of the withdrawal requests pursuant to this Section.
6.5 HARDSHIP DISTRIBUTIONS
If elected by the Employer in the Adoption Agreement, a participant may file a
written request with the Committee for a distribution on account of financial
hardship. A distribution will be on account of financial hardship only if the
distribution is on account of an immediate and heavy financial need of the
participant, is necessary to satisfy
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such financial need, and such need cannot be satisfied through other financial
resources reasonably available to the participant. The request must specify
the nature of the hardship, the total amount requested, and the total amount of
the actual expense incurred, or to be incurred, on account of the hardship.
Subject to the provisions of this Section 6.5, the Committee in its discretion
shall determine whether a hardship constitutes an immediate and heavy financial
need, and its decision to grant or deny a hardship distribution shall be final.
If the Committee determines that a hardship exists, the Committee shall direct
the Trustee to make a distribution to the participant in cash of the amount
approved by the Committee. The amount available for such distribution shall be
determined as of the adjustment date coincident with or next preceding receipt
by the Trustee of such direction from the Committee. The portion of a
participant's elective deferral account available for a hardship distribution
shall not exceed the amount in the participant's elective deferral account
(reduced by any previous hardship distribution not reflected as of such
adjustment date), excluding any earnings credited to his elective deferral
account as of any plan year ending after July 1, 1989. Amounts allocated to a
participant's qualified non-elective contribution account or qualified matching
contribution account shall not be available for distribution under this Section
6.5.
6.5.1 Notwithstanding the above, for purposes of this
Section 6.5, if daily adjustment dates are designated by the Employer
in the Adoption Agreement, the value of a participant's account or
accounts subject to a hardship withdrawal shall be determined on the
date the withdrawal request is processed.
6.5.2 Special rules for hardship withdrawals:
(i) The following are the only financial needs
considered immediate and heavy: expenses incurred or
necessary for medical care (as defined in Section 213(d) of
the Code) of the participant, the participant's spouse,
children, or dependents (as defined in Section 152 of the
Code); costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the
participant; payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
participant, the participant's spouse, children, or
dependents; or the need to prevent the eviction of the
participant from, or a foreclosure on the mortgage of, the
participant's principal residence.
(ii) A distribution will be considered as
necessary to satisfy an immediate and heavy financial need of
the participant only if:
(a) The participant has obtained all
distributions, other than hardship distributions, and
all nontaxable loans under all plans maintained by
the Employer;
(b) All plans maintained by the Employer
provide that, if any portion of the hardship
distribution is attributable to a participant's
elective deferrals, the participant's elective
deferrals and employee after-tax contributions will
be suspended for 12 months after the receipt of the
hardship distribution;
(c) The distribution is not in excess of
the amount of an immediate and heavy financial need
(including amounts necessary to pay any federal,
state, or local income taxes or penalties reasonably
anticipated to result from the distribution); and
(d) All plans maintained by the Employer
provide that the participant may not make elective
deferrals for the
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participant's taxable year immediately following the
taxable year of the hardship distribution in excess
of the applicable limit under Section 402(g) of the
Code for such taxable year less the amount of such
participant's elective deferrals for the taxable year
of the hardship distribution.
6.5.3 If a participant's termination of service occurs
after a request for a hardship distribution is approved in accordance
with the provisions of this Section 6.5, but prior to the actual
payment of such distribution, such approval shall be void, and the
accrued benefit of such participant shall be payable hereunder as if
such approval had not been made.
6.5.4 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of hardship distribution requests, including, but not
limited to, establishing limits on the maximum number of hardship
distributions that may requested by plan participants during a plan
year.
6.6 LOANS
If elected by the Employer in the Adoption Agreement, upon the written
application of any participant or beneficiary who is a party-in-interest as
defined in Section 3(14) of ERISA (other than an owner-employee or
shareholder-employee) (the "borrower"), the Committee in accordance with its
uniform, nondiscriminatory policy may direct the Trustee to permit the borrower
to borrow from such of his separate accounts designated by the Employer in the
Adoption Agreement as available sources for loan proceeds, subject to the
following provisions:
6.6.1 Loans shall be available to all borrowers on a
reasonably equivalent basis. Loans shall not be available to highly
compensated participants in an amount greater than to non-highly
compensated participants.
6.6.2 The minimum principal amount of any loan made to a
participant shall not be less than the amount designated by the
Employer in the Adoption Agreement. The maximum principal amount of
any loan made to the borrower, when added to the then unpaid balance
on all loans previously made to the borrower, shall not exceed the
lesser of:
(i) $50,000, reduced by the excess (if any) of
the highest outstanding balance of loans during the one-year
period ending on the day before the loan is made, over the
outstanding balance of loans from the plan on the day the loan
is made; or
(ii) 50% of the vested accrued benefit of the
borrower, other than amounts credited to his deductible
contribution account.
For purposes of this Section 6.6, the borrower's vested accrued
benefit shall be determined as of the adjustment date next preceding
the date the loan is processed. Notwithstanding the foregoing
sentence, if daily adjustment dates are designated by the Employer in
the Adoption Agreement, the borrower's vested accrued benefit shall be
determined as of the date the loan paperwork is generated. If a
borrower shall have a vested accrued benefit in more than one
tax-qualified retirement plan of the Employer or an affiliated
employer, the limitation in (i) or (ii) shall be applied both with
respect to this plan only and with respect to all such plans in the
aggregate. In applying the limitations with respect to this plan,
only loans to the borrower under this plan and his vested accrued
benefit under this plan shall be taken into account. In applying the
limitations with respect to all such plans in the aggregate, all loans
to the borrower under all such plans and the sum of his vested accrued
benefits under all such plans shall be taken into account.
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6.6.3 All loans made under this Section 6.6 shall be
considered earmarked investments of the borrower's account, and any
repayment of principal and interest on such loan shall be credited to
the borrower's account.
6.6.4 The principal amount of a loan shall be derived from
the borrower's separate accounts designated in the Adoption Agreement
as available sources for such loan proceeds in the following order of
priority:
(i) Qualified non-elective contribution account;
(ii) Qualified matching contribution account;
(iii) Elective deferral account;
(iv) Mandatory contribution account;
(v) Discretionary Employer contribution account;
(vi) Matching contribution account;
(vii) Direct transfer account;
(viii) Rollover account; and
(ix) Employee after-tax contribution account.
Any repayment of principal and interest on a loan shall be credited to
the borrower's separate accounts in the reverse order from which the
proceeds were first obtained. See Section 8.3 for special provisions
that apply in the event the participant's separate account from which
an amount is borrowed is also a directed separate account (as defined
in Section 8.1.1).
6.6.5 Notwithstanding the provisions of Section 6.6.4
above, if daily adjustment dates are elected by the Employer in the
Adoption Agreement, the principal amount of a loan shall be derived on
a pro rata basis from the borrower's separate accounts designated in
the Adoption Agreement as available sources for such loan proceeds.
Any repayment of principal and interest on a loan shall be credited to
such separate accounts on a pro rata basis. See Section 8.3 for
special provisions that apply in the event the participant's separate
account from which an amount is borrowed is also a directed separate
account (as defined in Section 8.1.1).
6.6.6 All loans shall by their terms require that repayment
be amortized in level payments of principal and interest, not less
frequently than quarterly, over a period not exceeding five years from
the date the loan is made. Notwithstanding the five-year repayment
obligation of the preceding sentence, in the case of loan made to a
borrower for the purpose of acquiring any dwelling unit which is used,
or will be used, within a reasonable time (determined at the time the
loan is made), as the primary residence of the borrower, the repayment
period may exceed five years, but shall not extend for more than 15
years from the date the loan is made. The Employer shall establish a
procedure for withholding at appropriate intervals from a
participant's regular payroll checks amounts necessary to satisfy the
borrowing participant's repayment obligations under the note. All
amounts so withheld shall be transferred immediately to the Trustee.
6.6.7 Each borrower making an application for a loan shall
receive from the Trustee a statement of the charges involved in the
loan transaction. This statement shall include the
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amount financed and the annual interest rate.
6.6.8 Each loan shall be secured by the pledge of 50% of
the borrower's vested accrued benefit, other than amounts credited to
his deductible contribution account (determined at the time the loan
is processed), and by the pledge of such further security as the
Committee, in its discretion, deems necessary or desirable to assure
repayment of the borrowed amount and all interest payable thereon in
accordance with the terms of the loan.
6.6.9 Each loan shall be evidenced by a negotiable
promissory note (the "note") in form acceptable to the Trustee,
payable to the order of the Trustee, bearing interest at a rate
commensurate with the prevailing rate charged by commercial lenders in
the geographic region of the Employer, as determined by the Trustee,
and, except as provided in Section 6.6.6, payable in full not more
than five years from the date thereof. The borrower shall execute any
additional documents as shall be deemed necessary or advisable by the
Committee to consummate the loan and to provide reasonable safeguards.
6.6.10 The occurrence of any one or more of the following
events of default shall constitute a default by the borrower under the
terms of the loan, whereupon the unpaid balance of the note, together
with accrued interest, will immediately become due and payable without
presentment, demand, protest, or notice of any kind. Events of
default include: (i) failure to make any payment when due, whether by
acceleration or otherwise; (ii) termination of service of a
participant who is not a party-in-interest as defined in Section 3(14)
of ERISA; (iii) bankruptcy or insolvency of the borrower; and (iv)
death of the borrower. Prior to foreclosure and attachment, the
unpaid principal and interest of the loan shall bear interest at a
rate two percentage points greater than the rate set forth in the
note. If the unpaid principal and interest exceed the amount of the
defaulting borrower's account that is pledged as security, all or any
part of any additional security pledged to secure the loan, in the
discretion of the Committee, may be sold at private or public sale.
The proceeds of such sale shall be applied first to pay the expenses
of conducting the sale, including reasonable attorneys' fees, then to
accrued interest, and then to principal of the loan. The borrower
shall remain liable for any deficiency. Any surplus shall be paid to
the borrower. No distribution under the plan to or on behalf of the
borrower shall be made unless and until all unpaid loans, include
interest thereon, are satisfied.
6.6.11 If an event of default shall occur with respect to a
borrower, the entire unpaid principal amount of the note, plus accrued
and unpaid interest shall immediately become due and payable;
provided, that foreclosure on the note and attachment of the
borrower's vested accrued benefit shall not occur until a
distributable event occurs under the plan.
6.6.12 If any portion of the accrued benefit of a
participant is applied to repay a loan under this Section 6.6 at a
time when such participant's accrued benefit is subject to forfeiture,
the participant's vested accrued benefit at any subsequent time until
he has a nonforfeitable right to his entire accrued benefit shall not
be less than an amount ("X") determined by the formula: X + P(AB + D)
- D. For purposes of applying the formula: P is the vested
percentage at the relevant time; AB is the accrued benefit at the
relevant time; and D is the amount of such participant's vested
accrued benefit applied to repay the loan.
6.6.13 During the period a participant's loan request is
pending, the participant shall not be permitted to request any
distributions or withdrawals (including hardship withdrawals) from his
account.
6.6.14 If a participant's termination of service occurs
after a request for a loan is approved in accordance with the
provisions of this Section 6.6, but prior to the actual payment of
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such loan proceeds, such approval shall be void, and the vested
accrued benefit of such participant shall be payable hereunder as if
such approval had not been made.
6.6.15 The Committee from time to time may adopt additional
uniform and nondiscriminatory policies or rules to assist in the
administration of participant loan requests, including, but not
limited to, establishing limits on the maximum number of loans that
may be requested during a plan year or outstanding at one time.
SECTION 7. ADJUSTMENT OF PARTICIPANT ACCOUNTS
7.1 ESTABLISHMENT OF ACCOUNTS
The Committee shall cause an account to be maintained under the plan with
respect to each participant, which account shall include to the extent
applicable the separate accounts described in Section 1.1. The fair market
value of each separate account with respect to the participant shall be
determined and adjusted as of each adjustment date under one of the adjustment
methods designated by the Employer in the Adoption Agreement.
7.2 GENERAL
The Committee shall have and may exercise all powers necessary or advisable in
order to implement the provisions of this Section 7 and to ensure that the
accounts maintained under the plan are fairly and accurately adjusted as of
each adjustment date.
SECTION 8. PARTICIPANT DIRECTED INVESTMENTS
8.1 PARTICIPANT DIRECTED INVESTMENTS
Notwithstanding any other provisions of the plan, each participant having an
amount to his credit under the plan may, acting through the Committee, direct
the Trustee as to the investment or reinvestment of his account to the extent
permitted by the Employer in the Adoption Agreement, subject to the following
provisions of this Section 8 and Section 9:
8.1.1 Directed investment funds: The Committee shall
determine from time to time the investment options ("directed
investment funds") available to participants. If elected by the
Employer in the Adoption Agreement, the directed investment funds may
include an Employer stock fund (as defined in Section 9.1). Each
participant shall be entitled to direct the investment and
reinvestment of such of his separate accounts as shall be permitted in
the Adoption Agreement ("directed separate accounts") among the
directed investment funds. Each directed separate account of a
participant shall be divided into sub-accounts reflecting the portion
of such directed separate account invested in each directed investment
fund ("fund accounts").
8.1.2 Adjustment of fund accounts: Except as otherwise
specifically provided herein, each fund account shall be adjusted as
of each adjustment date in the manner provided in Section 7, as if it
were the entire directed separate account of the participant to which
it is subsidiary, with respect to distributions, withdrawals, loans,
contributions and forfeitures allocated to it and with respect to its
share of the net income or net loss of the directed investment fund of
which it is a part.
8.1.3 Direction of future contributions: In accordance
with procedures adopted by the Committee, contributions allocated to a
participant's directed separate accounts shall be apportioned among
the directed investment funds in the manner designated by the
participant. Any such designation for future contributions shall be
made in multiples of the percentage chosen by the Employer in the
Adoption Agreement. Any designation among directed investment funds
shall remain in effect unless and until the participant shall file a
timely application providing for
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a different designation. A participant may change his investment
direction at such intervals during the plan year as designated by the
Employer in the Adoption Agreement. If for any reason a participant
shall not have made an effective designation with respect to any
portion of a contribution allocated to a directed separate account,
such contribution for which no designation was made shall be invested
by the Trustee at the direction of the Committee.
8.1.4 Reallocations among directed investment funds: In
accordance with procedures adopted by the Committee, a participant
shall be entitled to reallocate the amount credited to each of his
directed separate accounts among the available directed investment
funds in multiples of the percentage designated by the Employer in the
Adoption Agreement. The Committee specifically reserves the right to
restrict transfers out of a directed investment fund to the extent
that such transfers will endanger the value and liquidity of the Fund.
Such reallocations may be made at such intervals during the plan year
as designated by the Employer in the Adoption Agreement.
8.1.5 Notification of Trustee: The Committee shall notify
the Trustee of all directions made in accordance with Section 8.1.3
and 8.1.4 as soon as practicable following their receipt.
8.2 RIGHTS IN DIRECTED INVESTMENT FUNDS
Notwithstanding the fact that all or a portion of a participant's account may
be invested in directed investment funds selected by the Committee and may be
expressed in dollars, shares, or units in a particular directed investment
fund, such references shall mean the aggregate of the dollar amount and the
number of shares of Employer stock, if any, which are credited to the
participant's account at any point in time. Nothing contained in this Section
8 shall be deemed to give any participant any interest in any specific property
in any directed investment fund or any interest in the plan, other than (i) the
right to receive payments or distributions in accordance with the plan, (ii)
the right to instruct the Trustee how to vote Employer stock as permitted under
Section 9.4, (iii) the right to instruct the Trustee with respect to the sale,
exchange, or transfer of Employer stock as permitted under Section 9.5, or (iv)
to exercise any other right specifically granted to the participant under the
plan.
8.3 EFFECT OF PARTICIPANT LOANS
In the event the participant's separate account from which an amount is
borrowed pursuant to Section 6.6 is also a directed separate account, the
amount borrowed from such account shall be withdrawn from the fund accounts
with respect to such directed separate account on a pro rata basis. Any
repayment of principal and interest on such borrowed amount shall be reinvested
in the participant's fund accounts in accordance with the participant's
investment direction in effect on the adjustment date as of which such
repayment is credited to the participant's directed separate account.
8.4 DISTRIBUTIONS FROM DIRECTED SEPARATE ACCOUNTS
In the event the participant's separate accounts from which an amount is to be
distributed or withdrawn are also directed separate accounts, the amount
distributed from such accounts shall be withdrawn from the fund accounts with
respect to each such directed separate account on a pro rata basis.
8.5 ACCOUNTS NOT SUBJECT TO PARTICIPANT DIRECTION
In the event a participant is not permitted to direct the investment and
reinvestment of one or more of his separate accounts, such separate accounts
shall remain subject to the investment discretion of the Trustee pursuant to
Section 20 of the plan.
8.6 AUTHORITY OF TRUSTEE AND COMMITTEE
The Trustee shall have and may exercise all powers necessary or advisable in
order to implement the provisions of this Section 8. To the extent approved by
the Trustee, the Committee may promulgate rules or by-laws supplementing and
implementing the provisions of this Section 8, including such rules or by-laws
as may be necessary from time to time in order to provide a participant or
beneficiary, within the meaning of Section 404(c) of ERISA and the regulations
thereunder, an opportunity (i) to exercise control over assets in his account,
and (ii)
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to choose, from a broad range of investment alternatives, the manner in which
some or all of the assets in his account are invested. If it is not
practicable for the Trustee to effect the transfer of funds on any date
provided in this Section 8, the Trustee shall effect such transfer on the first
practicable date thereafter.
SECTION 9. INVESTMENTS IN EMPLOYER STOCK
9.1 EMPLOYER STOCK FUND
I elected by the Employer in the Adoption Agreement, at the direction of the
Committee, the Trustee shall establish a special investment fund for the
purpose of holding shares of Employer stock which shall be designated as the
"Employer stock fund." The Employer may elect under the Adoption Agreement to
designate the Employer stock fund as a directed investment fund under Section
8. A portion of the Employer stock fund may be invested in short-term United
States Government obligations, other short-term obligations guaranteed by the
United States Government, commercial paper, or money market funds for qualified
employee benefit trusts while awaiting investment in Employer stock, or to
provide sufficient liquidity to satisfy participants' requests for withdrawals,
loans, and distributions.
9.2 COMPLIANCE WITH THE SECURITIES ACT OF 1933 AND
THE SECURITIES EXCHANGE ACT OF 1934
The Committee shall adopt and implement such procedures as shall be necessary
(i) to comply with any applicable registration requirements for the
participants' interests in the plan under the Securities Act of 1933, and (ii)
to qualify any intra-plan transactions by officers, directors, and ten percent
owners of any Employer stock who are participants under the plan from
short-swing profit liability under Section 16 of the Securities Exchange Act of
1934.
9.3 RIGHT OF FIRST REFUSAL
If elected by the Employer in the Adoption Agreement, any Employer stock
distributed under the plan shall be subject to the terms of this Section 9.
9.3.1 Terms and conditions of offer to the Employer: If
any participant during his lifetime shall desire to sell, transfer (by
gift or otherwise), encumber or otherwise dispose of any Employer
stock distributed to him under the plan, the participant shall first
offer in writing to sell all of such stock to the Employer. If the
Employer does not purchase all of the stock within 14 days after the
receipt of such offer, the stock not so purchased may be sold,
transferred, encumbered or otherwise disposed of free from the
restrictions of this Section 9.3.1 for 30 days following the close of
the 14-day period. After the close of such 30-day period, the
restrictions of this Section 9.3.1 again shall apply to any of the
Employer stock not so sold, transferred, encumbered, or otherwise
disposed of. If any Employer stock is encumbered or otherwise
disposed of for a temporary period, and the recipient of such stock
under the plan receives all or a portion of such stock back at or
after the close of such temporary period, such stock again shall be
subject to the restrictions of this Section 9.3.1. The purchase price
of each share of Employer stock purchased hereunder shall be the fair
market value thereof as determined by the Employer pursuant to Section
9.3.2, but in no event less than the amount of any good faith (as
determined by the Employer) and then outstanding offer that has been
received by the participant desiring to dispose of the stock. The
purchase price of any Employer stock purchased in accordance with this
Section 9.3.1 shall be paid in full in cash at the time of the
closing. The closing shall take place at such time and place agreed
upon between the Employer and the participant, but not later than ten
days after the Employer notifies such recipient of the exercise of the
right of first refusal. At the closing, the participant shall deliver
certificates representing the offered Employer stock duly endorsed in
blank for transfer, or with stock powers duly executed in blank with
all required transfer tax stamps attached or provided for, and the
Employer shall deliver the purchase price.
9.3.2 Valuation of Employer stock: Subject to the
provisions of Section 9.3.1, all
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purchases of Employer stock by the Employer shall be made at a price
not in excess of fair market value. Any sale of Employer stock to a
disqualified person (as defined in Section 4975(e)(2) of the Code) or
a party-in-interest (as defined in Section 3(14) of ERISA) shall
conform to the requirements of Section 408(e) of ERISA. For all
purposes of the plan, the fair market value of Employer stock shall be
determined by the Employer in good faith. If there is a generally
recognized market for Employer stock, the fair market value shall be a
price not less favorable to the plan than the offering price for the
Employer stock established by the current bid and asked prices quoted
by persons independent of the Employer and any party-in-interest or
disqualified person. If there is no generally recognized market for
Employer stock, the determination of fair market value by the Employer
shall be based on a valuation by an independent appraiser appointed by
the Employer. In the case of a transaction between the plan and a
disqualified person or a party-in-interest, fair market value shall be
determined as of the date of the transaction. For all other purposes,
fair market value shall be determined as of the adjustment date
coincident with or next preceding the date of the transaction.
9.3.3 Legend: If recommended by legal counsel for the
Employer, certificates representing ownership of Employer stock
distributed from the plan shall bear an appropriate legend approved by
such counsel to ensure that Employer stock is issued in compliance
with all applicable federal and state securities laws.
9.4 VOTING OF EMPLOYER STOCK
The following provisions shall apply in the event the Employer elects in the
Adoption Agreement to pass-through voting of Employer stock allocated to a
participant's separate accounts to such participants or their beneficiaries
under the plan.
9.4.1 Readily tradeable Employer stock: If the Employer
stock allocated to a participant's separate accounts is readily
tradable on an established market, each participant or beneficiary
shall be entitled to direct the Trustee as to the manner in which
shares of Employer stock allocated to the participant's separate
accounts shall be voted with respect to any corporate matter that
involves voting the Employer stock allocated to the participant's
separate accounts as of any record date. For purposes of this Section
9, Employer stock is "readily tradeable on an established market" if
it is listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934 or quoted on a system
sponsored by a national securities association registered under
Section 15A(b) of the Securities Exchange Act and readily tradeable on
either such market.
9.4.2 Not readily tradeable Employer stock: If the
Employer stock allocated to a participant's separate accounts is not
readily tradable on an established market, each participant or
beneficiary shall be entitled to direct the Trustee as to the manner
in which shares of Employer stock allocated to the participant's
separate accounts shall be voted with respect to such matters
designated by the Employer in the Adoption Agreement that involve
voting the Employer stock allocated to the participant's separate
accounts as of any record date.
9.4.3 Trustee's responsibilities: Except as otherwise
provided in Sections 9.4.1 and 9.4.2, the Trustee shall vote the
Employer stock held by the trust on the record date as directed by the
Committee.
9.4.4 Voting instructions from participants: If
participants and beneficiaries are entitled to direct the Trustee in
voting Employer stock pursuant to Section 9.4.1 or 9.4.2, the Trustee
shall vote such Employer stock in accordance with the timely
instructions of the respective participants and beneficiaries. The
Trustee shall be responsible for soliciting and tabulating such votes.
Prior to the voting of Employer stock, the Committee shall distribute
to each participant and beneficiary the same information concerning
the vote as is furnished by the Employer to its shareholders. If
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the Employer does not furnish any such information within the
appropriate time period under applicable state corporate law prior to
the shareholders' meeting, the Committee shall as soon as practicable
provide each participant and beneficiary with an explanation of those
matters that to the best knowledge of the Committee are to be
presented at such meeting for action by shareholders and are subject
to direction by the participant or beneficiary and an appropriate form
on which the participant or beneficiary may direct voting on such
matters. If the Trustee does not receive participant or beneficiary
instructions with respect to any Employer stock or such instructions
are not timely received, such stock shall be voted by the Trustee as
directed by the Committee. Instructions received from participants
and beneficiaries by the Trustee shall be held in the strictest
confidence and shall not be divulged or released to any person,
including the Committee, or the officers, directors or employees of
the Employer.
9.5 TENDERING
The following provisions of this Section 9.5 shall apply in the event the
Employer elects in the Adoption Agreement to pass-through voting of Employer
stock to participants and beneficiaries, and a tender offer or exchange offer,
including but not limited to a tender offer or exchange offer within the
meaning of the Securities Exchange Act of 1934, as amended, for the Employer
stock held by the trust (a "tender offer") is commenced.
9.5.1 Independent record keeper; Trustee's responsibilities:
In the event a tender offer for the Employer stock held by the trust
is commenced, the functions under the plan applicable to participation
of such Employer stock in the tender offer shall be undertaken by the
independent record keeper appointed by the Committee at the time the
tender offer is commenced, and the Committee shall not undertake any
record keeping function under the plan that would serve to violate the
confidentiality of any directions given by the participants or
beneficiaries in connection with the tender offer. The independent
record keeper shall use its best efforts to timely distribute or cause
to be distributed to each participant and beneficiary such information
as is being distributed to other shareholders of the Employer in
connection with the tender offer. The Trustee shall have no
discretion or authority to sell, exchange or transfer any of the
Employer stock held in the participant's separate accounts pursuant to
such tender offer except to the extent, and only to the extent, that
the Trustee is timely directed to do so in writing as follows:
(i) Each participant and beneficiary shall be
entitled to direct the independent record keeper with respect
to the sale, exchange, or transfer of the Employer stock
allocated to the participant's separate accounts. The
independent record keeper shall then instruct the Trustee as
to the number of shares to be tendered, in accordance with the
above directions. The Committee shall instruct the Trustee to
follow the directions of the independent record keeper
pursuant to the terms of the tender offer. Instructions
received from participants and beneficiaries by the
independent record keeper shall be held in the strictest
confidence and shall not be divulged or released to any person
including the Committee, or the officers, directors, or
employees of the Employer.
(ii) The independent record keeper shall instruct
the Committee and the Trustee as to the number of shares for
which it did not receive any instructions or instructions were
not timely received. The Trustee shall tender or not tender
such shares of Employer stock as directed by the Committee.
9.5.2 Records: Following any tender offer that has resulted
in the sale or exchange or any shares of Employer stock held by the
trust, the independent record keeper to which responsibility has been
transferred shall continue to maintain on a confidential basis a
record of the separate account of each participant or beneficiary to
which shares of Employer stock were
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allocated at any time during such offer, until complete distribution
of such Employer stock. The record keeper shall keep confidential any
instructions that it may receive from participants or beneficiaries
relating to the tender offer.
SECTION 10. ADMINISTRATION BY COMMITTEE
10.1 MEMBERSHIP OF COMMITTEE
The Committee shall consist of such individuals who shall be appointed by the
Board to serve at the pleasure of the Board from time to time. Any member of
the Committee may resign, and his successor, if any, shall be appointed by the
Board. The composition of the Committee may be changed by the Board at any
time without amending the Adoption Agreement. The Committee shall be
responsible for the general administration and interpretation of the plan and
for carrying out its provisions, except to the extent all or any of such
obligations are specifically imposed on the Trustee or the Board. The
Committee shall furnish to the Trustee such information as the Trustee shall
require for the proper administration of the trust. The plan administrator
shall be the person designated by the Employer in the Adoption Agreement. The
Board may designate another plan administrator at any time without amending the
Adoption Agreement. The plan administrator shall be agent for service of legal
process on the plan.
10.2 COMMITTEE OFFICERS; SUBCOMMITTEE
The members of the Committee shall elect a chairman and may elect an acting
chairman. They shall also elect a secretary and may elect an acting secretary,
either of whom may be but need not be a member of the Committee. The Committee
may appoint from its membership such subcommittees with such powers as the
Committee shall determine, and may authorize one or more of its members or any
agent to execute or deliver any instruments or to make any payment in behalf of
the Committee.
10.3 COMMITTEE MEETINGS
The Committee shall hold such meetings upon such notice, at such places and at
such intervals as it may from time to time determine. Notice of meetings shall
not be required if notice is waived in writing by all the members of the
Committee at the time in office, or if all such members are present at the
meeting.
10.4 TRANSACTION OF BUSINESS
A majority of the members of the Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions or other
actions taken by the Committee at any meeting shall be by vote of a majority of
those present at any such meeting and entitled to vote. Resolutions may be
adopted or other action taken without a meeting upon written consent thereto
signed by all of the members of the Committee.
10.5 COMMITTEE RECORDS
The Committee shall maintain full and complete records of its deliberations and
decisions. The minutes of its proceedings shall be conclusive proof of the
facts of the operation of the plan. The records of the Committee shall contain
all relevant data pertaining to individual participants and their rights under
the plan and in the trust fund.
10.6 ESTABLISHMENT OF RULES
Subject to the limitations of the plan and of ERISA, the Committee may from
time to time establish rules or by-laws for the administration of the plan and
the transaction of its business.
