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As filed with the Securities and Exchange Commission on December 15, 1998
Registration No. 333-63021
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ASTROPOWER, INC.
(Exact name of registrant as specified in its charter)
____________
Delaware 51-0315869
(State or other jurisdiction of (I.R.S. EmployerIdentification Number)
incorporation or organization)
SOLAR PARK
NEWARK, DELAWARE 19716-2000
(ADDRESS, INCLUDING ZIP CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
ASTROPOWER, INC.
401(K) SAVINGS PLAN
(FULL TITLE OF THE PLAN)
DR. ALLEN M. BARNETT, PRESIDENT COPY TO:
ASTROPOWER, INC. PETER LANDAU, ESQ.
SOLAR PARK OPTON HANDLER FEILER & LANDAU, LLP
NEWARK, DELAWARE 19716-2000 52 VANDERBILT AVENUE
New York, N.Y. 10017
(ADDRESS, INCLUDING ZIP (212) 599-1744
CODE OF AGENT FOR SERVICE)
(302) 366-0400
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Title of Securities Amount to be Proposed maximum Proposed maximum Amount of
to be Registered Registered offering price per aggregate offering registration fee (1)
share (1) price (1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value per share,
for issuance
pursuant to 401(k) 500,000 Shares $8.75 $4,375,000 $1,290.62
Savings Plan
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the bid and asked price for
the Common Stock as quoted on the Nasdaq National Market on December 9,
1998 a date within five business days of the date of filing of this
Registration Statement.
(2) Pursuant to Rule 416, there is also registered hereunder such indeterminate
number of additional shares as may become issuable upon the exercise of
Options as a result of the antidilution provisions contained in the Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
A reoffer prospectus prepared in accordance with the requirements of Part I of
Form S-3 is being filed with the Commission as part of this Registration
Statement on Form S-8 (this "Registration Statement"). The information called
for by Part I of this Registration Statement will be sent or given to
Participants in the AstroPower, Inc. 401(k) Savings Plan in accordance with the
provisions of Rule 428 (b) (1) promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the Note to Part I of Form S-8,
this information is not being filed with or included in this Registration
Statement.
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PROSPECTUS
ASTROPOWER, INC.
500,000 SHARES OF COMMON STOCK
($.0l PAR VALUE)
The shares of Common Stock, par value $.01 per share of AstroPower, Inc.
together with its subsidiaries, (collectively the "Company") which are the
subject of this Prospectus (the "Shares") and which may be sold from time to
time, are Shares which may be issued to the Company's 401(k) Savings Plan (the
"Plan"). See "Selling Stockholders".
It is anticipated that the Shares may be offered for sale by the Plan on behalf
of one or more of the Plan Participants, in its discretion, on a delayed or
continuous basis from time to time in transactions in the open market at prices
prevailing at the time of sale on the Nasdaq National Market under the symbol
"APWR" or in private transactions at negotiated prices or otherwise. Such
transactions may be effected directly by the Trustees of the Trust Fund which
holds the assets of the 401(k) Plan, acting for the Plan or for the account of a
Plan Participant. Alternatively, such transactions may be effected through
brokers, dealers or other agents designated from time to time by the Plan, and
such brokers, dealers or other agents may receive compensation in the form of
customary brokerage commissions or concessions from the Plan or the purchasers
of the Shares. The Plan, brokers who execute orders on their behalf and other
persons who participate in the offering of the Shares on their behalf may be
deemed to be "underwriters" within the meaning of Section 2 (11) of the
Securities Act of 1933, as amended (the "Securities Act") and therefore a
portion of the proceeds of sales and commissions or concessions may be deemed
underwriting compensation for purposes of the Securities Act. The Company will
not receive any part of the proceeds from sale of Shares by the Plan. See "Plan
of Distribution".
The Company will pay all costs and expenses incurred by it in connection with
the registration of the Shares under the Securities Act. The Plan will pay the
costs associated with any sales of Shares, including any concessions,
commissions, fees and applicable transfer taxes.
See "Risk Factors" for a discussion of certain factors to be considered by
purchasers of the Shares.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 15, 1998.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
BUY THE SECURITIES TO WHICH THIS PROSPECTUS RELATES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATE AS
OF WHICH INFORMATION IS SET FORTH HEREIN.
TABLE OF CONTENTS
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Page
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Available Information.................................................. 3
Incorporation of Certain Documents by Reference........................ 4
The Company............................................................ 5
Risk Factors........................................................... 6
Use of Proceeds........................................................ 19
Selling Stockholders................................................... 19
Plan of Distribution................................................... 19
Resale of Shares by Affiliates......................................... 20
Legal Matters.......................................................... 21
Experts................................................................ 21
2
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act" ), and
accordingly, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission are available for
inspection and copying at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, 7 World Trade Center New York,
New York, 10048 and at 5757 Wilshire Boulevard, Los Angeles, California 90024.
Copies of such material also may be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549 at prescribed rates. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission, located at
http://www.sec.gov.
This Prospectus constitutes a part of a registration statement on Form S-8 (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act with respect to the securities offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Reference is hereby made to the Registration Statement and
to the exhibits thereto for further information with respect to the Company and
the securities offered hereby. Copies of the Registration Statement and the
exhibits thereto are on file at the offices of the Commission and may be
obtained upon payment of the prescribed fee or may be examined without charge at
the Public Reference Section of the Commission described above. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (the "1997 Annual Report").
(b) The Company's Quarterly Report on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998.
(c) The Company's Proxy Statement with respect to its 1998 Annual Meeting of
Shareholders, dated May 20, 1998.
(d) The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A, dated January 23, 1998, including all
amendments and reports filed for the purpose of updating such description.
All documents filed pursuant to Section 13 (a), 13 (c), 14 or 15 (d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
completion of the offering shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the date of filing of such documents.
Any statement contained in a document, all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document, which also is or
is deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon written or oral request, a
copy of any or all of such documents which are incorporated herein by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the documents that this Prospectus incorporates).
Written or oral requests for copies should be directed to Thomas J. Stiner, Vice
President and Chief Financial Officer, AstroPower, Inc., Solar Park, Newark,
Delaware 19716-2000, (302) 366-0400.
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THE COMPANY
The Company develops, manufactures, markets, and sells photovoltaic ("PV") solar
cells, modules and panels for generating solar electric power. Solar cells are
semiconductor devices which convert light directly into electricity. Solar
electric power is used off the electric utility grid for many applications in
the communications and transportation industries and in remote villages and
homes. Solar electric power is also used in on-grid applications by existing
electric utility customers to provide a clean, renewable source of alternative
or supplementary electric power.
The Company has developed a new proprietary technology, Silicon-Film(TM), which
it believes will provide significantly lower manufacturing costs for solar cells
than any other current process. Silicon-Film(TM) is an advanced continuous sheet
process for forming the crystalline silicon wafers from which solar cells are
fabricated. Silicon-Film(TM): (i) uses raw material which is lower in cost than
the solar or semiconductor grade silicon used in other solar cell processes:
(ii) operates at continuous high processing speeds, leading to lower capital and
manufacturing costs than conventional batch processes; and (iii) produces
crystalline silicon sheets which are larger than those obtained from
conventional processes, capturing economies of scale in manufacturing, materials
utilization and solar cell and module fabrication.
The Company currently produces most of its solar cells from silicon wafers
recycled from the semiconductor industry in its 5 megawatt ("MW") annual
capacity plant. In October 1997, the Company commenced equipment purchases for
the scale-up of its Silicon-Film(TM) process in a new 9 MW annual capacity plant
(the "9 MW plant"). In January 1998, the Company signed a lease for a 60,300
square foot facility to house the 9 MW plant. This facility came on line and
began making the first commercial shipments in the second quarter of 1998. When
operating at full capacity, this facility is expected to produce approximately 9
MW of products per year.
In addition, assuming successful and timely ramp up of its 9 MW plant, the
Company intends to implement a further major increase in Silicon-Film(TM)
capacity in 1999. The Company's planned expansion would approximately triple
manufacturing capacity in 1998 and further increase capacity in 1999 by a factor
of two or more. In the first quarter of 1998, the Company completed an initial
public offering of its Common Stock, raising net proceeds of $16.7 million.
The Company sells its solar cells, modules and panels to distribution and
manufacturing customers which either resell such products to other marketing
intermediaries or which assemble such products into completed systems for sale
to end users. The Company uses a "tiered" customer strategy, which aims to grow
volume with existing customers while selectively adding new customers, thereby
obtaining access to high growth market segments while maintaining geographic
diversification.
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The Company was incorporated in Delaware in 1989 as a successor to a business
that was organized in 1983. The Company's principal executive offices are
located at Solar Park, Newark, Delaware 19716-2000 and its telephone number is
(302) 366-0400.
RISK FACTORS
An investment in the shares of Common Stock offered by this Prospectus involves
a high degree of risk. In addition to the other information in this Prospectus,
prospective investors should carefully consider the following risk factors
before making a decision to purchase the Common Stock offered hereby.
This Prospectus contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of the Company's
management as well as assumptions made by and information currently available to
the Company's management. When used in this document, the words "anticipate",
"believe", "estimate", expect", "going forward", and similar expressions, as
they relate to the Company or Company management, are intended to identify
forward-looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions, including the risk factors described in this
Prospectus. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.
SCALE-UP OF NEW MANUFACTURING PLANT
The Company began manufacturing Silicon-Film(TM) products and making the first
commercial shipments from its new 9 MW annual capacity plant in the second
quarter of 1998. The new plant utilizes the Company's proprietary Silicon-
Film(TM) production equipment which has produced more than 130,000 solar cells
in pilot production for sale and for use in commercial and demonstration
programs. The Company believes, on the basis of its Silicon-Film(TM) pilot
production, that it has demonstrated manufacturing yields, equipment capability,
product performance and product quality that will enable it to produce solar
cells at costs lower than competitors when manufactured in large quantities.
However, the successful ramping of the 9 MW plant to full capacity requires
substantial engineering and is subject to significant risks, including risks of
cost overruns and delays. There can be no assurance that the Company will
successfully operate its Silicon-Film(TM) processes in high volume, make planned
process and equipment improvements, implement multiple production lines or be
able to hire and train the additional employees and management needed to operate
the 9 MW plant. To the extent that the Company's financial and operational
plans and capital budgets assume increases in productivity, equipment
performance and energy conversion efficiency of solar cells
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produced in its 9 MW plant over the levels achieved in pilot production, any
failure by the Company to achieve these projected increases, or any failure or
significant delay in ramping up the 9 MW plant, could materially and adversely
affect the Company's business, results of operations and financial condition.
HIGH-VOLUME OPERATION OF SILICON-FILM(TM) PRODUCTION EQUIPMENT
The Company's current Silicon-Film(TM) production machine began operation in
February 1997 and has made more than 100 pilot production runs aggregating more
than 500 hours. As the Company ramps up the 9 MW plant to full capacity, the
Company will begin continuous high-volume production of Silicon-Film(TM)
products using its current Silicon-Film(TM) production machine. The Company
believes that the production results obtained from the current Silicon-Film(TM)
machine demonstrate the Company's ability to produce Silicon-Film(TM) products
at full-scale production levels. However, there can be no assurance that the
current machine will perform as anticipated at continuous production levels.
The Company may not ultimately be able to operate the current machine at full-
scale production levels without experiencing significant delays, equipment
breakdowns, higher costs or lower product quality. In addition, to the extent
that the Company's business and financial projections assume increased levels of
productivity and economies of scale upon achieving full-scale production levels,
the failure to achieve such increases could materially and adversely affect the
Company's business, results of operations and financial condition.
ACCEPTANCE OF SILICON-FILM(TM) PRODUCTS IN THE SOLAR ELECTRIC POWER MARKET
The Company believes it can produce its Silicon-Film(TM) solar cells at a lower
cost per watt than any competing technology because of the continuous nature of
the Silicon-Film(TM) manufacturing process, the use of inexpensive raw materials
and the elimination of costly manufacturing steps that must be used in other
competing technologies. The Company believes that the anticipated lower cost per
watt of solar cells produced by the Silicon-Film(TM) process will provide it
with significant price advantages over current and potential alternative
technologies.
However, there is no assurance that the Company will be able to sell its
Silicon-Film(TM) products at a lower price per watt than conventional solar
cells because the Company may not be able to produce Silicon-Film(TM) products
at projected costs and/or because prices for competing solar cells may decline
more rapidly than anticipated. Although the Company plans to price its Silicon-
Film(TM) solar cells competitively, the market acceptance of the Company's
Silicon-Film(TM) products may also be affected by Silicon-Film's(TM) lower
energy conversion efficiency and power produced per unit of area compared to
some other competing solar cell products. The Company's Silicon-Film(TM)
products may also fail to win market acceptance due to the development of new
products or technologies by competitors. Other factors that may affect the
acceptance of the Company's Silicon-Film(TM) products include the size,
appearance and quality of Silicon-
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Film(TM) solar cells and the market acceptance of module products and systems
assembled by manufacturers over which the Company has no control. The failure of
the Company's Silicon-Film(TM) products to achieve market acceptance and/or
price advantage could materially and adversely affect the Company's business,
results of operations and financial condition
FUTURE EXPANSION OF MANUFACTURING CAPACITY
The Company commenced Silicon-Film(TM) production in the 9 MW plant in the first
half of 1998 and expects to reach full capacity production in 1999. Assuming
successful and timely ramp of the 9 MW plant, the Company intends to implement
another major increase in Silicon-Film(TM) capacity in 1999 (the "Future
Expansion"). The Company believes that this Future Expansion, based on its
experience with the 9 MW plant, will result in increases in productivity and
equipment performance, mostly through economies of scale associated with high
volume commercial production and advances in Silicon-Film(TM) manufacturing
technology. Based on its pilot production and the expected results from its 9
MW plant, the Company also believes that it will achieve further increases in
the energy conversion efficiency of the Silicon-Film(TM) solar cells as it
implements and scales up the Future Expansion. However, there can be no
assurance that production in the 9 MW plant will reach maximum capacity or that
the Company will be able to utilize additional manufacturing capacity from the
Future Expansion. There can also be no assurance that increased levels of
productivity, throughput levels, periods of equipment operation or product
energy conversion efficiencies will be obtained or can be consistently
maintained as a result of any Future Expansion. If the Company is unable for
any reason to successfully complete, scale-up or efficiently utilize additional
manufacturing capacity as a result of any Future Expansion, the Company's
business, results of operations or financial condition would be materially and
adversely affected.
MANAGEMENT OF GROWTH
The Company's planned rapid expansion of Silicon-Film(TM) manufacturing capacity
in 1998 and 1999 entails a planned threefold expansion of the Company's
manufacturing capacity in 1998 and a further two-fold expansion of that
manufacturing capacity in 1999. This planned expansion, involving major
increases in facilities and employees and enhancements to its operating systems,
could place a significant strain on the Company's senior management team and
other resources. Based on these plans, the Company has significantly increased
the number of its manufacturing employees through September 1998 and will have
to continue to do so during the balance of 1998 and again in 1999. While to
date, the Company has been able to hire and train a sufficient number of
employees on a timely basis or to upgrade its operating systems without undue
cost or delay, including additions to the Company's operating and financial
management team, there is no assurance it can continue to do so. Any future
inability of the Company to effectively manage the budgeting, forecasting and
other process control issues presented by such a rapid expansion could have an
adverse effect on the Company's operations and financial results. In addition,
the Company will be required to implement an enlarged
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sales and marketing plan for Silicon-Film(TM) technology and expand its
marketing and sales staff. There can be no assurance that the Company will be
able to successfully recruit and train additional required personnel and manage
its planned growth, and its failure to do so could have a material adverse
effect on the Company's business, results of operations and financial condition.
UNCERTAINTY OF ADDITIONAL FINANCING
As mentioned above, assuming successful and timely ramp up of its 9 MW plant,
the Company intends to implement a major increase in Silicon-Film(TM) capacity
during 1999. The Company expects that the net proceeds of its initial public
offering, together with existing sources of capital and projected cash generated
from operations, will be sufficient to fund its activities for the next 24
months, including the scale-up of the 9 MW plant and the equity capital
requirements for the Future Expansion. In the next 24 months, changes in
technology, a significant delay in full implementation of the 9 MW plant or the
Future Expansion, or a significant decrease in manufacturing efficiency or
operating margins may require further capital. The inability of the Company to
obtain the necessary capital or financing to fund the Future Expansion could
materially and adversely affect the Company's business, results of operations
and financial condition. Furthermore, there can be no assurance that the
Company will be profitable in the future or that the net proceeds of any
financing, together with any funds provided by operations and present capital,
will be sufficient to fund the Company's ongoing needs for product development,
manufacturing, marketing and working capital. Additional financing may not be
available when needed or may not be available on terms acceptable to the
Company. If additional funds are raised by issuing equity securities,
stockholders may incur dilution. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate one or more of its
development programs or otherwise limit the development, manufacture or sale of
Silicon-Film(TM) solar cells, which could materially and adversely affect the
Company's business, results of operations and financial condition.
PROTECTION OF PROPRIETARY TECHNOLOGY
The Company's ability to compete effectively will depend in part on its ability
to maintain the proprietary nature of its technology and manufacturing
processes through a combination of patent and trade secret protection. The
Company is assigned ten issued United States patents in the field of
photovoltaics and related optoelectronics materials and devices which expire
beginning in April 2003 and ending in April 2016. In addition, the Company has
three United States patents pending. Patent applications in the United States
are maintained in secrecy until patents issue and publication of discoveries in
the scientific literature tends to lag behind actual discoveries. The Company
therefore cannot be certain that it was the first creator of inventions covered
by pending patent applications or the first to file patent applications on such
inventions, and there can be no assurance that the Company's pending patent
applications will result in issued patents. International counterparts of four
issued patents have been filed under the Patent Cooperation Treaty.
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Patent applications filed in foreign countries are subject to laws, rules, and
procedures which differ from those of the United States, and thus there can be
no assurance that the Company's foreign patent applications will result in
issued patents or that such patents will provide meaningful patent protection.
In addition, no assurance can be given that patents issued to the Company will
not be intentionally infringed upon or designed around or that any of its issued
patents will provide meaningful patent protection. The inability of the Company
to maintain the proprietary nature of its products and core technologies could
have a material adverse effect on the Company's business, results of operations
and financial condition.
COMPETITION
The market for the Company's products are intensely competitive. There are many
competitors engaged in all areas of solar electric power generation in the
United States and abroad including, among others, major electrical, oil, and
chemical companies, specialized electronics firms, universities, research
institutions and foreign government-sponsored companies. Most of these entities
have substantially greater financial, research and development, manufacturing
and marketing resources than the Company. There is also a large number of
smaller companies involved in the development, manufacturing and marketing of
solar electric power products and systems.
UNCERTAINTY OF SOLAR ELECTRIC POWER MARKET GROWTH
The market for solar electric power products has grown steadily in the past.
However, there can be no assurance that the solar electric power market, or the
particular market segments and/or geographic regions where the Company sells its
products, will continue to grow. The Company's strategy of significantly
increasing manufacturing capacity is based in part on the assumption of
continuing market growth. The Company believes that its assumption of
continuing market growth is reasonable based on the large overall market for
solar electric power products and services world-wide, historical growth trends
in the solar electric power industry and solar electric power market growth
forecasts that have been developed by independent third parties. However, in
the event that the market for solar electric power does not experience
continuing growth, or that the particular market segments and/or geographic
sales regions where the Company sells the majority of its products do not
continue to grow, this factor could have a material adverse effect on the
Company's business, results of operations and financial condition.
DEPENDENCE ON KEY CUSTOMERS; CUSTOMER CONCENTRATION
The Company's strategy has been to market its products to a limited group of key
customers. The Company's five largest customers accounted for, in the
aggregate, approximately 60.0%, 60.4% and 67.8% of the Company's product sales
in fiscal years 1995, 1996 and 1997, respectively. The Company's product sales
accounted for 53.9%, 58.9% and 78.9% of the Company's total revenues in fiscal
years 1995, 1996 and 1997, respectively. The remainder of the Company's total
revenues for these periods was
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derived from government-related research and development contracts. The loss or
significant reduction of purchases by one or more of these customers could have
a material adverse effect on the Company's business, results of operations and
financial condition. The Company expects to continue its strategy of selling
solar electric power products to relatively few customers and that such
customers will account for a high percentage of its revenue in the foreseeable
future. The Company believes that it has successfully managed the level of
customer concentration in the past, and that the level of customer concentration
will decrease as the Company's manufacturing capacity increases, but there can
be no assurance that the Company's sales strategy of focusing on a small group
of customers will be successful in the future or can be successfully changed in
the future to another sales strategy.
RELIANCE ON MARKETING INTERMEDIARIES
The Company's marketing strategy has been to sell its products to marketing
intermediaries chosen to provide access to certain important market segments and
regions around the world. The Company's customers are not end users of the
Company's products but are distributors, module manufacturers, or system
integrators who either resell the Company's products to other customers, or
package the Company's products into systems for resale to end users. These
marketing intermediaries are not under the direct control of the Company, and
the Company therefore has no control over the ability of its customers to market
and sell to end-use customers or over the financial performance of its customers
that may determine their ability to buy the Company's products in the future.
Any reduction in sales activities by the Company's customers or a termination of
their relationship with the Company could have a material adverse effect on the
Company's business, results of operations and financial condition.
AVAILABILITY OF SYSTEM FINANCING FOR REMOTE ELECTRIC POWER APPLICATIONS
Solar electric power is used in many applications and has proven to be a cost
effective source of electric power where the electric power grid is unavailable.
Solar electric power has also proven to be cost-effective in competition with
diesel generators and/or other alternative forms of off-grid power generation.
The Company estimates that such remote electric power applications currently
comprise approximately 85% of the market for solar electric power. Because of
the high capital costs of solar electric power systems, users may not have
sufficient resources or credit to acquire such systems, particularly in
developing countries, and the Company believes that the availability of
financing, such as loans and lease arrangements, could have a significant effect
on the rate of growth of remote solar electric power growth, and that such
financing programs are becoming increasingly available through electric utility
companies, banks, local governments, and the World Bank. To the extent that the
Company believes that increased availability of system financing will play a
role in expanding the market for solar electric power products particularly in
developing countries and to the extent that the Company's plans for increased
sales of solar electric power products include increased sales within this
market segment, the lack of increased availability of system financing or the
elimination
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of existing system financing programs could have a material adverse effect on
the Company's business, results of operations and financial condition.
AVAILABILITY OF SUBSIDIES AND CONSUMER INCENTIVES FOR GRID-CONNECTED
APPLICATIONS
The cost of solar electric power currently substantially exceeds the cost of
power furnished by the conventional electric utility grid. The governments of
many countries, notably the United States, Germany and Japan, have provided
subsidies in the form of cost reductions, tax write-offs, and other incentives
to end users, distributors, systems integrators, and manufacturers of solar
electric power products to promote the use of solar energy in grid connected
applications and reduce dependency on other forms of energy. Although the
Company believes that grid-connected applications currently account for a
relatively minor fraction of the total market for solar electric power systems,
these applications are generally predicted by third party market research firms
to be among the most rapidly growing solar electric power market segments in the
future. Therefore, the future market for solar products depends in some measure
on the willingness of governments to enter into and to continue programs for
solar electric power subsidies and consumer incentives. There can be no
assurance that government subsidization of solar energy will continue into the
future. Any reduction or elimination of govenment subsidies may have a material
adverse effect on the Company's business, results of operations and financial
condition.
SUPPLY AND COST OF SILICON WAFERS AND OTHER RAW MATERIALS
The Company purchases and recycles silicon wafers from the semiconductor
industry for use in manufacturing its single crystal solar cells. Approximately
95% of the Company's total product sales in fiscal year ended, December 31,
1997, was derived from solar cells and modules manufactured from single crystal
silicon wafers. However, the Silicon-Film(TM) process is the focus of the
Company's plans for capacity expansion and the Silicon-Film(TM) process does not
use recycled silicon wafers.
Although the Company has generally been successful in obtaining sufficient
quantities of quality wafers in the past, there can be no assurance that such
wafers will be available at cost effective prices in the future. The absence of
cost effective sources of supply and the inability of the Company to locate
alternative sources of low-cost high-quality wafers could have a material
adverse effect on the Company's business, results of operations and financial
condition.
The Company presently has multiple sources of supply for its required raw
materials, including silicon wafers and silicon, although for economic and
quality control reasons the Company utilizes single sources of supply for
certain materials. In situations where it relies on single sources of supply,
the Company believes that an adequate supply of materials is available to meet
its foreseeable needs and, to date, the Company generally has been able to
obtain supplies of such materials in a timely manner. There can be no assurance
that supplies of the Company's critical materials will be adequate in the future
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or that the cost of such materials will remain low enough for the Company to
maintain a cost-competitive market position for its solar electric power
products.
PRIOR LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE PROFITABILITY
The Company generated net income of $651,826 for the fiscal year ended December
31, 1997 and $912,317 for the nine months ended September 30, 1998. It incurred
a net loss in one of the last five fiscal years and as of September 30, 1998 had
an accumulated deficit of approximately $4.033 million. The net income (loss)
for the years ended December 31, 1993, 1994, 1995, and 1996 was $257,000,
$17,000, $98,000, and $(2.4 million), respectively. There can be no assurance
that the Company will continue to be profitable.
INTERNATIONAL SALES
Approximately 86.0% and 73.0%, of the Company's net product revenues for the
years ended December 31, 1996 and 1997, respectively, was attributable to
international sales. For the year ended December 31, 1996, customers located in
Germany, Spain and India each accounted for more than 10% of the Company's
product sales. For the year ended December 31, 1997, customers located in
Germany and Spain, each accounted for more than 10% of the Company's product
sales. The Company expects that international sales will continue to represent
a significant portion of the Company's net revenues. To date, in connection
with its international sales, the Company has not experienced any material
adverse impact on its business, results of operations or financial condition,
however, there can be no assurance that this will be true in the future. All
past international sales were denominated in United States dollars and the
Company expects this practice to continue but there can be no assurance that
future sales will be protected from foreign currency fluctuations. The Company
believes that there are additional risks associated with the political and
economic stability of foreign countries inasmuch as this impacts the ability of
its foreign customers to pay for their purchases. The Company is also subject
to other risks associated with international sales, including but not limited to
tariff regulations, requirements for export licenses, long accounts receivable
cycles, potentially adverse tax consequences and the burdens of complying with a
wide variety of foreign laws, including compliance with technical standards.
STRATEGIC ALLIANCES
The Company has developed, and will continue to develop, strategic alliances
with customers, companies and other organizations to provide support for its own
technical, manufacturing and marketing staffs and to facilitate the entry into
certain geographic market areas. Such strategic alliances could be cooperative
agreements for sharing of information, cooperative marketing agreements, or any
other business relationships such as equity investments or joint ventures. The
goal of such alliances is to provide resources and experience which complement
those the Company already has in place, including manufacturing and marketing
expertise, and entry into new geographic markets. To
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accelerate the commercialization of its Silicon-Film(TM) technology, the Company
entered into strategic alliances with Corning Incorporated and GPU
International, Inc. There can be no assurance that the Company will be able to
enter into additional alliances or that existing and/or future alliances will
achieve their goals. The terms of such alliances may require the Company and its
partners to share revenues and/or expenses from certain activities or for the
Company to grant to its partners licenses to manufacture, market and/or sell
products based upon its Silicon-Film(TM) technology. The Company's current
alliances provide for cost sharing, technology sharing with respect to jointly
developed technologies, options to purchase equity in the Company,
securitization of loans made to the Company and pricing discounts. Such terms
could be part of any future strategic alliance and could materially impact the
Company's business, results of operations and financial condition.
On October 9, 1998 the Company prepaid its four-year $5 million convertible note
to Corning, Incorporated which was issued in August 1997 to obtain funding for
its start-up of the Company's new 9 MW manufacturing facility. Approximately
$4.3 million of the loan from Corning was used as funding in part of this
facility, including plant, equipment, and working capital.
Corning's investment in AstroPower was part of a strategic investment by Corning
involving several companies in the energy generation and storage fields.
Corning subsequently decided to discontinue the energy program, providing
AstroPower with an opportunity to prepay the loan. Corning has advised
AstroPower that its action was based entirely on Corning's desire to focus on
its core operations and did not reflect in any way on AstroPower's proprietary
Silicon-Film technology, which Corning said consistently met or exceeded its
expected performance. Corning provided the Company with valuable advice and
assistance during the planning and fit-up stages of the new factory.
The prepayment terminated Corning's right to convert the note into approximately
1,111,111 shares of AstroPower Common Stock and also terminated other agreements
relating to new technology, certain first offer rights to provide equity
financing for the Company and with respect to any sale or merger of the Company
or sale or licensing of its technology or assets.
In connection with the prepayment, options to purchase 119,000 shares of the
Company's Common Stock which were issued to Corning for consulting services were
cancelled and accrued interest of $49,000 was forgiven.
AstroPower's Board of Directors decided that the opportunity to prepay the loan
was in the best interests of shareholders in general and also served to
significantly reduce the potential dilution of outstanding shares.
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TECHNOLOGICAL CHANGE AND COMPETING TECHNOLOGIES
The Company believes it has developed a new technology for solar electric power
applications. The future success of the Company will depend, however, in large
part upon its ability to keep pace with advancing solar electric power
technology. In addition to the Company's Silicon-Film(TM) technology, there is
a variety of competing technologies under active development by other companies,
including amorphous silicon, cadmium telluride and copper indium diselenide, as
well as advanced concepts for the manufacture of both bulk silicon and thin film
crystalline silicon. Any of these competing technologies could achieve
manufacturing costs less than the manufacturing costs achieved by the Silicon-
Film(TM) products being developed by the Company. There can also be no
assurance that the Company's development efforts will not be rendered obsolete
by technological advances of others or that other materials will not prove more
advantageous for the commercialization of solar electric power products. The
Company believes that to remain competitive in the future, it will need to
invest significant financial resources in research and development.
GOVERNMENT CONTRACTS
The Company intends to continue to complement and enhance its own resources with
funding derived from contracts with agencies of the United States government.
The percentage of the Company's total revenue derived from government-related
contracts was approximately 41.1%, 21.1% and 14.2% of total revenue for fiscal
years 1996 and 1997 and for the nine months ended September 30, 1998,
respectively. The Company's contracts involving the United States government
are subject to various risks such as the risk of termination at the convenience
of the government. No termination by the government of any of the Company's
contracts has occurred to date. Other risks include potential disclosure of the
Company's confidential information to third parties, audits and the exercise of
"march-in"' rights by the government. March-in rights refer to the right of the
United States government or government agency to exercise its non-exclusive,
royalty-free, irrevocable worldwide license to any technology developed under
contracts funded by the government if the contractor fails to continue to
develop the technology. There can be no assurance that the United States
government will continue its commitment to programs to which the Company's
development projects are applicable or that the Company can compete successfully
to obtain funding available pursuant to such programs. A reduction or
discontinuance of such commitment or of the Company's participation in such
programs could have a material adverse effect on the Company's business,
operating results and financial condition. Substantially all of the Company's
revenues from government contracts are subject to audit under various federal
statutes. Although the Company has received final written acceptance of its
overhead rates through 1993, it has been advised that the Defense Contract Audit
Agency is disputing certain element of those submissions as well as those
overhead rates for 1994 and 1995. The dispute is centered on the effect of the
Company's manufacturing operations on its government contract overhead rates
during the years of transition from a contract research
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and development organization to commercial manufacturing. The overhead rates for
1996 have been submitted, but have not yet been audited. This dispute does not
affect the Company's overhead rates for 1997 and 1998, inasmuch as the Company
revised its methodology for determining overhead rates. It is management's
opinion that adjustments to revenue, if any, will not have a material adverse
effect on the Company's business and financial condition, but may impact results
of operations.
ENVIRONMENTAL REGULATIONS
The Company uses, generates and discharges small quantities of toxic, volatile
or otherwise hazardous chemicals and wastes in its research and development and
manufacturing activities. Therefore, the Company is subject to a variety of
federal, state and local governmental regulations related to the storage, use
and disposal of these materials. The Company believes that it has all the
permits necessary to conduct its business. However, failure to comply with
present or future regulations could result in fines being imposed on the
Company, suspension of production or a cessation of operations. The Company
believes that it has properly handled its hazardous materials and wastes and has
not contributed to any contamination at its premises. The Company is not aware
of any environmental investigation, proceeding or action by federal or state
agencies involving these premises. However, under certain federal and state
statutes and regulations, a governmental agency may seek recovery and response
costs from both operators and owners of property where releases of hazardous
substances have occurred or are ongoing. Any failure by the Company to control
the use of, or to restrict adequately the discharge of, hazardous substances
could subject it to substantial financial liabilities and could have a material
adverse effect on the Company's business, results of operations and financial
condition.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company has experienced and may continue to experience significant annual
and quarterly fluctuations in its operating results. The Company's annual and
quarterly operating results may fluctuate as a result of a variety of factors
including the timing of orders from, and shipments to, major customers; the
timing of new product introductions by the Company or its competitors, delays in
the planned Silicon-Film(TM) manufacturing expansion; variations in the mix of
products sold by the Company or its competitors, including possible decreases in
average selling prices of the Company's products in response to competitive
pressures; market acceptance of new and enhanced versions of the Company's
products; the availability and cost of key raw materials, requirements for cost
sharing on government contracts and fluctuations in general economic conditions.
There can be no assurance that the Company will be able to achieve and sustain
consistent profitability on an annual or quarterly basis.
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DEPENDENCE ON KEY PERSONNEL
The Company is dependent on its corporate officers and other principal members
of its management and technical personnel. The Company's success in the future
will depend in part on attracting and retaining qualified management and
technical personnel. There can be no assurance that the Company will be
successful in hiring or retaining qualified personnel. Loss of key personnel or
inability to hire and retain qualified personnel could have a material adverse
effect on the Company's business, results of operations and financial condition.
CONTROL BY EXISTING STOCKHOLDERS
The Company's officers, and directors together with their affiliates
beneficially own approximately 41.3% of the outstanding Common Stock. As a
result, they may have the ability to elect the Company's directors and to
determine all corporate actions requiring stockholder approval. This
concentration of ownership may also have the effect of delaying or preventing a
change in control of the Company.
ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS;
POSSIBLE ISSUANCE OF PREFERRED STOCK
The Company is subject to the provisions of Section 203 of the General
Corporation Law. Section 203 prohibits certain publicly held Delaware
corporations from engaging in a "business combination" with an "interested
stockholder", for a period of three years after the date of the transaction in
which the person became an "interested stockholder", unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and stock transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates, owns, or
within three years prior to the date on which the determination of whether such
person is an interested stockholder is being made, did own 15% or more of the
Company's voting stock. Parallel provisions have been included in the Company's
Amended and Restated Certificate of Incorporation. These provisions may make it
more difficult for a third party to acquire, or may discourage acquisition bids
for the Company. The Company's Amended and Restated Certificate of
Incorporation and By-laws contain additional provisions that may also have the
effect of discouraging a third party from making an acquisition proposal for the
Company. The Amended and Restated Certificate of Incorporation and By-Laws of
the Company, among other things, (i) classify the Board of Directors into three
classes, with directors of each class serving for a staggered three-year period,
(ii) provide that directors may be removed only for cause and only upon the
affirmative vote of the holders of at least 80% of the outstanding shares of
Common Stock entitled to vote for such directors, (iii) permit the Board of
Directors but not the Company's stockholders, to fill vacancies and newly
created directorships on the Board; and (iv) provide that any action required or
permitted to be taken by the stockholders of the Company must be effected at an
annual or special meeting of stockholders and not by any consent in writing by
such
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stockholders. Special meetings of stockholders may be called only by the
Board of Directors. Such provisions would make the removal of incumbent
directors more difficult and time-consuming and may have the effect of
discouraging a tender offer or other takeover attempt not previously approved by
the Board of Directors. In addition, 5 million shares of the Company's
Preferred Stock may be issued in the future without further stockholder approval
and upon such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any Preferred Stock that may be issued in the future. The
issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or discouraging a
third party from acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue any shares of Preferred
Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market following the
Offering could have an adverse effect on the price of the Common Stock, and
future sales of Common Stock by existing stockholders could also have an adverse
effect on such price and on the Company's ability to raise capital. Beginning
August 13, 1998, 4,804,655 shares of Common Stock became eligible for sale in
the public market upon the expiration of lock-up agreements between the
Company's stockholders and the Underwriters in connection with the Company's
initial public offering of Common Stock in the first quarter of 1998, subject in
some cases to the volume and other restrictions of Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"). Additionally, 1,800,000 shares
of Common Stock are reserved for issuance under the Company's 1989 Stock Option
Plan; and 160,000 shares of Common Stock are reserved for issuance under the
1998 Non-Employee Directors Stock Option Plan.
The Company has registered the shares subject to outstanding options as well as
reserved for issuance under the Company's stock option plans, which shares are
eligible for sale in the public market. Certain holders of shares of Common
Stock will have the right, under certain conditions, to participate in future
Company registrations.
