As filed with the Securities and Exchange Commission on July 25, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
ADVANCED TECHNOLOGY LABORATORIES, INC.
(Exact name of Registrant as specified in its charter)
Washington 91-1353386
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
22100 Bothell Everett Highway
P.O. Box 3003
Bothell, WA 98041-3003
(Address of principal executive offices, including zip code)
AMENDED 1992 NONOFFICER EMPLOYEE STOCK OPTION PLAN
AMENDED 1992 OPTION, STOCK APPRECIATION RIGHT, RESTRICTED
STOCK, STOCK GRANT AND PERFORMANCE UNIT PLAN
AMENDED NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
AMENDED AND RESTATED INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
(Full title of the plan)
W. BRINTON YORKS, Jr.
Vice President, General Counsel and Secretary
ADVANCED TECHNOLOGY LABORATORIES, INC.
22100 Bothell-Everett Highway
P.O. Box 3003
Bothell, WA 98041-3003
(206) 487-7000
(Name, address and telephone number, including area code, of
agent for service)
__________________
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Maximum Maximum Amount
to Be Number to Offering Aggregate of
Registered be Price Per Offering Registra-
Registered Registered Share(1) Price(1) tion Fee
---------- ---------- --------- --------- --------
Common 1,025,000(2) $33.0625 $33,889,062 $11,685.88
Stock, par
value $.01
per Share
(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(h). The price per share is estimated to
be $33.0625 based on the average of the high and low prices for
the Common Stock in the over-the-counter market on July 23, 1996
as reported on the Nasdaq National Market.
(2) Of this number, 70,000 are being registered for issuance pursuant
to the Amended 1992 Nonofficer Employee Stock Option Plan,
550,000 are being registered for issuance pursuant to the Amended
1992 Option, Stock Appreciation Right, Restricted Stock, Stock
Grant And Performance Unit Plan, 55,000 are being registered for
issuance pursuant to the Amended Nonemployee Director Stock
Option Plan and 350,000 are being registered for issuance
pursuant to the Amended and Restated Incentive Savings and Stock
Ownership Plan. In addition to this number of shares, an
indeterminate number of additional shares which may be necessary
to adjust the number of shares reserved for issuance pursuant to
such plans as the result of any future stock split, stock
dividend or similar adjustment of the outstanding Common Stock of
the Registrant.
Exhibit Index is on page 6
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REGISTRATION OF ADDITIONAL SECURITIES
Pursuant to General Instruction E, this registration
statement on Form S-8 is filed by Advanced Technology
Laboratories, Inc. (the "Registrant") to register additional
securities under the Plans described in Registration
Statement Nos. 33-38217, 33-47967, 33-54757, 33-59914, 33-
61807 and 33-66298 (including post-effective Amendment No.1
thereto (the "Post-Effective Amendment")) to be issued
pursuant to an amendment to the Plans approved by the
Registrant's Board of Directors on February 22, 1996 and May
8, 1996, and by the Registrant's Shareholders on May 8,
1996. Portions of Registration Statement Nos. 33-38217, 33-
47967, 33-54757, 33-59914, 33-61807, 33-66298 and the Post-
Effective Amendment are incorporated herein by reference.
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference
in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995 filed on March 31, 1996;
(b) All other reports filed by the Registrant
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since
the end of the fiscal year covered by the Annual Report
referred to in (a) above;
(c) The description of the Registrant's Common
Stock contained in the Current Report on Form 8-K filed on
January 11, 1996; and
(d) The description of the Registrant's Common
Stock contained in the Registration Statement on Form 10
(Registration No. 0-15160) filed with the Commission on
November 12, 1986 under Section 12(g) of the Exchange Act,
and any amendment or report filed for the purpose of
updating such description.
All documents filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
after the date hereof, and prior to the filing of a post-
effective amendment which indicates that the securities
offered hereby have been sold or which deregisters the
securities covered hereby then remaining unsold, shall also
be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof commencing on
the respective dates on which such documents are filed.
Item 4. Not Applicable
Item 5. Not Applicable
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Incorporated herein by reference to the Post-Effective
Amendment on Form S-8, filed with the Commission on August
11, 1995 under Registration Statement No. 33-54757.
Item 7. Not Applicable
2
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Item 8. EXHIBITS
Exhibit
Number Description
- ------- ---------------------------------------
5.1 Opinion of Bogle & Gates P.L.L.C.
10.1 Amended 1992 Nonofficer Employee Stock
Option Plan
10.2 Amended 1992 Option, Stock Appreciation
Right, Restricted Stock, Stock Grant And
Performance Unit Plan
10.3 Amended Nonemployee Director Stock Option
Plan
10.4 Amended and Restated Incentive Savings and
Stock Ownership Plan
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Bogle & Gates P.L.L.C. (included
in opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if in the aggregate, the
changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to
such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (A)(1)(i) and (A)(1)(ii)
above do not apply if the registration statement is on Form
S-8 or Form S-3, and the information required to be included
in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
Undertakings pursuant to Regulation S-K Rule 512(b) and
(h) are incorporated by reference to Registration Statement
Nos. 33-38217, 33-47967, 33-54757, 33-59914, 33-61807, 33-
66298 and the Post-Effective Amendment.
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SIGNATURES
The Registrant. Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Bothell, State of Washington, on this 25th day of
July, 1996.
ADVANCED TECHNOLOGY
LABORATORIES, INC.
/s/ Dennis C. Fill
By ___________________
Dennis C. Fill
Chairman and Chief
Executive Officer
The Plan. Solely with respect to the Registrant's
Incentive Savings and Stock Ownership Plan and pursuant to
the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the employee benefit plan)
have duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in
the City of Bothell, State of Washington, on this 25th day
of July, 1996.
INCENTIVE SAVINGS AND
STOCK OWNERSHIP PLAN
/s/ Harvey N. Gillis
By ________________________
Harvey N. Gillis, Senior
Vice President
and Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Dennis C. Fill and W. Brinton Yorks, Jr., and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
any amendments to the Registration Statements, and to file
the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the date
indicated on July 25, 1996.
Signature Title
/s/ Dennis C. Fill Chairman of the Board, Chief
------------------- Executive Officer
Dennis C. Fill
/s/ Harvey N. Gillis Senior Vice President, Chief
-------------------- Financial Officer (Principal
Harvey N. Gillis Financial Officer)
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/s/ Phillip M. Nudelman Director
---------------------
Phillip M. Nudelman, Ph.D.
/s/ Kirby L. Cramer Director
----------------------
Kirby L. Cramer
/s/ Harvey Feigenbaum Director
----------------------
Harvey Feigenbaum, M.D.
/s/ Eugene A. Larson Director
----------------------
Eugene A. Larson
/s/ John R. Miller Director
----------------------
John R. Miller
/s/ Harry Woolf Director
----------------------
Harry Woolf, Ph.D.
/s/ Richard S. Totorica Vice President and Corporate
---------------------- Controller (Principal Accounting
Richard S. Totorica Officer)
5
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INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------- -------------------------------- ----------
5.1 Opinion of Bogle & Gates P.L.L.C. 7
10.1 Amended 1992 Nonofficer Employee Stock 8 - 21
Option Plan
10.2 Amended 1992 Option, Stock Appreciation 22 - 37
Right, Restricted Stock, Stock Grant And
Performance Unit Plan
10.3 Amended Nonemployee Director Stock Option 38 - 41
Plan
10.4 Amended and Restated Incentive Savings and 42 - 116
Stock Ownership Plan
23.1 Consent of KPMG Peat Marwick LLP 117
23.2 Consent of Bogle & Gates P.L.L.C.(included
in opinion filed as Exhibit 5.1)
24.1 Power of Attorney (see signature page)
6
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Bogle & Gates P.L.L.C. Letterhead Exhibit 5.1
Two Union Square July 24, 1996
601 Union Street
Seattle, Washington 98101-2436
Advanced Technology Laboratories, Inc.
22100 Bothell Everett Highway
Bothell, WA 98041-3003
Gentlemen and Ladies:
We are acting as counsel to Advanced Technology
Laboratories, Inc., a Washington corporation (the
"Company"), in connection with the filing of a registration
statement on Form S-8 (the "Registration Statement") under
the Securities Act of 1933, as amended, with the Securities
and Exchange Commission, relating to the proposed sale by
the Company of an aggregate of 1,025,000 shares of its
common stock, par value $0.01 per share (the "Common
Stock"), issuable pursuant to the Company's i) Amended 1992
Nonofficer Employee Stock Option Plan, ii) Amended 1992
Option, Stock Appreciation Right, Restricted Stock, Stock
Grant And Performance Unit Plan, iii) Amended Nonemployee
Director Stock Option Plan and iv) Amended and Restated
Incentive Savings and Stock Ownership Plan.
In connection with the foregoing, we are of the opinion
that the Common Stock will, when sold, be legally issued,
fully paid and nonassessable.
We hereby authorize and consent to the use of this
opinion as Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ Boble & Gates P.L.L.C.
Exhibit 10.1
February 22, 1996
ADVANCED TECHNOLOGY LABORATORIES, INC.
Amended 1992 Nonofficer Employee Stock Option Plan
1. Definitions
The following terms have the corresponding meanings for
purposes of the Plan:
"Change of Control" means
(a) a "Board Change." For purposes of the Plan, a Board Change
shall have occurred if a majority of the seats (other than vacant
seats) on the Corporation's Board of Directors (the "Board") were to
be occupied by individuals who were neither (i) nominated by a
majority of the Incumbent Directors nor (ii) appointed by directors so
nominated. An "Incumbent Director" is a member of the Board who has
been either (i) nominated by a majority of the directors of the
Corporation then in office or (ii) appointed by directors so
nominated, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(b) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of (i) 20% or more of either (A)
the then outstanding shares of common stock (the "Outstanding
Corporation Common Stock") or (B) the combined voting power of the
then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding Corporation
Voting Securities"), in the case of either (A) or (B) of this clause
(i), which acquisition is not approved in advance by a majority of the
Incumbent Directors or (ii) 33% or more of either (A) the Outstanding
Corporation Common Stock or (B) the Outstanding Corporation Voting
Securities, in the case of either (A) or (B) of this clause (ii),
which acquisition is approved in advance by a majority of the
Incumbent Directors; provided, however, that the following
acquisitions shall not constitute a Change of Control: (x) any
acquisition by the Corporation, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, or (z)
any acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and (iii)
of the following subsection (c) are satisfied; or
(c) approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless,
immediately following such reorganization, merger or consolidation,
(i) more than 60% of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation
Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (ii) no
Person (excluding the Corporation, any employee benefit plan (or
related trust) of the Corporation or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization, merger
or consolidation, directly or indirectly, 33% or more of the
Outstanding Corporation Common Stock or Outstanding Corporation Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (iii) at least a majority
of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were Incumbent
Directors at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) approval by the stockholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii) the
sale or other disposition of all or substantially all of the assets of
the Corporation, other than to a corporation, with
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respect to which immediately following such sale or other disposition,
(A) more than 60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation
Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (B) no Person (excluding the
Corporation and any employee benefit plan (or related trust) of the
Corporation or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or
indirectly, 33% or more of the Outstanding Corporation Common Stock or
Outstanding Corporation Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 33% or more of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors, and (C) at least a majority of the members
of the board of directors of such corporation were approved by a
majority of the Incumbent Directors at the time of the execution of
the initial agreement or action of the Board providing for such sale
or other disposition of assets of the Corporation.
"Committee" means the Committee provided for in Section 4, which
shall administer the Plan.
"Common Stock" means common stock, par value $0.01 per share, of
the Corporation.
"Corporation" means Advanced Technology Laboratories, Inc., a
Washington corporation.
"Designated Beneficiary" means any person designated in writing
by a Participant as a legal recipient of payments due under an award
in the event of the Participant's death, or in the absence of such
designation, the Participant's estate. Such designation must be on
file with the Corporation in order to be effective but, unless the
Participant has made an irrevocable designation, may be changed from
time to time by the Participant.
"Fair Market Value" of the Common Stock as of any trading day
means the average (rounded to the next highest cent in the case of
fractions of a cent) of the high and low sales prices of the Common
Stock as reported on such trading day by the NASDAQ National Market
System. If no sales price is reported for the Common Stock on such
trading day, then "Fair Market Value" shall mean the highest bid price
reported for the Common Stock on such trading day by the National
Quotation Bureau Incorporated or any similar nationally recognized
organization. The Committee, in its sole discretion, shall make all
determinations required by this definition.
"Participant" means an employee who has received an award under
the Plan.
"Plan" means this Advanced Technology Laboratories, Inc. Amended
1992 Nonofficer Employee Stock Option Plan.
"Retirement" means the termination of the services of a
Participant because of early or normal retirement as defined in the
Corporation's Retirement Plan.
"Withholding Tax" means any tax, including any federal, state or
local income tax or payroll tax, required by any governmental entity
to be withheld or otherwise deducted and paid with respect to the
transfer of shares of Common Stock as a result of the exercise of an
option.
2. Stock Subject to the Plan
There are reserved for issuance upon the exercise of options
under the Plan 320,000 shares of Common Stock. Such shares may be
authorized and unissued shares of Common Stock or previously
outstanding shares of Common Stock then held in the Corporation's
treasury. If any option granted under the Plan shall expire or
terminate for any reason (including, without limitation, by reason of
its surrender, pursuant to the provisions of Section 6(f) or the third
paragraph of Section 6(b) or otherwise, or cancellation, in whole or
in part, pursuant to the provisions of Section 6(c) or otherwise, or
the substitution in place thereof of a new option) without having been
exercised in full, the shares subject thereto shall again be available
for the purposes of issuance under the Plan.
3. Administration
(a) The Plan shall be administered by the Committee. Subject to
the express provisions of the Plan, the Committee shall have plenary
authority, in its discretion, to determine the individuals to whom,
and the time or times at which options shall be granted and the number
of shares to be covered by each such grant. In making such
determinations, the Committee
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may take into account the nature of the services rendered by the respective
Participants, their present and potential contributions to the Corporation's
success and such other factors as the Committee in its discretion may deem
relevant. Subject to the express provisions of the Plan, the Committee shall
have plenary authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms
and provisions of option agreements (which need not be identical) and
to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations of the
matters referred to in this Section 3 shall be conclusive. It is the
intention of the Corporation that the Plan and the administration
hereof comply in all respects with Section 16(b) of the Exchange Act,
and the rules and regulations promulgated thereunder, and if any Plan
provision is later found not to be in compliance with Section 16(b),
the provision shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of
Rule 16b-3.
(b) The Committee may in its discretion delegate to a committee
appointed by the Board consisting of one or more officers of the
Corporation (the "Grant Committee") the authority to grant, pursuant
to this Plan, options for a total number of shares of Common Stock
determined by the Committee, and under terms, conditions and criteria
which are approved by the Committee. Such authorization may include
the ability to determine the Participants to whom, the number of
shares in respect of which, and the time or times at which, such
options shall be granted. In the event the Committee shall grant such
authority to the Grant Committee, the Grant Committee shall report to
the Committee in writing, at times determined by the Committee, (i)
the names of Participants who have received any such grants, (ii) the
number of shares covered by each option so granted, (iii) the date
upon which each such option was granted and (iv) such other
information as the committee may request. Any action of the Grant
Committee pursuant to authority granted by the Committee under this
Section 3(b) in accordance with the Committee resolution granting such
authority shall be deemed to be the action of the Committee.
4. The Committee
(a) The Board shall designate a Committee of members of the
Board which shall meet the requirements of Section 16(b) of the
Exchange Act. Currently, the Committee shall consist solely of two or
more members of the Board who are disinterested. If at any time an
insufficient number of disinterested directors is available to serve
on such Committee, interested directors may serve on the Committee;
however, during such time, no options shall be granted under the Plan
to any person if the granting of such options would not meet the
requirements of Section 16(b) of the Exchange Act.
(b) For purposes of this Section 4, a "disinterested director"
is a person who meets the definition of "disinterested person" as set
forth in the rules and regulations promulgated under Section 16(b) of
the Exchange Act. Currently, a disinterested director is a member of
the Board who is not (and, during the 12-month period preceding his
appointment as a member of the Committee has not been) granted or
awarded stock, stock appreciation rights or other equity securities of
the Corporation or any affiliated corporation pursuant to the Plan or
any other plan of the Corporation or any affiliated corporation except
for formula plans (as such term is defined in Rule 16b-3(c)(2)(ii)
issued under the Exchange Act) or ongoing securities acquisition plans
(as described in Rule 16b-3(d)(2)(i) issued under the Exchange Act).
The Committee shall be appointed by the Board, which may from time to
time appoint members of the Committee in substitution for members
previously appointed and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such times and places as it
may determine. A majority of its members shall constitute a quorum.
All determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced to
writing and signed by all the members shall be fully as effective as
if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary, shall keep minutes of
its meetings and shall make such rules and regulations for the conduct
of its business as it shall deem advisable.
5. Eligibility
The Committee may grant options only to employees of the
Corporation and of its present and future subsidiary corporations
("subsidiaries") who, at the time of the grant, are not officers or
directors (within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder) of the Corporation
or any of its present and future subsidiary corporations. Any person
eligible under the Plan may receive one or more grants of options as
the Committee shall from time to time determine, and such
determinations may be different as to different Participants.
6. Option Grants
(a) The Committee is authorized under the Plan, in its
discretion, to issue only options which do not qualify as "incentive
stock options" as defined in Section 422 of the United States Internal
Revenue Code of 1986, as amended ("Nonqualified Stock Options") and
the options shall be designated as Nonqualified Stock Options in the
applicable option agreement. The purchase price of the Common Stock
under each option granted under the Plan shall be determined by the
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Committee but shall be not less than the average Fair Market Value of
the Common Stock over any continuous period of trading days beginning
and ending no more than 30 business days before or after the date such
option is granted.
(b) The Committee shall be authorized in its discretion to
prescribe in the option grant the installments, if any, in which an
option granted under the Plan shall become exercisable, provided that
no option shall be exercisable prior to the first anniversary of the
date of grant thereof except as provided in Section 6(c), (d), (g),
and (h) or except as the Committee otherwise determines. In no case
may an option be exercised as to less than 100 shares at any one time
(or the remaining shares covered by the option if less than 100)
during the term of the option. The Committee shall also be authorized
to establish the manner of the exercise of an option. The term of
each option shall be not more than 10 years from the date of grant
thereof. In general, upon exercise, the option price is to be paid in
full in cash; however, the Committee can determine at any time prior
to exercise that additional forms of payment will be permitted. To
the extent permitted by the Committee and applicable laws and
regulations (including, but not limited to, federal tax and securities
laws and regulations and state corporate law), an option may be
exercised (i) in Common Stock owned by the option holder having a Fair
Market Value on the date of exercise equal to the aggregate option
price, or in a combination of cash and stock; provided, however, that
payment in stock shall not be made unless such stock shall have been
owned by the option holder for a period of at least three months prior
thereto; or (ii) by delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker designated by the
Corporation, all in accordance with the regulations of the Federal
Reserve Board, to deliver promptly to the Corporation the amount of
sale or loan proceeds to pay the exercise price and any Withholding
Tax obligations that may arise in connection with the exercise.
In lieu of requiring an option holder to pay cash or stock and to
receive in turn certificates for shares of Common Stock upon the
exercise of an option, if the option agreement so provides, the
Committee may elect to require the option holder to surrender the
option to the Corporation for cancellation as to all or any portion of
the number of shares covered by the intended exercise and receive in
exchange for such surrender a payment, at the election of the
Committee, in cash, in shares of Common Stock or in a combination of
cash and shares of Common Stock, equivalent to the appreciated value
of the shares covered by the option surrendered for cancellation.
Such appreciated value shall be the difference between the option
price of such shares (as adjusted pursuant to Section 15) and the Fair
Market Value of such shares, which shall for this purpose be
determined by the Committee taking into consideration all relevant
factors, but which shall not be less than the Fair Market Value of
such shares on the date on which the option holder's notice of
exercise is received by the Corporation. Upon delivery to the
Corporation of a notice of exercise of option, the Committee may avail
itself of its right to require the option holder to surrender the
option to the Corporation for cancellation as to shares covered by
such intended exercise. The Committee's right of election shall
expire, if not exercised, at the close of business on the fifth
business day following the delivery to the Corporation of such notice.
Should the Committee not exercise such right of election, the delivery
of the aforesaid notice of exercise shall constitute an exercise by
the option holder of the option to the extent therein set forth, and
payment for the shares covered by such exercise shall become due
immediately.
(c) In the event that a Participant's services for the
Corporation or one of its subsidiaries shall cease and the termination
of such individual's service is for cause, the option shall
automatically terminate upon first notification to the option holder
of such termination of services, unless the Committee determines
otherwise, and such option shall automatically terminate upon the date
of such termination of services for all shares which were not
purchasable upon such date. For purposes of this Section 6(c),
"cause" is defined as a determination by the Committee that the option
holder (i) has committed a felony, (ii) has engaged in an act or acts
of deliberate and intentional dishonesty resulting or intended to
result directly or indirectly in improper material gain to or personal
enrichment of the individual at the Corporation's expense, or (iii)
has willfully disobeyed the Corporation's appropriate rules,
instructions or orders, and such willful disobedience has continued
for a period of 10 days following notice thereof from the Corporation.
In the event of the termination of the services of the holder of
an option because of Retirement or disability, he or she may (unless
such option shall have been previously terminated pursuant to the
provisions of the preceding paragraph or unless otherwise provided in
the option grant) exercise such option at any time prior to the
expiration of the option, (i) in the event of disability or normal
Retirement, to the extent of the number of shares covered by such
option, whether or not such shares had become purchasable by him or
her at the date of the termination of his or her services and (ii) in
the event of early Retirement, to the extent of the number of shares
covered by such option at such time or times as such option becomes
purchasable by him or her in accordance with its terms.
In the event of the death of an individual to whom an option has
been granted under the Plan, while he or she is performing services
for the Corporation or a subsidiary, the option theretofore granted to
him or her (unless the option shall have been previously terminated
pursuant to the provisions of this Section 6(c) or unless otherwise
provided in the option grant) may, subject to the limitations
described in Section 6(g), be exercised by his or her Designated
Beneficiary, by his or her legatee or legatees of the option under his
last will, or by his or her personal representatives or distributees,
at any time within a period of one year after his or her death, but
not after the expiration of the option, to the extent of the remaining
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shares covered by the option whether or not such shares had become
purchasable by such an individual at the date of death. In the event
of the death of an individual (i) during the one-year period following
termination of his or her services or (ii) following termination of
his or her services by reason of Retirement or disability, then the
option (if not previously terminated pursuant to the provisions of
this Section 6(c)) may be exercised during the remainder of such one-
year period or during the remaining term of the option, respectively,
by his or her Designated Beneficiary, by his or her legatee under his
or her last will, or by his or her personal representative or
distributee, but only to the extent of the number of shares
purchasable by such Participant pursuant to the provisions of Section
6(d) at the date of termination of services.
In the event of the termination of the services of the holder of
an option, other than by reason of Retirement, disability or death, he
or she may (unless the option shall have been previously terminated
pursuant to the provisions of this Section 6(c) or unless otherwise
provided in the option grant) exercise the option at any time within
one year after such termination but not after the expiration of the
option, to the extent of the number of shares covered by the option
which were purchasable by him or her at the date of the termination of
services, and such option shall automatically terminate upon the date
of such termination of services for all shares which were not
purchasable upon such date.
(d) Notwithstanding the foregoing provisions, the Committee may
determine, in its sole discretion, in the case of any termination of
services, that the holder of an option may exercise such option to the
extent of some or all of the remaining shares covered thereby whether
or not such shares had become purchasable by such an individual at the
date of the termination of his services and may exercise such option
at any time prior to the expiration of the original term of the
option. Options granted under the Plan shall not be affected by any
change of relationship with the Corporation so long as the holder
continues to be an employee of the Corporation or of a subsidiary;
however, a change in a Participant's status from an employee to a
nonemployee shall result in the termination of an outstanding option
held by such Participant in accordance with Section 6(c). The
Committee, in its absolute discretion, may determine all questions of
whether particular leaves of absence constitute a termination of
service. Nothing in the Plan or in any option granted pursuant to the
Plan shall confer on any individual any right to continue in the
employ or other service of the Corporation or any other person or
interfere in any way with the right of the Corporation or any other
person to terminate his or her employment or other services at any
time.
(e) The date of grant of an option pursuant to the Plan shall be
the date specified by the Committee, or the Grant Committee acting
pursuant to authority granted under Section 3(b), at the time it
grants such option, provided that such date shall not be prior to the
date of such action by the Committee or the grant Committee, and that
the price shall be determined in accordance with Section 6(a) on such
date. The Committee or Grant Committee shall promptly notify a
grantee of an award and a written option grant shall promptly be duly
executed and delivered by or on behalf of the Corporation.
(f) The Committee shall be authorized, in its absolute
discretion, to permit option holders to surrender outstanding options
in exchange for the grant of new options or to require option holders
to surrender outstanding options as a condition precedent to the grant
of new options. The number of shares covered by the new options, the
option price (subject to the provisions of Section 6(a)), the option
period and other terms and conditions of the new options shall all be
determined in accordance with the Plan and may be different from the
provisions of the surrendered options.
(g) Notwithstanding any contrary waiting period, installment
period or other limitation or restriction in any option agreement or
in the Plan, in the event of a Change of Control, each option
outstanding under the Plan shall thereupon become exercisable at any
time during the remaining term of the option, but not after the term
of the option, to the extent of the number of shares covered by the
option, whether or not such shares had become purchasable by the
Participant thereunder immediately prior to such Change of Control.
(h) Anything in the Plan to the contrary notwithstanding, during
the 90 calendar days from and after a Change of Control (x) an
optionee (other than an optionee who initiated a Change of Control in
a capacity other than as an officer or a Director of the Corporation)
who is an officer or a Director of the Corporation (within the meaning
of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder) with respect to an option that was granted at
least six months prior to the date of exercise pursuant to this
sentence and (y) any other optionee who is not an officer or a
Director with respect to an option shall, unless the Committee shall
determine otherwise at the time of grant, have the right, in lieu of
the payment of the full purchase price of the shares of Common Stock
being purchased under the option and by giving written notice to the
Corporation, to elect (within such 90-day period) to surrender all or
part of the option to the Corporation and to receive in cash an amount
equal to the amount by which the Fair Market Value of the Common Stock
on the date of exercise shall exceed the purchase price per share
under the option multiplied by the number of shares of Common Stock
granted under the stock option as to which the right granted by this
sentence shall have been exercised. Such written notice shall specify
the optionee's election to purchase shares granted under the option or
to receive the cash payment referred to in the immediately preceding
sentence.
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<PAGE>
7. Withholding Taxes
In connection with the transfer of shares of Common Stock as a
result of the exercise of an option the Corporation (a) shall not
issue a certificate for such shares until it has received payment from
the Participant of any Withholding Tax in cash or by the retention by
the Corporation or acceptance by the Corporation upon delivery thereof
by the Participant of shares of Common Stock sufficient in Fair Market
Value to cover the amount of such Withholding Tax and (b) shall have
the right to retain or sell without notice, or to demand surrender of,
shares of Common Stock in value sufficient to cover any Withholding
Tax. The Corporation shall have the right to withhold from any cash
amounts due from the Corporation to the Participant pursuant to the
Plan an amount equal to the Withholding Tax. In either case, the
Corporation shall make payment (or reimburse itself for payment made)
to the appropriate taxing authority of an amount in cash equal to the
amount of such Withholding Tax, remitting any balance to the
Participant. For purposes of this Section 7, the value of shares of
Common Stock so retained or surrendered shall be equal to the Fair
Market Value of such shares on the date that the amount of the
Withholding Tax is to be determined (the "Tax Date"), and the value of
shares of Common Stock so sold shall be the actual net sale price per
share (after deduction of commissions) received by the Corporation.