10.7 CONFLICTS OF INTEREST
No individual member of the Committee shall have any right to vote or decide
upon any matter relating solely to himself or to any of his rights or benefits
under the plan (except that such member may sign unanimous written consent to
resolutions adopted or other action taken without a meeting), except to the
extent such right shall be generally provided to participants pursuant to the
terms of the plan.
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10.8 CORRECTION OF ERRORS
The Committee may correct errors and, so far as practicable, may adjust any
benefit or credit or payment accordingly. The Committee may in its discretion
waive any notice requirements in the plan; provided, that a waiver of a
requirement to notify the Trustee shall be made only with the consent of the
Trustee. A waiver of notice in one or more cases shall not be deemed to
constitute a waiver of notice in any other case. With respect to any power or
authority which the Committee has discretion to exercise under the plan, such
discretion shall be exercised in a nondiscriminatory manner.
10.9 AUTHORITY TO INTERPRET PLAN
Subject to the claims procedure set forth in Section 15, the Committee and the
plan administrator shall have the duty, authority, and discretion to interpret
and construe the provisions of the plan and to decide any dispute which may
arise regarding the rights of participants hereunder, including the authority
to construe uncertain provisions of the plan and to make determinations as to
the eligibility of employees for plan participation and of employees and
beneficiaries for benefits under the plan. Determinations by the Committee or
plan administrator shall apply uniformly to all persons similarly situated and
shall be binding and conclusive upon all interested persons. Such
determinations shall only be set aside if the Committee or plan administrator
is found to have acted arbitrarily and capriciously in interpreting and
construing the terms of the plan.
10.10 THIRD PARTY ADVISORS
The Committee may engage an attorney, accountant or any other technical advisor
on matters regarding the operation of the plan and to perform such other duties
as shall be required in connection therewith, and may employ such clerical and
related personnel as the Committee shall deem requisite or desirable in
carrying out the provisions of the plan. The Committee shall from time to
time, but no less frequently than annually, review the financial condition of
the plan and determine the financial and liquidity needs of the plan as
required by ERISA. The Committee shall communicate such needs to the Employer
and to the Trustee so that the funding policy and investment policy may be
appropriately coordinated to meet such needs.
10.11 COMPENSATION OF MEMBERS
No fee or compensation shall be paid to any member of the Committee for his
service as such.
10.12 COMMITTEE EXPENSES
The Committee shall be entitled to reimbursement out of the trust fund for its
reasonable expenses properly and actually incurred in the performance of its
duties in the administration of the plan; provided, that the Employer may, in
the discretion of the Board, pay such expenses.
10.13 REQUIREMENT OF WRITING
All requests, directions, requisitions, and instructions of the Committee to
the Trustee shall be in writing and signed by such person or persons as shall
be designated in writing by the Committee.
10.14 INDEMNIFICATION OF COMMITTEE
To the maximum extent permitted by ERISA, no member of the Committee shall be
personally liable by reason of any contract or other instrument executed by him
or on his behalf as a member of the Committee nor for any mistake of judgment
made in good faith, and the Employer shall indemnify and hold harmless,
directly from its own assets (including the proceeds of any insurance policy
the premiums for which are paid from the Employer's own assets), each member of
the Committee and each other officer, employee, or director of the Employer to
whom any duty or power relating to the administration or interpretation of the
plan may be delegated or allocated, against any unreimbursed or uninsured cost
or expense (including any sum paid in settlement of a claim with the prior
written approval of the Board) arising out of any act or omission to act in
connection with the plan, unless arising out of such person's own fraud, bad
faith, willful misconduct, or gross negligence.
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SECTION 11. MANAGEMENT OF FUNDS AND AMENDMENT OR
TERMINATION OF PLAN
11.1 FIDUCIARY DUTIES
All assets of the plan shall be held in a trust forming part of the plan, which
shall be administered as a trust fund to provide for the payment to the
participants or their successors in interest, out of the income and principal
of the trust, of benefits as provided in the plan. All fiduciaries (as defined
in ERISA) with respect to the plan shall discharge their duties as such solely
in the interest of the participants and their successors in interest, and (i)
for the exclusive purposes of providing benefits to participants and their
successors in interest and defraying reasonable expenses of administering the
plan, including the trust which is a part of the plan, (ii) with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of like character and with like aims, and (iii)
in accordance with the plan, except to the extent such document may be
inconsistent with the then applicable federal laws relating to fiduciary
responsibility. The trust fund shall be used for the exclusive benefit of the
participants and beneficiaries and to pay administrative expenses of the plan
and trust to the extent not paid by the Employer, and no portion of the trust
fund shall ever revert to or inure to the benefit of the Employer (except as
otherwise provided in this Section 11.1 and in Section 23). Notwithstanding
the foregoing provisions of this Section 11.1, the following special provisions
shall apply:
11.1.1 The Sponsor expressly reserves the right to amend or
terminate the plan and liquidate the trust, and the Employer, by
execution of the Adoption Agreement, delegates to the Sponsor the
authority to amend or terminate the plan and to liquidate the trust by
written instrument signed by the duly authorized representative of the
Sponsor, and the Employer shall be deemed to have consented to any
such amendments or termination. No amendment to the plan shall be
effective to the extent that it has the effect of decreasing a
participant's accrued benefit. Notwithstanding the preceding
sentence, a participant's accrued benefit may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes of this
Section 11.1.1, a plan amendment which has the effect of decreasing a
participant's accrued benefit or eliminating an optional form of
benefit, with respect to benefits attributable to service before the
amendment, shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a plan is amended, in the case
of an employee who is a participant as of the later of the date such
amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such
employee's right to his matching contribution account or discretionary
Employer account will not be less than his percentage computed under
the plan without regard to such amendment.
11.1.2 An Employer acting through its Board may amend the
plan by (i) changing the choice of options in the Adoption Agreement,
(ii) adding overriding plan language to the Adoption Agreement where
such language is necessary to satisfy Sections 415 or 416 of the Code
because of the required aggregation of multiple plans under these
sections, and (iii) adding certain model amendments published by the
Internal Revenue Service which specifically provide that their
adoption will not cause the plan to be treated as individually
designed. The Employer shall be considered to have an individually
designed plan if the Employer amends the plan or nonelective portions
of the Adoption Agreement for any other reason. The Employer may
terminate the plan as applicable to it at any time, subject to the
provisions of Sections 14.1 and 14.2.
11.1.3 Notwithstanding any other provisions of the plan, the
following provisions shall apply:
(i) If the plan receives an adverse determination
with respect to the initial qualification of the plan under
Section 401(a) of the Code, on written request of the
Employer, the Trustee shall return to the Employer the amount
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of such contribution (increased by earnings attributable
thereto and reduced by losses attributable thereto) within one
calendar year after the date that qualification of the plan is
denied; provided, that the application for the determination
is made by the time prescribed by law for filing the
Employer's federal income tax return for the taxable year in
which the plan is adopted or such later date as the Secretary
of the Treasury may prescribe;
(ii) On written request of the Employer, the
Trustee shall return a disallowed contribution to the extent
the deduction is disallowed under Section 404 of the Code
(reduced by losses attributable thereto, but not increased by
earnings attributable thereto) to the Employer within one year
after the date the deduction is disallowed; and
(iii) If a contribution or any portion thereof is
made by the Employer by mistake of fact, on written request of
the Employer, the Trustee shall return the contribution or
such portion (reduced by losses attributable thereto, but not
increased by earnings attributable thereto) to the Employer
within one year after the date of payment to the Trustee.
11.2 ADOPTION OF PLAN
The Employer shall, upon proper authorization, adopt the plan and execute the
Adoption Agreement. When such Adoption Agreement has been accepted and
executed by the Trustee and an initial contribution has been received by the
Trustee from the Employer, the plan as applied to the Employer shall become
effective as of the date specified in the Adoption Agreement.
11.3 REQUIREMENT OF WRITING
All requests, directions, requisitions, and instructions of the Committee to
the Trustee shall be in writing, signed by such person or persons as designated
by the Committee.
SECTION 12. ALLOCATION OF RESPONSIBILITIES AMONG NAMED
FIDUCIARIES
12.1 DUTIES OF NAMED FIDUCIARIES
The named fiduciaries with respect to the plan and the fiduciary duties and
other responsibilities allocated to each, which shall be carried out in
accordance with the other applicable terms and provisions of the plan, are as
follows:
12.1.1 Board:
(i) To amend the plan (subject to Sections 11.1.1
and 11.1.2);
(ii) To appoint and remove members of the
Committee, including the plan administrator;
(iii) To appoint and remove any investment
managers;
(iv) To appoint and remove the Trustee under the
plan;
(v) To determine the amount to be contributed to
the plan each year by the Employer;
(vi) To authorize the Committee to invest assets
of the trust in Employer stock or to establish an Employer
stock fund as described in Section 9.1; and
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(vii) To terminate the plan.
12.1.2 Committee:
(i) To interpret the provisions of the plan and
to determine the rights of participants under the plan, except
to the extent otherwise provided in Section 16 relating to
claims procedure;
(ii) To administer the plan in accordance with its
terms, except to the extent powers to administer the plan are
specifically delegated to another named fiduciary or other
person or persons as provided in the plan;
(iii) To designate and approve any investment funds
for participant directed investments, if permitted by the
Employer under the Adoption Agreement;
(iv) To account for the accrued benefits of
participants;
(v) To direct the Trustee in the distribution of
trust assets;
(vi) To direct the Trustee in the voting and
tendering of Employer stock held by the trust to the extent
provided in Section 9;
(vii) To direct the Trustee in the purchase and
sale of Employer stock for the trust, subject to the
provisions of Section 8 and Section 9; and
(viii) To establish such procedures as it may be
advisable for the proper administration of the plan,
including, but not limited to, procedures for changes in
investment directions, transfers of assets between fund
accounts, and applications for elective deferrals, employee
after-tax contributions, participant loans, withdrawals,
distributions, direct transfers, and rollover contributions.
12.1.3 Plan Administrator:
(i) To file such reports as may be required with
the United States Department of Labor, the Internal Revenue
Service, and any other government agencies to which reports
may be required to be submitted from time to time;
(ii) To comply with requirements of law for
disclosure of plan provisions and other information relating
to the plan to participants and other interested parties; and
(iii) To administer the claims procedure to the
extent provided in Section 16.
12.1.4 Trustee:
(i) To invest and reinvest trust assets, if
authorized by the Board, or pursuant to direction of any
investment manager(s) appointed by the Board;
(ii) To invest and reinvest trust assets in
Employer stock, if authorized by the Board and directed by the
Committee;
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(iii) To make distributions to plan participants as
directed by the Committee;
(iv) To render annual accountings to the Employer
as provided in the plan; and
(v) Otherwise to hold, administer and control the
assets of the trust as provided in Section 20 of the plan.
12.1.5 Investment Manager: In the event the Board shall
appoint an investment manager to manage (including the power acquire
and dispose of) assets of the trust, as provided in Section 20.1.3 of
the plan, the duties of the investment manager shall be to manage,
acquire and dispose of assets of the trust, or to direct the Trustee
in the management, acquisition, and disposition of assets of the
trust.
12.1.6 Custodian: If the Trustee appoints a custodian to
hold and manage the assets of the trust under the plan, then
notwithstanding the foregoing provisions of this Section 12.1 or any
other provisions of the plan, the duties of the custodian shall be to
receive, hold, sell, exchange, and otherwise deal with the assets of
the trust as instructed by the Trustee (or by the investment manager,
if any, to the extent of the authority of the investment manager), to
make distributions to participants as directed by the Committee, and
to render accounts to the Trustee as provided in Section 20.2.
12.2 CO-FIDUCIARY LIABILITY
Except as otherwise provided in ERISA, a named fiduciary shall not be
responsible or liable for any act or omission of another named fiduciary with
respect to fiduciary responsibilities allocated to such other named
fiduciaries, and a named fiduciary of the plan shall be responsible and liable
only for its own acts or omissions with respect to fiduciary duties
specifically allocated to it and designated as its responsibility.
SECTION 13. BENEFITS NOT ASSIGNABLE; FACILITY OF PAYMENTS
13.1 BENEFITS NOT ASSIGNABLE
No portion of any benefit held or paid under the plan with respect to any
participant shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be void, nor shall any portion of such accrued benefit be in any
manner payable to any assignee, receiver or trustee, or be liable for his
debts, contracts, liabilities, engagements, or torts, or be subject to any
legal process to levy upon or attach; provided, that this Section 13.1 shall
not apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a participant pursuant to a qualified domestic
relations order, as defined in Section 414(p) of the Code, or any domestic
relations order entered before January 1, 1985.
13.2 PAYMENT TO MINORS AND OTHERS
If any individual entitled to receive any payments under the plan shall be
physically, mentally, or legally incapable of receiving or acknowledging
receipt of such payment, the Committee, upon the receipt of satisfactory
evidence of his incapacity and satisfactory evidence that another person or
institution is maintaining him and that no guardian or committee has been
appointed for him, may cause any payment otherwise payable to him to be made to
such person or institution so maintaining him. Payment to such person or
institution shall be in full satisfaction of all claims by or through the
participant to the extent of the amount thereof.
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SECTION 14. TERMINATION OF PLAN AND TRUST; REMOVAL OF
TRUSTEE; MERGER OR CONSOLIDATION OF PLAN
14.1 COMPLETE TERMINATION
In the event of termination of the plan, all contributions shall cease and no
additional participants shall enter the plan. The assets under the plan shall
thereupon vest (that is, become nonforfeitable) in the participants,
beneficiaries, or other successors in interest, as their interests may appear,
and such vested benefit of each such individual shall be held in the plan for
distribution in accordance with the provisions of Sections 3 and 4 of the plan;
provided, that the Committee may in its discretion provide for a liquidation of
the trust and distributions to the participants of their vested accrued
benefits in cash, in kind, or in any combination thereof. In addition, the
participant's accrued benefit may, without the participant's consent, be
distributed to the participant or transferred to another defined contribution
plan (other than an employee stock ownership plan defined in Section 4975(e)(7)
of the Code) of an affiliated employer. For purposes of the plan, a
termination of Employer contributions or a suspension or reduction of such
contributions which amounts in effect to a termination of contributions shall
be regarded as a termination of the plan.
14.2 PARTIAL TERMINATION
In the event of a partial termination of the plan, the provisions of Section
14.1 regarding a complete termination shall apply in determining interests and
rights of the participants and their beneficiaries with respect to whom the
partial termination shall occur, and shall apply to the portion of the trust
fund allocable to such participants and beneficiaries.
14.3 REMOVAL AND RESIGNATION OF TRUSTEE
The Employer, at any time by written notice of at least 30 days to the Trustee,
may remove the Trustee as trustee under the plan. The Trustee may resign at
any time upon 30 days notice in writing to the Employer. As of the date of any
such removal or resignation of the Trustee, the Trustee shall transfer the
assets of the trust attributable to the plan as applied to the Employer to the
successor trustee or custodian named in the notice. Prior to such transfer,
the accounts of the Trustee shall be finally settled. Following such transfer,
the Trustee shall be released and discharged from all further accountability or
liability with respect to the assets of the trust fund and shall not be
responsible in any way for further disposition of such assets or any part
thereof.
14.4 MERGER OR CONSOLIDATION
In the event of any merger or consolidation of the plan with any other plan, or
a transfer of assets or liabilities of the plan to any other plan (which
merged, consolidated, or transferee plan shall be referred to in this Section
14.4 as the "successor plan"), the amount which each participant would receive
if the successor plan (and this plan, if he has any interest remaining therein)
were terminated immediately after the merger, consolidation, or transfer shall
be equal to or greater than the amount he would have received if this plan (and
the successor plan, if he had any interest therein immediately prior to the
merger, consolidation, or transfer) had been terminated immediately preceding
the merger, consolidation, or transfer.
SECTION 15. COMMUNICATION TO PARTICIPANTS
In accordance with the requirements of ERISA, the plan
administrator shall communicate the principal terms of the plan to the
participants. The plan administrator shall make available for inspection by
participants and their beneficiaries during reasonable hours, at the principal
office of the Employer and at such other places as may be required by ERISA, a
copy of the plan, the trust agreement, and such other documents as may be
required by ERISA.
SECTION 16. CLAIMS PROCEDURE
The following claims procedure shall apply with respect to the
plan:
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16.1 FILING OF A CLAIM FOR BENEFITS
If a participant or beneficiary (the "claimant") believes that he is entitled
to benefits under the plan which are not being paid to him or which are not
being accrued for his benefit, he shall file a written claim therefor with the
plan administrator. In the event the plan administrator shall be the claimant,
all actions which are required to be taken by the plan administrator pursuant
to this Section 16 shall be taken instead by another member of the Committee
designated by the Committee.
16.2 NOTIFICATION TO CLAIMANT OF DECISION
Within 90 days after receipt of a claim by the plan administrator (or within
180 days if special circumstances require an extension of time), the plan
administrator shall notify the claimant of his decision with regard to the
claim. In the event of such special circumstances requiring an extension of
time, there shall be furnished to the claimant prior to expiration of the
initial 90-day period written notice of the extension, which notice shall set
forth the special circumstances and the date by which the decision shall be
furnished. If such claim shall be wholly or partially denied, notice thereof
shall be in writing and worded in a manner calculated to be understood by the
claimant, and shall set forth: (i) the specific reason or reasons for the
denial; (ii) specific reference to pertinent provisions of the plan on which
the denial is based; (iii) 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 (iv) an explanation of
the procedure for review of the denial. If the plan administrator fails to
notify the claimant of the decision in a timely manner, the claim shall be
deemed denied as of the close of the initial 90-day period (or the close of the
extension period, if applicable).
16.3 PROCEDURE FOR REVIEW
Within 60 days following receipt by the claimant of notice denying his claim,
in whole or in part, or, if such notice shall not be given, within 60 days
following the latest date on which such notice could have been timely given,
the claimant shall appeal denial of the claim by filing a written application
for review with the Committee. Following such request for review, the
Committee shall fully and fairly review the decision denying the claim. Prior
to the decision of the Committee, the claimant shall be given an opportunity to
review pertinent documents and to submit issues and comments in writing.
16.4 DECISION ON REVIEW
The decision on review of a claim denied in whole or in part by the plan
administrator shall be made in the following manner:
16.4.1 Within 60 days following receipt by the Committee of
the request for review (or within 120 days if special circumstances
require an extension of time), the Committee shall notify the claimant
in writing of its decision with regard to the claim. In the event of
such special circumstances requiring an extension of time, written
notice of the extension shall be furnished to the claimant prior to
the commencement of the extension. If the decision on review is not
furnished in a timely manner, the claim shall be deemed denied as of
the close of the initial 60-day period (or the close of the extension
period, if applicable).
16.4.2 With respect to a claim that is denied in whole or in
part, the decision on review shall set forth specific reasons for the
decision, shall be written in a manner calculated to be understood by
the claimant, and shall cite specific references to the pertinent plan
provisions on which the decision is based.
16.4.3 The decision of the Committee shall be final and
conclusive.
16.5 ACTION BY AUTHORIZED REPRESENTATIVE OF CLAIMANT
All actions set forth in this Section 16 to be taken by the claimant may
likewise be taken by a representative of the claimant duly authorized by him to
act in his behalf on such matters. The plan administrator and the Committee
may require such evidence as either may reasonably deem necessary or advisable
of the authority to act of any such
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representative.
SECTION 17. PREVIOUSLY EXISTING QUALIFIED PLANS OF THE
EMPLOYER
By so designating in the Adoption Agreement, adoption of the
plan shall amend and supersede in its entirety a previously existing defined
contribution plan of the Employer which is qualified under Section 401(a) of
the Code immediately prior to such adoption, as evidenced by a current
favorable determination letter or opinion letter issued by the Commissioner of
Internal Revenue or his delegate (which previously existing plan shall be
referred to herein as the "prior plan"). Adoption of the instant plan shall be
deemed to amend and supersede the prior plan and shall not be deemed to be a
termination thereof. Except as permitted by regulations, no plan amendment or
transaction having the effect of a plan amendment shall be effective if it
eliminates or reduces any benefit protected under Section 411(d)(6) of the
Code, or adds or modifies conditions relating to Section 411(d)(6) protected
benefits, the result of which is a further restriction on such benefit, unless
such protected benefits are preserved with respect to benefits accrued as of
the later of the adoption date or effective date of the amendment. In applying
the provisions of Section 5.2 following adoption of this plan, each participant
in this plan on the effective date of adoption of this plan who was a
participant in the prior plan immediately before such effective date shall have
a vested percentage in his accrued benefit which shall not be less than the
percentage of his benefit in the prior plan which would have been vested in him
if the prior plan had continued in effect through the adjustment date for the
plan year in which the vested percentage is being determined.
SECTION 18. SPECIAL PROVISIONS RELATING TO TRANSFERS FROM
QUALIFIED PLANS
With the written approval of the Committee in accordance with
procedures approved by the Committee, the Trustee shall receive and hold, as a
part of the trust fund, assets (hereinafter referred to as the "transferred
assets," which shall be deemed to include all increments allocable to such
transferred assets) transferred directly from the trustee or custodian of any
other retirement plan (hereinafter referred to as the "transferor plan") which
is qualified under Section 401(a) of the Code. Such transferred assets may
include cash or other types of property allowed as an investment under the
plan. In applying the provisions of this Section 18, the following special
provisions shall apply:
18.1 CERTAIN TRANSFERS TO THE PLAN NOT PERMITTED
The Committee shall not permit nor the Trustee accept any transfer from the
trustee of a defined benefit plan, a defined contribution plan which is subject
to the funding standards of Section 412 of the Code, or any defined
contribution plan that would cause this plan to be the direct or indirect
transferee of a plan which is subject to the joint and survivor annuity
requirements of Section 401(a)(11) of the Code, or would otherwise cause this
plan to become subject to such requirements.
18.2 NONFORFEITABILITY OF TRANSFERRED ASSETS
The transferred assets and all rights to or derived therefrom shall be at the
time of the transfer and at all times thereafter fully nonforfeitable and
vested in the respective participants (and in the proportions) to whom such
transferred assets had been allocated under the transferor plan.
18.3 PROTECTED BENEFITS UNDER SECTION 411(D)(6) OF THE
CODE
The protected benefits of the transferor plan, as defined in Section 411(d)(6)
of the Code, shall be preserved with respect to the direct transfer account of
each participant.
18.4 LIABILITY OF TRUSTEE
The Trustee under this plan shall not be liable or responsible for any acts or
omissions in the administration of any transferor plan and the trust thereunder
of any other person or entity who was trustee, custodian, or other fiduciary
under any such transferor plan, and the Trustee shall be held harmless from
such liability or responsibility.
18.5 SEPARATE ACCOUNTS
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The Trustee shall keep a separate and identifiable account with respect to the
transferred assets of each participant (which may be commingled for investment
purposes with other assets of the trust), designated as the "direct transfer
account." The direct transfer account of each participant shall be adjusted in
the manner specified in Section 7.
18.6 GENERAL
To the extent not inconsistent with the provisions of this Section 18, the
Committee may promulgate rules or by-laws supplementing and implementing the
provisions of this Section 18.
SECTION 19. ROLLOVERS
19.1 ACCEPTANCE OF ROLLOVERS BY THIS PLAN
To the extent elected by the Employer in the Adoption Agreement, an employee or
participant who receives, or deemed to receive, a distribution of all or part
of his interest from another retirement plan which is qualified under Section
401(a) of the Code on the date of such distribution may, with the written
consent of the Committee and in accordance with procedures approved by the
Committee, transfer all or a part of such distribution to the Trustee under
this plan. The amount so transferred may include cash or other types of
property allowed as an investment under the plan. In applying the provisions
of this Section 19, the following special provisions shall apply:
19.1.1 The transfer to the Trustee must occur on or before
the 60th day following the receipt by the employee or participant of
such distribution or, if such distribution has previously been
deposited in an individual retirement account or individual retirement
annuity (as defined in Section 408 of the Code), the transfer must
occur on or before the 60th day following the receipt by the employee
or participant of the balance to his credit under such individual
retirement account or individual retirement annuity.
19.1.2 For distributions made to the employee or participant
prior to January 1, 1993, the distribution must be a qualified total
distribution within the meaning of Section 402(a)(5)(E)(i) of the
Code. For distributions made to the employee or participant after
December 31, 1992, the distribution must be an eligible rollover
distribution within the meaning of Section 402(c)(4) of the Code.
19.1.3 The amount transferred to the Trustee is limited to
the maximum rollover amount as provided in Section 402(a)(5)(B) of the
Code (Section 402(c)(2) of the Code for distributions made to an
employee or participant after December 31, 1992).
19.1.4 The amount transferred to the Trustee shall be
credited to a separate account with respect to the employee or
participant, designated as the "rollover account." With respect to
each rollover account, the following special provisions shall apply:
(i) Except as provided in paragraph (iii) below,
each rollover account shall be adjusted in the manner
specified in Section 7.
(ii) Each employee or participant having a
rollover account shall have a nonforfeitable interest therein.
(iii) Except as otherwise provided in this Section
19, the assets in the rollover account shall be administered
by the Trustee in the same manner as other trust assets.
Assets of the rollover account may be commingled for
investment with other assets of the trust fund; provided, that
with respect to a rollover contribution made other than on an
adjustment date, such contribution shall not be commingled
until immediately following the next adjustment date, and for
the period preceding such adjustment date the rollover account
of an
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employee or participant shall be adjusted under Section 7 as
if such account constituted the entire trust fund.
19.1.5 If an eligible employee shall be permitted under the
Adoption Agreement to make such a transfer prior to his completion of
the participation requirements of Section 1.40, his rollover account
shall represent his sole interest in the plan until he becomes a
participant.
19.2 ROLLOVER DISTRIBUTIONS
This Section 19.2 shall be effective with respect to distributions made to a
participant or beneficiary after December 31, 1992. Subject to the provisions
of this Section 19.2, a participant who becomes entitled to receive a
distribution of all or part of his account may, in accordance with procedures
adopted by the Committee, elect to have such distribution treated as a rollover
distribution and transferred by the Trustee directly to the trustee or
custodian of another retirement plan or individual retirement arrangement (the
"transferee plan"). In applying the provisions of this Section 19.2, the
following provisions shall apply:
19.2.1 The distribution to be made to the participant must
be an eligible rollover distribution within the meaning of Section
402(c)(4) of the Code.
19.2.2 The amount transferred to the transferee plan may not
exceed the amount that would otherwise be includable in the gross
income of the participant if not transferred as provided in this
Section 19.2.
19.2.3 The transferee plan must be an eligible retirement
plan within the meaning of Section 401(a)(31)(D) of the Code.
19.2.4 The election provided for in this Section 19.2 shall
also apply to (i) the surviving spouse of a participant who becomes
entitled to receive a distribution from the plan upon the death of the
participant, and (ii) the spouse or former spouse of a participant who
becomes entitled to receive a distribution from the plan pursuant to a
qualified domestic relations order (within the meaning of Section
414(p) of the Code). Notwithstanding the foregoing, a surviving
spouse of a participant may only elect to have an eligible rollover
distribution transferred directly to the trustee or custodian of an
individual retirement arrangement that qualifies as an eligible
retirement plan under Section 401(a)(31)(D) of the Code.
19.2.5 At least 30 days, but no more than 90 days, before a
distribution is to be made from a participant's account, the plan
administrator shall provide the participant or other distributee with
a written statement advising him of his rights under this Section
19.2, and of the requirement that federal income taxes be withheld on
the distribution if he does not elect to have the distribution
transferred directly to a transferee plan. The written statement
shall contain such other information as is required by Section 402(f)
of the Code.
19.2.6 Notwithstanding anything contained in this Section
19.2 to the contrary, the provisions of this Section 19.2 shall at all
times be construed and enforced according to the requirements of
Section 401(a)(31) of the Code, as the same may be amended from time
to time.
SECTION 20. TRUST PROVISIONS
20.1 TRUSTEE'S POWERS
20.1.1 The Trustee shall receive, hold, manage, convert,
sell, exchange, invest, reinvest, disburse, and otherwise deal with
the assets of the trust, including contributions made by the Employer
and employees to the trust and the income and profits therefrom, in
the manner and
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for the uses and purposes in the plan and as herein provided. Subject
to the fiduciary responsibilities imposed upon the Trustee by ERISA,
the plan, and the trust, and subject further to the provisions of
Sections 8, 9, 10.1, 20.1.2, and 20.1.3, in the investment,
reinvestment and management of the fund constituting the trust, and
the Trustee is hereby authorized and empowered:
(i) To receive all rents, issues, dividends,
income, profits and properties of every nature due the trust,
and to hold or make distribution thereof in accordance with
the terms of the plan and this trust agreement.
(ii) To retain the properties now or hereafter
received by the trust, or to dispose of them as and when
deemed advisable by public or private sale or exchange or
otherwise, for cash or upon credit, or partly upon cash and
partly upon credit, and upon such terms and conditions as
shall be deemed proper.
(iii) To participate in any plan of liquidation,
reorganization, consolidation, merger, or other financial
adjustment of any corporation or business in which the trust
is or shall be financially interested, and to exchange any
property held in the trust for property issued under any such
plan.