ABSENCE OF DIVIDENDS
The Company has never paid any dividends and it is currently anticipated that no
cash dividends will be paid to the holders of the Common Stock in the
foreseeable future.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of any Shares of Common
Stock which may be offered hereby. The Selling Stockholder will receive all of
the net proceeds from the sale of such Shares.
SELLING STOCKHOLDERS
Shares of the Company's Common Stock which will become eligible for sale
pursuant to this Prospectus whether or not the holders thereof have any present
intent to do so are Shares which may be issued by the Company pursuant to the
Plan as follows: (1) The Plan permits the Company to make matching
contributions and additional matching contributions (together referred to as
"Matching Contributions") to the Plan in the form of Common Stock of the
Company. The Company may choose to contribute either cash or Common Stock to
the Plan when making Matching Contributions to the Plan. If the Company makes
Matching Contributions in Common Stock, Participants in the Plan may keep their
shares of the Matching Contribution in the form of Common Stock of the Company,
or they may direct the Trustees to liquidate their shares of the Company's
Common Stock and reinvest the proceeds in any of the other approved investment
options; and (2) Company Stock of the Company has been added to the Plan as an
alternative investment option. Participants can also elect to invest all, or
any portion, of their other accounts in Company Stock, or they may elect not to
invest any portion of their account in Company Stock.
When Participants receive benefits from the Plan, any Common Stock of the
Company invested in their account will be liquidated and paid out to them in the
form of cash.
All employees of the Company who are 21 years of age and have completed one
month of service with the Company are eligible to participate in the Plan.
While the names of Participants, and the amount of shares they may own or wish
to sell, if any, are presently unknown, the Trustees may be directed to
liquidate the shares of Common Stock of the Company of any Participant in the
Plan or of the Plan itself and such persons and the Plan will become a Selling
Stockholder eligible to use this Prospectus.
PLAN OF DISTRIBUTION
The Common Stock is listed for trading on the Nasdaq National Market ("NASDAQ").
Shares may be offered for sale by one or more of the Selling Stockholders, in
their discretion, on a delayed or continuous basis from time to time in
transactions in the open market at prices prevailing at the time of sale on
NASDAQ, or in private transactions at negotiated prices or otherwise. Such
transactions may be effected directly by the
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Trustees on behalf of Plan, or on behalf of the Plan for the account of a
Participant in the Plan, in each case a Selling Stockholder. Alternatively, such
transactions may be effected through brokers, dealers or other agents designated
from time to time by the Trustees, and such brokers, dealers or other agents may
receive compensation in the form of customary brokerage commissions or
concessions from the Selling Stockholders or the purchasers of the Shares. It is
anticipated that such transactions will be effected without payment of any
underwriting commissions or discounts, other than brokers' commissions or fees
customarily paid in connection with such transactions, which commissions and
fees will be borne by the Selling Stockholders.
The Company has agreed to bear the costs estimated at $5,000 of registering the
Shares offered hereby under the Securities Act, but will not receive any of the
proceeds from the sale of the Shares.
There is no assurance that the Selling Stockholders will sell all or any of the
Shares which may be offered hereby.
RESALE OF SHARES BY AFFILIATES
AND HOLDERS OF RESTRICTED SECURITIES
Any shares of Company Stock may be resold freely, except that any shares to be
sold for the account of a Participant deemed to be an "affiliate" of the
Company, within the meaning of that term under the Securities Act and the rules
and regulations promulgated thereunder, may only sell the shares of Company
Stock for its account of such Participants subject to the amount of securities
to be sold pursuant to the Prospectus being limited to the amount specified in
Rule 144(e) of the Securities Act which allows them to: sell, within any three-
month period, up to the number Shares that does not exceed the greater of (i)
one percent of the then outstanding shares of Common Stock of the Company and
(ii) the average weekly trading volume during the four calendar weeks preceding
the date of receipt of the order to execute the transaction by the broker or the
date of execution of the transaction directly with a market maker.
An employee who is not an executive officer or director of the Company generally
will not be deemed to be an "affiliate" of the Company. In addition, the
acquisition of shares of Common Stock by officers or directors of the Company
through Matching Contributions by the Company to the 401(k) Plan will generally
not be considered a "purchase", but the sale thereof will generally be
considered a "sale" for purposes of Section 16(b) of the Securities Act. After
such "sale" of Common Stock, the officer or director must discontinue further
purchases of Company Common Stock for his or her account for six months.
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LEGAL MATTERS
The validity of the shares of Common Stock offered hereby is being passed upon
for the Company by Opton Handler Feiler and Landau, LLP, New York, New York.
Members of the firm of Opton Handler Feiler & Landau, LLP own an aggregate of
129,900 shares of Common Stock of the Company.
EXPERTS
The financial statements and schedule of AstroPower, Inc. as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997 have been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said experts in accounting and auditing.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by the Company with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), are incorporated by reference, as of their
respective dates, in this Registration Statement:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997
(Commission File No. 000-23657);
(b) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(c) Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders
of the Company held on June 18, 1998, and
(d) Registration Statement on Form 8-A filed with the Commission on January
23, 1998.
In addition, all documents hereafter filed by AstroPower, Inc. pursuant to
Sections 13 (a), 13 (c), 14 or 15 (d) of the Exchange Act prior to the filing of
a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all such securities then remaining unsold
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to modified or superseded for
purposes of this Registration Statement to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
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Item 4. Description of Securities
Not applicable (securities to be offered are registered under
Section 12 of the Exchange Act).
Item 5. Interests of Named Experts and Counsel
The validity of the shares of Common Stock offered hereby is being passed upon
for the Company by Opton Handler Feiler & Landau, LLP, New York, New York.
Members of the firm of Opton Handler Feiler & Landau, LLP own an aggregate of
129,900 shares of Common Stock of the Company.
Item 6. Indemnification of Directors and Officers
Article VIII of the Company's Amended and Restated Certificate of Incorporation
provides in part as follows:
"The corporation shall, to the fullest extent permitted by 145 of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders of disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person."
Under Delaware law, directors, officers, employees, and other individuals may be
indemnified against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation - a "derivative action") if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of conduct is applicable in the case of a
derivative action, but indemnification extends only to expenses (including
attorney's fees) incurred in connection with defense or settlement of such an
action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the corporation.
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The Company has adopted in its Amended and Restated Certificate of Incorporation
and Bylaws the provisions of Section 102(b)(7) of the Delaware General
Corporation Law which eliminate or limit the personal liability of a director of
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except that this provision shall not eliminate or limit the
liability of a director of any breach of the director's duty of loyalty to the
Company or its stockholders, for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, under Section 174
of the Delaware General Corporation Law, or for any transaction from which the
director derived an improper personal benefit.
Item 7. Exemption From Registration Claimed
Any restricted securities to be offered or resold pursuant to this Registration
Statement are exempt under Section 4 (2) of the Securities Act of 1933, as
amended, as a non-public offering of securities.
Item 8. Exhibits
Unless otherwise noted the following exhibits are filed herewith:
3.3 Form of Amended and Restated Certificate of Incorporation of the
Registrant*.
3.1 Form of Amended and Restated By-Laws of the Registrant*.
4.1 Specimen certificate representing the Common Stock of the Registrant*.
5.1 Opinion of Opton Handler Feiler & Landau, LLP with respect to the
legality of the securities being registered.
10.1 AstroPower, Inc. 401(k) Savings Plan, as amended
10.2 AstroPower, Inc. 401(k) Savings Plan -- Summary Plan Description
10.3 Annual Return/Report of AstroPower, Inc. 401(k) Savings Plan on Form
5500 for 1997.
10.4 AstroPower, Inc. 401(k) Savings Plan -- Trust Agreement*
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Opton Handler Feiler & Landau, LLP (contained in Exhibit
5.1).
* Previously filed as an exhibit to Registrant's Registration Statement on Form
S-1, File No. 33342591 which became effective on February 12, 1998, and which
are incorporated herein by reference.
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Item 9. Undertakings
(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) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or most recent post-
effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement provided, however, that paragraphs (1) (1) and (1) (ii)
do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section
15 (d) of the Exchange Act that are incorporated by reference in
this Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities being offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the registrant's By-Laws,
Certificate of Incorporation, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission,
such indemnifications against public policy as expressed in the act and is
therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer, or controlling person in
connection with the securities being registered), the Registrant will,
unless in the opinion of its counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
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 Newark, Delaware, on
December 15, 1998
AstroPower, Inc.
By:_____________________________________
Allen M. Barnett
President, Chief Executive Officer and Director
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
dates indicated:
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
_____________________ President, Chief Executive December 15, 1998
Allen M. Barnett Officer and Director
_____________________ Director December 15, 1998
George S. Reichenbach
_____________________ Vice President, Chief December 15, 1998
Thomas J. Stiner Financial Officer and
Principal Accounting
Officer
_____________________ Director December 15, 1998
George W. Roland
_____________________ Director December 15, 1998
Gilbert Steinberg
_____________________ Director December 15, 1998
Clare E. Nordquist
_____________________ Director December 15, 1998
Charles R. Schaller
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, the Administrative
Committee of the AstroPower, Inc. 401(k) Savings Plan has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Newark, Delaware on December 15, 1998.
AstroPower, INC. 401(k) SAVINGS PLAN
By:_________________________________
Thomas J. Stiner Member,
Administrative Committee
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
3.3 Form of Amended and Restated Certificate of Incorporation of the
Registrant**.
3.4 Form of Amended and Restated By-Laws of the Registrant**.
4.1 Specimen certificate representing the Common Stock of the
Registrant**.
5.1 Opinion of Opton Handler Feiler & Landau, LLP with respect to
the legality of the securities being registered*.
10.1 AstroPower, Inc. 401(k) Savings Plan as amended*
10.2 AstroPower, Inc. 401(k) Savings Plan Summary Plan Description*
10.3 Annual Return/Report of AstroPower, Inc. 401(k) Savings Plan on
Form 5500 for 1997. *
10.4 AstroPower, Inc. 401(k) Savings Plan Trust Agreement*
23.1 Consent of KPMG Peat Marwick LLP*.
23.2 Consent of Opton Handler Feiler & Landau, LLP
(contained in Exhibit 5. 1).
*Filed herewith.
**Previously filed as an exhibit to Registrant's Registration Statement on Form
S-1, File No. 333-42591 which became effective on February 12, 1998, and which
is incorporated herein by reference.
<PAGE>
EXHIBIT 5.1
December 15, 1998
AstroPower, Inc.
Solar Park
Newark, Delaware 19716-2000
Ladies and Gentlemen:
We have acted as counsel to AstroPower, Inc., a Delaware corporation (the
"Company"), in connection with the registration under the Securities Act of 1933
(the "Act") of an aggregate of 500,000 shares (the "Shares") of the Company's
common stock, $.01 par value (the "Common Stock"), which shares may be issued to
the AstroPower, Inc. 401(k) Savings Plan by the Company as Matching
Contributions or may be purchased directly from the Company at the discretion of
a Plan Participant as an alternative investment option and which may be re-
offered for sale by the Trustees of the Trust Fund which holds the assets of the
Plan acting on behalf of the Plan or for the account of a Participant.
In connection therewith, we have examined or considered originals or copies,
certified or otherwise identified to our satisfaction, of the Amended and
Restated Certificate of Incorporation of the Company, the Amended and Restated
By-laws of the Company, the Plans, records of relevant corporate proceedings
with respect to the offering of the Shares and such other documents, instruments
and corporate records as we have deemed necessary or appropriate for the
expression of the opinions contained herein. We have also reviewed the
Company's Registration Statement on Form S-8 (the "Registration Statement") to
be filed with the Securities and Exchange Commission with respect to the Shares.
We have assumed the authenticity and completeness of all records, certificates
and other instruments submitted to us as originals, the conformity to original
documents of all records, certificates and other instruments submitted to us as
copies, the authenticity and completeness of the originals of those records,
certificates and other instruments submitted to us as copies and the correctness
of all statements of fact contained in all records, certificates and other
instruments that we have examined.
Based on the foregoing and having regard for such legal considerations as we
have deemed relevant, we are of the opinion that the Shares have been duly and
validly authorized for the issuance and, that the Shares issued and outstanding
are and that the Shares to be issued, when issued in accordance with the terms
of the applicable Plan will be, duly and validly issued, fully paid and
nonassessable.
<PAGE>
AstroPower, Inc.
December 15, 1998
Page 2
The foregoing opinion is limited to the federal law of the United States of
America and the General Corporation Law of the State of Delaware, and we are
expressing no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Item 5.
Interests of Named Experts and Counsel" in the Registration Statement and under
the heading "Legal Matters" in the Prospectus.
Sincerely,
Opton Handler Feiler & Landau, LLP
By:_______________________
Peter Landau
<PAGE>
EXHIBIT 10.1
ASTROPOWER, INC.
401(k) SAVINGS PLAN
PREPARED AS OF MAY 1, 1995
<PAGE>
ASTROPOWER. INC.
----------------
CERTIFIED COPY OF RESOLUTIONS OF BOARD OF DIRECTORS
---------------------------------------------------
"RESOLVIED: That this Amendment and Restatement to the AstroPower, Inc.
401(k) Savings Plan to be effective January 1, 1994 in the form presented to
this Meeting with such changes as may be approved by counsel, is hereby adopted
and the proper officers of the Employer are hereby authorized to execute said
Amended and Restated Plan and to perform all acts and take all actions necessary
or desirable in connection with the same."
"RESOLVED: That AstroPower, Inc. is hereby reappointed as the Plan
Administrator and Robert B. Hall, Cheryl Keith and Thomas J. Stiner are hereby
reappointed as the Trustees, to serve until death, resignation, or prior removal
by this Board. The Board of Directors hereby appoints Robert B. Hall, Cheryl
Keith and Thomas J. Stiner as members of the Committee, whose duties shall be to
administer the 401(k) Savings Plan in accordance with the provisions set forth
herein."
This is to certify that the above is a true and accurate copy of a
resolution adopted by the Board of Directors of AstroPower, Inc. at a Board
Meeting held at the Institute of Energy Conversion in Newark, Delaware on the
29th day of May, 1996.
________________________(Seal)
Assistant Secretary
<PAGE>
ASTROPOWER, INC.
---------------
CERTIFIED COPY OF RESOLUTION OF BOARD OF DIRECTORS
--------------------------------------------------
"RESOLVED: That AstroPower, Inc. shall contribute for taxable years
beginning January 1, 1994, until changed by further Resolution of Board of
Directors, the following amount: A Matching Contribution equal to $0.25 for each
dollar of a Participant's Elective Deferral Contribution."
This is to certify that the above is a true and accurate copy of a
resolution adopted by the Board of Directors of AstroPower, Inc. at a Board
Meeting held at the Institute of Energy Conversion in Newark, Delaware on the
29th day of May, 1996.
________________________(Seal)
Assistant Secretary
<PAGE>
TABLE OF CONTENTS
-----------------
Page No.
--------
STATEMENT OF PURPOSE................................. 1
ARTICLE I
DEFINITIONS........................................ 2
ARTICLE II
ELIGIBILITY AND PARTICIPATION...................... 15
ARTICLE III
CONTRIBUTIONS...................................... 17
ARTICLE IV
CONTRIBUTION LIMITATIONS........................... 24
ARTICLE V
MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS
AND VALUATION OF THE TRUST FUND.................... 33
ARTICLE VI
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT.... 35
ARTICLE VII
DISTRIBUTION OF BENEFITS........................... 40
ARTICLE VIII
ADMINISTRATION OF THE PLAN......................... 48
ARTICLE IX
AMENDMENT AND TERMINATION.......................... 56
ARTICLE X
PARTICIPATING COMPANIES............................ 58
ARTICLE XI
TOP-HEAVY PROVISIONS............................... 60
ARTICLE XII
WITHDRAWAL OF FUNDS DURING EMPLOYMENT.............. 65
ARTICLE XIII
LOANS.............................................. 68
ARTICLE XIV
GENERAL PROVISIONS................................. 70
<PAGE>
ASTROPOWER, INC. 401(k) SAVINGS PLAN
------------------------------------
STATEMIENT OF PUPPOSE
---------------------
AstroPower, Inc. has had in effect since September 1, 1990 the AstroPower, Inc.
401(k) Savings Plan, to which it made contributions for the purpose of sharing
its profits with its employees and incenting eligible employees to save in order
to provide for the accumulation of funds for the benefit of eligible employees
and their beneficiaries in the manner and to the extent set forth in such plan.
The AstroPower, Inc. 401(k) Savings Plan, hereinafter set forth, constitutes an
amendment in its entirety to said Plan which is continued effective as of
January 1, 1994 with respect to employees and Participants who had not yet
retired, terminated employment or died as of such date.
The rights of anyone covered under the Plan prior to January 1, 1994, who
retired, terminated employment or died before that date, shall be determined in
accordance with the terms and provisions of the plan in effect on the date of
such retirement, termination of employment or death, except as otherwise
specifically provided herein.
Unless otherwise provided herein, those provisions added or amended to comply
with the Tax Reform Act of 1986 required to be effective as of the first day of
the first Plan Year beginning after December 31, 1986 shall be effective as of
such date.
1
<PAGE>
ARTICLE I
-------------
DEFINITIONS
-----------
For purposes of the Plan, the following words and phrases shall have the
following meanings unless a different meaning is plainly required by the
context. Wherever used, the masculine pronoun shall include the feminine
pronoun and the feminine pronoun shall include the masculine and the singular
shall include the plural and the plural shall include the singular.
1.01 "Account"
--------
The interest of a Participant in the Trust Fund as represented by his
accounts as designated below.
(a) "Elective Deferral Contribution Account" - Portion of Trust Fund
--------------------------------------
attributable to a Participant's Elective Deferral Contributions in
accordance with the provisions of Section 3.01 and the provisions of
the Plan in effect prior to the Supplemental Effective Date.
(b) "Matching Contribution Account" - Portion of Trust Fund attributable
-----------------------------
to the Company's
(i) Matching Contributions in accordance with the provisions of
Subsection 3.03(a) and the provisions of the Plan in effect
prior to the Supplemental Effective Date.
(ii) Additional Matching Contributions in accordance with the
provisions of Subsection 3.03(b) and with the provisions of the
Plan in effect prior to the Supplemental Effective Date.
(c) "Regular Contribution Account" - Portion of Trust Fund attributable
----------------------------
to the Company's Regular Contributions in accordance with the
provisions of Subsection 3.03(d) and the provisions of the Plan in
effect prior to the Supplemental Effective Date, and Top-Heavy
Contributions in accordance with Article XI.
(d) "Rollover Account" - Portion of Trust Fund attributable to funds
----------------
rolled over from another qualified plan or conduit Individual
Retirement Account or Annuity in accordance with Section 3.06.
(e) "Qualified Matching Contribution Account" - Portion of Trust Fund
---------------------------------------
attributable to the Company's Qualified Matching Contributions in
accordance with the provisions of Subsection 3.03(c).
2
<PAGE>
(f) "Qualified Nonelective Contribution Account" - Portion-of Trust Fund
------------------------------------------
attributable to the Company's Qualified Nonelective Contributions in
accordance with the provisions of Subsection 3.03(e).
1.02 "Anniversary Date"
----------------
Each January 1 commencing after the Supplemental Effective Date.
1.03 "Annuity Starting Date"
---------------------
The first day of the first period for which an amount is payable as an
annuity. If a benefit is not payable in the form of an annuity, the first
day on which all events have occurred which entitle the Participant to such
benefit.
1.04 "Applicable Computation Period"
-----------------------------
(a) For purposes of Hours of Employment for eligibility in accordance
with Section 2.01, an Eligible Employee's first Applicable
Computation Period shall be the 12-month period beginning as of the
date a person first completed an Hour of Employment with an Employer.
Thereafter, such Eligible Employee's Applicable Computation Period
shall be each Plan Year, commencing with the Plan Year which begins
after the date he first completed an Hour of Employment.
(b) For all other purposes, Applicable Computation Period shall be the
Plan Year.
1.05 "Beneficiary"
-----------
The person designated to receive benefits payable under the Plan in the
event of death. In the event a Beneficiary is not designated, the
Participant's surviving spouse shall be deemed his Beneficiary or in the
absence of a surviving spouse, the benefits shall be paid to the
Participant's estate.
1.06 "Board of Directors"
------------------
The Board of Directors of AstroPower, Inc.
1.07 "Committee"
---------
The persons appointed to administer the Plan in accordance with Section
8.01 of the Plan. In the absence of such designation, the Company shall
serve as the Committee and in such case all references herein to the
Committee shall be deemed a reference to the Company.
3
<PAGE>
1.08 "Company"
-------
(a) AstroPower, Inc. and any successor which shall maintain this Plan;
and
(b) any other business entity which duly adopts the Plan with the
approval of the Board of Directors.
1.09 "Compensation"
------------
(a) Unless otherwise indicated, for purposes of Sections 3.01, 3.03 and
3.04, the amount described in Subsection (c). For purposes of
Section 3.01, third party insurance payments shall be excluded.
(b) For purposes of Section 4.03, the Participant's wages for the Plan
Year paid by the Employer of the type reported on Form W-2. Such
wages shall include amounts within the meaning of Section 3401(a) of
the Code plus any other amounts paid to the Participant by the
Employer for which the Employer is required to furnish a written
statement under Section 604 1(d) and 6051(a)(3) of the Code,
determined without regard to any rules that limit the amount required
to be reported based on the nature or location of the employment or
services performed, exclusive of
(i) severance pay on a non payroll basis;
(ii) non-qualified deferred compensation payments;
(iii) any amounts paid or reimbursed by the Employer for moving
expenses which the Employer reasonably believes at the time of
such payment to be deductible by the Employee under Section
217 of the Code; and
(iv) welfare benefits, fringe benefits (cash and noncash),
reimbursements of other expense allowances, moving expenses
and deferred compensation.
For purposes of self-employed individuals, earned income which shall
be defined as the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items not
included in gross income and the deductions allowable to such items.
For taxable years beginning after December 31, 1989, net earnings are
determined with regard to the deduction allowed to the taxpayer by
Section 164(f) of the Code. Net
4
<PAGE>
earnings are reduced by contributions by the Employer to a qualified
plan to the extent deductible under Section 404 of the Code.
(c) For purposes of Sections 1.16 and 4.02 and Article XI, the amount
described in Subsection (b) increased by the amount of any
contributions made by the Employer under any salary reduction or
similar arrangement to a qualified deferred compensation, pension or
cafeteria plan, contributions to a simplified employee pension plan
described in Section 408(k) of the Code, contributions towards the
purchase of an annuity contract described in Section 403(b) of the
Code, compensation deferred under a deferred compensation plan within
the meaning of Section 457(b) of the Code and Employee contributions
(under governmental plans described in Section 414(h)(2) of the Code)
Which are picked up and treated as Employer contributions. For
purposes of Section 1.16, the amount described above shall be for the
applicable period for making the determination of Highly Compensated
Employees.
Notwithstanding the foregoing provisions, for any Plan Year the amounts
described above in Subsections (a), (b) and (c) shall not exceed $200,000
in accordance with Section 401(a)(17) of the Code, adjusted annually for
increases in the cost-of-living in accordance with Section 415(d) of the
Code, effective as of January 1 of the calendar year such increase is
promulgated and applicable to the Plan Year which begins with or within
such calendar year, or such other amount as determined under Section
401(a)(17) of the Code and Regulations thereunder. For purposes of
determining such $200,000 limitation, the rules of Section 414(q)(6) of the
Code, pertaining to family members, shall apply, except that the term
"family member" 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. Any Compensation in excess of that amount shall be
prorated among family members in accordance with Section 401(a)(17) of the
Code.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
'93 annual Compensation limit. The OBRA '93 annual Compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost-of-
living in accordance with section 401(a)(17)(B) of the Code. The cost-of-
living adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined (determination
period) beginning in such calendar year. If a determination period
consists of fewer than 12 months, the OBRA '93 annual Compensation limit
will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
5
<PAGE>
For Plan Years beginning on and after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 annual Compensation limit set forth in this provision.
1.10 "Controlled or Affiliated Service Group"
--------------------------------------
(a) "Controlled Group" - Any group of business entities under common
----------------
control, including but not limited to proprietorships and
partnerships, or a controlled group of corporations within the
meaning of Section 414(b), (c) and (o) of the Code.
(b) "Affiliated Service Group"' - Any group of business entities within
------------------------
the meaning of Section 414(m) of the Code.
1.11 "Disability"
----------
Any physical or mental condition which may reasonably be expected to be
permanent and which renders the Participant incapable of continuing as an
Employee for his customary Hours of Employment. The determination of
disability shall be by a licensed physician chosen by the Committee. The
determination shall be applied uniformly to all Participants.
1.12 "Effective Date"
--------------
September 1, 1990, the date as of which the Plan was established.
"Supplemental Effective Date"
---------------------------
January 1, 1994, the last date as of which the Plan was amended in its
entirety.
Unless otherwise provided herein, those provisions added or amended to
comply with the Tax Reform Act of 1986 required to be effective as of the
first day of the first Plan Year beginning after December 31, 1986 shall be
effective as of such date.
1.13 "Election Period"
---------------
The period commencing 90 days before the Annuity Starting Date and ending
on such Annuity Starting Date.
1.14 "Employee"
--------
Any person in the employ of the Company.
6
<PAGE>
Leased Employees within the meaning of Section 414(n) of the Code shall be
included as Employees unless (i) such individual is covered by a money
purchase pension plan providing (A) a nonintegrated employer contribution
rate of at least 10 percent of compensation, as defined in Section
415(c)(3) of the Code, but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable from the
Leased Employee's gross income under Section 125, 401(a)(8), 402(h) or
403(b) of the Code; (B) immediate participation; and (C) full and immediate
vesting and (ii) Leased Employees do not constitute more than 20% of the
Employer's Nonhighly Compensated Employee workforce.
"Eligible Employee"
-----------------
An Employee for whom the Company is required to contribute Federal
Insurance Contributions Act taxes excluding persons (a) who are Leased
Employees, or (b) under the jurisdiction of a collective bargaining unit
(i) having a pension or profit sharing plan to which the Employer is
required to contribute under the terms of the collective bargaining
agreement and (ii) for whom retirement benefits were the subject of good
faith bargaining.
Notwithstanding the above, Leased Employees shall be included in the
definition of Eligible Employee if the requirements of Section 414(n)(2) of
the Code require such inclusion in order to meet the plan qualification
requirements enumerated in Section 414(n) and then only if the coverage
requirements of Section 410(b) of the Code would otherwise not be met.
"Leased Employee"
---------------
Any person (other than an Employee of the recipient) who pursuant to an
agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by employees in the business field of the recipient employer.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
"Owner-Employee"
--------------
An individual who is a sole proprietor, or who is a partner owning more
than 10 percent of either the capital or profits interest of the
partnership.
"Self-Employed Individual"
------------------------
An individual who has earned income for the taxable year from the trade or
business for which the plan is established; also, an individual who would
have had
7
<PAGE>
earned income but for the fact that the trade or business had no net
profits for the taxable year. A Self-Employed Individual shall be treated
as an Eligible Employee.
1.15 "Employer"
--------
The Company and any other business entity in a Controlled or Affiliated
Service Group which includes the Company.
1.16 "Highly Compensated Employee"
---------------------------
(a) An Employee who is a Highly Compensated Active Employee or a Highly
Compensated Former Employee.
(b) A Highly Compensated Active Employee is any Employee who performs
Service with the Employer during the Determination Year and is
described in either the Look-back Year Group or the Determination
Year Group or both such groups.
(i) The Look-back Year Group includes any Employee who (A) was at
any time during the Look-back Year a 5% owner, as defined in
Section 416(i)(1) of the Code; (B) received Compensation from
the Employer in excess of $75,000; (C) received Compensation
from the Employer in excess of $50,000 and was in the Top-Paid
Group, as defined in Section 414(q) of the Code, of employees
for such Look-back Year; or (D) was at any time an officer and
received Compensation greater than 5O% of the maximum dollar
limitation under Section 415(b)(1)(A) of the Code.
The Code Section 415(6)(1)(A) limitation and the $75,000 and
$50,000 thresholds set forth above shall be adjusted annually
for increases in the cost-of-living in accordance with Section
415(d) of the Code, effective as of January 1 of the calendar
year such increase is promulgated and applicable to the Plan
Year which begins with or within such calendar year.
(ii) The Determination Year Group includes any Eligible Employee who
(A) was at any time during the Determination Year a 5% owner, as
defined in Section 416(i)(1) of the Code; or (B) is both (1)
described in Subparagraphs (i)(B), (i)(C) or (i)(D) above
substituting the Determination Year for the Look-back Year; and
(2) a member of the group consisting of the 100 employees paid
8
<PAGE>
the greatest Compensation during the Determination Year of
reference.
(c) A Highly Compensated Former Employee for a Determination Year is any
former Employee who separated from Service prior to such Determination
Year and was a Highly Compensated Active Employee for either the year
in which such Employee separated from Service or any Determination
Year ending on or after such Employee's 55th birthday.
(d) For purposes of this definition, the following shall be applicable:
(i) The Determination Year is the applicable Plan Year for which a
determination is being made and the Look-back Year is the 12-
month period immediately preceding such Plan Year.
(ii) If there are no officers as described above in either the
Determination Year or the Look-back Year, then the highest paid
officer of the Employer in each such year shall be deemed a
Highly Compensated Employee with respect to such year.
(iii) The determination of Highly Compensated Employees, including
the determinations of the number and identity of Employees in
the Top-Paid Group, the top 100 Employees and the number of
Employees treated as officers shall be governed by Section
414(q) of the Code and Treasury Regulation 1.414(q)-IT.
(iv) The Compensation and contributions under the Plan of a Highly
Compensated Employee who is a 5% owner or in the group
consisting of the 10 Highly Compensated Employees paid the
greatest Compensation during any Determination Year or Look-
back Year shall be determined by aggregating such amounts with
the Compensation and contributions of each other Employee who
is the spouse, lineal ascendant or descendant or Spouse of a
lineal ascendant or descendant of such Highly Compensated
Employee.
(e) The Company may make the following elections as provided for in
Treasury Regulation 1-.414(q)-IT:
(i) the special rule for determining Highly Compensated Former
Employees who separated from Service before January 1, 1987 in
accordance with Treasury Regulation 1.414(q)-lT, Q&A 4(d).
However, once such an election is made it may not be changed
without the consent of the Commissioner;
(ii) the calendar year election for the Look-back Year in accordance
with Treasury Regulation 1.414(q)-IT, Q&A 14(b);
9
<PAGE>
(iii) the modification on a consistent and uniform basis of the
permissible age and service exclusions in accordance with
Treasury Regulation 1.414(q)-IT, Q&A 9(b)(2);
(iv) the inclusion of employees covered under a collective
bargaining agreement in accordance with Treasury Regulation
1.414(q)-lT, Q&A 9(b)(2);
(v) the inclusion of leased employees in determining the highly
compensated group in accordance with Treasury Regulation
1.414(q)-lT, Q&A 7(b)(4); and
(vi) the transitional rule in accordance with Treasury Regulation
1.414(q)-lT, Q&A 15.
"Nonhighly Compensated Employee" - An Employee who is not deemed to be a
------------------------------
Highly Compensated Employee.
1.17 "Internal Revenue Code" or "Code"
-------------------------------
The Internal Revenue Code of 1986, and any amendments thereto.
1.18 "Participant"
-----------
(a) An Employee who is eligible to participate under the Plan in
accordance with Section 2.01 of the Plan.
(b) Each other Employee or former Employee for whom an Account is
maintained.
1.19 "Plan"
----
The Plan of the Company, as herein set forth and as from time to time
supplemented and amended, which Plan is intended to be a profit sharing
plan for purposes of Sections 401(a), 402, 412 and 417 of the Code.
1.20 "Plan Year"
---------
A period of 12 consecutive months commencing on the Supplemental Effective
Date and each Anniversary Date thereof.
1.21 "Protected Spouse"
----------------
The spouse to whom the Participant had been legally married on the date of
the Participant's death.
10
<PAGE>
(a) In the case of a Participant who is not married on his Annuity
Starting Date, an immediate annuity payable for the life of the
Participant. Upon the Participant's death, all benefits cease.
1.22 "Qualified Domestic Relations Order"
----------------------------------
A domestic relations order as defined in Section 8.09 in accordance with
Section 414(p) of the Code.
1.23 "Retirement"
----------
The termination of employment of a Participant on his Early, Normal or
Deferred Retirement Date.
1.24 "Retirement Dates"
----------------
(a) "Normal Retirement Date" - The first day of the month coincident with
----------------------
or next following the date on which the Participant attains age 65.
(b) "Early Retirement Date" - The first day of any month coincident with
---------------------
or next following the date on which the Participant attains age 55,
provided he has completed 10 Years of Service as of such date.
(c) "Deferred Retirement Date" - The first day of any month subsequent to
------------------------
the Participant's Normal Retirement Date.
1.25 "Service"
-------
(a) All Hours of Employment with the Employer during an Applicable
Computation Period.
(b) "Break-in-Service" - An Applicable Computation Period during which an
----------------
Employee fails to receive credit for 501 Hours of Employment.
If, commencing on or after the first day of the first Plan Year
beginning after December 31, 1984, an Employee is absent by reason of
(i) the pregnancy of the Employee, (ii) the birth of a child of the
Employee, (iii) the placement of a child with the Employee in
connection with an adoption of such child by such Employee, or (iv)
caring for such child immediately following such birth or placement,
such Employee will be credited with the number of Hours of Employment
which would normally have been credited but for such absence, or, in
---
any case in which the Committee is unable to determine such hours
normally credited, eight Hours of Employment per day. The Hours of
Employment required to be credited for such absence shall not exceed
501.
11
<PAGE>
Hours of Employment shall be credited for the Plan Year in which the
absence from work begins, only if credit is necessary to prevent the
Employee from incurring a Break-in-Service, or, in any other case, in
the immediately following Plan Year.
If an Employee who did not have a vested interest in his Account in
accordance with the provisions of Section 6.04 incurs five or more
consecutive Breaks-in-Service and is then reemployed by the Employer,
he shall be deemed a new Employee and shall not receive credit for his
Service prior to the date he incurred such Breaks-in-Service unless
his Service was equal to or greater than the period of his absence.
(c) "Year of Service" - An Applicable Computation Period during which the
---------------
Employee receives credit for at least 1,000 Hours of Employment.
(d) "Month of Service" - A calendar month during which the Employee
----------------
receives credit for continuous, uninterrupted service and is entitled
to payment for said services.
(e) "Hour of Employment" -
------------------
(i) Each hour during an Applicable Computation Period for which the
person is directly or indirectly paid or entitled to payment
for the performance of duties or for the period of time when no
duties are performed, irrespective of whether the employment
relationship has terminated, such as vacation, holiday, lay-
off, jury duty or approved Leave of Absence.