Notwithstanding the foregoing, the Participant may elect, subject
to approval by the Committee, to satisfy the obligation to pay any
Withholding Tax, in whole or in part, by providing the Corporation
with funds sufficient to enable the Corporation to pay such
Withholding Tax or by having the Corporation retain or accept upon
delivery thereof by the Participant shares of Common Stock sufficient
in Fair Market Value to cover the amount of such Withholding Tax.
Each election by a Participant to have shares retained or to deliver
shares for this purpose shall be subject to the following
restrictions: (i) the election must be in writing and made on or
prior to the Tax Date and (ii) if the Participant is subject to
Section 16 of the Exchange Act, an election to have shares retained to
satisfy the Withholding Tax must be an irrevocable election made at
least six months prior to the Tax Date or the withholding election
must become effective during the 10-business-day period beginning on
the third business day following the date on which the Corporation
releases for publication its annual or quarterly summary statements of
sales and earnings and ending on the twelfth business day following
the date of release thereof.
8. Transferability and Ownership Rights of Options
No option awarded under the Plan shall be transferable otherwise
than pursuant to the designation of a Designated Beneficiary or by
will, descent or distribution, and an option may be exercised, during
the lifetime of the holder thereof, only by him or her. The holder of
an option shall have none of the rights of a stockholder until the
shares subject thereto shall have been registered in the name of such
holder on the transfer books of the Corporation.
9. Section 16(b) Compliance and Bifurcation of Plan
It is the intention of the Corporation that, if any of the
Corporation's equity securities are registered pursuant to Section
12(b) or 12(g) of the Exchange Act, the Plan shall comply in all
respects with Rule 16b-3 under the Exchange Act and, if any Plan
provision is later found not to be in compliance with such Section,
the provision shall be deemed null and void, and in all events the
plan shall be construed in favor of its meeting the requirements of
Rule 16b-3. Notwithstanding anything in the Plan to the contrary, the
Board, in its absolute discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
participants who are officers and directors subject to Section 16 of
the Exchange Act without so restricting, limiting or conditioning the
Plan with respect to other participants.
10. Adjustments Upon Changes in Capitalization
Except as otherwise provided in Section 6(h) and Section 6(i), in
the event of any changes in the outstanding stock of the Corporation
by reason of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations or exchanges of shares, split-
ups, split-offs, spin-offs, liquidations or other similar changes in
capitalization, or any distribution to stockholders other than cash
dividends, the Committee shall make such adjustments, if any, in light
of the change or distribution as the Committee in its sole discretion
shall determine to be appropriate, in the number and class of shares
or rights subject to options and the exercise prices of the options
covered thereby. In the event of any such change in the outstanding
Common Stock of the Corporation, the aggregate number and class of
shares available under the Plan and the maximum number of shares as to
which options may be granted shall be appropriately adjusted by the
Committee.
11. Amendment and Termination
Unless the Plan shall theretofore have been terminated as
hereinafter provided, the Plan shall terminate on, and no awards of
options shall be made after, October 31, 2002; provided, however, that
such termination shall have no effect on awards of options made prior
thereto. The Plan may be terminated, modified or amended by the
stockholders of the
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Corporation. The Board of Directors of the Corporation may also terminate
the Plan, or modify or amend the Plan in such respects as it shall deem
advisable in order to conform to any change in any law or regulation
applicable thereto, or in other respects. The amendment or termination of
the Plan shall not, without the consent of the recipient of any award
under the Plan, alter or impair any rights or obligations under any award
theretofore granted under the Plan.
12. Effectiveness of the Plan
The Plan shall become effective on November 1, 1992. The
Committee may in its discretion authorize the granting of options, the
exercise of which shall be expressly subject to the conditions that
(a) the shares of Common Stock reserved for issuance under the Plan
shall have been duly listed, upon official notice of issuance, upon
each stock exchange in the United States upon which the Common Stock
is traded and (b) a registration statement under the Securities Act of
1933, as amended, with respect to such shares shall have become
effective.
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Exhibit 10.2
May 8, 1996
ADVANCED TECHNOLOGY LABORATORIES, INC.
Amended 1992 Option, Stock Appreciation Right, Restricted Stock,
Stock Grant and Performance Unit Plan
1. Definitions
The following terms have the corresponding meanings for
purposes of the Plan:
"Award Cycle" means a period of not less than three fiscal
years over which performance units granted during a particular
year are to be earned out.
"Change of Control" means
(a) a "Board Change." For purposes of the Plan, a Board Change
shall have occurred if a majority of the seats (other than vacant
seats) on the Corporation's Board of Directors (the "Board") were
to be occupied by individuals who were neither (i) nominated by a
majority of the Incumbent Directors nor (ii) appointed by
directors so nominated. An "Incumbent Director" is a member of
the Board who has been either (i) nominated by a majority of the
directors of the Corporation then in office or (ii) appointed by
directors so nominated, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(b) The acquisition by any individual, entity or group (within
the meaning of Section 13(d) (3) or 14(d) (2) of the Exchange
Act) (a "Person") of "Beneficial Ownership" (within the meaning
of Rule 13d3 promulgated under the Exchange Act) of (i) 20% or
more of either (A) the then outstanding shares of common stock
(the "Outstanding Corporation Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities"), in
the case of either (A) or (B) of this clause (i), which
acquisition is not approved in advance by a majority of the
Incumbent Directors or (ii) 33% or more of either (A) the
Outstanding Corporation Common Stock or (B) the Outstanding
Corporation Voting Securities, in the case of either (A) or (B)
of this clause (ii), which acquisition is approved in advance by
a majority of the Incumbent Directors; provided, however, that
the following acquisitions shall not constitute a Change of
Control: (x) any acquisition by the Corporation, (y) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation
controlled by the Corporation, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of the following subsection (c) are satisfied; or
(c) Approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more
than 60% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to
such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
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Securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such
reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 33% or more of
the Outstanding Corporation Common Stock or Outstanding
Corporation Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 33% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors, and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were Incumbent
Directors at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) Approval by the stockholders of the Corporation of (i) a
complete liquidation or dissolution of the Corporation or (ii)
the sale or other disposition of all or substantially all of the
assets of the Corporation, other than to a corporation, with
respect to which following such sale or other disposition, (A)
more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (B) no Person (excluding the
Corporation and any employee benefit plan (or related trust) of
the Corporation or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, 33% or more of the Outstanding
Corporation Common Stock or Outstanding Corporation Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors, and (C) at least a majority of the members of the
board of directors of such corporation were approved by a
majority of the Incumbent Directors at the time of the execution
of the initial agreement or action of the Board providing for
such sale or other disposition of assets of the Corporation.
"Committee" means the Committee provided for in Section 4,
which shall administer the Plan.
"Common Stock" means common stock, par value $0.01 per share,
of the Corporation.
"Corporation" means Advanced Technology Laboratories, Inc., a
Delaware corporation.
"Designated Beneficiary" means any person designated in writing
by a Participant as a legal recipient of payments due under an
award in the event of the Participant's death, or in the absence
of such designation, the Participant's estate. Such designation
must be on file with the Corporation in order to be effective
but, unless the Participant has made an irrevocable designation,
may be changed from time to time by the Participant.
"Fair Market Value" of the Common Stock as of any trading day
means the average (rounded to the next highest cent in the case
of fractions of a cent) of the high and low sales prices of the
Common Stock as reported on such trading day by the NASDAQ
National Market System. If no sales price is reported for the
Common Stock on such trading day, then "Fair Market Value" shall
mean the highest bid price reported for the Common Stock on such
trading day by the National Quotation Bureau Incorporated or any
similar nationally recognized organization. The Committee, in
its sole discretion, shall make all determinations required by
this definition.
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<PAGE>
"Participant" means an employee, consultant or independent
contractor who has received an award under the Plan.
"Payment Schedule" means the schedule adopted by the Committee
in accordance with Section 10 with respect to an Award Cycle to
govern determination of the Payment Value of a performance unit
at the end of such Award Cycle in accordance with Section 10.
"Payment Value" means the value, expressed in dollars, of a
performance unit at the conclusion of an Award Cycle, determined
in accordance with Section 10.
"Plan" means this Advanced Technology Laboratories, Inc.
Amended 1992 Option, Stock Appreciation Right, Restricted Stock,
Stock Grant and Performance Unit Plan.
"Restricted Stock" means the shares of Common Stock referred to
in Section 8.
"Retirement" means the termination of the services of a
Participant because of early or normal retirement as defined in
the Westmark Retirement Plan.
"Withholding Tax" means any tax, including any federal, state
or local income tax, required by any governmental entity to be
withheld or otherwise deducted and paid with respect to the
transfer of shares of Common Stock as a result of the exercise of
a Nonqualified Stock Option or stock appreciation right, the
payment of performance units or the award of Restricted Stock or
stock grants.
2. Stock Subject to the Plan
There are reserved for issuance upon the exercise of options,
for issuance of Restricted Stock and stock grant awards and for
issuance upon the payment of performance units and stock
appreciation rights under the Plan 2,700,000 shares of Common
Stock, of which no more than an aggregate of 550,000 shares may
be issued as Restricted Stock awards and stock grants under the
Plan. Such shares may be authorized and unissued shares of
Common Stock or previously outstanding shares of Common Stock
then held in the Corporation's treasury. If any option or stock
appreciation right granted under the Plan shall expire or
terminate for any reason (including, without limitation, by
reason of its surrender, pursuant to the provisions of Section
6(f) or the third paragraph of Section 6(b) or otherwise, or
cancellation, in whole or in part, pursuant to the provisions of
Section 6(c) or otherwise or pursuant to Section 7(f), or the
substitution in place thereof of a new option or stock
appreciation right) without having been exercised in full, the
shares subject thereto shall again be available for the purposes
of issuance under the Plan. If shares of Restricted Stock shall
be forfeited and returned to the Corporation pursuant to the
provisions of Section 8, such shares shall again be available for
the purposes of issuance under the Plan. In no event shall
shares of Common Stock which, under the Plan, are authorized to
be used in payment of performance unit awards be deemed to be
unavailable for purposes of the Plan until such shares have been
issued in payment thereof in accordance with the provisions of
Section 10(g). Stock appreciation rights and performance unit
awards providing for payments only in cash are not subject to the
overall limitations referred to above.
3. Administration
The Plan shall be administered by the Committee. Subject to
the express provisions of the Plan, the Committee shall have
plenary authority, in its discretion, to determine the
individuals to whom, and the time or times at which, performance
units or Restricted Stock shall be awarded and stock appreciation
rights or options shall be granted (including, without
limitation, whether such options shall be Incentive Stock Options
or Nonqualified Stock Options or a combination thereof, as such
terms are defined in Section 6(a)) and the number of units and/or
shares to be covered by each such award or grant. In making such
determinations, the Committee may take into account the nature of
the services rendered by
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<PAGE>
the respective Participants, their present and potential
contributions to the Corporation's success and such other
factors as the Committee in its discretion may deem relevant.
Subject to the express provisions of the Plan, the Committee
shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to
determine the terms and provisions of Restricted Stock,
performance unit, stock appreciation right and option agreements
(which need not be identical) and to make all other
determinations necessary or advisable for the administration of
the Plan. The Committee's determinations of the matters referred
to in this Section 3 shall be conclusive. It is the intention of
the Corporation that the Plan and the administration hereof
comply in all respects with Section 16(b) of the Exchange Act,
and the rules and regulations promulgated thereunder, and if any
Plan provision is later found not to be in compliance with
Section 16(b), the provision shall be deemed null and void, and
in all events the Plan shall be construed in favor of its meeting
the requirements of Rule 16b-3. Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to persons who are subject to
Section 16 of the Exchange Act without so limiting or
conditioning the Plan with respect to other persons.
4. The Committee
The Board shall designate a Committee of members of the Board
which shall meet the requirements of Section 16(b) of the
Exchange Act. Currently, the Committee shall consist solely of
two or more members of the Board who are disinterested. If at
any time an insufficient number of disinterested directors is
available to serve on such Committee, interested directors may
serve on the Committee; however, during such time, no options,
stock appreciation rights or Restricted Stock shall be granted
under the Plan to any person if the granting of such options,
stock appreciation rights or Restricted Stock would not meet the
requirements of Section 16(b) of the Exchange Act.
For purposes of this Section 4, a "disinterested director" is a
person who meets the definition of "disinterested person" as set
forth in the rules and regulations promulgated under Section
16(b) of the Exchange Act. Currently, a disinterested director
is a member of the Board who is not (and, during the 12-month
period preceding his appointment as a member of the Committee has
not been) granted or awarded stock, stock appreciation rights or
other equity securities of the Corporation or any affiliated
corporation pursuant to the Plan or any other plan of the
Corporation or any affiliated corporation except for formula
plans (as such term is defined in Rule 16b-3 (c) (2) (ii) issued
under the Exchange Act) or ongoing securities acquisition plans
(as described in Rule 16b-3 (d) (2) (i) issued under the Exchange
Act). The Committee shall be appointed by the Board, which may
from time to time appoint members of the Committee in
substitution for members previously appointed and may fill
vacancies, however caused, in the Committee. The Committee shall
select one of its members as its Chairman and shall hold its
meetings at such times and places as it may determine. A
majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced
to writing and signed by all the members shall be fully as
effective as if it had been made by a majority vote at a meeting
duly called and held. The Committee may appoint a secretary,
shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem
advisable.
5. Eligibility
The Committee may award performance units and Restricted Stock
and grant options and stock appreciation rights only to
employees, consultants or independent contractors (which term as
used herein includes officers) of the Corporation and of its
present and future subsidiary corporations ("subsidiaries"). Any
person eligible under the Plan may receive one or more awards of
performance units or Restricted Stock or one or more grants of
options or stock appreciation rights, or any combination thereof,
as the Committee shall from time to time determine, and such
determinations may be different as to different Participants and
may vary as to different awards and grants.
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<PAGE>
The maximum number of shares of Common Stock with respect to
which an option or options or a stock appreciation right or stock
appreciation rights may be granted to any eligible employee in
any one fiscal year of the Company shall not exceed ten percent
of the aggregate number of shares of Common Stock authorized for
issuance under the plan (the "Maximum Annual Employee Grant").
6. Option Grants
(a) The Committee is authorized under the Plan, in its
discretion, to issue options as "Incentive Stock Options" (as
defined in Section 422 of the United States Internal Revenue Code
of 1986, as amended (the "Code")) or as "Nonqualified Stock
Options" (all other options granted hereunder) and the options
shall be designated as Incentive Stock Options or Nonqualified
Stock Options in the applicable option agreement. The purchase
price of the Common Stock under each option granted under the
Plan shall be determined by the Committee but shall be not less
than 100% of the Fair Market Value of the Common Stock at the
time such option is granted. Notwithstanding the previous
sentence, any Nonqualified Stock Option may provide that the
purchase price be equal to the average Fair Market Value of the
Common Stock over any continuous period of trading days beginning
and ending no more than 30 business days before or after the date
such option is granted.
(b) The Committee shall be authorized in its discretion to
prescribe in the option grant the installments, if any, in which
an option granted under the Plan shall become exercisable,
provided that no option shall be exercisable prior to the first
anniversary of the date of grant thereof except as provided in
Sections 6(c), (d), (h), (i) and (j) or except as the Committee
otherwise determines. In no case may an option be exercised as
to less than 100 shares at any one time (or the remaining shares
covered by the option if less than 100) during the term of the
option. The Committee shall also be authorized to establish the
manner of the exercise of an option. The term of each option
shall be not more than 10 years from the date of grant thereof.
In general, upon exercise, the option price is to be paid in
full in cash; however, the Committee can determine at the time
the option is granted for Incentive Stock Options or at any time
prior to exercise for Nonqualified Stock Options, that additional
forms of payment will be permitted. To the extent permitted by
the Committee and applicable laws and regulations (including, but
not limited to, federal tax and securities laws and regulations
and state corporate law), an option may be exercised (i) in
Common Stock owned by the option holder having a Fair Market
Value on the date of exercise equal to the aggregate option
price, or in a combination of cash and stock; provided, however,
that payment in stock shall not be made unless such stock shall
have been owned by the option holder for a period of at least
three months prior thereto; or (ii) by delivery of a properly
executed exercise notice, together with irrevocable instructions
to a broker designated by the Corporation, all in accordance with
the regulations of the Federal Reserve Board, to deliver promptly
to the Corporation the amount of sale or loan proceeds to pay the
exercise price and any federal, state or local withholding tax
obligations that may arise in connection with the exercise.
In lieu of requiring an option holder to pay cash or stock and
to receive in turn certificates for shares of Common Stock upon
the exercise of a Nonqualified Stock Option, if the option so
provides, the Committee may elect to require the option holder to
surrender the option to the Corporation for cancellation as to
all or any portion of the number of shares covered by the
intended exercise and receive in exchange for such surrender a
payment, at the election of the Committee, in cash, in shares of
Common Stock or in a combination of cash and shares of Common
Stock, equivalent to the appreciated value of the shares covered
by the option surrendered for cancellation. Such appreciated
value shall be the difference between the option price of such
shares (as adjusted pursuant to Section 15) and the Fair Market
Value of such shares, which shall for this purpose be determined
by the Committee taking into consideration all relevant factors,
but which shall not be less than the Fair Market Value of such
shares on the date on which the option holder's notice of
exercise is received by the Corporation. Upon delivery to the
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Corporation of a notice of exercise of option, the Committee may
avail itself of its right to require the option holder to
surrender the option to the Corporation for cancellation as to
shares covered by such intended exercise. The Committee's right
of election shall expire, if not exercised, at the close of
business on the fifth business day following the delivery to the
Corporation of such notice. Should the Committee not exercise
such right of election, the delivery of the aforesaid notice of
exercise shall constitute an exercise by the option holder of the
option to the extent therein set forth, and payment for the
shares covered by such exercise shall become due immediately.
(c) In the event that a Participant's services for the
Corporation or one of its subsidiaries shall cease and the
termination of such individual's service is for cause, the option
shall automatically terminate upon first notification to the
option holder of such termination of services, unless the
Committee determines otherwise, and such option shall
automatically terminate upon the date of such termination of
services for all shares which were not purchasable upon such
date. For purposes of this Section 6(c), "cause" is defined as a
determination by the Committee that the option holder (i) has
committed a felony, (ii) has engaged in an act or acts of
deliberate and intentional dishonesty resulting or intended to
result directly or indirectly in improper material gain to or
personal enrichment of the individual at the Corporation's
expense, or (iii) has willfully disobeyed the Corporation's
appropriate rules, instructions or orders, and such willful
disobeyance has continued for a period of 10 days following
notice thereof from the Corporation.
In the event of the termination of the services of the holder
of an option because of Retirement or disability, he may (unless
such option shall have been previously terminated pursuant to the
provisions of the preceding paragraph or unless otherwise
provided in his option grant) exercise such option at any time
prior to the expiration of the option, (i) in the event of
disability or normal Retirement, to the extent of the number of
shares covered by such option, whether or not such shares had
become purchasable by him at the date of the termination of his
services and (ii) in the event of early Retirement, to the extent
of the number of shares covered by such option at such time or
times as such option becomes purchasable by him in accordance
with its terms. (Although the option may be exercised after
Retirement or disability, under Section 422 of the Code, if the
option has been designated as an Incentive Stock Option, it must
be exercised within three months after the date of Retirement or
one year after the termination of employment due to disability in
order to qualify for incentive stock option tax treatment.)
In the event of the death of an individual to whom an option
has been granted under the Plan, while he is performing services
for the Corporation or a subsidiary, the option theretofore
granted to him (unless his option shall have been previously
terminated pursuant to the provisions of this Section 6(c) or
unless otherwise provided in his option grant) may, subject to
the limitations described in Section 6(g), be exercised by his
Designated Beneficiary, by his legatee or legatees of the option
under his last will, or by his personal representatives or
distributees, at any time within a period of one year after his
death, but not after the expiration of the option, to the extent
of the remaining shares covered by his option whether or not such
shares had become purchasable by such an individual at the date
of his death. In the event of the death of an individual (i)
during the one-year period following termination of his services
or (ii) following termination of his services by reason of
Retirement or disability, then the option (if not previously
terminated pursuant to the provisions of this Section 6(c)) may
be exercised during the remainder of such one-year period or
during the remaining term of the option, respectively, by his
Designated Beneficiary, by his legatee under his last will, or by
his personal representative or distributee, but only to the
extent of the number of shares purchasable by such Participant
pursuant to the provisions of Section 6(d) at the date of
termination of his services.
In the event of the termination of the services of the holder
of an option, other than by reason of Retirement, disability or
death, he may (unless his option shall have been previously
terminated pursuant to the provisions of this Section 6(c) or
unless otherwise provided in his option grant) exercise his
option at any time within one year after such termination, but
not after the expiration of the option, to the extent of the
number of shares covered by his option which were purchasable by
him at the date of the
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termination of his services, and such option shall automatically
terminate upon the date of such termination of services for
all shares which were not purchasable upon such date.
(d) Notwithstanding the foregoing provisions, the Committee
may determine, in its sole discretion, in the case of any
termination of services, that the holder of an option may
exercise such option to the extent of some or all of the
remaining shares covered thereby whether or not such shares had
become purchasable by such an individual at the date of the
termination of his services and may exercise such option at any
time prior to the expiration of the original term of the option,
except that such extension shall not cause any Incentive Stock
Option to fail to continue to qualify as an Incentive Stock
Option without the consent of the option holder. Options granted
under the Plan shall not be affected by any change of
relationship with the Corporation so long as the holder continues
to be an employee, consultant or independent contractor of the
Corporation or of a subsidiary; however, a change in a
participant's status from an employee to a nonemployee (e.g.,
consultant or independent contractor) shall result in the
termination of an outstanding Incentive Stock Option held by such
participant in accordance with Section 6(c). The Committee, in
its absolute discretion, may determine all questions of whether
particular leaves of absence constitute a termination of
services; provided, however, that with respect to incentive stock
options, such determination shall be subject to any requirements
contained in the Code. Nothing in the Plan or in any option
granted pursuant to the Plan shall confer on any individual any
right to continue in the employ or other service of the
Corporation or any other person or interfere in any way with the
right of the Corporation or any other person to terminate his
employment or other services at any time.
(e) The date of grant of an option pursuant to the Plan shall
be the date specified by the Committee at the time it grants such
option, provided that such date shall not be prior to the date of
such action by the Committee and that the price shall be
determined in accordance with Section 6(a) on such date. The
Committee shall promptly notify a grantee of an award and a
written option grant shall promptly be duly executed and
delivered by or on behalf of the Corporation.
(f) The Committee shall be authorized, in its absolute
discretion, to permit option holders to surrender outstanding
options in exchange for the grant of new options or to require
option holders to surrender outstanding options as a condition
precedent to the grant of new options. The number of shares
covered by the new options, the option price (subject to the
provisions of Section 6(a)), the option period and other terms
and conditions of the new options shall all be determined in
accordance with the Plan and may be different from the provisions
of the surrendered options.
(g) In the event an optionee is granted Incentive Stock
Options that in the aggregate entitle the optionee to purchase,
in the first year such options become exercisable (whether under
their original terms or as a result of the occurrence of an
Acceleration Event, as defined below), Common Stock of the
Corporation, any parent corporation or any subsidiary of the
Corporation having a Fair Market Value (determined as of the time
such options are granted) in excess of $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock
Option. Such limitation shall not apply if the Internal Revenue
Service publicly rules, issues a private ruling to the
Corporation, any optionee of the Corporation or any legatee,
personal representative or distributee of an optionee or states
in proposed, temporary or final regulations that provisions which
allow the full exercise of an optionee's Incentive Stock Options
upon the occurrence of the relevant Acceleration Event do not
violate Section 422(d) of the Code. An "Acceleration Event"
means (i) a determination of the Committee to allow an optionee
to exercise his options in full upon termination of his
employment or other service as provided in Section 6(c) or (d),
(ii) the death of an optionee while he is employed by the
Corporation or a subsidiary, (iii) any Change of Control, or (iv)
the optionee's termination of employment or other service under
circumstances that will allow him to exercise options not
otherwise exercisable pursuant to Section 6(j).
(h) Notwithstanding any contrary waiting period, installment
period or other limitation or restriction in any option agreement
or in the Plan, in the event of a Change of Control, each option
outstanding under the Plan shall thereupon become exercisable at
any time during the remaining term of the option, but not after
the term of the option, to the extent of the number of shares
covered by the option, whether
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or not such shares had become purchasable by the Participant
thereunder immediately prior to such Change of Control, subject,
however, to the limitations described in Section 6(g), by the
holder of the option.
(i) Anything in the Plan to the contrary notwithstanding,
during the 90-day period from and after a Change of Control (x)
an optionee (other than an optionee who initiated a Change of
Control in a capacity other than as an officer or a Director of
the Corporation) who is an officer or a Director of the
Corporation (within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder) with
respect to an option that was granted at least six months prior
to the date of exercise pursuant to this sentence and is
unaccompanied by a stock appreciation right and (y) any other
optionee who is not an officer or a Director with respect to an
option that is unaccompanied by a stock appreciation right shall,
unless the Committee shall determine otherwise at the time of
grant, have the right, in lieu of the payment of the full
purchase price of the shares of Common Stock being purchased
under the option and by giving written notice to the Corporation,
to elect (within such 90-day period) to surrender all or part of
the option to the Corporation and to receive in cash an amount
equal to the amount by which the amount determined pursuant to
Section 7(d) hereof on the date of exercise (determined as if the
optionee had exercised a limited stock appreciation right on such
date) shall exceed the purchase price per share under the option
multiplied by the number of shares of Common Stock granted under
the stock option as to which the right granted by this sentence
shall have been exercised. Such written notice shall specify the
optionee's election to purchase shares granted under the option
or to receive the cash payment referred to in the immediately
preceding sentence.
(j) Notwithstanding the foregoing provisions, the optionee's
employment or other contract with the Corporation may provide
that upon termination of his employment or other services for
other than cause or for "good reason" (as defined in his
contract), all stock options shall become immediately
exercisable.
7. Stock Appreciation Rights
(a) Stock appreciation rights may be paid upon exercise in
cash, Common Stock or any combination thereof, as the Committee
in its sole discretion may determine. A stock appreciation right
is an incentive award that permits the holder to receive (per
share covered thereby) an amount equal to the amount by which the
Fair Market Value of a share of Common Stock on the date of
exercise exceeds the Fair Market Value of such share on the date
the stock appreciation right was granted.
(b) The Committee may grant a stock appreciation right
separately or in tandem with a related option and may grant both
"general" and "limited" stock appreciation rights. A general
stock appreciation right granted in tandem with a related option
will generally have the same terms and provisions as the related
option with respect to exercisability, and the base price of such
a stock appreciation right will generally be equal to the option
price under the related option. Upon the exercise of a tandem
stock appreciation right, the related option will be deemed to be
exercised for all purposes of the Plan and vice versa.