(iv) To invest or reinvest principal and income of
the funds belonging to the trust in (a) common or preferred
stocks or options to buy and sell such stocks, (b) bonds,
notes or other securities (including commercial paper and
other short-term obligations), (c) mutual funds, (d)
guaranteed investment contracts issued by a legal reserve life
insurance company, (e) real or personal properties or
interests therein, (f) cash equivalent deposits, certificates
of deposit or accounts (including such deposits or accounts
issued by the Trustee), or any combination of (a) through (f),
as shall from time to time be approved by the Trustee, or to
hold any part of such principal or income in cash as may from
time to time be determined by the Trustee.
(v) If authorized by the Board and directed by
the Committee, to invest or reinvest principal and income of
the funds belonging to the trust in Employer stock.
(vi) To hold any investment belonging to the trust
in bearer form, or to register and hold the same in the name
of the Trustee or in the name of its duly authorized nominee.
(vii) To borrow for the benefit of the trust for
such periods of time and upon such terms and conditions as may
be deemed proper, any sum or sums of money, and to secure such
loans by mortgage or pledge of any property belonging to the
trust, without personal liability therefor.
(viii) To execute such deeds, leases, contracts,
bills of sale, notes, proxies, and other instruments in
writing as shall be deemed requisite or desirable in the
proper administration of the trust.
(ix) To compromise, arbitrate, or otherwise adjust
or settle claims in favor of or against the trust, except to
the extent the plan provides otherwise with respect to claims
for benefits under the plan.
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(x) To make distributions to participants or
their beneficiaries at the direction of the Committee.
(xi) To renew or extend or participate in the
renewal or extension of any mortgage, upon such terms as may
be deemed advisable, and to agree to a reduction in the rate
of interest on any mortgage or to any other modification or
change in the terms of any mortgage or of any guarantee
pertaining thereto, in any manner and to any extent that may
be deemed advisable for the protection of the trust fund or
the preservation of the value of any investment of the trust
fund; to waive any default, whether in the performance of any
covenant or condition of any mortgage or in the performance of
any guarantee, or to enforce any such default in such manner
and to such extent as may be deemed advisable; to exercise and
enforce any and all rights of foreclosure, to bid in property
on foreclosure, to take a deed in lieu of foreclosure with or
without paying a consideration therefor, and in connection
therewith to release the obligation on the bond secured by
such mortgage; and to exercise and enforce in any action,
suit, or proceeding at law or in equity any rights or remedies
in respect to any mortgage or guarantee.
(xii) To repair, alter, or improve any buildings
which may be on any real estate forming part of the trust fund
or to erect entirely new structures thereon.
(xiii) To exercise the right to vote or tender any
securities held in the trust, or to grant proxies to vote such
securities, except to the extent that the right to vote or
tender any such securities may specifically be designated to
another hereunder.
(xiv) To make loans from the trust to participants
in accordance with the provisions of Section 6.6.
(xv) To receive and hold, as part of the trust
fund, direct transfers (as described in Section 18) and
rollovers (as described in Section 19), subject to all
limitations and requirements set forth in the plan.
(xvi) In accordance with the provisions of Section
8 and subject to the direction of the Committee, to invest and
reinvest amounts credited to participants' directed separate
accounts in such directed investment funds selected by the
Committee, including an Employer stock fund established
pursuant to Section 9.
(xvii) To transfer, at any time and from time to
time, a portion of the assets held by it pursuant to this plan
to any common trust fund within the meaning of Section 584 of
the Code or to any trust which is qualified under Section
401(a) and exempt under Section 501(a) of the Code, and which
common trust fund is maintained as a medium for the pooling of
funds of pension and profit-sharing trusts for diversifying
investments. The terms and provisions of any such trust
shall, upon such transfer and execution, be incorporated by
reference into this plan to the extent of the assets so
transferred.
(xviii) To transfer monies of this trust to a
separate fund or funds maintained solely for the assets of the
trust established with respect to the plan
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maintained by the Employer, which fund or funds shall not be
commingled, pooled, or consolidated for investment with assets
of another qualified trust. Each such fund shall be referred
to herein as an "investment fund" and collectively as
"investment funds." Assets transferred to an investment fund
shall be invested and reinvested by the Trustee in accordance
with the provisions of this Section 20.
(xix) When and to the extent directed by the
Committee, to invest all or a portion of the funds of the
trust in a group annuity or guaranteed investment contract
issued by a legal reserve life insurance company; provided,
that if the Trustee requests, the Employer shall provide the
Trustee with satisfactory indemnification against any loss,
damage or expense (including expenses of defense) incurred by
the Trustees with respect to such investment.
(xx) At the direction of the Board, to appoint a
custodian designated by the Board who shall have the authority
and responsibilities set forth in Section 12.1.6.
(xxi) To do all acts and to exercise any and all
powers, although not specifically set forth herein, as the
Trustee may deem are for and in the best interest of the plan,
the participants, and beneficiaries.
20.1.2 In carrying out the powers and duties specified in
Section 20.1.1 regarding the investment and reinvestment of trust
assets, the Trustee shall consider any general investment guidelines
which may be communicated to the Trustee from time to time by the
Committee; provided, that the Trustee shall not be required or
obligated to follow any such general guidelines, and all investment
decisions shall be the sole responsibility of the Trustee unless
specifically provided to the contrary in the trust agreement or the
plan.
20.1.3 The Board may at any time direct the Trustee to
segregate all or a specified portion of the trust assets into a
separate fund (the "directed fund") and invest it in accordance with
the directions of one or more investment managers appointed by the
Board, subject to the following provisions:
(i) Any investment manager so appointed shall be
(a) registered as an investment advisor under the Investment
Advisers Act of 1940; (b) a bank, as defined in the Investment
Advisers Act of 1940; or (c) an insurance company qualified
under the laws of more than one state to manage, acquire, and
dispose of assets of the trust under the plan.
(ii) The Board shall deliver to the Trustee a copy
of a written acknowledgment by the investment manager that it
meets the requirements of paragraph (i), that it is a
fiduciary with respect to the plan, and that it has accepted
appointment as an investment manager. The Trustee shall be
protected in assuming that the appointment of an investment
manager remains in effect until the Trustee shall be notified
in writing by the Board that such investment manager has been
removed or has resigned.
(iii) The Trustee shall invest and reinvest the
directed funds only to the extent and in the manner directed
by the investment manager. If the Trustee has not received
instructions from an investment manager with respect to the
investment of all or a part of the directed fund, the Trustee
shall invest such
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amounts in interest bearing obligations having maturities of
90 days or less, or in a common fund comprised substantially
of such obligations, until directed otherwise by the
investment manager.
(iv) Any investment manager may from time to time
issue orders for the purchase or sale of securities directly
to a broker or dealer, and the Trustee, upon direction from
the investment manager, shall execute and deliver appropriate
trading authorization. Written notice of the issuance of each
order and of execution of each order shall be authority to the
Trustee to receive securities purchased against payment
therefor and to deliver securities sold against receipt of the
proceeds therefrom, as the case may be.
(v) Upon removal or resignation of an investment
manager, and pending appointment of a substitute investment
manager, the Trustee shall invest any uninvested cash in the
manner described in paragraph (iii), and shall not sell or
liquidate any investments of the directed fund.
(vi) No plan fiduciary other than an investment
manager shall be liable for any act or omission of such
investment manager unless such fiduciary participates
knowingly in, or knowingly undertakes to conceal, such act or
omission which such fiduciary knows to be a breach of the
fiduciary responsibility of the investment manager with
respect to the plan. Further, no plan fiduciary other than an
investment manager shall be under any obligation to invest or
otherwise manage the assets of the plan that are subject to
the management of the investment manager and, to the maximum
extent permitted by ERISA, the plan fiduciaries other than the
investment manager shall have no liability or responsibility
for acts or failures to act as directed by the investment
manager, or, subject to paragraph (iii), failing to act in the
absence of any such direction.
20.1.4 Notwithstanding any other provisions of Section 20,
in no event shall the Trustee exercise any powers under the plan in a
manner that will constitute a prohibited transaction as defined in
Section 4975 of the Code and in Section 406 of ERISA.
20.1.5 Whenever a direction or authorization is required or
permitted by the plan or trust to be given to the Trustee, such
direction or authorization shall be duly made by the Trustee's receipt
of: (i) a copy of the corporate resolution or resolutions of the
Board certified by the Secretary of the Employer, in the case of any
action taken by the Board; (ii) a written instrument signed in the
name of the Employer, by its President or Secretary, in the case of
any action taken by the Employer; or (iii) a written instrument signed
by the duly authorized representative of the Committee, in the case of
any action taken by the Committee. Notwithstanding the foregoing, the
Trustee, in its sole discretion, may accept such other evidence of the
direction or authorization or may require such further evidence of the
direction or authorization as it deems reasonable and necessary. The
Trustee shall be fully protected in acting upon any instrument,
notice, resolution, order, certificate, opinion, facsimile, letter, or
other document that the Trustee believes to be genuine. No person
dealing with the Trustee in any transaction shall be required to
inquire into the decisions or authority of the Trustee or see to the
application by the Trustee of any property involved in such
transaction; provided, that this provision shall not relieve any plan
fiduciary dealing with the Trustee from fulfilling his fiduciary duty.
For the purposes of this trust agreement, the "fiduciary duty" of the
plan fiduciaries (including the Trustee) shall include the obligation
not to enter into prohibited transactions as described in Section
20.1.4 and all other duties imposed on plan fiduciaries by the plan,
the trust, and ERISA.
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20.1.6 In the management of the trust fund, the Trustee may
employ agents and delegate to them such ministerial and limited
discretionary duties as the Trustee shall see fit, and the Trustee
shall not be responsible for any loss occasioned by any such agent
unless the Trustee shall commit a breach of its fiduciary duty (as
defined in Section 20.1.5) in the designation of such agent, in
establishing or implementing a procedure for making such designation,
or in continuing such designation in effect. The Trustee may consult
with counsel of its own selection, who may also be of counsel to the
Sponsor. The reasonable compensation or fees charged by all such
persons for their services shall be deemed to be expenses of
administration of the trust.
20.1.7 All real and personal property taxes, income taxes,
and other taxes of any and all kinds whatsoever upon or in respect of
the trust hereby created or any money, income, or property forming a
part thereof, and all expenses actually and properly incurred in the
administration of the trust, shall be paid by the Trustee out of
principal or income of the trust, as the Trustee shall determine;
provided, that the Employer may, in the discretion of the Board, pay
any of the expenses incurred in the administration of the trust. The
payment out of the trust of any taxes and expenses authorized in this
Section 20.1.7, and the payment of all other costs, expenses, or
compensation authorized by this plan to be paid out of the trust,
shall be deemed to be for the exclusive benefit of the participants
under the plan.
20.2 ACCOUNTINGS
The Trustee shall keep accurate and detailed accounts of all investments,
receipts, disbursements, and other transactions and proceedings of the trust
and all such accounts and other records relating thereto shall be open to
inspection and audit at all reasonable times by any person designated by the
Board or the Committee. Within 90 days after the end of each plan year, and at
such other times as the Board may reasonably require, the Trustee shall prepare
and deliver to the Committee a statement of its accounts and proceedings for
such plan year. Each such statement shall be certified as accurate by the
Trustee and, with respect to the plan year in question, shall contain the
following:
20.2.1 A statement of assets and liabilities aggregated by
categories and valued at fair market value as of the close of the plan
year in question.
20.2.2 A statement setting forth changes in the net assets
available for plan benefits, including a statement of receipts and
disbursements during the plan year, aggregated by general source and
application.
20.2.3 A statement setting forth all assets held for
investment purposes aggregated and identified by issuer, borrower,
lessor, or similar party to the transaction, maturity date, rate of
interest, collateral, par or maturity value, cost, and current fair
market value.
20.2.4 A statement setting forth all loans or fixed income
obligations which were in default as of the close of the plan year or
were classified during the plan year as uncollectible, and such
detailed information with respect thereto as is required by ERISA to
be included in the annual report to be filed with the Internal Revenue
Service.
20.2.5 A statement setting forth all leases which were in
default as of the close of the plan year or were classified during the
plan year as uncollectible, and such detailed information with respect
thereto as is required by ERISA to be included in the annual report to
be filed with the Internal Revenue Service.
20.2.6 If some or all of the assets of the trust are held in
a guaranteed investment contract issued by a legal reserve life
insurance company, such information as is required by the plan
administrator to comply with the requirement to file an annual report
with the Internal
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Revenue Service.
20.2.7 A statement setting forth each reportable transaction
(as defined in ERISA), including such detailed information with
respect thereto as is required by ERISA to be included in the annual
report to be filed with the Internal Revenue Service.
20.2.8 If some or all of the assets of the trust are held in
a common or collective trust maintained by the Trustee, the most
recent annual statement of assets and liabilities of said common or
collective trust.
20.2.9 Such other information as may reasonably be required
by the plan administrator to comply with the requirements to file an
annual report with the Internal Revenue Service.
20.3 COMPENSATION OF TRUSTEE
If the Trustee is a bank or corporation qualified to serve as a trustee under
state law, it shall be entitled to retain or receive out of the trust fund
(subject to the provisions of Section 20.1.6) as compensation for its services
hereunder, compensation in accordance with its usual schedule of fees in effect
at the time of performance of such services, but not in excess of reasonable
compensation for such services. If the Trustees are individuals, whether or
not employees of the Employer, they shall not receive any compensation for
their services as Trustees.
20.4 RESPONSIBILITIES AND SCOPE OF DUTIES OF TRUSTEE
The Trustee hereby agrees to hold in trust and administer the fund hereunder,
subject to all of the terms and conditions of the plan, and to render an annual
accounting as provided in Section 20.2. The Trustee shall act in accordance
with written instructions or directions of the Committee made in conformity
with ERISA and the terms of the plan, and signed by an authorized
representative of the Committee. In carrying out such instructions or
directions, the Trustee shall not be obligated to inquire into the purpose or
purposes for such instructions or directions or whether such instructions or
directions are consistent with the plan or are otherwise proper.
20.5 FAILURE TO DIRECT TRUSTEE
If at any time the Employer or the Committee shall be incapable for any reason
of giving instructions, directions, or authorizations to the Trustee as herein
provided, the Trustee may act without such instructions, directions, or
authorizations as it, in its discretion, shall deem appropriate or advisable
under the circumstances for carrying out the provisions of the plan and trust.
The Trustee shall be fully protected with respect to any action taken or
omitted consistent with the terms of the plan and trust or at the direction of
the Employer, the Committee, or any participant or beneficiary pursuant to
Section 8 or Section 9, or any action taken or omitted upon the failure of the
Employer or the Committee to give directions to the Trustee as required or
permitted by the plan and trust.
20.6 INDEMNIFICATION OF TRUSTEE
If the Trustee shall be one or more individuals and not a corporation or
banking institution, the Employer shall indemnify the Trustee, directly from
the Employer's general assets (including the proceeds of any insurance policy,
the premiums for which are paid from the Employer's assets), from and against
any and all claims, demands, losses, damages, expenses (including, by way of
illustration and not limitation, reasonable attorneys' fees and other legal and
litigation costs), judgments, and liabilities arising from, out of, or in
connection with the administration of the plan or trust (including without
limitation, any action taken or omitted pursuant to directions contained in the
plan or trust, at the direction of the Employer, the Committee, or any
participant or beneficiary pursuant to Section 8 or Section 9, or any action
taken or omitted upon the failure of the Employer or the Committee to give
directions to the Trustee as required by or permitted by this trust or the
plan) or the Trustee's fiduciary duties under the plan or trust, except when
the same are judicially determined to be due to the gross negligence or willful
misconduct of the Trustee (the "exception"). The exception shall not apply
with respect to any action or failure to act by the Trustee if the action or
failure to act was directed by the Employer or the Committee (either directly
or by failing to provide directions when requested). The Trustee shall notify
the Employer of any claim, demand, loss, damage, expense, judgment, or
liability asserted against the Trustee that may give rise to the right of
indemnification
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provided for in this Section 20.6 as soon as practicable after the Trustee has
actual knowledge thereof. With the prior written consent of the Trustee, the
Employer shall have the right, at its expense, to conduct the defense of the
Trustee in any proceeding to which this Section 20.6 applies. The Employer
also agrees to reimburse the Trustee for any expense (including, by way of
illustration and not limitation, reasonable attorneys' fees and other legal and
litigation costs) incurred by the Trustee in enforcing the provisions of this
Section 20.6.
20.7 MODIFICATION OF THIS SECTION
An Employer may amend or modify the administrative provisions of this Section
20 by adopting a separate trust or custodial account document, provided that
such other document does not cause the plan to fail to satisfy the requirements
of Section 401(a) of the Code. The provisions of such other document shall
override any contrary provisions in this Plan. This subsection shall not
apply, however, if the plan as adopted by the Employer is a standardized plan.
SECTION 21. QUALIFICATION OF PLAN
21.1 NON-STANDARDIZED PLANS
If the plan is not a standardized form plan, the Employer shall promptly submit
the plan (including the Adoption Agreement and all necessary supporting
documents), and all amendments permitted under Section 11.1.2 which are made by
the Employer to the plan, to the Internal Revenue Service with a request for a
determination letter that the plan as applied to the Employer meets the
qualification requirements of Section 401(a) of the Code and that the trust
constituting a part of the plan is exempt under Section 501(a) of the Code.
21.2 DENIAL OF QUALIFICATION
Should the Internal Revenue Service determine pursuant to such initial
submission that the plan as applied to the Employer does not so qualify, the
following procedures shall be followed:
21.2.1 Notwithstanding any other provisions of the plan, the
plan as applied to the Employer shall be deemed canceled, the Employer
shall not be a party to the plan, and no employee of the Employer or
person claiming under any such employee shall have any right or claim
to any asset or benefit of the trust fund, except as provided in
Section 21.2.3.
21.2.2 The Trustee shall liquidate the trust of the Employer
and, after paying or making provision for the compensation of the
Trustee and any expenses of administration or liquidation of the
trust, shall pay the balance of the proceeds of such liquidation to
the Employer.
21.2.3 The Employer shall refund to each employee the amount
of any contribution made by him (or, if less, the amount of such
contribution then in his account).
21.3 NOTIFICATION OF SPONSOR
The Employer shall promptly advise the Sponsor should it be notified by the
Internal Revenue Service that the plan as applied to the Employer is no longer
qualified as specified in Section 21.1. If the plan as applied to the Employer
is disqualified, such plan will no longer participate in this prototype plan
and will be considered an individually designed plan.
SECTION 22. SPECIAL TOP-HEAVY PROVISIONS
The following special provisions shall apply and supersede any
conflicting provisions in the plan or Adoption Agreement with respect to any
plan year beginning after December 31, 1983 in which the plan is determined to
be top-heavy:
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22.1 DEFINITIONS
The following definitions shall apply for purposes of this Section 22:
22.1.1 "Determination date" shall mean for any plan year
subsequent to the first plan year, the last day of the preceding plan
year. For the first plan year of the plan, the last day of that year
shall be the determination date.
22.1.2 "Key employee" shall mean any employee or former
employee (and the beneficiaries of such employee) who at any time
during the determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar limitation
under Section 415(b)(1)(A) of the Code, an owner (or considered an
owner under Section 318 of the Code) of one of the ten largest
interests in the Employer if such individual's compensation exceeds
100% of the dollar limitation under Section 415(c)(1)(A) of the Code,
a five percent owner of the Employer, or a one percent owner of the
Employer who has an annual compensation of more than $150,000. Annual
compensation means compensation as defined in Section 23.5.2, but
including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the employee's gross
income under Sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
The determination period is the plan year containing the determination
date and the preceding four plan years. The determination of who is a
key employee will be made in accordance with Section 416(i)(1) of the
Code and the regulations thereunder. A "non-key employee" shall mean
any employee or former employee who is not a key employee.
22.1.3 "Permissive aggregation group" shall mean the
required aggregation group of plans plus any other plan or plans of
the Employer which, when considered as a group with the required
aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
22.1.4 "Present value" shall mean the present value
determined by reference to the interest and mortality rates specified
in Adoption Agreement.
22.1.5 "Required aggregation group" shall mean (i) each
qualified plan of the Employer in which at least one key employee
participates or participated at any time during the determination
period (regardless of whether the plan has terminated), and (ii) any
other qualified plan of the Employer which enables a plan described in
(i) to meet the requirements of Sections 401(a)(4) or 410 of the Code.
22.1.6 "Top-heavy plan" shall mean, for any plan year
beginning after December 31, 1983, this plan if any of the following
conditions exists:
(i) The top-heavy ratio for this plan exceeds 60%
and this plan is not part of any required aggregation group or
permissive aggregation group of plans.
(ii) This plan is a part of a required aggregation
group of plans but not part of a permissive aggregation group
and the top-heavy ratio for the group of plans exceeds 60%.
(iii) This plan is a part of a required aggregation
group and part of a permissive aggregation group of plans and
the top-heavy ratio for the permissive aggregation group
exceeds 60%.
22.1.7 "Top-heavy ratio" shall mean the following:
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(i) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension
plan) and the Employer has not maintained any defined benefit
plan which during the five-year period ending on the
determination date(s) has or has had accrued benefits, the
top-heavy ratio for this plan alone or for the required or
permissive aggregation group as appropriate is a fraction, the
numerator of which is the sum of the accrued benefits of all
key employees as of the determination date(s) [including any
part of any accrued benefit distributed in the five-year
period ending on the determination date(s)], and the
denominator of which is the sum of all accrued benefits
[including any part of any accrued benefit distributed in the
five-year period ending on the determination date(s)], both
computed in accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and denominator of
the top-heavy ratio are increased to reflect any contribution
not actually made as of the determination date, but which is
required to be taken into account on that date under Section
416 of the Code and the regulations thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension
plan) and the Employer maintains or has maintained one or more
defined benefit plans which during the five-year period ending
on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the numerator
of which is the sum of accrued benefits under the aggregated
defined contribution plan or plans for all key employees,
determined in accordance with paragraph (i) above, and the
present value of accrued benefits under the aggregated defined
benefit plan or plans for all key employees as of the
determination date(s), and the denominator of which is the sum
of the accrued benefits under the aggregated defined
contribution plan or plans for all participants, determined in
accordance with paragraph (i) above, and the present value of
accrued benefits under the defined benefit plan or plans for
all participants as of the determination date(s), all
determined in accordance with Section 416 of the Code and the
regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an
accrued benefit made in the five-year period ending on the
determination date.
(iii) For purposes of paragraphs (i) and (ii)
above, the value of account balances and the present value of
accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month
period ending on the determination date, except as provided in
Section 416 of the Code and the regulations thereunder for the
first and second plan years of a defined benefit plan. The
account balances and accrued benefits of a participant (a) who
is a non-key employee but who was a key employee in a prior
year, or (b) who has not been credited with at least one hour
of service with any employer maintaining the plan at any time
during the five-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance
with Section 416 of the Code and the regulations thereunder.
Deductible employee contributions will not be taken into
account for purposes of computing the top-heavy ratio. When
aggregating plans, the value of account balances and accrued
benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
The
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accrued benefit of a participant who is a non-key employee
shall be determined under (a) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional
rule of Section 411(b)(1)(C) of the Code.
22.1.8 "Valuation date" shall mean the adjustment date
defined in Section 1.4.
22.2 TOP-HEAVY REQUIREMENTS
Notwithstanding any other provisions of the plan, the plan must satisfy the
following requirements for any plan year in which the plan is a top-heavy plan:
22.2.1 Minimum allocation requirements: Except as otherwise
provided in (a) and (b) below, the Employer contributions and
forfeitures allocated on behalf of any participant who is a non-key
employee shall not be less than the lesser of three percent of such
participant's compensation or, in the case where the Employer has no
defined benefit plan which designates this plan to satisfy Section 401
of the Code, the largest percentage of Employer contributions and
forfeitures (as a percentage of the first $200,000 of the key
employee's compensation) allocated on behalf of any key employee for
that year. If the highest percentage of Employer contributions and
forfeitures allocated to a key employee is less than three percent,
elective deferrals shall be considered when determining the amount of
contributions made on behalf of key employees. The minimum allocation
is determined without regard to any Social Security contribution.
This minimum allocation shall be made even though, under other plan
provisions, the participant would not otherwise be entitled to receive
an allocation, or would have received a lesser allocation for the
year, because of (i) the participant's failure to complete 1,000 hours
of service (or any equivalent provided in the plan), (ii) the
participant's failure to make mandatory employee contributions to the
plan, or (iii) compensation less than a stated amount. For purposes
of computing the minimum allocation, compensation shall mean
compensation as defined in Section 23.5.2 of the plan.
The provisions of this Section 22.2.1 shall not apply: (a) to
any participant who was not employed by the Employer on the last day
of the plan year, or (b) to any participant to the extent the
participant is covered under any other plan or plans of the Employer
and the Employer has provided in Section XVII. B. of the Adoption
Agreement that the minimum allocation or benefit requirement
applicable to top-heavy plans will be met in the other plan or plans.
The minimum allocation required (to the extent required to be
nonforfeitable under Section 416(b) of the Code) may not be forfeited
under Section 411(a)(3)(B) or 411(a)(3)(D) of the Code. Neither
elective deferrals nor matching contributions made by the Employer
under Section 2 of the plan shall be taken into account for purposes
of the minimum allocation required under this Section 22.2.1 in the
event this plan is top-heavy and another plan of the Employer is not
designated to satisfy the top-heavy requirements of Section 416 of the
Code. If any additional contribution is required to be made by the
Employer on behalf of a participant to satisfy the provisions of this
Section 22.2.1, such contribution shall be allocated to the
participant's matching contribution account or discretionary Employer
contribution account, as determined by the Committee. The treatment
of any elective deferrals or matching contributions for purposes of
the minimum allocation requirement shall be made in accordance with
Section 1.416-1 of the Income Tax Regulations.
22.2.2 Minimum vesting requirements: For any plan year in
which this plan is top-heavy, one of the minimum vesting schedules as
elected by the Employer in the Adoption Agreement shall automatically
apply to the plan. The minimum vesting schedule applies to all
benefits within the meaning of Section 411(a)(7) of the Code, except
those attributable to elective deferrals and employee after-tax
contributions, including benefits accrued before the effective date of
Section 416 and benefits accrued before the plan became top-heavy.
Further, no reduction in vested benefits may occur in the event the
plan's status as top-heavy changes for any plan year. However,
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this Section 22.2.2 does not apply to the accrued benefits of any
employee who does not have an hour of service after the plan has
initially become top-heavy and such employee's accrued benefit
attributable to matching contributions, discretionary Employer
contributions, and forfeitures will be determined without regard to
this Section.
22.2.3 Adjustment to limitations on allocations:
Notwithstanding the provisions of Section 23, if, during any
limitation year in which this plan is top-heavy, the Employer
maintains a qualified defined benefit plan covering any participant in
this plan, the denominator of the participant's defined contribution
fraction (as defined in Section 23.5.5) and defined benefit fraction
(as defined in Section 23.5.3) shall be determined by substituting
"100%" for "125%" each place that it appears in Section 23.5. The
provisions of this Section 22.2.3 shall not apply, however, if the
plan would not be top-heavy for such limitation year if "90%" were
substituted for "60%" each place that it appears in Section 22.1.6 and
the minimum contribution allocated to the account of each non-key
employee who is otherwise entitled to share in the Employer
contribution for such year is one percent greater than the minimum
contribution required under Section 22.2.1.
SECTION 23. LIMITATIONS ON ALLOCATIONS
Limitations on allocations: In administering the plan, the
following special provisions shall apply:
23.1 LIMITATIONS ON ALLOCATIONS
The following provisions shall apply if the participant does not participate
in, and has never participated in, another qualified plan, welfare benefit fund
defined in Section 419(e) of the Code, or an individual medical account defined
in Section 415(l)(2) of the Code, maintained by the Employer, which provides an
annual addition defined in Section 23.5.1:
23.1.1 The amount of annual additions (as defined in Section
23.5.1) which may be credited to the participant's account for any
limitation year (as defined in Section 23.5.9) shall not exceed the
lesser of the maximum permissible amount (as defined in Section
23.5.10) or any other limitation contained in this plan. If the
Employer contribution that would otherwise be contributed or allocated
to the participant's account would cause the annual additions for the
limitation year to exceed the maximum permissible amount, the amount
contributed or allocated shall be reduced so that the annual additions
for the limitation year will equal the maximum permissible amount.
23.1.2 Prior to determining the participant's actual
compensation (as defined in Section 23.5.2) for the limitation year,
the Employer may determine the maximum permissible amount for a
participant on the basis of a reasonable estimation of the
participant's compensation for the limitation year, uniformly
determined for all participants similarly situated.
23.1.3. As soon as administratively feasible after the end of
the limitation year, the maximum permissible amount for the limitation
year shall be determined on the basis of the participant's actual
compensation for the limitation year.
23.1.4. If pursuant to Section 23.1.3 or as a result of an
allocation of forfeitures there is an excess amount (as defined in
Section 23.5.7), the excess will be disposed of as provided in the
Adoption Agreement.