As used herein and in Section 3.03 of the Plan, Leave of
Absence shall mean a leave granted for pregnancy, Disability,
illness, death or any other family obligation or status;
personal or family hardship or special business circumstances;
educational purposes; and/or civic, charitable or governmental
services, provided that all Employees under similar
circumstances shall be treated in a similar manner.
No more than 501 Hours of Employment are required to be
credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or
not such period occurs in a single computation period);
(ii) A person shall receive an Hour of Employment for each hour for
which back pay has been awarded or agreed to irrespective of
mitigation of damages, provided that each such hour shall be
credited to the Applicable Computation Period to which it
pertains,
12
<PAGE>
rather than the Applicable Computation Period in which the
award or agreement is made, and further provided that no such
award or agreement shall have the effect of crediting an Hour
of Employment for any hour for which the person previously
received credit under (i) above.
(iii) Notwithstanding the foregoing, Hours of Employment shall be
computed and credited in accordance with Department of Labor
Regulation 2530.200b-2, Subparagraphs (b) and (c).
(iv) If the Employer's payroll records are normally kept on other
than an hourly basis, the following equivalencies may be
utilized in determining the number of Hours of Employment to
which the Employee is entitled to be credited:
BASIS UPON WHICH THE CREDIT GRANTED IF EMPLOYEE
EMPLOYEE'S PAYROLL EARNS AT LEAST ONE (1) HOUR
RECORDS MAINTAINED OF SERVICE DURING PERIOD
- -----------------------------------------------------------------
Shift Actual Hours for Full Shift
Daily 10 Hours of Employment
Weekly 45 Hours of Employment
Semi-monthly 95 Hours of Employment
Monthly 190 Hours of Employment
(f) An Employee shall receive credit for the period of his employment with
another business entity to which he had been transferred by the
Company solely for purposes of determining his vested interest in
accordance with Section 6.04 of the Plan.
1.26 "Trust Agreement"
---------------
The instrument executed by the Company and the Trustee fixing the rights
and liabilities of each with respect to holding and administering the Trust
Fund for the purposes of the Plan.
1.27 "Trustee"
-------
The Trustee or any successor Trustee, appointed by the Board of Directors,
acting in accordance with the terms of the Trust Agreement.
1.28 "Trust Fund"
----------
All assets held by the Trustee in accordance with the terms of the Trust
Agreement.
13
<PAGE>
1.29 "Valuation Date"
--------------
The last day March, June, September and December or such other date as the
Committee may determine from time to time. For all Plan purposes, the
Valuation Date for Plan distributions shall be the Valuation Date
immediately preceding the date of such distribution.
14
<PAGE>
ARTICLE II
----------
ELIGIBRLITY AND PARTICIPATION
-----------------------------
2.01 Eligibility for Participation
-----------------------------
An Employee may become a Participant upon satisfaction of the following
requirements, provided he elects to contribute in accordance with Section
3.01.
(a) Each Eligible Employee on the Supplemental Effective Date who was a
Participant of the Plan shall continue as a Participant as of the
Supplemental Effective Date and each Eligible Employee on the
Supplemental Effective Date who was not yet a Participant in the Plan
on such date shall become a Participant of the Plan on the
Supplemental Effective Date.
(b) For the period effective January 2, 1994 through June 30, 1995, each
other Eligible Employee shall become a Participant as of the January
1, April 1, July 1 or October 1 next following the later of the date
he completes 6 Months of Service or attains age 21.
(c) Effective July 1, 1995, each other Eligible Employee shall become a
Participant as of the January 1, April 1, July I or October 1 next
following the later of the date he completes one Month of Service or
attains age 21.
(d) If a former Participant is reemployed, he shall be eligible to resume
his participation as of the date of his reemployment and may elect to
comply with the provisions of Section 3.01 as of any subsequent
January 1, April 1, July 1, or October 1.
2.02 Change in Employment Status
---------------------------
(a) In the event a Participant ceases to be an Eligible Employee as the
result of becoming part of an excluded class, only Compensation up to
the date he ceased to be an Eligible Employee shall be considered for
purposes of contributions in accordance with Articles III and XI.
Such Employee shall remain a Participant but shall not be permitted to
either make Elective Deferral Contributions in accordance with Section
3.01, or share in any Company contributions or forfeitures allocated
in accordance with Articles III and XI for the period beyond the date
he ceased to be an Eligible Employee.
15
<PAGE>
In the event such Participant returns to an eligible class and again
becomes an Eligible Employee, he shall be permitted to share in
Company contributions or forfeitures allocated in accordance with
Articles III and XI as of the date he again became an Eligible
Employee and may elect to comply with the provisions of Sections 3.01
as of such date or any subsequent January 1, April 1, July 1, or
October 1. Only Compensation from the date he again became an Eligible
Employee shall be considered for purposes of such contributions under
Article III. However, all Compensation in accordance with Regulation
Section 1.416-1 shall be considered for Article XI.
(b) If a person otherwise satisfied the eligibility requirements of
Section 2.01 and subsequently becomes an Employee, he shall be
eligible to become a Participant as of the date he became an Employee.
(c) Effect of Collective Bargaining - In the event a collective bargaining
-------------------------------
agreement is entered into between the Company and a representative for
any class of Employees in the employ of the Company subsequent to the
Supplemental Effective Date, eligibility for participation in the Plan
by such Employees who are not Participants shall not be extended
beyond the effective date of the collective bargaining agreement
unless the agreement extends participation in the Plan to such
Employees. The provisions of Subsection (a) shall apply to those
Employees who are currently Participants.
16
<PAGE>
ARTICLE III
-----------
CONTRIBUTIONS
-------------
3.01 Elective Deferral Contributions
-------------------------------
A Participant may elect to save through pay reduction each payroll period
when first eligible or as of any subsequent January 1, April 1, July 1, or
October 1 , no less than 1% nor more than 15%, in whole percentages, of
that portion of his Compensation (exclusive of third party insurance
payments) attributable to such payroll period, subject to the limitations
on Elective Deferral Contributions under Sections 4.01 and 4.02 and the
limitations on annual additions under Section 4.03.
Such contributions shall take the form of before tax contributions
(hereinafter known as "Elective Deferral Contributions") and shall be
deemed to be Company contributions for purposes of Section 414(h) of the
Code.
(a) An initial written election must be made by an Employee and submitted
to the Committee at least 30 days (or such other period as the
Committee may fix from time to time) prior to the first date the
Employee would be eligible to become a Participant of the Plan in
accordance with Section 2.01 of the Plan.
(b) An election, once made, shall remain in effect until subsequently
changed by the Employee in accordance with the provisions of this
Article III.
3.02 Reduction of Excess Elective Deferral Contributions
---------------------------------------------------
If Elective Deferral Contributions under Section 3.01 of the Plan are
projected to exceed the limitations of Sections 4.01 or 4.02 of the Plan
at any time during a Plan Year, the Committee, in a good faith effort to
comply with such limitations, retains the right to reduce the rate of
Elective Deferral Contributions made by Highly Compensated Employees. Such
reduction shall be made in the sole discretion of the Committee and for
purposes of Section 4.02 of the Plan shall be accomplished by
progressively reducing the Elective Deferral Contributions of those Highly
Compensated Employees with the highest deferral percentage until the
limitations are met.
3.03 Matching and Regular Contributions
----------------------------------
Subject to the limitations on annual additions under Section 4.03 of the
Plan, the Company shall contribute the following amounts:
17
<PAGE>
(c) Qualified Matching Contributions - For any Plan Year, the Company may
--------------------------------
contribute such additional amounts as it shall determine. Such
Qualified Matching Contributions shall be allocated to those
Participants who are Nonhighly Compensated Employees who are in the
---
employ of the Company on the last business day of such Plan Year, in
the same proportion that the Elective Deferral Contributions of each
such Participant for such Plan Year bear to the aggregate Elective
Deferral Contributions of all such Participants for such Plan Year.
Such contributions shall be subject to Treasury Regulation 1.401(k)-
1(g)(7).
Notwithstanding the foregoing provision, a Participant otherwise
eligible shall share in such Qualified Matching Contributions for the
Plan Year of (i) his Retirement, Disability or death, (ii) the
commencement of a "Leave of Absence" authorized by the Company or
(iii) his transfer to another business entity to which such
Participant had been transferred by the Company, even if the
Participant is not in the employ of the Company on the last business
day of such Plan Year.
A Participant shall not share in the allocation of the Company's
Qualified Matching Contributions for any Plan Year during which he
terminated his employment for reasons other than specified in (i),
(ii) or (iii) above.
(d) Regular Contributions
---------------------
(i) Such amount as the Company shall determine for each Plan Year, as
evidenced by a Company Resolution, which shall be allocated to
Participants who are in the employ of the Company on the last day
of such Plan Year, which amount shall be credited at the end of
the Plan Year.
Effective as of the last day of each Plan Year beginning on or
after January 1, 1989, the Company shall allocate to the Accounts
of eligible Participants amounts contributed by the Company as
its contribution with respect to such Plan Year in the order set
forth below.
(A) If the Plan Year in question is determined to be top heavy as
provided for under the provisions of Article XI of the Plan, the
following allocations shall be made:
(1) First, each eligible Participant shall have allocated to his
Account 3% of his Compensation, or the percentage of
Compensation determined under Section 11.03 of the Plan,
18
<PAGE>
(2) Second, each eligible Participant shall have allocated to
his Account 3% of his Excess Compensation, defined in (C)
below, or the percentage of Compensation determined under
Section 11.03 of the Plan,
(3) Third, the balance of the contribution, after the
application of Subsections (A)(1) and (A)(2) above, shall be
allocated to the Accounts of eligible Participants in the
proportion that the ratio of the sum of each such
Participant's total Compensation plus such Participant's
Excess Compensation is to the sum of the total Compensation
and Excess Compensation of all eligible Participants.
Notwithstanding the foregoing, the amount allocated to an
eligible Participant under this Subsection (A)(3) shall not
exceed the "applicable percentage" of the sum of the
eligible Participant's (1) Compensation and (2) Excess
Compensation. The "applicable percentage shall be the
difference between (1) the greater of 5.7% or the Current
Tax Rate as defined in (D), below, and (2) the percentage of
Compensation determined under Section 11.03 of the Plan.
(4) The balance of the contribution, if any, after the
application of the preceding subsections shall be allocated
to the Accounts of eligible Participants in the proportion
that the ratio of the Compensation of each eligible
Participant is to the total Compensation of all eligible
Participants for the Plan Year.
(5) To the extent Company contributions are not sufficient to
make the full allocation under Subsection (1), (2) or (3)
above, then each Participant eligible to share in the
allocation shall have an amount allocated to his Account of
an equal percentage of the amount which would have been
allocated to him under Subsection (1), (2) or (3), above.,
as the case may be, if the full allocation was made.
(B) If the Plan Year in question is not top-heavy, the following
allocations shall be made:
(1) First, each eligible Participant shall have allocated to his
Account an amount equal to the proportion that the ratio of
the sum of each such Participant's total Compensation and
Excess Compensation, defined in (C) below, is to the sum of
the total Compensation and Excess Compensation of all
19
<PAGE>
eligible Participants. Notwithstanding the foregoing, the
amount allocated to an eligible Participant under this
subsection shall not exceed the greater of 5.7% or the
Current Tax Rate as defined in (D), below, of the sum of the
eligible Participant's Compensation plus such eligible
Participant's Excess Compensation.
(2) Second, the balance of the contribution, if any, after the
application of the preceding subsection shall be allocated
to the Accounts of eligible Participants in the proportion
that the ratio of the Compensation of each eligible
Participant is to the total Compensation of all eligible
Participants for the Plan Year.
(3) To the extent Company contributions are not sufficient to
make the full allocation under Subsection (1), above, then
each Participant eligible to share in the allocation shall
have an amount allocated to his Account of an equal
percentage of the amount which would have been allocated to
him under Subsection (1), above, as the case may be, if the
full allocation was made.
(C) Excess Compensation is a Participant's Compensation in excess of
the Social Security Taxable Wage Base.
(D) The Current Tax Rate shall mean the rate of tax applicable under
the Code Sections 3111(a) or 401(l)(2)(A)(ii) attributable to old
age insurance, which is in effect on the first day of the Plan
Year in reference.
(E) Social Security Taxable Wage Base shall mean the maximum amount
of earning which may be considered wages under Section 312 1
(a)(1) of the Code as of the first day of the Plan Year in
reference.
(ii) Exception to Allocation Requirements: Notwithstanding the
---------------------------------------
foregoing provision, a Participant shall be entitled to a share
of the Company's contributions for the Plan Year of (1) his
Retirement, Disability or death, (2) the commencement or end of a
Leave of Absence authorized by the Company or (3) his transfer to
another business entity to which such Participant had been
transferred by the Company, even if the Participant is not in the
employ of the Company on the last day of such Plan Year.
20
<PAGE>
A Participant shall not share in the allocation of the Company's
contributions for any Plan Year during which he terminated his
employment for reasons other than specified in (1), (2) or (3).
Notwithstanding Section 3.03(a) above, in the event the Plan
fails to meet the requirements of Section 401(a)(26) or 410(b) of
the Code, those Participants who are in the employ of the Company
as of the last day of the Plan Year shall share in the allocation
of the Company's contribution to the extent necessary by
progressively including those Participants with the greatest
number of Hours of Employment until such requirements are met.
If after the inclusion of such Participants the requirements of
Section 401(a)(26) or 410(b) are still not met, those
Participants who are not in the employ of the Company on the last
business day of the Plan Year shall share in the allocation of
the Company's contribution to the extent necessary by
progressively including those Participants with the greatest
number of Hours of Employment to a minimum of 501 such hours
until such requirements are met.
(e) Qualified Nonelective Contributions - Such amount as the Company shall
-----------------------------------
determine for any Plan Year, which shall be allocated to those
Participants who are Nonhighly Compensated Employees in the same
proportion that each Participant's Compensation bears to the aggregate
Compensation of all such Participants for such Plan Year, provided the
Participant is in the employ of the Company on the last business day
of such Plan Year, which amount shall be credited at the end of the
Plan Year.
Such contributions shall be subject to Treasury Regulation Section
1.401(k)-l(g)(7).
Notwithstanding the foregoing provision, a Participant otherwise
eligible shall be entitled to a share of the Company's Qualified
Nonelective Contributions for the Plan Year of (i) his Retirement,
Disability or death, (ii), the commencement or end of a "Leave of
Absence" authorized by the Company or (iii) his transfer to another
business entity to which such Participant had been transferred by the
Company, even if the Participant is not in the employ of the Company
on the last business day of such Plan Year.
A Participant shall not share in the allocation of the Company's
Qualified Nonelective Contributions for any Plan Year during which he
terminated his employment for reasons other than specified in (i),
(ii) or (iii) above.
3.04 Contribution Changes
--------------------
21
<PAGE>
A Participant may, subject to the minimum and maximum percentages specified
in Section 3.01, increase or decrease the percentage rate of his Elective
Deferral Contributions as of any January 1, April 1, July 1, or October 1
(or as of such other dates as the Committee may fix from time to time), by
written notification to the Committee at least 30 days (or such other
period as the Committee may fix from time to time) prior to the effective
date of such change.
3.05 Discontinuance of Contributions
-------------------------------
(a) A Participant may discontinue his Elective Deferral Contributions at
any time by written notification to the Committee at least 30 days
(or such other period as the Committee may fix from time to time)
prior to the effective date of such discontinuance.
(b) A Participant may resume his Elective Deferral Contributions as of
any subsequent January 1, April 1, July 1, or October 1 (or such
other dates as the Committee may fix from time to time) by written
notification to the Committee at least 30 days (or such other period
as the Committee may fix from time to time) prior to the effective
date of such resumption.
(c) The discontinuance of Elective Deferral Contributions will
automatically include a discontinuance of the Matching Contributions.
3.06 Rollover Contributions from Other Qualified Plans
-------------------------------------------------
(a) Any Eligible Employee upon commencement of employment may make a
rollover contribution to the Trust Fund of all or any portion of the
entire amount (including money or any other property acceptable to
the Committee and Trustee) which is an eligible rollover
distribution, as defined in Section 402(c)(4) of the Code and
temporary Treasury Regulation Section 1.402(c)-2T, Q&A 3 and 4,
provided such rollover contribution is either (i) a direct transfer
from another qualified plan or (ii) received on or before the 60th
day immediately following the date the Employee received such
distribution from a qualified plan or conduit Individual Retirement
Account or Annuity.
Such Eligible Employee must complete and sign the Plan's rollover
request form and provide such evidence as is requested by the
Committee, including evidence supporting the satisfaction of the
remaining provisions of this Section.
(b) The distribution intended to be rolled over must be an eligible
rollover distribution from a:
(i) qualified trust, as verified by written evidence from the
administrator of the distributing plan; or
22
<PAGE>
(ii) conduit IRA, as verified in writing by the custodian or
insurance company that the original distribution from the
qualified trust was an eligible rollover distribution; or
(iii) qualified trust as a direct rollover as provided for in Section
402(c) of the Code.
(c) The Committee shall credit the fair market value of any rollover
contribution and investment earnings attributable thereto to the
Participant's Rollover Account. Such rollover contributions shall not
be considered annual additions for purposes of Section 4.03 of the
Plan.
(d) An Eligible Employee who becomes a Participant by virtue of the
acceptance of such rollover contribution, but who is not otherwise
eligible for participation in accordance with Section 2.01, shall not
be entitled to make contributions or share in any Company
contribution allocated in accordance with this Article III or Article
XI.
(e) The Committee may promulgate specific rules and regulations governing
all aspects of this Section.
3.07 Deposit of Contributions
------------------------
The Company shall deposit the Elective Deferral Contributions with the
Trustee as soon as practicable (in no event to exceed 90 days) following
the date on which such amounts would otherwise have been paid to the
Participant. All other Company contributions must be deposited by the
earlier of the end of the subsequent Plan Year or after the end of the
period described in Code Section 404(a)(6) applicable to the tax year of
the Company with or within which the Plan Year ends.
3.08 Payment of Expenses
-------------------
In addition to its contributions, the Company may elect to pay all the
administrative expenses of the Plan and all fees and retainers of the
Plan's Trustee, accountant, counsel, consultant, administrator or other
specialist so long as the Plan or Trust Fund remains in effect. If the
Company does not pay all or part of such expenses, the Trustee shall pay
these expenses from the Trust Fund. All expenses relating directly to the
investments of the Trust Fund, including taxes, brokerage commissions and
registration charges, must be paid from the Trust Fund.
23
<PAGE>
ARTICLE IV-
----------
CONTRIBUTION LIMITATIONS
------------------------
4.01 $7,000 Limitation on Elective Deferral Contributions
----------------------------------------------------
Each Participant's Elective Deferral Contributions under Section 3.01, when
added to any additional elective deferrals, as defined in Section 402(g) of
the Code, under all other plans maintained by the Employer, shall be
limited to $7,000 during any calendar year, adjusted annually for increases
in the cost-of-living in accordance with Section 415(d) of the Code, or
such other maximum permitted under Section 402 of the Code.
To the extent a Participant's Elective Deferral Contributions exceed the
above limitation the Employer will notify the Plan of such excess and such
amount will be designated as an excess deferral. Such excess deferral will
be distributed to such Participant with investment experience no later than
April 15 following the close of the calendar year to which such excess
relates. Such excess may be distributed prior to the close of the calendar
year of reference provided the correcting distribution is made after the
date on which the plan received the excess deferral and is specifically
designated as an excess deferral. Investment experience will be determined
in accordance with the fourth paragraph of Section 4.02(d) below.
4.02 Limitation on Elective Deferral and Matching Contributions
----------------------------------------------------------
(a) The Actual Deferral Percentage of Eligible Highly Compensated
Employees in the Testing Group for any Plan Year shall be limited to
the greater of
(i) the Actual Deferral Percentage for the Eligible Nonhighly
Compensated Employees in the Testing Group multiplied by 1.25;
or
(ii) the Actual Deferral Percentage for the Eligible Nonhighly
Compensated Employees in the Testing Group multiplied by 2.00,
provided, however, that the Actual Deferral Percentage for the
Eligible Highly Compensated Employees in the Testing Group may
not exceed the Actual Deferral Percentage for the Nonhighly
Compensated Employees by more than two percentage points.
(b) The Actual Contribution Percentage of Eligible Highly Compensated
Employees in the Testing Group for any Plan Year shall be limited to
the greater of
24
<PAGE>
(i) the Actual Contribution Percentage for Eligible Nonhighly
Compensated Employees in the Testing Group multiplied by 1.25;
or
(ii) the Actual Contribution Percentage for Eligible Nonhighly
Compensated Employees in the Testing Group multiplied by 2.00,
provided, however, that the Actual Contribution Percentage for
the Eligible Highly Compensated Employees in the Testing Group
may not exceed the Actual Contribution Percentage for the
Nonhighly Compensated Employees by more than two percentage
points.
(c) If one or more Highly Compensated Employees are eligible for both
Elective Deferral Contributions and to receive Matching Contributions
or, if applicable to this Plan, to make Voluntary Contributions, such
contributions shall be limited to the greater of (i) or (ii) below.
Notwithstanding the above, this Subsection (c) shall only be
applicable if both the Actual Deferral Percentage and the Actual
Contribution Percentage of the Highly Compensated Employees exceeds
1.25 multiplied by the respective Nonhighly Compensated Employee
percentages.
(i) The sum of
(A) 1.25 times the greater of
(1) the Actual Deferral Percentage for the Nonhighly
Compensated Employees, or
(2) the Actual Contribution Percentage for the Nonhighly
Compensated Employees; and
(B) two plus the lesser of Subparagraph (1) or (2) above,
provided that such amount may not exceed 200% of the lesser
of Subparagraph (1) or (2).
(ii) The sum of
(A) 1.25 times the lesser of
(1) the Actual Deferral Percentage for the Nonhighly
Compensated Employees, or
(2) the Actual Contribution Percentage for the Nonhighly
Compensated Employees; and
25
<PAGE>
(B) two plus the greater of Subparagraph (1) or (2) above,
provided that such amount may not exceed 200% of the
greater of Subparagraph (1) or (2).
(d) To the extent the otherwise applicable Elective Deferral, Matching,
and, if applicable, Voluntary Contributions for any Plan Year must be
limited due to the restrictions described in Subsections (a), (b) and
(c), such limitations shall be applied to the Highly Compensated
Employees' Elective Deferral, Matching, and/or, if applicable,
Voluntary Contribution percentages, whichever applicable, beginning
with the highest of such percentages until the limitations are met. In
satisfying the limited percentages applicable to any individual Highly
Compensated Employee, reductions will first be made to Voluntary
Contributions, if applicable. Additional reductions to satisfy
Subsection (c) shall be applied first to unmatched Elective Deferral
Contributions, if any, and then to matched Elective Deferral
Contributions and Matching Contributions proportionately.
Excess Elective Deferral, Matching, and, if applicable, Voluntary
Contributions shall be allocated to Participants who are subject to
the family aggregation rules of Section 414(q)(6) of the Code in
proportion to their unadjusted deferrals and contributions.
Any excess Elective Deferral or, if applicable, Voluntary
Contributions that result from the above limitations shall be refunded
to such Highly Compensated Employees with investment experience, no
later than the last day of the Plan Year subsequent to the Plan Year
to which the excess relates. The limitation on Matching Contributions
is effected by limiting the otherwise applicable Matching
Contributions in accordance with Subsection 3.03(a).
Investment experience shall be the income or loss allocable to the
Participant's Elective Deferral Contribution Account or, if
applicable, Voluntary Contribution Account for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
excess Elective Deferral or, if applicable, Voluntary Contributions
for the year and the denominator is the sum of (i) the Participant's
Elective Deferral Contribution Account or, if applicable, Voluntary
Contribution Account balance as of the beginning of the Plan Year and
(ii) the Participant's Elective Deferral or, if applicable, Voluntary
Contributions for the Plan Year.
(e) Definitions and Special Rules
-----------------------------
(i) The Actual Deferral Percentage for the Eligible Highly
Compensated Employees and Eligible Nonhighly Compensated
26
<PAGE>
Employees for a Plan Year shall be the average of the ratios
(calculated separately for each Eligible Employee in the Testing
Group) of
(A) the amount of contributions credited to the Elective
Deferral Contribution Account on behalf of each such
Eligible Employee in the Testing Group during such Plan
Year, to
(B) the Compensation of each such Participant in the Testing
Group for such Plan Year.
For purposes of the above, Qualified Matching Contributions and
Qualified Nonelective Contributions may be taken into account in
determining the Actual Deferral Percentage for each Eligible
Employee in the Testing Group for such Plan Year provided such
amounts comply with the provisions of Treasury Regulation Section
1.401(k)-l(b).
Qualified Matching Contributions, Qualified Nonelective
Contributions, and Elective Deferral Contributions included in
the calculation of the Actual Contribution Percentages will not
be included in the calculation of Actual Deferral Percentages.
(ii) The Actual Contribution Percentage for the Eligible Highly
Compensated and Eligible Nonhighly Compensated Employees in the
Testing Group for a Plan Year shall be the average of the ratios
(calculated separately for each Eligible Employee in the Testing
Group) of
(A) the amount of Matching Contribution and recharacterized
Elective Deferral Contributions credited on behalf of each
such Eligible Employee in the Testing Group for such Plan
Year, and any recharacterized Elective Deferral
Contributions as a result of Subsection 4.02(d) for such
Plan Year, to
(B) the Compensation of each such Participant in the Testing
Group for such Plan Year.
For purposes of the above, Qualified Matching Contributions,
Qualified Nonelective Contributions, and Elective Deferral
Contributions may be taken into account in determining the Actual
Contribution Percentage for each Eligible Employee in the Testing
Group for such Plan Year provided such amounts comply with the
provisions of Treasury Regulation Section 1.401(m)-l(b).
27
<PAGE>
Qualified Matching Contributions, Qualified Nonelective
Contributions, and Elective Deferral Contributions included in
the calculation of the Actual Deferral Percentages will not be
included in the calculation of Actual Contribution Percentages.
Testing Group shall mean the group of all Eligible Employees
eligible for participation in accordance with Section 2.01.
(iv) All Eligible Employees in the Testing Group will be included in
determining the Actual Deferral Percentages and/or the Actual
Contribution Percentages, whichever is applicable. The ratio
averaged into the respective percentages will be zero for any
Eligible Employee in the Testing Group if the otherwise applicable
numerator is zero.
(v) All such ratios and the average of such ratios shall be calculated
to the nearest one-hundredth of one percent.
(vi) The deferral percentage and/or contribution percentage for a Plan
Year for any Highly Compensated Employee who is eligible to
participate under two or more plans or arrangements described in
Section 401(a) or 401(k) of the Code that are maintained by the
Employer shall be determined as if all contributions were made under
a single plan.
(vii) In the event that this Plan satisfies the requirements of Section
410(b) of the Code only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of Section
410(b) of the Code only if aggregated with this Plan, deferral and
contribution percentages shall be determined as if all such plans
were a single plan. Any other plan may be aggregated with this Plan
at the discretion of the Company, provided such plans have the same
plan year.
(viii) The ratio for any 5% owner, as defined in Section 416(i)(1) of the
Code, and for any Highly Compensated Employee in the group
consisting of the 10 Highly Compensated Employees paid the greatest
Compensation shall be determined by aggregating the Elective
Deferral Contributions or Matching Contributions and Compensation of
such individual with the respective amounts of each other Eligible
Employee who is a family member of such Highly Compensated Employee.
Once the ratio for the family group is determined, the individual
ratios of the family members are not taken into account.
For purposes of this paragraph, family member shall mean the spouse,
lineal ascendant or descendant or spouse of a lineal ascendant or
descendant of the Highly Compensated Employee.
28
<PAGE>
4.03 Limitation on Allocations
-------------------------
(a) The "annual addition" for any Participant shall not exceed the amount
determined hereunder. Annual addition shall mean the sum of Employer
contributions, Employee contributions and forfeitures allocated on
behalf of a Participant for a Plan Year, which is defined to be the
limitation year. Annual additions shall also include excess
deferrals, excess contributions and excess aggregate contributions,
other than excess deferrals distributed in accordance with Treasury
Regulation 1.402(g)-1(e)(2) or (3).
The determination of the annual addition will be made as if all
defined contribution plans of the Employer were one plan and any
Participant contributions to defined benefit plans will be treated as
contributions to defined contribution plans. Annual additions will
be applied to the applicable Plan Year in accordance with Section
1.415-6(b) of the Treasury Regulations.
For purposes of Subsection (b)(i), annual addition shall also include
amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Section 415(l) of the Code which is part of a
defined benefit plan maintained by the Employer and amounts derived
from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post-
retirement medical benefits allocated to the separate account of a
Key Employee (as defined in Section 11.02) under a welfare benefit
plan (as defined in Section 419A(d) of the Code) maintained by the
Employer.
(b) The annual addition for any Participant shall not exceed the lesser of
(i) or (ii) below:
(i) $30,000, or if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1)(A) of the Code as in
effect for the limitation year.
In the event of a short Plan Year, the maximum dollar limitation
shall be divided by 12 and multiplied by the number of months in
the short Plan Year.
(ii) 25% of the Participant's Compensation.
(c) If a Participant also is or has been a participant in one or more
defined benefit plans of the Employer, whether or not terminated, the
projected annual benefit from such defined benefit plans shall be
reduced so that a
29
<PAGE>
"combined benefit factor" in excess of 1.0 shall not result. The
combined benefit factor is the sum of (i) the defined benefit factor
and (ii) the defined contribution factor where
(i) the defined benefit factor is a fraction
(A) the numerator of which is the Participant's projected annual
benefit under all defined benefit plans of the Employer at
the end of the limitation year of the Plan, and
(B) the denominator of which is the lesser of
(1) 1.25 multiplied by the maximum allowable annual benefit
under Sections 415(b)(1)(A) and 415(d) of the Code at
the end of the limitation year of the Plan, or
(2) 1.4 multiplied by the maximum allowable annual benefit
under Section 415(b)(1)(B) of the Code at the end of
the limitation year of the Plan, and
(ii) the defined contribution factor is a fraction
(A) the numerator of which is the sum of the annual additions
for such Participant under all defined contribution plans of
the Employer, whether or not terminated, for all such years
during which he was a participant in such plans, and
(B) the denominator of which is the sum of the lesser of the
amounts determined in (1) or (2) for the current year and
each prior year during which the Participant was employed by
the Employer, regardless of whether or not a plan was in
existence during those years:
(1) 1.25 multiplied by the maximum dollar limitation as
defined in Subsection (b)(i), or
(2) 1.4 multiplied by the compensation limitation as
defined in Subsection (b)(ii).
(d) A Participant shall not be permitted to defer Compensation or
contribute amounts, nor shall he be entitled to an allocation of any
Employer contributions or forfeitures under any qualified defined
contribution plan which exceeds the limitations described herein.
30
<PAGE>
(e) The limitations on allocations to a Participant's Account will be
applied by limiting otherwise allocable amounts starting with the
latest allocations during the limitation year. To the extent more
than one type of addition is allocated, as of any date, the limitation
will be applied in the following order:
(i) forfeitures;
(ii) Employer contributions under profit-sharing plans other than
matching contributions;
(iii) Employer contributions under money purchase plans other than
matching contributions;
(iv) Employer matching contributions under money purchase plans.
(v) Employer matching contributions under profit-sharing plans;
(vi) Employee contributions; and
(vii) elective deferrals.
Amounts listed above which would have been added to a Participant's
Account based on an allocation method specified in a Plan will be
reallocated among the remaining Participants eligible to share under
the Plan.
Amounts listed above which would have been added to the Participant's
Account based on an individually defined entitlement will reduce the
Employer's contribution commitment.
Employee contributions and elective deferrals will be limited at the
time deposited and will not be permitted to the extent the limits of
this Section would be violated.
In the event annual additions on behalf of a Participant participating
in more than one plan of the same type during a Plan Year are required
to be limited under this Section, the limitation shall be ratably
apportioned among all such plans.
(f) Notwithstanding the above, if an excess allocation occurs as a result
of
(i) an allocation of forfeitures;
(ii) a reasonable error in determining a Participant's Compensation;
31
<PAGE>
(iii) a reasonable error in determining the amount of elective deferrals
that may be made under this Section; or
(iv) any other reason acceptable to the Internal Revenue Service,
the resulting additions to the Participant's Account will be reduced by
first eliminating Employee contributions and elective deferrals to the
extent otherwise required to be refunded under Sections 402(g), 401(k)(3)
or 401(m)(2) of the Code. Any additional reductions permitted under this
Subsection will be applied in the manner described in Subsection (e).
However, any amounts paid to the Trust for the limitation year which are
not allocated to other Participants will be held in a suspense account,
without investment earnings, and allocated and reallocated in the following
limitation year and, to the extent necessary, each subsequent limitation
year. Allocations from a suspense account in a money purchase plan will be
viewed as an allocation of accrual requirement for the year in which the
amount is ultimately allocated.
In the event a plan is terminated, suspense accounts shall revert to the
Employer to the extent such accounts may not then be allocated on behalf of
any remaining eligible Participants.
(g) The annual addition for any Plan Years beginning before January 1, 1987
shall not be recomputed to include all Employee contributions.
(h) Notwithstanding any provision of the Plan to the contrary, transitional
rules provided in conjunction with legislative changes and changes in the
Plan's top-heavy status will be applied in accordance with Internal Revenue
Service promulgation's and legislative history.
32
<PAGE>
ARTICLE V
---------
MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND VALUATION OF THE TRUST FUND
-------------------------------------------------------------------------
5.01 Maintenance of Accounts
-----------------------
The Committee shall establish and maintain a separate accounting in the
name of each Participant to which it shall credit all amounts contributed
in accordance with Articles III and XI.
5.02 Investment Election
-------------------
(a) Initial Election - Each Participant shall -designate one or more of
----------------
the investment funds established in accordance with Section 5.03 for
the investment of his Account. The percentage elected for investment
in any one of the investment funds must be a multiple of 10%, and the
same percentage shall be applied equally to each of the Participant's
Accounts.
Such initial election may only be made as of January 1, April 1, July
1, or October 1. Contributions or transfers to the Participant's
Account prior to such date shall automatically be invested in the
Guaranteed Income Contract Fund until the next January 1, April 1,
July 1 or October 1.
(b) Subsequent Election - A Participant may, by written notice to the
-------------------
Committee at least 30 days prior to the January 1, April 1, July 1, or
October 1 as of which such election is to be effective, change his
investment fund election with respect to all current and subsequent
contributions. However, until changed, an investment fund election,
once made, shall remain in effect for all subsequent Plan Years.
(c) In the absence of an investment direction from any Participant, the
Committee shall retain complete discretion with respect to the
investment of such Participant's Account.
(d) No person or persons, other than the Participant, shall be liable for
any loss resulting from a Participant's direction of the investment of
any part of his Account.
(e) The Committee may promulgate any additional rules and regulations it
deems necessary or appropriate to govern all aspects of this Section.
5.03 Investment Funds
----------------
33
<PAGE>
The Trust Fund shall be divided into such investment funds as designated by
the Committee and approved by the Trustee for the investment of all
Accounts, which shall be administered as a unit.
5.04 Valuation of Trust Fund
-----------------------
(a) The Trust Fund shall be valued by the Trustee as of each Valuation
Date on the basis of its fair market value.
(b) The Trust Fund may also be valued by the Trustee as of any other date
as the Committee may authorize for any reason the Committee deems
appropriate.
5.05 Allocation of Investment Earnings and Expenses
----------------------------------------------
On the basis of the valuation as of a Valuation Date, subject to the
provisions of Subsection 7.03(h), the Accounts of all Participants, shall
be (a) proportionately adjusted to reflect expenses in accordance with
Section 3. 10 and investment earnings such as interest, dividends, realized
and unrealized investment profits and losses; and (b) directly adjusted to
reflect all other applicable transactions during the Plan Year attributable
to such Accounts including, but not limited to, any contributions or
distributions.