(c) A general stock appreciation right granted separately and
not in tandem with any option will have such terms as the
Committee may determine. The base price of a stand-alone stock
appreciation right may not be less than the Fair Market Value of
the Common Stock, determined as in Section 6(a) in the case of a
Nonqualified Stock Option; the term of a stand-alone stock
appreciation right may not be greater than 10 years from the date
it was granted.
(d) A limited stock appreciation right may be exercised only
during the 90 calendar days immediately following the date of a
Change in Control. For the purpose of determining the amount
payable upon exercise of a limited stock appreciation right, the
fair market value of the Common Stock will be equal to the higher
of (x) the highest Fair Market Value of the Common Stock during
the 90-day
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period ending on the date the limited stock appreciation
right is exercised and (y) whichever of the following is
applicable:
(i) the highest per share price paid in any tender or
exchange offer which is in effect at any time during the 90
calendar days preceding the exercise of the limited right;
(ii) the fixed or formula price for the acquisition of
shares of Common Stock in a merger or similar agreement approved
by the Corporation's stockholders or Board, if such price is
determinable on the date of exercise; and
(iii) the highest price per share paid to any stockholder of
the Corporation in a transaction or group of transactions giving
rise to the exercisability of the limited right. In no event,
however, may the holder of a limited stock appreciation right
granted in tandem with a related Incentive Stock Option receive
an amount in excess of the maximum amount which will enable the
option to continue to qualify as an Incentive Stock Option
without the consent of the Participant.
(e) Limited stock appreciation rights are payable only in
cash. General stand-alone stock appreciation rights are payable
only in cash, unless the Committee provides otherwise at the time
of grant. General stock appreciation rights granted in tandem
with a related option are payable in cash, Common Stock or any
combination thereof, as determined in the sole discretion of the
Committee. Notwithstanding the foregoing, and to the extent
required by Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, a payment, in whole or in part, of cash upon
exercise of a stock appreciation fight may be made to an optionee
who is an officer or director of the Corporation (within the
meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder) only if (i) the fight was
granted at least six months prior to the date of exercise (except
that in the event of the death or disability of the optionee
prior to the expiration of the sixmonth period, this limitation
shall not apply) and (ii) the optionee's election to receive cash
in settlement of the fight and the exercise of the right are made
(a) during the period beginning on the third business day
following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the
Corporation and ending on the twelfth business day following such
date, (b) six months prior to the date the stock appreciation
right becomes taxable or (c) during the 90-day period from and
after a Change of Control.
(f) Unless otherwise provided by the Committee at the time
of grant, the provisions of Section 6 relating to the termination
of the service of a holder of an option shall apply equally, to
the extent applicable, to the holder of a stock appreciation
right.
8. Restricted Stock Awards
(a) The consideration to be received for shares of Restricted
Stock issued hereunder out of authorized but unissued shares or
out of treasury shares shall be equal to cash in an amount equal
to the par value thereof and past services for the Corporation.
The recipient of Restricted Stock shall be recorded as a
stockholder of the Corporation, at which time the Corporation, at
its discretion, may either issue a Restricted Stock Certificate
or make a book entry credit in the Corporation's stock ledger to
evidence the award of such Restricted Stock, and the Participant
shall have, subject to the provisions hereof, all the rights of a
stockholder with respect to such shares and receive all dividends
or other distributions made or paid with respect to such shares;
provided, that the shares themselves, and any new, additional or
different shares or securities which the recipient may be
entitled to receive with respect to such shares by virtue of a
stock split or stock dividend or any other change in the
corporate or capital structure of the Corporation, shall be
subject to the restrictions hereinafter described.
(b) During a period of years following the date of grant, as
determined by the Committee, which shall in no event be less than
one year (the "Restricted Period"), the Restricted Stock or any
rights thereto may not be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of
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by the recipient, except in the event of death or the transfer
thereof to the Corporation under the provisions of the next
succeeding paragraph. In the event of the death or normal Retirement
of the recipient during the Restricted Period, such restrictions
shall immediately lapse, and the recipient or, in the case of the
recipient's death, his Designated Beneficiary, the legatee under
his last will or his personal representative or distributee shall
be free to transfer, encumber or otherwise dispose of the
Restricted Stock. In the event of the early Retirement of the
recipient during the Restricted Period, such restrictions shall
continue until they lapse in accordance with the terms of the
grant.
Except as provided in Section 8(c), in the event that, during
the Restricted Period, the service of the recipient by the
Corporation or one of its subsidiaries is terminated for any
reason (including termination with or without cause by the
Corporation or such subsidiary or resignation by the recipient),
other than termination of service due to the Retirement or death
of the recipient, then the shares of Restricted Stock held by him
shall be forfeited to the Corporation and the recipient shall
immediately transfer and return to the Corporation the
certificates, if any have been issued to him, representing all
the Restricted Stock and the recipient's rights as a stockholder
with respect to the Restricted Stock shall cease, effective with
such termination of service. Notwithstanding the foregoing, the
recipient's service contract with the Corporation may provide
that upon termination of his service for other than cause or for
good reason, all Restricted Stock shall cease to be subject to
such restrictions.
A recipient's rights to Restricted Stock may not be assigned or
transferred except upon death by will, descent or distribution.
In the event of any attempt by the recipient to sell, exchange,
transfer, pledge or otherwise dispose of shares of Restricted
Stock in violation of the provisions hereof, such shares shall be
forfeited to the Corporation.
(c) Notwithstanding the Restricted Period contained in the
grant of Restricted Stock, in the event of a Change of Control
(as defined in Section 1), all restrictions on shares of
Restricted Stock shall immediately lapse and such Restricted
Shares shall become immediately transferable and nonforfeitable.
(d) Notwithstanding anything contained in the Plan to the
contrary, the Committee may determine, in its sole discretion, in
the case of any termination of a recipient's service, that the
restrictions on some or all of the shares of Restricted Stock
awarded to a recipient shall immediately lapse and such
Restricted Shares shall become immediately transferable and
nonforfeitable.
9. Stock Grant Awards
(a) Each nonofficer employee of the Corporation is eligible to
receive a grant of Common Stock as a stock bonus (i) at the end
of each fiscal year or (ii) if the employee terminates prior to
year-end, at the time of termination. The number of shares to be
granted shall be determined by setting a percentage of the
employee's salary at the fiscal year-end or time of termination
and dividing that amount by the price per share of the Common
Stock or by any other method determined by the Committee. For
this purpose, the price for the Common Stock shall be the Fair
Market Value on the date of grant and each grant shall be for
full shares only; any fractional shares resulting from this
calculation shall be disregarded. The consideration to be
received for shares of Common Stock issued under this Section
9(a) shall be cash in an amount equal to the par value thereof
and past services for the Corporation.
(b) In addition, each recipient of a stock grant under Section
9(a) may be granted a cash award at the time the shares are
issued in an amount sufficient to offset the recipient's
estimated tax liabilities arising from the issuance of the Common
Stock under Section 9(a).
(c) Determinations regarding eligibility for grants under
Section 9 (a), the amount of individual grants of Common Stock,
the amount of the cash offset award, the interpretation of
Section 9 and all other matters relating to the administration of
Section 9 are within the sole discretion of the Committee.
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10. Performance Unit Awards
(a) Performance units which are awarded to a Participant shall
have a "unit base value," expressed in dollars, determined by the
Committee on the day on which the award is granted and generally
determined to be the Fair Market Value of the Common Stock on
such day. The performance units will also have a Payment Value
at the end of the applicable Award Cycle contingent upon the
performance of the Corporation and/or of such Participant's
subsidiary, division or department during the Award Cycle. The
performance measures may include, but shall not be limited to,
cumulative growth in earnings per share or pretax profits, return
on stockholders' equity, asset management, cash flow or return on
capital employed. Such measures may be applied on an absolute
basis or relative to industry indices and shall be defined in a
manner which the Committee shall deem appropriate. For each
performance unit awarded, the Committee shall determine the
length of the Award Cycle, which shall be a period of not less
than three fiscal years, and shall establish a Payment Schedule
based upon the performance measures determined for such
performance unit and the length of the Award Cycle, setting forth
a range of Payment Values corresponding to performance levels
targeted for the Corporation or such subsidiary, division or
department. If during the course of an Award Cycle there should
occur, in the opinion of the Committee, significant changes in
economic conditions or in the nature of the operations of the
Corporation or a subsidiary, division or department which the
Committee did not foresee in establishing the performance
measures for such Award Cycle and which, in the Committee's sole
judgment have, or are expected to have, a substantial effect on
the performance of the Corporation or of a Participant's
subsidiary, division or department during such Award Cycle, the
Committee may revise the Payment Schedule and performance
measures formerly determined by it in such manner as the
Committee, in its sole judgment, may deem appropriate except as
otherwise provided in Section 10(1).
(b) In determining the number of performance units to be
awarded, the Committee shall take into account a person's
responsibility level, performance, potential, cash compensation
level and such other considerations as it deems appropriate.
(c) Except as otherwise provided in Section 10(l), an award of
performance units to a Participant shall terminate for all
purposes if the services of the Participant for the Corporation
or one of its subsidiaries ceases during the Award Cycle, except
in the case of death, disability or retirement under the
Corporation's pension plan (including early retirement at the
request of the Corporation), in which case (and provided that the
Participant at the time of death, disability or retirement as
aforesaid shall have maintained his employment or other
qualifying relationship with the Corporation or one of its
subsidiaries continuously during the period commencing on the
date the award was granted and ending on the first anniversary
thereof) the Participant will be entitled to payment (such
payment to be made in accordance with the provisions of Section
10(d)) of the same portion of the Payment Value of the award the
Participant would otherwise have been paid (such Payment Value,
if any, to be determined at the conclusion of the applicable
Award Cycle in accordance with the provisions of Sections 10(a)
and 10(e) unless otherwise provided in Section 10(l)) as the
portion of the Award Cycle during which the Participant
maintained such relationship with the Corporation bears to the
full Award Cycle. Under particular circumstances, the Committee
may make other determinations with respect to Participants whose
services do not meet the foregoing requirements, including the
waiver of any of the requirements of this subsection (c) relating
to periods of continuous service.
(d) Except as otherwise provided in Section 10(l), unless the
Committee otherwise determines, no payment with respect to
performance units will be made to a Participant prior to the end
of such Participant's Award Cycle; provided, however, that if a
Participant should die during an Award Cycle and his award shall
not have been terminated hereunder prior to his death, such
Participant's Designated Beneficiary, the legatee under the
Participant's last will, his personal representative or his
distributee may elect instead, subject to the approval of the
Committee, to have the pro rata portion of the Participant's
Payment Value determined by the Committee as of the end of the
year during which such Participant's death occurred, based upon
application of the Payment Schedule to the part of the Award
Cycle which
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shall have elapsed (for such purpose, the cumulative growth rate
or improvement achieved in the applicable performance measures
to the end of the fiscal year in which death occurs will be
assumed to continue for the Award Cycle), in which event such
pro rata portion shall be paid in cash or Common Stock, as
provided in Section 10(g), as soon as practicable following such
year (or in such number of installments as shall have been
requested by the Participant and approved by the Committee) to
such Participant's Designated Beneficiary or legal
representative.
(e) Except as otherwise provided in Section 10(d) in the case
of death, or in Section 10(l) in the case of a Change in Control,
a Participant's interest in any performance units awarded to him
shall mature on the last day of the Award Cycle for such award.
The Payment Value of a performance unit shall be the dollar
amount calculated on the basis of the Payment Schedule applicable
to such Award Cycle.
(f) The total amount of Payment Value due a Participant at the
conclusion of an Award Cycle shall be paid on such date following
the conclusion of such Award Cycle as the Committee shall
designate, except as specifically otherwise provided in the Plan;
provided, however, that the Committee shall have authority, if it
deems appropriate, to defer payment (in cash or in stock or both
in specified percentages) of the Payment Value due a Participant
if the Participant shall request the Committee to do so at any
time prior to the last year of the Award Cycle for such award.
In respect of awards made or to be made in one or more deferred
installments in cash, interest shall be credited semiannually on
each such award at a rate to be determined semiannually by the
Committee, but in no event shall such rate be less than the
average rate on 10-year AAA new industrial corporate bonds during
each such semiannual period as calculated on the basis of the
average of such rates for each calendar week ending during the
period January 1 through June 30 and July 1 through December 31;
provided that awards made during any such six-month period shall
be credited on the basis of the average rate for that period; and
provided further that installments paid during any six-month
period shall be credited with interest on the basis of the
average rate for the next preceding six-month period, in each
case adjusted for the number of days such award was to be
credited. Unless paid to the recipient of such award at the time
credited, interest at the foregoing rate shall be credited on the
interest so credited until so paid. The foregoing minimum
interest rate for any award that is payable in one or more
deferred installments under the Plan may not be modified without
the prior written consent of the Participant.
Whenever an award is made in one or more deferred installments
in Common Stock, the Committee may determine that there shall be
credited on such award an amount equivalent to the dividends
which would have been paid with respect to such shares of Common
Stock if they had been issued and outstanding. Such dividend
equivalents shall be credited on the dividend record dates until
certificates for such shares shall have been delivered to the
recipient of such award or until such earlier date as the
Committee may determine.
Such interest and dividend equivalents shall be paid to the
recipient of any such award in cash (or in property if the
related dividend shall have been in property) at such time or
times during the deferred period of such award or at the same
time as the cash or shares of Common Stock to which such interest
and dividend equivalents apply, all as the Committee shall
determine. The Committee may also determine that any such
dividend equivalents may be used to purchase additional shares of
outstanding Common Stock (such shares to be valued for such
purpose at Fair Market Value on the dividend record date) to be
added to the shares of Common Stock covered by such award and
held subject to the same terms and conditions, including
provisions relating to the payment of amounts equivalent to
dividends thereon.
(g) Except as otherwise provided in Section 10(l), the
Committee in its discretion may determine at the time of grant or
at the end of the Award Cycle as to each Participant whether the
payment of the Payment Value due a Participant shall be made (i)
in cash, (ii) in shares of Common Stock (valued at the average
Fair Market Value of the Common Stock for the five trading days
immediately preceding the date of payment), or (iii) in a
combination of cash and shares of Common Stock so valued.
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(h) If the payment of any award shall be deferred until after
the termination of the services of the recipient by the
Corporation or one of its subsidiaries, the cash or Common Stock
covered by such award, together with any deferred interest or
dividend equivalents thereon, shall be delivered in not more than
20 annual installments, commencing not later than the January 31
after such termination of services (or such other date as the
Committee from time to time shall determine), all as the
Committee may determine. If the payment of an award under the
Plan is deferred, such payment thereafter may be accelerated so
that such payment shall be made immediately or at such earlier
time or in such less number of installments, in each case as the
Committee may from time to time determine, but only with the
prior written consent of the Participant.
(i) A Participant to whom any award has been made shall not
have any interest beyond that of a general creditor of the
Corporation in the cash or Common Stock awarded, or in any
interest or dividend equivalents credited to him until the cash
has been paid to him or the certificates for the Common Stock
have been delivered to him, as the case may be, in accordance
with the provisions of the Plan.
(j) In the case of the death of the recipient of an award,
before or after the termination of his services, any unpaid
installments of such deferred award shall pass to the Designated
Beneficiary, the legatee under the Participant's last will, his
personal representative or his distributee. Unpaid installments
of a deferred award shall be paid either in the same installments
as originally provided or otherwise as the Committee may
determine in individual cases.
(k) Subject to the provisions of Section 10(l), in any case in
which payment of an award is to be made in Common Stock, the
Corporation shall have the right, in lieu of delivering the
certificate or certificates for any or all of the stock which
would otherwise be deliverable to the Participant pursuant to the
Plan, to pay to such Participant on the date on which such
certificate or certificates would otherwise be deliverable an
amount in cash equal to the Fair Market Value of such Common
Stock on such date or dates as may be determined by the
Committee, but not more than five trading days prior to such
date, all as the Committee may determine in individual cases.
(l) Anything herein to the contrary notwithstanding, in the
event of a Change of Control, with respect to any unmatured
performance unit awards which a Participant held immediately
prior to such Change of Control, the Participant will be entitled
to immediate payment in cash (unless payment of such performance
unit awards shall be deferred in accordance with Section 10(f),
in which event the amount provided to be payable by this Section
10(l) shall also be so deferred) in an amount equal to the value
of such units determined in accordance with the Payment Schedule
applicable to such awards, based on the cumulative, growth rate
in the Corporation's reported earnings per share for all
previously elapsed fiscal years, if any, included in the Award
Cycles for such awards and the actual or presumed cumulative
growth rate in the earnings per share for the balance of each
Award Cycle, determined as follows: (i) if such Change of Control
occurs prior to the completion of the first fiscal year of an
Award Cycle, the cumulative growth rate to be utilized for the
balance of the Award Cycle shall be the cumulative growth rate in
the Corporation's earnings per share in the four fiscal years
preceding the first year and (ii) if such Change of Control
occurs during any subsequent fiscal year of an Award Cycle, the
cumulative growth rate to be utilized for the balance of the
Award Cycle shall be the cumulative growth rate of the preceding
fiscal year(s) in that Award Cycle prior to the fiscal year in
which occurs the Change of Control. In the event that a
performance measure other than earnings per share is employed,
similar adjustments shall be made for such holders of unmatured
performance units. The Committee may in its discretion determine
that such historical financial data are not appropriate or not
available and may use the latest budgets, projections, forecasts
or plans for the Corporation or its business units or
subsidiaries. Except as expressly set forth in this Section
10(l), upon the occurrence of a Change of Control, no change(s)
shall be made in the terms of any performance unit (including,
without limitation, its unit base value, Payment Value or
performance criteria) or in the underlying accounting assumptions
or practices for purposes of determining the amount due
thereunder, which change(s) would lessen the value of any
performance unit to the holder thereof.
13
11. Withholding Taxes
In connection with the transfer of shares of Common Stock as a
result of the exercise of a Nonqualified Stock Option or stock
appreciation right, the payment of performance units or the award
of Restricted Stock or stock grants, the Corporation (a) shall
not issue a certificate for such shares until it has received
payment from the Participant of any Withholding Tax in cash or by
the retention or acceptance upon delivery thereof by the
Participant of shares of Common Stock sufficient in Fair Market
Value to cover the amount of such Withholding Tax and (b) shall
have the right to retain or sell without notice, or to demand
surrender of, shares of Common Stock in value sufficient to cover
any Withholding Tax. The Corporation shall have the right to
withhold from any cash amounts due from the Corporation to the
award recipient pursuant to the Plan an amount equal to the
Withholding Tax. In either case, the Corporation shall make
payment (or reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such
Withholding Tax, remitting any balance to the Participant. For
purposes of this Section 11, the value of shares of Common Stock
so retained or surrendered shall be equal to the Fair Market
Value of such shares on the date that the amount of the
Withholding Tax is to be determined (the "Tax Date"), and the
value of shares of Common Stock so sold shall be the actual net
sale price per share (after deduction of commissions) received by
the Corporation.
Notwithstanding the foregoing, the Participant may elect,
subject to approval by the Committee, to satisfy the obligation
to pay any Withholding Tax, in whole or in part, by providing the
Corporation with funds sufficient to enable the Corporation to
pay such Withholding Tax or by having the Corporation retain or
accept upon delivery thereof by the Participant shares of Common
Stock sufficient in Fair Market Value to cover the amount of such
Withholding Tax. Each election by a Participant to have shares
retained or to deliver shares for this purpose shall be subject
to the following restrictions: (i) the election must be in
writing and made on or prior to the Tax Date and (ii) if the
Participant is subject to Section 16 of the Exchange Act, an
election to have shares retained to satisfy the Withholding Tax
must be an irrevocable election made at least six months prior to
the Tax Date or the withholding election must become effective
during the ten-businessday period beginning on the third business
day following the date on which the Corporation releases for
publication its annual or quarterly summary statements of sales
and earnings and ending on the twelfth business day following the
date of release thereof.
12. Transferability and Ownership Rights of Options, Stock
Appreciation Rights and Performance Units
No option or stock appreciation fight granted or performance
unit awarded under the Plan shall be transferable otherwise than
pursuant to the designation of a Designated Beneficiary or by
will, descent or distribution, and an option or stock
appreciation fight may be exercised, during the lifetime of the
holder thereof, only by him. The holder of an option, stock
appreciation right or performance unit award shall have none of
the rights of a stockholder until the shares subject thereto or
awarded thereby shall have been registered in the name of such
holder on the transfer books of the Corporation.
13. Holding Periods
(a) If a director or officer subject to Section 16 of the
Exchange Act sells shares of Common Stock obtained upon the
exercise of a stock option within six months after the date the
option was granted, the option grant will no longer be exempt
from Section 16(b) and will retroactively be deemed a nonexempt
purchase as of the date of the option grant.
(b) In order to obtain certain tax benefits afforded to
incentive stock options under Section 422 of the Code, an
optionee must hold the shares issued upon the exercise of an
incentive stock option for two years after the date of grant of
the option and one year from the date of exercise. An optionee
may be subject to the alternative minimum tax at the time of
exercise of an incentive stock option.
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The Committee may require an optionee to give the Corporation
prompt notice of any disposition in advance of the required
holding period of shares of Common Stock acquired by exercise
of an incentive stock option. Tax advice should be obtained
when exercising any option and prior to the disposition of the
shares issued upon the exercise of any option.
14. Section 16(b) Compliance and Bifurcation of Plan
It is the intention of the Corporation that, if any of the
Corporation's equity securities are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, the Plan shall comply
in all respects with Rule 16b-3 under the Exchange Act and, if
any Plan provision is later found not to be in compliance with
such Section, the provision shall be deemed null and void, and in
all events the Plan shall be construed in favor of its meeting
the requirements of Rule 16b-3. Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to participants who are officers and
directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to
other participants.
15. Adjustments Upon Changes in Capitalization
Except as otherwise provided in Section 6(h) and Section 10(l),
in the event of any changes in the outstanding stock of the
Corporation by reason of stock dividends, stock splits,
recapitalizations, mergers, consolidations, combinations or
exchanges of shares, split-ups, split-offs, spin-offs,
liquidations or other similar changes in capitalization, or any
distribution to stockholders other than cash dividends, the
Committee shall make such adjustments, if any, in light of the
change or distribution as the Committee in its sole discretion
shall determine to be appropriate, (i) in the number and class of
shares or rights subject to options and stock appreciation rights
and the exercise prices of the options and stock appreciation
rights covered thereby, (ii) in the number of shares of Common
Stock covered by a performance unit award for which certificates
have not been delivered, any dividend equivalents to which
deferred awards of Common Stock are entitled, and the performance
measures established by the Committee under Section 10(a), and
(iii) in the Maximum Annual Employee Grant. In the event of any
such change in the outstanding Common Stock of the Corporation,
the aggregate number and class of shares available under the Plan
and the maximum number of shares as to which options may be
granted and stock appreciation rights or performance units
awarded and the maximum number of shares of Restricted Stock
which may be awarded shall be appropriately adjusted by the
Committee.
16. Amendment and Termination
Unless the Plan shall theretofore have been terminated as
hereinafter provided, the Plan shall terminate on, and no awards
of performance units, stock appreciation rights, or Restricted
Stock or options shall be made after, June 26, 2002; provided,
however, that such termination shall have no effect on awards of
performance units, stock appreciation rights, Restricted Stock or
options made prior thereto. The Plan may be terminated, modified
or amended by the stockholders of the Corporation. The Board of
Directors of the Corporation may also terminate the Plan, or
modify or amend the Plan in such respects as it shall deem
advisable in order to conform to any change in any law or
regulation applicable thereto, or in other respects; however, to
the extent required by applicable law or regulation, stockholder
approval will be required for any amendment which will (a)
materially increase the total number of shares as to which
options may be granted or which may be used in payment of
performance unit awards or stock appreciation right awards under
the Plan or which may be issued as Restricted Stock, (b)
materially change the class of persons eligible to receive awards
of performance units or Restricted Stock and grants of stock
appreciation rights or options, (c) materially increase the
benefits accruing to participants under the Plan, or (d)
otherwise require stockholder approval under any applicable law
or regulation. The amendment or termination of the Plan shall
not, without the consent of the recipient of any award under the
Plan, alter or impair any rights or obligations under any award
theretofore granted under the Plan.
15
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17. Effectiveness of the Plan
The Plan shall become effective on June 26, 1992. The
Committee may in its discretion authorize the awarding of
performance units and Restricted Stock and the granting of
options and stock appreciation rights, the payments, issuance or
exercise of which, respectively, shall be expressly subject to
the conditions that (a) the shares of Common Stock reserved for
issuance under the Plan shall have been duly listed, upon
official notice of issuance, upon each stock exchange in the
United States upon which the Common Stock is traded and (b) a
registration statement under the Securities Act of 1933, as
amended, with respect to such shares shall have become effective.
16
Exhibit 10.3
May 8, 1996
ADVANCED TECHNOLOGY LABORATORIES, INC.
AMENDED NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
ARTICLE I PURPOSES
The purposes of the Advanced Technology Laboratories, Inc.
Stock Option Plan for Nonemployee Directors (the "Plan") are to
attract and retain the services of experienced and knowledgeable
nonemployee directors of Advanced Technology Laboratories, Inc.
(the "Corporation") and to provide an incentive for such
directors to increase their proprietary interests in the
Corporation's long-term success and progress.
ARTICLE II SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with Article VI hereof,
the total number of shares of the Corporation's common stock,
$.0l par value per share (the "Common Stock"), for which options
may be granted under the Plan is 105,000 (the "Shares"). The
Shares shall be shares presently authorized but unissued or
subsequently acquired by the Corporation and shall include shares
representing the unexercised portion of any option granted under
the Plan which expires or terminates without being exercised in
full.
ARTICLE III ADMINISTRATION OF THE PLAN
The administrator of the Plan (the "Plan Administrator")
shall be the Board of Directors of the Corporation (the "Board").
Subject to the terms of the Plan, the Plan Administrator shall
have the power to construe the provisions of the Plan, to
determine all questions arising thereunder and to adopt and amend
such rules and regulations for the administration of the Plan as
it may deem desirable. No member of the Plan Administrator shall
participate in any vote by the Plan Administrator on any matter
materially affecting the rights of any such member under the
Plan.
ARTICLE IV PARTICIPATION IN THE PLAN
Each member of the Board elected or appointed who is not
otherwise an employee of the Corporation or any parent or
subsidiary corporation (an "Eligible Director") shall
automatically receive the grant of an option to purchase 5,000
Shares on the first day of July in each year that the Eligible
Director serves.
ARTICLE V OPTION TERMS
Each option granted to an Eligible Director under the Plan
and the issuance of Shares thereunder shall be subject to the
following terms:
1. Option Agreement
Each option granted under the Plan shall be evidenced by an
option agreement (an "Agreement") duly executed on behalf of the
Corporation. Each Agreement shall comply with and be subject
to the terms and conditions of the Plan. Any Agreement may contain
such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Plan Administrator.
2. Option Exercise Price
The option exercise price for an option granted under the
Plan shall be the fair market value of the Shares covered by the
option at the time the option is granted. For purposes of the
Plan, "fair market value" shall be the average of the high and low
sales prices at which the Common Stock was sold on such date as
reported by the
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NASDAQ National Market System on such date or, if no Common Stock
was traded on such date, on the next preceding date on which Common
Stock was so traded.