23.2 PARTICIPATION IN MULTIPLE REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLANS
The following provisions shall apply if, in addition to this plan, the
participant is covered under another qualified regional prototype defined
contribution plan, a welfare benefit fund defined in Section 419(e) of the
Code, or an individual medical account defined in Section 415(l)(2) of the
Code, maintained by the Employer, which provides
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an annual addition as defined in Section 23.5.1 during any limitation year:
23.2.1 The annual additions which may be credited to a
participant's account under this plan for any such limitation year
shall not exceed the maximum permissible amount reduced by the annual
additions credited to a participant's account under the other plans
and welfare benefit funds for the same limitation year. If the annual
additions with respect to the participant under other defined
contribution plans and welfare benefit funds maintained by the
Employer are less than the maximum permissible amount and the Employer
contribution that would otherwise be contributed or allocated to the
participant's account under this plan would cause the annual additions
for the limitation year to exceed this limitation, the amount
contributed or allocated shall be reduced so that the annual additions
under all such plans and funds for the limitation year will equal the
maximum permissible amount. If the annual additions with respect to
the participant under such other defined contribution plans and
welfare benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount shall be contributed or
allocated to the participant's account under this plan for the
limitation year.
23.2.2 Prior to determining the participant's actual
compensation for the limitation year, the Employer may determine the
maximum permissible amount for a participant in the manner described
in Section 23.1.2.
23.2.3 As soon as administratively feasible after the end of
the limitation year, the maximum permissible amount for the limitation
year shall be determined on the basis of the participant's actual
compensation for the limitation year.
23.2.4 If, pursuant to Section 23.2.3 or as a result of the
allocation of forfeitures, a participant's annual additions under this
plan and such other plans would result in an excess amount for a
limitation year, the excess amount shall be deemed to consist of the
annual additions last allocated, except that annual additions
attributable to a welfare benefit fund or individual medical account
will be deemed to have been allocated first regardless of the actual
allocation date.
23.2.5 If an excess amount was allocated to a participant on
an adjustment date of this plan which coincides with an adjustment
date of another plan, the excess amount attributed to this plan will
be the product of (A) multiplied by (B), where (A) is the total excess
amount allocated as of such date, and (B) is the ratio of (i) the
annual additions allocated to the participant for the limitation year
as of such date under this plan to (ii) the total annual additions
allocated to the participant for the limitation year as of such date
under this and all other qualified regional prototype defined
contribution plans.
23.2.6 Any excess amount attributed to this plan will be
disposed in the manner described in Section 23.1.4.
23.3 PARTICIPATION IN TWO OR MORE DEFINED CONTRIBUTION
PLANS
If the participant is covered under another qualified defined contribution plan
maintained by the Employer which is not a regional prototype plan (as defined
in Section 23.5.12), annual additions which may be credited to the
participant's account under this plan for any limitation year shall be limited
in accordance with Sections 23.2.1 through 23.2.6 as though the other plan were
a regional prototype plan unless the Employer provides other limitations in the
Adoption Agreement.
23.4 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN
If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any participant in this plan, the sum of the
participant's defined benefit fraction (as defined in Section 23.5.3) and
defined contribution
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fraction (as defined in Section 23.5.5) shall not exceed 1.0 in any limitation
year. The annual additions which may be credited to the participant's account
under this plan for any limitation year shall be limited in accordance with the
Adoption Agreement.
23.5 DEFINITIONS
For purposes of this Section 23, the following definitions shall apply:
23.5.1 "Annual additions" shall mean the sum of the
following amounts credited to a participant's account for the limitation year:
(a) Employer contributions;
(b) forfeitures; and
(c) employee after-tax contributions.
For this purpose, any excess amount applied under Sections 23.1.4 or
23.2.6 in the limitation year to reduce Employer contributions will be
considered annual additions for such limitation year. Amounts
allocated, after March 31, 1984, to an individual medical account, as
defined in Section 415(1)(1) of the Code, which is part of a pension
or annuity benefit plan maintained by the Employer, shall be 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, which are attributable to
post-retirement medical benefits allocated to the separate account of
a key employee, as defined in Section 419A(d)(3) of the Code, under a
welfare benefit fund, as defined in Section 419(e) of the Code,
maintained by the Employer, are treated as annual additions to a
defined contribution plan. Excess contributions (including amounts
recharacterized as employee after-tax contributions) shall be treated
as annual additions under the plan.
23.5.2 "Compensation" shall mean one of the following as
elected by the Employer in the Adoption Agreement:
(i) Information required to be reported under
Sections 6041 and 6051 of the Code (Wages, Tips and Other
Compensation Box on Form W-2.): Compensation is defined as
wages as defined in Section 3401(a) of the Code and all other
payments of compensation to an employee by the Employer (in
the course of the Employer's trade or business) for which the
Employer is required to furnish the employee a written
statement under Sections 6041(d) and 6051(a)(3) of the Code.
Compensation must be determined without regard to any rules
under Section 3401(a) of the Code that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed (such as the exception
for agricultural labor in Section 3401(a)(2) of the Code).
(ii) Section 3401(a) wages: Compensation is
defined as wages within the meaning of Section 3401(a) of the
Code for the purposes of income tax withholding at the source
but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location
of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2) of the
Code).
(iii) 415 safe harbor compensation: Compensation
is defined as a participant's earned income, wages, salaries,
and fees for professional services
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and other amounts received for personal services actually
rendered in the course of employment with the Employer
maintaining the plan (including, but not limited to,
commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and reimbursements
or other expenses allowances under a nonaccountable plan (as
described in Section 1.62-2(c) of the Income Tax Regulations),
and excluding the following:
(a) 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, 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;
(b) Amounts realized from the exercise
of a non-qualified stock option, or when restricted
stock (or property) held by the employee either
becomes freely transferable or is no longer subject
to a substantial risk of forfeiture;
(c) Amounts realized from the sale,
exchange or other disposition of stock acquired under
a qualified stock option; and
(d) Other amounts which receive special
tax benefits, contributions made by the Employer
(whether or not under a salary reduction agreement)
toward the purchase of an annuity contract described
in Section 403(b) of the Code (whether or not the
contributions are actually excludable from the gross
income of the employee).
For limitation years beginning after December 31, 1991, for
purposes of applying the limitations of this Section 23,
compensation for a limitation year is the compensation
actually paid or made available during such limitation year.
Notwithstanding the preceding sentence, compensation for a
participant in a defined contribution plan who is permanently
and totally disabled (as defined in Section 22(e)(3) of the
Code) is the compensation such participant would have received
for the limitation year if the participant had been paid at
the rate of compensation paid immediately before becoming
permanently and totally disabled; such imputed compensation
for the disabled participant may be taken into account only if
the participant is not a highly compensated employee (as
defined in Section 414(q) of the Code) and contributions made
on behalf of such participant are nonforfeitable when made.
23.5.3 "Defined benefit fraction" shall mean a fraction, the
numerator of which is the sum of the participant's projected annual
benefits (as defined in Section 23.5.11) under all the defined benefit
plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125% of the dollar limitation
determined for the limitation year under Sections 415(b) and (d) of
the Code or 140% of the highest average compensation (as defined in
Section 23.5.8), including any adjustments under Section 415(b) of the
Code. Notwithstanding the above, if the participant was a participant
as of the first day of the first
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limitation year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction shall not
be less than 125% of the sum of the annual benefits under such plans
which the participant had accrued as of the close of the last
limitation year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Section 415 of the Code for all limitation years beginning before
January 1, 1987.
23.5.4 "Defined contribution dollar limitation" shall mean
$30,000 or, if greater, 25% of the defined benefit dollar limitation
set forth in Section 415(b)(1) of the Code as in effect for the
limitation year.
23.5.5 "Defined contribution fraction" shall mean a
fraction, the numerator of which is the sum of the annual additions to
the participant's account under all the defined contribution plans
(whether or not terminated) maintained by the Employer for the current
and all prior limitation years (including the annual additions
attributable to the participant's employee after-tax contributions to
all defined benefit plans, whether or not terminated, maintained by
the Employer, and the annual additions attributable to all welfare
benefit funds defined in Section 419(e) of the Code, and individual
medical accounts defined in Section 415(l)(2) of the Code, maintained
by the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior limitation
years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum
aggregate amount in any limitation year is the lesser of 125% of the
dollar limitation in effect under Section 415(c)(1)(A) of the Code or
35% of the participant's compensation for such year. If the employee
was a participant as of the end of the first day of the first
limitation year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction shall be
adjusted if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this plan. Under the
adjustment, an amount equal to the product of (A) multiplied by (B),
where (A) is the excess of the sum of the fractions over 1.0, and (B)
is the denominator of 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 end of the
last limitation year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the plan made
after May 5, 1986, but using the Section 415 limitation applicable to
the first limitation year beginning on or after January 1, 1987. The
annual addition for any limitation year beginning before January 1,
1987, shall not be recomputed to treat all employee after-tax
contributions as annual additions.
23.5.6 "Employer" shall mean (for purposes of this Section
23) the Employer that adopts this plan, and all affiliated employers.
For purposes of this Section 23, determination of the members of a
controlled group of employers and employers under common control
pursuant to Sections 414(b) and (c) of the Code shall be made by
substituting the phrase "more than 50%" for the phrase "at least 80%"
where it appears in such Code sections.
23.5.7 "Excess amount" shall mean the excess of the
participant's annual additions for the limitation year over the
maximum permissible amount.
23.5.8 "Highest average compensation" shall mean the average
compensation for the three consecutive years of service with the
Employer that produces the highest average. A year of service with
the Employer is the 12-consecutive month period defined in Section
1.62.
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23.5.9 "Limitation year" shall mean a calendar year or the
12-consecutive month period elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must use
the same limitation year. If the limitation year is amended to a
different 12-consecutive month period, the new limitation year must
begin on a date within the limitation year in which the amendment is
made.
23.5.10 "Maximum permissible amount" shall mean the maximum
annual addition that may be contributed or allocated to a
participant's account under the plan for any limitation year, which
shall not exceed the lesser of (a) the defined contribution dollar
limitation, or (b) 25% of the participant's compensation for the
limitation year. The compensation limitation referred to in clause
(b) of the preceding sentence shall not apply to any contribution for
medical benefits (within the meaning of Sections 401(h) or 419A(f)(2)
of the Code) which is otherwise treated as an annual addition under
Section 415(l)(1) or 419A(d)(2) of the Code. If a short limitation
year is created because of an amendment changing the limitation year
to a different 12-consecutive month period, the maximum permissible
amount shall not exceed the defined contribution dollar limitation
multiplied by the following fraction:
Number of months
in the short limitation year
12
23.5.11 "Projected annual benefit" shall mean the annual
retirement benefit (adjusted to an actuarially equivalent straight
life 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 plan
assuming:
(i) the participant will continue employment
until normal retirement age under the plan (or current age, if
later), and
(ii) the participant's compensation for the
current limitation year and all other relevant factors used to
determine benefits under the plan will remain constant for all
future limitation years.
23.5.12 "Regional prototype plan" shall mean a plan which is
the subject of a favorable notification letter from the Internal
Revenue Service.
SECTION 24. MISCELLANEOUS PROVISIONS
24.1 NOTICES
Each participant who is not in service and each beneficiary shall be
responsible for furnishing the plan administrator with his current address for
the mailing of notices, reports, and benefit payments. Any notice required or
permitted to be given to such participant or beneficiary shall be deemed given
if directed to such address and mailed by regular United States mail, first
class, postage prepaid. If any check mailed to such address is returned as
undeliverable to the addressee, mailing of checks will be suspended until the
participant or beneficiary furnishes the proper address. This provision shall
not be construed as requiring the mailing of any notice or notification
otherwise permitted to be given by posting or by other publication.
24.2 LOST DISTRIBUTEES
A benefit shall be deemed forfeited if the plan administrator is unable after a
reasonable period of time, as determined by the Committee, to locate the
participant or beneficiary to whom payment is due; provided, however, that such
benefit shall be restored from current forfeitures if a valid claim is later
made by or on behalf of the participant or beneficiary for the forfeited
benefit.
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24.3 RELIANCE ON DATA
The Employer, Trustee, and plan administrator shall have the right to rely on
any data provided by the participant or any beneficiary, including
representations as to age, health, and marital status. Such representations
shall be binding upon any party seeking to claim a benefit through a
participant, and the Employer, Trustee, and plan administrator shall have no
obligation to inquire into the accuracy of any representation made at any time
by a participant or beneficiary.
24.4 BONDING
Each fiduciary shall be bonded for each plan year to the extent required by
ERISA. The bond shall provide protection to the plan against any loss by
reason of acts of fraud or dishonesty by the fiduciary alone or in connivance
with others. The cost of the bond shall be an expense of the trust and shall
be paid from the trust fund unless the Board shall elect for such cost to be
paid by the Employer.
24.5 RECEIPT AND RELEASE FOR PAYMENTS
Any payment made from the plan to or with respect to any participant or
beneficiary, or pursuant to a disclaimer by a beneficiary, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the plan, the
Employer and all fiduciaries with respect to the plan. The recipient of any
payment from the plan may be required by the Committee, as a condition
precedent to such payment, to execute a receipt and release with respect
thereto in such form as shall be acceptable to the Committee.
24.6 NO GUARANTEE
The Trustee, the Committee, and the Employer in no way guarantee the trust fund
from loss or depreciation, nor do they guarantee the payment of any money or
other assets from the trust fund that may be or become due to any person.
Nothing herein contained shall give any participant or beneficiary an interest
in any specific part of the trust fund or any other interest except the right
to receive benefits from the trust fund in accordance with the provisions of
the plan and trust.
24.7 HEADINGS
The headings and subheadings of the plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.
24.8 CONTINUATION OF EMPLOYMENT
The establishment of the plan shall not be construed as conferring any legal or
other rights upon any employee or any persons for continuation of employment,
nor shall it interfere with the right of the Employer to discharge any employee
or to deal with him without regard to the effect thereof under the plan.
24.9 CONSTRUCTION
The provisions of the plan shall be construed and enforced according to the
laws of the state indicated in the Adoption Agreement, except to the extent
such laws shall be superseded by the provisions of ERISA.
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GODWINS BOOKE & DICKENSON
PROTOTYPE PROFIT SHARING
AND
EMPLOYEE SAVINGS PLAN AND TRUST
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TABLE OF CONTENTS
PROTOTYPE PROFIT SHARING
AND
EMPLOYEE SAVINGS PLAN AND TRUST
Page
Section 1. Definitions
Section 2. Contributions to the Trust and Allocation Thereof
2.1 Elective Deferrals
2.2 Employee After-tax Contributions
2.3 Matching Contributions
2.4. Discretionary Employer Contributions
2.5 Voluntary Deductible Employee Contributions
2.6 Mandatory Employee Contributions
2.7 Maximum Contribution Permitted
2.8 Requirement of Current or Accumulated Net Profits
Section 3. Retirement; Termination of Service; Death; Entry of Qualified
Domestic Relations Order
3.1 Normal Retirement
3.2 Early Retirement
3.3 Delayed Retirement
3.4 Death
3.5 Disability
3.6 Termination of Service
3.7 Cash-out Distributions
3.8 Limitations on Certain Distributions
3.9 Entry of a Qualified Domestic Relations Order
Section 4. Payment of Benefits
4.1 Distribution of Accrued Benefits
4.2 Payment of Death Benefits
4.3 Transitional Rule for Required Distributions
4.4 Definitions Applicable to Plan Distributions
4.5 Distributions to Alternate Payees
4.6 Interim Payments
4.7 Continued Share in Profits or Losses of Trust Fund
4.8 Medium of Distributions
4.9 Daily Adjustment Dates
Section 5. Vesting
5.1 Vesting Upon the Occurrence of Certain Events
5.2 Service Requirement for Vesting
5.3 Forfeiture of Non-vested Benefits
Section 6. In-Service Withdrawals and Loans
6.1 Withdrawal of Matching Contributions and Discretionary Employer
Contributions
6.2 Withdrawal of Employee After-tax Contributions
6.3 Withdrawal of Rollover Contributions
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6.4 Distributions on or After Attainment of Age 59 1/2
6.5 Hardship Distributions
6.6 Loans
Section 7. Adjustment of Participant Accounts
7.1 Establishment of Accounts
7.2 General
Section 8. Participant Directed Investments
8.1 Participant Directed Investments
8.2 Rights in Directed Investment Funds
8.3 Effect of Participant Loans
8.4 Distributions from Directed Separate Accounts
8.5 Accounts Not Subject to Participant Direction
8.6 Authority of Trustee and Committee
Section 9. Investments in Employer stock
9.1 Employer Stock Fund
9.2 Compliance with the Securities Act of 1933 and the Securities
Exchange Act of 1934
9.3 Right of First Refusal
9.4 Voting of Employer Stock
9.5 Tendering
Section 10. Administration by Committee
10.1 Membership of Committee
10.2 Committee Officers; Subcommittee
10.3 Committee Meetings
10.4 Transaction of Business
10.5 Committee Records
10.6 Establishment of Rules
10.7 Conflicts of Interest
10.8 Correction of Errors
10.9 Authority to Interpret Plan
10.10 Third Party Advisors
10.11 Compensation of Members
10.12 Committee Expenses
10.13 Requirement of Writing
10.14 Indemnification of Committee
Section 11. Management of Funds and Amendment or Termination of Plan
11.1 Fiduciary Duties
11.2 Adoption of Plan
11.3 Requirement of Writing
Section 12. Allocation of Responsibilities Among Named Fiduciaries
12.1 Duties of Named Fiduciaries
12.2 Co-fiduciary Liability
Section 13. Benefits Not Assignable; Facility of Payments
13.1 Benefits Not Assignable
13.2 Payment to Minors and Others
Section 14. Termination of Plan and Trust; Removal of Trustee; Merger or
Consolidation of Plan
14.1 Complete Termination
14.2 Partial Termination
14.3 Removal and Resignation of Trustee
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14.4 Merger or Consolidation
Section 15. Communication to Participants
Section 16. Claims Procedure
16.1 Filing of a Claim for Benefits
16.2 Notification to Claimant of Decision
16.3 Procedure for Review
16.4 Decision on Review
16.5 Action by Authorized Representative of Claimant
Section 17. Previously Existing Qualified Plans of the Employer
Section 18. Special Provisions Relating to Transfers From Qualified Plans
18.1 Certain Transfers to the Plan Not Permitted
18.2 Nonforfeitability of Transferred Assets
18.3 Protected Benefits Under Section 411(d)(6) of the Code
18.4 Liability of Trustee
18.5 Separate Accounts
18.6 General
Section 19. Rollovers
19.1 Acceptance of Rollovers by this Plan
19.2 Rollover Distributions
Section 20. Trust Provisions
20.1 Trustee's Powers
20.2 Accountings
20.3 Compensation of Trustee
20.4 Responsibilities and Scope of Duties of Trustee
20.5 Failure to Direct Trustee
20.6 Indemnification of Trustee
20.7 Modification of this Section
Section 21. Qualification of Plan
21.1 Non-standardized Plans
21.2 Denial of Qualification
21.3 Notification of Sponsor
Section 22. Special Top-Heavy Provisions
22.1 Definitions
22.2 Top-heavy Requirements
Section 23. Limitations on Allocations
23.1 Limitations on Allocations
23.2 Participation in Multiple Regional Prototype Defined
Contribution Plans
23.3 Participation in Two or More Defined Contribution Plans
23.4 Participation in this Plan and a Defined Benefit Plan
23.5 Definitions
Section 24. Miscellaneous Provisions
24.1 Notices
24.2 Lost Distributees
24.3 Reliance on Data
24.4 Bonding
24.5 Receipt and Release for Payments
24.6 No Guarantee
24.7 Headings
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24.8 Continuation of Employment
24.9 Construction
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EXHIBIT 10.3(b)
GODWINS BOOKE & DICKENSON
PROTOTYPE PROFIT SHARING
AND
EMPLOYEE SAVINGS PLAN AND TRUST
NON-STANDARDIZED FORM
ADOPTION AGREEMENT - 001
The Employer hereby makes the following declarations,
designations, and elections for purposes of the plan and trust:
I. EMPLOYER INFORMATION
A. Name: Plexus Corp.
B. Address: 55 Jewelers Park Drive, Neenah WI 54952
C. Telephone: 414-722-3451
D. Employer Identification (or Social Security) Number: 39-1344447
E. Type of entity: [Select one]
X (1) Corporation
----
(2) Partnership
----
(3) Sole Proprietorship
----
(4) S Corporation
----
F. Nature of Employer's Business: Electronic - Design & Manufacture
G. Primary Standard Industry Code (SIC): 3699
H. Date of Incorporation or Commencement of Business: 12/1979
I. State of Incorporation or State of Principal Business Activity:
Wisconsin
J. Fiscal Year End: September 30
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K. Other corporations or trades or businesses affiliated with or in the
same controlled group of corporations or trades or businesses as the
Employer:
(1) Name: Electronic Assembly Corporation
Address: 2121 Harrison Street, Neenah WI
Employer Identification Number: 39-1158348
(2) Name: Technology Group Inc.
Address: 55 Jewelers Park Drive, Neenah WI
Employer Identification Number: 39-1361270
(3) Name: _____________________________________________
Address: __________________________________________
Employer Identification Number: ___________________
If there are additional members of the same affiliated or controlled
group of corporations or trades or businesses as the Employer, please
attach a statement containing the above information for each additional
member.
II. PLAN FIDUCIARIES
[Numbers shown in parenthesis throughout the remainder of this Adoption
Agreement are references to sections of the accompanying plan document.]
A. Committee (1.12; 10; 12.1.2): [Insert the names of the individuals to
be appointed by the Board]
As designated by the Board
Joseph D. Kaufman
Lori A. Hoersch
John L. Nussbaum
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B. Plan Administrator (1.44; 10; 12.1.3): [Select one and complete, if
necessary]
(1) The chairman of the Committee.
----
X (2) The Committee.
----
(3) Other:
----
C. Trustee(s) (1.61; 12.1.4; 20):
(1) Name: Riggs National Bank
Address: 808 17th Street NW Washington DC 20090
Telephone: 202-835-6796
Employer Identification Number or Social Security Number:
52-1956537
(2) Name: ___________________________________________________
Address: ________________________________________________
Telephone: _____________________________________________
Employer Identification Number or Social Security Number:
(3) Name: ___________________________________________________
Address: ________________________________________________
Telephone: _____________________________________________
Employer Identification Number or Social Security Number:
III. STATUS OF THE PLAN
A. Name of the plan (1.43): Plexus Corp. Employee Stock Savings Plan
B. Original effective date (1.19): January 1, 1989
C. If this plan is an amendment and restatement of an existing plan, except
as otherwise provided in the plan document, the effective date of this
amendment and restatement shall be (1.19; 17): January 1, 1996
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D. Plan year end (1.45): December 31
E. Limitation year (23.5.9): Plan Year
F. Plan number: 001
G. Governing state law (24.9):
If this plan is an amendment and restatement, please attach a copy of the most
recent determination letter.
IV. PARTICIPATION
A. All employees of the Employer shall be eligible to participate in the
plan, except the following (1.21): [Select the desired exclusions]
(1) No exclusions will apply.
----
(2) Employees of an affiliated employer that is not a party to
---- the plan.
X (3) Leased employees.
----
(4) Other: _________________________________________________
---- _________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
_________________________________________________________
B. Number of years of service required to participate (1.40): [Select one]
(1) 0 Years of Service.
----
X (2) 1 Year of Service.
----
(3) Other:
---- [not to exceed one year of service].
C. Minimum age required to participate (1.40): [Select one]
X (1) No minimum age required.
----
(2) 21 years of age.
----
(3) _____ years of age [not to exceed 20 1/2 years of age].
----
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<PAGE> 5
D. Entry date (1.28): [Select one]
(1) First day of the first payroll period beginning after the
----- employee's date of hire.
(2) First day of the first payroll period after the completion
----- of any minimum age and service requirements chosen above.
(3) First day of the month coincident with or next following
----- the completion of any minimum age and service requirements
chosen above.
(4) First day of the plan year or seventh month of the plan
----- year, whichever is earlier, coincident with or next
following the completion of any minimum age and service
requirements chosen above.
X (5) First day of the plan year quarter coincident with or next
----- following the completion of any minimum age and service
requirements chosen above.
(6) First day of the plan year coincident with or next
----- following the completion of any minimum age and service
requirements chosen above.
[Note: This option (6) may only be selected if the
number of months of service required to participate
is six or less.]
(7) First day of the plan year in which any minimum age and
----- service requirements chosen above are completed.
[Note: This option (7) is a retroactive entry
date.]
V. SERVICE
A. Method for determining service for each employee (1.34, 1.41):
[Select one]
X (1) Service will be determined on the basis of hours of service
---- calculated as follows: [Select one]
X (a) On the basis of actual hours for which an employee
---- is paid or entitled to payment.
(b) On the basis of days worked. An employee shall be
---- credited with 10 hours of service for each day if
he would be credited with at least one hour of
service for such day under the plan.
(c) On the basis of weeks worked. An employee shall be
---- credited with 45 hours of service for each week if
he would be credited with at least one hour of
service for such week under the plan.
(d) On the basis of semi-monthly payroll periods. An
---- employee shall be credited with 95 hours of service
for each payroll period if he would be credited
with at least one hour of service for such payroll
period under the plan.
(e) On the basis of calendar months worked. An
---- employee shall be credited with 190 hours of
service for each month if he would be credited with
at least one hour of service for the month under
the plan.
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<PAGE> 6
(2) Service will be determined on the basis of elapsed time.
----
B. Prior service with certain affiliated employers (1.52.2): [Select one]
X (1) Service with an employer prior to such employer becoming an
---- affiliated employer shall not be recognized.
(2) Service with an employer prior to such employer becoming
---- an affiliated employer shall be recognized.
VI. COMPENSATION
A. Compensation defined (1.13; 23.5.2):
A participant's "compensation" used in determining the amount of
contributions and forfeitures, if any, allocable to such participant's
account under the plan shall mean all of his: [Select one]
X (1) W-2 earnings (Box 1), as defined in Section 23.5.2(i) of
---- the plan.
(2) Code Section 3401(a) wages, as defined in Section
---- 23.5.2(ii) of the plan.
(3) Code Section 415 safe-harbor compensation, as defined in
---- Section 23.5.2(iii) of the plan.
B. In determining the amount of a participant's compensation to be used in
calculating the amount of contributions and forfeitures, if any,
allocable to such participant's account, certain salary reduction
amounts shall be treated as follows (1.13): [Select one]
(1) Compensation shall not include Employer contributions made
---- pursuant to a salary reduction agreement which are not
includible in the gross income of the employee under
Sections 125, 402(g)(3), 402(h), or 403(b) of the Code.
X (2) Compensation shall include Employer contributions made
---- pursuant to a salary reduction agreement which are not
includible in the gross income of the employee under
Sections 125, 402(g)(3), 402(h), or 403(b) of the Code.
C. Compensation excluded (1.13):
The compensation of a participant used in determining the amount of
contributions and forfeitures, if any, allocable to such participant's
account under the plan shall not include the following items: [Select
the applicable exclusions]
(1) Overtime.
----
(2) Bonuses.
----
(3) Commissions.
----
(4) Compensation in excess of $___________.
----
(5) Other:
----
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<PAGE> 7
___________________________________________________________
___________________________________________________________
D. Compensation considered (1.13):
The compensation considered in determining the amount of contributions
and forfeitures, if any, allocable to a participant's account under the
plan shall include compensation actually paid to such participant
during: [Select one]
X (1) The plan year. [Note: This option must be elected if the
---- Employer elects for the plan to include a Cash or Deferred
Arrangement under item VII below.]
(2) The taxable year ending with or within the plan year.
----
(3) The limitation year ending with or within the plan year.
----
VII. CASH OR DEFERRED ARRANGEMENT
A. The plan shall not include a Cash or Deferred Arrangement
---- described in Section 401(k) of the Code (2.1).
[If the above option is selected, do not complete the
remaining questions of item VII.]
X The plan shall include a Cash or Deferred Arrangement described in
---- Section 401(k) of the Code.
[If the above option is selected, please complete the
remaining questions of item VII.]
B. Elective deferrals (1.20; 2.1):
(1) Amount of elective deferrals: [Select any applicable options and
complete as appropriate]
A participant may elect to have his compensation (as selected
under Item VI. above) reduced by the following percentage or
amount per payroll period, as designated in writing to the plan
administrator: [Select and complete one or both options below]
X (a) Up to 15 % of the employee's compensation
---- considered under the plan.
(b) An amount not in excess of $___________.
----
(2) Change of elective deferrals (2.1.1):
A participant may modify the amount of elective deferrals
contributed to the plan on his behalf effective as of the first
full payroll period beginning on or after the: [Select one]
(a) First day of the next succeeding plan year.
----
(b) First day of the plan year and the first day of the
---- seventh month of the plan year.
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<PAGE> 8
X (c) First day of the next plan year quarter.
----
(d) First day of the next succeeding month.
----
(e) Receipt by the Committee of the participant's
---- election to modify the amount of his elective
deferrals.
(3) Distribution of elective deferrals (3.8; 6.5):
Elective deferrals (and any qualified non-elective contributions
and qualified matching contributions) and income allocable to
such amounts shall be distributable upon termination of service,
death, or disability, and upon: [Select one or more]
(a) No other events.
----
X (b) Termination of the plan without the establishment of
---- another defined contribution plan (other than an
employee stock ownership plan as defined in Section
4975(e) of the Code).
X (c) The disposition by the Employer to an unrelated
---- corporation of substantially all of the assets
(within the meaning of section 409(d)(2) of the
Code) used in a trade or business of the Employer,
where (i) the participant is employed by such trade
or business and continues employment with the
entity acquiring such assets, and (ii) the Employer
continues to maintain the plan after the sale or
other disposition.