34
<PAGE>
ARTICLE VI
----------
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
-----------------------------------------------
6.01 Upon Retirement
---------------
(a) Vesting - A Participant shall be 100% vested in his Account at all
-------
times after first becoming eligible for Retirement.
(b) A Participant shall be eligible to retire on his Early, Normal or
Deferred Retirement Date.
(c) In the event a Participant does not retire on his Early or Normal
Retirement Date, he shall continue to be credited with contributions
in accordance with Articles III and XI until his actual retirement and
shall be entitled to receive his Account upon his election while still
employed by the Company.
6.02 Upon Disability
---------------
(a) Vesting - A Participant who incurs a Disability prior to termination
-------
of employment shall be 100% vested in his Account.
(b) In determining the existence of a Participant's Disability, the
Committee may select a physician to examine such Participant and
render a medical opinion. The final determination shall be made by
the Committee on the basis of the evidence requested and made
available.
(c) If such Participant returns to the employ of the Company, he shall
resume his participation as of the date of his return. The
Participant's vested interest in that portion of his Account
attributable to Service from the date of his last reemployment shall
be determined in accordance with the provisions of Article VI, without
regard to his prior Disability.
6.03 Upon Death
----------
(a) Vesting - A Participant who dies prior to termination of employment
-------
shall be 100% vested in his Account.
(b) Upon the death of a Participant, his Beneficiary shall be entitled to
100% of such Participant's vested Account.
(c) Beneficiary Designation - Each Participant, upon becoming eligible
-----------------------
for participation in the Plan, may designate a primary Beneficiary to
receive
35
<PAGE>
the benefits payable in the event of his death, may designate a
secondary Beneficiary to receive any benefits payable in the event of
the death of the primary Beneficiary. If a Participant designates a
primary Beneficiary but not a secondary Beneficiary or if any such
secondary Beneficiary dies, the Beneficiary last in receipt of or
entitled to any benefit shall have the right to designate a successor
Beneficiary to receive any benefits payable in the event of his
death. In the absence of any such designation, benefits payable upon
the death of the last living Beneficiary shall be paid in a lump sum
to such Beneficiary's estate. A Participant may change his
Beneficiary designation at any time. All Beneficiary designations and
changes shall be made on an appropriate form and filed with the
Committee.
If the primary Beneficiary designated by the Participant is anyone
other than the Participant's Protected Spouse, such designation must
include the written acknowledgment and consent of such spouse and be
witnessed by a Plan representative or a notary public, to the extent
required by law and the Committee. Such consent will bE limited to a
specific alternate Beneficiary and any change in such alternate
Beneficiary will require a new spousal consent.
6.04 Upon Other Termination of Employment
------------------------------------
(a) Upon a Participant's termination of employment for reasons other than
Retirement Disability or death, the following provisions shall be
applicable:
(i) Such Participant shall have a 100% vested interest in his
Elective Deferral Contribution, Matching, Rollover, Transfer,
Qualified Matching Contribution and Qualified Nonelective
Contribution Accounts.
(ii) Such Participant's vested interest in his Regular Contribution
Account shall, subject to Subsection 6.05(a) of the Plan, be
determined in accordance with the following schedule on the basis
of such Participant's full Years of Service excluding any Service
before the month within which the Participant attained age 18.
Number of Years Percentage of Account
--------------- ---------------------
Less than 2 full years 0%
2 full years 40%
3 full years 60%
4 full years 80%
5 or more full years 100%
36
<PAGE>
(iii) The above notwithstanding, prior to July 1, 1994, a
Participant's vested interest in his Matching Contribution and
Regular Contribution Accounts shall, subject to Subsection
6.05(a) of the Plan, be determined in accordance with the
following schedule on the basis of such Participant's full
Years of Service excluding any Service before the month within
which the Participant attained age 18.
Number of Years Percentage of Account
--------------- ---------------------
Less than 1 full year 0%
1 full year 20%
2 full years 40%
3 full years 60%
4 full years 80%
5 or more full years 100%
(b) The vested interest of all Participants with three or more Years of
Service as of the later of the adoption date or effective date of any
amendment to the vesting schedule, shall be determined on the basis of
the provisions of the vesting schedule prior to such amendment to the
extent that such schedule provides a greater vested percentage. All
other Participants shall be entitled to the vested percentage
determined under the schedule in Subsection (a) above, provided that
such vested percentage shall not be less than the vested percentage at
the time of the change determined on, the basis of the provisions of
the vesting schedule prior to such amendment.
(c) Forfeitures - The portion of a Participant's Account which is not
-----------
vested shall be forfeited on the earlier of the date on which the
Participant receives a distribution of his vested benefits or the date
on which such Participant incurs five consecutive Breaks-in-Service,
but in no event shall such forfeiture occur earlier than the Valuation
Date coincident with or next following the date on which the
Participant terminated employment.
If a Participant does not have a vested interest in his Account, he
shall be deemed to have received an immediate distribution as of the
Valuation Date coincident with or next following the date on which
such Participant terminated employment.
37
<PAGE>
(d) That portion of the Participant's Account which is not vested shall be
allocated along with the Company's Regular Contribution as described
in Section 3.03(d) of the Plan.
(e) Prior to the effective date of this Subsection, a Participant's vested
interest in his Regular Contribution Account shall be determined on
the basis of the provisions of the Plan before this restatement.
6.05 Reemployment and Repayment of Benefits
--------------------------------------
(a) If a Participant receives a distribution and is reemployed by the
Employer prior to incurring five consecutive Breaks-in-Service, the
dollar amount which was subject to forfeiture in accordance with
Subsection 6.04(c) of the Plan will be restored to the Participant's
Account if the Participant repays the total amount previously
distributed, if any, from Elective Deferral Contribution, Matching
Contribution, Regular Contribution, Qualified Matching Contribution
and Qualified Nonelective Contribution
Accounts. Such amounts must be repaid to the Trust Fund in a lump sum
within five years from the date such Participant resumes his
employment with the Employer.
If a Participant is deemed to receive a distribution pursuant to
Subsection 6.04(c) and is reemployed by the Employer prior to
incurring five consecutive Breaks-in-Service, the dollar amount which
was subject to forfeiture in accordance with such Subsection will be
restored to the Participant's Account. The funds required for the
restoration of such Account may, as determined by the Committee, be
paid by the Company or from forfeitures, Company Regular
Contributions, or investment gains of the Trust Fund attributable to
the Regular Contribution Accounts of all Participants.
Such repaid amounts shall be credited to the Participant's Account as
determined by the Committee, taking into account the applicable
vesting schedules, amounts subject to special tax treatment and
withdrawal rules. Additional Accounts will be established, if
required, to accommodate these objectives. Amounts repaid and
restored in accordance with this Subsection will not be treated as
annual additions for purposes of Section 4.03 of the Plan.
(b) Notwithstanding the above, no restoration shall be made to a
Participant's Account and no repayment will be permitted with respect
to funds accumulated prior to reemployment in the case of
(i) any Participant who was fully vested,
38
<PAGE>
(ii) any Participant who is reemployed after incurring five
consecutive Breaks-in-Service,
(iii) if applicable to this Plan, any Participant who incurred a one
year Break-in-Service prior to the Plan Year beginning after
December 31, 1984 and reemployment, or
(iv) if applicable to this Plan, any Participant who did not incur a
one year Break-in-Service prior to reemployment by the Plan
Year beginning after December 31, 1982 but failed to repay the
amount distributed within two years of reemployment.
39
<PAGE>
ARTICLE VII
-----------
DISTRIBUTION OF BENEFITS
------------------------
7.01 Claim Procedure For Benefits
----------------------------
(a) Any request for specific information with respect to benefits
under the Plan must be made to the Committee in writing by a
Participant or his Beneficiary. Oral communications will not be
recognized as a formal request or claim for benefits.
(b) The Committee shall provide adequate notice in writing to any
Participant or Beneficiary whose claim for benefits under the
Plan has been denied, (i) setting forth the specific reasons for
such denial; specific references to pertinent plan provisions; a
description of any material and information which had been
requested but not received by the Committee; and, (ii) advising
such Participant or Beneficiary that any appeal of such
determination must be in writing to the Committee, within such
period of time designated by the Committee but, until changed,
not more than 60 days after receipt of such notification, and
must include a full description of the pertinent. issues and
basis of claim.
(c) If the Participant or Beneficiary fails to appeal such action to
the Committee in writing within the prescribed period of time,
the Committee's determination shall be final.
(d) If an appeal is filed with the Committee, the Participant or
Beneficiary shall submit such issues he feels are pertinent and
the Committee shall re-examine all facts, make a final
determination as to whether the denial of benefits is justified
under the circumstances, and advise the Participant or
Beneficiary in writing of its decision and the specific reasons
on which such decision was based, within 60 days of receipt of
such written request, unless special circumstances require a
reasonable extension of such 60-day period.
7.02 Commencement of Benefits
------------------------
The following provisions shall be applicable for determining when
distribution of benefits shall be made. These provisions are intended
to conform to the requirements of Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit under proposed
Treasury Regulation Section 1.401(a)(9)-2, and shall be construed
accordingly:
40
<PAGE>
(a) Benefits Less than $3,500 - Unless otherwise provided in Subsection
-------------------------
(c), in the event of termination of employment, benefits which total
$3,500 or less will commence as soon as administratively feasible
following the date on which such Participant's employment with the
Employer terminates.
(b) Benefits More than $3,500
-------------------------
(i) Unless otherwise provided in this Section, in the event of
termination of employment, benefits which total more than $3,500
will commence as soon as administratively feasible following the
date on which such Participant's employment with the Employer
terminates provided that, if the Participant has not attained his
Normal Retirement Date, the Participant consents to such
distribution within his Election Period.
(ii) If a Participant does not consent to the distribution at the time
specified above and fails to elect deferral in accordance with
Subsection (d), benefits will commence as of the 60th day
following the last day of the Plan Year during which the
Participant's Normal Retirement Date occurs.
(c) Valuation Date of Distribution - The amount of any benefit payable
------------------------------
will be determined as of the Valuation Date preceding the date such
benefit is processed, adjusted to reflect intervening contributions
and withdrawals, if applicable, but not investment experience.
(d) Adverse Impact on Plan - If the amount of any payment under this
----------------------
Section would adversely affect the Trust Fund by forcing the premature
liquidation of assets, such payment may be delayed until the timely
and orderly liquidation of investments can be accomplished, but in no
event later than the 60th day following the last day of the Plan Year
during which occurs the latest of
(i) the date a Participant attains the earlier of his Normal
Retirement Date or age 65;
(ii) the tenth anniversary of the year during which the Participant
commenced participation in the Plan; or
(iii) the date the Participant terminates his employment.
If the amount of any payment under this Section cannot be ascertained
by the applicable commencement date, payment shall be made no later
than
41
<PAGE>
60 days after the earliest date on which the amount of such payment can be
ascertained.
(e) Participant Deferment of Distribution
-------------------------------------
(i) Notwithstanding the above, no consent to a distribution prior to
the date the Participant attained or would have attained his
Normal Retirement Date shall be valid until after written
notification of the right to defer is received by the
Participant. The Committee shall provide such written
notification of the right to defer any benefit payable no less
than 30 days nor more than 90 days before the Annuity Starting
Date.
(ii) A Participant who terminates employment may elect that benefit
payments commence at a date later than specified in Subsection
(b), above, by submitting a signed, written statement describing
the benefit and the date on which the payment of such benefit
shall commence, provided such date is not later than the April 1
following the calendar year during which the Participant attains
age 70 1/2 or such later date as may be promulgated by the
Internal Revenue Service.
(f) Minimum Distribution Requirement - Distribution of benefits must
--------------------------------
commence not later than the April I following the calendar year in
which the Participant attains age 70 1/2, or such later date as
promulgated by the Internal Revenue Service, whether or not the
Participant terminates employment in that year and whether or not the
Participant applies for benefit payment.
The foregoing shall not apply to a Participant
(i) who attains age 70 1/2 before January 1, 1988 unless such
Participant was or becomes a 5% owner, within the meaning of
Section 416(i)(1)(B)(i) of the Code, at any time during the Plan
Year ending with or within the calendar year in which he attains
age 66 1/2 or any subsequent Plan Year, or
(ii) who had made a valid election under Section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA) to commence
his benefits at a later date.
(g) If the designated Beneficiary is,
(i) Spouse Beneficiary - If the designated Beneficiary is the
------------------
Participant's spouse, such spouse may elect that benefit payments
42
<PAGE>
commence at a date later than specified in Subsection (b) by
submitting a signed written statement describing the benefit and
the date on which the payment of such benefit shall commence,
provided such date is not later than, the latest of (A) December
31 of the calendar year in which the Participant dies, (B)
December 31 of the calendar year during which the Participant
would have attained age 70 1/2, or (C) such later date as may be
promulgated by the Internal Revenue Service.
If such spouse dies prior to the commencement of benefits, and if
the distribution of any death benefit payable to the spouse's
Beneficiary is made in a form that may extend beyond the December
31 of the calendar year during which the fifth anniversary of
such spouse's death occurs, such distribution must commence no
later than the December 31 of the calendar year immediately
following the date of such spouse's death or such later date as
may be promulgated by the Internal Revenue Service.
(ii) Non-Spouse Beneficiary - If the designated Beneficiary is other
----------------------
than the Participant's spouse, and the death benefit payable is
made in a form that may extend beyond the December 31 of the
calendar year during which the fifth anniversary of such
Participant's death occurs, such distribution must commence no
later than the December 31 of the calendar year immediately
following the date of such Participant's death or such later date
as may be promulgated by the Internal Revenue Service.
(h) If a Participant is in receipt of benefits from the Company's insured
long-term disability program, if applicable, payment of the
Participant's Elective Deferral Contribution, Matching Contribution,
Regular Contribution, Qualified Matching Contribution and Qualified
Nonelective Contribution Accounts shall be deferred to the first day
of the month in which such Participant is no longer eligible to
receive such benefits or, if earlier, the 60th day following the last
day of the Plan Year during which the Participant's Normal Retirement
Date occurs, provided the benefits payable under the long-term
disability program would otherwise be reduced by the benefits payable
under the Plan.
(i) Waiver of 30-day Notification Requirement
-----------------------------------------
If a distribution is one to which sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30 days
after the notice required under section 1.41l(a)-ll(c) of the Income
Tax Regulations is given, provided that:
43
<PAGE>
(i) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not
to elect a. distribution (and, if applicable, a particular
distribution option), and
(ii) the Participant, after receiving the notice, affirmatively elects
a distribution.
7.03 Method and Form of Payment of Benefits
--------------------------------------
The following provisions shall be applicable for determining the
method and form of payment of all benefits. These provisions are
intended to conform to the requirements of Section 401(a)(9) of the
Code, including the minimum distribution incidental benefit under
proposed Treasury Regulation Section 1.401(a)(9)-2, and shall be
construed accordingly:
(a) (i) Subject to Section 7.02 of the Plan, all benefits will be
distributed in a lump sum.
(ii) If a Participant or Beneficiary dies after Benefit payments
have commenced but prior to the receipt of his entire
Benefit, the remaining balance of the Benefit shall continue
to be paid at least as rapidly as the payments then in
effect to the designated Beneficiary of such recipient.
(b) Segregation of Deferred Amount - Notwithstanding the provisions
------------------------------
of Article V, when distribution of benefits from the Trust Fund is to
be deferred in accordance with Section 7.02, whether in whole or in
part, the Committee may direct the Trustee to deposit the
Participant's Account in an interest-bearing account. Thereafter, such
Participant's Account shall be credited with the interest attributable
to such account and the provisions of Article V shall not be
applicable.
(c) Subject to Section 7.02 of the Plan, if a Participant's benefits
are required to commence in accordance with Subsection 7.02(e), in
lieu of an immediate lump sum distribution, the Participant may elect
to have the minimum amount required to be distributed each year under
Code Section 401(a)(9) with the remaining balance payable in a lump
sum upon termination of employment. Such benefit shall be payable
directly from the Trust Fund and shall reflect the Participant's
elections regarding Beneficiary and recalculation of life expectancies
in accordance with regulations under Code Section 401(a)(9).
In the absence of an election by the Participant, the form of payment
shall irrevocably be in either (1) the form of a lump sum or (2) the
minimum amount required to be distributed each year under Code Section
401(a)(9)
44
<PAGE>
payable directly from the Trust Fund with the remaining balance
payable in a lump sum upon such Participant's termination of
employment and life expectancies shall not be recalculated, as
elected by the Committee in a consistent manner.
(d) Any benefits payable under this Article may be paid in cash,
securities, or such other assets of the Trust Fund as the Committee
may direct.
(e) Discharge of Obligations - The distribution of a lump sum payment to
------------------------
the Participant or his Beneficiary will constitute the complete
discharge of all obligations of the Plan.
7.04 Disposition of Unclaimed Benefits
---------------------------------
In the event that any check or notice with respect to the payment of
benefits under the Plan remains outstanding at the expiration of six
months from the date of mailing of such check to the last known address of
the payee, the Committee shall notify the Trustee to stop payment of all
such outstanding checks and to suspend the issuance of any further checks,
if any, to such payee. If, during the three-year period (or such other
period as specified in the Trust Agreement) from the date of mailing of
the first such check or of notice that a benefit is due under the Plan,
the Committee cannot establish contact with the payee by taking such
action as it deems appropriate and the payee does not make contact with
the Committee, the remaining benefits may be allocated to Participants in
the same manner as Matching Contributions in accordance with Section 3.03
of the Plan. In the event the payee is located subsequent to the date the
benefits were forfeited, the dollar amount of such benefits shall be
restored from Company contributions in accordance with the provisions of
Article VI.
7.05 Non-Assignability
-----------------
No benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and
any such action shall be void for all purposes of the Plan. No benefit
shall in any manner be subject to the debts, contracts, liabilities,
engagements or torts of any person, nor shall it be subject to attachments
or other legal process for or against any person, except with respect to a
Qualified Domestic Relations Order as defined in Section 414(p) of the
Code and in such other instances and to such extent as may be required by
law and except with respect to the debts of Participants to the Trust
Fund.
7.06 Substitute Payee
----------------
If a Participant or Beneficiary entitled to receive any benefits hereunder
is in his minority or is, in the judgment of the Committee, legally,
physically, or mentally
45
<PAGE>
incapable of personally receiving and receipting any distribution, the
Committee may instruct the Trustee to make distributions to his legally
appointed guardian.
7.07 Satisfaction of Liability
-------------------------
After all benefits have been distributed in full to a Participant or to
his Beneficiary, all liability to such Participant or to his Beneficiary
shall cease.
7.08 Direct Rollover Requirements
----------------------------
(a) This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributes may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified
by the distributes in a direct rollover.
(b) Definitions
-----------
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of' the distributes, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributes or the joint
lives (or joint life expectancies) of the distributes and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
and the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in section
408(b) of the Code, an annuity plan described in section 403(a)
of the Code, or a qualified trust described in section 401(a)
of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee: A distributes includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse
46
<PAGE>
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the
Code, are distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributees.
47
<PAGE>
ARTICLE VIII
------------
ADMINISTRATION OF THE PLAN
--------------------------
8.01 Assignment of Administrative Authority
--------------------------------------
The Board of Directors shall appoint a Committee to administer the Plan.
The Committee may consist of directors, officers, Employees, or any other
individuals, who, upon acceptance of such appointment, shall serve at the
pleasure of the Board of Directors. Any member may resign by delivering
his written resignation to the Board of Directors and to the Committee.
Vacancies in the Committee arising from resignation, death or removal
shall be filled by the Board of Directors. In the absence of an
appointment of a Committee by the Board of Directors, the Company shall
administer the Plan. The Board of Directors shall also appoint the
Trustee and may appoint an investment manager.
8.02 Organization and Operation of the Committee
-------------------------------------------
(a) The Committee shall act, in carrying out its duties and
responsibilities, in the interest of the Participants and
Beneficiaries with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man, acting in a
like capacity and familiar with such matters, would use in the
conduct of an enterprise of like character and aims.
(b) The Committee shall act by a majority of its members unless
unanimous consent is required by the Plan or by unanimous approval
of its members if there are two or less members in office at the
time. In the event of a Committee deadlock, the Committee shall
determine the method for resolving such deadlock. If there are two
or more Committee members, no member shall act upon any question
pertaining solely to himself, and the other member or members shall
make any determination required by the Plan in respect thereof.
(c) The Committee may authorize any one or more of its members to
execute documents on behalf of the Committee and shall notify the
Trustee in writing of such action and the name or names of the
member or members so designated.
(d) The Committee may, by unanimous consent, delegate specific authority
and responsibilities to one or more of its members. The member or
members so designated shall be solely liable, jointly and severally,
for their acts or omissions with respect to such delegated authority
and responsibilities. Members not so designated, except as provided
under
48
<PAGE>
Subsection 8.06(b) of the Plan, shall be relieved from liability for
any act or omission resulting from such delegation.
(e) The Committee shall endeavor not to engage in any prohibited
transactions, as specified in the Employee Retirement Income
Security Act of 1974, or any successor act. However, any member of
the Committee who is a Participant or Beneficiary shall not be
precluded from receiving benefits payable under the Plan.
8.03 Authority and Responsibility
----------------------------
The Committee and its delegates shall have full discretionary authority and
responsibility for administration of the Plan. Such authority and
responsibility shall include, but shall not be limited to, the following
areas.
(a) Appointment of qualified accountants, consultants, administrators,
counsel or other persons it deems necessary or advisable, who shall
serve the Committee as advisors only and shall not exercise any
discretionary authority, responsibility or control with respect to the
management or administration of the Plan.
Any action of the Committee on the basis of advice, opinion, reports,
etc. furnished by such qualified accountants, consultants,
administrators and counsel shall be the sole responsibility of the
Committee.
Members of the Committee shall not be precluded- from serving the
Committee in any other capacity, provided any compensation paid for
such services is reasonable.
(b) Determination of eligibility to participate and all benefits, and
resolution of all questions arising from the administration,
interpretation and application of the Plan including the determination
of the validity of any Qualified Domestic Relations Order in
accordance with Section 8.09 of the Plan.
(c) Notification to the Trustee of all benefits payable under the Plan and
the manner in which such benefits are to be paid.
(d) Adoption of forms and regulations for the administration of the Plan.
(e) Remedy of any inequity resulting from incorrect information received
or communicated, or of administrative error.
(f) Assurance that its members, the Trustee and other persons who handle
funds or other property of the Trust Fund are bonded as required by
law.
49
<PAGE>
(g) Settlement or compromise of any claims or debts arising from the
operation of the Plan and the commencement of any legal actions or
administrative proceeding.
(h) Direction to the Trustee as to specific investments which, under the
terms of the Trust Agreement, may be made only upon written direction
of the Committee or which are made in accordance with specific
provisions of the Plan, such as annuity or group investment contracts,
loans to Participants, or earmarked investments selected by
Participants.
(i) Action as agent for the service of legal process.
(j) Communication- regarding the liquidity needs of the Plan so that
investment discretion can be exercised to effect specific objectives.
8.04 Records and Reports
-------------------
(a) The Committee shall keep a record of its proceedings and acts and
shall keep books of account, records and other data necessary for the
proper administration of the Plan.
(b) The Committee shall make its records available for examination by the
Employer, or any Participant or Beneficiary during business hours at
the principal place of business of the Company. However, a
Participant or Beneficiary may examine only records pertaining
exclusively to himself and such other records specified by law.
(c) The Committee shall make available to any Participant or Beneficiary
any material required by law without cost. The Committee may, upon
written request by any Participant or Beneficiary, provide copies of
such material as it deems appropriate and shall furnish copies of
such material required by law. The Participant or Beneficiary may be
required to pay the reasonable cost as determined by the Committee of
preparing and furnishing such material or the cost as prescribed by
law.
8.05 Required Information
--------------------
The Company and Participants or Beneficiaries entitled to benefits shall
furnish forms, including but not limited to annuity applications, and any
information or evidence, as requested by the Committee for the proper
administration of the Plan. Failure on the part of any Participant or
Beneficiary to comply with such request within a reasonable period of time
shall be sufficient grounds for delay in the payment of benefits until the
information or evidence requested is received.
50
<PAGE>
8.06 Fiduciary Liability
-------------------
(a) A member of the Committee who breaches the responsibilities,
obligations, or duties imposed by law shall be liable to the Plan for
any losses resulting from such breach.
(b) A member of the Committee shall be liable for a breach of fiduciary
responsibility by another Committee member or Trustee, with respect
to the Plan or Trust Fund, under the following circumstances.
(i) The member knowingly participates in or undertakes to conceal
an act or omission of another member of the Committee or
Trustee, with knowledge that the act or omission is such a
breach.
(ii) If the member's failure to comply with Subsection 8.02(a) of
the Plan has enabled another member or Trustee to commit such a
breach.
(iii) The member has knowledge of such a breach by another member or
Trustee and does not make reasonable efforts under the
circumstances to remedy the breach.
8.07 Payment of Expenses
-------------------
Those members of the Committee who are full-time paid employees of the
Company shall serve without compensation. The expenses of the
Committee, including reasonable compensation as may be agreed upon in
writing between the Company and the Committee for members of the
Committee who are not full-time employees of the Company, shall be
deemed administrative expenses payable in accordance with Article 111.
8.08 Indemnification
---------------
The Company shall indemnify members of the Committee against personal
financial loss resulting from liability incurred in the administration
of the Plan, unless such liability and loss were caused by such
individual's gross negligence or willful misconduct.
8.09 Qualified Domestic Relations Orders
-----------------------------------
(a) Requirements
------------
(i) A Qualified Domestic Relations Order (hereinafter referred to
as "QDRO") is a Domestic Relations Order which 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
51
<PAGE>
benefits payable with respect to a Participant under the Plan, and
which the Committee has determined meets the requirements of
Subsections (a) (ii) and (iii) below.
(ii) A Domestic Relations Order meets the requirements of a QDRO only
if the Order clearly specifies
(A) the name and the last known mailing address (if any) of the
Participant and the name and mailing address of each
alternate payee covered by the Order;
(B) the amount or percentage of the Participant's benefits to be
paid by the Plan to each such alternate payee, or the manner
in which such amount or percentage is to be determined;
(C) the number of payments or period to which such Order applies;
and
(D) that the Order applies to this Plan.
(iii) A Domestic Relations Order meets the requirements of a QDRO
only if the Order
(A) does not require the Plan to provide any type or form of
benefits, or any option, not otherwise provided under the
Plan;
(B) does not require the Plan to provide increased benefits
(determined on the basis of actuarial value); and
(C) does not require the payment of benefits to an alternate
payee which are required to be paid to another alternate
payee under another Domestic Relations Order previously
determined to be a QDRO.
(iv) In the case of any payment before a Participant has separated
from service, a QDRO shall not be treated as failing to meet the
requirements of Subsection (a)(iii)(A), above, solely because the
order requires the payment of benefits to an alternate payee
(A) on or after the date on which the Participant attains (or
would have attained) the Earliest Retirement Age;
(B) as if the Participant had retired on the date such payment
is to begin under such order; and
52
<PAGE>
(C) in any form in which such benefits may be paid under the
Plan to the Participant (other than in the form of a joint
and survivor annuity. with respect to the alternate payee
and his or her subsequent spouse).
(v) For purposes of Subsection (a)(iv), above, Earliest Retirement
Age means the earlier of
(A) the date on which the Participant is entitled to a
distribution under the Plan; or
(B) the later of (1) the date the Participant attains age 50 or
(2) the earliest date on which the Participant could begin
receiving benefits under the Plan if such Participant
separated from service.
Notwithstanding any provision of the Plan to the contrary, for
purposes of Subsection (v)(A) above, a distribution to an
alternate payee may be made prior to the date on which the
Participant is entitled to a distribution under Section 7.02 of
the Plan or Article XII, if applicable, if requested by the
alternate payee to the extent such distribution is permitted
under the QDRO. Nothing in this provision shall permit the
Participant to receive a distribution at a date otherwise not
permitted under Section 7.02 of the Plan or Article XII, if
applicable, nor shall it permit the alternate payee or receive a
form of payment not permitted in Section 7.03 of the Plan.
(b) Procedures
----------
Upon receipt of a Domestic Relations Order, the Committee shall take,
or cause to be taken, the following actions:
(i) The Committee shall promptly notify the Participant, each
alternate payee covered by the order and each representative for
these parties of the receipt of the Domestic Relations Order.
Such notice shall include a copy of the Order and these QDRO
Procedures for determining whether such Order is a QDRO.
(ii) Once a Domestic Relations Order has been received, the affected
Participant will not be permitted to request a withdrawal or a
loan from the Plan if the Plan provides for such withdrawal or
loan; and no distributions will be made from the Plan to the
Participant upon a subsequent termination until after the payment
to the alternate payee has been determined, unless the Committee
determines the order not to be a QDRO.
53
<PAGE>
(iii) Within a reasonable period after receipt of a Domestic
Relations Order, the Committee shall determine whether it is a
QDRO and shall notify the parties indicated in Subsection
(b)(i), above, of such determination. Such notice shall
indicate whether the benefits payable to the alternate payee
in accordance with the QDRO are subject to a previously
existing QDRO.
(iv) Pending the Committee's determination of whether a Domestic
Relations Order is a QDRO, if payments are due to be paid to
the Participant, the Committee shall withhold payment and
separately account for the amounts otherwise payable to the
alternate payee during such period if the order is
subsequently determined to be a QDRO (hereinafter referred to
as the "segregated amounts"). If, within the 18-month period
beginning with the date the first payment would have been
required to be made under the Domestic Relations Order, the
Committee determines the order to be a QDRO, the Committee
shall pay the segregated amounts, including any interest
thereon, to the person or persons entitled thereto. If, within
such 18-month period, the Committee determines an order is not
a QDRO or the Committee fails to reach a decision, the
Committee shall pay the segregated amounts to the Participant.
If, after the 18-month period, the Committee subsequently
determines that the order is a QDRO, the Committee shall pay
benefits subsequent to such determination in accordance with
the order. If action is taken in accordance with this
Subsection (b), the Plan's obligation to the Participant and
each alternate payee shall be discharged to the extent of any
payment made pursuant to the QDRO.
(v) In determining the segregated amount in accordance with
Subsection (b)(iv), the Participant's vested interest shall be
prorated between the Participant and alternate payee and the
entire amount of any nonvested interest or any outstanding
Plan loans, if applicable, will be credited to the Participant
and not taken into consideration in making such determination.
Any future contributions or loan repayment, if applicable,
will be credited to the Participant and not the alternate
payee.
(vi) Upon a determination by the Committee that a Domestic
Relations Order is a QDRO, the Committee shall arrange for
benefits to be paid to the alternate payee in accordance with
such order and Sections 7.02 and 7.03 of the Plan as if the
Participant had terminated employment at such time.
54
<PAGE>
(vii) If benefits are not immediately distributable to the
alternate payee, such amount shall be separately accounted
for until such time as the distribution is made. Any amount
subject to a QDRO will not be available to the Participant
under the Plan withdrawal provisions nor will it be available
as collateral for a Plan loan, if the Plan provides for
either Withdrawals or Loans.
(viii) The alternate payee shall be treated as a Beneficiary for all
purposes of the Plan. If the Plan provides for Participant
investment direction, the alternate payee will be eligible
for the same investment election option in accordance with
Article V as the Participant.
(ix) Any expense charges related to the administration of the QDRO
may be prorated between the Participant and the alternate
payee and may be automatically deducted by the Committee from
the amount payable.
The foregoing provisions are effective for QDROs entered into on or
after January 1, 1985, except that, in the case of a Domestic
Relations Order entered into before January 1, 1985, the Committee
(i) may treat such order as a QDRO even though such order fails to
meet the requirements of Subsections (a)(ii) and (iii) above, and
(ii) must treat such order as a QDRO if benefits were being paid
pursuant to such order on January 1, 1985.
55
<PAGE>
ARTICLE IX
----------
AMENDMENT AND TERMINATION
-------------------------
9.01 Amendment
---------
(a) The Plan may be amended or otherwise modified by the Board of
Directors, or the Committee to the extent authorized in accordance
with Subsection (c), below. Copies of any such amendment or
modification shall be sent to the governing body of each
participating Company, if any. It shall be deemed each Company
consented to such amendment or modification unless its governing body
delivers written notice to the contrary to the Board of Directors,
the Committee and the Trustee within 30 days of its receipt of such
amendment or modification.
(b) No amendment or modification shall
(i) permit any part of the Trust Fund, other than such part as is
required to pay taxes, administrative expenses and expenses
incurred in effectuating such changes, to be used for or
diverted to purposes other than the exclusive benefit of the
Participants or Beneficiaries and/or persons entitled to
benefits under the Plan or permit any portion of the Trust
Fund to revert to or become the property of the Company;
(ii) have the effect of reducing the Account of any Participant as
of the date of such amendment or deprive any Participant or
Beneficiary of a benefit accrued and payable; or
(iii) eliminate any option which constitutes a valuable right
available to a Participant with respect to benefits previously
accrued to the extent the Participant satisfied, either before
or after the amendment, the conditions for the form of payment
except as otherwise permitted by applicable law and
regulations.
(c) The Committee may amend or modify the Plan in order to bring the Plan
into compliance with applicable law or regulations, provided said
amendment or modification does not have a material effect on the
estimated cost of maintaining the Plan and does not create a new
class of benefits or entitlements.
56
<PAGE>
9.02 Termination
-----------
While the Plan and Trust Fund are intended to be permanent, they may be
terminated at the discretion of the Board of Directors. Written
notification of such action shall be given to each Company, the Trustee
and the Committee. Thereafter, no further contributions shall be made to
the Trust Fund.
9.03 Vesting Upon Termination
------------------------
Upon the complete discontinuance of Company contributions or the
termination or partial termination of the Plan and Trust Fund, the Account
of each affected Participant shall become fully vested and shall not be
reduced except
(a) for adjustments resulting from a valuation in accordance with Article
V, which valuation shall also reflect the expenses incurred for
administration of the Plan and/or Trust Fund after such
discontinuance or termination date, and all expenses incurred in
effectuating the complete discontinuance of Company contributions or
termination or partial termination of the Plan and Trust Fund, such
as the fees and retainers of the Plan's Trustee, accountant,
custodian, administrator, consultant, counsel and other specialists
if such expenses are not paid by the Company;
(b) for distributions of benefits by the Trustee to the Participant in
accordance with the Plan and at the written direction of the
Committee; and
(c) as provided in Section 14.01.
9.04 Distribution of Benefits After Termination
------------------------------------------
As soon as administratively feasible, the Trustee, as authorized and
directed by the Committee, shall, provided there is no successor defined
contribution plan within the meaning of Section 401(k)(10)(A)(i) of the
Code, distribute each Account, after adjustment in accordance with
Subsection 9.03(a) of the Plan, in a manner consistent with the provisions
of Article VII.
57
<PAGE>
ARTICLE X
---------
PARTICIPATING COMPANIES
-----------------------
10.01 Adoption by Other Entities
--------------------------
Any corporation or other business entity may, by resolution of its own
governing body, and with the approval of the Board of Directors, adopt
the Plan and thereby become a Company. Notwithstanding the adoption of
the Plan by other entities, the Plan will be administered as a single
plan and all Plan assets will be available to pay benefits to all
Participants under the Plan.
10.02 Alternative Provisions
----------------------
No Company may adopt alternative provisions as to itself or its
Employees.
Upon request of the governing body of a Company, the Board of Directors
may amend the Plan with respect to the Employees of such Company provided
that any change will only apply if any inequity resulting from such
changed Plan provisions is not found to be discriminatory on behalf of
Highly Compensated Employees.
10.03 Right to Withdraw (Plan Spinoff)
--------------------------------
Each Company having adopted the Plan shall have the right as of the last
day of any month to withdraw from the Plan and/or Trust Agreement by
delivering to the Board of Directors, the Committee and the Trustee
written notification from its own governing body of such action and
setting forth the date as of which the withdrawal shall be effective. The
date specified in such written notice shall be deemed a Valuation Date.