3. Vesting and Exercisability
An option shall become fully vested and become
nonforfeitable on July 1 of the year following the year in which
the option was granted if the optionee has continued to serve as
a Director until such date.
4. Time and Manner of Exercise of Option
Each option may be exercised in whole or in part at any time
and from time to time; provided, however, that no fewer than
100 Shares (or the remaining Shares then purchasable under the
option, if less than 100 Shares) may be purchased upon any exercise
of option rights hereunder and that only whole Shares will be issued
pursuant to the exercise of any option.
Any option may be exercised by giving written notice, signed
by the person exercising the option, to the Corporation stating
the number of Shares with respect to which the option is being
exercised, accompanied by payment in full for such Shares, which
payment may be in whole or in part (i) in cash or by check or
(ii) in shares of Common Stock already owned for at least three
(3) months by the person exercising the option, valued at fair
market value at the time of such exercise.
5. Term of Options
Each option shall expire five (5) years from the date of the
granting thereof, but shall be subject to earlier
termination as follows:
(a) In the event that an optionee ceases to be a
director of the Corporation for any reason other than the
death of the optionee, the options granted to such optionee
may be exercised by him or her only within one (1) year
after the date such optionee ceases to be a director of the
Corporation.
(b) In the event of the death of an optionee, whether
during the optionee's service as a director or during the
one (1) year period referred to in Section 5 (a), the
options granted to such optionee shall be exercisable, and
such options shall expire unless exercised within one (1)
year after the date of the optionee's death, by the legal
representatives or the estate of such optionee, by any
person or persons whom the optionee shall have designated in
writing on forms prescribed by and filed with the
Corporation or, if no such designation has been made, by the
person or persons to whom the optionee's rights have passed
by will or the laws of descent and distribution.
6. Transferability
During an optionee's lifetime, an option may be exercised
only by the optionee. Options granted under the Plan and the
rights and privileges conferred thereby shall not be subject to
execution, attachment or similar process and may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation
of law or otherwise) other than by will or by the applicable laws
of descent and distribution except that, to the extent permitted
by applicable law and Rule 16b-3 promulgated under Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan Administrator may permit a recipient of an option
to designate in writing during the optionee's lifetime a beneficiary
to receive and exercise options in the event of the optionee's
death (as provided in Section 5(b)). Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of any option under
the Plan or of any right or privilege conferred thereby, contrary
to the provisions of the Plan, or the sale or levy or any attachment
or similar process upon the rights and privileges conferred hereby,
shall be null and void.
7. Participant's or Successor's Rights as Stockholder
Neither the recipient of an option under the Plan nor the
optionee's successor(s) in interest shall have
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any rights as a stockholder of the Corporation with respect to
any Shares subject to an option granted to such person until such
person becomes a holder of record of such Shares.
8. Limitation as to Directorship
Neither the Plan nor the granting of an option nor any other
action taken pursuant to the Plan shall constitute or be evidence
of any agreement or understanding, express on implied, that an
optionee has a right to continue as a director for any period
of time or at any particular rate of compensation.
9. Regulatory Approval and Compliance
The Corporation shall not be required to issue any
certificate or certificates for Shares upon the exercise
of an option granted under the Plan, or record as a holder of
record of Shares the name of the individual exercising an option
under the Plan, without obtaining to the complete satisfaction of
the Plan Administrator the approval of all regulatory bodies
deemed necessary by the Plan Administrator, and without
complying, to the Plan Administrator's complete satisfaction,
with all rules and regulations under federal, state or local law
deemed applicable by the Plan Administrator.
ARTICLE VI CAPITAL ADJUSTMENTS
The aggregate number and class of Shares for which options may be
granted under the Plan, the number and class of Shares covered by
each automatic grant and each outstanding option and the exercise
price per Share thereof (but not the total price) shall all be
proportionately adjusted for any stock dividends, stock splits,
recapitalizations, combinations or exchanges of shares, split-
ups, split-offs, spinoffs, or other similar changes in
capitalization. Upon the effective date of a dissolution or
liquidation of the Corporation with one or more corporations
which results in more than eighty percent of the outstanding
voting shares of the Corporation being owned by one or more
affiliated corporations or other affiliated entities, or of a
transfer of all or substantially all the assets or more than
eighty percent of the then outstanding shares of the Corporation
to another corporation or other entity, this Plan and all options
granted hereunder shall terminate. In the event of such
dissolution, liquidation, reorganization, merger, consolidation,
transfer of assets or transfer of stock, each optionee shall be
entitled, for a period of twenty days prior to the effective date
of such transaction, to purchase the full number of shares under
his or her option which he or she is otherwise would have been
entitled to purchase during the remaining term of such option.
Adjustments under this Article IV shall be made by the
Plan Administrator, whose determination shall be final. In the
event of any adjustment in the number of Shares covered by any
option, any fractional Shares resulting from such adjustment
shall be disregarded and each such option shall cover only the
number of full Shares resulting from such adjustment.
ARTICLE VII EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of
the Plan shall be borne by the Corporation; none of such expenses
shall be charged to any optionee.
ARTICLE VIII EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective on May 5, 1993. The Plan shall
continue in effect until it is terminated by action of
the Board or the Corporation's stockholders, but such
termination shall not affect the then-outstanding terms of
any options.
ARTICLE IX TERMINATION AND AMENDMENT OF THE PLAN
The Board may amend, terminate or suspend the Plan at any
time, in its sole and absolute discretion; provided, however,
that if required to qualify the Plan under Rule 16b-3 promulgated
under Section 16(b) of the Exchange Act, no amendment may be made
more than once every six (6) months that would change the amount,
price, timing or vesting of the options, other than to comport
with changes in the Internal Revenue Code of 1986, as
3
<PAGE>
amended, or the rules and regulations promulgated thereunder; and
provided, further, that if required to qualify the Plan under Rule
16b-3, no amendment that would
(a) materially increase the number of Shares that may
be issued under the Plan,
(b) materially modify the requirements as to
eligibility for participation in the Plan, or
(c) otherwise materially increase the benefits
accruing to participants under the Plan shall be
made without the approval of the Corporation's
stockholders.
ARTICLE X COMPLIANCE WITH RULE 16b-3
It is the intention of the Corporation that the Plan comply
in all respects with Rule 16b-3 promulgated under Section 16(b)
of the Exchange Act and that Plan participants remain
disinterested persons ("disinterested persons") for purposes of
administering other employee benefit plans of the Corporation and
having such other plans be exempt from Section 16 (b) of the
Exchange Act. Therefore, if any Plan provision is later found
not to be in compliance with Rule 16b-3 or if any Plan provision
would disqualify Plan participants from remaining disinterested
persons, that provision shall be deemed null and void, and in all
events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
Adopted by the Corporation's Board of Directors on February
26, 1993 and approved by the Corporation's Shareholders and
effective on May 5, 1993. Amended and approved by the
Corporation's Directors and Shareholders effective on May 10,
1995 and May 8, 1996.
<PAGE>
Exhibit 10.2
ADVANCED TECHNOLOGY LABORATORIES, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
AMENDED AND RESTATED
EFFECTIVE
JANUARY 1, 1995
Prepared for review by legal counsel.
<PAGE>
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PREAMBLE.................................................... 1
SECTION 1 -- DEFINITIONS.................................... 2
1.1 Account....................................... 2
1.2 Affiliated Companies.......................... 2
1.3 After-Tax Contribution Account................ 2
1.4 Before-Tax Contribution Account............... 2
1.5 Beneficiary................................... 3
1.6 Board of Directors............................ 3
1.7 Code.......................................... 3
1.8 Committee..................................... 3
1.9 Company....................................... 3
1.10 Company Matching Contributions................ 4
1.11 Company Matching Contribution Account......... 4
1.12 Company Stock................................. 4
1.13 Compensation.................................. 4
1.14 Current Market Value.......................... 4
1.15 Disabled...................................... 4
1.16 Early Terminee................................ 4
1.17 Earnings...................................... 5
1.18 Effective Date................................ 5
1.19 Eligible Employee............................. 5
1.20 Employee...................................... 6
1.21 Employment Commencement Date.................. 6
1.22 ERISA......................................... 6
1.23 Highly Compensated Employee................... 6
1.24 Hour of Service............................... 7
1.25 Normal Retirement Date........................ 8
1.26 Participant................................... 8
1.27 Participating Company......................... 8
1.28 Period of Service............................. 8
1.29 Period of Severance........................... 9
1.30 Plan.......................................... 9
1.31 Plan Administrator............................ 9
1.32 Plan Year..................................... 9
1.33 Rollover Account.............................. 9
1.34 Service....................................... 9
1.35 Severance From Service Date................... 10
1.36 Supplemental Company Contribution Account..... 10
1.37 Temporary Termination......................... 10
1.38 Terminated.................................... 10
1.39 Trust or Trust Fund........................... 10
1.40 Trustee....................................... 10
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1.41 Valuation Date............................... 10
1.42 Additional Definitions in Plan................ 11
SECTION 2 -- PARTICIPATION.................................. 12
2.1 Participation................................. 12
2.2 Reemployment After Termination................ 12
2.3 Employees in a Bargaining Unit................ 12
SECTION 3 -- BEFORE-TAX CONTRIBUTIONS....................... 13
3.1 Salary Deferral Agreement..................... 13
3.2 Participant Modification of Salary Deferral
Agreement................................... 13
3.3 Procedure for Making and Revoking Salary
Deferral Agreement.......................... 14
3.4 Non-Discrimination Test For Deferrals (ADP
Test)....................................... 14
SECTION 4 -- PLAN CONTRIBUTIONS............................. 16
4.1 Participant and Company Contributions......... 16
4.2 Time of Contribution.......................... 19
4.3 Non-Discrimination Test for Company Matching
Contributions and After-Tax Contributions
(ACP Test).................................. 19
4.4 Multiple Use of Alternative Limitations
Under ADP and ACP Tests..................... 20
4.5 Corrective Procedures to Satisfy
Discrimination Tests........................ 21
4.6 Return of Contributions....................... 21
4.7 Recharacterization of Excess Before-Tax
Contributions............................... 24
SECTION 5 -- ACCOUNT ADMINISTRATION......................... 25
5.1 Types of Accounts............................. 25
5.2 Investment Options............................ 25
5.3 Allocation of Trust Fund Earnings and Losses
to Participant Accounts..................... 27
5.4 Valuation of the Trust Fund................... 28
5.5 Account Statements............................ 28
SECTION 6 -- INVESTMENT OF CONTRIBUTIONS.................... 29
6.1 Optional Funds................................ 29
6.2 Selection of Investment Funds................. 29
6.3 Investment in Loan Repayments................. 30
6.4 Change in Investment of Future Contributions.. 30
6.5 Changes in Investment of Existing Accounts.... 30
6.6 Changes in Investment of Former Intespec,
Inc. Accounts............................... 31
6.5 Investment of Company Contributions........... 31
SECTION 7 -- BENEFITS AND FORMS OF PAYMENT.................. 32
7.1 Eligibility for Benefits...................... 32
7.2 Time of Benefit Commencement.................. 32
7.3 Form of Payment............................... 34
7.4 Distributions of Stock........................ 34
7.5 Withdrawals Prior to Termination.............. 35
7.6 Hardship Withdrawal........................... 37
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7.7 Beneficiary Designation........................ 39
7.8 Loans.......................................... 39
7.8 Directed Rollovers............................. 42
SECTION 8 -- VESTING......................................... 44
8.1 Vesting........................................ 44
8.2 Forfeitures.................................... 45
8.3 Reemployment................................... 46
8.4 Suspension of Installment Payments............. 46
SECTION 9 -- LIMITATION ON CONTRIBUTIONS..................... 47
9.1 Maximum Annual Contribution to the Plan........ 47
9.2 Additional Limitation Relating to Defined
Benefit Plans................................ 48
SECTION 10 -- TOP HEAVY PROVISIONS........................... 50
10.1 Scope.......................................... 50
10.2 Top Heavy Status............................... 50
10.3 Minimum Contribution........................... 52
10.4 Limitation to Annual Additions in Top Heavy
Plan......................................... 53
10.5 Vesting........................................ 53
SECTION 11 -- ADMINISTRATION OF THE PLAN..................... 54
11.1 Plan Administrator............................. 54
11.2 Organization and Procedures.................... 54
11.3 Duties and Authority of Committee.............. 54
11.4 Expenses....................................... 56
11.5 Bonding and Insurance.......................... 56
11.6 Commencement of Benefits....................... 56
11.7 Appeal Procedure............................... 57
11.8 Plan Administration - Miscellaneous............ 58
11.9 Domestic Relations Orders...................... 61
11.10 Plan Qualification............................. 62
11.11 Deductible Contribution........................ 62
11.12 Voting of Company Stock and SpaceLabs
Medical, Inc. Stock.......................... 62
SECTION 12 -- AMENDMENT AND TERMINATION...................... 63
12.1 Amendment and Termination...................... 63
12.2 Consolidation or Merger........................ 63
12.3 Termination of the Plan........................ 64
12.4 Allocation of the Trust Fund on Termination
of Plan...................................... 64
12.5 Partial Termination............................ 65
SECTION 13 -- FUNDING........................................ 66
13.1 Contributions to the Trust Fund................ 66
13.2 Trust Fund for Exclusive Benefit of
Participants................................. 66
13.3 Trustee........................................ 66
13.4 Investment Manager............................. 66
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<S> <C> <C> <C>
SECTION 14 -- FIDUCIARIES.................................... 68
14.1 Limitation of Liability of the Company and
Others....................................... 68
14.2 Indemnification of Fiduciaries................. 68
14.3 Scope of Indemnification....................... 68
SIGNATURE PAGE............................................... 69
APPENDIX I................................................... 70
</TABLE>
<PAGE>
PREAMBLE
THIS SAVINGS AND STOCK OWNERSHIP PLAN (hereinafter referred to as the
"Plan"), formerly known as the Westmark International Incorporated Incentive
Savings and Stock Ownership Plan and now known as the Advanced Technology
Laboratories, Inc. Incentive Savings and Stock Ownership Plan) is amended and
restated effective January 1, 1995, by Advanced Technology Laboratories, Inc., a
Delaware corporation (hereinafter "Company").
WHEREAS, the Plan is a profit sharing plan and the purpose of the Plan
is to attract and retain Eligible Employees by providing them with an
opportunity to save for their retirement; and
WHEREAS, the Plan was adopted by Westmark International Incorporated
effective January 1, 1987, and was amended and restated effective January 1,
1989; and
WHEREAS, effective June 26, 1992, the corporate name of Westmark
International Incorporated was changed to Advanced Technology Laboratories, Inc.
and the Plan was divided into two plans, with the portion of the Plan
attributable to SpaceLabs, Inc. as a Participating Company becoming the
SpaceLabs Medical, Inc. Incentive Savings and Stock Ownership Plan; and
WHEREAS, effective June 26, 1992, the Plan was amended and restated as
the Advanced Technology Laboratories, Inc. Incentive Savings and Stock Ownership
Plan; and
WHEREAS, effective May 17, 1994, the Company merged with Interspec,
Inc.; and
WHEREAS, the Company desires to merge the Interspec, Inc. 401(k)
Retirement/Savings Plan into the Plan effective January 1, 1995; and
WHEREAS, the Company desires to amend and restate the Plan to effect
certain changes; and
WHEREAS, the Plan shall be maintained for the exclusive benefit of
covered Employees, and is intended to comply with the Internal Revenue Code of
1986, as amended, including without limitation Section 401(k) thereof, the
Employee Retirement Income Security Act of 1974, as amended, and other
applicable law;
NOW, THEREFORE, except as otherwise specified herein, the Employer
does hereby amend and restate the Plan as set forth in the following pages
effective January 1, 1995, except that any change required by federal law,
including without limitation amendments to the Internal Revenue Code, the
Employee Retirement Income Security Act, the Age Discrimination in Employment
Act and regulations or rulings issued pursuant thereto shall be effective on
the latest date on which such change may become effective and comply with
such laws.
1
<PAGE>
SECTION 1
DEFINITIONS
The following terms when used herein shall have the following meaning, unless a
different meaning is plainly required by the context. Capitalized terms are
used throughout the Plan text for terms defined by this and other sections.
1.1 Account
-------
"Account" means a Participant's Before-Tax Contribution Account, Company
Matching Contribution Account, Supplemental Company Contribution Account,
After-Tax Contribution Account and Rollover Account.
1.2 Affiliated Companies
--------------------
"Affiliated Companies" means
(a) the Company,
(b) any other corporation which is a member of a controlled group of
corporations which includes the Company (as defined in Section 414(b)
of the Code),
(c) any other trade or business under common control with the Company (as
defined in Section 414(c) of the Code), or
(d) an affiliated service group which includes the Company (as defined in
Section 414(m) of the Code).
For purposes of the limitation on contributions in Section 9, the
determination of whether a corporation is an Affiliated Company will be
made in accordance with Sections 414(b) and (c) of the Code as modified in
Section 415(h).
1.3 After-Tax Contribution Account
------------------------------
"After-Tax Contribution Account" means an account established to hold a
Participant's After-Tax Contributions to the Plan.
1.4 Before-Tax Contribution Account
-------------------------------
"Before-tax Contribution Account" means an account established to receive a
Participant's Before-Tax Contributions to the Plan and funds formerly
held in the Participant's Salary Reduction Contributions Account, if any
under the Interspec, Inc. 401(k) Retirement/Savings Plan.
2
<PAGE>
1.5 Beneficiary
-----------
"Beneficiary" means the person or persons designated to be the Beneficiary
by the Participant in writing to the Committee. In the event a married
Participant designates someone other than his or her spouse as Beneficiary,
such initial designation or subsequent change shall be invalid unless the
spouse consents in a writing, which names the designated Beneficiary and is
notarized, or witnessed by a Plan representative. If a Participant fails
to designate a Beneficiary or no designated Beneficiary survives the
Participant, the Committee may direct that payment of benefits be made in
equal shares to the person or persons in the first of the following classes
of successive preference Beneficiaries to survive the Participant. The
Participant's:
(a) spouse,
(b) descendants, per stirpes,
(c) parents,
(d) brothers and sisters,
(e) estate.
1.6 Board of Directors
------------------
"Board of Directors" means the Board of Directors of Advanced Technology
Laboratories, Inc., a Delaware corporation.
1.7 Code
----
"Code" means the Internal Revenue Code of 1986, as amended and including
all regulations promulgated pursuant thereto.
1.8 Committee
---------
"Committee" means the Advanced Technology Laboratories, Inc. Benefits
Committee as from time to time constituted and appointed by the
Compensation Committee of the Board of Directors of the Company to
administer the Plan.
1.9 Company
-------
"Company" means Advanced Technology Laboratories, Inc., a Delaware
corporation. Effective May 11, 1995 "company means Advanced Technology
Laboratories, Inc., a Washington corporation. For purposes other than
Sections 12, 13 and 14, the term "Company" shall also include other
Participating Companies as provided from time to time in Appendix I to
this Plan.
3
<PAGE>
1.10 Company Matching Contributions
------------------------------
"Company Matching Contributions" has the meaning set forth in Section
4.1(c).
1.11 Company Matching Contribution Account
-------------------------------------
"Company Matching Contribution Account" means an account established to
receive a Participant's share of Company Matching Contributions to the
Plan to receive funds formerly held in the Participant's Employer
Matching Contributions Account, if any, and Employee Matching
Contributions Account, if any, under the Interspec, Inc. 401(k)
Retirement/Savings Plan, and to receive the Participants share, if any,
of Supplemental Company Contributions to the Plan made before January 1,
1994.
1.12 Company Stock
-------------
"Company Stock" means the common stock of the Company.
1.13 Compensation
------------
"Compensation," for any Plan Year, has the meaning set forth in Section
415(c)(3) of the Code, provided, for purposes of determining who is a
Highly Compensated Employee, "Compensation" shall also include Participant
Before-Tax Contributions to this Plan and elective Employee contributions
to a cafeteria plan described in Code Section 125.
1.14 Current Market Value
--------------------
"Current Market Value," as applied to the common stock of the Company on
any day, means the closing market price of such stock on the NASDAQ
National Market on such day, or if the common stock of the Company was not
traded on such day, the closing price on the next preceding trading day on
which the common stock of the Company is traded.
1.15 Disabled
--------
"Disabled" means that a Participant is entitled to benefits under a long
term disability plan sponsored by the Participating Company, or a long term
disability plan to which the Participating Company contributes on behalf of
the Participant.
1.16 Early Terminee
--------------
"Early Terminee" means a Participant (including a retired or terminated
former participant in the Interspec, Inc. 401(k) Retirement/Savings Plan)
with a vested Account balance greater than $3,500, whose employment has
terminated prior to age 55 by reason other than death but who has
elected to defer receipt of payment of his Accounts for a period of more
than ninety (90) days after termination.
4
<PAGE>
1.17 Earnings
--------
"Earnings" for any Plan Year means basic compensation and commissions paid
to an Employee for services rendered to the Participating Company
(calculated without regard to any reduction for Before-Tax Contributions or
pre-tax contributions to a cafeteria plan pursuant to Section 125 of the
Code), excluding amounts deferred pursuant to a non-qualified deferred
compensation plan, and also excluding additional compensation such
as shift differentials, overtime, severance payments, living and similar
allowances, bonuses, and any wages paid by a foreign branch or subsidiary
of the Company under a non-U.S. payroll.
Notwithstanding the foregoing, annual Earnings in excess of $200,000 shall
be disregarded; provided, however, that this $200,000 limit shall be
automatically adjusted to the maximum permissible dollar limitation
permitted by the Commissioner of the Internal Revenue Service. In
determining Earnings of a Participant for purposes of this limitation, the
rules of Section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the close of the year. If as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then the limitation
shall be prorated among the affected individuals in proportion to each such
individual's Earnings as determined under this Section 1.17 prior to the
application of this limitation.
Effective January 1, 1994, the $200,000 figure in the preceding paragraph
shall be replaced with $150,000.
1.18 Effective Date
--------------
"Effective Date" means January 1, 1987, or with respect to any company
specified in appendices to this Plan, the date such Company adopted the
Plan.
1.19 Eligible Employee
-----------------
"Eligible Employee" means any Employee who is on the U.S. payroll of the
Company and who is not:
(a) a leased employee; or
(b) a temporary employee; or
(c) covered under a collective bargaining agreement where retirement
benefits were the subject of good faith bargaining which does not
provide for retirement benefits under this Plan.
5
<PAGE>
1.20 Employee
--------
"Employee" means any person (including any officer or director) who is
employed by the Company as a common law employee and any leased employee
within the meaning of Code Section 414(n)(2); provided, however, if leased
employees constitute twenty percent or less of the Company's non-highly
compensated work force, the term "Employee" shall not include a leased
employee who is covered by a plan maintained by the leasing organization
which meets the requirements of Code Section 414(n)(5).
1.21 Employment Commencement Date
----------------------------
"Employment Commencement Date" means the later of (a) the Effective Date,
and b) the date on which during the current period of employment, an
Employee first completes an Hour of Service for a Participating
Company on or after the date it becomes a Participating Company.
1.22 ERISA
-----
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and including all regulations promulgated pursuant thereto.
1.23 Highly Compensated Employee
---------------------------
"Highly Compensated Employee" means an Employee who, during the Plan Year
or the twelve-month period preceding the Plan Year, is included in one of
the following categories within the meaning of Section 414(q) of the Code
and regulations thereunder:
(a) an Employee who was at any time a 5% owner of a Participating Company;
(b) an Employee who received aggregate Compensation from all the
Affiliated Companies in excess of the dollar limitation under Section
414(q)(1)(B) of the Code ($100,000 for the Plan Year ending December
31, 1995);
(c) an Employee who received aggregate Compensation from all the
Affiliated Companies in excess of the dollar limitation contained in
Section 414(q)(1)(C) of the Code ($66,000 for the Plan Year ending
December 31, 1995) and was in the "top paid group" as defined in
Section 414(q)(4) of the Code; or
(d) an officer of a Participating Company whose annual Compensation
exceeds 50% of the dollar limitation under Section 415(b)(1)(A) of the
Code ($60,000 for the Plan Year ending December 31, 1995).
An Employee described in subparagraphs (b) through (d) above for the Plan
Year in question, who is not one of the 100 highest paid Employees in the
current Plan Year, will not be considered a Highly Compensated Employee for
the current year unless he or she
6
<PAGE>
was a Highly Compensated Employee in the preceding Plan Year (without
regard to this sentence). No more than 50 Employees shall be considered
officers or if less, no more than the greater of (i) 3 or (ii) 10% of
all Employees shall be considered officers. If all officers earn less
than the Compensation threshold in subparagraph (d) above, then the
highest paid officer shall be considered highly compensated.
In determining Highly Compensated Employees, the rules of Section 414(q)(6)
of the Code shall apply. The term "family" shall include only the spouse
of the employee or former employee and any lineal ascendants and
descendants and the spouses of such ascendants and descendants.
The Company may elect, by resolution, from year to year, to make the
determination of Highly Compensated Employees for the twelve-month period
preceding the Plan Year, described above, with respect to the calendar year
that coincides with the current plan year rather than with respect to the
twelve-month period preceding the current plan year.
The Company may elect, by resolution, for any year during which the Company
at all times maintained significant business activities and employed
employees in at least two significantly separate geographic areas, to
modify the above definition by substituting the dollar amount in
subparagraph (d) for the dollar amount in subparagraph (b) and by
disregarding subparagraph (c).
1.24 Hour of Service
---------------
"Hour of Service" means each hour for which an Employee is paid or entitled
to payment by the Company or any Affiliated Companies on account of:
(a) Performance of duties;
(b) A period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff, jury
duty, military duty, or leave of absence. No more than 501 Hours of
Service shall be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be calculated
and credited pursuant to 29 CFR 2530.200b-2(b) and (c), which are
incorporated herein by this reference; and
(c) An award of back pay, irrespective of mitigation of damages, agreed to
by the Participating Company or any Affiliated Company. However,
hours credited under (a) or (b) above shall not also be credited under
this subsection (c).
7
<PAGE>
1.25 Normal Retirement Date
----------------------
"Normal Retirement Date" means the first day of the month coinciding with
or immediately preceding the Participant's sixty-fifth (65th) birthday.
1.26 Participant
-----------
"Participant" means any Eligible Employee who qualifies for participation
pursuant to Section 2. A vested Participant shall cease to be a
Participant when his or her vested Accounts are fully paid.
1.27 Participating Company
---------------------
"Participating Company" means the Company or any Affiliated Company that
adopts the Plan with the approval of the Board of Directors of the Company,
and any successor thereto. A list of all Participating Companies is
attached as Appendix I to the Plan.
1.28 Period of Service
-----------------
"Period of Service" means the period of time commencing with the Employment
Commencement Date and ending on the Severance From Service Date. Non-
successive periods are aggregated to determine the Employee's total Period
of Service. An Employee's Period of Service shall also include the
following:
(a) Periods not in Service due to Temporary Termination;
(b) Periods of Service required to be taken into account by Section
414(a)(1) of the Code or under Treasury Regulations issued pursuant to
Section 414(a)(2) of the Code, and Service with Affiliated Companies.