X (d) The disposition by the Employer to an unrelated
---- entity of the Employer's interest in a subsidiary
(within the meaning of section 409(d)(3) of the
Code), where (i) the participant is employed by
such subsidiary and continues employment with such
subsidiary following such sale or other
disposition, and (ii) the Employer continues to
maintain the plan after the sale or other
disposition.
X (e) The participant's attainment of age 59 1/2.
----
X (f) The hardship of the participant as described in
---- Section 6.3 of the plan. [If elected, this option
shall not apply to (i) qualified non-elective
contributions, (ii) qualified matching
contributions, (iii) income allocable to such
amounts, or (iv) income allocable to elective
deferrals after the end of the last plan year
ending before July 1, 1989.]
C. Qualified non-elective contributions (1.47; 2.1.5):
(1) Qualified non-elective contributions made by the Employer to
enable the plan to satisfy the actual deferral percentage ("ADP")
test and the average contribution percentage ("ACP") test shall
be allocated to the accounts of: [Select one]
(a) All participants.
----
(b) Only non-highly compensated participants.
----
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<PAGE> 9
(c) A group of non-highly compensated participants
---- designated by the Committee.
(2) The formula for allocating qualified non-elective contributions
among those participants selected in Item VII.C.(1) above shall
be as follows: [Select one]
(a) In the ratio which each participant's compensation
---- for the plan year bears to the total compensation
of all participants for such plan year.
(b) In the ratio which each participant's compensation
---- not in excess of $___________ for the plan year
bears to the total compensation of all participants
not in excess of $___________ for such plan year.
(c) $__________ for each participant.
----
(3) In order to share in any qualified non-elective contribution made
with respect to a plan year, an employee must be a participant
during such plan year, and must (2.1.5; 2.1.8): [Select one]
(a) Fulfill no additional requirements.
----
(b) Complete a year of service within the plan year.
----
(c) Be in the service of the Employer on the adjustment
---- date as of which the qualified non-elective
contribution is allocated.
(d) Complete a year of service within the plan year and
---- be in the service of the Employer on the year-end
adjustment date as of which the qualified
non-elective contribution is allocated.
D. Qualified matching contributions (1.46; 2.1.4; 2.3.2):
(1) Qualified matching contributions made by the Employer to enable
the plan to satisfy the ADP test and/or the ACP test shall be
allocated to the accounts of: [Select one]
(a) All participants who make elective deferrals or
---- employee after-tax contributions for the plan year.
(b) Only non-highly compensated participants who make
---- elective deferrals or employee after-tax
contributions for the plan year.
(c) A group of non-highly compensated participants
---- designated by the Committee.
(2) In order to share in any qualified matching contributions made
with respect to a plan year, an employee must be a participant
with respect to such plan year, and must (2.3.2): [Select one]
(a) Fulfill no additional requirements.
----
(b) Complete a year of service within the plan year.
----
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<PAGE> 10
(c) Be in the service of the Employer on the adjustment
---- date as of which the qualified matching
contribution is allocated.
(d) Complete a year of service within the plan year and
---- be in the service of the Employer on the year-end
adjustment date as of which the qualified matching
contribution is allocated.
VIII. EMPLOYEE AFTER-TAX CONTRIBUTIONS
A. X (1) Participants shall not be permitted to make employee
---- after-tax contributions to the plan (2.2).
[If the above option is selected, do not complete
the remaining questions in this item VIII.]
(2) Participants shall be permitted to make employee after-tax
---- contributions to the plan.
[If the above option is selected, please complete
the remaining questions in this item VIII.]
B. Amount of employee after-tax contributions (2.2.1): [Select one or both
and complete as appropriate]
A participant may elect to make employee after-tax contributions
to the plan each payroll period, subject to the following
limitations:
(a) Up to _____% of the employee's compensation
---- considered under the plan.
(b) An amount not in excess of $___________.
----
C. Change of employee after-tax contributions (2.2.2):
A participant may modify the amount of his employee after-tax
contributions to the plan effective as of the first full payroll
period beginning on or after the: [Select one]
(a) First day of the next following plan year.
----
(b) First day of the plan year and the first day of the
---- seventh month of the plan year.
(c) First day of the next plan year quarter.
----
(d) First day of the next succeeding month.
----
(e) Receipt by the Committee of the participant's
---- election to modify the amount of his employee
after-tax contributions.
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<PAGE> 11
D. Withdrawals from employee after-tax contribution account (6.2): [Select
one and complete as appropriate]
(1) Except as otherwise provided in XI.E. or G, amounts
---- allocated to a participant's employee after-tax
contribution account shall not be withdrawn prior to his
termination of service, death, or disability.
(2) In addition to any withdrawal rights provided in XI E, or
---- G, at a participant's request, amounts allocated to his
employee after-tax contribution account may be withdrawn
prior to his termination of service, death, or disability,
subject to the following conditions: [Complete (a);
complete (b) if daily adjustment dates have been selected,
also complete (c) through (f) as appropriate]
(a) A participant may not request more than _____ [not
to exceed four] withdrawal(s) during a plan year.
(b) No withdrawal shall exceed _____% of the amount in
the participant's employee after-tax contribution
account, determined on the date the withdrawal
request is actually processed.
(c) No withdrawal shall be made in an amount less than
$___________ [Insert amount not in excess of $1,000]
(d) No withdrawal may be made until the participant has
taken all available withdrawals from the following
accounts: __________________________________________
____________________________________________________
____________________________________________________
(e) A withdrawal may only be made if the participant
incurs a financial hardship. For purposes of this
paragraph, a "financial hardship" is defined as
____________________________________________________
_____________________________
____________________________________________________
________________________________[specify clear,
objective criteria for determining a financial
hardship that precludes employer discretion]
(f) A participant who receives a withdrawal shall not
be eligible to contribute to the plan ______________
____________________________________________________
____________________________________________________
[Insert type of contribution affected and period
of suspension]
IX. MATCHING CONTRIBUTIONS AND DISCRETIONARY EMPLOYER CONTRIBUTIONS
A. Matching contributions (1.36; 2.3):
The Employer shall not make matching contributions to the plan.
----
[If the above option is selected, do not complete the
remaining questions in this item IX.A.; proceed to item
IX.B.]
X The Employer shall make matching contributions to the plan.
----
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<PAGE> 12
[If the above option is selected, please complete the
remaining questions in this item IX.]
(1) Employer matching contributions shall be allocated according to
the terms of the plan among: [Select one]
X (a) All participants
----
(b) All participants who are non-highly compensated
---- employees
who have made elective deferrals and/or employee after-tax
contributions, as appropriate, to the plan for such plan year.
(2) The amount of matching contributions contributed to the plan by
the Employer with respect to each participant's elective
deferrals and/or employee after-tax contributions made during a
plan year shall equal: [Select one or more]
X (a) 100 % of the first 2.5 % of the participant's
---- elective deferrals,
0 % of the next 0 % of the participant's
elective deferrals, and
0 % of the remaining 0 % of the participant's
elective deferrals, but
not to exceed a total matching contribution of
$_____.
(b) _____% of the first _____% of the participant's
---- employee after-tax contributions,
_____% of the next _____% of the participant's
employee after-tax contributions, and
_____% of the remaining _____% of the participant's
employee after-tax contributions, but
not to exceed a total matching contribution of
$___________.
(c) _____% of the aggregate of the participant's
---- elective deferrals and employee after-tax
contributions, not to exceed the first _____% of
the participant's compensation, but not to exceed a
total matching contribution of $__________ .
(d) _____% of the first _____% of the aggregate of the
---- participant's elective deferrals and employee
after-tax contributions,
_____% of the next _____% of the aggregate of the
participant's elective deferrals and employee
after-tax contributions, and
_____% of the remaining _____% of the aggregate of
the participant's elective deferrals and employee
after-tax contributions, but
not to exceed a total matching contribution of
$___________.
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<PAGE> 13
(e) A uniform amount or percentage of elective
---- deferrals and/or employee after-tax contributions
determined with respect to each plan year by the
Employer prior to the first day of such plan year,
but not to exceed a total matching contribution of
$___________.
(f) A uniform amount or percentage of elective
---- deferrals and/or employee after-tax contributions
determined each plan year by the Employer in its
discretion.
(g) $_____________ for each participant making elective
---- deferrals during the plan year.
(h) $_______ for each participant making employee
---- after-tax contributions during the plan year.
(i) $___________ for each participant making elective
---- deferrals and/or employee after-tax contributions
during the plan year.
(j) Such additional amount or percentage as the
---- Employer in its discretion shall determine to be
allocated in the same manner as chosen above.
(3) In order to share in any matching contribution made with respect
to a plan year, an employee must be a participant with respect to
such plan year, and must (2.3): [Select one]
X (a) Fulfill no additional requirements.
----
(b) Complete a year of service within the plan year.
----
(c) Be in the service of the Employer on the adjustment
---- date as of which the matching contribution is
allocated.
(d) Complete a year of service within the plan year and
---- be in the service of the Employer on the year-end
adjustment date as of which the matching
contribution is allocated.
(4) The requirements of item IX.A.(3) above shall not apply
---- with respect to a participant who retires, including
disability retirement, or dies while in service during a
plan year.
The requirements of item IX.A.(3) above shall apply with
---- respect to a participant who retires, including disability
retirement, or dies while in service during a plan year.
(5) Withdrawals from matching contribution account (6.1): [Select
one]
X (a) Except or otherwise provided in XI. E. or G., amounts
---- allocated to a participant's matching contribution account
shall not be withdrawn prior to his termination of
service, death, or disability.
(b) In addition to any withdrawals rights provided in XI. E.
---- or G., at a participant's request, amounts allocated to
his matching contribution account may be withdrawn prior
to his termination of service, death, or disability,
subject to the following conditions: [Complete (i),
complete (ii) if daily adjustment dates have been
selected, and also complete (iii) through (ix), as
appropriate]
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<PAGE> 14
(i) A participant may not request more than _____ [not
to exceed four] withdrawal(s) during a plan year.
(ii) No withdrawal shall exceed _____% of the vested
amount in the participant's matching contribution
account, determined on the date the withdrawal
request is actually processed.
(iii) The participant must have attained at least the
---- fifth anniversary of his initial participation in
the plan.
(iv) The participant cannot withdraw any matching
---- contributions that have not been in the plan for at
least 2 years unless he has attained at least the
fifth anniversary of his initial participation in
the plan.
(v) The participant cannot withdraw any matching
---- contributions that have not been in the plan for
at least 2 years.
(vi) No withdrawal shall be made in an amount less than
---- $______ [Insert amount not in excess of $1,000]
(vii) No withdrawal may be made until the participant has
---- taken all available withdrawals from the following
accounts: __________________________________________
____________________________________________________
____________________________________________________
(viii) A withdrawal may only be made if the participant
---- incurs a financial hardship. For purposes of this
paragraph, a "financial hardship" is defined as
____________________________________________________
____________________________________________________
____________________________________________________
________________________________[Specify clear,
objective criteria for determining a financial
hardship that precludes employer discretion.]
(ix) A participant who receives a withdrawal shall not
---- be eligible to contribute to the plan
____________________________
________________________________[Insert type of
contribution affected and period of suspension.]
B. Discretionary Employer contributions (2.4; 2.8):
X The Employer shall not make discretionary Employer contributions
---- to the plan.
[If the above option is selected, do not complete the
remaining questions in this item IX.B.]
The Employer may make discretionary Employer contributions to the
---- plan.
[If the above option is selected, please complete the
remaining questions in this item IX.B.]
(1) Any discretionary Employer contributions made to the plan shall
be determined as follows: [Select one and complete as
appropriate]
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<PAGE> 15
____ (a) An amount out of the current or accumulated net
profit of the Employer for such year as the
Employer in its discretion shall determine.
____ (b) _____% of the net profit of the Employer for such
year plus such additional amount, if any, out of
the current or accumulated net profit of the
Employer as the Employer in its discretion shall
determine.
____ (c) An amount of the net profit of the Employer for
such year determined as follows: _____% of the
first $___________ of such net profit, plus _____%
of the next $___________ of such net profit, plus
_____% of all such net profit over $___________.
____ (d) _____% of the net profit of the Employer for such
year.
____ (e) Such amount as the Employer in its discretion shall
determine without regard to current or accumulated
net profit.
[If option (e) above is selected, do not
complete item IX.B.(2) below.]
(2) The Employer's net profit for purposes of determining the amount
of any discretionary Employer contribution to the plan shall
(1.37): [Select one]
____ (a) Exclude a return on the net worth of the Employer
of ____% of such net worth.
____ (b) Exclude $___________ from such net profit as
computed for other purposes.
____ (c) Not provide for any exclusions.
(3) Discretionary Employer contributions shall be allocated as of the
adjustment date for which such contribution was made among the
participants entitled to share therein in the manner determined
as follows (2.4): [Select one]
____ (a) The discretionary Employer contribution shall be
allocated in the same ratio that each participant's
compensation bears to the compensation for all
participants entitled to share in such
discretionary Employer contribution.
____ (b) The discretionary Employer contribution shall be
allocated as follows:
(i) If the plan is top-heavy and the minimum
allocation is required in this plan, there
shall be allocated to the account of each
participant (including for this purpose each
employee entitled to the minimum allocation
provided in Section 22.2.1 of the plan) the
amount determined by multiplying the minimum
allocation percentage times his compensation.
[If the plan is not top-heavy or the minimum
allocation is not required in this plan,
disregard paragraph (ii) below.]
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<PAGE> 16
(ii) If any portion of the discretionary Employer
contribution shall remain to be allocated,
the remaining portion, not exceeding the
amount determined by multiplying the minimum
allocation percentage times the excess
compensation of participants, shall be
allocated in the ratio that each
participant's excess compensation bears to
the excess compensation for all
participants, but not in excess of 3% of
each participant's compensation. For
purposes of this paragraph (ii), in the case
of any participant who has exceeded the
cumulative permitted disparity limit
described below, such participant's total
compensation for the plan year will be taken
into account.
(iii) If any portion of the discretionary Employer
contribution shall remain to be allocated,
the remaining portion, not exceeding the
amount determined by multiplying (a) times
(b), where (a) is the profit-sharing
disparity rate and (b) is the sum of the
compensation plus the excess compensation of
participants, shall be allocated in the
ratio that the sum of each participant's
compensation plus excess compensation bears
to the sum of the compensation plus excess
compensation for all participants. For
purposes of this paragraph (iii), in the
case of any participant who has exceeded the
cumulative permitted disparity limit
described below, two times such
participant's total compensation for the
plan year will be taken into account.
(iv) If any portion of the discretionary Employer
contributions shall remain to be allocated,
the remaining portion shall be allocated in
the ratio that the compensation of each
participant bears to the compensation for
all participants.
For this purpose, the following definitions shall apply:
(a) "Compensation" shall mean compensation as defined
in Section 1.13.
(b) "Excess compensation" shall mean compensation in
excess of the integration level.
(c) "Integration level" shall mean: [Select one and
complete as appropriate]
_____ (i) The taxable wage base.
_____ (ii) $___________ [a dollar amount less
than the taxable wage base].
_____ (iii) ________% of the taxable wage base
[not to exceed 100%].
(d) "Maximum profit-sharing disparity rate" shall mean
the lesser of 5.7% (or, if greater, the percentage
equal to the portion of the rate of tax under
Section 3111(a) of the Code (as of the beginning of
the plan year) which is attributable to old-age
insurance), or the applicable percentage determined
in accordance with the following table:
-16-
<PAGE> 17
(I) If the integration level is:
more than but not more thanthe applicable
percentage is
--------- -------------------------------
$ 0 X 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y 5.4%
X = the greater of $10,000 or 20% of TWB
Y = any amount more than 80% of TWB but
less than 100% of TWB.
(II) If the integration level is equal to the
taxable wage base, the applicable percentage
is 5.7% (or, if greater, the percentage
equal to the portion of the rate of tax
under Section 3111(a) of the Code (as of the
beginning of the plan year) which is
attributable to old-age insurance).
(e) "Minimum allocation percentage" shall mean the
percentage specified in item XVII.B of the Adoption
Agreement.
(f) "Profit-sharing disparity rate" shall mean a
percentage equal to _____%. [Insert the desired
percentage not to exceed the maximum profit-sharing
disparity rate.] If the minimum allocation
percentage is allocated in Item IX.B.(3)(b)(i)
above, the profit-sharing disparity rate must be
reduced (but not below zero) by the minimum
allocation percentage before applying Item
IX.B.(3)(b)(iii).
(g) "Taxable wage base" or "TWB" shall mean the maximum
amount of earnings which may be considered wages
for a year under Section 3121(a)(1) of the Code as
in effect as of the first day of the plan year.
Overall permitted disparity limits.
Annual overall permitted disparity limit: Notwithstanding
the preceding paragraphs, for any plan year this plan
benefits any participant who benefits under another
qualified plan or simplified employee pension, as defined
in section 408(k) of the Code, maintained by the employer
that provides for permitted disparity (or imputes
disparity), employer contributions and forfeitures will be
allocated to the account of each participant entitled to
share therein in the ratio that such participant's total
compensation bears to the total compensation of all
participants.
Cumulative permitted disparity limit: Effective for plan
years beginning on or after January 1, 1995, the
cumulative permitted disparity limit for a participant is
35 total cumulative permitted disparity years. Total
cumulative permitted years means the number of years
credited to the participant for allocation or accrual
purposes under this plan, any other qualified plan or
simplified employee pension plan (whether or not
terminated) ever maintained by the employer. For purposes
of determining the participant's cumulative permitted
disparity limit, all years ending in the same calendar
year are treated as the same year. If the participant has
not benefited under a defined benefit or target benefit
plan for any year beginning on or after January 1, 1994,
the participant has no cumulative disparity limit.
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<PAGE> 18
____ (c) Each such participant shall receive an allocation
of $______________.
(4) In order to share in any discretionary Employer contribution made
with respect to a plan year, an employee must be a participant
during such plan year, must not have a break in service during
such plan year, and must (2.4): [Select one]
____ (a) Fulfill no additional requirements.
____ (b) Complete a year of service within the plan year.
[If this item IX.B.(4)(b) is selected, this
condition will not apply in any plan year in which
the plan is top-heavy.]
____ (c) Be in the service of the Employer on the last day
of such plan year.
____ (d) Complete a year of service within the plan year and
be in the service of the Employer on the last day
of such plan year. [If this item IX.B.(4)(d) is
selected, the condition that an employee complete a
year of service within the plan year will not apply
in any plan year in which the plan is top-heavy.]
(5) ____ The requirements of item IX.B.(4) above shall not apply
with respect to a participant who retires, including
disability retirement, or dies while in service during a
plan year.
____ The requirements of item IX.B.(4) above shall apply with
respect to a participant who retires, including disability
retirement, or dies while in service during a plan year.
If the Employer does not elect under item XII.C below to apply
forfeitures to reduce future discretionary Employer contributions,
forfeitures of discretionary Employer contributions shall be allocated
to the accounts of participants eligible to share in discretionary
Employer contributions for a plan year in the same manner as the
Employer shall elect above.
(6) Withdrawals from discretionary Employer contribution account
(6.1): [Select one]
____ (a) Except as otherwise provided in XI. E. or G., amounts
allocated to a participant's discretionary Employer
contribution account shall not be withdrawn prior to his
termination of service, death, or disability.
____ (b) In addition to any withdrawal rights provided in XI. E. or
G., at a participant's request, amounts allocated to his
discretionary Employer contribution account may be
withdrawn prior to his termination of service, death, or
disability, subject to the following conditions:
[Complete (i), complete (ii) if daily adjustment dates
have been selected, and also complete (iii) through (ix),
as appropriate]
(i) A participant may not request more than _____ [not
to exceed four] withdrawal(s) during a plan year.
(ii) No withdrawal shall exceed _____% of the vested
amount in the participant's discretionary Employer
contribution account, determined on the date the
withdrawal request is actually processed.
_____ (iii) The participant must have attained at least the
fifth anniversary of his initial participation in
the plan.
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<PAGE> 19
(iv) The participant cannot withdraw any discretionary
---- Employer contributions that have not been in the
plan for at least 2 years unless he has attained at
least the fifth anniversary of his initial
participation in the plan.
(v) The participant cannot withdraw any discretionary
---- employer contributions that have not been in the
plan for at least 2 years.
(vi) No withdrawal shall be made in an amount less than
---- $______ [Insert amount not in excess of $1,000]
(vii) No withdrawal may be made until the participant has
---- taken all available withdrawals from the following
accounts: __________________________________________
____________________________________________________
____________________________________________________
(viii) A withdrawal may only be made if the participant
---- incurs a financial hardship. For purposes of this
paragraph, a "financial hardship" is defined as
____________________________________________________
____________________________________________________
____________________________________________________
________________________________[Specify clear,
objective criteria for determining a financial
hardship that precludes employer discretion.]
(ix) A participant who receives a withdrawal shall not
---- be eligible to contribute to the plan
____________________________________________________
________________________________[Insert type of
contribution affected and period of suspension.]
X. ADJUSTMENT DATE AND METHOD
A. The separate accounts of each participant shall be adjusted on the last
day of each plan year and such other times as may be designated below
(1.4; 7; 8.1.2): [Select any additional dates desired]
(1) The last day of each month during the plan year.
----
(2) The last day of each third month during the plan year.
----
(3) The last day of each sixth month during the plan year.
----
(4) The last day of each week during the plan year.
----
X (5) On each day shares are traded on a national stock exchange,
---- except for regularly scheduled holidays of the Sponsor or
Trustee ("daily adjustment dates").
B. The separate accounts of each participant shall be adjusted as of each
adjustment date under the method designated below (7): [Select one.
Note: Item X.B.(2) below must be elected if the Employer chooses daily
adjustment dates in item X.A.(5) above.]
(1) Balance forward method.
----
(a) Payments: Prior to the allocation of net income or
loss of the trust, there shall be subtracted from
the account any payments made from the account
subsequent to the preceding adjustment date.
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<PAGE> 20
(b) Forfeitures: Prior to the allocation of net income
or loss of the trust, there shall be subtracted
from the account any amounts forfeited by the
participant pursuant to Section 5.3 or Section 23
of the plan subsequent to the preceding adjustment
date.
(c) Loans: Prior to the allocation of net income or
loss of the trust, there shall be subtracted from
the account the total amount of any loans made from
such account subsequent to the preceding adjustment
date.
(d) Elective deferrals: Prior to the allocation of net
income or loss of the trust, there shall be added
to the participant's elective deferral account
_____% [indicate a percentage not to exceed 100%]
of any elective deferrals made by the participant
subsequent to the preceding adjustment date. After
the allocation of net income or loss of the trust,
there shall be added to the participant's elective
deferral account any elective deferrals made
subsequent to the preceding adjustment date that
were not added in by the preceding sentence.
(e) Employee after-tax contributions: Prior to the
allocation of net income or loss of the trust,
there shall be added to the participant's employee
after-tax contribution account _____% [indicate a
percentage not to exceed 100%] of any employee
after-tax contributions made by the participant
subsequent to the preceding adjustment date. After
the allocation of net income or loss of the trust,
there shall be added to the participant's employee
after-tax contribution account any employee
after-tax contributions made subsequent to the
preceding adjustment date that were not added in by
the preceding sentence.
(f) Employer contributions:
(i) Prior to the allocation of net income or
loss of the trust, there shall be added to
the participant's matching contribution
account _____% [indicate a percentage not to
exceed 100%] of the Employer matching
contributions made on the participant's
behalf subsequent to the preceding
adjustment date. After the allocation of
net income or loss of the trust, there shall
be added to the participant's matching
contribution account any Employer matching
contributions made on the participant's
behalf subsequent to the preceding
adjustment date that were not added in by
the preceding sentence.
(ii) Prior to the allocation of net income or
loss of the trust, there shall be added to
the participant's discretionary Employer
contribution account _____% [indicate a
percentage not to exceed 100%] of the
discretionary Employer contributions made on
the participant's behalf subsequent to the
preceding adjustment date. After the
allocation of net income or loss of the
trust, there shall be added to the
participant's discretionary Employer
contribution account any discretionary
Employer contributions made on the
participant's behalf subsequent to the
preceding adjustment date that were not
added in by the preceding sentence.
(iii) Prior to the allocation of net income or
loss of the trust, there shall be added to
the participant's qualified matching
contribution account _____% [indicate a
percentage not to exceed 100%] of the
Employer
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<PAGE> 21
qualified matching contributions made on the
participant's behalf subsequent to the
preceding adjustment date. After the
allocation of net income or loss of the
trust, there shall be added to the
participant's qualified matching
contribution account any Employer qualified
matching contributions made on the
participant's behalf subsequent to the
preceding adjustment date that were not
added in by the preceding sentence.
(iv) Prior to the allocation of net income or
loss of the trust, there shall be added to
the participant's qualified non-elective
contribution account _____% [indicate a
percentage not to exceed 100%] of the
Employer qualified non-elective
contributions made on the participant's
behalf subsequent to the preceding
adjustment date. After the allocation of
net income or loss of the trust, there shall
be added to the participant's qualified
non-elective contribution account any
Employer qualified non-elective
contributions made on the participant's
behalf subsequent to the preceding
adjustment date that were not added in by
the preceding sentence.
(g) Loan repayments: Prior to the allocation of net
income or loss of the trust, there shall be added
to the participant's account _______% [indicate a
percentage not to exceed 100%] of any loan
repayments, including interest, made by the
participant subsequent to the preceding adjustment
date. After the allocation of net income or loss
of the trust, there shall be added to the
participant's account any loan repayments,
including interest, made by the participant
subsequent to the preceding adjustment date that
were not added in the preceding sentence.
(h) Employee rollovers: Prior to the allocation of net
income or loss of the trust, there shall be added
to the participant's rollover account _______%
[indicate a percentage not to exceed 100%] of any
rollover contributions made subsequent to the
preceding adjustment date. After the allocation of
net income or loss of the trust, there shall be
added to the participant's rollover account any
rollover contribution made subsequent to the
preceding adjustment date that were not added in by
the preceding sentence.
(i) Direct transfers: Prior to the allocation of the
net income or loss of the trust, there shall be
added to the participant's direct transfer account
_______% [indicate a percentage not to exceed 100%]
of any amounts transferred to the plan on behalf of
the participant pursuant to Section 18 of the plan
subsequent to the preceding adjustment date. After
the allocation of net income or loss of the trust,
there shall be added to the participant's direct
transfer account any amounts directly transferred
to the plan on behalf of the participant subsequent
to the preceding adjustment date that were not
added in by the preceding sentence.
(j) Reallocation of forfeitures: After the allocation
of net income or loss of the trust, there shall be
added to the participant's matching contribution
account and/or discretionary Employer contribution
account, as applicable, any forfeitures derived
from matching contributions and/or discretionary
Employer contributions in the manner prescribed by
Section 5.3 or Section 23 of the plan.
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<PAGE> 22
(k) Net income or loss: There shall be credited or
debited to each separate account that portion of
the net income or net loss of the trust since the
last preceding adjustment date which the basic
credit as of the last preceding adjustment date, as
adjusted in the manner prescribed in the above
paragraphs, bears to the total of all the basic
credits as of such preceding adjustment date, as so
adjusted. The net income or net loss of the trust
shall be ascertained by the Trustee and shall mean
the profits and income actually realized and
received, less the losses and expenses actually
incurred and paid, plus any net increase or minus
any net decrease in the fair market value of the
assets of the trust not actually realized and
received or incurred and paid. Net income or net
loss shall not include elective deferrals,
qualified non-elective contributions, employee
after-tax contributions, matching contributions,
qualified matching contributions, or discretionary
Employer contributions. In ascertaining such
value, the expense of liquidation shall not be
taken in account. "Basic credit as of the last
preceding adjustment date" shall be such credit
after the adjustments described in the above
paragraphs have been made. Any qualified
non-elective contributions, matching contributions,
qualified matching contributions, or discretionary
Employer contributions made after the close of a
plan year, but allocated to a participant's account
as of the last day of such prior plan year, shall
be considered part of the basic credit, as of the
adjustment date immediately preceding the date such
contributions are actually made. For purposes of
this paragraph, to the extent a participant's
account shall be invested in a group annuity
contract or guaranteed investment contract issued
by a legal reserve life insurance company, such
contracts shall be valued using an estimated daily
earnings rate, if accurate earnings are not
otherwise available to the Committee. The
determination of net income or net loss to be
allocated to the separate accounts of a participant
shall be further subject to the requirements of
Section 8 of the plan to the extent such accounts
are subject to the participant's investment
direction.
(l) Employee buyback: After the allocation of net
income or loss of the trust, there shall be added
to the participant's account any amounts repaid by
the participant in order to restore his account
pursuant to Section 5.3 of the plan.
(m) Transfer of investment: Any change in the
investment direction by the participant shall
become effective on each adjustment date after all
adjustments above have been made. There shall be
added or subtracted any amounts transferred from
one investment fund to another.
X (2) Unit adjustment method. [This option must be elected if
----- the Employer chooses daily adjustment dates in item
X.A.(5) above.]
The value of each participant's account shall be converted
to units or shares. Thereafter, when the participant's
account is credited with an allocation of any employee
and/or Employer contributions, direct transfers from
another qualified plan, rollover contributions, principal
and interest payments on any loans made to the
participant, and/or reallocated forfeitures in accordance
with the terms of the plan, the value of such allocation
shall be used to purchase units or shares and added to
such participant's account. When any distributions,
participant loans, withdrawals, transfers between
investment funds, and/or administrative fees are charged
against the participant's account in accordance with the
terms of the plan, the number of units or
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<PAGE> 23
shares equal in value to the amount paid from the
participant's account shall be deducted from the
outstanding units or shares.