10.04 Procedure Upon Withdrawal
-------------------------
(a) If a Company withdraws from the Plan and Trust Agreement as the
result of its adoption of a different plan, the Trustee shall
segregate the portion of the Trust Fund attributable to the Accounts
of Participants employed solely by such Company.
As soon as administratively feasible the Trustee shall transfer the
segregated assets to the insurance carrier or fiduciary designated
by the Company as the agency through which the benefits of such
successor plan are to be disbursed.
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<PAGE>
(b) If a Company withdraws from the Plan and Trust Agreement as the
result of its adoption of a resolution to terminate its
participation in the Plan and to distribute assets to its Employees
who are Participants, the Trustee shall segregate the portion of the
Trust Fund attributable to the Accounts of the Participants who are
employed solely by such Company, and the termination provisions of
Sections 9.03 and 9.04 of the Plan shall apply with respect to such
segregated assets.
59
<PAGE>
ARTICLE XI
----------
TOP-HEAVY PROVISIONS
--------------------
11.01 Definition of Top-Heavy and Super Top-Heavy
-------------------------------------------
(a) The Plan will be Top-Heavy for a Plan Year if, as of the final
Valuation Date of the preceding Plan Year (or the final Valuation
Date of the current Plan Year, if such year is the first Plan Year),
hereinafter referred to as the Determination Date,
(i) the aggregate value of the Accounts of all Participants who are
Key Employees (as defined in Section 11.02 of the Plan) exceeds
60% of the aggregate value of such Accounts of all Participants
and the Plan cannot be aggregated with any other plans which
would result in the formation of a non-Top-Heavy aggregation
group of plans; or
(ii) the Plan is required to be part of an aggregation group of plans
and the aggregation group is Top-Heavy. The group will be
deemed Top-Heavy if the aggregate value of all defined
contribution plan accounts and the value of all defined benefit
plan accrued benefits attributable to Key Employees exceeds 60%
of such values attributable to all members of the aggregated
plans. Such benefit values and accounts shall be aggregated
using the Determination Dates of the individual plans which fall
within the same calendar year.
For purposes of this Section, aggregation group means all plans,
including terminated plans, maintained by the Employer if maintained
within the last five years ending on the Determination Date, in which
a Key Employee is a participant or which enables any plan in which a
Key Employee is a participant to meet the requirements of Section
401(a)(4) or Section 410 of the Code, as well as all other plans
maintained by the Employer, provided that inclusion of such other
plans in the aggregation group would not prevent the group of plans
from continuing to meet the requirements of such applicable Sections
of the Code.
(b) The Plan will be Super Top-Heavy for a Plan Year if the aggregate
value of all defined contribution plan accounts and the value of all
defined benefit plan accrued benefits attributable to all Participants
who are Key Employees exceeds 90% of such values attributable to all
Participants in lieu of 60% as stated in Subsection (a), above.
60
<PAGE>
(c) For purposes of determining the aggregate value of the benefit values
and accounts under this Section, distributions, other than rollovers
or direct transfers to another qualified plan maintained by the
Employer or rollovers or direct transfers not initiated by the
Participant, made during the five-year period ending on the
Determination Date of the plan from which such distributions were
made, shall be included to the extent such distributions are not
otherwise reflected in the value of any accrued benefit under a
defined benefit plan as determined with respect to such plan's
Determination Date. Such aggregate value shall not include any (i)
assets rolled over or transferred at the initiation of the Participant
directly from a qualified plan maintained by a business entity other
than an Employer to the Plan, after December 31, 1983, (ii) amounts
attributable to former Key Employees, (iii) amounts attributable to
Participants not employed during such five-year period, or (iv)
amounts attributable to deductible employee contributions under former
Section 219(e)(2) of the Code.
A Participant's accounts under any defined contribution plan as of any
Determination Date, other than the Determination Date which falls
within the first Plan Year, shall not include any Employer
contributions due and not yet paid as of the Determination Date, if
the plan under which the account is maintained is not subject to
Section 412 of the Code.
Accrued benefit values under defined benefit plans aggregated with
this Plan shall be determined, subject to the rules set forth in
Section 416(g)(4)(F)(ii) of the Code, as of the dates of the most
recent valuations preceding or coincident with such defined benefit
plans' Determination Dates, in accordance with the interest and
mortality rate assumptions specified in such defined benefit plans for
this purpose or, if not specified, shall be determined using an
interest rate of 5% and mortality rates in accordance with Group
Annuity Mortality Table for 1951 (Projection 'C' to 1970, set back
five years for females). Such accrued benefit values shall be
determined under the method of accrual used for all plans of the
Employer or, if such method is not identical, as if such benefit
accrued under the fractional rule as described in Section 41 1
(b)(1)(C) of the Code.
11.02 Definition of Key Employee
--------------------------
An Employee or a former Employee will be considered to be a Key Employee
for a Plan Year if, at any time during the Plan Year or the preceding four
Plan Years, he is an officer of the Employer earning more than 50% of the
maximum dollar limitation under Section 415(b)(1)(A) of the Code; one of
the 10 employees owning the largest interests (minimum 1/2%) in the
Employer earning more than the maximum dollar limitation under Section
415(c)(1)(A) of the Code; a 5% owner; or a 1% owner whose compensation
exceeds $150,000. This definition of Key Employee shall be governed by
Section 416 of the Code
61
<PAGE>
and Regulations thereunder. For purposes of this definition, but only to
the extent required by law, a Key Employee's Beneficiary shall be treated
as a Key Employee, and ownership percentages shall be determined without
regard to aggregation of entities under common control within the meaning
of Sections 414(b), (c) and (m) of the Code. In no event shall more than
50 employees (or, if less, the greater of three employees or 10 percent of
the employees) be deemed officers for purposes of this definition.
11.03 Allocation of Contributions and Forfeitures
-------------------------------------------
(a) To the extent that the allocations provided under Article III of the
Plan satisfies the minimum percentage specified in Subsection (b)
below, the allocation procedures under said Article III of the Plan
shall govern in lieu of those provided for in this Article.
(b) Unless otherwise provided, in this Section, for any Plan Year in which
the Plan is determined to be Top-Heavy the Company contribution shall
be allocated to non Key Employee Participants in the employ of the
Company on the last business day of that Plan Year and to those other
Participants eligible to share in accordance with Article III of the
Plan in proportion to their Compensation up to 3%, provided that the
amount allocated to any such non Key Employee in the employ of the
Company on the last business day of the Plan Year shall not be less
than an amount which, in combination with all other such amounts
allocated to him under all other defined contribution plans maintained
by the Employer, is equal to the lesser of
(i) 3% of the Participant's Compensation or
(ii) the highest percentage of Compensation (net of amounts
contributed under a qualified salary reduction or similar
arrangement) at which contributions (including Employer Matching
Contributions and forfeitures) are allocated for the Plan Year
under the Plan and under any other defined contribution plan
required to be aggregated with the Plan on behalf of any Key
Employee, times the Participant's Compensation.
(c) To the extent the amount to be allocated exceeds the amount above, the
remaining balance shall be allocated to those Participants eligible to
share in accordance with Article III of the Plan, in proportion to
Compensation (excluding any amount paid by the Employer which is not
paid by the Company) in excess of up to 3% of such Compensation.
(d) If any Participant is also covered by a defined benefit plan or plans
maintained by the Employer, then for each year the Plan is determined
to be Top-Heavy, 5% will be substituted in lieu of the 3% minimum
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<PAGE>
allocation under Subsection (b)(i) and Subsection (c) for such
Participant and Subsection (b)(ii) shall not be applicable, unless the
Participant receives the Top-Heavy defined benefit minimum under the
defined benefit plan or plans in accordance with Section 416(c)(1) of
the Code, notwithstanding any offset attributable to defined
contribution account balances, in which event no minimum contribution
will be required under the Plan.
(e) For purposes of this section, only benefits derived from Employer
contributions under the Plan, or any other defined contribution plan or
plans are to be taken into account to determine whether the minimum
Employer contribution or benefit has been satisfied, excluding matching
contributions and any contributions attributable to a salary reduction
or similar arrangement, but including contributions as defined in
Treasury Regulation 1.401(k)-1(g)(7). Such salary reduction
contributions will be taken into account to determine the Employer
contribution made on behalf of any Key Employee under subsection
11.03(b)(ii), but not to determine whether the minimum Employer
contribution or benefit has been satisfied.
(f) For purposes of this Section only, Participant shall also include any
Participant who did not meet the 1,000 Hours of Employment requirement,
if applicable, necessary to share in the Company's Regular
contributions.
(g) An Eligible Employee who has not met the 1,000 Hours of Employment
requirement, if applicable, for eligibility in accordance with Article
11 of the Plan, shall not be considered a Participant for purposes of
this Section.
(h) An employee of a business entity which has not adopted the Plan shall
not be considered a Participant for purposes of this Section unless
also employed by the Company.
(i) An Eligible Employee who becomes a Participant by virtue of the
acceptance of a rollover contribution or a transfer of assets in
accordance with Article III of the Plan but who is not otherwise
eligible in accordance with Section 2.01, shall not be entitled to
share in any Company contribution allocated in accordance with this
Article.
11.04 Minimum Vesting
---------------
(a) The following vesting schedule shall be substituted for the vesting
schedule under Subsection 6.04(a) as of the first day of the first
Plan Year the Plan is determined to be Top-Heavy for persons not
under the jurisdiction of a collective bargaining unit.
63
<PAGE>
11.05 Adjustments to Vesting Schedule
-------------------------------
Since the vesting provision in Article VI complies with Internal Revenue
Code Section 416, the vesting provision in Article VI shall remain the
same in any Top-Heavy Plan Year.
11.06 Limitation of Allocations
-------------------------
For any Plan Year in which the Plan is determined to be Top-Heavy or
Super Top-Heavy, the reference to "1.25" in Subsection 4.03(c)(ii)(B)(1)
will be changed to read "1.0".
64
<PAGE>
ARTICLE XII
-----------
WITHDRAWAL OF FUNDS DURING EMPLOYMENT
-------------------------------------
12.01 Withdrawals from Elective Deferral Contribution Account
-------------------------------------------------------
(a) Subject to the General Withdrawal Rules below, a Participant may
withdraw up to 100% of his Elective Deferral Contribution Account
provided (i) he has attained age 59 1/2 or (ii) such withdrawal
meets the Financial Hardship Rules below.
(b) Effective for Plan Years beginning after December 31, 1988, the
amount of any Financial Hardship Withdrawal shall be limited to the
sum of the Participant's Elective Deferral Contributions plus the
income credited on such Contributions as of the last Valuation Date
in 1988.
12.02 Withdrawals from Matching Contribution, Additional Matching Contribution
------------------------------------------------------------------------
and Rollover Accounts
---------------------
Subject to the General Withdrawal Rules below, a Participant may withdraw
up to 100% of the vested portion of his Matching Contribution, Additional
Matching, and/or Rollover Accounts provided (i) he has attained age
59 1/2 or (ii) such withdrawal meets the Financial Hardship Rules below.
12.03 Withdrawals from Regular Contribution Account
---------------------------------------------
Subject to the General Withdrawal Rules below, a Participant may elect to
withdraw up to 100% of his Regular Contribution Account provided he has
attained age 59 1/2.
12.04 Withdrawals from Qualified Matching Contribution and Qualified
--------------------------------------------------------------
Nonelective Contribution Accounts
---------------------------------
Subject to the General Withdrawal Rules below, a Participant may withdraw
up to 100% of his Qualified Matching Contribution and/or Qualified
Nonelective Contribution Accounts provided (i) he has attained age
59 1/2 or (ii) such withdrawal meets the Financial Hardship Rules below.
65
<PAGE>
12.05 Financial Hardship Rules
------------------------
(a) For purposes of this Article, a Financial Hardship withdrawal may be
made only if it is on account of an immediate and heavy financial
need of the Participant and is necessary to satisfy such financial
need, including income taxes and penalties, if applicable.
(b) The following needs shall be recognized as immediate and heavy
financial needs:
(i) medical expenses, as described in Section 213(d) of the Code,
previously incur-red by the Participant, the Participant's
spouse or the Participant's dependents, or funds necessary
for these persons to obtain medical care described in Section
213(d) of the Code,
(ii) purchase of a principal residence for the Participant,
(iii) tuition payments and related educational fees for the next 12
months of post-secondary education for the Participant or the
Participant's spouse, children or other dependents,
(iv) the need to prevent eviction from or foreclosure on the
mortgage of the Participant's principal residence,
(v) any other financial need as may be promulgated by the
Internal Revenue Service, and
(vi) any other financial stress the satisfaction of which is
necessary for the safety, well-being, livelihood or health of
the Participant or his immediate family.
(c) The following requirements will be applicable:
(i) The Participant must have obtained all other distributions and
loans available under all plans maintained by the Employer.
(ii) Elective Deferral Contributions and any other Employee
contributions under all plans maintained by the Employer will
be suspended for 12 months following the receipt of the
Financial Hardship withdrawal. The Participant's Elective
Deferral Contributions under Section 3.01 will be resumed
following the Participant's election for resumption.
(iii) The limitation of Section 4.01 which is imposed on a
Participant's Elective Deferral Contributions for the calendar
year immediately
66
<PAGE>
following the calendar year of the Financial Hardship
withdrawal will be reduced by the amount of such contributions
and/or deferrals for the calendar year of such withdrawal.
(d) A Financial Hardship withdrawal from a Participant's Elective
Deferral Contribution Account will be available only after the total
amount available from all other Accounts has been withdrawn. The
amount of such Financial Hardship withdrawal may not exceed the
amount required to meet the specified need plus any amounts
necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the withdrawal.
12.06 General Withdrawal Rules
------------------------
Any withdrawal shall be subject to the following requirements:
(a) Only one withdrawal will be permitted during any Plan Year.
(b) A written request for a withdrawal must be submitted to the Committee
at least 30 days prior to the requested date of withdrawal.
(c) If a loan is outstanding at the time a withdrawal is requested, such
withdrawal shall be permitted only to the extent that the remaining
vested Account balance under the Plan will be at least 100% of the
outstanding loan balance as of the date of the withdrawal.
67
<PAGE>
ARTICLE XIII
------------
LOANS
-----
13.01 Amount of Loans and Terms of Repayment
--------------------------------------
The Committee shall promulgate any additional specific rules and
regulations governing all aspects of this Article as it deems necessary.
The following general rules shall serve as the basis for any specific
rules and regulations:
(a) Application for Loan - Upon written application on forms provided by
--------------------
the Committee, the Committee may grant a loan to a Participant,
except shareholders or owner employees as referred to in Section
4975(d) of the Code.
(b) Minimum Loan - The minimum amount-of any loan shall be $1,000.
------------
(c) Maximum Loan - In no event shall a loan exceed the lesser of
------------
(i) $50,000, reduced by the highest outstanding loan balance during
the one-year period ending on the day before the date on which
any new loan is to be granted, or
(ii) 50% of the amount to which the Participant is vested under this
Plan on the date the loan is granted.
(d) Each loan granted to a Participant must be repaid in full before any
subsequent loan is granted to such Participant.
(e) All loans issued under this Article shall be considered investments
of the Account of the Participant to whom the loan is granted and
shall be charged to the investment funds as designated by the
Participant.
Interest shall be charged thereon at a rate equal to the prime
lending rate, as stated in The Wall Street Journal as of the date
the loan is granted, plus 1%.
(f) Each loan shall be secured by the assignment of not more than 50% of
the Participant's vested Account balance under this Plan on the date
the loan is granted, a promissory note executed by the Participant
and such additional collateral as the Committee shall require to
assure repayment of the loan and all interest payable thereon.
68
<PAGE>
(g) Repayment - Each loan shall be repaid by the Participant either
---------
through payroll deductions or in such other manner as the Committee
shall determine, provided such payment schedule does not permit
payment less frequently than quarterly. All payment schedules shall
be calculated to amortize principal and interest in level payments
over the period of the loan as agreed to by the Committee and the
Participant not to exceed five years from the date of such loan.
Notwithstanding the foregoing, in the event a loan is approved for
the purchase of a principal residence, the five-year repayment
requirement will not be applicable.
Principal and interest payments shall be credited to the Account of
the Participant to whom the loan is granted and shall be invested in
accordance with the Participant's current investment election.
(h) Default - If a Participant should fail to make a payment when due,
-------
the entire unpaid balance of the loan shall be in default and the
Committee shall take any one or more of the following steps, as it
deems necessary, to secure repayment of such loan:
(i) Deduct the amount of the outstanding indebtedness from the
Participant's Account, to the extent permitted and available
under law and in accordance with the terms of the Plan. Such
deduction will not occur until a distributable event occurs
under the terms of the Plan.
(ii) Instruct the Trustee to sell any property held as collateral
for such loan.
(iii) Take such other steps as may be required.
(i) Spouse Consent - Each loan will require that within the 90-day
--------------
period before the granting of the loan, the Participant and, if
married, his spouse, consent to such loan in writing, and
acknowledge the reduction in the Participant's Account in the event
the loan is in default.
(j) Any Participant who is a "party in interest" as defined in ERISA
Section 3(14) and who ceases to be an active Eligible Employee may
be eligible to borrow from the Plan under terms and conditions
reflecting valid differences between active Participants and other
Participants which would be considered in a normal commercial
setting, such as the unavailability of payroll deductions for
repayment. In no event will loans be unreasonably withheld from any
eligible applicant.
69
<PAGE>
ARTICLE XIV
-----------
GENERAL PROVISIONS
------------------
14.01 Exclusiveness of Benefits
-------------------------
The Plan has been created for the exclusive benefit of the Participants
and their Beneficiaries. No part of the Trust Fund shall ever revert to
the Company nor shall such Trust Fund ever be used other than for the
exclusive benefit of the Participants and their Beneficiaries, except as
provided in Sections 3.10 and 9.03, if applicable, and Subsection
4.03(d) of the Plan provided, however, that contributions made by the
Company by mistake of fact or which are not deductible under Section 404
of the Code, may be returned to the Company within one year of the
mistaken payment of the contribution or the date of disallowance of the
deduction, as the case may be. All contributions made by the Company
shall be conditional upon their deductibility under Section 404 of the
Code. No person shall have any interest in or right to any part of the
Trust Fund, or any equitable right under the Trust Agreement, except to
the extent expressly provided in the Plan or Trust Agreement.
14.02 Limitation of Rights
--------------------
Neither the establishment of the Plan, nor any modification thereof, nor
the creation of any fund, trust or account, nor the purchase of any
policy, nor the payment of any benefits shall be construed as giving any
Participant, Beneficiary, or any other person whomsoever, any legal or
equitable right against the Company, the Committee, or the Trustee,
unless such right shall be specifically provided for in the Plan or
conferred by affirmative action of the Committee or the Company in
accordance with the terms and provisions of the Plan; or as giving any
Participant or any other employee of the Company the right to be retained
in the service of the Company and all Participants and other employees
shall remain subject to discharge to the same extent as if the Plan had
never been adopted.
14.03 Limitation of Liability and Legal Actions
-----------------------------------------
In any action or proceeding involving the Trust Fund, or any part
thereof, or the administration thereof, the Company, the Committee, and
the Trustee shall be the only necessary parties. Any final judgment
entered in any such action or
70
<PAGE>
proceeding, which is not appealed or appealable, shall be binding and
conclusive on the parties thereto, and all persons having or claiming to
have an interest in the Trust Fund or under the Plan.
14.04 Construction of Agreement
-------------------------
The Plan shall be construed according to the laws of the State in which
the Company named under Article I has its principal place of business,
and all provisions hereof shall be administered according to, and its
validity shall be determined under, the laws of such State except where
pre-emptied by Federal law.
14.05 Title to Assets
---------------
No Participant, Beneficiary or any other person shall have any legal or
equitable right or interest in the funds set aside by the Company, or
otherwise received or held under the Plan, or in any assets of the Trust
Fund, except as expressly provided in the Plan, and no Participant,
Beneficiary or any other person shall be deemed to possess a right to any
assets except as herein provided.
14.06 Severability
------------
Should any provision of the Plan or any regulations adopted thereunder be
deemed or held to be unlawful or invalid for any reason, such fact shall
not adversely affect the other provisions or regulations unless such
invalidity shall render impossible or impractical the functioning of the
Plan and, in such case, the appropriate parties shall immediately adopt a
new provision or regulation to take the place of the one held illegal or
invalid.
14.07 Titles and Headings
-------------------
The titles and headings of the Sections in this instrument are for
convenience of reference only and, in the event of any conflict, the text
rather than such titles or headings shall control.
14.08 Counterparts as Original
------------------------
The Plan has been prepared in counterparts, each of which so prepared
shall be construed an original.
14.09 Merger of Plans
---------------
Upon the merger or consolidation of any other plan with this Plan or the
transfer of assets or liabilities from this Plan to any other plan, all
participants of this Plan shall be entitled to a benefit immediately
after the merger, consolidation or transfer (if the merged, consolidated
or transferee plan had then been terminated) at least equal to the
benefit they would have been entitled to immediately prior to such
merger, consolidation or transfer (if the Plan had then terminated).
71
<PAGE>
at least equal to the benefit they would have b een entitled to
immediately prior to such merger, consolidation or tansfer (if Plan had
then terminated).
14.10 Special Rules with Respect to Owner-Employees
---------------------------------------------
If this Plan provides contributions or benefits for one or more Owner-
Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when looked at
as a single plan, satisfy Sections 401(a) and (d) of the Code for the
employees of this Plan and all other trades and businesses.
If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Sections 401(a) and (d) of the Code and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him under the most
favorable plan of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
72
<PAGE>
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees, shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such Owner-
Employee or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
TO RECORD the adoption of this Plan, the Employer has caused its
authorized officer to affix its corporate name and seal hereto
this_____day of________________, 1995.
Attest: ASTROPOWER, INC.
_________________________ By:____________________(SEAL)
Secretary President
73
<PAGE>
AMENDMENT
TO THE
ASTROPOWER, INC. 401(k) SAVINGS PLAN
The AstroPower, Inc. 401(k) Savings Plan the ("Plan"), be and it is hereby
amended effective as of January 1, 1998 as set forth hereafter:
1. A new Section 1.30 is added to the Plan as follows:
1.30 "Company Stock"
Common stock issued by the Employer which is readily tradable on a national
or generally recognized securities market.
2. Subsection 3.03(a) is amended by deleting the first paragraph and
substituting the following in its place:
3.03 (a) Matching Contributions -- Such amount as the Company shall
----------------------
determine for each Plan Year and as evidenced by a Company Resolution. The
Matching Contribution amount shall be equal to a designated percentage rate
of each Participant's Elective Deferral Contributions with respect to
Elective Deferral Contributions which are not required to be restricted
under Sections 3.02, 4.01 or 4.02. Such Matching Contributions may be made
in the form of cash or Company Stock or any combination thereof, as
determined by the Employer in its sole discretion, and shall be allocated
to Participants who are in the employ of the Company on the last business
day of such Plan Year. No Matching Contribution will be provided in excess
of the limitations under Subsections 4.02(b) and (c) of the Plan.
3. Subsection 3.03(b) is amended by deleting the first paragraph and
substituting the following in its place:
3.03 (b) Additional Matching Contributions -- For any Plan Year, the
---------------------------------
Company may contribute Additional Matching Contributions as it shall
determine. Additional Matching Contributions may be contributed in the form
of cash or Company Stock or any combination thereof, as determined by the
Employer in its sole discretion, and shall be allocated to Participants who
are in the employ of the Company on the last business day of such Plan
Year, in the same proportion that the Elective Deferral Contributions of
each Participant for such Plan Year bear to the aggregate Elective Deferral
Contributions of all Participants for such Plan Year.
4. Subsection 5.02(c) is deleted in its entirety and the following is
substituted in its place:
(c) In the absence of an investment direction from any Participant, the
Committee shall retain complete discretion with respect to the investment
of such Participant's Account, except that the Committee shall not invest
any Participant's Account in Company Stock except as otherwise required
under Subsections 3.03(a) or (b) hereof.
5. A new Subsection 5.02(f) is added as follows:
5.02 (f) Any Company Stock that is contributed to the Plan as a Matching
Contribution or as an Additional Matching Contribution shall remain in the
form of Company Stock until the Participant directs the Trustee otherwise
in accordance with this Section 5.02.
6. Section 5.04 is amended by adding a new subsection (c) as follows:
(c) Company Stock shall be valued at its trading price as of the close of
the trading day on the date such shares are acquired or liquidated by the
Trustee.
7. Subsection 7.03(d) is deleted and the following is substituted in its
place:
7.03(d) Any benefits payable under this Article may be made in cash,
securities, or such other assets of the Trust as the Committee may direct,
except that Company Stock may not be distributed to any Participant or
Beneficiary.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed this
30th day of October, 1998.
ASTROPOWER, INC.
By: /s/ Thomas J. Stiner
----------------------
Vice President
ATTEST
/s/ Robert B. Hall
- ---------------------
Assistant Secretary
<PAGE>
EXHIBIT 10.2
ASTROPOWER, INC. 401(k)
SUMMARY PLAN DESCRIPTION
PREPARED AS OF AUGUST 28, 1995
The following provisions are subject to review and approval by the
Internal Revenue Service. We will inform you of any required changes.
<PAGE>
INTRODUCTION
If you would like assistance in better understanding the benefits and provisions
of our 401(k) Savings Plan and your rights and obligations under the 401(k)
Savings Plan, please contact the Committee.
---------
The AstroPower, Inc. 401(k) Savings Plan (the "Plan") was established by
AstroPower, Inc. (the "Company') to provide all eligible employees with an
opportunity to save for their retirement and to participate in the growth and
prosperity of the Company.
An essential purpose of the Plan is to accumulate funds for an employee's
retirement and to provide additional financial security in the event of an
employee's disability or death while still employed by the Company.
The Plan is designed to supplement your Social Security benefits as well as your
personal savings and investments.
The Company has appointed Robert B. Hall, Cheryl Keith, and Thomas J. Stiner as
the Trustees for the Plan's trust fund. The Trustees assume responsibility for
the investment and distribution of the funds and may also receive service of
legal process.
The Company is the Plan Administrator and has appointed Robert B. Hall, Cheryl
Keith and Thomas J. Stiner as its representatives (the "Committee'). The
Committee is fully responsible for the Plan's administration, including the
determination of eligibility for participation, determination of benefits, and
all other questions that may arise during the operation of the Plan. It also
acts as agent to receive service of legal process.
The Plan was established as of September 1, 1990 and was last amended and
restated effective as of January 1, 1994. Financial records are maintained on a
plan year basis, which begins on each January 1 and ends on the following
December 31.
Highlights of the Plan and answers to many questions employees are likely to ask
are provided in this summary plan description. Although every effort has been
made to describe the essential provisions of the Plan as accurately as possible,
the requirements for participation and the benefits payable will be determined
strictly in accordance with the Plan document, its Trust Agreement, and all
regulations, which are available it the office of the Committee.
Benefits under defined contribution plans of this type are not insured by the
Pension Benefit Guaranty Corporation.
<PAGE>
Plan provisions intended to conform to the Tax Reform Act of 1986 are included
in this summary plan description. Such provisions are subject to modification
to conform to regulations issued by the Internal Revenue Service in the future.
THIS SUMMARY PLAN DESCRIPTION DESCRIBES THE PLAN AS IN EFFECT ON AUGUST 28,
1995.
<PAGE>
BOOKLETS SUMMARY AND INDEX
Question Page
Number Number
------ ------
PLAN PARTICIPATION
1. Who Is Eligible to Participate in the Plan? 1
YOUR SAVINGS
2. How Much May I Save? 1
3. How May My Rate of Contributions Be Changed? 2
4. Can I Make a Rollover Contribution? 3
5. How Much Will the Company Contribute on the Basis of My Elective
Deferral Contributions? 3
6. Will the Company Make Other Contributions to the Plan? 3
INVESTMENT AND VALUATION OF ACCOUNTS
7. How Are the Funds Invested? 5
8. How and When Will My Account Be Valued? 5
9. Will I Receive a Statement of My Account? 5
AVAILABILITY OF FUNDS WHILE STILL EMPLOYED
10. May I Withdraw Funds While Still Employed? 5
11. May I Borrow from the Trust Fund? 7
PAYMENT OF BENEFITS
12. What Are My Benefits When I Leave the Company? 8
13 How Will Benefits Be Payable? 9
14. What Is the Earliest Date-My Benefit Can Commence? 10
LEGAL AND TAX CONSIDERATIONS
15. Are There Legal Restrictions and Limitations on Contributions
and Benefits? 10
16. What Are the-Tax Effects of Plan Distributions?
17. May the Plan Be Amended or Terminated?
18. What Is the Plan's Benefit Claim Procedure?
19. Do the Plan Provisions Ever Change Automatically?
20. May I Deduct My Contributions to an Individual Retirement
Account (ERA)?
21. What Are My Rights Under ERISA?
<PAGE>
PLAN PARTICIPATION
1. WHEN AM I ELIGIBLE TO PARTICIPATE IN THE PLAN?
All employees who were participants of the Plan prior to January 1, 1994,
will automatically qualify for continued participation. All employees who
were eligible to participate on January 1, 1994 shall become a participant
as of January 1, 1994.
Effective January 2, 1994 through June 30, 1995, you were eligible for
Participation on the January 1, April 1, July 1, or October 1 following the
date you completed one Month of Service with the Company or, if later, the
January 1, April 1, July I, or October 1 after you attained age 21.
Effective July 1, 1995, you will be eligible for participation on the
January 1, April 1, July 1, or October 1 following the date you complete
one Month of Service with the Company or, if later, the January 1, April 1,
--------------------
July 1, or October 1 after you attain age 21.
------------------------
For purposes of eligibility, you will receive credit for One Month of
Service for each calendar month you receive credit for continuous,
-----------
uninterrupted service and are entitled to pay for services.
---------------------
You should note that the Plan does not cover employees under the
jurisdiction of a collective bargaining unit or leased employees.
YOUR SAVINGS
2. HOW MUCH MAY I SAVE?
You have the choice of saving on a before-tax basis, by pay reduction, any
amount from 1 % to 15 % (in whole percentages) of your compensation each
payroll period. These contributions are called "Elective Deferral
Contributions". See "Are There Legal Restrictions and Limitations on
Contributions and Benefits?" for a description of the overall limitations
placed on the amount of your Elective Deferral Contributions.
Compensation means the wages you receive from the Company during a plan
year and which is reported to the Internal Revenue Service on Form W-2.
Further, compensation earned prior to your entry into the Plan is not
included.
At least 30 days before your enrollment date, you must file an election and
investment form designating the percentage of your salary to be contributed
to the
-1-
<PAGE>
Plan as an Elective Deferral Contribution and to indicate your investment
selections.
Your Elective Deferral Contributions are treated as Company contributions
to the Plan and, therefore, are not currently subject to federal or state
(except for Pennsylvania) income taxes.
These contributions are subtracted from your paycheck before the applicable
tax withholding rates are applied.
This means that some of the money you save under the Plan would otherwise
have been paid in current taxes. However, your unreduced compensation will
still be used to calculate your overtime pay, if applicable, future salary
increases, Social Security benefits, and all other benefits, including the
allocation of the Company's Regular Contributions (see "Will the Company
Make Other Contributions to the Plan?").
EXAMPLE - Assume a participant, whose annual pay is $20,000, pays 20%
of his compensation for federal and state income taxes. Also assume,
for comparison purposes, that the participant has been saving $1,000
each year after paying his taxes. Here is how saving under this Plan,
before paying current taxes, would compare to the participant's
existing savings program:
<TABLE>
<CAPTION>
Current Plan's
After Tax Before Tax
Savings Savings
------- -------
<S> <C> <C>
Annual Pay $ 20,000 $ 20,000
Before Tax Savings -0- - 1,000
-------- --------
Adjusted Annual Pay $ 20,000 $ 19,000
Current Taxes (20%) - 4,000 - 3,800
-------- --------
Net Pay $ 16,000 $ 15,200
After Tax Savings 1,000 -0-
-------- --------
Net Pay After Savings $ 15,000 $ 15,200
</TABLE>
As a result of being able to save with before-tax dollars, the
participant's net pay increases by $200 from the tax deferral.
3. HOW MAY MY RATE OF CONTRIBUTIONS BE CHANGED?
-2-
<PAGE>
When your pay changes, the dollar amount of your Elective Deferral
Contributions and the Company's Matching Contributions on your behalf will
be adjusted automatically.
You may increase or decrease your Elective Deferral Contribution rate as of
any January 1, April 1, July 1 or October 1 by written notice to the
Committee at least 30 days before the date you want the change to take
affect.
The Committee may decrease your Elective Deferral Contribution rate at any
time during the plan year in the event your Elective Deferral Contributions
need to be reduced in order to meet various legal requirements (see 'Are
There Legal Restrictions and Limitations on Contributions and Benefits?').
You may also fully discontinue your Elective Deferral Contributions at any
time during the year by written notice to the Committee at least 30 days
before the date you want the discontinuance to take effect. A
discontinuance of your Elective Deferral Contributions will automatically
require the discontinuance of the Company's Matching Contributions.
You may resume your Elective Deferral Contributions as of any subsequent
January 1, April 1, July I or October 1 by written notice to the Committee
at least 30 days before the date you want the contributions resumed.
4. MAY I ROLL OVER MONEY FROM MY PREVIOUS EMPLOYER'S RETIREMENT PLAN?
Provided certain requirements are met, you may elect to have all or a
portion of your benefit under your former employer's retirement plan
directly rolled over into this Plan. If you receive a distribution from
your former employer's retirement plan which satisfies the requirements for
rollover into another qualified plan, you may be permitted to "roll over"
the distribution into this Plan. These rollover funds are automatically
invested in the same way other funds deposited in the Plan are invested
(see "When Are Contributions Made and How Are They Invested?"). Please see
the Committee for further information concerning rollover requirements.
A rollover of your benefit will, of course, be 100% vested (and therefore
non-forfeitable) at all times. It will be separately accounted for by the
Trustees, and will be distributed to you along with your Plan benefit.
5. HOW MUCH WILL THE COMPANY CONTRIBUTE ON THE BASIS OF MY ELECTIVE DEFERRAL
CONTRIBUTIONS?
To encourage participation and long-term savings, the Company may deposit
to your account in the trust fund an amount to be determined by a company
resolution which shall be equal to a designated percentage of your Elective
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Deferall Contributions. This contribution is called a "Matching
Contribution". Effective January 1, 1994, the Company has decided to match
$0.25 for each dollar of your Elective Deferral Contributions.
You will share in this Matching Contribution only if you are in the employ
of the Company on the last business day of the plan year. However, the
requirement for active employment at the end of the plan year will not
apply for any plan year during which you begin a Company-approved leave of
absence, become permanently disabled, retire or die.
6. WILL THE COMPANY MAKE OTHER CONTRIBUTIONS TO THE PLAN?
The foundation and success of the Plan will always be closely related to
the Company's financial condition and growth. At the end of each plan
year, the Company will review business operations for the year and
determine whether an additional contribution will be made to the trust
fund.
These contributions are called the Company's "Regular Contributions". You
do not have to elect to have your compensation reduced to be eligible to
receive a share of the Company's Regular Contributions.
You will share in the Company's Regular Contributions provided you are m
the Company's employ on the last business day of the plan year. However,
requirement for active employment at the end of the plan year will not
apply for any plan year during which you are on a Company-approved leave of
absence, become permanently disabled, retire or die.
Company Regular Contributions are generally allocated in three stages as
follows:
Step One: If the Plan is determined to be top heavy for the plan year in
question (as discussed in "Do the Plan Provisions Ever Change
Automatically?"), each eligible participant will receive an allocation up
to 3% of his compensation. In addition, each eligible participant will
receive an allocation up to 3% of his compensation in excess of the Taxable
Wage Base (i.e., "excess compensation").