Where the Company maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as service for
the Company, as may be required by the Code;
(c) For any Participant who became an Employee prior to September 1, 1987,
any period of employment with a Participating Company under the Squibb
Corporation Incentive Savings and Stock Ownership Plan to the extent
such employment was credited as "Service" under that plan; and
(d) Periods of Service with Interspec, Inc. and with Echo Ultrasound,
which was a division of Interspec, Inc, and before that was a
division of General Electric Company, determined as if such employers
were Participating Companies prior to May 17, 1994.
Notwithstanding the above, with respect to an individual who was a
Participant in this Plan and whose Account balances were transferred to the
SpaceLabs Medical, Inc. Incentive Savings and Stock Ownership Plan between
June 25 and December 31, 1992, such Employee's Period of Service under this
Plan, for participation and vesting purposes, shall begin on the first
Employment Commencement Date after December 31, 1992 that follows such
transfer of the Employee's Accounts.
8
<PAGE>
1.29 Period of Severance
-------------------
"Period of Severance" means the period of time commencing at the Severance
From Service Date and ending on the date the Employee again performs an
Hour of Service for the Participating Company; provided, however, such
period shall commence one year later if a male or female Employee is absent
due to pregnancy, birth or adoption of a child, or caring for a child
immediately following birth or adoption.
Notwithstanding any Plan provision to the contrary, a Period of Severance
for an employee of Interspec, Inc. and Echo Ultrasound is determined as
if they were Participating Companies prior to May 17, 1994.
1.30 Plan
----
"Plan" means the Advanced Technology Laboratories, Inc. Incentive Savings
and Stock Ownership Plan either in its previous or present form or as
amended from time to time.
1.31 Plan Administrator
------------------
"Plan Administrator" means the person or entity designated in Section 11 to
administer the Plan.
1.32 Plan Year
---------
"Plan Year" means the twelve-month period commencing each January 1 and
ending each December 31.
1.33 Rollover Account
----------------
"Rollover Account" means an account established to hold a Participant's
rollover contribution to the Plan and funds formerly held in the
Participant's Rollover Contribution Account, if any, under Interspec,
Inc. 401(k) Retirement/Savings Plan.
1.34 Service
-------
"Service" with a Participating Company means periods for which an Employee
is paid or entitled to payment for the performance of duties for the
Participating Company. Service shall include a period of employment with a
predecessor to the Participating Company to the extent (i) provided by the
Board in its discretion on a non-discriminatory basis as to all Employees
similarly situated or (ii) required by Section 414(a) of the Code.
9
<PAGE>
1.35 Severance From Service Date
---------------------------
"Severance From Service Date" means the earlier of the date on which an
Employee quits, retires, is discharged or dies, or the first anniversary of
absence from work for any other reason. An individual employed by an
Affiliated Company other than the Company shall incur a Severance From
Service Date on the date the individual's employer ceases to be an
Affiliated Company of the Company.
1.36 Supplemental Company Contribution Account
-----------------------------------------
"Supplemental Company Contribution Account" means an account established to
receive a Participant's share of Supplemental Company Contributions to the
Plan made after December 31, 1993.
1.37 Temporary Termination
---------------------
Termination is deemed "Temporary" if the Employee is rehired and in Service
within one year of the initial date of absence from work.
9
<PAGE>
1.38 Terminated
----------
"Terminated" means no longer in Service or employed as an Employee with the
Company or any Affiliated Company for reasons of resignation, retirement,
discharge or death.
1.39 Trust or Trust Fund
-------------------
"Trust" or "Trust Fund" means the trust fund into which shall be paid all
contributions and from which all benefits shall be paid under this Plan.
1.40 Trustee
-------
"Trustee" means the trustee or trustees who receive, hold, invest, and
disburse the assets of the Trust in accordance with the terms and
provisions set forth in a trust agreement.
1.41 Valuation Date
--------------
"Valuation Date" means the last business day in each calendar quarter and
any other day which the Plan Administrator may designate from time to time.
10
<PAGE>
1.42 Additional Definitions in Plan
------------------------------
The following terms are defined in the following sections of the Plan.
<TABLE>
<CAPTION>
Section
--------
<S> <C>
ACP Test 4.3
ADP Test 3.4
After-Tax Contributions 4.1(b)
Aggregate Account 10.2(e)
Aggregation Group 9.2(h)
Aggresive Equity Fund 5.2(h)
Annual Additions 9.1
Balanced Fund 5.2(c)
Before-Tax Contributions 3.1(a)
Company Stock Fund 5.2(a)
Company Matching Contributions 4.1(c)
Core Equity Fund 5.2(g)
Determination Date 10.2(c)
Diversified Equity Fund 5.2(d)
Domestic Relations Order 11.9
Fixed Income Fund 5.2(b)
Investment Manager 13.4
International Fund 5.2(e)
Key Employee 10.2(g)
Lump Sum Supplemental Contribution 4.1(e)
Money Market Fund 5.2(h)
Part-Time Employee 2.1(b)
Present Value of Accrued Benefit 10.2(f)
SpaceLabs Stock Fund 5.2(f)
Super Top Heavy 10.2(b)
Supplemental Company Contributions 4.1(d)
Top Heavy 10.2(a)
Valuation Date (for Top Heavy) 10.2(d)
</TABLE>
11
<PAGE>
SECTION 2
PARTICIPATION
2.1 Participation
-------------
(a) Each Eligible Employee who is not already a Participant shall
become a Participant in this Plan on the later of:
(i) the first day of the first month coinciding with or following
completion of a two consecutive-month Period of Service: and
(ii) the date his or her employer becomes a Participating
Company,
provided he or she is an Eligible Employee on such date.
(b) Each Participant in the Interspec, Inc. 401(k) Retirement/
Savings Plan as of December 31, 1994 shall become a Participant
in the Plan on January 1, 1995.
2.2 Reemployment After Termination
------------------------------
Upon the reemployment of a Terminated former Participant as an Eligible
Employee, he or she shall immediately become a Participant.
An Employee who Terminates prior to becoming a Participant and is later
reemployed shall become a Participant upon satisfying the requirements of
Section 2.1. A Period of Service earned prior to Termination shall not be
forfeited for purposes of this Section 2.
2.3 Employees in a Bargaining Unit
------------------------------
An Employee belonging to a collective bargaining unit, which has entered an
agreement with the Participating Company that does not provide for
retirement benefits under this Plan, shall not qualify for participation.
If such an Employee is a Participant when such an agreement is entered, the
Employee shall cease active participation on the effective date of the
bargaining agreement. If such an agreement provides for Plan
participation, a covered Employee may continue or resume participation.
12
<PAGE>
SECTION 3
BEFORE-TAX CONTRIBUTIONS
3.1 Salary Deferral Agreement
-------------------------
(a) General
-------
A Participant who desires to make salary deferrals pursuant to this
Section 3.1 shall enter a salary deferral agreement with the
Participating Company at least 15 days prior to the first day of the
month on which the salary deferral is to commence. Such agreement
shall authorize the Company to make payroll deductions equal to a
whole percentage of Earnings between 1% and 16% designated as Before-
tax Contributions. Payroll deductions shall be based on Earnings for
each payroll period.
To the extent a Participant's salary deferral agreement is based on a
percentage of Earnings, the dollar amount of a Participant's salary
deferral shall be automatically increased or decreased to reflect
changes in the amount of the Participant's Earnings.
The salary deferral agreement shall be effective on the first day of
the payroll period coinciding with or following the later of: (1) the
date participation commences, or (2) the first day of the month which
coincides with or next follows completion of the agreement, and shall
remain in effect until such agreement is superseded by a subsequent
agreement or revoked. Deferrals shall be deducted from Participant
Earnings each payroll period, except for those periods in which the
deferral amount exceeds the amount remaining after other payroll
deductions. In the event a deduction is not taken in a payroll
period, the Committee, with sole discretion, shall determine whether
there will be a make-up deduction in a subsequent payroll period.
(b) Maximum Dollar Contribution
---------------------------
Notwithstanding the foregoing, Before-Tax Contributions for any
calendar year to this Plan (and any other plans of Affiliated
Companies subject to Section 402(g) of the Code) shall not exceed the
maximum dollar limitation on elective deferrals under Section 402(g)
of the Code ($9,240 for 1995).
3.2 Participant Modification of Salary Deferral Agreement
-----------------------------------------------------
The payroll deduction percentages designated in the Participant's salary
deferral agreement shall continue in effect regardless of changes in
Earnings until the Participant elects in writing to change the percentage.
A Participant may change the deferral amount by completing a new salary
deferral agreement and submitting it to the Committee. The
13
<PAGE>
agreement will become effective on the first day of the month after 15
days from the date such notice is received by the Committee. Completion
of a salary deferral agreement shall automatically revoke all prior
salary deferral agreements entered into by a Participant. A
Participant may change the deferral amount or suspend deferrals as
frequently as each month, as long as the salary deferral agreement is
received by the Committee at least fifteen days before the effective
date of the change.
A Participant may discontinue contributions effective on the first day of
any future month by submitting a request form to the Committee at least 15
days prior to the effective date. Contributions may be resumed on the
first day of any month after having been suspended as long as the salary
deferral agreement is received by the Committee at least fifteen days
before the salary deferrals are to commence.
3.3 Procedure for Making and Revoking Salary Deferral Agreement
-----------------------------------------------------------
The salary deferral agreement and any modification or revocation thereof
shall be made by the Participant on such form, within such time and in
accordance with such rules and procedures as prescribed by the Committee.
3.4 Non-Discrimination Test For Deferrals (ADP Test)
------------------------------------------------
For each Plan Year, the Plan must meet one of the actual deferral
percentage (hereinafter "ADP") tests described below to satisfy the non-
discrimination requirement. For purposes of this ADP test, Eligible
Employees who do not qualify for participation pursuant to Section 2 shall
not be considered.
(a) The ADP for the group of Eligible Employees who are Highly Compensated
Employees does not exceed the ADP for all other Eligible Employees
multiplied by 1.25; or
(b) The ADP for the group of Eligible Employees who are Highly Compensated
Employees (i) is not more than two percentage points higher than the
ADP for all other Eligible Employees and (ii) does not exceed the ADP
for all other Eligible Employees multiplied by 2.
The ADP for a specified group of Eligible Employees shall be the average of
the ratios (calculated separately for each Employee in the group to the
nearest one-hundredth of one percent of the Employee's Compensation) of
(i) Participant Before-tax Contributions to (ii) the Employee's
Compensation earned while eligible to participate, determined in
accordance with Code Section 401(k) and regulations pursuant thereto.
For purposes of the ADP tests, the definition of "Compensation" may be
modified from year to year to mean any definition of compensation that
complies with Section 414(s) of the Code.
In applying the foregoing tests, Compensation paid to and Before-Tax
Contributions on behalf of family members (as defined in Code Section
414(q)(6)(B)) of a Highly Compensated Employee who is a 5% owner or in
the group consisting of the ten Highly
14
<PAGE>
Compensated Employees paid the greatest Compensation shall be considered
together to determine a combined ADP for the family group (which is
treated as one Highly Compensated Employee).
If for any Plan Year a Highly Compensated Employee is also eligible to
participate in another cash for deferred arrangement maintained by any
Affiliated Company, then the ADP of such Highly Compensated Employee shall
be determined by treating all the cash or deferred arrangements in which he
or she is eligible to participate and this Plan as one arrangement.
For purposes of the foregoing test, all Before-tax Contributions made to
this plan any other plan which is aggregated with this Plan for purposes
of satisfying the coverage requirements of Code Section 410(b) (except
the average benefits percentage test) shall be treated as made to a
single plan. In addition, Before-tax Contributions to this Plan may be
permissively aggregated with before-tax contributions to one or more
other cash of deferred aggrangements, so long as the aggregated plans
satisfy the requirements of Code Sections 401(a)(4) and 410(b) as if
they were a single plan.
15
<PAGE>
SECTION 4
PLAN CONTRIBUTIONS
4.1 Participant and Company Contributions
-------------------------------------
(a) Participant Payroll Deduction Contributions
-------------------------------------------
The Company shall make a Participant Before-Tax Contribution on behalf
of each active Participant in an amount equal to 100% of the salary
deferral amount pursuant to the Participant's salary deferral
agreement, as provided in Section 3, for each payroll period.
Participant contributions shall be credited to the Participant's
Before-Tax Contribution Account.
To the extent a Participant's salary deferral agreement is based on a
percentage of Earnings, the dollar amount of a Participant's Before-
Tax Contributions shall be automatically increased or decreased to
reflect changes in the amount of the Participant's Earnings.
The Company shall pay the Participants' Before-Tax Contributions in
cash to the Trustee within a reasonable time after each pay-period but
not later than a reasonable time after the end of each month.
(b) Employee After-Tax Contributions
--------------------------------
A Participant may elect to contribute to the Plan, through payroll
deductions, an amount equal to a whole percentage of Earnings between
1% and 16%, reduced by the amount (if any) of the Before-Tax
Contributions to be made on his behalf. Such amounts are referred to
as After-Tax Contributions. A Participant may make such election by
filing a written application which authorizes a deduction of
contributions from his Earnings at least 15 days prior to the first
day of the month on which a deduction is to commence. After-Tax
Contributions shall be credited to the Participant's After-Tax
Contribution Account.
An election to make After-Tax Contributions may be modified or
canceled subject to the same provisions that apply to Before-Tax
Contributions pursuant to Section 3.2.
The dollar amount of a Participant's After-Tax Contributions shall be
automatically increased or decreased to reflect changes in the amount
of the Participant's Earnings.
The Company shall pay the Participants' After-Tax Contributions in
cash to the Trustee within a reasonable time after each pay-period but
not later than a reasonable time after the end of each month.
16
<PAGE>
(c) Company Matching Contributions
------------------------------
Each Company shall make the Company Matching Contribution for any Plan
Year in an amount equal to:
(i) 50% of the first 3% of each Participant's Before-Tax
Contributions and After-Tax Contributions in respect of Earnings
paid by the Company during such Plan Year; and
(ii) 25% of each Participant's Before-Tax Contributions and After-Tax
Contributions over 3% and up to 6% of Earnings paid by the
Company during such Plan Year.
Provided that, Participant Lump Sum Supplemental Contributions
pursuant to Section 4.1(e) will not be matched by a Company Matching
Contribution.
Such amounts shall be called Company Matching Contributions. The
percentage of Company Matching Contributions shall be determined
separately for the Company from time to time by the Board, subject to
the percentage limitations contained in the preceding sentence. The
rate of Company Matching Contributions shall be certified to the
Committee and shall remain effective until changed by the Board and
certified to the Committee. Company Matching Contributions shall be
credited to the Participants' Company Matching Contribution Accounts.
The amount of the Company Matching Contributions due under this
Section 4.1(c) (reduced by any Company Matching Contributions
forfeited during the month, as provided in Section 8.2) shall be
determined each pay period during the Plan Year and shall be
remitted to the Trustee within a reasonable time after each pay
period but not later than a reasonable time after the end of each
month.
The Company may, at its option, make its contribution under this
Section 4.1(c) by delivering or causing to be delivered to the Trustee
shares of Company Stock at the aggregate Current Market Value of the
stock so delivered on the date of the delivery. Such shares shall be
treasury shares, authorized but unissued shares or shares purchased on
the open market.
(d) Supplemental Company Contributions
----------------------------------
On the last day of the Plan Year, each Participating Company may
contribute a uniform percentage of a Participant's Earnings, on behalf
of each Participant who completed 1,000 or more Hours of Service
during the Plan Year and (i) who is employed on the first and last
days of the Plan Year, (ii) who terminated employment during the Plan
Year as a result of retirement, Disability or death, or (iii) who was
employed by the Participating Company but who was transferred during
the Plan Year to the employ of an Affiliated Company that is not a
Participating Company.
17
<PAGE>
Amounts contributed by each Participating Company may be different
from the amount contributed by another Participating Company. Amounts
contributed by each Participating Company will be allocated only to
Participants employed by that Participating Company, based on Earnings
paid by that Participating Company. Such amounts are referred to as
Supplemental Company Contributions and shall be credited to
Supplemental Company Contribution Accounts. The percentage of
Supplemental Company Contributions shall be determined separately for
each Participating Company by the Board.
Supplemental Company Contributions shall be remitted to the Trustee on
or before the due date for filing the Company's Federal income tax
return for the Plan Year, including extensions.
A Participating Company may, at its option, make its contributions
under this Section 4.1(d) by delivering or causing to be delivered to
the Trustee shares of Company Stock at the aggregate Current Market
Value of the stock so delivered on the date of delivery. Such shares
shall be treasury shares, authorized but unissued shares or shares
purchased on the open market.
(e) Lump-Sum Supplemental Contributions
-----------------------------------
In addition to any other contributions made by him, a Participant who
has completed at least five years of Service with the Participating
Company may make a contribution to the Plan, effective as of the last
day of any month, by delivering a check to the Participating Company,
provided that no more than two Lump-Sum Supplemental Contributions may
be made hereunder by a Participant in any calendar year. Lump-Sum
Supplemental Contributions shall be treated as After-Tax Contributions
and credited to the Participant's After-Tax Contribution Account.
The Company shall pay the Lump-Sum Supplemental Contributions in cash
to the Trustee within a reasonable time after receipt of a
Participant's check.
(f) Rollover Contributions
----------------------
An Eligible Employee may request in writing on one or more forms
required by the Committee accept a rollover amount which was
distributed from another qualified plan (other than a plan maintained
by the Company or an Affiliated Company) or conduit Individual
Retirement Account (IRA). Also, the Eligible Employee must provide
any written assurances required by the Committee that such amounts
are eligible rollover distributions. The amount must be a direct
rollover or must be rolled over by the Eligible Employee within 60
days after receiving the distribution from the other plan or conduit
IRA. Rollovers of any type of property other than cash will not be
accepted. In the event that an Eligible Employee contributes a
rollover amount, such amount shall be allocated to a separate,
fully vested account and subject to the same terms of the Plan as
other
18
<PAGE>
amounts in a Before-Tax Contribution Account, provided, amounts in
a Rollover Account may be withdrawn in Service at any time.
If the Eligible Employee never satisfies the participation
requirements of Section 2, the Eligible Employee shall be considered a
Participant only with respect to the rollover amount.
4.2 Time of Contribution
--------------------
In no event shall contributions for any Plan Year be made later than the
time prescribed by law (i) for the deduction of such contributions for
purposes of Federal income tax, as determined by the applicable provisions
of the Code, or (ii) for making such contributions under a cash or deferred
arrangement (within the meaning of Section 401(k) of the Code).
4.3 Non-Discrimination Test for Company Matching Contributions and After-Tax
------------------------------------------------------------------------
Contributions (ACP Test)
------------------------
For each Plan Year the Plan must meet one of the average contribution
percentage (hereinafter "ACP") tests described below to satisfy this non-
discrimination requirement. For purposes of this ACP test, Eligible
Employees who do not qualify for participation pursuant to Section 2 shall
not be considered.
(a) The ACP for the group of Eligible Employees who are Highly Compensated
Employees does not exceed the ACP for all other Eligible Employees
multiplied by 1.25; or
(b) The ACP for the group of Eligible Employees who are Highly Compensated
Employees (i) is not more than two percentage points higher than the
ACP for all other Eligible Employees and (ii) does not exceed the ACP
for all other Eligible Employees multiplied by 2.
The ACP for a specified group of Eligible Employees shall be the average of
the ratios (calculated separately for each Employee in the group to the
nearest one-hundredth of one percent of the Employee's Compensation) of (i)
Company Matching Contributions on behalf of each such Employee and the
Employee's After-Tax Contributions and Lump-Sum Supplemental Contributions,
if any, to (ii) the Employee's Compensation earned while eligible to
participate, determined in accordance with Code Section 401(m) and
regulations pursuant thereto. For purposes of the ACP tests, the
definition of "Compensation" may be modified from year to year to mean any
definition of compensation that complies with Section 414(s) of the Code.
For purposes of the foregoing test, all Company Matching Contributions,
After-tax
19
<PAGE>
Contributions and Lump Sum Supplemental Contributions made under this
Plan may be permissively aggregated with matching contributions made to
another plan, so long as the aggregated plans satisfy the requirements
of Code Sections 401(a)(4) and 410(b) as if they were a single plan.
In applying the foregoing tests, Compensation paid to and contributions on
behalf of family members (as defined in Code Section 414(q)(6)(B)) of a
Highly Compensated Employee who is a 5% owner or in the group consisting of
the ten Highly Compensated Employees paid the greatest Compensation shall
be considered together to determine a combined ACP for the family group
(which is treated as one Highly Compensated Employee).
If for any Plan Year a Highly Compensated Employee is also eligible to
participate in another plan offering company matching contributions and/or
after-tax contributions maintained by any Affiliated Company, the ACP of
such Highly Compensated Employee shall be determined by aggregating all
such contributions.
4.4 Multiple Use of Alternative Limitations Under ADP and ACP Tests
---------------------------------------------------------------
If the sum of the ADP and ACP for Highly Compensated Employees determined
under Section 3.4 and Section 4.3, respectively, after correcting any
excess deferrals or contributions pursuant to Section 4.5, exceeds the
Aggregate Limit defined below, then Highly Compensated Employee
contributions shall be further limited pursuant to this section. This
multiple use limitation shall be applied in accordance with the provisions
of Treas. Reg. Sections 1.401(m)-1 and 1.401(m)-2.
The Aggregate Limit means the greater of (a) or (b) below:
(a) the sum of:
(i) 1.25 multiplied by the greater of the ADP or the ACP for the
group of all Eligible Employees who are not Highly Compensated
Employees, and
(ii) two plus the lesser of the ADP or the ACP for the group of all
Eligible Employees who are not Highly Compensated Employees (in
no event shall this amount exceed twice the lesser of such ADP or
ACP).
(b) the sum of:
(i) 1.25 multiplied by the lesser of the ADP or the ACP for the group
of all Eligible Employees who are not Highly Compensated
Employees, and
(ii) two plus the greater of the ADP or the ACP for the group of all
Eligible Employees who are not Highly Compensated Employees (in
no event shall this amount exceed twice the greater of such ADP
or ACP).
4.5 Corrective Procedures to Satisfy Discrimination Tests
-----------------------------------------------------
If at any time during a Plan Year the Committee determines on a projected
basis that it is necessary to reduce the Participant Before-Tax
Contributions, After-Tax Contributions or Company Matching Contributions of
any Highly Compensated Employee to satisfy the dollar limit on annual
deferrals, the ADP non-discrimination test, the ACP non-discrimination
test, or the multiple use of alternative limitations test, it shall have
the authority to do so in such amounts and for such periods of time as it
shall deem necessary under the circumstances.
20
<PAGE>
The Committee may, in its sole discretion, elect to aggregate Company
Matching Contributions and/or Supplemental Company Contributions with
Participant Before-Tax Contributions to the extent necessary to satisfy the
ADP discrimination test provided such aggregation does not itself result in
discrimination. Notwithstanding any Plan provisions to the contrary, any
Company contributions so aggregated shall be 100% vested as of the date
contributed to the Plan and shall be subject to the withdrawal provisions
of Section 7.4 as if they are Before-Tax Contributions. The ACP test must
be passed without taking such Company contributions into account.
The Committee may also, in its sole discretion, elect to aggregate
Supplemental Company Contributions with Company Matching Contributions to
the extent necessary to satisfy the ACP discrimination test, provided such
aggregation does not itself result in discrimination. Notwithstanding any
Plan provision to the contrary, any Company contributions so aggregated
shall be 100% vested, and shall be subject to the withdrawal provisions of
Section 7.4 as if they are Before-Tax Contributions.
4.6 Return of Contributions
-----------------------
(a) Mistake of Fact
---------------
If the amount of contribution made to the Plan by a Participating
Company for any Plan Year is in excess of the amount required under
Section 4.1, and such excess payment is due to mistake of fact, the
Participating Company shall have the right to recover such excess
contribution within one year after the date the contribution is made
to the Trustee. The return of a contribution shall be permitted
hereunder only if the amount so returned (i) is the excess of the
amount actually contributed over the amount which would have otherwise
been contributed, (ii) does not include the earnings attributable to
such contribution, and (iii) is reduced by any losses attributable to
such contribution.
(b) Excess Deferrals
----------------
An excess deferral exists for a Participant if Before-Tax
Contributions under this Plan together with any other plans subject to
the deferral limit in Code Section 402(g) (for 1995 this limit is
$9,240) exceed such dollar limitation for any calendar year.
In the event an excess deferral exists in plans maintained by the
Participating Company (and Affiliated Companies, if applicable), such
excess deferral, adjusted for investment gains or losses, less amounts
previously returned pursuant to subparagraph (c), shall be distributed
no later than April 15 following the calendar year in which the excess
deferral occurred.
In the event an excess deferral exists in plans maintained by the
Company and any unrelated employer(s), and a Participant submits a
written request for a return of excess deferrals by March 1 following
the calendar year in which an excess deferral occurs (or any other
date authorized by the Committee), the Committee
21
<PAGE>
shall distribute such excess deferral, adjusted for investment gains
or losses, less amounts previously returned pursuant to subparagraph
(c), no later than April 15 following the calendar year in which the
excess deferral occurred. Such written request shall contain
information which the Committee may require.
(c) ADP Excess Contribution
-----------------------
An ADP excess contribution exists if contributions under this Plan on
behalf of Highly Compensated Employees fail to meet the ADP test
described in Section 3.4. Within twelve months after the end of the
Plan Year for which there is an excess, contributions which exceed the
ADP limitation, adjusted for earnings and losses, less amounts
previously returned pursuant to subparagraph (b), shall be distributed
to Highly Compensated Employees by reducing each Highly Compensated
Employee's deferral in the order of deferral percentages beginning
with the highest.
In the event excess deferrals are returned to a Highly Compensated
Employee whose contributions and Compensation were aggregated with
other family members for purposes of the ADP test in Section 3.4, such
returned amounts shall be returned to each family member in the same
proportion that his or her contributions and Compensation bears to
total contributions and Compensation of the family member group.
(d) ACP Excess Contribution
-----------------------
An ACP excess contribution exists if contributions under this Plan on
behalf of Highly Compensated Employees fail to meet the ACP test
described in Section 4.3. Within twelve months after the end of the
Plan Year for which there is an excess, unmatched After-Tax
Contributions, and then matched After-Tax Contributions and Company
Matching Contributions (in equal amounts) of Highly Compensated
Employees which exceed the ACP limitation shall be reduced, beginning
with the highest contribution percentage and then continuing with each
next lower percentage as the ceiling declines, as follows:
(i) Any amount reduced from After-Tax Contributions (including
recharacterized contributions) shall be distributed with related
earnings to the Employee to whom it applies.
(ii) Any amount reduced from Company Matching Contributions shall be
distributed, with related earnings, to the extent vested, to the
Employee to whom it applies.
(iii)Any amount reduced from Company Matching Contributions not
distributed under (ii) above shall be forfeited, with related
earnings. Amounts so forfeited shall be applied to offset future
Company Matching Contributions.
22
<PAGE>
In the event excess deferrals are returned to a Highly Compensated
Employee whose contributions and Compensation were aggregated with
other family members for purposes of the ACP test in Section 4.3, such
returned amounts shall be returned to each family member in the same
proportion that his or her contributions and Compensation bears to
total contributions and Compensation of the family member group.
(e) Contributions in Excess of the Aggregate Limit
----------------------------------------------
In the event contributions exceed the Aggregate Limit (as defined in
Section 4.4), Participant unmatched After-Tax Contributions, then
unmatched Before-Tax Contributions, then matched After-Tax
Contributions, then matched Before-Tax Contributions shall be
considered excess contributions pursuant to (c) or (d) above, as
applicable, and shall be returned to Highly Compensated Employees
pursuant thereto.