XI. DISTRIBUTIONS TO PARTICIPANTS
A. Normal retirement age shall mean the date a participant (1.38; 3.1):
[Select one and complete as appropriate]
X (1) Attains age 65 [not to exceed 65].
----
(2) Attains age _____ [not to exceed 65] or the _____ [not to
---- exceed fifth] anniversary of the first day of the plan
year in which the participant commenced his participation
in the plan.
B. Early retirement (3.2): [Select one]
X (1) Early retirement shall not be applicable under the plan.
----
(2) A participant may elect to retire prior to his normal
---- retirement date as of the first day of any calendar month
following his: [Select one and complete as appropriate]
(a) Attainment of age _____.
----
(b) Completion of _____ years of service.
----
(c) Attainment of age _____ and completion of
---- _____ years of service.
C. Distributions to terminated participants (3.6):
A participant who terminates service before he is eligible to retire may
elect to have his vested accrued benefit valued as of the adjustment
date specified below (the "termination adjustment date") and distributed
as soon as practicable thereafter: [Select one]
(1) The adjustment date coincident with or next following the
---- termination of service of the participant.
(2) The adjustment date coincident with the close of the plan
---- year in which the participant incurs a one year break in
service.
(3) The adjustment date coincident with the close of the plan
---- year in which the participant incurs five consecutive one
year breaks in service.
(4) The adjustment date coincident with or next following the
---- normal retirement date of the participant.
(5) The adjustment date next preceding the termination of the
---- participant; provided that such participant's vested
accrued benefit shall include any elective deferrals and
employee after-tax contributions made and attributable to
the period after such adjustment date and allocable to the
participant's account, but shall not include any earnings
or losses thereon after such adjustment date.
[Note: If option (5) above is elected and the
participant is entitled to an allocation of
qualified non- elective contributions, matching
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<PAGE> 24
contributions, qualified matching contributions, or
discretionary Employer contributions under the plan
for any period after his termination adjustment
date, an additional distribution of the vested
portion of any such contribution shall be made to
the participant as soon as practicable after the
adjustment date as of which such contributions are
made.]
X (6) The adjustment date the distribution is actually processed.
---- [This item must be selected if daily adjustment dates have
been elected.]
[Note: A prior plan cannot be amended to eliminate or reduce an
existing optional form of benefit, including payment schedule,
time of commencement, and medium of distribution.]
D. Segregation of terminated participant's vested benefit (3.6.3):
[Select one]
[Complete this item XI.D only if a participant is not permitted to
direct the investment of his entire account.]
X (1) The Trustee shall not segregate for investment purposes
---- that portion of the terminated participant's vested
accrued benefit which is not credited to his directed
separate accounts (as defined in Section 8.1).
(2) The Trustee shall segregate for investment purposes that
---- portion of the terminated participant's vested accrued
benefit which is not credited to his directed separate
accounts (as defined in Section 8.1). The segregated
portion shall be held in a deferred payment account
pursuant to Section 3.6.3.
E. Distributions on or after attainment of age 59 1/2 (6.4):
[If you select this option a participant may withdraw all or any portion
of his account on or after attaining age 59 1/2, regardless of whether
he is still in service.]
X If this option is selected, a participant may withdraw all or any
---- portion of the following separate accounts which are a part of
his entire account on or after attainment of age 59 1/2, provided
that a participant may not request more than one [not to exceed
four] withdrawals during a plan year.[Select one or more ]
(a) the discretionary Employer contribution account;
----
(b) the mandatory contribution account;
----
X (c) the elective deferral account;
----
(d) the qualified non-elective contribution account;
----
(e) the employee after-tax contribution account;
----
X (f) the matching contribution account;
----
(g) the qualified matching contribution account;
----
X (h) the rollover account; and
----
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<PAGE> 25
(i) the direct transfer account.
----
F. Determination of life expectancies for minimum distributions (4.4):
Required minimum distributions under Section 4.4 will be determined
based on the life expectancy of: [Select one]
X (1) The participant only.
----
(2) The participant and his or her designated beneficiary.
----
G. Hardship withdrawals (6.5): [Select one]
(1) Hardship distributions shall not be permitted under the
---- plan.
X (2) Hardship distributions shall be permitted under the plan.
---- Hardship distributions shall be available from the vested
portion of the following accounts of the participant:
[Select one]
(a) All of his accounts (other than his qualified
---- matching contribution account and his qualified
non-elective contribution account);
(b) His elective deferral account only (excluding
---- earnings credited as of any plan year ending after
July 1, 1989);
X (c) The elective deferrals credited to his elective
---- deferral account only (excluding all earnings).
H. Mode of distribution (4.1):
All distributions pursuant to Section 4.1.1 of the plan shall be made in
accordance with one of the following optional forms of payment. [Select
one or more]
(1) Term certain as described in 4.1.1(i).
----
X (2) Lump sum as described in 4.1.1(ii).
----
See addendum for protected payout installment option.
XII. VESTING OF MATCHING AND DISCRETIONARY EMPLOYER CONTRIBUTIONS
A. Vesting schedule (2.3.4; 2.4; 5.1; 5.2):
The nonforfeitable percentage of each participant in his matching
contribution account and discretionary Employer contribution account
shall be determined according to the following schedule: [Select one]
(1) 100% vesting after _____ [not to exceed 5] years of
---- service.
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<PAGE> 26
(2) Number of Years Vesting
---- of Service Percentage
----------------- ----------
Less than 1
----
1
----
2
----
3 (at least 20%)
----
4 (at least 40%)
----
5 (at least 60%)
----
6 (at least 80%)
----
7 or more
----
X (3) Immediate 100% vesting.
----
B. Years of service counted for vesting purposes (1.62; 5.2):
All years of service with the Employer shall be counted to determine the
vested percentage of the participant's accrued benefit derived from
matching contributions and discretionary Employer contributions except:
[Select the desired exclusions, if any]:
X (1) No exclusions.
----
(2) Years of service before age _____ [not to exceed age 18].
----
(3) Years of service during a period for which the participant
---- made no mandatory contributions, if required under a prior
plan.
(4) Years of service before the Employer maintained this plan.
----
(5) Years of service before January 1, 1971, unless the
---- employee has had at least three years of service after
December 31, 1970.
(6) Years of service before the effective date of ERISA, if
---- such service would have been disregarded under the break
in service rules of a prior plan in effect from time to
time before such date. For this purpose, the break in
service rules are rules which result in the loss of prior
vesting or benefit accruals, or which deny an employee
eligibility to participate, by reason of separation or
failure to complete a required period of service within a
specified period of time.
(7) Years of service before a participant's one year break in
---- service, provided that the participant shall be credited
with such years of service upon his completion of a year
of service following his date of reemployment.
C. Allocation of forfeitures of matching contributions and discretionary
Employer contributions (5.3): [Select one]
[Note: Forfeitures of excess aggregate contributions shall be treated in
the same manner as elected in this item XII.C with respect to
forfeitures of matching contributions, except that if such forfeitures
are reallocated, they shall only be reallocated among the accounts of
non-highly compensated participants.]
(1) All forfeitures of matching contributions shall be
---- reallocated to the matching contribution account of each
participant eligible to share in matching contributions
for
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<PAGE> 27
the plan year in which the forfeiture occurs in the same
proportion that the matching contributions allocated to
the participant's matching contribution account bears to
the matching contributions allocated to the matching
contribution accounts of all participants eligible to
share in such matching contributions for such plan year.
All forfeitures of discretionary Employer contributions
under the plan shall be reallocated to the discretionary
Employer contribution account of all participants who are
entitled to share in such discretionary Employer
contributions for the plan year in which the forfeiture
occurs in the same proportion that the discretionary
Employer contributions allocated under the plan for such
plan year (or would have been allocated if a contribution
had been made).
(2) All forfeitures of matching contributions and
---- discretionary Employer contributions under the plan shall
be allocated to a participant's discretionary Employer
contribution account in the same ratio that each
participant's compensation bears to the compensation for
all participants entitled to share in the discretionary
Employer contributions.
(3) All forfeitures of matching contributions and
---- discretionary Employer contributions under the plan shall
be applied to reduce future matching and discretionary
Employer contributions, if any.
(4) All forfeitures of matching contributions under the plan
---- shall be applied to reduce future matching contributions,
if any. All forfeitures of discretionary Employer
contributions under the plan shall be reallocated among
all participants who are entitled to share in such
discretionary Employer contributions for the plan year in
which the forfeiture occurs in the same manner as
discretionary Employer contributions are allocated under
the plan for such plan year (or would have been allocated
if a contribution had been made).
XIII. PARTICIPANT LOANS
A. Permissibility of participant loans (6.4): [Select one]
X Loans to participants or beneficiaries shall not be permitted
---- under the plan.
[If the above option is selected, do not complete the
remaining question in this item XIII.]
Loans to participants or beneficiaries (but not owner-employees
---- or shareholder-employees of S corporations) shall be permitted
under the plan.
[If the above option is selected, please complete the
remainder of this item XIII as applicable.]
B. Amount of participant loans:
The minimum amount of a participant loan that may be obtained under the
plan shall be: [Select one]
(1) $500
----
(2) $1,000.
----
C. Sources of participant loans:
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<PAGE> 28
The principal amount of a participant loan may be obtained from the
vested portion of the following accounts of the participant: [Select
one]
____ (1) His entire account (other than his deductible contribution
account).
____ (2) His elective deferral account only.
____ (3) The following separate accounts which are a part of his
entire account: [Select one or more]
____ (a) the discretionary Employer contribution account;
____ (b) the mandatory contribution account;
____ (c) the elective deferral account;
____ (d) the qualified non-elective contribution account;
____ (e) the employee after-tax contribution account;
____ (f) the matching contribution account;
____ (g) the qualified matching contribution account;
____ (h) the rollover account; and
____ (i) the direct transfer account.
D. Loans from separate accounts invested in Employer stock: [Select one]
____ (1) Notwithstanding the above, amounts allocated to a
participant's separate account that are required to be
invested or reinvested in Employer stock shall not be sold
or applied to fund the principal amount of a participant
loan under the plan.
____ (2) Amounts allocated to a participant's separate account that
are required to be invested or reinvested in Employer
stock may be sold or applied to fund the principal amount
of a participant loan under the plan.
XIV. PARTICIPANT DIRECTED INVESTMENTS
A. Permissibility of participant directed investments (8.1): [Select one.
If option (3) is selected, complete option (3) as instructed.]
____ (1) Each participant shall not be permitted to direct the
investment or reinvestment of any portion of his account.
[If the above option is selected, do not complete the
remaining questions in this item XIV.]
____ (2) Each participant shall be permitted to direct the
investment and reinvestment of his entire account among
the directed investment funds, including, if elected by
the Employer in item XV below, the Employer stock fund.
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<PAGE> 29
[If the above option is selected, please complete the
remaining questions in this item XIV. See item XV below
for an election to permit directed investments in Employer
stock.]
X (3) Each participant shall be permitted to direct the
---- investment and reinvestment of one or more of the
following separate accounts, which are a part of his
entire account, among the directed investment funds,
including, if elected by the Employer in item XV below,
the Employer stock fund: [Select one or more as desired]
(a) the discretionary Employer contribution account;
----
(b) the deductible contribution account;
----
(c) the mandatory contribution account;
----
X (d) the elective deferral account;
----
(e) the qualified non-elective contribution account;
----
(f) the employee after-tax contribution account;
----
(g) the matching contribution account;
----
(h) the qualified matching contribution account;
----
X (i) the rollover account; and
----
(j) the direct transfer account.
----
[If the above option is selected, please complete the
remaining questions in this item XIV. See item XV below
for an election to permit directed investments in Employer
stock.]
B. Direction by terminated participants and beneficiaries (3.6.3; 8.1):
[Select one]
(1) Following a participant's termination of service for any
---- reason, such participant or his beneficiary shall not be
entitled to continue to direct the investment of the
participant's directed separate accounts. If the
participant's vested accrued benefit will be held under
the plan for future payment to him or his beneficiary
pursuant to Section 3.6.3, Section 4.1, or Section 4.2,
the amounts credited to the participant's directed
separate accounts will be transferred as of the adjustment
date coincident with or next following the date of his
termination of service to the most conservative directed
investment fund as designated by the Committee.
X (2) Following a participant's termination of service for any
---- reason, such participant or his beneficiary shall be
entitled to continue to direct the investment of the
participant's directed separate accounts until the
participant's benefit is paid to him or his beneficiary in
full as provided in Section 3.6.3, Section 4.1, or Section
4.2.
C. Allocation among investment funds (8.1.3; 8.1.4):
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<PAGE> 30
Each participant shall be permitted to direct the investment of future
contributions allocated to his directed separate accounts among the
available directed investment funds in multiples of the following
percentage: [Select one and complete, if necessary]
(1) 10%
----
(2) 25%
----
X (3) 5% [Insert any whole percentage that divides evenly into
---- 100]
Each participant shall be permitted to reallocate the amounts credited
to his directed separate accounts among the available directed
investment funds as follows: [Select one or more and complete as
appropriate]
X (1) In multiples of the following percentage:
----
(a) 10%
----
(b) 25%
----
(c) 5% [Insert any whole percentage that divides
---- evenly into 100].
(2) In units.
----
(3) In dollars.
----
D. Frequency of investment directions (8.1.3; 8.1.4):
Each participant shall be permitted to change his direction of the
future contributions allocated to his directed separate accounts or to
reallocate the amounts credited to his directed separate accounts among
the available directed investment funds as of the following adjustment
dates: [Select one. Note: The dates selected under this item XIV.D
should coincide with the adjustment date(s) selected in item X.A above.
Participants should not be permitted to give investment directions more
frequently than the adjustment dates selected for the plan.]
X (1) Each day during the plan year.
----
[Note: Item XV.D.(1) above should not be elected unless
daily adjustment dates have been elected.]
(2) The last day of each month during the plan year.
----
(3) The last day of each third month during the plan year.
----
(4) The last day of each sixth month during the plan year.
----
(5) The last day of each week during the plan year.
----
(6) The last day of each plan year.
----
(7) Other:
---- ---------------------------------------------------
----------------------------------------------------------
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<PAGE> 31
XV. INVESTMENTS IN EMPLOYER STOCK
A. Permissibility of investments in Employer stock (1.26; 9; 20).
[Select one]
(1) The Trustee shall not be authorized to invest plan assets
---- in Employer stock.
[If the above option is selected, do not complete
the remaining questions in this item XV.]
(2) The Committee shall be authorized to direct the Trustee to
---- invest and reinvest plan assets in shares of Employer
stock as a general investment of the trust in accordance
with Section 20.
[Note: This option should be selected if the Employer
does not intend to make matching contributions and/or
discretionary Employer contributions to the plan in shares
of Employer stock and participants are not permitted to
direct the investment of any portion of their accounts
(i.e., if item XIV.A.(1) above was selected).]
[If the above option is selected, do not complete
the remaining questions in this item XV.]
X (3) The Committee shall be authorized to direct the Trustee to
---- establish an Employer stock fund (as described in Section
9.1) for the purpose of receiving and holding any shares
of Employer stock contributed to the plan as matching
contributions and/or discretionary Employer contributions.
[Note: This option should be selected if the Employer
intends to make matching contributions and/or
discretionary Employer contributions to the plan in shares
of Employer stock.]
If this option (3) is selected and participants are permitted to direct
the investment of any portion of their accounts among the other directed
investment funds (i.e., if either item XIV.A.(2) or item XIV.A.(3) above
was selected), select one of the following additional options :
(A) Each participant shall not be permitted to direct the
---- investment or reinvestment of any portion of his account
in the Employer stock fund.
(B) Each participant shall be permitted to direct the
---- investment and reinvestment of his entire account in the
Employer stock fund.
X (C) Each participant shall be permitted to direct the
---- investment and reinvestment of one or more of the
following separate accounts which are a part of his entire
account in the Employer stock fund: [Select one or more
as desired]
(a) the discretionary Employer contribution account;
----
(b) the deductible contribution account;
----
(c) the mandatory contribution account;
----
X (d) the elective deferral account;
----
-31-
<PAGE> 32
(e) the qualified non-elective contribution account;
----
(f) the employee after-tax contribution account;
----
(g) the matching contribution account;
----
(h) the qualified matching contribution account;
----
X (i) the rollover account; and
----
(j) the direct transfer account.
----
[If item XV.A.(3) is selected, please complete the
remaining questions in this item XV.]
(4) The Committee shall be authorized to direct the Trustee to
---- establish an Employer stock fund (as described in Section
9.1) for the purpose of allowing participants to direct
the investment or reinvestment of all or a portion of
their accounts in Employer stock as designated below.
[Note: This option should be selected if the Employer
does not intend to make matching contributions and/or
discretionary Employer contributions to the plan in shares
of Employer stock, but wants to permit participants to
invest and reinvest all or a portion of their accounts in
Employer stock.]
If this item XV.A.(4) is selected, select one of the following
additional options:
(A) Each participant shall be permitted to direct the
---- investment or reinvestment of his entire account in the
Employer stock fund.
(B) Each participant shall be permitted to direct the
---- investment and reinvestment of one or more of the
following separate accounts which are a part of his entire
account in the Employer stock fund: [Select one or more
as desired]
(a) the discretionary Employer contribution account;
----
(b) the deductible contribution account;
----
(c) the mandatory contribution account;
----
(d) the elective deferral account;
----
(e) the qualified non-elective contribution account;
----
(f) the employee after-tax contribution account;
----
(g) the matching contribution account;
----
(h) the qualified matching contribution account;
----
(i) the rollover account; and
----
(j) the direct transfer account.
----
-32-
<PAGE> 33
[If this item XV.A.(4) is selected, please complete the
remaining questions in this item XV.]
B. Medium of payment (4.8).
To the extent amounts allocated to a participant's separate account are
invested in Employer stock, the distribution of such amounts shall be
made in: [Select one]
(1) Cash.
----
(2) Shares of Employer stock.
----
X (3) Cash or shares of Employer stock, as elected by the
---- participant or beneficiary.
[If item XV.B.(1) is selected, please proceed to item
XV.D. Do not complete item XV.C.]
C. Right of first refusal (9.3): [Select one]
X (1) Any participant who receives a distribution of Employer
---- stock under the plan and desires to dispose of such
Employer stock shall not be required to first offer to
sell such Employer stock to the Employer.
(2) Any participant who receives a distribution of Employer
---- stock under the plan and desires to dispose of such
Employer stock shall be required to first offer to sell
such Employer stock to the Employer.
D. Voting of Employer stock (9.4).
(1) Readily tradable Employer stock (9.4.1): [Select one]
[Complete this item XV.D.(1) only if the Employer stock held by
the Trustee is readily tradable on an established market. If it
is not readily tradable, please proceed to item XV.D.(2). See
Section 9.4.1 for a definition of "readily tradable on an
established market."]
(a) Each participant or his beneficiaries shall not be
---- entitled to direct the Trustee as to the manner in which
shares of Employer stock allocated to the participant's
separate accounts shall be voted with respect to any
corporate matter that involves voting the Employer stock
allocated to the participant's separate accounts.
X (b) Each participant or his beneficiaries shall be entitled to
---- direct the Trustee as to the manner in which shares of
Employer stock allocated to the participant's separate
accounts shall be voted with respect to any corporate
matter that involves voting the Employer stock allocated
to the participant's separate accounts.
[Note: It may be advisable to amend this item XV.D if the
Employer stock allocated to a participant's separate accounts
should become not readily tradable in the future.]
(2) Not readily tradable Employer stock (9.4.2): [Select one]
[Complete this item XV.E.(2) only if the Employer stock held by
the Trustee is not readily tradable on an established market.]
-33-
<PAGE> 34
(a) Each participant or his beneficiaries shall not be
---- entitled to direct the Trustee as to the manner in which
shares of Employer stock allocated to the participant's
separate accounts shall be voted with respect to any
corporate matter that involves voting the Employer stock
allocated to the participant's separate accounts.
(b) Each participant or his beneficiaries shall be entitled to
---- direct the Trustee as to the manner in which shares of
Employer stock allocated to the participant's separate
accounts shall be voted with respect to any corporate
matter that involves voting the Employer stock allocated
to the participant's separate accounts.
(c) Each participant or his beneficiaries shall be entitled to
---- direct the Trustee as to the manner in which shares of
Employer stock allocated to the participant's separate
accounts shall be voted with respect to any corporate
matter involving the approval or disapproval of any
corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, or sale of
substantially all of the assets of the Employer's trade or
business.
[Note: It may be advisable to amend this item XV.D if the
Employer stock allocated to a participant's separate accounts
should become readily tradable in the future.]
XVI. ROLLOVERS
A. Permissibility of rollovers to the plan (19.1): [Select one]
Rollovers to the plan shall not be permitted.
----
[If the above option is selected, do not complete the
remaining question in this item XVI.]
X Rollovers to the plan shall be permitted by the individuals
---- designated in item XVI.B below.
[If the above option is selected, please complete item
XVI.B.]
See addendum for limits on rollovers.
B. Persons eligible to make rollovers to the plan (19.1): [Select one.]
X All employees eligible to participate in the plan under Item IV.A,
---- including employees who have not completed the participation
requirements under the plan.
All participants.
----
C. Withdrawals from rollover account: [Select one or more]
(a) Except as provided in XI. E. or G., amounts allocated to a
---- participant's rollover account shall not be withdrawn
prior to his termination of service, death, or disability.
X (b) In addition to any withdrawal rights provided in XI. E. or
---- G., at a participant's request, amounts allocated to his
rollover contribution account may be withdrawn prior to
his termination of service, death, or disability, subject
to the following conditions:
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<PAGE> 35
[Complete (i); complete (ii) if daily adjustment dates
have been selected; also complete III through V as
appropriate]
(i) A participant may not request more than 1 [not
to exceed four] withdrawal(s) during a plan year.
(ii) No withdrawal shall exceed 100 % of the amount in
the participant's rollover contribution account,
determined on the date the withdrawal request is
actually processed.
(iii) No withdrawal shall be made in an amount less than
---- $______ [Insert amount not in excess of $1,000.}
(iv) No withdrawal may be made until the participant has
---- taken all available withdrawals from the following
accounts: __________________________________________
____________________________________________________
____________________________________________________
X (v) A withdrawal may only be made if the participant
---- incurs a financial hardship. For purposes of this
paragraph, a "financial hardship" is defined as a
hardship within the meaning of Section 6.5.2 of the
plan. [Specify clear, objective criteria for
determining a financial hardship that precludes
employer discretion.]
XVII. TOP-HEAVY PROVISIONS
A. Top-heavy ratio (22.1.7):
For purposes of establishing present value to compute the top-heavy
ratio, any benefit shall be discounted only for interest and mortality
based on the following: [Complete both]
(1) Interest rate: 6 %
(2) Mortality table: PBGC I for males, PBGC II for females
B. Minimum top-heavy allocations (22.2.1):
For purposes of minimum top-heavy allocations, contributions and
forfeitures equal to 3 % of each non-key employee's compensation will
be allocated to the employee's account when the plan is top-heavy.
[Insert a percentage that is not less than 3%; provided that "0"
may be inserted if the minimum allocation will be provided to
participants under any other plan or plans of the Employer. If
permitted pursuant to Section 22.2.1 of the plan, such percentage
shall in no event exceed the largest percentage of Employer
contributions and forfeitures allocated on behalf of any key
employee. Neither elective deferrals nor matching contributions
may be taken into account for the purpose of satisfying the
minimum top-heavy allocation requirement. The Employer may
attach additional provisions as necessary to satisfy Section 416
of the Code because of the required aggregation of multiple
plans.]
C. Top-heavy vesting schedule (22.2.2):
-35-
<PAGE> 36
[Complete this question if option (3) of item XII.A is not selected and
either (a) option (1) of item XII.A is selected and the number of years
of service is greater than three, or (b) option (2) of item XII.A is
selected and the vested percentage for any year under such option is
less than the vested percentage for the same year under option (2) of
this item.]
The nonforfeitable percentage of each participant in his accrued benefit
attributable to matching contributions and discretionary Employer
contributions for any top-heavy plan year shall be determined as
follows: [Select one]
(1) 100% vesting after _____ [not to exceed 3] years of
---- service.
(2) Number of Years Vesting
---- of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
XVIII. MAXIMUM ALLOCATIONS
A. Correction of excess allocations (23.1.4; 23.2.6):
If, as a result of the allocation of forfeitures, a reasonable error in
estimating a participant's compensation, a reasonable error in
determining the amount of elective deferrals that may be made by a
participant under the limitations of Section 23 of the plan, or other
limited facts and circumstances, the maximum permissible amount would be
exceeded for any limitation year, such excess amount with respect to a
participant for such limitation year shall be disposed of in the
following order:
(1) Any employee after-tax contributions (and any gains attributable
thereto) to the extent of such excess shall be returned to the
participant.
(2) If further reductions are necessary, any elective deferrals to
the extent of such excess shall be returned to the participant.
(3) If further reductions are necessary, then the Committee shall
reduce the excess amount in the following manner: [Select one]
X (a) First, such participant's share of the discretionary
---- Employer contributions, then his share of the
matching contributions, and finally, his share of
any forfeitures for the limitation year shall be
reduced in that order to the extent of such
remaining excess. Such excess amount shall be
credited to a separate special account for the
participant designated as a "suspense account," and
shall be applied in the next limitation year (and
succeeding limitation years if necessary) to reduce
matching contributions and discretionary Employer
contributions for the participant, provided he is
covered under the plan as of the adjustment date
such matching contributions or discretionary
Employer contributions are allocated. If the
participant is not covered under the plan at such
time, the balance of the suspense account shall be
reallocated among the remaining participants in the
ratio which each of such participant's compensation
during the limitation year in question bears to the
aggregate
-36-
<PAGE> 37
compensation of all such participants during such
limitation year, and before any employee after-tax
contribution, elective deferrals, qualified
non-elective contributions, matching contributions,
qualified matching contributions, or discretionary
Employer contributions for such limitation year are
allocated.
The suspense account shall be adjusted annually for
additions thereto and distributions therefrom, but
not for any net income or net loss attributable
thereto. In the event the plan is terminated, any
balance in the suspense account shall be returned
to the Employer.
(b) First, such participant's share of the
---- discretionary Employer contributions, then his
share of the matching contributions, and finally,
his share of any forfeitures for the limitation
year shall be reduced in that order to the extent
of such remaining excess. The amount of the
reduction shall be reallocated among the remaining
participants in the ratio which each of such
participant's compensation during the limitation
year in question bears to the aggregate
compensation of all such participants during such
limitation year and before any employee after-tax
contributions, elective deferrals, qualified
non-elective contributions, matching contributions,
qualified matching contributions, or discretionary
Employer contributions for such limitation year are
allocated. If all of the amount of such reduction
cannot be reallocated without causing the account
of each other participant to exceed the maximum
permissible amount, then such remaining amount
shall be credited to a suspense account.
The suspense account shall contain the excess
amounts of Employer contributions and forfeitures
from all limitation years. Such excess amounts
shall be allocated for each succeeding limitation
year among the accounts of participants in the
ratio which each of such participant's compensation
for the limitation year in question bears to the
aggregate compensation of all such participants
during such limitation year and before any employee
after- tax contributions, elective deferrals,
qualified non-elective contributions, matching
contributions, qualified matching contributions, or
discretionary Employer contributions for such year
are allocated. The suspense account shall be
adjusted annually for additions thereto and
distributions therefrom, but not for any net income
or net loss attributable thereto. In the event the
plan is terminated, any balance in the suspense
account shall be returned to the Employer.
Notwithstanding anything above or in the plan to the contrary, if all or
part of a participant's elective deferrals or employee after- tax
contributions are distributed to the participant pursuant to the
provisions of Section 23 of the plan, the matching contribution made
with respect to such elective deferrals or employee after-tax
contributions, adjusted for income and losses allocable thereto, shall
be forfeited by the participant on or before the March 15 next following
the end of the plan year for which the matching contribution was made.
The income and losses allocable to the forfeited matching contributions
for the plan year shall be determined in the same manner as income and
losses allocable to excess aggregate contribution are determined
pursuant to Section 2.3.6. Forfeitures of matching contributions
(including income and losses allocable thereto) shall be applied in the
current or next succeeding plan year in the same manner as elected by
the Employer in item XII.C of this Adoption Agreement.
B. Limits for multiple plans:
-37-
<PAGE> 38
If the Employer maintains another qualified defined contribution plan,
other than a regional prototype plan: [Select one]
X (1) The provisions of Section 23.2.1 through 23.2.6 will apply
---- as if the other plan were a regional prototype plan.
(2) [Provide the method under which the plans will limit total
---- annual additions to the maximum permissible amount, and
will properly reduce any excess amounts, in a manner that
precludes Employer discretion].
C. If the participant is or has ever been a participant in a defined
benefit plan maintained by the Employer: [Insert provision which
satisfies 1.0 limitation of Section 415(e) of the Code. See Treasury
Regulation Section 1.415-1 for guidance.]
If the sum of the defined benefit fraction and the defined contribution
fraction shall exceed 1.0 in any limitation year for any participant in
this plan, the Employer shall adjust the numerator of the defined
benefit fraction so that the sum of the defined benefit fraction and the
defined contribution fraction shall not be in excess of 1.0 in any year
for such participant in accordance with the provisions set forth in the
defined benefit plan.