Step Two: If there is any remaining Regular Contribution, each eligible
participant will receive an allocation of an amount equal to the proportion
that the ratio of the sum of the participant's compensation plus the
participant's excess compensation is to the sum of the total compensation
plus excess compensation of all eligible participants. However, the pro-
rata allocation of Step Two cannot be greater than the difference of 5.7%
(or the old age insurance portion of the Old Age Survivor's Disability
Insurance (OASDI) tax rate percentage in effect on the first day of the
plan year) and the top heavy allocation percentage, if any, up to 3%.
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Step Three: If there is any Regular Contribution remaining after Steps One
and Two, then the remainder will be allocated to each eligible participant
in the ratio that each eligible participant's compensation bears to the
total compensation of all eligible participants.
If the Plan is not top heavy, the allocation of the Company's Regular
Contribution will begin from Step Two. In that case, however, the
allocation can be up to 5.7% (or the old age insurance portion of the Old
Age Survivor's Disability Insurance (OASDI) tax rate percentage in effect
on the first day of the plan year) of compensation plus excess
compensation.
Finally, if the Regular Contribution is not sufficient to make the full
allocation under Step One, if applicable, and Step Two, then the account of
each participant eligible to share in the allocation will receive an
allocation of an equal percentage of the amount which would have been
allocated to him under Step One, if applicable, and Step Two, as the case
may be, if the full allocation was made.
For purposes of allocating Company Regular Contributions the following
terms apply:
"Compensation," for purposes of sharing in the Company's Regular
Contribution, is defined in "How Much May I Save?".
The Taxable Wage Base is the maximum amount of salary on which both you,
the employee, and your Employer will be taxed for social security purposes.
Everyone is taxed up to that predetermined amount, but once you earn over
the amount, social security taxes are no longer taken out of your pay for
that year. The federal government annually determines the maximum amount
of salary which will be taxed; thus, the amount of salary to be taxed for
social security changes each year. The Social Security Taxable Wage Base
for 1993 was $57,600 and $60,600 for 1994. The Taxable Wage Base for each
plan year will be that amount in effect on the first day of the plan year.
INVESTMENT AND VALUATION OF ACCOUNTS
7. WHEN ARE CONTRIBUTIONS MADE AND HOW ARE THEY INVESTED?
All of your Elective Deferral Contributions will normally be transferred to
the Trustees as soon as practicable following each pay period. The
Company's contributions are normally transferred to the Trustees after the
end of the plan year.
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You are entitled to direct the investment of your account under the Plan.
The Committee will provide you with more information on the investment of
your accounts.
8. HOW AND WHEN WILL MY ACCOUNT BE VALUED?
The Plan is valued four times a year, as of each March 31, June 30,
September 30, and December 31, at which time the Trustees will prepare a
complete accounting of the trust fund and your accounts will be credited
with their proportional share of investment experience in accordance with
your investment election. The valuation date for Plan distribution
purposes is the March, 31, June 30, September 30, December 31 preceding
the actual distribution.
9. WILL I RECEIVE A STATEMENT OF MY ACCOUNT?
You will receive a statement of your account quarterly. In addition,
financial information with respect to the trust fund's assets and
investments will be made available annually.
AVAILABILITY OF FUNDS WHILE STILL EMPLOYED
10. MAY I WITHDRAW FUNDS WHILE STILL EMPLOYED?
You may withdraw funds while employed (see "What Are My Benefits When I
Leave the Company?") to the extent described below.
GENERAL RULES FOR ALL WITHDRAWALS
Only one withdrawal may be requested during any plan year. If you have an
outstanding loan (see "May I Borrow From the Trust Fund?") the amount of
funds available for withdrawal may be limited. The Committee will notify
you if this is the case. Your request must be made in writing to the
Committee at least 30 days in advance.
Withdrawals of Elective Deferrals, Company contributions and investment
earnings made before age 59 1/2 will normally be subject to an additional
10% excise tax unless used for medical expenses to the extent deductible
under Section 213 of the Internal Revenue Code (See "What Are the Tax
Effects of Plan Distributions?").
ELECTIVE DEFERRAL CONTRIBUTIONS
You may take an in-service withdrawal from your Elective Deferral
Contribution Account if your request meets the Hardship Withdrawal Rules
below. You may
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not, however, withdraw investment earnings that are credited on your
Elective Deferral Contributions.
In addition, once you have attained age 59 1/2 you may withdraw up to 100%
of your Elective Deferral Contribution Account (including investment
earnings) for any reason.
COMPANY CONTRIBUTIONS
You may withdraw up to 100% of your Company Matching Contribution if your
request meets the Hardship Withdrawal Rules below, or for any reason once
you have attained age 59 1/2.
You may withdraw the vested portion of your Regular Contribution Account
for any reason once you have attained age 59 1/2.
ROLLOVER CONTRIBUTIONS
You may withdraw up to 100% of your Rollover Contribution Account if your
request meets the Hardship Withdrawal Rules below, or for any reason once
you have attained age 59 1/2.
HARDSHIP WITHDRAWAL RULES
In order to qualify for a hardship withdrawal you must meet two
requirements:
FIRST - you must have an immediate and heavy financial need.
The following needs will automatically be considered to be immediate
and heavy financial needs:
. medical expenses of the type potentially deductible on your income
tax return for you, your spouse or your dependents,
. purchase of your principal place of residence,
. tuition payments for the next 12-month period of post-secondary
education for you, your spouse, children or other dependents, or
. the amount required to prevent eviction from or foreclosure on your
principal place of residence.
In addition, you may request a hardship withdrawal for any other
immediate and heavy financial need. Determination of whether you have
an immediate
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and heavy financial need will be made on the basis of all relevant
facts and circumstances.
For any hardship, you must furnish evidence that satisfies the
Committee that a hardship exists.
SECOND - The withdrawal must be necessary to meet the immediate and
heavy financial need and may not exceed the amount actually required to
meet the need, including taxes and penalties, if applicable. You will
also have to meet the following requirements.
. Your Elective Deferral Contributions and any other employee
contributions under this Plan or any other qualified plan the
Company maintains will be suspended for 12 months following the date
the hardship withdrawal is granted.
. Your Elective Deferral Contributions will be resumed as of the
January 1, April 1, July 1, or October 1 following the required
suspension period if you so elect. However, for the calendar year
during which you resume your contributions, the dollar limitation on
Elective Deferral Contributions will be reduced by the amount of
Elective Deferral Contributions made in the year of the hardship
Withdrawal.
11. MAY I BORROW FROM THE TRUST FUND?
You - may borrow up to 50% of the vested portion of all your accounts,
subject to a maximum of $50,000 (reduced by the highest outstanding loan
balance during the one-year period ending on the day before the date on
which any new loan is granted) and a minimum of $1,000. Only one loan will
be granted at a time and it must be repaid in full before you can request
another loan.
The loan amount available will be determined by the Committee which may
request whatever evidence it considers appropriate to verify the purpose
and need for the funds.
Loans will be subject to an interest rate based on the prime lending rate,
as stated in The Wall Street Journal as of the date the loan is granted,
plus 1%.
Loans must normally be repaid within such period as agreed to between you
and the Committee, up to a maximum of five years. However, if the loan is
made for the purchase of your principal place of residence, the repayment
period may be longer than five years. Repayment will normally be made
through payroll deductions.
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In the event of non-payment at any time, the loans will automatically be in
default and the Committee will implement such collection procedures as
required.
Within the 90-day period before the loan, you and, if you are married, your
spouse must consent to the provisions of the loan in writing, acknowledging
that your account will be reduced by an amount equal to the unpaid balance
of the loan plus interest due in the event of non-payment. If such written
consent and acknowledgment is not provided, the loan will not be granted.
PAYMENT OF BENEFITS
12. WHAT ARE MY BENEFITS WHEN I LEAVE THE COMPANY?
You will be entitled to a 100% vested interest in your Elective Deferral
Contribution, Matching, Rollover, Qualified Matching Contribution and
Qualified Nonelective Contribution accounts upon your termination of
employment for any reason.
You will have a 100% vested interest in your account upon attainment of
Normal Retirement, Early Retirement, in the event of a permanent
disability, or in the event of your death prior to your termination of
employment.
Normal Retirement is the attainment of age 65. Your Normal Retirement Date
is the first day of the month coincident with or next following your
attainment of Normal Retirement. If you continue to work for the Company
after your Normal Retirement Date, you may continue to contribute to the
Plan, and Company contributions to the Plan on your behalf will continue.
If you wish, you may elect to start receiving your benefits, even if you
continue working.
Early Retirement is the attainment of age 55, provided you have completed
at least 10 years of service with the Company. Your Early Retirement Date
is the first day of the month coincident with or next following your
attainment of Early Retirement.
You will be considered permanently disabled if you are unable to continue
with the Company for your customary hours of employment because of a
disability. The Committee may request whatever evidence it considers
appropriate to verify the extent and duration of your disability.
In the event of your resignation or discharge before any of the above
events, you will be entitled to the full value of your account if you have
completed 5 full years of service with the Company after attaining age 18.
Please note that you are
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always 100% vested in your Elective Deferral Contribution, Matching
Contribution, and Rollover Contribution Accounts.
If you completed less than 5 full years of service, you will be entitled to
a percentage of your Regular Contribution Account on the basis of your full
years of service after age 18 in accordance with the following schedule:
Number of Years VESTED PERCENTAGE
--------------- -----------------
Less than 1 full year 0%
1 full year 20%
2 full years 40%
3 full years 60%
4 full years 80%
5 or more full years 100%
You will receive credit for a full year of service for each plan year after
you attain age 18 during which you are entitled to pay for at least 1,000
hours of employment.
Your service is considered interrupted if you receive pay for less than 501
hours in any plan year. This is called a one year "break in service". If
you had five consecutive one Year breaks in service and resume full
employment at a later date, you will receive no credit for your service
before the break in service years unless (a) the number of break in service
years is less than your earlier period of service or (b) you were entitled
to a vested benefit under the Plan for your prior service.
If you incurred a one year break in service as a result of a maternity or
paternity leave of absence, the first one year break in service will not be
counted as one of the five one year breaks in service.
When you terminate employment, any portion of your account in which you are
not vested win be forfeited and reallocated among the remaining
participants entitled to a share of the Company's Regular contribution.
Forfeitures will occur upon the earlier of (1) the date you receive a
distribution of your vested interest in the Plan or (2) the date you incur
5 consecutive "one year breaks in service".
Generally, if you are rehired within five years, any amounts previously
forfeited when you left the Company will be restored to your account
provided you repay the full amount of all the funds previously distributed
to you from the Plan in a lump sum within five years of your reemployment.
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Repayment is not permitted if you were fully vested since you will have had
no forfeiture.
13. HOW WILL BENEFITS BE PAYABLE?
The value of your vested account when you terminate your employment for any
reason will be payable in a lump sum beginning at any date you select up to
age 70 1/2.
However, if benefits payable under any Company long-term disability
insurance program would be reduced by benefits payable from this Plan, in
lieu of an immediate distribution of your account, payment of your account
will be deferred and held in the trust fund until the benefits under the
disability insurance are no longer payable or, if earlier, the end of the
plan year during which you attain age 65.
In the event of your death, the benefits under the Plan will be paid to
your spouse in the form described above unless you obtained your spouse's
written acknowledgment and consent to name another beneficiary. In that
event, or if you did not have a spouse or if you had certified that your
spouse could not be located, you may designate your children, other close
relatives or any other person or persons as your beneficiary. If there is
no surviving spouse or no person has been designated, the funds will be
payable to your estate for distribution to your heirs.
14. WHAT IS THE EARLIEST DATE MY BENEFIT CAN COMMENCE?
If the value of your account is less than or equal to $3,500, it will be
paid to you as soon as administratively feasible following the valuation
date after your termination of employment. The amount to be paid to you
will equal the value of your account as of that succeeding valuation date.
If the value of your account is greater than $3,500, it may be immediately
paid to you only if you consent to this payment. You may elect to have the
value of your account determined (a) as of the valuation date immediately
prior to your termination of employment, increased by any contributions
made after that date and decreased by any withdrawals after that date, or
(b) as of the valuation date after your termination. If you elect to have
the value of your account determined under (a) above, the amount paid to
you will not include any investment earnings from the prior valuation date
to the date of payment to you.
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LEGAL AND TAX CONSIDERATIONS
15. ARE THERE LEGAL RESTRICTIONS AND LIMITATIONS ON CONTRIBUTIONS
AND BENEFITS?
By law your Elective Deferral Contributions under this Plan and all similar
plans are limited to a specific dollar amount during any calendar year,
adjusted for cost-of-living increases ($9,240 for 1994). This limit may be
reduced if a hardship withdrawal is made.
In addition, it is possible, if you are a higher-paid employee, that your
Elective Deferral Contributions during the year relative to the Elective
Deferral Contributions of other participants of the Plan could exceed the
amount permitted by law. Should this occur, your Elective Deferral
Contributions may be reduced during the plan year to the extent necessary
to satisfy the legal limitations or any excess Elective Deferral
Contributions may be refunded after the end of the plan year.
Finally, the Internal Revenue Code and Regulations impose maximum
limitations on all contributions permitted under all qualified plans.
These limitations are quite liberal and would not normally prevent a
participant from receiving full benefits. For example, the total of all
contributions made to the plan on your behalf for any plan year may not
exceed 25% of your total taxable compensation or $30,000, if less.
Any participant affected by any of the above restrictions or limitations
will be notified by the Committee.
No benefit under this Plan may be assigned or pledged, nor may any benefit
be subject to your debts or other legal obligations except in accordance
with a qualified domestic relations order or as otherwise provided by law.
16. WHAT ARE THE TAX EFFECTS OF PLAN DISTRIBUTIONS?
The following is only a general description of some income tax implications
of benefit distributions under this Plan. The laws are complex and subject
to frequent change.
YOU SHOULD NOT RELY SOLELY ON THIS INFORMATION AND SHOULD CONSULT THE
INTERNAL REVENUE SERVICE OR YOUR TAX ADVISOR TO OBTAIN CURRENT INFORMATION
AT THE TIME YOU ARE CONSIDERING A DISTRIBUTION UNDER THE PLAN AND BEFORE
DETERMINING THE MOST APPROPRIATE TAX PLANNING UNDER YOUR CIRCUMSTANCES.
NEITHER THE COMPANY NOR THE COMMITTEE CAN PROVIDE YOU WITH TAX ADVICE.
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Your Elective Deferral Contributions, the Company's Matching and Regular
Contributions and all investment earnings on the accumulating funds are
currently free from federal income tax while held on your behalf.
Income taxes may be payable when these funds are actually distributed to
you in the future. Such taxes may be less if the distribution is deferred
until your retirement when your total taxable income is generally reduced.
ROLLOVERS
The Internal Revenue Code permits you to avoid current taxation on any
portion of the taxable amount of an eligible rollover distribution by
rolling over that portion into another qualified employer retirement plan
that accepts rollover contributions or into an individual retirement
arrangement (IRA).
There are two ways to effect a rollover:
(1) a direct rollover from this Plan to another plan, or
(2) a distribution to you that you transfer to another Plan within 60 days
of receipt.
Under either method, the amount rolled over is not subject to federal
income tax (nor the Early Distribution Tax Penalty described below) in the
year of distribution. However, federal law requires that the Trustees
withhold for federal income tax 20% of the amount of a distribution which
is actually received by you. This is not necessarily the tax you owe, it
is just the amount of tax withheld. If payment is made to you, the amount
withheld for federal Income tax will be taxable unless you add your own
funds equal to the amount withheld and also roll this amount over to
another plan within the 60-day period mentioned above.
EXAMPLE: Assume you have $5,000 in your account. If you elect a direct
rollover, there will be no taxation on the amount rolled over. However, if
you elect to have it distributed to you, the Trustees will send $ 1,000 to
the IRS as income tax withholding and distribute the remaining $4,000 to
you. If you elect to roll over the total distribution, you will have to
add $1,000 of your own funds to make up the full $5,000. If you only roll
over the $4,000 you received, you will owe income tax on the $1,000
withheld and possibly the Early Distribution Tax Penalty described below.
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DIRECT ROLLOVER REQUIREMENTS
If your account balance is $200 or more and you make a rollover election
and provide the required information, the Trustees will directly roll over
all or a portion of your account balance either to:
(1) the trustee of an IRA, or
(2) the trustee of another employer's qualified plan that accepts such
rollovers, and, if applicable, distribute the remaining amount
directly to you. If you choose to receive a portion of your account in
cash while requesting the Trustees to directly roll over the
remainder, the amount you elect to have rolled over must equal not
less than $500.
There are specific and technical qualifications and requirements set forth
in the Internal Revenue Code that must be satisfied in order for your Plan
distribution to be eligible to be rolled over. You will receive a special
tax notice explaining these requirements when you request an eligible
rollover distribution. If interested, you may obtain additional
information on the establishment and maintenance of an IRA from your tax
advisor.
EARLY DISTRIBUTION TAX PENALTY
Taxable distributions from the Plan prior to age 59 1/2 are not only
---
subject to regular income taxation, but also are subject to an Early
Distribution Tax Penalty equal to 10% of the taxable amount distributed.
Taxable distributions are the portion of a distribution not rolled over to
an IRA or other qualified plan.
Distributions are exempt from the Early Distribution Tax penalty if paid on
account of (a) death, (b) disability or (c) termination of employment after
age 55. Exemptions are also permitted for payments to alternate payees
under qualified domestic relations orders and amounts not in excess of
certain deductible medical expenses.
MINIMUM DISTRIBUTION REQUIREMENTS
The Internal Revenue Code requires that you begin receiving a minimum
distribution from the Plan each year beginning on the April 1 following the
calendar year during which you attain age 701/2 even if you continue in the
employ of the Company. The Committee will provide you with information
describing the optional forms of distribution available to you. if this
minimum distribution requirement is not met, you may be subject to an
excise tax of 50 % of the difference between the required distribution and
the amount actually distributed.
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SPECIAL TAX BENEFITS
Special tax benefits, such as income averaging, may be available to you.
You should consult your tax advisor for more information.
17. MAY THE PLAN BE AMENDED OR TERMINATED?
Yes. The Company has the right to amend or terminate the Plan at any time.
The Plan must be operated for the exclusive benefit of its participants.
If the Plan and Trust are terminated, all participants will be 100% vested
in their account and benefits will be payable under the terms of the Plan.
If the Plan is amended or terminated, participants will be advised
accordingly.
18. WHAT IS THE PLAN'S BENEFIT CLAIM PROCEDURE?
The Committee will endeavor to administer the Plan fairly and consistently
and to pay all benefits to which participants or beneficiaries are properly
entitled. However, failure to execute any forms required or to furnish
information requested by the Committee within a reasonable period of time
may result in delayed benefit payments.
All claims for unpaid benefits should be made in writing to the Committee.
If a claim is wholly or partially denied, you will receive a written notice
from the Committee indicating the reason for the denial, the Plan
provisions pertinent to the denial, and a request for whatever additional
information may be necessary to consider the claim further. You must be
informed of the denial within 90 days from the date the Committee receives
your claim, unless there are any special circumstances which require an
extension of this 90-day period. You will be informed if an extension is
required. Any extension of this period may not exceed 90 days from the
last day of the original 90-day period.
After receipt of a notice denying a claim for benefits, you or your
authorized representative may review pertinent documents, submit comments
on issues involved and request in writing that the Committee review its
action.
Your written request must be received by the Committee no later than 60
days following your receipt of the denial of your claim for benefits. The
Committee will reexamine your claim and issue a final decision within 60
days after the receipt of your appeal, unless special circumstances require
a reasonable extension of the 60-day period.
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19. DO THE PLAN PROVISIONS EVER CHANGE AUTOMATICALLY?
Yes, under current law, special rules for sharing in an employer's
contribution are applicable for any "top-heavy" plan year only.
A Plan is considered to be top-heavy for a plan year if the account
balances of participants who are "key-employees" exceed 60% of the account
balances of all participants. Key employees generally include employees
who (a) are officers of the employer, (b) are among the ten employees
owning the largest interest in the employer, (c) own more than 5% of the
employer, or (d) own more than 1% of the employer and receive pay in
excess of $150,000.
In a top-heavy plan year, the employer must contribute at least 3% (or, if
less, the highest rate of contribution on behalf of a key employee) of
total pay for each eligible employee who is not a key employee unless the
minimum benefit is provided from another plan.
You will be notified if our Plan is ever affected by these changes.
There are additional top-heavy limitations which may be applicable to
certain participants. Any participant affected by these limitations will
be fully advised.
20. MAY I DEDUCT MY CONTRIBUTIONS TO AN INDIVIDUAL RETIREMENT ACCOUNT (IRA)?
As a result of your participation in this Plan or any other qualified plan,
you may no longer be eligible for a full deduction of your contributions to
an IRA.
The full $2,000 deduction is preserved for employees with adjusted gross
income under specified levels ($40,000 for married couples filing joint
returns; $25,000 for single taxpayers). After that, the deductible IRA
contribution phases out gradually until it disappears completely (at
$50,000 for married couples; $35,000 for singles).
You may, however, still contribute the full amount or the difference
between $2,000 and the allowable deductible amount on an after-tax basis.
The investment earnings under the IRA will continue to be tax free until
distributed. You should consult your tax advisor with respect to the tax
implications of making contributions to an IRA.
21. WHAT ARE MY RIGHTS UNDER ERISA?
As a participant of this Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974
(ERISA). This law provides that all plan participants shall be entitled
to:
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. Examine, without charge, at the office of the Committee (and at other
specified locations, if appropriate), all plan documents, including
copies of all documents filed by the plan with the U.S. Department of
Labor, such as detailed financial reports.
. Obtain copies of all plan documents and other plan information upon
written request to the Committee. The Committee may make a reasonable
charge for the copies.
. Receive a summary of the plan's financial report as required by law.
. Obtain a statement telling you whether you have an earned current
vested interest in your account and whether, under the terms of the
plan, you will be entitled to receive a retirement income under an
annuity at normal retirement age, if you stop working under the plan
now.
If you do not have a current vested interest or right to an annuity at
normal retirement age, the statement will tell you how many more years you
have to work to obtain these rights. This statement must be requested in
writing and is not required to be given more than once a year. The Plan
must provide the statement free of charge.
In addition to creating rights for plan participants, ERISA imposes duties
upon the people who are responsible for the operation of the employee
benefit plan. The people who operate your plan, called 'fiduciaries' of
the plan, have a duty to do so prudently and in the interest of you and
other plan participants and beneficiaries.
No one, including your employer or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining
your benefits or exercising your rights under ERISA.
If your claim for your benefit is denied in whole or in part you must
receive a written explanation of the reason for the denial. You have the
right to have the Committee review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a case,
the court may require the Committee to provide the materials and pay you up
to $100 a day until you receive the materials, unless the materials were
not sent because of reasons beyond the control of the Committee.
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If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court.
If it should happen that plan fiduciaries misuse the Plan's money, or if
you are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued
to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about your plan, you should contact the
Committee. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
The Plan Sponsor's name, address, and telephone number are: AstroPower,
Inc., Solar Park, Newark, DE 19716-2000; (302) 366-0400.
Its Federal Identification Number is 51-0315869.
The Serial Number assigned to this Plan is 001.
THE FOREGOING PROVISIONS ARE SUBJECT TO REVIEW AND APPROVAL BY THE
INTERNAL REVENUE SERVICE. WE WILL INFORM YOU OF ANY REQUIRED CHANGES.
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Form 5500 ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN OMB Nos. 1210-0016
Department of the Treasury (with 100 or more participants) 1210-0089
---------------------------
Internal Revenue Service This form is required to be filed under sections 104 and 1997
-------------- ---------------------------
Department of Labor 4065 of the Employee Retirement Income Security Act of 1974 This Form is Open to Public
Pension and Welfare Benefits and sections 6030D, 6047(e), 6057(b), and 6058(a) of the Inspection.
Administration Internal Revenue Code, referred to as the Code.
--------------
Pension Benefit Guaranty Corporation * See separate Instructions.
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FOR THE CALENDAR PLAN YEAR 1997 OR FISCAL PLAN YEAR BEGINNING , 1997, AND ENDING ,19
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<CAPTION>
<S> <C>
If A(1) through A(4), B, C, and/or D, do not apply to this year's FOR IRS USE ONLY
return/report, leave the boxes unmarked. EP-ID
---------------------------------------------------
A This return/report is: (1) [_] the first return/report filed for the plan; (3) [_] the final return/report filed for the
(2) [_] an amended return/report; plan; or
(4) [_] a short plan year return/report (less than
12 months)
IF ANY INFORMATION ON A PREPRINTED PAGE 1 IS INCORRECT, CORRECT IT. IF ANY INFORMATION IS MISSING, ADD IT. PLEASE USE RED INK
WHEN MAKING THESE CHANGES AND INCLUDE THE PREPRINTED PAGE 1 WITH YOUR COMPLETED RETURN/REPORT.
B Check here if any information reported in 1a, 2a, 2b, or 5a changed since the last return/report for this plan............. * [_]
c If your plan year changed since the last return/report, check here......................................................... * [_]
D If you filed for an extension of time to file this return/report, check here and attach a copy of the approved extension... * [X]
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
1a Name and address of plan sponsor (employer, if for a single-employer plan) 1b Employer Identification number (ENI)
(Address should include room or suite no.) 51:0315869
------------------------------------------
ASTROPOWER, INC. 1c Sponsor's telephone number
(302) 366-0400
------------------------------------------
SOLAR PARK 1d Business code (see instructions, page
20) 3698
------------------------------------------
NEWARK, DE 19716-2000 1e CUSIP issuer number
04644A
- ------------------------------------------------------------------------------------------------------------------------------------
2a Name and address of plan administrator (if same as plan sponsor, enter "Same") 2b Administrator's EIN
SAME
------------------------------------------
2c Administrator's telephone number
- ------------------------------------------------------------------------------------------------------------------------------------
3 If you are filing this page without the preprinted historical plan information and the name, address, and EIN of the plan sponsor
or plan administrator has changed since the last return/report filed for this plan, enter the information from the last
return/report in line 3a and/or line 3b and complete line 3c.
a Sponsor_________________________________________________________________________________ EIN ________________Plan number_________
b Administrator___________________________________________________________________________ Ein ____________________________________
c If line 3a indicates a change in the sponsor's name, address, and EIN, is this a change in sponsorship only ? (See line 3c on
page 8 of the instructions for the definition of sponsorship.) Enter "Yes" or "No." *
- ------------------------------------------------------------------------------------------------------------------------------------
4 ENTITY CODE. (If not shown, enter the applicable code from page 8 of the A
instructions.) *
- ------------------------------------------------------------------------------------------------------------------------------------
5a Name of plan * ASTROPOWER, INC. 401(K) SAVINGS PLAN 5b Effective date of plan (mo., day,
----------------------------------------------------------------------
yr.) 9/01/90
________________________________________________________________________________________ ------------------------------------------
5c Three-digit
- ------------------------------------------------------------------------------------------
All filers must complete 6a through 6d, as applicable. plan number * 001
------------------------------------------
6a [_] Welfare benefit plan 6b [X] Pension benefit plan 2
------------------------------------------
(If the correct codes are not preprinted below, enter the applicable codes from
------------------------------------------
page 8 of the instructions in the boxes.)
6c Pension plan features. (If the correct codes are not preprinted below, enter the
------------------------------------------
applicable pension plan feature codes from page 8 of the instructions in the boxes.) C G
------------------------------------------
6d [_] Fringe benefit plan. Attach Schedule F (Form 5500). See instructions.
- ------------------------------------------------------------------------------------------------------------------------------------
CAUTION: A penalty for the late or incomplete filing of this return/report will be assessed unless reasonable cause is established.
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report,
including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete.
Signature of employer/plan sponsor * /s/ SIGNATURE ILLEGIBLE ^^ Date * 12/12/98
------------------------------------------------------------- -------------------------
Type or print name of individual signing above /s/ SIGNATURE ILLEGIBLE ^^
-------------------------------------------------------------------------------------
Signature of plan administrator * /s/ SIGNATURE ILLEGIBLE ^^ Date * 12/12/98
---------------------------------------------------------------- -------------------------
Type or print name of individual signing above /s/ SIGNATURE ILLEGIBLE ^^
- ------------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see the instructions for Form 5500. MGA Form 5500 (1997)
</TABLE>
<PAGE>
Form 5500 (1997) Page 2
- --------------------------------------------------------------------------------
6e Check all applicable investment arrangements below (see instructions on page
9):
(1) [_] Master trust (2) [_] 103-12 investment entity
(3) [_] Common/collective trust (4) [_] Pooled separate account
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
f Single-employer plans enter the tax year end of the employer in which this plan year ends * Month 12 Day
31 Year 97
g Is any part of this plan funded by an insurance contract described in Code section 412(1)?............... [_] Yes [X] No
h If line 6g is "Yes," was the part subject to the minimum funding standards for either of the prior 2 plan
years?................................................................................................... [_] Yes [_] No
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
7 Number of participants as of the end of the plan year (welfare plans complete only lines
7a(4), 7b, 7c and 7d):
a Active participants: (1) Number fully vested ........................................ a(1) 171
-------------------
(2) Number partially vested .................................... a(2) 0
-------------------
(3) Number nonvested ........................................... a(3) 0
-------------------
(4) Total ....................................................................... a(4) 171
------------------
b Retired or separated participants receiving benefits .................................................. b 0
------------------
c Retired or separated participants entitled to future benefits ......................................... c 15
------------------
d Subtotal. Add lines 7a(4), 7b, and 7c ................................................................. d 186
------------------
e Deceased participants whose beneficiaries are receiving or are entitled to receive benefits ........... e 0
------------------
f Total. Add lines 7d and 7e ............................................................................ f 186
------------------
g Number of participants with account balances. (Defined benefit plans do not complete this line
item) ................................................................................................. g 97
------------------
h Number of participants that terminated employment during the year with accrued benefits that were
less than 100% vested.................................................................................. h 0
------------------
i (1) Was any participant(s) separated from service with a deferred vested benefit for which a Schedule Yes No
---------------
SSA (Form 5500) is required to be attached? (See instructions)..................................... i(1) X
---------------
(2) if "Yes," enter the number of separated participants required to be reported * 8
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
8a Was this plan ever amended since its effective date? If "Yes," complete line 8b........................ 8a X
---------------
If the amendment was adopted in this plan year, complete lines 8c through 8e.
b If line 8a is "Yes," enter the date the most recent amendment was adopted * Month 1 Day 1 Year 94
c Did any amendment during the current plan year result in the retroactive reduction of accrued benefits
---------------
for any participants? c
---------------
d During this plan year did any amendment change the information contained in the latest summary plan
---------------
descriptions or summary description of modifications available at the time of amendment?............... d
---------------
e If line 8d is "Yes," has a summary plan description or summary description of modifications that
reflects the plan amendments referred to on line 8d been furnished to participants?
---------------
(see instructions)..................................................................................... e
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
9a Was this plan terminated during this plan year or any prior year? If "Yes," enter the year *___________ 9a X
--------------
b Were all the plan assets either distributed to participants or beneficiaries, transferred to another
--------------
plan, or brought under the control of PBGC?............................................................ b X
--------------
c Was a resolution to terminate this plan adopted during this plan year or any prior plan year?.......... c X
--------------
d If line 9a or line 9c is "Yes," have you received a favorable determination letter from the IRS for the
termination?........................................................................................... d
--------------
e If line 9d is "No," has a determination letter been requested from the IRS?............................ e
--------------
f If line 9a or line 9c is "Yes," have participants and beneficiaries been notified of the termination
or the proposed termination?........................................................................... f
--------------
g If line 9a is "Yes," and the plan is covered by PBGC, is the plan continuing to file a PBGC Form 1 and
pay premiums until the end of the plan year in which assets are distributed or brought under the
control of PBGC?....................................................................................... g
--------------
h During this plan year, did any trust assets revert to the employer for which the Code section 4980
excise tax is due?..................................................................................... h X
--------------
i If line 9h is "Yes," enter the amount of tax paid with Form 5330 * $
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
10a In this plan year, was this plan merged or consolidated into another plan(s), or were assets or
liabilities transferred to another plan(s)? If "Yes," complete lines 10b through 10e................... * [_] Yes [X] No
If "Yes," identify the other plan(s) c Employer identification number(s) d Plan number(s)
b Name of plan(s) * __________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________
e If required, has a Form 5310-A been filed?............................................................. * [_] Yes [_] No
- --------------------------------------------------------------------------------------------------------------------------------
11 Enter the plan funding arrangement code from page 12 Enter the plan benefit arrangement code from page 10 of the
10 of the instructions......... * 2 instructions * 2
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Yes No
--------------
13a Is this a plan established or maintained pursuant to one or more collective bargaining agreements?..... 13a X
--------------
b If line 13a is "Yes," enter the appropriate six-digit LM number(s) of the sponsoring labor
organization(s) (see instructions):
(1) (2) (3)
- -------------------------------------------------------------------------------------------------------------------------------
14 If any benefits are provided by an insurance company, insurance service, or similar organization, enter
the number of Schedules A (Form 5500), Insurance Information, attached. If none, enter "-0-" * 1
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500 (1997) Page 3
- ------------------------------------------------------------------------------------------------------------------------------------
Welfare Plans Do Not Complete Lines 15 Through 24. Go To Line 25 On Page 4.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Yes No
15a If this is a defined benefit plan subject to the minimum funding standards for this plan year, is Schedule
------------------
B (Form 5500) required to be attached ? (if this is a defined contribution plan leave blank.).............. 15a
------------------
b If this is a defined contribution plan (i.e., money purchase or target benefit), Is it subject to the
minimum funding standards?
(If a waiver was granted, see instructions.) (If this is a defined benefit plan, leave blank............... b
If "Yes," complete (1), (2), and (3) below: ------------------
(1) Amount of employer contribution required for the plan year under Code section 412 b(1) $
---------------------
(2) Amount of contribution paid by the employer for the plan year.................... b(2) $
---------------------
Enter date of last payment by employer * Month......... Day......... Year........
---------------------
(3) If (1) is greater than (2), subtract (2) from (1) and enter the funding deficiency
here; otherwise, enter -0-. (If you have a funding deficiency, file Form 5330.) b(3) $
- ------------------------------------------------------------------------------------------------------------------------------------
16 Has the annual compensation of each participant taken into account under the current plan year been
limited as required by section 401(a)(17)? (See instructions.)............................................. 16 X
- ------------------------------------------------------------------------------------------------------------------------------------
17a (1) Did the plan distribute any annuity contracts this year? (See instructions.).......................... a(1) X
------------------
(2) If (1) is "Yes," did these contracts contain a requirement that the spouse consent before any
------------------
distributions under the contract are made in a form other than a qualified joint and survivor annuity? a(2)
------------------
b Did the plan make distributions or loans to married participants and beneficiaries without the required
------------------
consent of the participant's spouse?....................................................................... b X
------------------
c Upon plan amendment or termination, do the accrued benefits of every participant include the subsidized
------------------
benefits that the participant may become entitled to receive subsequent to the plan amendment or
termination?............................................................................................... c X
- ------------------------------------------------------------------------------------------------------------------------------------
18 Is the plan administrator making an election under section 412(c)(8) for an amendment adopted after the
------------------
end of the plan year? (See instructions.).................................................................. 18 X
------------------
19 If a change in the actuarial funding method was made for the plan year pursuant to a Revenue Procedure
------------------
providing automatic approval for the change, indicate whether the plan sponsor agrees to the change........ 19
------------------
20 Is the employer electing to compute minimum funding for the plan year using the Transition rule of Code
------------------
section 412(1)(11)?........................................................................................ 20
- ------------------------------------------------------------------------------------------------------------------------------------
21 Check if you are applying the substantiation guidelines from Revenue Procedure 93-42, in completing
lines 21a through 21o (see instructions)............................................................ [_]
If you checked the box, enter the first day of the plan year for which data is being submitted *
Month......... Day......... Year.........
a Does the employer apply the separate line of business rules of Code section 414(r) when testing this
------------------
plan for the coverage and discrimination tests of Code sections 410(b) and 401(a)(4)?...................... 21a X
------------------
b If line 21a is "Yes," enter the total number of separate lines of business claimed by the employer *.......