(f) Adjustment for Income
---------------------
An Excess Deferral, ADP excess contribution or ACP excess contribution
distributed to a Participant shall be adjusted for income or loss for
the calendar year using the method described in Section 5.3.
(g) Vesting Exception
-----------------
Notwithstanding the vesting provisions of Section 8, a Participant
shall not have a nonforfeitable right to excess Company contributions
which are returned or adjusted pursuant to this Section 4.6.
4.7 Recharacterization of Excess Before-Tax Contributions
-----------------------------------------------------
(a) Before-Tax Contributions made to the Plan that exceed the limitations
of Section 3.1(b) (dollar limitation) or Section 3.4 (ADP test) in the
discretion of the Committee for each Plan Year may be recharacterized
as After-Tax Contributions rather than distributed to Participants as
provided in Section 4.6(b) and (d) above.
(b) Recharacterization may be combined with a distribution to correct
the excess. If part of the excess is recharacterized, the
distribution necessary for correction shall be calculated after
determining the amount of Before-tax Contributions to be
recharacterized. Income related to a recharacterized excess shall
not be treated as an amount recharacterized, but shall remain
attributed to the applicable Before-Tax Contribution Account.
Recharacterized Before-Tax Contributions will be eligible for
Company Matching Contributions.
(c) An amount recharacterized shall be treated as the Company
contribution for purposes of Sections 9 "Limitation on
Contributions" and 10 "Top Heavy Provisions". An amount
recharcterized before January 1, 1988 shall be treated as an After-
tax Contribution for purposes of withdrawal under Section 7.5(b).
Amounts recharacterized after January 1, 1988 shall be treated as an
After-Tax Contribution for purposes of withdrawal under Section
7.5(d). Recharacterized amounts shall be treated as Before-Tax
Contributions for purposes of determining Compensation.
24
<PAGE>
SECTION 5
ACCOUNT ADMINISTRATION
5.1 Types of Accounts
-----------------
All contributions shall be made to the Trust Fund which will have the
following types of accounts for each Participant:
(a) Before-Tax Contribution Account
(b) After-Tax Contribution Account
(c) Company Matching Contribution Account
(d) Supplemental Company Contribution Account
(e) Rollover Account
5.2 Investment Options
------------------
The Trust Fund shall be divided into the following investment subfunds:
(a) Company Stock Fund
------------------
The Company Stock Fund, including earnings thereon, shall be invested
by the Trustee in shares of Company Stock and short-term cash
investments.
(b) Fixed Income Fund
-----------------
The Fixed Income Fund seeks to pay current interest rates while
maintaining principal. The Fund may consist of a variety of
guaranteed investment contracts with diversified maturities, bank
investment contracts, and short-to-intermediate-term high-quality
fixed income securities.
(c) Balanced Fund
-------------
The Balanced Fund attempts to provide income, conservation of
principal and long-term growth of principal and income. The Fund
invests in a mix of stocks and bonds. The equity style is value-
oriented and the Fund may invest in both small and large capitalized
companies.
25
<PAGE>
(d) International Fund
------------------
The International Fund focuses on long-term capital growth. The Fund
invests primarily in stocks and debt securities of companies outside
the United States. It may also invest in bonds and money market
instruments.
(f) SpaceLabs Stock Fund
--------------------
Effective July 1, 1992, the Trust Fund shall contain a SpaceLabs Stock
Fund, which will be invested in common stock of SpaceLabs Medical,
Inc. and short-term cash investments. Shares of common stock of
SpaceLabs Medical, Inc. distributed on June 26, 1992 with respect to
shares held in the Company Stock Fund shall be transferred to the
SpaceLabs Stock Fund effective July 1, 1992. No additional
contributions shall be invested in the SpaceLabs Stock Fund.
A Participant may elect to have all or part of his Company Matching
Contribution and Supplemental Company Contribution Accounts invested
in the SpaceLabs Stock Fund transferred to the Company Stock Fund, and
may elect to have all or part of his Before-Tax Contribution, After
Tax Contribution and Rollover Accounts transferred to the Core Equity
Fund, the Fixed Income Fund, the International Fund, the Aggressive
Equity Fund, the Balance Fund, the Company Stock Fund, or effective
July 1, 1995, the Money Market Fund in accordance with the
procedure described in Section 6.4. Participants may not elect to
transfer account balances to this Fund.
(f) Core Equity Fund
----------------
The Core Equity Fund seeks capital appreciation and current income
utilizing a value-oriented style. The Fund invests primarily in U.S.
stocks which pay dividends.
(g) Aggressive Equity Fund
----------------------
The Aggressive Equity Fund is a growth equity fund which seeks capital
appreciation. The Fund invests primarily in U.S. stocks of small and
large capitalized companies. The Fund may periodically invest in
bonds and money market instruments.
(h) Money Market Fund
-----------------
Effective July 1, 1995, the Trust Fund shall include a Money Market
Fund. The Money Market Fund seeks to provide interest income while
preserving the original investment and maintaining liquidity. The
Fund seeks to invest primarily in high-quality money market
instruments.
26
<PAGE>
5.3 Allocation of Trust Fund Earnings and Losses to Participant Accounts
--------------------------------------------------------------------
(a) Fixed Income Fund, Balanced Fund, Core Equity Fund, Aggressive Equity
---------------------------------------------------------------------
Fund, International Fund, and Money Market Fund
-----------------------------------------------
As of each Valuation Date, any increase or decrease in the fair market
values (including interest, dividends, realized and unrealized gains
and losses) of the Fixed Income Fund, the Balanced Fund, the Core
Equity Fund, the Aggressive Equity Fund, the International Fund, and
effective July 1, 1995, the Money Market Fund shall be allocated
the Participant Accounts on the basis of the interests in the
particular Fund held in the Accounts as of the immediately
preceding Valuation Date, adjusted for contributions, distributions
and transfers made since that date, in accordance with
administrative procedures established by the Committee.
Notwithstanding the foregoing, in the event a Terminated Participant
has received a distribution of his or her vested Account balances, the
nonvested portion of his or her Accounts shall not be credited with
Trust Fund earnings and losses pursuant to this section after the
Valuation Date which coincides with or next precedes the date of
Termination of employment.
(b) Company Stock Fund
------------------
Company Matching Contributions and Supplemental Company Contributions
shall be invested solely in the Company Stock Fund, except as
otherwise provided in Section 6.7, and may be made in cash or
shares of Company Stock. The Trustee shall apply cash
contributions to the purchase of Company Stock over a period of
time as directed by the Committee. As of each Valuation Date, each
Participant's Company Matching Contribution Account (and
Supplemental Company Contribution Account, if applicable) shall be
credited with a number of shares of Company Stock that represent
the Company Matching Contribution (and Supplemental Company
Contribution, if applicable) made on the Participant's behalf,
based on the average price of the shares contributed to the Plan
and purchased by the Trustee since the Valuation Date.
If a Participant elects to transfer amounts in his or her Accounts
invested in the SpaceLabs Stock Fund to the Company Stock Fund, the
Trustee shall apply the transferred cash amount to the purchase of
Company Stock as described in the preceding paragraph. As of the next
following Valuation Date, the Participant's Accounts will be credited
with a number of shares of Company Stock that represent the amount
transferred to the Company Stock Fund, based on the average price of
the shares purchased by the Trustee since the effective date of the
transfer.
As of each Valuation Date, dividends and other distributions received
on Company Stock held in the Company Stock Fund may be reinvested in
Company Stock or held in short-term cash investments. The
Participants' Accounts shall be credited with a proportionate amount
of shares and/or cash determined on the basis of the
27
<PAGE>
number of shares in each Participant's Accounts on the record date
of such distribution.
(c) SpaceLabs Stock Fund
--------------------
If a Participant elects to transfer amounts in his or her Accounts
invested in the SpaceLabs Stock Fund to other funds as provided in
Section 5.2(f), the transfer shall be made in cash. The cash value of
common stock of SpaceLabs Medical, Inc. that is so transferred shall
be based on the actual proceeds from the sale of the stock.
As of each Valuation Date, dividends and other distributions received
on common stock of SpaceLabs Medical, Inc. held in the SpaceLabs Stock
Fund shall be reinvested in common stock of SpaceLabs Medical, Inc. or
held in short term cash investments. The Participant's Accounts shall
be credited with a proportionate number of shares and/or cash
determined on the basis of the number of shares in each Participant's
Accounts on the record date of such distribution.
5.4 Valuation of the Trust Fund
---------------------------
The fair market value of the Trust Fund shall be determined as of each
Valuation Date and at any time specifically requested by the Plan
Administrator. Any portion of the Trust Fund held under an insurance
contract or bank investment contract in which asset values are only
maintained on a book value basis shall have that portion of the Trust Fund
valued at book value rather than market value.
5.5 Account Statements
------------------
Each Participant shall be provided with a statement of his or her Accounts
under the Plan showing the Account values on dates determined by the
Committee, but not more frequently than each calendar quarter. If within
thirty (30) days after the statement is mailed the Participant makes no
objection to the statement, it shall become binding and conclusive on the
Participant and any Beneficiary.
28
<PAGE>
SECTION 6
INVESTMENT OF CONTRIBUTIONS
6.1 Optional Funds
--------------
Each Participant, at the time the Participant elects to participate in the
Plan, shall direct that the Participant's After-Tax Contributions to the
Plan and the Before-Tax Contributions made on the Participant's behalf be
invested (in multiples of 10%) in any one of the following investment
funds, or in any combination of funds. Each Eligible Employee, at the
time he or she requrest to make a Rollover Contribution, shall direct
the Participant's Rollover Contributions (if any) be invested (in
multiples of 10%) in any one or combination of the following investment
funds other than the Company Stock Fund:
(a) the Fixed Income Fund;
(b) the Balanced Fund;
(c) the Core Equity Fund;
(d) the Aggressive Equity Fund;
(e) the International Fund; and
(f) the Company Stock Fund, not exceeding thirty percent (30%) of a
Participant's After-Tax Contributions and Before-Tax Contributions.
(g) the Money Market Fund.
A single investment election shall be made with respect to Before-Tax
Contributions and After-Tax Contributions, and a separate investment
election shall be made with respect to Rollover Contributions.
6.2 Selection of Investment Funds
-----------------------------
The selection of an investment option pursuant to this Section 6 is the
sole responsibility of each Participant. The Trustee, the Committee, any
Participating Company, or any of their officers or supervisors are not
empowered to advise a Participant as to the manner in which his Account
should be invested. The fact that a security is available to Participants
for investment under the Plan shall not be construed as a recommendation
for the purchase of that security, nor shall designation of any option by
the Participant impose any liability on a Participating Company, its
directors, officers or employees, the Trustee, the Committee or any
Participant in the Plan.
29
<PAGE>
Subject to any applicable provision of law, each Participant assumes all
risks connected with any decrease in the market value of any securities in
the funds and such funds shall be the sole source of payments to be made
under the Plan.
6.3 Investment of Loan Repyments
----------------------------
If a Participant is not making contributions at the time that loan
repayments pursuant to Section 7.8 begin, the Participant shall direct
investment of the loan repayments among the optional Funds under Section
6.1 by written notice to the Committee at least 15 days before the first
repayment.
6.4 Change in Investment of Future Contributions and Loan Repayments
----------------------------------------------------------------
A Participant may, upon not less than 15 days prior written notice to the
Committee, change the Participant's investment election with respect to
contibutions and loan repayments, if any, made after the applicable
effective date. The change shall be effective as of the first day of
the next month following receipt of written notice by the Committee.
6.5 Changes in Investment of Existing Accounts
------------------------------------------
Upon not less than 15 days prior notice to the Committee, a Participant,
including an Early Terminee except as provided below, may elect to have
all or part (in 10% increments) of the Participant's existing After-Tax
Contribution Account, Before-Tax Contribution Account, and Rollover
Account and any earnings thereon transferred from the fund or funds in
which they are invested to the Fixed Income Fund, the Balanced Fund, the
Core Equity Fund, the Aggressive Equity Fund, the Money Market Fund or
the International Fund, except that amounts invested in the Fixed Income
Fund, cannot be transferred directly to the Money Market Fund. The
transfer shall be effective as of the first day of the next calendar
quarter (the first day of calendar quarters being January 1, April 1,
July 1, and October 1). The transfer shall be based upon the values of
the Accounts on the last business day of the quarter immediately
preceding the date as of which the election is effective. A single
investment election shall be made with respect to Before-Tax
Contributions and After-Tax Contributions, and a separate investment
election shall be made with respect to Rollover Contributions. No more
than four elections with respect to Before-Tax Contributions and
After-Tax Contributions and four elections with respect to Rollover
Contributions may become effective in any calendar year. The transfer
shall be made as soon as administratively feasible after completion of
the valuation for the effective date of the transfer.
An Early Terminee's Accounts shall be transferred on behalf of the
Participant to one or more available funds as directed by the Company,
the Trustee, or the Investment Manager on the first day of the calendar
quarter following 12 months after the end of the month in which
employment terminates. Until such transfer, an Early Terminee may
continue to direct the investment of his or her Accounts. Accounts so
transferred will remain invested in the Fixed Income Fund until
distributed pursuant to the Early Terminee's
30
<PAGE>
election under Section 7.2 or following his or her death. A Participant
who is not an Early Terminee and who reaches age 55 may change
investments pursuant to Section 6.7.
6.6 Changes in Investment of Former Interspec, Inc. Accounts
--------------------------------------------------------
A participant in the Interspec, Inc. 401(k) Retirement/Savings Plan may,
upon written notice to the Committee before December 16, 1994, elect to
have all or part (in ten percent (10%) increments) of the Participant's
accounts in the Interspec, Inc. 401(k) Retirement/Savings Plan
transferred form the fund or funds in which they are invested under the
Interspec, Inc. 401(k) Retirement/Savings Plan to the Fixed Income Fund,
the Balanced Fund, the Core Equity Fund, the Aggressive Equity Fund, or
the Internaitional Fund effective February 1, 1995. Accounts of a
Participant who fails to make an election prior to December 16, 1994
shall be invested in one or more of those funds as directed by the
Company, the Trustee, or the Investment Manager on behalf of the
Participant.
6.7 Investment of Company Contributions
-----------------------------------
(a) General Rule
------------
All Company Matching Contributions (other than those transferred from
the Predecessor Plan) and Supplemental Company Contributions shall be
invested in the Company Stock Fund, except as provided below.
(b) Change in Investment
--------------------
Any Participant, who is not an Early Terminee, and who has reached
his or her fifty-fifth (55th) birthday may make either (or both) of
the following elections:
(i) He or she may, upon not less than 15 days prior written notice
to the Committee, elect, effective as of the first day of the
next calendar quarter, to have all or part of his or her Company
Matching Contributions Account and/or his Supplemental Company
Contributions Account transferred (in multiples of 10%) to one
or more of the other funds, (other than the SpaceLabs Stock
Fund and the Company Stock Fund), based on the values of the
Account on the last day of the quarter immediately preceding
the date as of which the election is effective. Only four
such elections may become effective in any calendar year.
(ii) He or she may, upon not less than 15 days' prior written
notice to the Committee, elect, effective as of the first day
of the next calendar quarter, to have future Company Matching
Contributions and/or Supplemental Company Contributions made
on his behalf invested in any one or more of the funds (other
than the SpaceLabs Stock Fund) in the same manner as Before-
tax and After-tax Contributions. Any election made hereunder
may be changed by similar written notice.
31
<PAGE>
SECTION 7
BENEFITS AND FORMS OF PAYMENT
7.1 Eligibility for Benefits
------------------------
A Participant shall be eligible to receive a distribution of his or her
Accounts, to the extent vested, upon retirement, becoming Disabled, or upon
Termination of employment with the Company and any Affiliated Companies. A
Participant's Beneficiary shall be eligible to receive a distribution of
the balance of the Participant's accounts upon the death of the
Participant.
Notwithstanding the foregoing, in the event a Participant again becomes an
Employee before benefits commence, he or she shall no longer be eligible to
receive a distribution.
Also notwithstanding the foregoing, with respect to an individual who was a
Participant in this Plan between June 25 and December 31, 1992 and whose
Account balances were transferred to the SpaceLabs Medical, Inc. Incentive
Savings and Stock Ownership Plan ("SpaceLabs Plan") in connection with the
spin-off of that plan from this Plan, such individual's Account balances as
of the date of such transfer shall be payable from the SpaceLabs Plan and
shall not be payable from this Plan.
7.2 Time of Benefit Commencement
----------------------------
(a) Benefit Commencement
--------------------
Benefits shall be paid as soon as practical following a request for
benefit commencement and determination of the amount of payment under
subparagraph (b) below. Participants and Beneficiaries may request
benefit commencement as described below.
(i) Participant
-----------
A Participant who is eligible for benefits may request benefit
commencement by written notice to the Committee. Benefits may
commence at any time following Termination and on or before the
April 1 following the year in which the Participant attains or
would have attained age 70-1/2. If such a Participant fails to
request benefit commencement, he or she shall be deemed to have
requested that benefits commence on the April 1 following the
year in which the Participant attains age 70-1/2.
(ii) Beneficiary
-----------
A Beneficiary who is eligible for benefits may request benefit
commencement by written notice to the Committee. Benefits for a
spouse
32
<PAGE>
Beneficiary may commence at any time after the Participant's
death and on or before the Participant's Normal Retirement Date,
calculated as if he or she had survived. If a spouse Beneficiary
fails to request benefit commencement, benefits shall commence on
or immediately preceding the April 1 following the calendar year
in which the Participant would have attained age 65 if he or she
had survived.
Benefits for a non-spouse Beneficiary shall not be contingent on
receipt of a written request for benefit commencement, but shall
commence as soon as practical following the end of the month
which coincides with or next follows the date of the
Participant's death.
(b) Amount of Payment
-----------------
With the exception of amounts invested in the Company Stock Fund or
the SpaceLabs Stock Fund, the amount distributed shall be based on the
Account balance determined as of the last Valuation Date on which the
Accounts were valued, adjusted for earnings and losses since such
date.
If stock is distributed from the Company Stock Fund or the SpaceLabs
Stock Fund, the number of shares distributed shall be the number of
whole shares in the Participant's Account as of the date of
distribution, with any fractional shares paid in cash based on the
average of the high and low selling price on the day preceding the
date of distribution.
If stock held in the Company Stock Fund or the SpaceLabs Stock Fund is
distributed in cash, the amount distributed shall be based on the
price at which the stock held in the Participant's Accounts is sold,
or, if the stock held in the Participant's Accounts is not sold, the
average of the high and low selling price on the day preceding the
date of distribution.
The value of a distribution of the portion of the Participant's
Accounts invested in the Company Stock Fund or SpaceLabs Stock Fund
that is invested in cash shall be based on the Account balance
invested in cash as of the last Valuation Date on which the Accounts
were valued.
(c) Small Benefits
--------------
Notwithstanding any election to commence benefits or lack thereof, the
Committee shall distribute a benefit which is $3,500 or less at the
time benefits commence, in a lump sum as soon as practical following
Termination of employment, death or becoming Disabled, without
Participant or Beneficiary consent.
33
<PAGE>
7.3 Form of Payment
---------------
(a) Participant
-----------
If a Participant terminates Service and the value of his Accounts (to
the extent vested) exceeds $3,500, (a) his Accounts shall only be
distributed prior to the Participant's attainment of age 65 if the
Participant consents to the distribution, and (b) whether or not the
Participant has attained age 65, he may irrevocably elect to receive
his interest in the Plan in the form of a:
(i) lump sum, or
(ii) five, ten or fifteen annual installments, to be paid in cash
only, on or after attaining age 65.
(iii) with respect to the balance as of December 31, 1994 in a
Participant's account, if any, that were transferred from the
Interspec, Inc. 401(k) Retirement/Savings plan, payments over
a period certain in monthly, quarterly, semiannual, or annual
cash installments.
A Participant may not elect a period over which installment payments
shall be made which is expected to exceed the joint life expectancy of
the Participant and Beneficiary.
(b) Beneficiary
-----------
If the value of a deceased Participant's Accounts (to the extent
vested) exceeds $3,500, the Beneficiary shall receive a lump sum
payment unless the Beneficiary irrevocably elects in a written notice
filed with the Committee no more than 30 days after the Participant's
death to receive payment in the form of five annual installments, to
be paid in cash only. A spouse Beneficiary may elect five, ten or
fifteen annual installments; provided, however, that such installments
may not be paid over a period that extends beyond the life expectancy
of the spouse Beneficiary and provided further that if distributions
were deemed to have commenced under Section 7.2(a)(i) before a
Participant's death (due to the Particiant's attainment of age 70-
1/2), the remaining benefits will be distributed at least as
rapidly as under the method of distribution being used as of the date
of the Participant's death.
7.4 Distributions of Stock
----------------------
(a) Distribution From Company Stock Fund
------------------------------------
If the vested portion of a Participant's Accounts invested in the
Company Stock Fund consists of less than 50 shares, payment shall be
made in cash only.
34
<PAGE>
If the vested portion of a Participant's Accounts invested in the
Company Stock Fund consists of 50 or more shares, disbursements of the
shares held in the Accounts shall be made in full shares of Company
Stock to the extent possible, with the balance, if any, paid in cash,
unless the Participant or Beneficiary directs that all of the vested
Account balance in the Company Stock Fund be paid in cash.
(b) Distribution from SpaceLabs Stock Fund
--------------------------------------
If the vested portion of a Participant's Accounts invested in the
SpaceLabs Stock Fund consists of less than 50 shares, distribution
shall be made in cash only.
If the vested portion of a Participant's Accounts invested in the
SpaceLabs Stock Fund consists of 50 or more shares, disbursements
from the SpaceLabs Stock Fund shall be made in full shares of
common stock of SpaceLabs Medical, Inc. to the extent possible,
with the balance, if any, paid in cash, unless the Participant or
Beneficiary directs that all of the vested Account balance in the
SpaceLabs Stock Fund be paid in cash.
7.5 Withdrawals Prior to Termination
--------------------------------
(a) Time of Withdrawal
------------------
A Participant may apply to the Committee for withdrawal of all or a
portion of the following Accounts at the following times prior to
Termination of employment. The withdrawn amount shall be paid as soon
as practical following a request for withdrawal and determination of
the amount of payment in accordance with (f) below.
(b) Withdrawal of After-Tax Contributions and Investment Earnings
-------------------------------------------------------------
A Participant may withdraw 100% of the dollar amount of his or her
After-Tax Contribution Account or any portion thereof that is an
integral multiple of $100.
A Participant may not make more than two withdrawals under this
Section 7.5(b) during any calendar year. No Company Matching
Contributions will be made for two months following a withdrawal under
this Section 7.5(b) unless the Participant has reached age 59-1/2.
(c) Withdrawal of Company Contributions and Related Investment Earnings
-------------------------------------------------------------------
A Participant who is 59-1/2 or has participated in the Plan for five
years, who has withdrawn (or is simultaneously withdrawing) 100% of
his or her After-Tax Contributions Account (if any) and Rollover
Account (if any), and whose interest in his or her Company Matching
and Supplemental Contribution Accounts is fully vested, may
withdraw 100% of the balance in the Company Contribution Account
or any portion thereof that is an integral multiple of $100.
A Participant may not
35
make more than one withdrawal under this Section 7.5(c) during any
calendar year. No Company Matching Contributions will be made for
12 months following a withdrawal under this Section 7.5(c) unless
the Participant has reached age 59-1/2.
(d) Withdrawal of Before-Tax Contributions
--------------------------------------
A Participant may withdraw all or a portion of his or her Before-Tax
Contribution Account if he or she has reached age 59-1/2. A
Participant may also apply for a hardship withdrawal from his or her
Before-Tax Contribution Account as provided in Section 7.6 below.
(e) Withdrawal of Rollover Contributions
------------------------------------
A Participant may withdraw all or a portion of his or her Rollover
Contribution Account.
(f) Withdrawal Procedure
--------------------
Withdrawals may be made as of the last day of any month by filing a
notice in writing with the Committee at least 15 days prior to such
date. Any amount withdrawn hereunder shall be paid in cash only, in a
lump sum as promptly as possible after the applicable date.
The amount distributed shall be based on the value of the
Participant's Accounts on the effective date of the withdrawal, except
that the amount of a withdrawal representing shares held in the
Company Stock Fund or SpaceLabs Stock Fund shall be based on the price
at which the shares are sold, or, if the shares are not sold, the
average of the high and low selling price on the date preceding the
date of the distribution.
(g) Investment Funds and Withdrawals
--------------------------------
A Participant who makes a partial withdrawal of any of his or her
Accounts may request that the withdrawal be made from a specified fund
or funds. Should the Participant's Account in the specified fund or
funds prove to be inadequate to provide the amount of the required
withdrawal, the remainder of the withdrawal shall be made from the
Participant's Accounts in the other funds in an order of preference
designated by the Participant. Should the Participant fail to
designate a preference, the Trustee shall make the withdrawal from
each of the funds on a pro-rata basis.
(h) Restrictions on Withdrawals by Early Terminees
----------------------------------------------
In no event shall an Early Terminee be permitted to withdraw his
Accounts prior to attaining age 65, unless he elects to withdraw 100%
of his or her vested balance in all Accounts.
36
<PAGE>
7.6 Hardship Withdrawal
-------------------
(a) Amounts
-------
A Participant who has withdrawn (or is simultaneously withdrawing)
100% of his After-Tax Contribution Account (if any), his Company
Matching and Supplemental Contribution Accounts (if he is fully vested
and therefore eligible to do so) and his Rollover Account (if any) may
apply to the Committee for a hardship withdrawal prior to Termination
of employment and age 59-1/2 of his or her:
(i) Before-Tax Contribution Account balance as of December 31, 1988,
and
(ii) Before-Tax Contributions after December 31, 1988, excluding
earnings thereon.
Provided however, that a Participant may not withdraw more than the
amount necessary to meet the expense that causes hardship, and, in the
event that a loan is outstanding, the amount specified above that exceeds
the amount pledged as collateral for the loan.
(b) Availability
------------
All hardship withdrawals are subject to Committee approval. A
hardship withdrawal shall only be approved if it is for a specific
type of expense and if it is necessary to satisfy such expense.
(c) Hardship Expenses
-----------------
Hardship withdrawals are available only to pay for the following
expenses (including any penalties and taxes incurred as a result of
the hardship distribution):
(i) expenses for medical care described in Code Section 213(d)
incurred by the Participant or his or her spouse or dependents
(as defined in Code Section 152), or amounts necessary for such
person to obtain such medical care;
(ii) purchase (excluding mortgage payments) of a principal residence
for the Participant;
(iii)tuition and related educational fees and room and board expenses
for the next twelve months of post-secondary education for the
Participant, his or her spouse, children, or dependents;
(iv) preventing eviction of the Participant from his or her principal
residence or foreclosure on the mortgage of the Participant's
principal residence;
37
<PAGE>
(v) repair to the Participant's primary home to prevent decline in
value;
(vi) repair to the Participant's primary vehicle used for commuting to
and from work;
(vii) legal expenses incident to the divorce of the Participant and
expenses of the Participant's establishing a new home after a
divorce;
(viii) expenses related to involuntary loss of employment or
reduction of work hours by the Participant's spouse; and
(ix) expenses of debt consolidation.