-38-
<PAGE> 39
XIX. SUBSTITUTE TRUST OR CUSTODIAL ACCOUNT AGREEMENT (20.7)
[Complete this Item XIX only if you are adopting a separate trust
or custodial account agreement that overrides the trust
provisions of Section 20 of the plan.]
X The attached trust or custodial agreement overrides the
---- trust provisions of Section 20 of the plan.
-39-
<PAGE> 40
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto on the day of 19
------- --------------------------------, ------.
PLEXUS CORP.
-------------------------------------------
Name of Employer
By:
---------------------------------------
President, Partner, or Sole Proprietor
Attest/Witness:
- ------------------------------------
[Corporate Seal]
Name of Trustee(s)
By:
----------------------------------------
Individual/Authorized Officer
Attest:
- ------------------------------------
[Corporate Seal]
NOTE: The Employer may not rely on the notification letter
issued by the National or District Office of Internal Revenue Service as
evidence that this plan is qualified under Section 401 of the Code. In order
to obtain reliance with respect to plan qualification, the Employer must apply
to the appropriate Key District Office for a determination letter.
-40-
<PAGE> 41
The plan is adopted by the following affiliated employers:
-------------------------------------
Name of Affiliated Employer
By:
-------------------------------------
President, Partner, or Sole Proprietor
Attest/Witness:
- ------------------------------------
[Corporate Seal]
------------------------------------
Name of Affiliated Employer
By:
------------------------------------
President, Partner, or Sole Proprietor
Attest/Witness:
- ------------------------------------
[Corporate Seal]
------------------------------------
Name of Affiliated Employer
By:
------------------------------------
President, Partner, or Sole Proprietor
Attest/Witness:
- -----------------------------------
[Corporate Seal]
-41-
<PAGE> 1
EXHIBIT 10.5(c)
AMENDMENT NO. 1 TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
AND CORPORATE GUARANTEE AGREEMENT
as of August 28, 1996
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53201
LaSalle National Bank
120 South LaSalle Street
Chicago, Illinois 60603
Gentlemen:
Each of Electronic Assembly Corporation, a Wisconsin
corporation (the "Company"), and Plexus Corp., a Wisconsin corporation
("Plexus"), hereby agrees with you as follows:
1. Definitions. Reference is made to the Amended and
Restated Revolving Credit Agreement dated as of March 18, 1996 (the "Loan
Agreement") between the Company and each of you, pursuant to which the Company
has issued its promissory notes to each of you, each dated as of March 18, 1996
(the "Existing Notes"), in an aggregate principal amount equal to $55,000,000.
Further reference is made to the Amended and Restated Corporate Guarantee
Agreement dated of March 18, 1996 (the "Plexus Guarantee") made by Plexus in
favor of the Banks with respect the obligations of the Company under the Loan
Agreement. All capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms by the Loan Agreement as supplemented and
amended hereby.
<PAGE> 2
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 2
2. Decrease in Credit; Other Changes. The Company and
Plexus request that you agree to (i) decrease the aggregate amount of credit
available to the Company under the Loan Agreement from $55,000,000 to
$40,000,000, and (ii) make certain changes to the interest rate pricing option
provisions, covenants and other terms and conditions of the Loan Agreement and
the Plexus Guarantee. In connection with such credit reduction, the Company
and the Banks have agreed that all outstanding principal and accrued interest
on the Existing Note held by LaSalle National Bank (the "LaSalle Note"),
together with all fees and other amounts due LaSalle National Bank under the
Loan Agreement, shall be paid in full on the date hereof, and that effective
upon such payment LaSalle National Bank shall no longer be a party to the Loan
Agreement.
3. New Notes. Any additional loans made pursuant to the
Loan Agreement, together with the unpaid balances of the Existing Notes (other
than the LaSalle Note which shall be paid in full), shall be evidenced by new
promissory notes of the Company in the form of Exhibit A annexed hereto (the
"New Notes") to be dated the date hereof in the principal amounts of the
respective Commitments set forth in section 4(d) below. The New Notes shall be
executed by the Company and delivered to each of the remaining Banks against
return of their Existing Notes to the Company. Accrued interest on such
Existing Notes outstanding on the date of issuance of the New Notes shall be
included in the interest due on the New Notes issued in replacement of such
Existing Notes on the first interest payment date specified therein.
4. Amendments to Loan Agreement. Upon the execution and
delivery of the New Notes and the payment in full of the LaSalle Note as
provided below, and subject to all of the terms and conditions hereof, the Loan
Agreement shall be amended as of the date hereof as follows:
(a) All references in the Loan Agreement to the
Notes issued thereunder and the loans evidenced thereby shall refer to
the New Notes issued hereunder and the loans evidenced thereby
(including the unpaid balances of the Existing Notes after giving
effect to the transactions contemplated by this Amendment).
(b) All references to the Loan Agreement in the
Loan Agreement and the other agreements relating
<PAGE> 3
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 3
thereto shall refer to the Loan Agreement as amended hereby.
(c) The first paragraph of the Loan Agreement is
amended by deleting the reference therein to LaSalle National Bank, a
national banking association. All references to the "Banks" or the
"Creditor" in the Loan Agreement and the other agreements relating
thereto shall be deemed to refer only to Firstar Bank Milwaukee, N.A.,
Harris Trust and Savings Bank, and Bank One, Milwaukee, NA.
(d) The table set forth in Section 1.8 of the
Loan Agreement (Commitment) shall be amended to read in its entirety
as follows:
<TABLE>
<CAPTION>
Bank Percentage Interest Commitment
---- ------------------- ----------
<S> <C> <C>
Firstar Bank 45% $18,000,000
Milwaukee, N.A.
Harris Trust and 37.5% $15,000,000
Savings Bank
Bank One, 17.5% $ 7,000,000
Milwaukee, NA
Total 100% $40,000,000
==== ===========
</TABLE>
(e) The reference to $55,000,000 in clause (i) of
Section 1.23 of the Loan Agreement (Maximum Amount of Credit) is
amended to $40,000,000.
(f) Section 2.3(b) of the Loan Agreement
(Interest Calculation - Applicable Rate) is amended by deleting the
word "monthly" where it appears in clause (ii) thereof.
(g) The table set forth in Section 2.3(b) of the
Loan Agreement (Interest Calculation - Applicable Rate) is amended to
read in its entirety as follows:
<PAGE> 4
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 4
<TABLE>
<CAPTION>
Consolidated Debt
to Worth Ratio LIBOR Rate Spread Prime Rate Spread
----------------- ----------------- -----------------
<S> <C> <C>
greater than or 2.0% 0.25%
equal to 2.00 to 1
less than 2.00 to 1 1.5% 0%
but greater than or
equal to 1.5 to 1
less than 1.5 to 1 1.25% (0.25%)
but greater than or
equal to 1.25 to 1
less than 1.25 to 1 1.0% (0.25%)
but greater than or
equal to 1.00 to 1
less than 1.00 to 1 0.875% (0.25%)
</TABLE>
(h) The first sentence of Section 2.4 of the Loan
Agreement (Commitment Fee) is amended to read in its entirety as
follows:
"The Company will pay, with respect to each Note, a commitment
fee of one-eighth of one percent (1/8%), on a per annum basis,
as to the unused portion of the Commitment represented by such
Note during the period from the date of this Agreement to the
date on which the Commitment is terminated and the entire
amount of principal of and interest due on such Note is paid
in full."
(i) Section 6.6 of the Loan Agreement (Fixed
Asset Expenditures) is deleted in its entirety.
(j) Section 10.7 of the Loan Agreement (Notices)
is amended by deleting the name and address of LaSalle National Bank.
5. Amendments to Plexus Guarantee. Upon the execution
and delivery of the New Notes and the payment in full of the
<PAGE> 5
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 5
LaSalle Note as provided below, and subject to all of the terms and conditions
hereof, the Plexus Guarantee shall be amended as of the date hereof as follows:
(a) All references to the Plexus Guarantee in the
Loan Agreement and the other agreements relating thereto shall refer
to the Plexus Guarantee as amended hereby.
(b) Paragraph A of the Recitals to the Plexus
Guarantee is amended by deleting the reference therein to LaSalle
National Bank.
(c) Section 7(a) of the Plexus Guarantee is
amended to read in its entirety as follows:
"(a) Consolidated Tangible Net Worth.
Maintain at all times Consolidated Tangible Net Worth of not
less than $37,500,000."
(d) Section 7(h)(i) of the Plexus Guarantee is
hereby amended to read in its entirety as follows:
"(i) Within 45 days after the end of each
of the first three fiscal quarters in each
fiscal year, consolidated and consolidating
balance sheets for the Guarantor as of the
end of such quarter and consolidated and
consolidating statements of income of the
Guarantor for such quarter and for that part
of the fiscal year ending with such quarter,
all in reasonable detail and certified as
true and correct, subject to review and
normal year-end adjustments, by the chief
financial officer or chief operating officer
of the Guarantor;"
6. Representations and Warranties. The Company repeats
and reaffirms the representations and warranties set forth in Section 3 of the
Loan Agreement as of the date hereof. The Company also represents and warrants
that the execution, delivery and performance of this Amendment are within the
corporate powers of the Company, have been duly authorized by all necessary
corporate action and do not and will not (i) violate any provision of the
<PAGE> 6
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 6
articles of incorporation or by-laws of the Company or of any law, rule,
regulation, order or judgment presently in effect having applicability to the
Company; (ii) require the consent or approval of, or filing or registration
with, any governmental body, agency or authority; or (iii) result in any breach
of or constitute a default under any indenture or other agreement or instrument
under which the Company or any Subsidiary is a party or by which it or its
properties may be bound or affected.
7. Payment of LaSalle National Bank; Adjustment of
Interests, etc. On the date of this Amendment, the Company shall pay to
LaSalle National Bank the aggregate amount of $2,797,787.79, representing the
sum of $2,781,200 in respect of unpaid principal of the LaSalle Note,
$14,919.98 in respect of accrued and unpaid interest on the LaSalle Note, and
$1,667.81 in respect of accrued and unpaid fees and expenses under the Loan
Agreement. Upon receipt by LaSalle National Bank of such payment, (i) LaSalle
National Bank shall be eliminated as a party to the Loan Agreement, (ii) each
of you (other than LaSalle National Bank) will make such adjustments among
yourselves as are necessary so that after giving effect to such adjustments,
the Percentage Interest of each of you in the loans outstanding under the Loan
Agreement will be the Percentage Interest set forth under Section 1.8 of the
Loan Agreement as amended hereby, and (iii) all debts and obligations of the
Company and the Guarantors to LaSalle National Bank shall be satisfied in full
and LaSalle National Bank shall no longer have any rights or obligations under
the Loan Agreement or any of the agreements relating thereto.
8. Conditions. Without limiting any of the other terms
of the Loan Agreement as amended hereby, this Amendment shall not become
effective, and the Banks shall not be required to make any further loans to the
Company unless and until:
(a) No Default or Event of Default shall have
occurred and be continuing and neither the business nor the assets nor
the financial condition of the Company or any Guarantor shall have
been materially adversely affected as the result of any event or
development since September 30, 1995; and
(b) All proceedings taken in connection with the
transactions contemplated by this Amendment and all
<PAGE> 7
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 7
instruments, authorizations and other documents applicable thereto
shall be satisfactory in form and substance in the reasonable opinion
of the Banks and their counsel.
9. Confirmation of Loan Agreement, etc. Except as
expressly provided above, the Loan Agreement and the other agreements related
thereto shall remain in full force and effect.
10. Fees and Expenses. The Company shall be responsible
for the payment of all fees and out-of-pocket disbursements reasonably incurred
by the Banks in connection with the preparation, execution, delivery,
administration and enforcement of this Amendment including without limitation
the reasonable fees and disbursements of counsel for the Banks, whether or not
any transaction contemplated by this Amendment is consummated.
11. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws (other than the conflict of laws
rules) of the State of Wisconsin.
12. Counterparts. This Amendment may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
If the foregoing is satisfactory to you, please sign the form
of acceptance below and return a signed counterpart hereof to us.
Very truly yours,
ELECTRONIC ASSEMBLY CORPORATION
By:
------------------------------------
Title:
---------------------------------
PLEXUS CORP.
By:
------------------------------------
Title:
---------------------------------
<PAGE> 8
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 8
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE, N.A.
By:
------------------------------------
Title:
--------------------------------
HARRIS TRUST AND SAVINGS BANK
By:
------------------------------------
Title:
--------------------------------
BANK ONE, MILWAUKEE, NA
By:
------------------------------------
Title:
---------------------------------
LASALLE NATIONAL BANK
By:
------------------------------------
Title:
---------------------------------
<PAGE> 9
Firstar Bank Milwaukee, N.A.
Harris Trust and Savings Bank
Bank One, Milwaukee, NA
LaSalle National Bank
August 28, 1996
Page 9
The undersigned Guarantors hereby consent to the foregoing
Amendment, and agree that their respective Corporate Guarantee Agreements, each
dated as of March 18, 1996, and all collateral or security therefor, shall
remain in full force and effect notwithstanding the amendments made above.
Dated as of , 1996.
-----------------
PLEXUS CORP.
By:
------------------------------------
Title:
---------------------------------
TECHNOLOGY GROUP, INC.
By:
------------------------------------
Title:
--------------------------------
<PAGE> 10
EXHIBIT A
REVOLVING CREDIT NOTE
$_______________ _______________, 1996
FOR VALUE RECEIVED, the undersigned, ELECTRONIC ASSEMBLY
CORPORATION, hereby promises to pay to the order of _______________ (the
"Payee"), on July 31, 1998, at the office of Firstar Bank Milwaukee, N.A., as
Agent for the payee hereof, at 777 East Wisconsin Avenue, Milwaukee, Wisconsin
in lawful money of the United States of America and in immediately available
funds, the principal amount of ____________________ Dollars ($______________)
or, if less, the aggregate unpaid principal amount of all loans made by the
Payee to the undersigned under the Amended and Restated Revolving Credit
Agreement dated as of March 18, 1996, as amended from time to time (the "Credit
Agreement"), by and among the undersigned, Firstar Bank Milwaukee, N.A., for
itself and as Agent, and certain other banks named therein, together with
interest on the principal amount hereof from time to time unpaid. Interest
(computed on the basis of the actual number of days elapsed and a year of 360
days) shall accrue on such unpaid principal amount from time to time at the
rate or rates set forth in the Credit Agreement, and shall be payable monthly
on the first Business Day of each month, or at such other times as may be
provided in the Credit Agreement.
This Note is one of the New Notes issued under the Amended and
Restated Credit Agreement, as amended by Amendment No. 1 thereto dated as of
August 28, 1996, and is subject to permissive and mandatory prepayment, in each
case upon the terms provided in the Credit Agreement. This Note is payable and
secured in accordance with, is governed by and subject to, and is entitled to
the benefits of, the Credit Agreement. All capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement.
This Note shall be construed in accordance with the laws
(other than the conflict of laws rules) of the State of Wisconsin. The
undersigned waives presentment, protest and notice of dishonor, and agrees, in
the event of default hereunder, to pay all costs and expenses of collection,
including reasonable attorneys' fees.
ELECTRONIC ASSEMBLY CORPORATION
By: ___________________________________
Title:
_________________________________
<PAGE> 1
EXHIBIT 10.16
MASTER EQUIPMENT LEASE
LEASE NO. 90017
LESSOR: CARGILL LEASING CORPORATION (herein called the "Lessor")
6000 CLEARWATER DRIVE
MINNETONKA, MN 55343-9497
LESSEE: PLEXUS CORPORATION (herein called the "Lessee")
55 JEWELERS PARK DRIVE
NEENAH, WI 54957
<PAGE> 2
1. LEASE
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, pursuant
to the terms of this Master Equipment Lease (herein called the "Lease"), the
personal property described in Schedule(s) A, attached hereto and incorporated
herein, and all attachments, additions, accessories, replacement parts,
substitutions and repairs incorporated therein and/or affixed thereto, (herein
called the "Equipment") and the proceeds thereof. The parties may from time to
time, by mutual agreement, add other items of equipment to this Lease for such
terms and at such rates as may be agreed by execution of additional Schedule(s)
A, and this Lease shall control and be effective as to such additional items of
equipment as though the same were set forth herein. For purposes of construing
this Lease, all Schedule(s) A attached hereto shall be incorporated herein and
form a part hereof. No respective Schedule A shall be construed as an
independent separate lease.
2. TERM
This Lease shall be in force with respect to each item of Equipment for a
period beginning with the Commencement Date or if earlier, with respect to any
item of Equipment, the commencement of the corresponding Interim Rent Period as
set forth in the corresponding Schedule(s) A and ending at the expiration of
the period ("Expiration Date") set forth in the corresponding Schedule(s) A
(herein called the "Lease Term").
3. RENT
Lessee shall pay to Lessor the payment amounts set forth in Schedule(s) A
(herein called "Rent") for use of the Equipment for the Lease Term. Rent shall
be payable to Lessor at the office of Lessor in Minnetonka, Minnesota
55343-9497 or at such other location as Lessor may from time to time instruct
Lessee in writing. In the event Lessee should fail to pay Lessor any Rent
within fifteen (15) days of the due date thereof, or any other sum required to
be paid to the Lessor within fifteen (15) days of demand, Lessee shall pay unto
Lessor a delinquent payment charge from the due date of payment until paid at
an annual rate of 18% unless otherwise prohibited by law, in which case
interest will be charged at the highest lawful rate allowed. All payments
hereunder shall be applied to unpaid obligations then due per schedule.
4. WARRANTIES
LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER'S
AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT
TO THE EQUIPMENT, INCLUDING BUT NOT LIMITED TO: THE MERCHANTABILITY OF THE
EQUIPMENT OR ITS FITNESS FOR A PARTICULAR PURPOSE; THE DESIGN OR CONDITION OF
THE EQUIPMENT; THE QUALITY OR CAPACITY OF THE EQUIPMENT; THE WORKMANSHIP IN
THE EQUIPMENT; COMPLIANCE OF THE EQUIPMENT WITH THE REQUIREMENTS OF ANY LAW,
RULE, OR SPECIFICATION; PATENT INFRINGEMENTS OR LATENT DEFECTS, IT BEING
AGREED THAT THE EQUIPMENT IS LEASED "AS IS" AND THAT ALL RISKS AS BETWEEN
LESSOR AND LESSEE ARE TO BE BORNE BY LESSEE. LESSOR IS NOT RESPONSIBLE FOR
INSTALLATION OF, OR FOR ANY REPAIRS OR SERVICE TO, THE EQUIPMENT. LESSOR IS
NOT RESPONSIBLE FOR LOSS OF PROFIT OR FINANCIAL LOSS OR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OR INTERRUPTION OF
BUSINESS, WHICH MAY BE DIRECTLY OR INDIRECTLY CAUSED BY OR ATTRIBUTABLE TO THE
INADEQUACY OF THE EQUIPMENT. Lessee will be subrogated to Lessor's claims, if
any, against the manufacturer or supplier of the Equipment for breach of any
warranty or representation and, Lessor shall enforce any such warranty, express
or implied, issued on or applicable to any of the Equipment, provided, that
Lessee is not in default under the Lease pursuant to Section 13, hereof, and
<PAGE> 3
Lessor shall not be obligated to enforce any such warranty unless Lessee agrees
in writing to pay all expenses in connection therewith. All proceeds of any
such warranty recovery from the manufacturer or supplier of the Equipment shall
be used at the discretion of Lessor to either repair or replace the affected
Equipment. NOTWITHSTANDING THE FOREGOING, LESSEE'S OBLIGATION TO PAY RENT OR
ANY OTHER SUM REQUIRED UNDER THIS LEASE SHALL BE AND IS ABSOLUTE AND
UNCONDITIONAL.
5. TITLE AND IDENTIFICATION
This Lease is intended to constitute a true lease and not a sale of the related
Equipment. However, to the extent, at any time or from time to time, this
Lease is construed to be a transaction intended as security, Lessor retains
and Lessee hereby grants to Lessor a security interest in and to the Equipment,
the proceeds of any sale thereof, the assignment, lease, or sublease thereof,
any insurance proceeds with respect thereto, and any other rights of Lessee,
tangible or intangible, in and to the Equipment, the Lease, and their proceeds;
provided, further, that Lessee may not, to the extent this Lease is construed
to be a transaction intended as security, sell or otherwise encumber the
Equipment without Lessor's prior written consent. No right, title or interest
in the Equipment shall pass to Lessee other than, conditioned upon Lessee's
compliance with and fulfillment of the terms and conditions of this Lease, the
right to maintain possession and use the Equipment for the Lease Term as
provided in Schedule(s) A. Lessee, at its expense, will protect and defend
Lessor's title to the Equipment from and against all claims, liens, and legal
process of creditors of Lessee and take such action as is necessary to
discharge any such claim, lien, or legal process. Lessor may require plates or
markings to be affixed to or placed on the Equipment indicating Lessor is the
owner and Lessee will not alter, deface, cover or remove such ownership
identification.
6. TAXES, REGISTRATION, AND LICENSING
Lessee agrees to comply with all laws, regulations and orders relating to the
Lease and to pay when due as additional rent and indemnify Lessor on an
after-tax basis for, all assessments, license fees, taxes (including but not
limited to sales, use, excise, personal property, value added, consumption,
franchise, state income, gross receipts, ad valorem, stamp, documentary and
federal highway use tax) and all other governmental charges, fees, fines or
penalties whatsoever, whether payable by Lessor or Lessee, on or relating to
the Equipment or the purchase, manufacture, maintenance, transfer, lease,
possession, use, registration, rental, shipment, transportation, delivery,
ownership or operation thereof or on or relating to the Lease and the schedules
executed in connection therewith except taxes of Lessor on net income imposed
by the United States or the State of Minnesota other than sales, use, ad
valorem or rental taxes; provided, however, that if under local law or custom
such payments may be made only by Lessor, Lessee shall promptly notify Lessor,
and shall reimburse Lessor, upon demand, for all payments made by Lessor.
Where any tax or government charge is paid or reported directly by Lessor, the
amount of such tax attributable to the Equipment or the Lease shall be
determined in good faith by Lessor based on the same general assumptions and
methodology upon which Lessor and its parent company customarily file their
returns. If Lessee disagrees with such determination, such determination shall
be verified by KPMG Peat Marwick or another independent firm of certified
public accountants acceptable to Lessor; such verification to be based on the
provisions of this Section 6 and shall not involve the disclosure of
confidential information to Lessee. Lessor shall include the Equipment,
if_applicable, on Lessor's personal property tax return and Lessee shall
reimburse Lessor, upon demand, for all taxes paid by Lessor with respect
thereto. Unless otherwise requested by Lessor, Lessee shall prepare and file
all other returns required with respect to charges payable by Lessee hereunder
and furnish copies to Lessor; provided, however, that the foregoing shall not
include any federal and state income taxes of Lessor. Lessee shall obtain such
licensing and registration of the Equipment as is required by federal, state
and local law or regulation. Lessee agrees to promptly notify Lessor in
writing not more than five (5) days after any attachment, tax lien or other
judicial process shall attach to the Equipment and the full particulars
thereof.
7. GENERAL INDEMNIFICATION
<PAGE> 4
Lessee assumes liability for, and hereby agrees to indemnify, protect and hold
harmless Lessor on an after-tax basis, its agents, employees, officers,
directors, successors and assigns from and against any and all liabilities,
obligations, liens, losses, damages, injuries, claims, demands, penalties,
actions, costs and expenses, including reasonable attorney fees of whatsoever
kind and nature (including any of the foregoing arising in connection with
latent or other defects, or any claim for patent, trademark or copyright
infringement or under the doctrine of strict liability) (collectively
"Claims"), arising out of the manufacture, possession, use, condition,
operation, installation, alteration (with or without Lessor's consent), repair,
maintenance, ownership, selection, delivery, leasing, removal or return of the
Equipment, by Lessee, its agents, its employees or any permitted sublessees, or
arising out of any failure on the part of Lessee to perform or comply with
conditions of this Lease or by operation of law; provided such Claims are not
solely due to Lessor's gross negligence or willful misconduct. The indemnities
and assumptions of liabilities and obligations provided in Sections 6 and 8
hereof and in this Section shall continue in full force and effect
notwithstanding assignment, expiration or other termination of the Lease.
8. TAX INDEMNITY
Lessee agrees that if (i) Lessor shall not be entitled to accelerated cost
recovery deductions (the "MACRS deductions") as allowed under Section 168 of
the Internal Revenue Code of 1986, as amended, ("the Code") based on 100% of
the Original Cost of the Equipment to Lessor and utilizing the depreciable life
and method referred to in the attached Schedule(s) A, or (ii) if Lessor loses
any other intended tax benefit as a result of any subsequent change in the
Code, (including a change in the maximum federal corporate income tax rates
from the rates in effect under the Code as of the date of this Lease
hereinafter referred to as a "Tax Rate Change") or rules and regulations
promulgated pursuant thereto, whether or not retroactive, which impacts
Lessor's intended return and economics from this transaction, or (iii) if
Lessor is required to recognize income other than Rent and Stipulated Loss
Value (as defined below) as contemplated under the Lease, or (iv) if any item
of income, gain, loss or deduction is treated as having been derived from or
allocable to sources outside the U.S. (any of clauses (i) through (iv) herein
individually and collectively called the "Loss"), then Lessee shall pay to
Lessor, within thirty (30) days after the date of such Losses a lump sum amount
which, after deduction of all taxes required to be paid by Lessor in respect of
the receipt of such sum under the laws of any federal, foreign, state or local
government or taxing authority, shall preserve Lessor's after-tax discounted
cash flow rate of return on equity, cash flows and book income based on FASB
13, assumed by Lessor in entering into this Lease (hereinafter the "Lessor's
Economic Return") plus the amount required to reimburse Lessor on an after tax
basis for interest and penalties (including additions to tax because of
underpayment of estimated tax) which may be payable to any federal, state or
local government or taxing authority in connection with such Loss.
Notwithstanding the foregoing, any payment with respect to a Loss (except for
the amount of Loss, if any, which has occurred to date) caused by a Tax Rate
Change and due during the Lease Term shall be made through an increase to the
Rent sufficient to maintain the Lessor's Economic Return on an on-going,
current basis. The amount of such Loss and the resulting tax and indemnity
payable hereunder shall be determined in good faith by Lessor based on the
specific provisions hereof and based on the same general assumptions and
methodology upon which Lessor and its consolidated group customarily file their
returns (including such methodology used by Lessor for purposes of determining
available foreign tax credits), but shall be computed assuming that Lessor has
sufficient taxable income to fully utilize the intended tax benefits on a
current basis. Such determination shall be subject to the mutual agreement of
Lessor and Lessee or, failing such agreement shall be verified, without
disclosure to Lessee of confidential information, by KPMG Peat Marwick, or
another independent firm of certified public accountants acceptable to Lessor,
at Lessee's expense. The determination of such independent firm shall be
binding on the parties. For purposes of this Section 8 "Lessor" shall include
a reference to any consolidated group of corporations with which Lessor files
its federal income tax return.
In the event there is a change in tax law which affects the Stipulated Loss
Value schedule as originally computed, then as soon as reasonably possible
after the change in tax law the Stipulated Loss Value schedule shall be
adjusted accordingly. In making the adjustment Lessor shall use the same
assumptions as used in computing the original Stipulated Loss Value schedule
except that the change in tax law shall be substituted for the old tax
<PAGE> 5
law.
For the purpose of this Lease, the date of any such Loss shall be the earliest
of (i) the occurrence of any event (such as disposition or change in use of the
Equipment) which may cause such Loss, or (ii) the payment by Lessor (or the
consolidated federal taxpayer group of which Lessor is a part) to the Internal
Revenue Service of the tax increase resulting from such Loss, or (iii) receipt
by Lessor from the appropriate taxing authority of any notice of proposed
deficiency, statutory notice of deficiency or assessment relating to the Loss
or (iv) a determination by KPMG Peat Marwick or another independent firm of
certified public accountants or an independent tax counsel of a nationally
recognized law firm to the effect that Lessor (or the consolidated federal
taxpayer group of which Lessor is a part) is not entitled to such deduction or
is required to report such Loss, or (v) the adjustment of the tax return of
Lessor (or the consolidated federal taxpayer group of which Lessor is a part)
to reflect such Loss. If Lessee is not in default as defined in Section 13
hereof, Lessee shall not be required to pay the foregoing amounts if the Loss
results solely from the occurrence of any of the following events: (i) a
disqualifying disposition due to sale by Lessor of the Equipment or the lease
thereof by Lessor unless such sale is initiated by Lessee or otherwise
contemplated in accordance with the terms of this Lease, or (ii) a failure of
Lessor to timely claim depreciation for the Equipment in the appropriate tax
return of Lessor (or the consolidated federal taxpayer group of which Lessor is
a part) unless there is no reasonable basis to claim such deductions, or
claiming such deductions is inconsistent with previous Internal Revenue Service
adjustments.
9. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS
If Lessee shall fail to duly and promptly perform any of its obligations under
this Lease with respect to the Equipment, Lessor may, at its option, perform
any act or make any payment which Lessor deems necessary for the maintenance
and preservation of the Equipment and Lessor's title thereto, including
payments for satisfaction of liens, repairs, taxes, levies and insurance, and
all sums so paid or incurred by Lessor, together with any delinquent payment
charges pursuant to Section 3 hereof, and any reasonable legal fees incurred by
Lessor in connection therewith, shall be paid by Lessee to Lessor upon demand.