If more than one separate line of business, see instructions for additional information to attach.
------------------
c Does the employer apply the mandatory disaggregation rules under Income Tax Regulations section
1.410(b)-7(c)?............................................................................................ c X
------------------
If "Yes," see instructions for additional information to attach.
d In testing whether this plan satisfies the coverage and discrimination tests of Code sections 410(b) and
------------------
401(a), does the employer aggregate plans?................................................................ d X
------------------
e Does the employer restructure the plan into component plans to satisfy the coverage and discrimination
------------------
tests of Code sections 410(b) and 401(a)(4)7.............................................................. e X
------------------
f If you meet either of the following exceptions, check the applicable box to tell us which exception you
meet and do NOT complete the rest of question 21:
(1) [_] No highly compensated employee benefited under the plan at any time during the plan year;
(2) [_] This is a collectively bargained plan that benefits only collectively bargained employees, no
more than 2% of whom are professional employees.
------------------
g Did any leased employee perform services for the employer at any time during the plan year?............... g X
------------------
h Enter the total number of employees of the employer. Employer includes entities aggregated with the Number
------------------
employer under Code section 414(b),(c), or (m). Include leased employees and self-employed individuals.... h 208
------------------
i Enter the total number of employees excludable because of: (1) failure to meet requirements for minimum
age and years of service; (2) collectively bargained employees; (3) nonresident aliens who receive no
earned income from U.S. sources; and (4) 500 hours of service/last day rule............................... i 37
------------------
j Enter the number of nonexcludable employees. Subtract line 211 from line 21h.............................. j 171
------------------
k Do 100% of the nonexcludable employees entered on line 21j benefit under the plan?.........[X] Yes [_]No
If line 21k is "Yes," do NOT complete lines 21l through 21o.
------------------
l Enter the number of nonexcludable employees (line 21j) who are highly compensated employees............... l
------------------
m Enter the number of nonexcludable employees (line 21j) who benefit under the plan......................... m
------------------
n Enter the number of employees entered on line 21m who are highly compensated employees.................... n
------------------
o This plan satisfies the coverage requirements on the basis of (check one):
(1) [_] The average benefits test (2) [_] The ratio percentage test-Enter percentage * [_] [_] [_] [.] [_] %
- ------------------------------------------------------------------------------------------------------------------------------------
21(c)-(o)-101(k)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500 (1997) Page 4
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Welfare Plans Go To Line 25 On This Page. Yes No
- ----------------------------------------------------------------------------------------------------------------------------------
22a Is it or was it ever intended that this plan qualify under Code section 401(a)? If "Yes," complete lines 22b
and 22c..................................................................................................... 22a X
----------------
b Enter the date of the most recent IRS determination letter....................... * Month 11 Year 97
c Is a determination letter request pending with the IRS?..................................................... c X
- ----------------------------------------------------------------------------------------------------------------------------------
23a Does the plan hold any assets that have a fair market value that is not readily determinable on an
established market? (If "Yes," complete line 23b) (See instructions)....................................... 23a X
----------------
b Were all the assets referred to in line 23a valued for the 1997 plan year by an independent third-party
appraiser?.................................................................................................. b
----------------
c If line 23b is "No." enter the value of the assets that were not valued by an independen third-party
appraiser for the 1997 plan year. * ---------------------------------
d Enter the most recent date the assets on line 23c were valued by an independent third-party appraiser.
(If more than one asset, see instructions.) * Month ....... Day ......... Year ..........
(If this plan does not have ESOP features leave line 23a blank and go to line 24.)
e If dividends paid on employer securities held by the ESOP were used to make payments on ESOP loans,
enter the amount of the dividends used to make the payments........................................... 23a
- ----------------------------------------------------------------------------------------------------------------------------------
24 Does the employer/sponsor listed on line 1a of this form maintain other qualified pension benefit plans?.... 24 X
----------------
If "Yes," enter the total number of plans, including this plan *
- ----------------------------------------------------------------------------------------------------------------------------------
25a Did any person who rendered services to the plan receive directly or indirectly $5,000 or more
in compensation from the plan during the plan year (except for employees of the plan who were paid ----------------
less than $1,000 in each month)?............................................................................ 25a X
----------------
If "Yes," complete Part I of Schedule C (Form 5500)?........................................................ b X
----------------
b Did the plan have any trustees who must be listed in Part II of Schedule C (Form 5500)?.....................
c Has there been a termination in the appointment of any person listed on line 25d below?..................... c X
----------------
d If line 25c is "Yes," check the appropriate box(es), answer lines 25e and 25f, and complete Part III of
Schedule C (Form 5500);
(1) [_] Accountant (2) [_] Enrolled actuary (3) [_] Insurance carrier (4) [_] Custodian
(5) [_] Administrator (6) [_] Investment manager (7) [_] Trustee
e Have there been any outstanding material disputes or matters of disagreements concerning the above ----------------
termination?......................................................................................... e
----------------
f If an accountant or enrolled actuary has been terminated during the plan year, has the terminated
accountant/actuary been provided a copy of the explanation required by Part III of Schedule C
(Form 5500) with a notice advising them of their opportunity to submit comments on the explanation ----------------
directly to the DOL?..................................... f
----------------
g Enter the number of Schedules C (Form 5500) that are attached. If none, enter -0- * 1
- ----------------------------------------------------------------------------------------------------------------------------------
26a Is this plan exempt from the requirement to engage an independent qualified public accountant?
(See instructions)............................................................................. 26a X
----------------
b If line 26a is "No," attach the accountant's opinion to this return/report and check the appropriate box.
This opinion is:
(1) [_] Unqualified
(2) [x] Qualified/disclaimer per Department of Labor Regulations 29 CFR 2520,103-8 and/or 2520,103-12(d)
(3) [_] Qualified/disclaimer other (4) [_] Adverse (5) [_] Other (explain)......................
............................................................................................................
............................................................................................................
c If line 26a is "No," does the accountant's report, including the financial statements and/or notesrequired
to be attached to this return/report disclose (1) errors or irregularities; (2) illegal acts;
(3) material internal control weakness; (4) a loss contingency indicating that assets are impaired or
a liability incurred; (5) significant real estate or other transactions in which the plan and (A) the sponsor,
(B) the plan administrator, (C) the employer(s), or (D) the employee organization(s) are jointly involved;
(6) that the plan participated in any related party transactions; or (7) any unusual or infrequent events or
transactions occurring subsequent to the plan year end that might significantly affect the usefulness of the
financial statements in assessing the plan's present or future ability to pay benefits? ----------------
d If line 28c is "Yes," provide the total amount involved in such disclosure * c X
- ----------------------------------------------------------------------------------------------------------------------------------
27 If line 26a is "No," complete the following questions. [You may NOT use "N/A" in response to lines 27a
through 27i): If line 27a, 27b, 27c, 27d, 27e, or 27f is checked "Yes," schedules of these items in the
format set forth in the instructions are required to be attached to this return/report. Schedule G
(Form 5500) may be used as specified in the instructions.
During the plan year: ----------------
a Did the plan have assets held for investment?................................................................ 27a X
----------------
b Were any loans by the plan or fixed income obligations due the plain in default as of the close of the ----------------
plan year or classified during the year as uncollectible? b X
----------------
c Were any leases to which the plan was a party in default or classified during the year as uncollectible?.... c X
----------------
d Were any plan transactions or series of transactions in excess of 5% of the current value of plan assets?... d X
----------------
e Do the notes to the financial statements accompanying the accountant's opinion disclose any nonexempt
transactions with parties-in-interest?..................................................................... e X
----------------
f Did the plan engage in any nonexempt transactions with parties-in-interest not reported on line 27e?........ f X
----------------
g Did the plan hold qualifying employer securities that are not publicly traded?.............................. g X
----------------
h Did the plan purchase or receive any nonpublicly traded securities that were not appraised in ----------------
writing by an unrelated third party within 3 months prior to their receipt?............................... h X
----------------
i Did any person manage plan assets who had a financial interest worth more than 10% in any party providing ----------------
services to the plan or receive anything of value from any party providing services to the plan?............ i X
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form 5500 (1997) Page 5
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
YES NO
--------------
28 Did the plan acquire individual whole life Insurance contracts during the plan year?..................... 28 X
- ----------------------------------------------------------------------------------------------------------------------------------
29 During the plan year:
a (1) Was this plan covered by a fidelity bond? If "Yes," complete lines 29a(2) and 29a(3)................. 29a(1) X
(2) Enter amount of bond * $200,000
(3) Enter the name of the surety Company * ITT HARTFORD
b (1) Was there any loss to the plan, whether or not reimbursed, caused by fraud or dishonesty?............ 29b(1) X
(2) If line 29b(1) is "Yes," enter amount of loss * $
- ----------------------------------------------------------------------------------------------------------------------------------
30a Is the plan covered under the Pension Benefit Guaranty Corporation termination insurance program?
[_] Yes [X] No [_] Not determined
b If the 30a is "Yes" or "Not determined," enter the employer identification number and the plan number used to identify it.
Employer identification number * Plan number *
- ----------------------------------------------------------------------------------------------------------------------------------
31 Current value of plan assets and liabilities at the beginning and end of the plan year. Combine the value of plan assets held
in more than one trust. Allocate the value of the plan's interest in a commingled trust containing the assets of more than one
plan on a line-by-line basis unless the trust meets one of the specific exceptions described in the instructions. Do not enter
the value of that portion of an Insurance contract that guarantees, during this plan year, to pay a specific dollar benefit at
a future date. Round off amounts to the nearest dollar; any other amounts are subject to rejection. Plans with no assets at
the beginning and the end of the plan year, enter -0- on line 31f.
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS (a) Beginning of Year (b) End of Year
---------------------------------------
a Total noninterest-bearing cash....................................................... []
---------------------------------------
b Receivables: (1) Employer contributions.............................................. b(1) 104,590 109,824
---------------------------------------
(2) Participant contributions...................................................... (2) 44,296 38,417
---------------------------------------
(3) Income......................................................................... (3)
---------------------------------------
(4) Other.......................................................................... (4)
---------------------------------------
(5) Less allowance for doubtful accounts........................................... (5)
---------------------------------------
(6) Total. Add lines 31b(1) through 31b(4) and subtract line 31b(5)...............* (6) 148,886 148,241
---------------------------------------
c General Investments: (1) Interest-bearing cash (including money market funds)........ c(1)
---------------------------------------
(2) Certificates of deposit........................................................ (2)
---------------------------------------
(3) U.S. Government securities..................................................... (3)
---------------------------------------
(4) Corporate debt instruments: (A) Preferred...................................... (4)(A)
---------------------------------------
(B) All other.................................................................. (4)(B)
---------------------------------------
(5) Corporate stocks: (A) Preferred................................................ (5)(A)
---------------------------------------
(B) Common..................................................................... (5)(B)
---------------------------------------
(6) Partnership/joint venture interests............................................ (6)
---------------------------------------
(7) Real estate: (A) Income-producing.............................................. (7)(A)
---------------------------------------
(B) Nonincome-producing........................................................ (7)(B)
---------------------------------------
(8) Loans (other than to participants) secured by mortgages: (A) Residential....... (8)(A)
---------------------------------------
(B) Commerical................................................................. (8)(B)
---------------------------------------
(9) Loans to participants: (A) Mortgages........................................... (9)(A)
GENERAL ---------------------------------------
(B) OTHER...................................................................... (9)(B) 114,624 122,899
---------------------------------------
(10) Other loans....................................................................
(10)
---------------------------------------
(11) Value of interest in commom/collective trusts.................................. (11)
---------------------------------------
(12) Value of interest in pooled separate accounts.................................. (12)
---------------------------------------
(13) Value of interest in master trusts............................................. (13)
---------------------------------------
(14) Value of interest in 103-12 investment entities................................ (14)
---------------------------------------
(15) Value of interest in registered investment companies........................... (15) 1,288,368 1,824,932
---------------------------------------
(16) Value of funds held in Insurance company general account (unallocated contracts). (16) 295,995 347,554
---------------------------------------
(17) Other___________________________________________________________________________ (17)
---------------------------------------
(18) Total. Add lines 31c(1) through 31c(17).......................................* (18) 1,698,987 2,295,385
---------------------------------------
d Employer-related investments: (1) Employer securities............................... d(1)
---------------------------------------
(2) Employer real property......................................................... (2)
---------------------------------------
e Buildings and other property used in plan operation................................. e
---------------------------------------
f Total assets. Add lines 31a,31b(6), 31c(18), 31d(1),31d(2) and 31e.................* f 1,847,873 2,443,626
LIABILITIES
---------------------------------------
g Benefit claims payable.............................................................. g
---------------------------------------
h Operating payables.................................................................. h
---------------------------------------
i Acquisition indebtedness............................................................ i
---------------------------------------
j Other liabilities................................................................... j
---------------------------------------
k Total liabilities. Add lines 31g through 31j.......................................* k 0 0
NET ASSETS
---------------------------------------
l Subtract line 31k from line 31f....................................................* l 1,847,873 2,443,626
---------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Form 5500 (1997) Page 6
- --------------------------------------------------------------------------------
32 Plan income, expenses, and changes in net assets for the plan year. Include
all income and expenses of the plan, including any trust(s) or separately
maintained fund(s), and any payments/receipts to/from insurance carriers.
Round off amounts to the nearest dollar, any other amounts are subject to
rejection.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME (a) Amount (b) Total
-----------------------------------------------
<S> <C> <C> <C>
a Contributions:
(1) Received or receivable from:
(A) Employers............................................................ a(1)(A) 109,825
----------------------------
(B) Participants......................................................... (B) 256,146
----------------------------
PARTICIPANT ROLLOVERS
(C) Others............................................................... (C) 80,659
----------------------------
(2) Noncash contributions.................................................... (2)
----------------------------
(3) Total contributions. Add lines 32a(1)(A), (B), (C) and line 32a(2)......* (3) 446,630
--------- --------------
b EARNINGS ON INVESTMENTS:
(1) Interest
(A) Interest-bearing cash (Including money market funds)................. b(1)(A)
----------------------------
(B) Certificates of deposit ............................................. (B)
----------------------------
(C) U.S. Government securities........................................... (C)
----------------------------
(D) Corporate debt Instruments........................................... (D)
----------------------------
(E) Mortgage loans....................................................... (E)
PARTICIPANT ----------------------------
(F) Other loans.......................................................... (F) 10,915
INSURANCE ----------------------------
(G) Other interest....................................................... (G) 20,232
----------------------------
(H) Total interest. Add lines 32b(1)(A) through (G).....................* (H) 31,147
--------- --------------
(2) Dividends: (A) Preferred stock........................................... b(2)(A)
----------------------------
(B) Common stock......................................................... (B)
----------------------------------------------
(C) Total dividends. Add lines 32b(2)(A) and (B)........................* (C) 0
--------- --------------
(3) Rents.................................................................... (3)
--------- --------------
(4) Net gain (loss) on sale of assets: (A) Aggregate proceeds................ (4)(A)
----------------------------
(B) Aggregate carrying amount (see instructions)......................... (B)
----------------------------------------------
(C) Subtract (B) from (A) and enter result............................... (C) 0
--------- --------------
(5) Unrealized appreciation (depreciation) of assets......................... (5)
--------- --------------
(6) Net investment gain (loss) from common/collective turns.................. (6)
--------- --------------
(7) Net investment gain (loss) from pooled separate accounts................. (7)
--------- --------------
(8) Net investment gain (loss) from master trusts............................ (8)
--------- --------------
(9) Net investment gain (loss) from 103-12 investment entities............... (9)
--------- --------------
(10) Net investment gain (loss) from registered investment companies.......... (10) 272,922
--------- --------------
c Other income................................................................. c
--------- --------------
d Total income. Add all amounts in column (b) and enter total ................* d 750,699
--------- --------------
EXPENSES
e Benefit payment and payments to provide benefits:
(1) Directly to participants or beneficiaries................................ e(1) 154,946
----------------------------
(2) To insurance carriers for the provision of benefits...................... (2)
----------------------------
(3) Other.................................................................... (3)
----------------------------
(4) Total payments. Add lines 32a(1) through 32a(3).........................* (4) 154,946
--------- --------------
f Interest expense............................................................. f
---------
g Administrative expenses: (1) Salaries and allowances......................... g(1)
----------------------------
(2) Accounting fees.......................................................... (2)
----------------------------
(3) Actuarial fees........................................................... (3)
----------------------------
(4) Contract administrator fees.............................................. (4)
----------------------------
(5) Investment advisory and management fees.................................. (5)
----------------------------
(6) Legal fees............................................................... (6)
----------------------------
(7) Valuation/appraisal fees................................................. (7)
----------------------------
(8) Trustees fees/expenses (including travel, seminars, meetings, etc.)...... (8)
----------------------------
(9) Other.................................................................... (9)
----------------------------------------------
(10) Total administrative expenses. Add lines 32g(1) through 32g(?)........... (10) 0
--------- --------------
h Total expenses. Add lines 32e(4), 32f, and 32g(10)..........................* h 154,946
--------- --------------
i Net Income (loss), Subtract line 32h from line 32d..........................* i 595,753
--------- --------------
j Transfers to (from) the plan (see instructions).............................. j
--------- --------------
k Net assets at beginning of year (line 31I, column (a))....................... k 1,847,873
--------- --------------
l Net assets at end of year (line 31I, column (b))............................* l 2,443,626
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Yes No
--------
33 Did any employer sponsoring the plan pay any of the administrative
expenses of the plan that were not reported on line 32g? X
- --------------------------------------------------------------------------------
<PAGE>
ATTACHMENT TO 1997 FORM 5500
FOR ITEM 21
Plan Name ASTROPOWER, INC. 401(K) SAVING PLAN EIN 51-0315869
--------------------------------------------------- -----------
PN 001
--------------------------------------------------- -----------
Attachment Number 1 of 1 for:
--- ---
[X] Mandatory Disaggregation
[_] Separate Line of Business (SLOB)
Plan Part / SLOB 401(M)
--------------------------------------------------------------
21b Enter the total number of separate lines of business
claimed by the employer *______
c Does the employer apply the mandatory disaggregation
rules under Income Tax Regulations section
1.410(b)-7(c)? Yes X No___
---
d In testing whether this plan satisfies the coverage
and discrimination tests of Code sections 410(b)
and 401(a), does the employer aggregate plans?....... Yes___ No X
---
e Does the employer restructure the plan into component
plans to satisfy the coverage and discrimination
tests of Code sections 401(b) and 401(a)(4)?......... Yes___ No X
---
f If you meet either of the following exceptions, check
the applicable box to tell us which exception you
meet and do NOT complete the rest of question 21:
(1) [_] No highly compensated employee benefited
under the plan at any time during the
plan year.
(2) [_] This is a collectively bargained plan that
benefits only collectively bargained
employees, no more than 2% of whom are
professional employees.
g Did any leased employee perform services for the
employer at any time during the plan year?........... Yes___ No X
---
h Enter the total number of employees of the employer.
Employer includes entities aggregated with the
employer under Code section 414(b), (c), or (m).
Include leased employees and self-employed Number
individuals.......................................... 208
---------------
i Enter the total number of employees excludable
because of: (1) failure to meet requirements for
minimum age and years of service; (2) collectively
bargained employees; (3) nonresident aliens who
receive no earned income from U.S. sources; and
(4) 500 hours of service/last day rule............... 37
---------------
j Enter the number of nonexcludable employees. Subtract
line 21i from line 21h............................... 171
---------------
k Do 100% of the nonexcludable employees entered on
line 21j benefit under the plan? Yes X No___
---
If line 21k is "Yes," do NOT complete line 21i
through 21o.
l Enter the number nonexcludable employees (line 21j)
who are highly compensated employees................. _______________
m Enter the number of nonexcludable employees (line 21j)
who benefit under the plan........................... _______________
n Enter the number of employees entered on line 21m who
are highly compensated employees..................... _______________
o This plan satisfies the coverage requirements on the
basis of (check one):
(1) [_] The average benefits test (2) [_] The ratio
percentage test--Enter percentage *______%
Notes:__________________________________________________________________________
__________________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SCHEDULE A INSURANCE INFORMATION OMB No. 1210-0018
(FORM 5500) -------------------------------
Department of the Treasury This Schedule is required to be filed under section 104 of the 1997
Internal Revenue Service Employee Retirement Income Security Act of 1974. -------------------------------
-------------- THIS FORM IS
Department of Labor * FILE AS AN ATTACHMENT TO FORM 5500 or 5500-C/R. OPEN TO PUBLIC
Pension and Welfare Benefits INSPECTION
Administration * Insurance companies are required to provide this information -------------------------------
-------------- as per ERISA section 103(a)(2).
Pension Benefit Guaranty
corporation
- ------------------------------------------------------------------------------------------------------------------------------------
For calendar year 1997 or fiscal plan year beginning .1997, and ending .19 .
- ------------------------------------------------------------------------------------------------------------------------------------
* PART I MUST BE COMPLETED FOR ALL PLANS REQUIRED TO FILE THIS SCHEDULE. * ENTER MASTER TRUST OR 103-12 1E IN PLACE OF "SPONSOR"
* PART II MUST BE COMPLETED FOR ALL INSURED PENSION PLANS. AND SPECIFY INVESTMENT ACCOUNT OR 103-12 1E IN PLACE OF
* PART III MUST BE COMPLETED FOR ALL INSURED WELFARE PLANS. "PLAN" IF FILING WITH DOL FOR A MASTER TRUST OR 103-12 1E.
- ------------------------------------------------------------------------------------------------------------------------------------
Name of sponsor as shown on line 1s of Form 5500 or 5500-C/R Employer Identification number
ASTROPOWER, INC. 51 : 0315869
- ------------------------------------------------------------------------------------------------------------------------------------
Name of plan ASTROPOWER, INC. 401(K) SAVINGS PLAN Three-digit
plan number * 0 0 1
- -----------------------------------------------------------------------------------------------------------------------------------
PART 1 SUMMARY OF ALL INSURANCE CONTRACTS INCLUDED IN PARTS II AND III
Group all contracts in the same manner as in parts II and III.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Check appropriate box: a [_] Welfare plan b [X] Pension plan c [_] Combination pension and welfare plan
- ------------------------------------------------------------------------------------------------------------------------------------
2 Coverage: (a) Name of insurance carrier (b) Contract or (c) Approximate number of Policy or contract year
Identification persons covered at end of --------------------------
number policy or contract year (d) From (e) To
- -----------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY 1G4 10873 90 1/01/97 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
3 Insurance fees and commissions paid to agents and brokers:
(a) Contract or (b) Name and address of the agents to (c) Amount of (d) Fees paid
------------------------------------------
identification number whom commissions or fees were paid commissions paid Amount Purpose
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
4 Premiums due and unpaid at end of the plan year * $ : Contract or identification number *
- ----------------------------------------------------------------------------------------------------------------------------------
PART II INSURED PENSION PLANS Provide Information for each contract on a separate Part II. Where Individual contracts are
provided, the entire group of such individual contracts with each carrier may be treated as a unit for purposes of this
report.
- -----------------------------------------------------------------------------------------------------------------------------------
* Contract or identification number * IG4 10873
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
5 Contracts with allocated funds, (for example, individual policies or group deferred annuity contracts):
A State the basis of premium rates * ............................................................................................
B Total premiums paid to carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C If the carrier, service, or other organization incurred any specific costs in connection with the acquisition
or retention of the contract or policy, other than reported in 3 above, enter amount . . . . . . . . . . . .
Specify nature of costs *
- ------------------------------------------------------------------------------------------------------------------------------------
6 Contracts with unallocated funds, (for example, deposit administrator or immediate participation
guarantee contracts). Do not include portions of these contracts maintained in separate accounts:
A Balance at the end of the previous year . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 295,995
-------------------
B Additions: (i) Contributions deposited during year . . . . . . . . . . . . . . . . . 77,858
----------------
(ii) Dividends and credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----------------
(iii) Interest credited during the year . . . . . . . . . . . . . . . . . . . . . . 20,232
-----------------
(iv) Transferred from separate account . . . . . . . . . . . . . . . . . . . . . . . .
(v) Other (specify) * ............................................................... ----------------
(vi) Total additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,090
---------------------
C Total of balance and additions (add a and b(vi)) . . . . . . . . . . . . . . . . . . . . .. . . . . . . 394,085
---------------------
D Deductions:
(i) Disbursed from fund to pay benefits or purchase annuities during year . . . . . .. _______________
(ii) Administration charges made by carrier . . . . . . . . . . . . . . . . . . . . . . _______________
(iii) Transferred to separate account . . . . . . . . . . . . . . . . . . . . . . . . . _______________
PAID TO TRUSTEE FOR PARTICIPANT BENEFITS 46,531
(iv) Other (specify) * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. _______________
(v) Total deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,531
-------------------
E Balance at end of current policy year (subtract d(v) from c) . . . . . . . . . . . . . . . . . . . . . . . 347,554
--------------------
- -----------------------------------------------------------------------------------------------------------------------------------
7 Separate accounts: Current value of plan's interest in separate accounts at year end . . . . . . . . . . . 0
- -----------------------------------------------------------------------------------------------------------------------------------
FOR PAPERWORK REDUCTION ACT NOTICE, SEE THE INSTRUCTIONS FORM 5500 OR 5500-C/R MGA SCHEDULE A (FORM 5500) 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule A (Form 5500) 1997 Page 2
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PART III INSURED WELFARE PLANS
Provide Information for each contract on a separate Part III. If more than one contract covers the same group of
employees of the same employer(s) or members of the same employee organization(s), the information may be combined for
reporting purposes if such contracts are experience-rated as a unit. Where individual contracts are provided, the
entire group of such individual contracts with each carrier may be treated as a unit for purposes of this report.
- ------------------------------------------------------------------------------------------------------------------------------------
8 (a) Contract or (b) Type of (c) List gross premium for (d) Premium rate or
identification number benefit each contract subscription charge
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
9 Experience-rate contracts: a Premium: (i) Amount received................................ __________________
(ii) Increased (decrease) in amount due but unpaid.................................... __________________
(iii) Increased (decrease) in unearned premium reserve................................. __________________
(iv) Premiums earned, add (i) and (ii), and subtract (iii)............................ .................. ________________
b Benefit charges: (i) Claims paid......................................................... __________________
(ii) Increased (decrease) in claim reserves........................................... __________________
(iii) Incurred claims (add (i) and (ii))............................................... .................. ________________
(iv) Claims charged................................................................... .................. ________________
c Remainder of premium: (i) Retention charges (on an accrual basis)--
(A) Commissions................................................................ __________________
(B) Administrative service or other fees....................................... __________________
(C) Other specific acquisition costs........................................... __________________
(D) Other expenses............................................................. __________________
(E) Taxes...................................................................... __________________
(F) Charges for risks or contingencies......................................... __________________
(G) Other retention charges.................................................... __________________
(H) Total retention............................................................ .................. ________________
(ii) Dividends or retroactive rate funds. (These amounts were [_] paid in cash, or [_] credited.)........ ________________
d Status of policyholder reserves at end of year. (i) Amount held to provide benefits after retirement........ ________________
(ii) Claim reserves................................................................... .................. ________________
(iii) Other reserves................................................................... .................. ________________
e Dividends or retroactive rate refunds due. (Do not include amount entered in c(ii).)..... .................. ________________
- ------------------------------------------------------------------------------------------------------------------------------------
10 Nonexperience-rated contracts: a Total premiums or subscription charges paid to carrier..................... ________________
b If the carrier, service, or other organization incurred any specific costs in connection with the
acquisition or retention of the contract or policy, other than reported in 3 above, report amount........... ________________
Specify nature of costs *....................................................................................................
.............................................................................................................................
.............................................................................................................................
- ------------------------------------------------------------------------------------------------------------------------------------
If more space is required for any item, attach additional sheets the same size as this form.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GENERAL INSTRUCTIONS
This schedule must be attached to Form 5500 or 5500-C/R for every defined
benefit, defined contribution, and welfare benefit plan where any benefits under
the plan are provided by an insurance company, insurance service, or other
similar organization.
SPECIFIC INSTRUCTIONS
Information entered of Schedule A (Form 5500) should pertain to the insurance
contract or policy year ending with or within the plan year (for reporting
purposes, a year cannot exceed 12 months). For example, if an insurance contract
year begins on July 1 and ends on June 30, and the plan year begins on January 1
and ends on December 31, the Schedule A information attached to the 1997 Form
5500 should be for the insurance contract year ending on June 30, 1997.
Exception: If the insurance company maintains records on the basis of a plan
year rather than a policy or contract year, the information entered on Schedule
A (Form 5500) may pertain to the plan year instead of the policy or contract
year.
Include only the contracts issued to the plan for which this return/report
is being filed.
Plans participating in master trust(s) and 103-12 IE?,___See investment
Arrangements Filing Directly With DOL on page 4 of the instructions for Form
5500 or 5500-C/R.
Line 2(c).__Since the plan coverage may fluctuate during the year, the
administrator should estimate the number of persons that were covered by the
plan at the end of the policy or contract year.
Where contracts covering individual employees are grouped, entries should
be determined as of the end of the plan year.
Lines 2(d) and (e).__Enter the beginning and ending dates of the policy year for
each contract listed under column ???? Enter "N/A" in column (d) if separate
contracts covering individual employees are grouped.
Line 3.__Report all sales commissions in column (c) regardless of the identity
of the recipient. Do not report override commissions, salaries, bonuses, etc.,
paid to a general agent or manager for managing an agency, or for performing
other administrative functions.
Fees to be reported in column (d) represent payments by insurance carriers
to agents and brokers for items other than commissions (e.g., service fees,
consulting fees, and finders (fees).
Note: For purposes of this item, commissions and fees include amounts paid by an
insurance company on the basis of the aggregate value (e.g., policy amounts,
premiums) of contracts or policies (or classes thereof) placed or retained. The
amount (or pro rate share of the total) of such commissions or fees attributable
to the contract or policy placed with or retained by the plan must be reported
in column (c) or (d), as appropriate.
Fees paid by insurance carriers to persons other than agents and brokers
should be reported in Parts II and III on Schedule A (Form 5500) as acquisition
costs, administrative charges, etc., as appropriate. For plans with 100 or more
participants, fees paid by employee benefit plans to agents, brokers, and other
persons are to be reported on Schedule C (Form 5500).
Line 5a.__The rate information called for here may be furnished by attaching the
appropriate schedules of current rates filed with the appropriate state
insurance departments or by providing a statement regarding the basis of the
rates.
Line B.__Show deposit fund amounts rather than experience credit records when
both are maintained.
Line B(d).__The rate information called for here may be furnished by attaching
the appropriate schedules of current rates or a statement as to the basis of
the rates.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C> <C>
SCHEDULE C SERVICE PROVIDER AND TRUSTEE INFORMATION OMB No. 1210-0016
(FORM 5500) -------------------
Department of the Treasury THIS SCHEDULE IS REQUIRED TO BE FILED UNDER SECTION 104 OF THE 1997
Internal Revenue Service EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. -------------------
----------
Department of Labor * File as an attachment to Form 5500. THIS FORM IS
Pension and Welfare Benefits Administration Additional Schedules C (Form 5500) may be used, if needed, to OPEN TO PUBLIC
----------
Pension Benefit Guaranty Corporation provide additional information for Parts, I, II, and/or III. INSPECTION
- ------------------------------------------------------------------------------------------------------------------------------------
For the calendar year 1997 or fiscal plan year beginning , 1997, and ending ,19
- ------------------------------------------------------------------------------------------------------------------------------------
Name of plan sponsor as shown on line 1a of Form 5500 Employer Identification number
ASTROPOWER, INC. 51 0315869
- ------------------------------------------------------------------------------------------------------------------------------------
Name of plan ASTROPOWER, INC. 401(K) SAVINGS PLAN Three-digit
plan number * 0 0 1
- ------------------------------------------------------------------------------------------------------------------------------------
Part 1 SERVICE PROVIDER INFORMATION (SEE INSTRUCTIONS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Enter the total dollar amount of compensation paid by the plan to all persons receiving less than
$5,000 during the plan year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
- ------------------------------------------------------------------------------------------------------------------------------------
2 (d) Relationship to
(b) Employer (c) Official employer, employee (e) Gross salary (f) Fees and (g) Nature of
(a) Name identification plan organization, or or allowances commissions paid service code
number (see position person known to be a paid by plan by plan (see
instructions) party-in-interest Instructions)
- ------------------------------------------------------------------------------------------------------------------------------------
Contract
(1) administrator 12
- ------------------------------------------------------------------------------------------------------------------------------------
(2)
- ------------------------------------------------------------------------------------------------------------------------------------
(3)
- ------------------------------------------------------------------------------------------------------------------------------------
(4)
- ------------------------------------------------------------------------------------------------------------------------------------
(5)
- ------------------------------------------------------------------------------------------------------------------------------------
(6)
- ------------------------------------------------------------------------------------------------------------------------------------
(7)
- ------------------------------------------------------------------------------------------------------------------------------------
(8)
- ------------------------------------------------------------------------------------------------------------------------------------
(9)
- ------------------------------------------------------------------------------------------------------------------------------------
(10)
- ------------------------------------------------------------------------------------------------------------------------------------
(11)
- ------------------------------------------------------------------------------------------------------------------------------------
(12)
- ------------------------------------------------------------------------------------------------------------------------------------
(13)
- ------------------------------------------------------------------------------------------------------------------------------------
(14)
- ------------------------------------------------------------------------------------------------------------------------------------
(15)
- ------------------------------------------------------------------------------------------------------------------------------------
(16)
- ------------------------------------------------------------------------------------------------------------------------------------
(17)
- ------------------------------------------------------------------------------------------------------------------------------------
(18)
- ------------------------------------------------------------------------------------------------------------------------------------
(19)
- ------------------------------------------------------------------------------------------------------------------------------------
(20)
- ------------------------------------------------------------------------------------------------------------------------------------
(21)
- ------------------------------------------------------------------------------------------------------------------------------------
(22)
- ------------------------------------------------------------------------------------------------------------------------------------
(23)
- ------------------------------------------------------------------------------------------------------------------------------------
(24)
- ------------------------------------------------------------------------------------------------------------------------------------
(25)
- ------------------------------------------------------------------------------------------------------------------------------------
(26)
- ------------------------------------------------------------------------------------------------------------------------------------
(27)
- ------------------------------------------------------------------------------------------------------------------------------------
(28)
- ------------------------------------------------------------------------------------------------------------------------------------
(29)
- ------------------------------------------------------------------------------------------------------------------------------------
(30)
- ------------------------------------------------------------------------------------------------------------------------------------
(31)
- ------------------------------------------------------------------------------------------------------------------------------------
(32)
- ------------------------------------------------------------------------------------------------------------------------------------
(33)
- ------------------------------------------------------------------------------------------------------------------------------------
(34)
- ------------------------------------------------------------------------------------------------------------------------------------
(35)
- ------------------------------------------------------------------------------------------------------------------------------------
(36)
- ------------------------------------------------------------------------------------------------------------------------------------
(37)
- ------------------------------------------------------------------------------------------------------------------------------------
(38)
- ------------------------------------------------------------------------------------------------------------------------------------
(39)
- ------------------------------------------------------------------------------------------------------------------------------------
(40)
- ------------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see the Instructions for Form 5500. MGA Schedule C (Form 5500) 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule C (Form 5500) 1997 PAGE 2
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Enter the name and address of all trustees who served during the plan year. If more
PART II Trustee information
space is required to supply this information, attach additional Schedules C (Form 5500).
- ---------------------------------------------------------------------------------------------------------------------------
Name ROBERT B. HALL Name CHERYL KEITH
...................................................... ......................................................
Address ONE SOLAR PARK Address ONE SOLAR PARK
................................................... ...................................................
NEWARK, DE 19716 NEWARK, DE 19716
- ---------------------------------------------------------------------------------------------------------------------------
Name THOMAS K. STINER Name ......................................................