A hardship withdrawal will be available for an expense listed in (v)
through (ix) above only if the expense constitutes an immediate and
heavy financial need.
(d) Determination of Necessity
--------------------------
A distribution shall be deemed to be necessary to satisfy an expense
described in 7.6 above if both of the following requirements are
satisfied:
(i) the distribution is not in excess of the amount of such expense
(including any excise tax or income tax liability arising from
the distribution); and
(ii) the Participant has obtained all distributions (other than
hardship distributions), and all nontaxable loans currently
available under all plans maintained by the Participating
Company.
(e) Other Requirements
------------------
A hardship distribution shall be deducted first from the category of
available amounts described in (a)(ii) herein and then from the
category of available amounts described in (a)(i) herein.
The Participant shall enter into a written agreement not to make or
elect Before-Tax or After-Tax contributions to this or any other
qualified retirement plan or non-qualified deferred compensation plan
maintained by the Company for twelve (12) months after a hardship
withdrawal. Following a 12-month suspension, the Participant may
resume contributions pursuant to Section 3.2. In addition, the
Participant may not make a Before-Tax Contribution to the Plan or any
other Section 401(k) plan maintained by the Company for the
Participant's taxable year immediately following the taxable year of
the hardship withdrawal, in excess of Before-Tax Contributions
allowable in Section 3.1 for the next taxable year less the amount of
such Participant's Before-Tax Contributions for the taxable year of
the hardship withdrawal.
38
<PAGE>
Notwithstanding the foregoing, a Participant whose contributions have
been suspended for twelve months due to a hardship withdrawal shall be
deemed to be an Eligible Employee for purposes of the ADP test in
Section 3.4, ACP test in Section 4.3, and multiple use test in Section
4.4.
7.7 Beneficiary Designation
-----------------------
If payments are made to a designated Beneficiary in reasonable reliance on
(i) a written statement by the Participant that he or she was not married,
or (ii) a spousal consent that appeared to conform to the requirement in
Section 1.5, or (iii) evidence that the spouse could not be located at the
time of the Beneficiary designation, then, to the extent of such payments,
the Plan shall have no liability to a spouse.
7.8 Loans
-----
(a) General
-------
Effective April 1, 1995, a Participant who is a "party-in-interest"
under ERISA may apply to the Committee for a loan from his or her
vested Accounts, other than the Participant's Company Matching
Contribution Account and other than amounts invested in the Company
Stock Fund and the SpaceLabs Stock Fund. The Committee has
authority to administer all loans, and shall administer loans in a
manner that does not discriminate in favor of Highly Compensated
Employees, officers or shareholders. The Committee shall approve
all loans that meet the requirements set forth in this section.
For recordkeeping purposes, the loan amount shall be deducted
from the Participant's Accounts in the following order:
(i) from the Rollover Account;
(ii) from the After-tax Contnribution Account; and
(iii) from the Before-tax Contribution Account.
In the event that the amount in an Account exceeds the amount
needed to fund the loan and the Account is invested in more than
one fund, the loan amount shall be deducted from the investment
funds in which the Account is invested (other than the Company
Stock Fund and the SpaceLabs Stock Fund) in the same proportion that
the Account is invested in each fund.
Only one loan may be outstanding at any time, and all loans must
be secured by the Participant's Accounts.
A Participant must submit a loan request to the Committee. Loan
documents, including a promissory note, will be provided to the
Participant in response to the
39
<PAGE>
loan request. A loan request expires 30 days after it is made.
If the loan request is not approved before it expires,
the Participant may make another loan request. Loan proceeds shall
not be dispersed unless a promissory note, authorization of payroll
deduction of loan repayments, consent of the Particpant's spouse
(if any), and any other loan documents in the form approved by the
Committee are executed by the Participant and the Participant's
spouse (if any).
(b) Loan Fee
-------
A loan fee of $100 will be charged for each loan to pay the Plan's
cost of administering loan repayments. The loan fee will be added
to the amount of the loan.
(c) Hardship Loan
-------------
In no event shall a loan be approved unless the loan is for the
payment of one or more of the hardship expenses listed in Section
7.6, and the amount of the loan does not exceed the amount necessary
to satisfy the hardship expense and to pay the loan fee.
(d) Minimum and Maximum Loan Amounts
--------------------------------
The minimum amount which may be borrowed is $1,000. In no event
shall a loan at the time it is made, when added to the outstanding
balance of any other loans from any Employer-sponsored plan,
exceed the lesser of:
(i) 50 percent of the total vested Account balance as of the
Valuation Date immediately preceding the date of the loan
application;
(ii) $50,000 reduced by the excess (if any) of:
(1) the highest outstanding loan balance during the one-year
period ending on the day before the date on which the
current loan is made; over
(2) the outstanding loan balance (if any) on the date on
which the current loan is made; or
(3) 100 percent of the total vested Account balance invested
in funds other than the Company Stock Fund and SpaceLabs
Stock Fund.
(e) Repayments
----------
The Participant may elect to repay the loan over any whole-year term
which does not exceed 5 years; except that the term for a loan used
to purchase a primary residence for the Participant may be as long
as 20 years.
40
<PAGE>
Once the loan is made, the repayment term may not be changed,
provided however, that the Participant may elect to prepay the
full outstanding loan balance at any time during the repayment
term. All loans shall be repaid in level payments in an amount
no less than $12.50, and except as otherwise provided in this
Section, shall be made through payroll deduction each pay period
until the loan is repaid. Loan repayments are due each pay period
and are considered made when received by the Plan. Payroll
deductions shall commence with the first pay period following
the loan distribution. New financing or refinancing of an
outstanding loan is not permitted.
Loan repayments for a Participant:
(i) who is on an approved, unpaid leave of absence;
(ii) who dies, or
(iii) whose employment terminates involuntarily due to layoff
or reduction in force
shall be suspended, provided that the period of suspension does not
exceed one year and does not exceed the maximum repayment period
stated above. Upon return to Service following a period of loan
repayment suspension, the remaining loan balance shall be
reamortized over the remaining loan period, and the amount of
the remaining repayments shall be adjusted accordingly.
Each repayment shall be credited to each Account of the
Participant in the same porportion that amounts were deducted
from each Account to fund the loan. Repayments will be
invested in the investment funds (other than the Company Stock
Fund and the SpaceLabs Stock Fund) in the same manner as new
contributions are invested. If new contributions are not being
made, the Participant will be required to direct investment of
the loan repayments pursuant to Section 6.
(f) Interest Rate
-------------
A fixed reasonable rate of interest shall be charged for the term
of the loan. The interest rate shall be the prime corporate
lending rate offered by local commercial lending institutions on the
day on which the loan request is made; provided that the completed
loan documents are received by the Committee no later than 30 days
after the date of the loan request. Notwithstanding the preceding
sentence, if the Committee determines that such rate is not
reasonable, the interest rate shall be another rate which the
Committee determines is reasonable considering the prevailing
interest rate charged on similar commercial loans by persons in the
business of lending money, current economic conditions, and the
facts and circumstances of the loan application.
41
<PAGE>
In the event the reasonable interest rate determined by the
Committee under the preceding paragraph would violate usury laws,
the Committee shall deny the loan application.
(g) Default
-------
A loan shall be in default if:
(i) a loan repayment remains unpaid for thirty (30) days after
the due date for the repayment;
(ii) the Participant's pay is insufficient during any pay period
to cover the entire amount of the loan repayment;
(iii) the Participant revokes the authorization for payroll
deduction of loan repayments; or
(iv) distribution to an alternate payee pursuant to a Qualified
Domestic Relations Order under Section 11.9 of any amount
that secures the outstanding loan balance as of the date of
distribution.
If a loan is in default, the outstanding loan balance becomes
immediately due and payable in full, and the Plan shall forclose
upon the Participant's Account balance to the extent of the
outstanding loan balance as of the earliest date on which the
Participant is eligible for a distribution from the Plan. The
outstanding loan balance shall be treated as a distribution for
federal income tax purposes for the year in which the default
occurs.
7.9 Directed Rollovers
------------------
(a) General Rule
------------
A Participant, spouse Beneficiary or former spouse alternate payee
(each referred to as a "distributee") who is entitled to or elects
a lump sum distribution or annual installments over a period of
less than ten (10) years or obtains a hardship withdrawal
may direct the Committee to pay part or all of the benefit to a
trustee or custodian of another employer's qualified plan which
accepts such directed rollovers or an individual retirement
account (IRA), subject to the following provisions:
(i) A distributee may only direct such a rollover if the expected
benefit payment during the Plan Year is $200 or more;
(ii) A distributee may not request a directed rollover of an amount
distributed due to the minimum required distribution provision
under Section 11.6(b);
42
<PAGE>
(iii)the Rollover of a distribution may only be directed to no more
than two (2) qualified plans, two (2) IRAs, or one (1) IRA and
one (1) qualified plan;
(iv) A distributee may direct the rollover of a portion of the
distribution and elect to receive the remaining portion of
a distribution only if the rollover amount is at least $200;
(v) A distributee may not elect a direct rollover of an outstanding
loan balance which is treated as distributed upon termination
of the Participant's employment, or in the event of default;
(vi) A rollover direction regarding installments shall apply to all
installments, unless the direction is changed by the Participant
or Beneficiary;
(vii) A spouse Beneficiary or a former spouse alternate payee may
direct a rollover under the same terms and conditions as a
Participant, except that such Beneficiary may only direct a
rollover to an IRA;
(viii) A distributee provides the information or documentation
reasonably requested by the Committee.
(b) Notice to Participants
----------------------
The Committee shall furnish each Participant and Beneficiary and
alternate payee eligible for a directed rollover under this Section
with a written explanation of the directed rollover opportunity and
related withholding consequences of not choosing a directed
rollover within a reasonable period (at least thirty (30) but not
more than ninety (90) days) prior to the Annuity Starting Date;
provided, however, notice recpient may waive in writing the thirty
(30) day period.
43
<PAGE>
SECTION 8
VESTING
8.1 Vesting
-------
(a) Participant Before-Tax Contribution Account, After-tax Contribution
-------------------------------------------------------------------
Account and Rollover Account
----------------------------
Each Participant shall have a 100% vested, nonforfeitable right to
his or her Before-Tax Contribution Account, After-Tax Contribution
Account and Rollover Account.
(b) Company Matching and Supplemental Contribution Accounts
-------------------------------------------------------
Each Participant shall earn a vested, nonforfeitable right to his or
her Company Matching Contribution Account and Supplemental Company
Contribution Account based on his or her Period of Service multiplied
by the appropriate vesting percentage in accordance with the following
table:
<TABLE>
<CAPITION>
Period of Service Percent Vested
----------------- --------------
<S> <C>
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
</TABLE>
Notwithstanding the preceding, a Participant who has completed, as
of July 1, 1991, at least three Years of Service with Interspec,
Inc. shall have a 100 percent vested nonforfeitable right to his
or her Company Matching Contribution Account. For purposes of the
preceding sentence "Years of Service" has the same meaning as the
term defined under the Interspec, Inc. 401(k) Retirement/Savings
Plan.
In addition, each Participant shall have a 100% vested, nonforfeitable
right to his or her Company Matching Contribution Account and
Supplemental Company Contribution Account upon death, becoming
Disabled, or attainment of his or her Normal Retirement Date, provided
he or she is an Employee on such date.
In the event the Participant has received a prior distribution from
his or her Company Matching or Supplemental Contribution Accounts, the
vested portion of the Account balance (including the amount which may
yet be restored pursuant to Section 8.2) following the distribution
shall be determined by application of the following formula:
44
<PAGE>
X = P(AB+D) - D;
where X equals the vested amount; P equals the Employee's vested
interest in the Company Matching Contribution Account or Supplemental
Company Contribution Account at the time of subsequent distribution;
AB equals the balance of the Account at the time of subsequent
distribution; and D equals the amount previously distributed from the
Company Matching or Supplemental Contribution Account.
Notwithstanding the foregoing, this formula does not apply if the
Participant has repaid the prior distribution pursuant to Section
8.3(b). Also, the formula does not apply if the prior distribution
may not be repaid because the Participant has incurred five or more
consecutive one year Periods of Severance, or because five years or
more have elapsed since the date of reemployment.
8.2 Forfeitures
-----------
If a Participant terminates Service and is not fully vested in his
Accounts attributable to Company Contributions in accordance with
Section 8.1(b) the Participant shall forfeit his or her unvested
interest in such Accounts as of the last day of the month during which
his or her Service terminated. Amounts held in a Participant's Accounts
attributable to Company Contributions which are thus forfeited shall be
applied first to restore Accounts as provided below, and then to reduce
subsequent contributions by the Participant's Participating Company,
based on the Current Market Value of such shares as of the date
forfeited, where applicable, provided, however, if the Plan should be
terminated, or contributions thereunder permanently discontinued, an
amount not previously so applied shall be credited on a pro-rata basis
to the Accounts of all Participants in the Company Stock Fund. Each
year the Committee shall determine in its sole discretion whether
forfeitures shall be applied to reduce Company Matching Contributions or
Supplemental Contributions or both.
If such Participant returns to Service before suffering five consecutive
one year Periods of Severance, the amount forfeited shall be restored as of
the last day of the Plan Year in which the Participant returns to Service
and repays in full any prior distribution, if any, according to Section
8.3.
Assets to restore amounts forfeited shall be taken first from current
forfeitures. In the event that current year forfeitures are inadequate to
fully reinstate the Account, the Participating Company shall make a
contribution in addition to the contributions required under Section 4.1
equal to the balance necessary to fully reinstate the Account.
45
<PAGE>
8.3 Reemployment
------------
(a) Periods of Service
------------------
If a Terminated Employee later becomes a Participant again following
reemployment, all Periods of Service before and after the Period of
Severance shall be taken into account in determining the Participant's
vested interest in the Company Matching and Supplemental Contribution
Accounts established upon reemployment.
(b) Repayment
---------
If a Participant forfeited a portion of his or her Company Matching
and Supplemental Contribution Accounts upon termination and he or she
returns to Service after receiving a distribution and prior to
incurring a five-year Period of Severance, the Participant may
elect to repay the amount previously distributed from his or her
Company Matching and Supplemental Contribution Accounts. Such
Participant may elect to repay his or her prior distribution
before five years after the date of reemployment. The forfeited
amount shall be restored upon such repayment pursuant to Section
8.2. Amounts repaid shall be 100% vested and shall be invested in
accordance with Section 6.3. Such amounts shall be held in the
Participant's After-Tax Contribution Account if they are repaid
with After-tax amounts, and shall be held in the Participant's
Before-Tax Contribution Account if they are repaid with Before-
tax amounts transferred or rolled over from another qualified plan
or IRA.
(c) Restoration of Forfeitures
--------------------------
If a Participant forfeited a portion of his or her Company Matching
and Supplemental Contribution Accounts but did not receive a
distribution of the vested portion of such Accounts prior to
reemployment, and he or she returns to Service prior to incurring a
five-year Period of Severance, the forfeited amount shall be
reinstated as of the last day of the Plan Year in which reemployment
occurs.
8.4 Suspension of Installment Payments
----------------------------------
In the event that any person shall resume Service after a previous
termination of Service, installment payments being made to him (if any)
shall be suspended. In the event of such suspension, the amount held in
his Accounts at the time of his resumption of Service shall remain to his
credit on a fully vested basis, notwithstanding any other provision in the
Plan to the contrary.
46
<PAGE>
SECTION 9
LIMITATION ON CONTRIBUTIONS
9.1 Maximum Annual Contribution to the Plan
---------------------------------------
For purposes of this Section 8, the Company and any Affiliated Companies
shall be considered a single employer, to the extent required by the Code.
(a) Primary Rule
------------
Notwithstanding any other Plan provision to the contrary, the Annual
Additions to a Participant's Accounts in this Plan and any other
defined contribution plan maintained by the Company shall not exceed
the lesser of (i) $30,000 (or 25% of the Code Section 415 defined
benefit dollar limitation if greater), or (ii) 25% of the
Participant's Compensation.
(b) Annual Additions Defined
------------------------
For purposes of Section 8, the term "Annual Additions" for any
Participant in any Plan Year means the sum of:
(i) the amount of Company Contributions and Participant Before-Tax
and After-Tax Contributions allocated to a Participant's
Accounts;
(ii) forfeitures allocated to the Participant's Accounts; and
(iii)with respect only to the $30,000 limitation, amounts
attributable to retiree medical benefits on behalf of a key
Employee in a separate account in a welfare fund subject to Code
Section 419A.
(c) Cost-of-Living Adjustment
-------------------------
The $30,000 (or 25% of the Code Section 415 defined benefit dollar
limitation if greater) limit prescribed above shall be automatically
adjusted for cost-of-living increases, to the maximum permissible
dollar limitation determined by the Commissioner of Internal Revenue.
The dollar amount applicable in computing the maximum contribution for
any Participant shall be the dollar amount in effect for the calendar
year in which the contribution is made.
(d) Remedy
------
If for any Plan Year the Annual Additions exceed the foregoing
limitations because of a reasonable error in determining the amount of
a Participant's Before-Tax Contributions, the Plan Administrator shall
distribute the amount of Before-Tax
47
<PAGE>
Contributions in excess of the limits. If the Annual Additions
exceed the limits for any other reason, the Company shall allocate
the excess to a suspense account. The suspense account shall be
credited with investment earnings and losses as of each Valuation
Date in the same manner as Participant Accounts pursuant to Section
5.3. Such suspense account is for accounting purposes only and
shall remain in the Trust Fund to be reallocated as provided below.
Contents of the suspense account shall be allocated to the affected
Participant's Account in subsequent years when that can be done
without exceeding the limitations of this Section 9.1. So long as
any amount remains in the suspense account, the Company shall not
contribute to the Plan any amount which would cause an additional
allocation to the suspense account. In the event the Participant
ceases to be a Participant when any amount remains in a suspense
account, such amount shall be reallocated to active Participants
as of the end of the Plan Year following the calendar year in which
he or she ceases to be a Participant. In the event the Plan
terminates before any amount remaining in the suspense account has
been fully allocated to Participant Accounts, the balance of the
suspense account shall be distributed to the Company.
If any Participant is also a participant in another employee
retirement plan that (a) is a defined contribution plan within the
meaning of section 414(i) of the Code and (b) is sponsored by the
Company or an Affiliated Company, the foregoing limitations shall
be applied on an aggregate basis. Any reduction required to conform
to such limitations shall first be made (pro rata) in contributions
by the Participant under the plans involved; and a pro-rata
reduction shall then be made in the contributions by the Affiliated
Companies (including forfeitures) allocable to the Participant under
the plans involved.
9.2 Additional Limitation Relating to Defined Benefit Plans
-------------------------------------------------------
(a) Primary Rule
------------
For Participants who participate in this Plan and a defined benefit
plan maintained by the Company, the sum of (1) and (2) below for any
calendar year may not exceed 1.0, as determined by the Committee.
(i) The defined benefit plan fraction for any year is equal to the
quotient of (i) divided by (ii) below expressed as a fraction:
(1) The projected annual benefit, (determined by projecting
service, but not earnings, to normal retirement age) of the
Participant under the Plan determined as of the close of the
year.
(2) The lesser of: (a) 1.25 multiplied by the dollar limitation
in effect for defined benefit plans under Section 415 of the
Code for such year, or (b) 1.4 multiplied by 100% of the
Participant's average annual Compensation from the Company
for the consecutive calendar years (not in excess of three
such years) during which he
48
<PAGE>
was an active Participant in the Plan and for which such
average is highest.
(ii) The defined contribution plan fraction for any year is equal to
the quotient of (i) divided by (ii) below expressed as a
fraction:
(1) The sum of the Annual Additions to the Participant's
Accounts for the current year, as of the close of the year,
and for all prior years from and after the Employment
Commencement Date.
(2) The sum of the lesser of the following amounts for such year
and for each prior year of Service with the Company
(regardless of whether a plan was in existence during those
years): (a) 1.25 multiplied by the dollar limitation in
effect for defined contribution plans under Section 415 of
the Code for such year, or (b) 1.4 multiplied by 25% of a
Participant's Compensation for such year.
(b) Remedy
------
If such sum exceeds 1.0, the Annual Additions to this defined
contribution Plan shall be reduced to the extent necessary to satisfy
the limitations of this section.
49
<PAGE>
SECTION 10
TOP HEAVY PROVISIONS
10.1 Scope
-----
Notwithstanding any Plan provision to the contrary, for any Plan Year in
which the Plan is Top Heavy within the meaning of Section 416(g) of the
Code, the provisions of this Section 10 shall govern to the extent they
conflict with or specify additional requirements to the Plan provisions
governing Plan Years which are not Top Heavy.
10.2 Top Heavy Status
----------------
(a) Top Heavy
---------
This Plan shall be "Top Heavy" if, as of the Determination Date, (1)
the Present Value of Accrued Benefits of Key Employees, or (2) the
sum of the Aggregate Accounts of Key Employees under this Plan and any
plan of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Benefits or the Aggregate Accounts of all
Participants under this Plan and any plan of an Aggregation Group,
determined in accordance with Code Section 416(g) and regulations
thereunder.
The Present Value of Accrued Benefits and/or Aggregate Account balance
of a Participant who was previously a Key Employee but is no longer a
Key Employee (or his or her Beneficiary), shall not be taken into
account for purposes of determining Top Heavy status. Further, a
Participant's Present Value of Accrued Benefits and/or Aggregate
Account balance shall not be taken into account if he or she has not
performed services for the Affiliated Companies at any time during the
five year period ending on the Determination Date.
(b) Super Top Heavy
---------------
This Plan shall be "Super Top Heavy" if, as of the Determination Date,
(1) the Present Value of Accrued Benefits of Key Employees, or (2)
the sum of the Aggregate Accounts of Key Employees under this Plan and
any plan of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits or the Aggregate Accounts of all
Participants under this Plan and any plan of an Aggregation Group.
(c) Determination Date
------------------
Whether the Plan is Top Heavy for any Plan Year shall be determined as
of the Determination Date. "Determination Date" means (a) the last
day of the preceding Plan Year, or (b) in the case of the first Plan
Year, the last day of such Plan Year.
50
<PAGE>
(d) Valuation Date
--------------
"Valuation Date" means, for purposes of determining Top Heaviness, the
Determination Date instead of the meaning set forth in Section 1.
(e) Aggregate Account
-----------------
"Aggregate Account" means, with respect to a Participant, the sum of:
(i) his or her account balances as of the Valuation Date;
(ii) contributions after the Valuation Date due as of the
Determination Date;
(iii)distributions prior to the Valuation Date, made during the Plan
Year that contains the Determination Date and the four preceding
Plan Years.
(f) Present Value of Accrued Benefits
---------------------------------
The "Present Value of Accrued Benefits" with respect to a defined
benefit plan shall be based upon the Participant's accrued benefits
and the actuarial assumptions as determined under the provisions of
the applicable defined benefit plan.
(g) Key Employee
------------
"Key Employee" means an Employee or former Employee (and his or her
Beneficiaries) who, at any time during the Plan Year containing the
Determination Date or any of the four preceding Plan Years, is
included in one of the following categories as within the meaning of
Section 416(i)(l) of the Code and regulations thereunder:
(i) an officer of the Company whose annual aggregate Compensation
from the Affiliated Companies exceeds 50% of the dollar
limitation under Code Section 415(b)(1)(A) ($59,400 for the Plan
Year ending in 1994), provided that no more than 50 Employees
shall be considered officers, or if less, the greater of 10% of
the Employees or 3,
(ii) one of the ten Employees owning the largest interest in the
Company who owns more than a 0.5% interest of the Company, and
whose annual aggregate Compensation from the Affiliated Companies
exceeds the dollar limitation under Section 415(c)(1)(A) of the
Code ($30,000 for the Plan Year ending in 1994).
(iii)an Employee who owns more than 5% of the Company, or
51
<PAGE>
(iv) an Employee who owns more than 1% of the Company with annual
aggregate Compensation from the Affiliated Companies that exceeds
$150,000.
(h) Aggregation Group
-----------------
"Aggregation Group" means the group of plans that must be considered
as a single plan for purposes of determining whether the plans within
the group are Top Heavy (Required Aggregation Group), or the group of
plans that may be aggregated for purposes of Top Heavy testing
(Permissive Aggregation Group). The Determination Date for each plan
must fall within the same calendar year in order to aggregate the
plans.
(i) The Required Aggregation Group includes each plan of the
Affiliated Companies in which a Key Employee is a participant in
the Plan Year containing the Determination Date or any of the
four preceding Plan Years, and each other plan of the Affiliated
Companies which, during this period, enables any plan in which a
Key Employee participates to meet the minimum participation
standards or non-discriminatory contribution requirements of Code
Sections 401(a)(4) and 410.
(ii) A Permissive Aggregation Group may include any plan sponsored by
an Affiliated Company, provided the group as a whole continues to
satisfy the minimum participation standards and non-
discriminatory contribution requirements of Code Sections
401(a)(4) and 410.
Each plan belonging to a Required Aggregation Group shall be deemed
Top Heavy, or non-Top Heavy in accordance with the group's status. In
a Permissive Aggregation Group that is determined Top Heavy only those
plans that are required to be aggregated shall be Top Heavy. In a
Permissive Aggregation Group that is not Top Heavy, no plan in the
group shall be Top Heavy.
10.3 Minimum Contribution
--------------------
(a) General Rule
------------
For any Plan Year in which the Plan is Top Heavy, the total Company
contribution under Section 4.1 and any forfeitures allocated to any
non-key Participant's account shall not be less than 3% of such
Participant's Compensation. Participant contributions under Section
4.1(a) are not considered when determining whether this 3% requirement
is satisfied. However, in the event the Company contributions and
forfeitures allocated to each Key Employee's account do not exceed 3%
of his or her Compensation, such Company contributions and forfeitures
for non-Key Employees are only required to equal the highest
percentage of Compensation, including Participant Before-Tax
Contributions under Section 4.1(a), allocated to
52
<PAGE>
any Key Employee's accounts for that Plan Year under any defined
contribution plans sponsored by the Affiliated Companies.
The minimum contribution must be made on behalf of all non-Key
Participants who are employed on the last day of the Plan Year
including non-Key Employees who (1) failed to complete a year of
service, or (2) declined to make any mandatory contributions to the
Plan or enter a salary deferral agreement.
(b) Special Two Plan Rule
---------------------
Where this Plan and a defined benefit plan belong to an Aggregation
Group that is determined Top Heavy, the minimum contribution required
under paragraph (a) above shall be increased to 5%.
10.4 Limitation to Annual Additions in Top Heavy Plan
------------------------------------------------
For any Top Heavy Plan Year in which the Company does not make the extra
minimum allocation provided below, 1.0 shall replace the 1.25 factor found
in the denominators of the defined benefit and defined contribution plan
fractions for purposes of calculating the combined limitation on benefits
under a defined benefit and defined contribution plan pursuant to Section
415(e) of the Code (see Section 9.3).
If this Plan is Top Heavy, but is not Super Top Heavy, the above referenced
fractions shall remain unchanged provided the Company makes an extra
minimum allocation for non-Key Participants. The extra allocation (in
addition to the minimum contribution set forth in Section 10.3) shall equal
at least one percent (1%) of a non-Key Participant's compensation (or
2-1/2% if Section 10.3(b) applies).
10.5 Vesting
-------
For any Top Heavy Plan Year, a Participant's Accounts shall remain subject
to the vesting provisions in Section 8.1.