The performance of any act or payment by Lessor as provided herein shall not be
deemed a waiver or release of any obligation or default on the part of Lessee.
10. SELECTION, DELIVERY, AND INSTALLATION
Lessee has selected the Equipment, including the type, quantity, and the
supplier thereof, based solely on its own judgment and expressly disclaims any
reliance upon i) any statements or representations, if any, made by Lessor, its
agents or employees and ii) Lessor's, its agents or employees, skill of
judgement, if any, to select or furnish suitable equipment. Lessee
acknowledges that Lessor is not a dealer, manufacturer, merchant or supplier of
equipment of any kind and that the Equipment subject to this Lease is of a
type, size, design and capacity selected by Lessee and that Lessor is acquiring
the Equipment or the right to possession and use of the Equipment in connection
with this Lease. Lessor shall have no liability for any delivery or
installation of the Equipment or for any failure by supplier to fill the
purchase order or meet the conditions thereof.
11. USE AND ASSIGNMENT
Lessee, at its sole cost, will cause the Equipment to be operated and
maintained in accordance with any applicable manufacturer's manuals or
instructions, applicable laws, any insurance policies and any warranties of the
manufacturer with respect to the Equipment, by competent and duly qualified
personnel only, in accordance with applicable governmental regulations, if any,
and for its originally intended business purpose only. Lessee shall not sell,
pledge, hypothecate, or otherwise encumber or suffer a lien upon or against any
interest in this Lease or the Equipment nor shall Lessee move the Equipment
from its place of installation or delivery, as set forth in Schedule(s) A,
without Lessor's prior written consent. LESSEE SHALL NOT ASSIGN THE
<PAGE> 6
LEASE OR ASSIGN OR SUBLET ANY ITEM OF EQUIPMENT WITHOUT LESSOR'S PRIOR WRITTEN
CONSENT. ANY ASSIGNMENT OR SUBLEASE ENTERED INTO BY LESSEE WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, WHICH SHALL NOT BE UNREASONABLY WITHHELD, SHALL BE
NULL AND VOID.
Lessee agrees that Lessor may assign, sell or encumber all or any part of this
Lease, the Equipment and the Rent hereunder, and Lessee acknowledges that any
such assignment, sale, or encumbrance will not materially change its duty or
materially increase its burden or risk hereunder; and upon written notice
Lessee will unconditionally pay to such assignee all or any part of the Rent
and other sums due on or to become due under this Lease. Lessee shall not
assert against assignee and/or mortgagee any defense, counterclaim or offset
that Lessee may have against Lessor. Subject to the other terms and conditions
herein, this Lease inures to the benefit of and is binding upon the heirs,
legatees, personal representatives, successors and permitted assigns of the
parties hereto.
12. ALTERATIONS
Without the prior written consent of Lessor, Lessee shall not make any
alterations, additions or improvements to the Equipment. All permitted
alterations, additions and improvements of whatsoever kind or nature made to
the Equipment shall become the property of Lessor upon expiration or earlier
termination of this Lease except that any of the foregoing which are not
required pursuant to Section 11 and are removed without damage to the
Equipment, without adversely affecting the Equipment's commercial value, useful
life or originally intended use shall remain the property of Lessee. No
advertising or insignia shall be placed on the Equipment without the prior
consent of Lessor, unless the Equipment is rolling stock, whereas Lessor hereby
consents to the placement of Lessee's insignia.
13. EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute a default by
Lessee (herein called "Event of Default") in the performance of Lessee's
obligations hereunder:
(i) failure of Lessee to pay Rent within fifteen (15) days after it is
due, or failure of Lessee upon demand to pay any other amount required to be
paid herein or under any other agreement with Lessor; or
(ii) failure of Lessee to timely comply with any covenant, condition or
obligation, other than the payment of Rent and the obligations under Section 25
hereof, imposed on or required to be performed by Lessee under this Lease (and
such failure shall continue for fifteen (15) days after written notice by
Lessor) or under any material contract, loan or lease agreement or the
occurrence of an event of default under any other agreement with Lessor; or
(iii) failure of Lessee to perform or observe any covenant required to be
performed or observed by Lessee under Section 25 hereof; or
(iv) any representation or warranty made by Lessee herein shall prove
untrue in any material respect as of the date of issuance or making thereof; or
(v) Lessee or any of Lessee's guarantors ("Guarantor") shall become
insolvent or bankrupt or generally fails to pay, or shall admit in writing its
inability to pay, its debts as they come due, or shall make an assignment for
the benefit of, or any composition or arrangement with, its creditors, or shall
apply for, consent to or acquiesce in the appointment of a trustee, receiver,
liquidator or other custodian for Lessee or Guarantor, its business or all or a
substantial part of its property, or, in the absence of such application,
consent or acquiescence, a trustee, receiver, liquidator or other custodian
shall be appointed for Lessee or Guarantor, its business or all or a
substantial part of its property and is not discharged within thirty (30) days;
or
<PAGE> 7
(vi) any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy, insolvency or similar law of any applicable
jurisdiction, or any dissolution, winding up or liquidation case or proceeding
shall be commenced in respect of Lessee or Guarantor, and, if such case or
proceeding is not commenced by Lessee or Guarantor, as it shall be consented to
or acquiesced in by Lessee or Guarantor or remain undismissed for thirty (30)
days; or Lessee or Guarantor shall take any action to authorize, or in
furtherance of, any of the events described in clause (v) or this clause (vi);
or
(vii) any guaranty of Lessee's obligations hereunder for any reason ceases
to be in full force and effect or Guarantor denies that it has any further
liability under any such guaranty or gives notice to such effect; or
(viii) Lessee's or Guarantor's business is dissolved, terminated or is
discontinued; or Lessee or Guarantor dies, if either of them shall be an
individual; or
(ix) Lessee or Guarantor sells, transfers or disposes of all or
substantially all of its assets or property or a material portion thereof, or
merges with any other entity or engages in any form of corporate reorganization
or recapitalization without the prior written consent of Lessor; or
(x) A failure to notify within thirty (30) business days of any of the
following; transfer of ownership of the Lessee's or Guarantor's outstanding
voting stock or other action (issuance of new shares, sale of Treasury shares,
purchase of outstanding shares, dividends, etc.) resulting in a change in the
controlling interest of Lessee or Guarantor; or
(xi) Lessee attempts to move, sell, or transfer the Equipment from its
place of installation or domicile as described in Schedule(s) A attached
hereto, or encumber the Equipment or part with possession, sublet or assign
this Lease without Lessor's prior written consent.
14. REMEDIES
Upon occurrence of any Event of Default and at any time thereafter so long as
the same shall be continuing, Lessor may, at its option, declare this Lease to
be in default and may do one or more of the following with respect to any or
all Equipment as Lessor in its sole discretion shall elect, all of which are
hereby authorized by Lessee, to the extent permitted by and subject to
compliance with any mandatory requirements of applicable law then in effect:
(i) terminate this Lease effective immediately; or
(ii) cause Lessee, upon written demand and at Lessee's expense, to
promptly return any or all Equipment under all Schedules to Lessor pursuant to
Section l8 hereof; or
(iii) take possession of any or all Equipment and remove the same without
liability for injuries suffered through or loss caused by such repossession.
LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE AND JUDICIAL HEARING WITH RESPECT TO
THE REPOSSESSION OR ATTACHMENT OF THE EQUIPMENT BY LESSOR IN THE EVENT OF
DEFAULT HEREUNDER BY LESSEE. In the event Lessor proceeds pursuant to this
subsection (iii), Lessor may sell any or all Equipment at public or private
sale as is commercially reasonable given the existing conditions on an "AS IS,
WHERE IS" basis without recourse or warranties of any kind, or otherwise hold,
use, operate, or keep idle such Equipment, as Lessor in its sole discretion
determines is commercially reasonable free and clear of all rights of Lessee;
or
(iv) whether or not Lessor has exercised any other right hereunder, by
written notice to Lessee, cause Lessee to pay Lessor (as liquidated damages for
loss of a bargain and not as a penalty) on the date specified in such notice an
amount equal to the Rent due and payable on the first of the month following
the date of the notice of Lease termination plus a sum equal to the appropriate
Stipulated Loss Value determined as of the first of the month following the
date of the notice of Lease termination in accordance with the Stipulated Loss
Value
<PAGE> 8
Schedule set out in Schedule(s) A. "Stipulated Loss Value" shall mean an
amount equal to the product of the Original Cost of such Equipment multiplied
by the percentage set forth on the SLV Schedule in Schedule(s) A; or
(v) Lessor may exercise any other right or remedy which may be available
to it under the Uniform Commercial Code or any other applicable law or proceed
by appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
In addition, Lessee shall pay Lessor all costs and expenses incurred by Lessor
as a result of Lessee's default hereunder or the termination hereof including
without limitation, reasonable attorney's fees, and costs arising out of
repossession and disposal of the Equipment.
Provided Lessee has previously paid to Lessor the sum of the Stipulated Loss
Value, Rent due and owing, and other costs and expenses incurred pursuant
hereto, Lessee shall be entitled to the net proceeds of any such sale,
disposition, or re-lease of the Equipment to the extent they do not exceed the
Stipulated Loss Value. Any excess shall be retained by Lessor. To the extent
the Equipment is re-leased by Lessor, Lessee shall be credited the present
value of the lease rental stream at the discount rate of Chase Manhattan Prime
as of the date the re-lease is agreed to between the parties. Furthermore, to
the extent the parties to this Lease need to determine the present value of any
monies due under the Lease, the parties agree that the discount rate shall be
Chase Manhattan Prime.
In addition, Lessee shall continue to be liable for all indemnities under this
Lease and for all reasonable attorney fees and other costs and expenses
resulting from the termination hereof and/or the exercise of Lessor's remedies,
including placing any Equipment in the condition required by Section 18 hereof.
No remedy referred to in this Section is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity. Any repossession or
subsequent sale or lease by Lessor of the Equipment shall not bar an action for
a deficiency as herein provided and the bringing of any action or the entry of
judgment against the Lessee shall not bar the Lessor's right to repossess any
or all Equipment. No expressed or implied waiver by Lessor of any default
shall constitute a waiver of any other default by Lessee or a waiver of any of
Lessor's rights.
15. NOTICES
Any notices or demands required to be given herein shall be given to the
parties in writing and shall be deemed given when mailed by certified mail,
postage prepaid, by direct courier or by confirmed facsimile to the address
herein set forth or to such other address as the parties may hereafter
substitute by written notice.
16. REPAIRS: LOSS AND DAMAGE
Lessee agrees, at its sole expense, to keep the Equipment in good repair,
condition and working order, and to furnish all parts, mechanisms or devices
which may be required in the course of so doing. Lessee will maintain in force
a maintenance agreement covering the Equipment with the manufacturer thereof or
such other party with Lessor's prior written consent and will maintain the
Equipment at current engineering standards.
Lessee agrees to immediately inform Lessor of any damage to the Equipment or
caused by the Equipment or the existence of any Casualty Occurrence as
hereinafter defined. All risk of loss with respect to the Equipment shall be
borne by Lessee.
If Lessor determines that any Equipment is lost, stolen, destroyed, or damaged
for any reason, or in the event of any condemnation, confiscation, theft or
seizure or requisition of title to or the use of such Equipment (herein called
"Casualty Occurrence"), Lessee will, at the option of Lessor, either (a) repair
or replace the same with like Equipment in good repair or (b) promptly pay to
Lessor:
<PAGE> 9
(i) a sum equal to the Stipulated Loss Value of such Equipment
determined as of the date following the Casualty Occurrence set forth in the
Stipulated Loss Value Schedule in the related Schedule A(s); plus
(ii) an amount equal to the Rent in respect of the Equipment
suffering a Casualty Occurrence accrued up to the Stipulated Loss Value Date
used for calculation of the Stipulated Loss Value payment; less
(iii) any physical damage insurance proceeds received by Lessor as a
result of said Casualty Occurrence.
As of the date on which the Stipulated Loss Value is due, the Rent for such
Equipment shall cease to accrue and the term of this Lease as to such Equipment
shall terminate and (except in case of the loss, theft or complete
destruction), Lessor shall be entitled to recover possession of the Equipment.
Lessor hereby appoints Lessee its agent to dispose of any Equipment suffering a
Casualty Occurrence at the best price obtainable on an "AS IS, WHERE IS" basis
without recourse or warranties of any kind. Provided that Lessor has been paid
the Stipulated Loss Value and all Rent or other sums due and owing as to such
Equipment, Lessee shall be entitled to the net proceeds of such sale to the
extent they do not exceed the Stipulated Loss Value of such Equipment.
Any_excess shall be_paid to Lessor.
17. INSPECTION
Lessor, or its employees or agents, may, but shall not be obligated to, inspect
the Equipment at a reasonable time or place, and for such purpose enter any
building or place where said Equipment is located.
18. RETURN OF EQUIPMENT
Upon the Expiration Date, or earlier termination as provided herein, unless
Lessee shall have duly exercised a renewal or purchase option with respect
thereto, Lessee, at its own risk and expense, will immediately return the
Equipment as described in such Schedule(s) A to Lessor at such location(s) as
Lessor shall designate, freight and insurance prepaid; provided such location
is within the continental United States. Lessee hereby acknowledges that any
such designation is reasonably convenient to Lessee. Lessee shall have the
Equipment certified for the manufacturer's standard maintenance agreement prior
to redelivery to Lessor and will provide a letter to that effect if requested
by Lessor.
In the event that the Equipment is not returned within three (3) days after the
Expiration Date or such date as earlier terminated, Lessee shall pay as
additional rent an amount equal to the daily equivalent of Rent as described
in the applicable Schedule(s) A for each day from, and_including_the Expiration
Date or such date as earlier terminated until and including the day on which
the Equipment is returned. Payment of additional rent hereunder does not
relieve Lessee of its obligation to return the Equipment immediately at such
time as set forth herein.
19. FINANCIAL REPORTS
Lessee and Guarantor shall furnish Lessor during the Lease Term hereof with
annual audited financial statements within one hundred twenty (120) days after
the end of its fiscal year and such other public financial information as
Lessor may from time to time request including, without limitation, reports
filed with federal or state regulatory agencies. Lessee and Guarantor hereby
warrant and represent that all financial statements heretofore and hereafter
delivered to Lessor by or upon behalf of Lessee and Guarantor have been and
will be prepared in accordance with generally accepted accounting principles,
and any statements and data submitted in writing to Lessor in connection with
this Lease, are true and correct and present fairly the financial condition of
Lessee and Guarantor for the period involved.
<PAGE> 10
20. NO OFFSET
LESSEE HEREBY WAIVES ANY AND ALL EXISTING AND FUTURE CLAIMS AND OFFSETS,
AGAINST ANY RENT OR OTHER PAYMENTS DUE HEREUNDER; AND AGREES TO PAY THE RENT
AND OTHER AMOUNTS HEREUNDER REGARDLESS OF ANY OFFSET OR CLAIM WHICH MAY BE
ASSERTED BY LESSEE OR ON ITS BEHALF. LESSEE HEREBY FURTHER ACKNOWLEDGES THAT
THE MANUFACTURER AND/OR SUPPLIER OF THE EQUIPMENT, INCLUDING THEIR RESPECTIVE
AGENTS AND EMPLOYEES, WERE AT NO TIME AND ARE NOT NOW THE AGENT OR UNDER THE
SUPERVISION OF LESSOR, NOR WAS OR IS LESSOR IN ANY MANNER, THE AGENT OF THE
MANUFACTURER AND/OR SUPPLIER.
21. LESSEE'S REPRESENTATIONS
Lessee represents, warrants and agrees that (a) it has the full power,
authority and legal right to enter into and perform this Lease; the execution,
delivery and performance of this Lease have been duly authorized by all
necessary corporate or other legal action on the part of Lessee, do not require
the approval or consent of any stockholder, trustee or holders of any
indebtedness or obligations of Lessee, and will not contravene any law,
governmental rule, regulation or order binding on Lessee (or the Certificate or
Articles of Incorporation or By-Laws of Lessee if it is a corporation) or
contravene the provisions of, or constitute a default under, or result in the
creation of any lien or encumbrance upon the property of Lessee under any
indenture, mortgage, contract or other agreement to which Lessee is a party, or
by which its subsidiaries may be bound or affected; and (b) all consents and
approvals of, the giving of notice to, registration with, and the taking of any
other action in respect of any federal, state or foreign governmental authority
or agency, necessary, if at all, to permit the transactions contemplated by
this Lease have been taken; and (c) this Lease constitutes a legal, valid and
binding obligation of Lessee enforceable against Lessee in accordance with the
terms thereof; and (d) there are no pending or threatened actions or
proceedings before any court or administrative agency which will adversely
affect the condition, business or operations of Lessee or any of its
subsidiaries or the ability of Lessee to perform its obligations under this
Lease; and (e) the transactions contemplated by this Lease will raise no
presumption of fraud as against and will be effective against all creditors of
Lessee under applicable state and federal laws, including, without limitation,
laws relating to fraudulent conveyances or bulk transfers; and (f) Lessee shall
provide Lessor, upon request, with an opinion of counsel satisfactory to Lessor
with respect to the foregoing matters.
22. FURTHER ASSURANCES
Lessee shall execute and deliver to Lessor, upon Lessor's request, such further
documents, instruments, and assurances as Lessor deems reasonably necessary or
advisable for the confirmation or perfection of this Lease and Lessor's rights
hereunder and such information as is necessary to support Lessor's treatment of
the transaction for tax purposes. Lessee authorizes Lessor to file, at
Lessor's option, any such instruments (including financing statements and
certificates of title) without Lessee's signature, and if such signature is
required by law, Lessee appoints Lessor as Lessee's attorney-in-fact to execute
such items. Such appointment is irrevocable and shall be deemed to be coupled
with an interest. Lessee shall reimburse Lessor for all reasonable expenses
incurred by Lessor in connection with this provision, including the costs of
searches and all filings. Any such filing or recording shall not in and of
itself be a factor in determining whether or not the Lease is intended as
security.
23. QUIET ENJOYMENT
Lessor covenants that Lessor will not interfere in Lessee's quiet enjoyment of
the Equipment hereunder during the Lease Term so long as (i) Lessee is in
compliance with each term and condition hereof, and (ii) no Event
<PAGE> 11
of Default has occurred or is continuing.
24. WAIVER
The failure of Lessor to insist, in any one or more instances, upon strict
performance by_Lessee of any of the covenants of this Lease, or to exercise any
option herein contained, shall not be construed as a waiver or relinquishment
for the future of such covenant or option, but the same shall continue and
remain in full force and effect. The receipt by Lessor of Rent, with knowledge
of the breach of any covenant or condition hereof, shall not be deemed a waiver
of such breach and no waiver by Lessor of any provision hereof shall be deemed
to have been made unless expressed in writing and signed by Lessor.
25. INSURANCE
At its own expense, Lessee shall obtain and maintain for the Lease_Term,
physical damage and liability insurance. The physical damage insurance shall
insure against loss or damage to the Equipment including, without limitation,
loss by fire, explosion, wind, hail, flood, malicious mischief, vandalism,
theft, collision, upset, overturn, glass breakage and any other physical loss
to the Equipment. The amount of insurance against loss or damage shall not be
less than the replacement cost of the Equipment. Such policy providing
insurance for the damage to the Equipment shall name Lessor as Loss Payee as
Lessor's interest may appear and shall not have a deductible amount in excess
of $50,000 without the express written consent of Lessor.
The liability insurance shall provide coverage for the liability of Lessee and
Lessor for damages arising out of the ownership, maintenance, use, and
operation of the Equipment. Such liability insurance shall also contain a
contractual liability provision. Liability insurance shall have minimum limits
of $1,000,000 per person, $1,000,000 occurrence and $1,000,000 property damage,
or $1,000,000 combined single limit and shall have no deductible without the
express written consent of Lessor. Each insurance policy shall name Lessee as
the named insured and Lessor as an additional insured and shall contain a
clause requiring the insurer to give Lessor 30 days prior written notice of any
material alteration in the terms of the policy or of the cancellation thereof.
To the extent that Lessee may have liability insurance in excess of the minimum
limits required herein, Lessor shall be named as an additional insured on any
such coverage.
Lessee or Lessee's insurance agent(s) shall furnish to Lessor a Certificate of
Insurance or other evidence satisfactory to Lessor that such insurance coverage
is in or will be in effect as of the Commencement Date set forth in Schedule(s)
A or the date of Delivery and Acceptance by Lessee, whichever is earlier;
provided, however, that Lessor shall be under no duty either to ascertain the
existence of or to examine such insurance policy or to advise Lessee in the
event such insurance coverage shall not comply with the requirements hereof.
Lessee further agrees to give to Lessor prompt written notice not more than
five (5) days after any damage to, or loss of, the Equipment or damage or
injury caused by the Equipment. Lessee shall, at its own expense and cost,
have the duty and responsibility to make all proofs of loss and take all other
steps necessary to effect collections from underwriters for any loss under any
of the above mentioned policies. The proceeds of such insurance, at the option
of Lessor shall be applied (a) toward the replacement, restoration or repair of
the Equipment or (b) toward payment of the obligations of Lessee hereunder.
Any policies of insurance carried in accordance with this Section shall provide
that in respect of the interests of Lessor in such policies, the insurance
shall not be invalidated by any action or inaction of Lessee or any other
person (other than Lessor) including, but not limited to, any misrepresentation
and shall insure Lessor's interests, as they appear, regardless of any breach
or violation of any warranties, declarations, or conditions contained in such
policies by or binding upon Lessee or any other person (other than Lessor).
Lessee shall, to the extent reasonably possible, obtain the liability insurance
required hereunder on an occurrence basis rather than a claims-made basis. To
the extent that the Lessee must obtain some or all of this coverage on a
claims-made basis, Lessee shall provide Lessor with satisfactory evidence that
the retroactive date
<PAGE> 12
of the claims-made policy is prior to the Commencement Date or the date of
Delivery and Acceptance by Lessee, whichever is earlier; that the then
remaining aggregate amount of Lessee's coverage is and will be sufficient to
meet the minimum amount of coverage required hereunder, and that the policy
will either remain in force, be renewed, or a satisfactory discovery period
will be purchased to cover any claims which might arise hereunder in the
future.
Lessee's obligation to keep the Equipment insured as provided herein shall
continue until the Equipment is returned to Lessor pursuant to Section 18
hereof.
26. TERMINATION OPTIONS.
Provided Lessee shall have complied with all the terms and conditions of the
Lease and provided Lessee shall not be in default as defined in Section 13
herein, Lessee shall, at least 120 days prior to the Expiration Date of the
Lease, notify Lessor of its intent to exercise one of the following options:
(a) to its fair market value rental for no more than 2 years. Each
lease renewal will be subject to the approval of Lessor's investment
committee; or
(b) Lessee shall have the option to purchase on an "as is" basis the
Equipment at a cost equaling the then fair market value. The
determination of fair market value will assume the Equipment is to
be in the condition required under this Lease.
(i) The term "fair market value" shall mean the selling price
that would be obtained in an arms-length transaction between an
informed and willing buyer and an informed and willing seller each
under no compulsion to buy or sell. Fair market value shall be
determined on the basis that the Equipment is in complete
compliance with all conditions specified in this Lease. The fair
market value shall be an amount mutually agreed upon by Lessor and
Lessee. Lessee's reasonable estimate of the fair market value of the
Equipment shall accompany its notice to exercise its purchase
option. If Lessor and Lessee are unable to agree upon the fair
market value of the Equipment within 30 days after Lessor's receipt
of the estimate thereof, then Lessor shall employ a recognized
independent appraiser which will be selected by Lessor and consented
to by Lessee, which consent shall not be unreasonably withheld, to
determine fair market value. If Lessor and Lessee are not able to
agree upon an appraisal, or if the fair market value is not so
determined within 60 days after Lessor's receipt of Lessee's notice
of estimate, the fair market value shall be determined by an
appraisal mutually agreed to by two recognized independent appraisal
firms, one of which shall chose by Lessor and one by Lessee, or if
such appraisers cannot agree on the fair market value, an appraisal
arrived at by a third party independent appraiser chosen by the
mutual consent of the two appraisers. The fair market value as
finally determined shall bear interest at the late rate set forth in
section 3 for the period, if any, from the date of the expiration
of the Lease with respect to that item of Equipment to the date of
payment, and Lessee shall promptly reimburse Lessor for the costs of
all appraisals should any appraisal be necessary.
c) Lessee will at its sole risk and expense immediately return all
but not less than all of the Equipment under such expired
Schedule(s) A to Lessor pursuant to Section 18 hereof at such
location and at such time as Lessor shall designate within the
continental United States.
If lessee does not choose any of the above options at least 90 days prior to
the Expiration Date of the Lease, then the Lease will automatically extend
monthly, under the same terms and conditions then in effect, including Rent.
This extension will continue on a month to month basis until terminated by
Lessee or Lessor in writing and such termination will become effective 30 days
after receipt of such written notice.
<PAGE> 13
27. JURISDICTION
Lessee hereby consents to jurisdiction and venue of the federal or state courts
sitting in the State of Minnesota for purposes of resolving all disputes of any
nature whatsoever regarding the Lease, or any transaction contemplated hereby
and Lessee hereby waives objection which it may now or hereafter have to the
laying of jurisdiction or venue in the federal or state courts of Minnesota.
Lessor and Lessee agree that a summons and complaint commencing an action or
proceeding in any such court shall be properly served and shall confirm
personal jurisdiction if served personally, by certified mail to it at its
address designated pursuant to the Lease, or as otherwise provided under the
respective rules of the state or federal courts of Minnesota.
28. MISCELLANEOUS
If there should be more than one party executing this Lease as Lessee, all
obligations hereunder to be performed by Lessee shall be the joint and several
liability of all such parties. Any provision of this Lease which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Time is of the essence
with respect to this Lease. The captions in this Lease are for convenience
only and shall not define or limit any of the terms hereof.
The parties hereto acknowledge by INITIALING immediately hereafter that no
waiver, amendment, re-lease or modification of this Lease shall be established
by conduct, custom, or course of dealing but solely by an instrument in writing
duly executed by the parties hereto.
LESSEE: LESSOR:
---------- -----------
This Lease consists of the foregoing and the Schedules, Exhibits, Addenda, and
Riders referred to herein and correctly sets forth the entire Lease agreement
between Lessor and Lessee. No agreements or understandings shall be binding on
either of the parties hereto unless specifically set forth in this Lease.
THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MINNESOTA, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, REGARDLESS OF THE STATE OF MINNESOTA'S
CHOICE OF LAW PROVISIONS.
IN WITNESS WHEREOF, the parties hereto through a duly authorized representative
have executed this Lease as of this
25th day of January , 19 96 .
- ------ ---------------- ----
LESSEE: PLEXUS CORPORATION
By: (Lisa M Heid)
----------------------------
WITNESS/
<PAGE> 14
ATTEST: Title: (Asst. Controller)
------------------------- -------------------
LESSOR: CARGILL LEASING CORPORATION
By: (David L. Jacobson)
----------------------------------
Title: (Vice President)
-------------------------------
<PAGE> 1
EXHIBIT 11
1996 10-K
PLEXUS CORP.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
for the year ended September 30, 1996
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Primary Fully Diluted
------- -------------
<S> <C> <C>
Net income $7,431 $7,431
Adjustment for preferred
stock dividends earned 512 -
------ ------
Adjusted
net income $6,919 $7,431
====== ======
Weighted average number of
common shares outstanding 6,496 6,496
Adjustments:
Assumed issuances under
stock option plan 136 137
Assumed conversion of
preferred stock - 555
------ ------
6,632 7,188
====== ======
Net income per common share $ 1.04 $ 1.03
====== ======
</TABLE>
<PAGE> 1
EXHIBIT 21
1996 10-K
Subsidiaries of Plexus Corp.
1. Electronic Assembly Corporation, a Wisconsin corporation
2. Technology Group, Inc., a Wisconsin corporation
<PAGE> 1
EXHIBIT 23
1996 10-K
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Plexus Corp. and Subsidiaries on Form S-8 (File No.'s 33-06469, 33-23490,
33-28309, 33-56932, 33-89862 and 33-89864) of our reports dated November 13,
1996 on our audits of the consolidated financial statements and the financial
statement schedule of Plexus Corp. and Subsidiaries as of September 30, 1996
and 1995, and for each of the three years in the period ended September 30,
1996, which reports are included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 1,847
<SECURITIES> 0
<RECEIVABLES> 35,312
<ALLOWANCES> 275
<INVENTORY> 54,386
<CURRENT-ASSETS> 94,749
<PP&E> 33,676
<DEPRECIATION> 21,253
<TOTAL-ASSETS> 107,374
<CURRENT-LIABILITIES> 43,324
<BONDS> 0
0
0
<COMMON> 65
<OTHER-SE> 47,952
<TOTAL-LIABILITY-AND-EQUITY> 107,374
<SALES> 316,124
<TOTAL-REVENUES> 316,124
<CGS> 288,791
<TOTAL-COSTS> 288,791
<OTHER-EXPENSES> 13,346
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,924
<INCOME-PRETAX> 12,377
<INCOME-TAX> 4,946
<INCOME-CONTINUING> 7,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,431
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.03
</TABLE>