53
<PAGE>
SECTION 11
ADMINISTRATION OF THE PLAN
11.1 Plan Administrator
------------------
The Plan Administrator and named fiduciary shall be the Company. The
Compensation Committee of the Board of Directors shall appoint a
Committee composed of one or more persons which shall carry out the
general administration of the Plan. Every member of the Committee shall
be deemed a fiduciary. No Committee member who is an Employee shall
receive compensation with respect to his or her service on the
Committee. Any member of the Committee may resign by delivering
written resignation to the Compensation Committee of the Board of
Directors of the Employer and to the Committee. The Compensation
Committee of the Board of Directors may remove or replace any member of
the Committee at any time.
11.2 Organization and Procedures
---------------------------
The Compensation Committee of the Board of Directors shall designate
a chairman from the members of the Committee. The Committee
shall appoint a secretary, who may or may not be a member of the Committee.
The secretary shall have the primary responsibility for keeping a record of
all meetings and acts of the Committee and shall have custody of all
documents, the preservation of which shall be necessary or convenient to
the efficient functioning of the Committee. The chairman of the Committee
shall be the agent of the Plan for service of process. All reports
required by law may be signed by the chairman or another member of the
Committee designated by the Committee, on behalf of all members of the
Committee.
The Committee shall act by a majority of its members in office, and such
actions may be taken by a vote at a meeting or in writing without a
meeting. The Committee may adopt such by-laws and regulations as it
deems desirable for the conduct of its affairs.
11.3 Duties and Authority of Committee
---------------------------------
(a) Administrative Duties
---------------------
The Committee shall administer the Plan in a non-discriminatory manner
for the exclusive benefit of Participants and their Beneficiaries.
The Committee shall perform all such duties as are necessary to
supervise the administration of the Plan and to control its operation
in accordance with the terms thereof, including, but not limited to,
the following:
(i) Make and enforce such rules and regulations as it shall deem
necessary or proper for the efficient administration of the Plan,
including authorizing an
54
<PAGE>
Interactive Voice Response System in addition to or in lieu of
written notification required under the Plan;
(ii) Interpret the provisions of the Plan and resolve any question
arising under the Plan, or in connection with the administration
or operation thereof;
(iii)Make all determinations affecting the eligibility of any
Employee to be or become a Participant, Beneficiary or alternate
payee pursuant to a domestic relations order (including
determining the qualified status of a domestic relations order);
(iv) Determine eligibility for and amount of retirement benefits for
any Participant;
(v) Authorize and direct the Trustee with respect to all
disbursements of benefits under the Plan;
(vi) Employ and engage such persons, counsel and agents and to obtain
such administrative, clerical, medical, legal, audit and
actuarial services as it may deem necessary in carrying out the
provisions of the Plan;
(vii)Delegate and allocate specific responsibilities, obligations
and duties imposed by the Plan to one or more Employees,
officers, or such other persons as the Committee deems
appropriate.
(b) Investment Authority
--------------------
The Committee shall have responsibility and authority with respect to
the management, acquisition, disposition or investment of Plan assets
to the extent such responsibility and authority is not delegated to an
Investment Manager or Trustee. Participants directing investment of
their Accounts among the available investment funds shall have
responsibility and authority for such investment of their Accounts to
the extent provided by law.
(c) General Authority
-----------------
The Committee shall have all powers necessary or appropriate to carry
out its duties, including the discretionary authority to interpret the
provisions of the Plan and the facts and circumstances of claims for
benefits. Any interpretation or construction of or action by the
Committee with respect to the Plan and its administration shall be
conclusive and binding upon any and all parties and persons affected
hereby, subject to the exclusive appeal procedure set forth in Section
11.7.
55
<PAGE>
(d) Amendment Authority
-------------------
The Committee shall have responsibility and authority to approve
documents for the Plan and to approve amendments that may be required
to the Plan from time to time to keep the Plan in compliance with
relevant law or to facilitate the administration of the Plan. The
Chairman of the Committee is authorized to execute any such documents
or amendments on behalf of the Company.
11.4 Expenses
--------
No member of the Committee shall receive any compensation for his services
as such. However, all expenses incurred by the Committee in carrying out
its responsibilities hereunder (including any bond or other security
required for any member in any jurisdiction) shall be paid by the Plan
unless such amounts are paid by the Company. Brokerage commissions,
transfer taxes and other charges and expenses in connection with the
purchase or sale of securities shall be added to the cost of such
securities or deducted from the proceeds thereof, as the case may be. A
five dollar administrative charge shall be deducted each month from each
Early Terminee's Account. All other costs and expenses incurred in
administering the Plan shall be paid by the Plan unless such amounts are
paid by the Participating Companies.
11.5 Bonding and Insurance
---------------------
To the extent required by law, every Committee member, every fiduciary of
the Plan and every person handling Plan funds shall be bonded. The
Committee shall take such steps as are necessary to assure compliance with
applicable bonding requirements. The Committee may apply for and obtain
fiduciary liability insurance insuring the Plan against damages by reason
of breach of fiduciary responsibility at the Plan's expense and insuring
each fiduciary against liability to the extent permissible by law at the
Company's expense.
11.6 Commencement of Benefits
------------------------
(a) Conditions of Payment
---------------------
Benefit payments under the Plan shall not be payable prior to the
fulfillment of the following conditions:
(i) The Committee has been furnished with such applications,
consents, proofs of birth, address, form of benefit election,
spouse consent if required, and other information the Committee
deems necessary;
(ii) The Participant is eligible to receive benefits under the Plan as
determined by the Committee.
The amount of benefit payable to a Participant or Beneficiary shall be
determined under the terms of the Plan in effect at the time the
Participant Terminates
56
<PAGE>
employment. The time benefits commence to a Participant or
Beneficiary and the form of payment shall be determined under
the terms of the Plan in effect at the time benefits commence.
(b) Commencement of Payment
-----------------------
Unless a Participant elects otherwise, the payment of benefits shall
commence no later than 60 days after the end of the Plan Year in which
the latest of the following occurs:
(i) the date the Participant attains age 65,
(ii) the tenth anniversary of the year in which the Participant
commenced participation in the Plan, or
(iii)the Participant Terminates employment with the Company,
provided that payments shall not commence later than April 1
following the calendar year in which the Participant attains age
70-1/2, regardless of whether he or she remains in Service after
that date (unless the Participant attained age 70-1/2 prior to
January 1, 1988, and was not a 5% owner at any time after age
66-1/2, in which case payments shall commence no later than upon
termination of employment). The amount of any payments required
following age 70-1/2 or Termination shall at least satisfy the
minimum required distribution amount under Code Section
401(a)(9)(A)(ii) and related requlations.
If the information required in subparagraph (a) above is not available
prior to such date, the amount of payment required to commence will
not be ascertainable. In such event, the commencement of payments
shall be delayed until no more than 60 days after the date the amount
of such payment is ascertainable.
11.7 Appeal Procedure
----------------
(a) A claim for benefit payment shall be considered filed when an
application form is submitted to the Committee.
(b) Notice of Denial
----------------
Any time a claim for benefits is wholly or partially denied, the
Participant or Beneficiary (hereinafter "Claimant") shall be given
written notice of such action within 90 days after the claim is filed,
unless special circumstances require an extension of time for
processing. If there is an extension, the Claimant shall be notified
of the extension and the reason for the extension within the initial
90 day period. The extension shall not exceed 180 days after the
claim is filed. Such notice will indicate the reason for denial, the
pertinent provisions of the Plan on which the denial is based, an
explanation of the claims appeal procedure set forth
57
<PAGE>
herein, and a description of any additional material or information
necessary to perfect the claim and an explanation of why such
material or information is necessary.
(c) Right to Request Review
-----------------------
Any person who has had a claim for benefits denied by the Committee,
or is otherwise adversely affected by action of the Committee, shall
have the right to request review by the Committee. Such request must
be in writing, and must be made within 60 days after such person is
advised of the Committee's action. If written request for review is
not made within such 60-day period, the Claimant shall forfeit his or
her right to review. The Claimant or a duly authorized representative
of the Claimant may review all pertinent documents and submit issues
and comments in writing.
(d) Review of Claim
---------------
The Committee shall then review the claim. It may hold a hearing if
it deems it necessary and shall issue a written decision reaffirming,
modifying or setting aside its former action within 60 days after
receipt of the written request for review, or 120 days if special
circumstances, such as a hearing, require an extension. The Claimant
shall be notified in writing of any such extension within 60 days
following the request for review. A copy of the decision shall be
furnished to the Claimant. The decision shall set forth its reasons
and pertinent plan provisions on which it is based. The decision
shall be final and binding upon the Claimant and the Committee and all
other persons involved.
11.8 Plan Administration - Miscellaneous
-----------------------------------
(a) Limitations on Assignments
--------------------------
Benefits under the Plan may not be assigned, sold, transferred, or
encumbered, and any attempt to do so shall be void. The interest of a
Participant in benefits under the Plan shall not be subject to debts
or liabilities of any kind and shall not be subject to attachment,
garnishment or other legal process, except as provided in Section 11.9
relating to Domestic Relations Orders, or otherwise permitted by law.
Notwithstanding the above, any Participant or Beneficiary who is to
receive a distribution from the Plan in shares of Company Stock may,
subject to the provisions or Treasury Regulations (S)1.401(a)-13(e),
make a revocable election that such stock be issued jointly (with the
right of survivorship) to him and his spouse; provided, however, that
no such election shall be effective until the Participant's or
Beneficiary's spouse files a written acknowledgement with the
Committee, in accordance with Treasury Regulations (S)1.401(a)-
13(e)(2), stating that such spouse has no enforceable right in, or to,
any Plan benefit (except to the extent of payments actually received).
58
<PAGE>
(b) Masculine and Feminine, Singular and Plural
-------------------------------------------
Whenever used herein, pronouns shall include the opposite gender, and
the singular shall include the plural, and the plural shall include
the singular, whenever the context shall plainly so require.
(c) No Additional Rights
--------------------
No person shall have any rights in or to the Trust Fund, or any part
thereof, or under the Plan, except as, and only to the extent,
expressly provided for in the Plan. Neither the establishment of the
Plan, the establishment of Participant Accounts nor any action of the
Company or the Committee shall be held or construed to confer upon any
person any right to be continued as an Employee, or, upon dismissal,
any right or interest in the Trust Fund other than as herein provided.
The Company expressly reserves the right to discharge any Employee at
any time.
(d) Governing Law
-------------
This Plan shall be construed in accordance with applicable federal law
and the laws of the State of Washington.
(e) Disclosure to Participants
--------------------------
Each Participant shall be advised of the general provisions of the
Plan and, upon written request addressed to the Committee, shall be
furnished any information requested regarding the Participant's
status, rights and privileges under the Plan as may be required by
law.
(f) Income Tax Withholding Requirements
-----------------------------------
Any retirement benefit payment made under the Plan will be subject to
any applicable income tax withholding requirements. For this purpose,
the Committee shall provide the Trustee with any information the
Trustee needs to satisfy such withholding obligations and with any
other information that may be required by regulations promulgated
under the Code.
(g) Severability
------------
If any provision of this Plan shall be held illegal or invalid for any
reason, such determination shall not affect the remaining provisions
of this Plan which shall be construed as if said illegal or invalid
provision had never been included.
59
<PAGE>
(h) Facility of Payment
-------------------
In the event any benefit under this Plan shall be payable to a person
who is under legal disability or is in any way incapacitated so as to
be unable to manage his or her financial affairs, the Committee may
direct payment of such benefit to a duly appointed guardian,
committee or other legal representative of such person or in the
absence of a guardian or legal representative, to a custodian for
such person under a Uniform Gift to Minors Act or to any relative
of such person by blood or marriage, for such person's benefit.
Any payment made in good faith pursuant to this provision shall
fully discharge the Company and the Plan of any liability to the
extent of such payment.
(i) Correction of Errors
--------------------
Any Company contribution to the Trust Fund made under a mistake of
fact (or investment proceed of such contribution if a lesser amount)
shall be returned to the Company within one year after payment of the
contribution.
In the event an incorrect amount is paid to a Participant or
Beneficiary, any remaining payments may be adjusted to correct the
error. The Committee may take such other action it deems necessary
and equitable to correct any such error.
(j) Missing Persons
---------------
In the event a distribution is required to commence under Section 7.2
and the Participant or Beneficiary cannot be located, the
Participant's Account shall be forfeited on the last day of the Plan
Year following the Plan Year in which distribution was supposed to
commence. Such forfeiture shall be used to reduce Company Matching
Contributions.
If the affected Participant or Beneficiary later contacts the Company,
his or her Account shall be reinstated and distributed as soon as
practical. The Company shall reinstate the amount forfeited by making
a special contribution equal to such amount and allocating it to the
affected Participant's or Beneficiary's Account. Such reinstatement
shall not be considered an annual addition for purposes of the
limitations on contributions on benefits pursuant to Code Section 415.
Prior to forfeiting any Account, the Company shall attempt to contact
the Participant or Beneficiary by return receipt mail at his or her
last known address according to the Company's records, and by the
letter forwarding services offered through the Internal Revenue
Service, or the Social Security Administration, or such other means as
the Committee deems appropriate.
60
<PAGE>
11.9 Domestic Relations Orders
-------------------------
Notwithstanding any Plan provisions to the contrary, benefits under the
Plan may be paid to someone other than the Participant or Beneficiary
pursuant to a Qualified Domestic Relations Order, in accordance with
Section 414(p) of the Code. A Qualified Domestic Relations Order is a
judgment, decree, or order ("Order") (including approval of a property
settlement agreement) that:
(a) relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other
dependent of a Participant;
(b) is made pursuant to a state domestic relations law (including a
community property law);
(c) creates or recognizes the existence of an alternate payee's right
to, or assigns to an alternate payee the right to, receive all or a
portion of the benefits payable to a Participant under the Plan;
(d) specifies the name and last known address of the Participant and
each alternate payee;
(e) specifies the amount or method of determining the amount of benefit
payable to an alternate payee;
(f) names each plan to which the order applies;
(g) does not require any form, type or amount of benefit not otherwise
provided under the Plan;
(h) does not conflict with a prior Domestic Relations Order that meets
the other requirements of this section.
Payments to an alternate payee pursuant to a Qualified Domestic Relations
Order shall commence within a reasonable time following qualification of
the Order. Such payment shall commence regardless of the Participant's
age or whether the Participant Terminates or continues employment.
The Committee shall determine whether an order meets the requirements of
this section within a reasonable period after receiving an order. The
Committee shall notify the Participant and any alternate payee that an
order has been received. Any amounts which are to be paid pursuant to
the order, during the period while its qualified status is being
determined, shall be held in a separate account under the Plan for any
alternate payee pending determination that an order meets the
requirements of this section. If within eighteen months after such a
separate account is established, the order has not been determined to
be a qualified Order, the amount in the separate account shall be
distributed to the individual who would have been entitled to such
amount if there had been no order.
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11.10 Plan Qualification
------------------
Any modification or amendment of the Plan may be made retroactive, as
necessary or appropriate, to establish and maintain a "qualified plan"
pursuant to Section 401 of the Code, and ERISA and regulations thereunder
and exempt status of the Trust Fund under Section 501 of the Code.
11.11 Deductible Contribution
-----------------------
Notwithstanding anything herein to the contrary, any contribution by the
Company to the Trust Fund is conditioned upon the deductibility of the
contribution by the Company under the Code and, to the extent any such
deduction is disallowed, the Company may within one year following a
final determination of the disallowance, demand repayment of such
disallowed contribution and the Trustee shall return such contribution
less any losses attributable thereto to the Company within one year
following the disallowance.
11.12 Voting of Company Stock and SpaceLabs Medical, Inc. Stock
---------------------------------------------------------
Before each annual or special meeting of the stockholders of the Company,
the Company shall cause to be sent to each Participant having shares in
the Company Stock Fund or the SpaceLabs Stock Fund a copy of the proxy
solicitation material therefor, together with a form requesting
confidential instructions to the Trustee on how to vote the number of
shares of common stock in either Fund credited to such Participant. Upon
receipt of such instructions the Trustee shall vote the shares of stock
as instructed. Instructions received from individual Participants by the
Trustee shall be held in the strictest confidence and shall not be
divulged or released to any person, including officers or employees of
any Company or any Affiliated Company. The Trustee shall vote all
shares of Company Stock and SpaceLabs Medical, Inc. stock held by it
under the Plan, for which voting instructions shall not have been
received for or against proposals submitted, in the same proportions as
the shares for which instructions are received by the Trustee from
Participants.
In the event of a tender or exchange offer for Company Stock or SpaceLabs
Medical, Inc. common stock, the response to such offer by the Trustee
shall be determined as though the decision constitutes the exercise of
voting rights, as described in this Section 11.12, except that any
shares with respect to which instructions are not received from
Participants or Beneficiaries shall not be tendered by the Trustee.
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SECTION 12
AMENDMENT AND TERMINATION
12.1 Amendment and Termination
-------------------------
It is the Company's intention that the Plan will continue indefinitely;
however, the Company, by action of its Board of Directors, shall have the
right to amend, terminate, or partially terminate this Plan at any time
subject to any advance notice or other requirements of ERISA. Should the
Board amend the Plan, such amendment shall apply to all Participating
Companies as of the date that the amendment applies to the Company. A
participating Company may, however, adopt for its employees a different
definition of "Eligible Employee" than is contained in Section 1 or a
different standard of participation than is contained in Section 2, by
filing with the Committee a certified resolution of its Board of Directors,
provided, however, that such resolution shall become effective only if
approved by the Committee. No amendment of the Plan shall have the effect
of providing that the funds held in trust by the Trustee or the earnings
thereon may be used for, or diverted to, purposes other than the Plan.
12.2 Consolidation or Merger
-----------------------
In the event the Plan's assets and liabilities are merged into, transferred
to or otherwise consolidated with any other retirement plan, then such must
be accomplished so as to ensure that each Participant would (if the other
retirement plan then terminated) receive a benefit immediately after the
merger, transfer or consolidation, which is equal to or greater than the
benefit the Participant would have been entitled to receive immediately
before the merger, transfer or consolidation (as if the Plan had then
terminated). This provision shall not be construed as limiting the powers
of the Company to appoint a successor Trustee.
Subject to the foregoing, if any Affiliated Company becomes a Participating
Company, and such Company had a thrift plan or similar plan or participated
in a similar plan of another organization, the Board, with the approval of
the Affiliated Company, may merge such plan into the Plan and thereupon all
employees of the Affiliated Company who were members of such plan shall
automatically become Participants hereunder, and all amounts in the
accounts of such employees of the Affiliated Company shall become accounts
under this Plan, in the manner determined by the Committee; provided,
however, that amounts so transferred shall not be subject to the
limitations imposed under Sections 3 and 4 on such contributions and no
Participating Company shall be required or permitted to make company
matching contributions based on any of the amounts transferred to the Plan
under this paragraph.
If a Participating Company maintains a trust that qualified as an exempt
trust under Section 501(a) of the Code as a part of a qualified profit-
sharing plan to which contributions have been permanently discontinued and
all rights under the trust have vested in employees and former employees of
the Participating Company, the board of directors of the Participating
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Company, with the consent of the Board, may merge such trust into the
Trust under the Plan and thereupon all employees of such Participating
Company and employees of other Participating Companies who had a vested
interest in the merged trust shall automatically become Participants
in the Plan but solely for the purposes of investing the amounts so
transferred and distributing such amounts to such employees as
hereinafter set forth in the Plan. The amounts so transferred on behalf
of each such employee shall be invested in such funds as he shall direct,
under the provisions of Section 6.1. Any amounts transferred under this
paragraph shall constitute "Special Contributions." Under no circumstances
will any Participating Company be required or permitted to make company
matching contributions to the Plan based on Special Contributions. Special
Contributions and any earnings thereon may not be withdrawn by a
Participant until such time as the Participant ceases to be an Employee of
a Participating Company on account of death, retirement, or other voluntary
or involuntary termination of employment; provided, however, that a full
withdrawal of such Special Contributions and earnings may be made by a
Participant after attainment of age 59-1/2, if he shall at the same time
make a full withdrawal of all his interest in this Plan. Subject to the
foregoing, all such distributions shall be made in accordance with the
provisions of this Plan.
12.3 Termination of the Plan
-----------------------
The termination of the Plan shall not cause or permit any part of the Trust
Fund to be diverted to purposes other than for the exclusive benefit of the
Participants, or cause or permit any portion of the Trust Fund to revert to
or become the property of the Company at any time prior to the satisfaction
of all liabilities with respect to the Participants.
Upon termination of this Plan, the Committee shall continue to act for the
purpose of complying with the preceding paragraph and shall have all power
necessary or convenient to the winding up and dissolution of the Plan as
herein provided. While so acting, the Committee shall be in the same
status and position with respect to other persons as if the Plan remained
in existence.
12.4 Allocation of the Trust Fund on Termination of Plan
---------------------------------------------------
In the event of a complete or partial termination of the Plan, or upon
complete discontinuance of contributions under the Plan, with respect to
all Participants or a specified group or groups of Participants, the
Trustee shall allocate and segregate a proportionate interest in the Trust
Fund for the benefit of affected Participants.
All Accounts accrued by the affected Participants shall be 100% vested and
non-forfeitable. The Committee shall direct the Trustee to allocate the
assets of the Trust Fund to those affected Participants.
In the event that after the termination of the Plan the Board shall
determine that continuance of the investment funds is not in the best
interest of the Participants, the Company may liquidate the funds and the
Trustee shall apply the proceeds to payment to each Participant and
Beneficiary of the value of his or her Accounts. Such payment shall be
made, in the
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discretion of the Committee, either wholly or in part by the purchase of
non-transferable annuity contracts or by lump-sum payments.
12.5 Partial Termination
-------------------
If at any time the Plan is terminated with respect to any group of
Employees under such circumstances as to constitute a partial termination
of the Plan within the meaning of Section 411(d)(3) of the Code, the
amounts held in the funds that are allocable to such Employees shall be
segregated by the Trustee as a separate plan. The funds thus allocated to
such separate plan shall be applied for the benefit of such Employees in
the manner described in Section 12.4.
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SECTION 13
FUNDING
13.1 Contributions to the Trust Fund
-------------------------------
As a part of this Plan the Company shall maintain a Trust Fund. From time
to time, the Company shall make contributions to the Trust Fund in
accordance with Section 4.
13.2 Trust Fund for Exclusive Benefit of Participants
------------------------------------------------
The Trust Fund is for the exclusive benefit of Participants. Except as
provided in Sections 4.6 (Return of Contributions), 11.9 (Domestic
Relations Orders) and 11.11 (Deductible Contribution), no portion of the
Trust Fund shall be diverted to purposes other than this or revert to or
become the property of the Company at any time prior to the satisfaction of
all liabilities with respect to the Participants.
13.3 Trustee
-------
As a part of this Plan, the Company has entered into an agreement with a
Trustee who is designated by the Board of Directors. The Company has the
power and duty to appoint the Trustee and it shall have the power to remove
the Trustee and appoint successors at any time. As a condition to
exercising its power to remove any Trustee hereunder, the Company must
first enter into an agreement with a successor Trustee. The Committee may
delegate the authority to direct the investment of all or a portion of the
Trust Fund to the Trustee.
13.4 Investment Manager
------------------
The Committee has the power to appoint, remove or change from time to time
an Investment Manager to direct the investment of all or a portion of the
Trust Fund held by the Trustee. For purposes of this section "Investment
Manager" shall mean any fiduciary (other than the Trustee) who:
(a) has the power to manage, acquire, or dispose of any asset of the Plan;
(b) is either
(i) registered as an investment adviser under the Investment Advisers
Act of 1940; or
(ii) is a bank; or
(iii)is an insurance company qualified under the laws of more than
one state to perform the services described in subparagraph (a);
and
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(c) has acknowledged in writing that he, she or it is a fiduciary with
respect to the Plan.
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SECTION 14
FIDUCIARIES
14.1 Limitation of Liability of the Company and Others
-------------------------------------------------
To the extent permitted by law, no Participant shall have any claim against
the Company, or the Committee, or against their directors, officers,
members, agents or representatives, for any benefits under the Plan, and
such benefits shall be payable solely from the Trust Fund; nor shall the
Company, nor the Committee or their directors, officers, members, agents or
representatives incur any liability to any person for any action taken or
suffered or omitted to be taken by them under the Plan in good faith.
14.2 Indemnification of Fiduciaries
------------------------------
In order to facilitate the recruitment of competent fiduciaries, the
Company adopting this Plan agrees to provide the indemnification as
described herein. This provision shall apply to Employees who are
considered Plan fiduciaries including without limitation, Committee
members, any agent of the Committee, or any other officers, directors or
Employees. Notwithstanding the preceding, this provision shall not apply
and indemnification will not be provided for any Trustee or Investment
Manager appointed as provided in this Plan.
14.3 Scope of Indemnification
------------------------
The Company agrees to indemnify an Employee fiduciary as described above
for all acts taken in good faith in carrying out his or her
responsibilities under the terms of this Plan or other responsibilities
imposed upon such fiduciary by ERISA. This indemnification for all acts is
intentionally broad but shall not provide indemnification for embezzlement
or diversion of Plan assets for the benefit of the Employee fiduciary. The
Company agrees to indemnify Employee fiduciaries described herein for all
expenses of defending an action by a Participant, Beneficiary or government
entity, including all legal fees for counsel selected with the consent of
the Company and other costs of such defense. The Company will also
reimburse an Employee fiduciary for any monetary recovery in any court or
arbitration proceeding. In addition, if the claim is settled out of court
with the concurrence of the Company, the Company will indemnify an Employee
fiduciary for any monetary liability under said settlement. The Company
shall have the right, but not the obligation, to conduct the defense of
such persons in any proceeding to which this Section 14.3 applies. The
Company may satisfy its obligations under this Section 14.3 in whole or in
part through the purchase of a policy or policies of insurance providing
equivalent protection.
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The Advanced Technology Laboratories, Inc. Incentive Savings and Stock Ownership
Plan is adopted by Advanced Technology Laboratories, Inc.
IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed on this
25 th day of July , 1996.
- ------------ -----------------------
FOR ADVANCED TECHNOLOGY
LABORATORIES, INC.
/s/ Annette King /s/ Harvey N. Gillis
- --------------------------- -----------------------------------
Witness Authorized Officer
Chief Financial Officer
-----------------------------------
Title
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APPENDIX I
TO THE ADVANCED TECHNOLOGY LABORATORIES, INC.
INCENTIVE SAVINGS AND STOCK OWNERSHIP PLAN
"Participating Companies" as defined in Section 1.27 shall also include the
following companies during the specified time.
<TABLE>
<CAPTION>
Company Beginning Ending
- ------- --------- ------
<S> <C> <C>
Advanced Technology Laboratories, Inc. January 1, 1987
(Washington)
Interspec, Inc. January 1, 1995
</TABLE>
ACKNOWLEDGED AND ACCEPTED:
By: __________________________________________
Title: _______________________________________
Date: ________________________________________
70
KPMG Peat Marwick Letterhead EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
- -----------------------------------------------------------------------
The Board of Directors
Advanced Technology Laboratories, Inc.:
We consent to the use of our reports incorporated herein by reference
in the registration statement.
/s/KPMG PEAT MARWICK LLP
Seattle, Washington
July 24, 1996