......................................................
Address ONE SOLAR PARK Address ...................................................
...................................................
NEWARK, DE 19716
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
Name...................................................... Name ......................................................
Address................................................... Address ...................................................
- ---------------------------------------------------------------------------------------------------------------------------
PART III Termination Information (see instructions)
- ---------------------------------------------------------------------------------------------------------------------------
(a) Name (b) EIN (c) Position (d) Address (e) Telephone No.
- ---------------------------------------------------------------------------------------------------------------------------
(1) Explanation: ..........................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
- ---------------------------------------------------------------------------------------------------------------------------
(a) Name (b) EIN (c) Position (d) Address (e) Telephone No.
- ---------------------------------------------------------------------------------------------------------------------------
(2) Explanation: ..........................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
- ---------------------------------------------------------------------------------------------------------------------------
(a) Name (b) EIN (c) Position (d) Address (e) Telephone No.
- ---------------------------------------------------------------------------------------------------------------------------
(3) Explanation: ..........................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OMB No. 1210-0016
-------------------------------
SCHEDULE SSA ANNUAL REGISTRATION STATEMENT IDENTIFYING SEPARATED
(FORM 5500) PARTICIPANTS WITH DEFERRED VESTED BENEFITS 1997
-------------------------------
<S> <C> <C>
Under Section 6057(a) of the Internal Revenue Code THIS FORM IS NOT
Department of the Treasury * File as an attachment to Form 5500 or 5500-C/R. OPEN TO PUBLIC
Internal Revenue * For Paperwork Reduction Act Notice, see the instructions for Form INSPECTION
Service 5500 or 5500-C/R.
- ----------------------------------------------------------------------------------------------------------------------------------
For the calendar year 1997 or fiscal plan year beginning , 1997, and ending ,19
- ----------------------------------------------------------------------------------------------------------------------------------
1a Name of plan sponsor (employer if for a single employer plan) 1b Sponsor's employer identification number (EIN)
ASTROPOWER, INC. 51 0315869
- ------------------------------------------------------------------------------------------------------------------------------------
2a Name of plan ASTROPOWER, INC. 401(K) SAVINGS PLAN 2b Three digit
plan number * 0 0 I
- ------------------------------------------------------------------------------------------------------------------------------------
3 Enter one of the following Entry Codes in column (a) for each separated participant with deferred vested benefits that:
Code A - has not previously been reported.
Code B - has previously been reported under the above plan number but requires revisions to the information previously reported.
Code C - has previously been reported under another plan number but will be receiving their benefits from the plan listed above
instead.
Code D - has previously been reported under the above plan number but is no longer entitled to those deferred vested benefits.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
USE WITH ENTRY CODE USE WITH ENTRY CODE USE WITH ENTRY CODE
"A", "B", "C", or "D", "A", or "B", "C"
- ------------------------------------------------------------------------------------------------------------------------------------
Enter code for Amount of vested benefit
----------------------------
nature and Defined
(a) (b) (c) form of contribution (i) (j)
Entry Social security Name of benefit (f) plan Previous Previous
code number participant -------------------- ------------------- sponsor's plan
(d) (a) Defined benefit (g) (h) employeer number
Type of Payment plan-periodic Units or Total identification
annuity frequency payment shares value of number
account
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A ###-##-#### JAMES BECK A A 16902 16,902
A ###-##-#### JACOB BROWN A A 49868 49,868
A ###-##-#### JEFFREY COTTER A A 10760 10,760
A ###-##-#### MICHAEL CULIK A A 3599 3,599
A ###-##-#### THOMAS GOODWIN A A 5609 5,609
A ###-##-#### CLINTON LEAGUE A A 7641 7,641
A ###-##-#### PATRICK LASSWELL A A 92623 92,623
A ###-##-#### MICHAEL MCGUINNESS A A 16541 16,541
- ------------------------------------------------------------------------------------------------------------------------------------
[_] Check here if additional participants are shown on attachments. All attachments must include the sponsor's name, EIN, name of
plan, plan number, and column identification letter for each column completed for line 3.
- ------------------------------------------------------------------------------------------------------------------------------------
[_] Check here if plan is a government, church or other plan that elects to voluntarily file Schedule SSA. If so, complete lines 4
through 5c, and the signature area. Otherwise, complete the signature area only.
- ------------------------------------------------------------------------------------------------------------------------------------
4 Plan sponsor's address (number, street, and room or suite no.) (If a P.O. box, see instructions for line 4.)
- ------------------------------------------------------------------------------------------------------------------------------------
City or town, state, and ZIP code
- ------------------------------------------------------------------------------------------------------------------------------------
5a Name of plan administrator (If other than sponsor) 5b Administrator's EIN
- ------------------------------------------------------------------------------------------------------------------------------------
5c Number, street, and room or suite no. (If a P.O. box, see the instructions for line 4.)
- ------------------------------------------------------------------------------------------------------------------------------------
City or town, state, and ZIP code
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this report, and to the best of my knowledge and belief, it is true,
correct, and complete.
Signature of plan administrator * ^^SIGNATURE ILLEGIBLE^^
...................................................................................................
Phone number of plan administrator * 302-366-0400 Date * 10/12/98
- ------------------------------------------------------------------------------------------------------------------------------------
MGA Schedule S5A (Form 5500) (1997)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OMB No. 1210-0016
--------------------------
SCHEDULE P ANNUAL RETURN OF FIDUCIARY
(FORM 5500) OF EMPLOYEE BENEFIT TRUST 1997
--------------------------
<S> <C> <C>
Department of the Treasury > File as an attachment to Form 5500, 5500-C/R, or 5500-EZ This Form is Open to
Internal Revenue Service > For the Paperwork Reduction Notice, see the Form 5500 Instructions. Public inspection.
- --------------------------------------------------------------------------------
For trust calendar year 1997 ,1997, and ending ,19 .
or fiscal year beginning
- --------------------------------------------------------------------------------
Please type or Print
- --------------------------------------------------------------------------------
1a Name of Trustee or custodian
ROBERT B. HALL, CHERYL KEITH, THOMAS K. STINER
- --------------------------------------------------------------------------------
b Number, street, and room or suite no. (If a P.O. box, see the
instructions for Form 5500, 5500-C/R, or 5500-EZ)
ASTRO POWER, INC. ONE SOLAR PARK
- ---------------------------------------------------------------------------------------------------------------------------------
c City or town, state, and ZIP code
NEWARK, DE 19716-2000
- ---------------------------------------------------------------------------------------------------------------------------------
2a Name of trust b Trust's employer identification number
ASTROPOWER, INC. 401(K)SAVINGS TRUST AGREEMENT
51 0315869
- ---------------------------------------------------------------------------------------------------------------------------------
3 Name of plan if different from name of trust
ASTROPOWER, INC. 401(K) SAVINGS PLAN
- ---------------------------------------------------------------------------------------------------------------------------------
4 Have you furnished the participating employee benefit plan(s) with the trust financial information
required to be reported by the plan(s)? ........................................................... [X] YES [_] NO
- ---------------------------------------------------------------------------------------------------------------------------------
5 Enter the plan sponsor's employer identification number as shown on Form 5500,
5500-C/R, or 5500-EZ........................................................ * 51 0315869
- ---------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this schedule,
and to the best of my knowledge and belief it is true, correct, and complete.
Signature of fiduciary * /s/ SIGNATURE ILLEGIBLE Date * 10/12/98
- --------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS
Section references are to the Internal Revenue Code.
PURPOSE OF FORM
You may use this schedule to satisfy the requirements under section 6033(a) for
an annual information return from every section 401(a) organization exempt from
tax under section 501(a).
Filing this form will start the running of the statute of limitations under
section 6501(a) for any trust described in section 401(a), which is exempt from
tax under section 501(a).
WHO MAY FILE
1. Every trustee of a trust created as part of an employee benefit plan as
described in section 401(a).
2. Every custodian of a custodial account described in section 401(f).
HOW TO FILE
File Schedule P (Form 5500) for the trust year ending with or within any
participating plan's plan year. Attach it to the Form 5500, 5500-C/R, or 5500-EZ
filed by the plan for that plan year. A separately filed Schedule P (Form 5500)
will not be accepted.
If the trust or custodial account is used by more than one plan, file one
Schedule P (Form 5500). If a plan uses more than one trust or custodial account
for its funds, file one Schedule P (Form 5500) for each trust or custodial
account.
TRUST'S EMPLOYER IDENTIFICATION NUMBER
Enter the trust employer identification number (EIN) assigned to the employee
benefit trust or custodial account, if one has been issued to you. The trust EIN
should be used for transactions conducted for the trust. If you do not have a
trust EIN, enter the EIN you would use on Form 1099-R to report distributions
from employee benefit plans and on Form 945 to report withheld amounts of income
tax from those payments.
NOTE: Trustees who do not have an EIN may apply for one on Form SS-4,
Application for Employer Identification Number. You must be consistent and use
the same EIN for all trust reporting purposes.
SIGNATURE
The fiduciary (trustee or custodian) must sign this schedule. If there is more
than one fiduciary, the fiduciary authorized by the others may sign.
OTHER RETURNS AND FORMS THAT MAY BE REQUIRED
. FORM 990-T--For trusts described in section 401(a), a tax is imposed on
income derived from business that is unrelated to the purpose for which the
trust received a tax exemption. Report this income and tax on FORM 990-T, Exempt
Organization Business Income Tax Return. (See sections 511 through 514 and the
related regulations.)
. FORM 1099-R--If you made payments or distributions to individual beneficiaries
of a plan, report those payments on Form 1099-R. (See the instructions for Forms
1099, 1098, 5498, and W-2G.)
. FORM 945--If you made payments or distributions to individual beneficiaries of
a plan, you may be required to withhold income tax from those payments. Use FORM
945, Annual Return of Withheld Federal Income Tax, to report taxes withheld from
nonpayroll items. (See CIRCULAR E, Employer's Tax Guide (Pub. 15), for more
information.)
- --------------------------------------------------------------------------------
MGA Schedule P (Form 5500) 1997
<PAGE>
SUMMARY ANNUAL REPORT
FOR ASTROPOWER, INC. 401(K) SAVINGS PLAN
This is a summary of the annual report of the ASTROPOWER, INC. 401(K) SAVINGS
PLAN, EIN 51-0315869, Plan No. 001, for the period January 1, 1997 through
December 31, 1997. The annual report has been filed with the Internal Revenue
Service, as required under the Employee Retirement Income Security Act of 1974
(ERISA).
BASIC FINANCIAL STATEMENT
Benefits under the plan are provided through a trust fund and insurance. Plan
expenses were $154,946. These expenses included $154,946 in benefits paid to
participants and beneficiaries. A total of 186 persons were participants in or
beneficiaries of the plan at the end of the plan year.
The value of plan assets, after subtracting liabilities of the plan, was
$2,443,626 as of December 31, 1997, compared to $1,847,873 as of January 1,
1997. During the plan year the plan experienced an increase in its net assets of
$595,753. This increase includes unrealized appreciation and depreciation in the
value of plan assets; that is, the difference between the value of the plan's
assets at the end of the year and the value of the assets at the beginning of
the year or the cost of assets acquired during the year. The plan had total
income of $750,699 including employer contributions of $109,825, employee
contributions of $256,146, and earnings from investments of $304,069.
YOUR RIGHTS TO ADDITIONAL INFORMATION
You have the right to receive a copy of the full annual report, or any part
thereof, on request. The items listed below are included in that report:
1. an accountant's report;
2. assets held for investment;
3. transactions in excess of 5% of plan assets; and
4. insurance information, including sales commissions paid by insurance
carriers.
To obtain a copy of the full annual report, or any part thereof, write or call
ASTROPOWER, INC., SOLAR PARK, NEWARK, DE 19716-2000, (302) 366-0400.
You also have the right to receive from the plan administrator, on request and
at no charge, a statement of the assets and liabilities of the plan and
accompanying notes, or a statement of income and expenses of the plan and
accompanying notes, or both. If you request a copy of the full annual report
from the plan administrator, these two statements and accompanying notes will be
included as part of that report.
You also have the legally protected right to examine the annual report at the
main office of the plan (ASTROPOWER, INC., SOLAR PARK, NEWARK, DE 1976-2000) and
at the U.S. Department of Labor in Washington, D.C., or to obtain a copy from
the U.S. Department of Labor upon payment of copying costs. Requests to the
Department should be addressed to: Public Disclosure Room, N-5638, Pension and
Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution
Avenue, N.W., Washington, D.C. 20210.
<PAGE>
EXHIBIT 10.4
TRUST AGREEMENT TO THE
ASTROPOWER, INC. 401(K) SAVINGS PLAN
PREPARED AS OF MAY 1, 1995
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
ARTICLE I Page No.
--------
<S> <C>
Establishment of Trust Fund....................................... 1
ARTICLE II
Disbursement of Funds............................................. 2
ARTICLE III
Investment of Trust Fund.......................................... 3
ARTICLE IV
Powers of Trustees................................................ 5
ARTICLE V
Compensation, Expenses and Taxes.................................. 8
ARTICLE VI
Maintenance of Records............................................ 9
ARTICLE VII
Removal, Resignation or Death of Trustees and
Appointment of Successor Trustees................................. 10
ARTICLE VIII
Immunity of Trustees.............................................. 11
ARTICLE IX
Qualified Investment Manager...................................... 13
ARTICLE X
Concerning Insurance Companies.................................... 14
ARTICLE XI
Amendment and Termination......................................... 15
ARTICLE XII
Spendthrift Provisions............................................ 16
ARTICLE XIII
Adoption by Other Business Entities............................... 17
ARTICLE XIV
Construction of Agreement......................................... 18
ARTICLE XV
Miscellaneous Provisions.......................................... 19
</TABLE>
<PAGE>
TRUST AGREEMENT (the "Agreement") made as of January 1, 1994, by and between
AstroPower, Inc., a Delaware corporation (the "Company"), and Robert B. Hall,
Cheryl Keith, and Thomas K. Stiner, (the "Trustees").
WITNESSETH:
-----------
WHEREAS, effective September 1, 1990, the Company established the
AstroPower, Inc. 401(k) Savings Plan (the "Plan"); and
WHEREAS, pursuant to the terms of the Plan and effective as of the same
date, the Company entered into the AstroPower, Inc. 401(k) Savings Plan
Trust Agreement (the "Trust"); and
WHEREAS, effective January 1, 1994 the Plan was amended in its entirety and
restated into the AstroPower, Inc. 401(k) Savings Plan, copy of which is
annexed hereto; and
WHEREAS, the Company and Trustees desire to amend the Trust in its
entirety;
NOW, THEREFORE, based on the foregoing premises it is mutually agreed by
and between the Company and the Trustees as follows:
<PAGE>
ARTICLE I
---------
ESTABLISHMENT OF TRUST FUND
---------------------------
1.01 The Company hereby establishes with the Trustees a trust fund (the "Fund")
consisting of cash and such other property acceptable to the Trustees as
shall, from time to time, be paid or delivered to the Trustees and the
earnings and profits thereon. The Fund shall be held, managed and
administered by the Trustees in trust in accordance with the provisions of
this Agreement without distinction between principal and income. At no
time shall any part of the Fund (whether by reason of any amendment of
this Agreement, or otherwise) be used for, or diverted to, purposes other
than the exclusive benefit of participants of the Plan or their
beneficiaries; provided, however, that contributions made by the Company
by mistake of fact or which are not deductible under Section 404 of the
Internal Revenue Code of 1986 (the "Code") shall be returned to the
Company within one year of the mistaken payment of contribution or the
date of disallowance of the deduction, as the case may be.
1
<PAGE>
ARTICLE II
----------
DISBURSEMENT OF FUNDS
---------------------
2.01 Disbursement of Funds
---------------------
The Trustees shall, from time to time, on the written directions of the
committee provided for in the Plan (the "Committee"), make payments out of
the Fund to such persons, in such manner, in such amounts and for such
purposes as may be specified in the written directions of the Committee,
and upon any such payment being made, the amount thereof shall no longer
constitute a part of the Fund. The Trustees shall not be responsible in
any way with respect to the application of such payments or for the
administration of the Plan. The Trustees shall be under no duty to enforce
payment of any contributions to the Fund and shall not be responsible for
the adequacy of the Fund to meet and discharge any and all liabilities
under the Plan.
2.02 Excess Contributions
--------------------
Notwithstanding anything contained herein to the contrary, the amount of
"excess contributions" (as such term is defined by Section 401(k)(8)(B) of
the Code), "excess aggregate contributions" (as such term is defined by
Section 401(m)(6)(B) of the Code), and excess annual additions under
Section 415 of the Code may be returned to the Company or distributed to
"highly compensated employees" (as such term is defined by Section 414(q)
of the Code), as the case may be, pursuant to Section 401(k)(8) of the
Code and regulations thereunder.
2
<PAGE>
ARTICLE III
-----------
INVESTMENT OF TRUST FUND
------------------------
3.01 Investment of Trust Fund
------------------------
The Trustees shall invest and reinvest the Fund, in such securities or in
such property, real or personal wherever situated, as the Trustees shall
deem advisable. Investment of the Fund shall not be limited to the classes
of property in which trustees are authorized to invest by any state or
local law. The assets in which the Fund may be invested include, but are
not limited to, stocks, common or preferred, trust and participation
certificates, bonds and mortgages (including part interests in bonds and
mortgages or notes and mortgages insured by the Federal Housing, Veterans
Administration or similar agencies), group or annuity or insurance company
investment contracts, leaseholds on improved and unimproved real estate,
and other evidence of indebtedness or ownership and interests in any trust
fund that has been or shall be created and maintained for the collective
investment of funds of trusts for employee benefit plans (qualified under
sections 401 and 501 of the Code) and to the extent not prohibited by the
Plan and by section 407 of The Employee Retirement Income Security Act of
1974 (ERISA), qualifying employer securities (as defined in section
407(d)(5) of ERISA) issued by the Company and qualifying employer real
property (as defined in section 407(d)(4) of ERISA).
Without limiting the generality of the foregoing, the Trustees shall, as
and when directed by the Committee, invest a portion of the Fund in (a)
annuity or other insurance policies issued by any insurance company
approved by the Committee and shall deal with such policies as directed by
the Committee; (b) such separate investment fund or funds as designated by
the Committee, approved by the Trustees and established in accordance with
the terms of the Plan; and (c) loans, if any, granted to participants in
accordance with the terms of the Plan.
The Committee shall advise the Trustees in writing of the amounts which
shall be allocated for such annuity or other insurance policies, to each
of said investment fund or funds, and to each of said loans if any. The
Trustees shall hold the amounts so specified as part of the investment
fund to which it shall have been allocated.
The Trustee may invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, if any type of
deposit of the Trustee (or of a bank related to the Trustee within the
meaning of Code Section 414(b) at a reasonable rate of interest or in a
common trust fund, as described in Code Section 584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code Section 1504) maintains
3
<PAGE>
exclusively for the collective investment of money contributed by the bank
(or the affiliate) in its capacity as Trustee and which conforms to the
rules of the Comptroller of the Currency.
3.02 Fiduciary Standard of Conduct
-----------------------------
Each Trustee shall discharge his duties in the investment of the Fund
solely in the interest of the participants and their beneficiaries for the
exclusive purpose of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the Plan.
Each Trustee shall act with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man, acting in a like
capacity and familiar with such matters, would use in conducting an
enterprise of like character and with like aims, and shall diversify
investments of the Fund so as to minimize the risk of large losses, unless
under the circumstances it is clearly prudent not to do so.
From time to time the Committee shall communicate to the Trustees and to
any investment manager information relating to the liquidity needs of the
Plan so that investment discretion can be exercised to effect specified
objectives.
4
<PAGE>
ARTICLE IV
----------
POWERS OF TRUSTEES
------------------
The Trustees shall have the following powers and authority in the administration
of the trust hereby created:
4.01 Purchase of Property
--------------------
To purchase, or subscribe for, any security or property and to retain the
same in trust.
4.02 Sale, Exchange, Conveyance and Transfer of Property
---------------------------------------------------
To sell or otherwise dispose of, by private or public sale, any real or
personal property held by the Trustees. No person dealing with the
Trustees shall be bound to verify the application of the purchase money or
to inquire into the validity, expediency or propriety of any such sale or
other disposition.
4.03 Exercise of Owner's Rights
--------------------------
To exercise any ownership rights relating to any assets of the Fund
including, but not limited to, any rights as owner of any securities or
any interest in real property which are part of the Fund.
4.04 Right to Borrow
---------------
To borrow or raise monies for the purposes of the trust in such amount,
and upon such terms and conditions, as the Trustees in absolute discretion
may deem advisable; and, for any sums borrowed, to issue a promissory note
as Trustees and to secure the repayment thereof by pledging all, or any
part of, the Fund, provided, however, that if any borrowing is made
against life insurance policies (other than such policies which are
specifically allocated to participants in accordance with the terms of the
Plan), the interests of all participants shall be adjusted to reflect such
borrowing on a pro rata basis. No person lending money to the Trustees
shall be bound to verify the application of the money lent or to inquire
into the validity, expediency or propriety of any such borrowing.
4.05 Settlement of Claims and Debts
------------------------------
To settle, compromise or submit to arbitration any claim, debt or damage
due or owing to or from the Fund; to commence or defend suits or legal or
administrative proceedings; and to represent the Fund in all suits and
legal and administrative proceedings.
5
<PAGE>
4.06 Retention of Cash
-----------------
To keep such portion of the Fund in cash or cash balances as the Trustees
may, from time to time, deem to be in the best interests of the trust
created hereby, it being understood that the Trustees shall not be
required to pay any interest on any such cash balances.
4.07 Retention of Property Acquired
------------------------------
To accept and retain for such time as the Trustees may deem advisable any
security or other property received or acquired by the Trustees as
Trustees hereunder, whether or not such security or other property is
productive of income or would normally be purchased as investments
hereunder.
4.08 Maintaining Real Estate
-----------------------
To repair, alter, improve or lease any building or structure on any real
property forming part of the Fund, including, but not necessarily limited
to, the right to erect entirely new buildings or structures.
4.09 Mortgage Powers
---------------
To renew or extend or to participate in the renewal or extension of any
mortgage upon such terms as may be deemed advisable, and to agree to a
reduction in the rate of interest charged on any mortgage or to any other
modification or change in the terms of any mortgage or of any guarantee
pertaining thereto in any manner and to any extent that may be deemed
advisable for the protection of the Fund or the preservation of the value
of the investment; to waive any default, whether in the performance of any
covenant or condition of any mortgage or in the performance of any
guarantee, or to enforce any such default, in such manner and to such
extent as may be deemed advisable; to exercise and enforce any and all
rights of foreclosure; to bid on property in foreclosure; to take a deed
in lieu of foreclosure with or without paying a consideration therefore
and in connection therewith to release the obligation on the bond secured
by such mortgage; and to exercise and enforce in any action, suite or
proceeding at law or in equity any rights or remedies in respect to any
mortgage or guarantee.
4.10 Registration of Investments
---------------------------
To register any investment held as part of the Fund in the name of the
Trustees or in the name of a nominee and to hold any investment in bearer
form, but the books and records of the Trustees shall at all times show
that all such investments are part of the Fund.
6
<PAGE>
4.11 Employment of Agents and Counsel
--------------------------------
To employ suitable agents and counsel (who may be counsel for the Company
or any Trustees in his individual capacity) and to pay their reasonable
expenses and compensation.
4.12 Execution of Instruments
------------------------
To make, execute, acknowledge and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
Any instrument or document to be executed by the Trustees, may be made,
executed, acknowledged and delivered by the majority of individuals
appointed as the Trustees; and as a result, any person, firm, or
corporation, including any insurance company or bank, may rely upon and
shall be protected in relying upon the signature(s) of the majority of
individuals appointed as the Trustees, with the same force and effect as
though all Trustees had signed.
4.13 Power to do Any Necessary Act
-----------------------------
To do all such acts, undertake all such proceedings and exercise all such
rights and privileges, although not specifically mentioned herein, as
necessary or proper for the accomplishment of the foregoing powers or
otherwise in the best interests of the Fund.
7
<PAGE>
ARTICLE V
---------
COMPENSATION, EXPENSES AND TAXES
--------------------------------
5.01 The Company may elect to pay (a) the expenses incurred by the Trustees in
performance of appropriate duties, including reasonable fees for legal
services rendered to the Trustees; (b) such compensation to the Trustees,
other than to a Trustee who is a full-time paid employee of the Company,
as may be agreed upon in writing from time to time between the Company and
the Trustees; (c) all other proper charges and disbursements of the
Trustees; (d) administrative expenses of the Plan including premiums for
any surety bond covering fiduciaries of the Plan and trust which may be
required under Section 412 of ERISA and (e) the fees and retainers of the
Plan's actuary, consultant, custodian, administrator and counsel. If the
Company does not elect to pay all or part of these expenses, the Trustees
shall pay these expenses and charge the payment thereof against the assets
of the Fund. Until paid, any such fees and expenses shall constitute a
charge against the Fund. All taxes of any kind whatsoever that may be
levied or assessed under existing or future laws upon, or in respect of,
the Fund or the income thereof, and any expense directly relating to the
investments of the Fund such as brokerage commissions and registration
charges, shall be paid from the Fund.
8
<PAGE>
ARTICLE VI
----------
MAINTENANCE OF RECORDS
----------------------
6.01 The Trustees shall keep accurate and detailed accounts of all investments,
receipts, disbursements and other transactions hereunder, so as to reflect
each separate investment fund, if applicable, and all accounts, books and
records relating thereto shall be open to inspection and audit at all
reasonable times by any person designated by the Company.
Within 60 days following the close of the fiscal year of the Plan and
within 60 days after the removal or resignation of the Trustees as
provided in Article VII hereof, the Trustees shall file with the Company a
written account setting forth all investments, the receipts, the
disbursements and other transactions effected by the Trustees during such
fiscal year or during the period from the close of the last fiscal year to
the date of such removal or resignation, and setting forth the current
value of the Fund. Upon the expiration of 60 days from the date of filing
such annual or other account the Trustees shall, to the extent permitted
by law, be forever released and discharged from all liability and
accountability to anyone with respect to the propriety of the acts and
transactions shown in such account, except with respect to such acts or
transactions to which the Company shall file with the Trustees written
objections within such 60 day period.
No person other than the Company may require an accounting or bring an
action against the Trustees with respect to the trust created hereby or
the actions as Trustees, except to the extent permitted by law.
9
<PAGE>
ARTICLE VII
-----------
REMOVAL, RESIGNATION OR DEATH OF TRUSTEES AND APPOINTMENT
---------------------------------------------------------
OF SUCCESSOR TRUSTEES
---------------------
7.01 A Trustee may be removed by the Company at any time upon written notice to
such Trustee and the remaining Trustees, if any. A Trustee may resign at
any time upon written notice to the Company and the remaining Trustees.
Such resignation shall take effect upon the expiration of 60 days (or at
any other time agreed upon by the Trustee and the Company).
In the event of a vacancy in the office of Trustees as the result of a
Trustee's death, removal, resignation, refusal or inability to act, the
Company shall appoint a successor individual or corporate trustee, who,
upon acceptance of such appointment, shall have the same powers and duties
as those conferred upon the original Trustees hereunder; and, the title to
all funds and properties constituting the Fund shall vest jointly in
whoever shall from time to time be the Trustees hereunder. Pending the
appointment of any successor trustee and acceptance of such appointment,
the remaining Trustees, if any, shall have full power to take any action
hereunder.
10
<PAGE>
ARTICLE VIII
------------
IMMUNITY OF TRUSTEES
--------------------
8.01 Protection of Trustees
----------------------
The Trustees shall be fully protected in relying upon a certification of a
member of the Committee with respect to any instruction or direction of
the Committee, in relying upon the certification of an officer or agent of
the Company as to the membership of the Committee as it then exists, and
in continuing to rely upon such certification until a subsequent
certification is filed with the Trustees.
The Trustees shall be fully protected in acting upon any instrument,
certificate or paper believed by them to be genuine and to be signed or
presented by the proper person or persons, and the Trustees shall be under
no duty to make any investigation or inquiry as to any statement contained
in any such writing, but may accept the same as conclusive evidence of the
truth and accuracy of the statements therein contained.
The Trustees shall not be liable for the proper application of any part of
the Fund if action is taken by the Trustees in accordance with written
directions of the Committee as herein provided.
8.02 Limitation of Liability
-----------------------
The Trustees shall not be liable for the making, retention or sale of any
investment or reinvestment made by them, in their own discretion, nor for
any loss to, or diminution of the Fund, except due to Trustee's own
negligence, willful misconduct, lack of good faith or failure to discharge
the Trustee's duties in accordance with Section 3.02, nor shall a Trustee
be liable for the breach of responsibility of a co-trustee, if any, the
Committee or other fiduciary of the Plan except as provided by law and in
the following circumstances:
(a) if he knowingly participates in or knowingly conceals an act or
omission of the co-trustee, the Committee or other fiduciary, knowing
such act or omission to be a breach;
(b) if by failure to discharge his duties in accordance with Section
3.02, he has enabled such other fiduciary to commit a breach; or
(c) if he has knowledge of a breach by such other fiduciary and fails to
make reasonable efforts under the circumstances to remedy the breach.
8.03 Power to Allocate Responsibilities
----------------------------------
If at any time two or more persons serve as Trustee, they are specifically
authorized, by written agreement, to allocate specific responsibilities,
obligations
11
<PAGE>
or duties between themselves, to be effective upon delivery of such
agreement to the Company for retention with other Plan documents. In the
event such agreement is entered into, it shall be deemed a part of this
Trust and no Trustee shall be liable either individually or as a Trustee
for any loss resulting from the acts or omissions of another Trustee with
respect to responsibilities, obligations or duties allocated to such other
Trustee, except as provided in Section 8.02.
8.04 Evidence of Action of Company
-----------------------------
Except as otherwise herein specifically provided, any action by the
Company in accordance with any of the provisions of this Agreement shall
be evidenced by:
(a) a resolution of its board of directors (or similar governing body)
certified to the Trustees over the signature of its secretary or
assistant secretary or other duly authorized agent; or
(b) an appropriate written authorization of any person or committee to
which the board of directors has delegated the authority to take such
action, and the Trustees shall be fully protected in acting in
accordance with any such resolution or other authorization.
8.05 Reliance on Counsel
-------------------
The Trustees may from time to time consult with counsel (who may be
counsel for the Company, corporate Trustee, if applicable, or any Trustee
in his individual capacity) and shall be fully protected in acting upon
the advice of counsel.
8.06 Indemnification
---------------
The Company agrees to indemnify the Fund and Trustees against any
liability imposed as a result of a claim asserted by any person or persons
under the community property or other laws of any state where the Trustee
has acted in good faith in reliance on a written direction of the Company
or Committee. Claims against the Trustees by persons dealing with the
Trustees shall be limited to the Fund, and each Trustee shall not be
responsible for such claims in his individual capacity.
12
<PAGE>
ARTICLE IX
----------
QUALIFIED INVESTMENT MANAGER
----------------------------
9.01 Appointment and Acknowledgement
-------------------------------
The Company may appoint a qualified investment manager to manage and
control the investment and reinvestment of the Fund or a portion of the
Fund in his sole discretion in accordance with Article III. The accounts,
books, and records of the Trustees shall reflect the segregation of said
portion of the Fund in separate investment management accounts. Such
investment manager shall accept his appointment and acknowledge his status
as a fiduciary under the Plan in writing to the Trustees and shall be
subject to the standard of conduct described in Section 3.02.
9.02 Qualification
-------------
A qualified investment manager shall be (a) an investment adviser
currently registered under the Investment Advisers Act of 1940; (b) a
bank, as defined in the Act, or (c) an insurance company qualified to
perform investment management services under the laws of more than one
state. A certificate evidencing such qualifications shall be delivered to
the Trustees.
9.03 Relation to Trustees
--------------------
The appointed investment manager shall direct the Trustees in exercising
the powers enumerated in Sections 3.01 and Article IV with respect to the
separate investment management accounts under its management and control.
The Trustees shall be under no duty to review such investment directions.
Notwithstanding the provisions of Section 3.02, the Trustees shall not be
liable for acting pursuant to any direction of, or failing to act in the
absence of any direction from the investment manager, except as stated in
Section 8.02.
9.04 Resignation or Removal
----------------------
Until notified by the Company of the resignation or removal of the
Investment manager, the Trustees shall be fully protected in removal on
the acknowledgement and certification as delivered to the Trustees. On
receipt of such notice, the Trustees shall assume management
responsibility for the Fund in accordance with Articles III and IV. The
Trustees shall relinquish management responsibility for the Fund to a
successor investment manager upon receipt of such successor's
acknowledgement and certification.
13
<PAGE>
ARTICLE X
---------
CONCERNING INSURANCE COMPANIES
------------------------------
10.01 No insurance company which shall have issued or which shall issue a
contract or policy which forms a part of the Fund shall be deemed a party
to this Agreement. A certification in writing by the Trustees as to the
occurrence of any event contemplated by this Agreement shall be
conclusive evidence thereof and the insurance company shall be protected
in relying upon such certification and shall incur no liability for so
doing. With respect to any action under any such contract, the insurance
company may deal with the Trustees as the sole owner thereof and need not
see that any action of the Trustees is authorized by this Agreement. Any
change made or action taken by an insurance company upon the direction of
the Trustees shall fully discharge the insurance company from all
liability with respect thereto, and it need not see to the distribution
or further application of any monies paid by it to the Trustees or paid
in accordance with the direction of the Trustees.
14
<PAGE>
ARTICLE XI
----------
AMENDMENT AND TERMINATION
-------------------------
11.01 Amendment
---------
The Company reserves the right to amend, at any time, in whole or in
part, any or all of the provisions of this Agreement by notice thereof in
writing delivered to the Trustees, provided no such amendment which
affects the rights, duties or responsibilities of the Trustees may be
without the Trustee's consent.
11.02 Termination
-----------
This Agreement and the trust created hereby may be terminated by the
Company, upon 60 days prior notice in writing to the Trustees, as of the
last business day of any month. Upon such termination or upon the
dissolution or liquidation of the Company, the Fund shall be paid out by
the Trustees as and when directed by the Committee in accordance with the
provisions of Section 2.01 hereof and, to the extent directed by the
Committee, shall be used to purchase annuity or other contracts issued by
an insurance company approved by the Committee.
15
<PAGE>
ARTICLE XII
-----------
SPENDTHRIFT PROVISIONS
----------------------
12.01 No benefit, which shall be payable out of the Fund to any person
(including a participant of the Plan or his beneficiary), shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such attempt shall be
void. No benefit shall in any manner be subject to the debts, contracts,
liabilities, engagements or torts of any member of the Plan or his
beneficiary, nor shall any benefit be subject to attachment or other
legal process for or against such person, and any such attempt shall not
be recognized by the Trustees except with respect to (a) the debts of a
participant of the Plan to the Trustees, (b) a Qualified Domestic
Relations Order as defined in Section 414(b) of the Code and (c) such
other instances as required by law.
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ARTICLE XIII
------------
ADOPTION BY OTHER BUSINESS ENTITIES
-----------------------------------
13.01 Any corporation or other business entity may, with the approval of the
board of directors (or similar governing body) of the Company, by
resolution of its own board of directors (or similar governing body),
adopt the Trust hereby created if such corporation or other business
entity shall have adopted the Plan. Contributions made by such business
entity shall be invested and maintained together with the contributions
made hereunder by the Company and any other adopting business entity.
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ARTICLE XIV
-----------
CONSTRUCTION OF AGREEMENT
-------------------------
14.01 This agreement and the trust created hereby shall be administered,
construed and enforced according to the laws of the State of Delaware,
and the Trustees shall be liable to account only in the courts of that
state. All transfers of funds or other property to the Trustees shall be
deemed to take place in the State of Delaware. The Trustees may at any
time initiate an action or proceeding for the settlement of the Trust
accounts or for the determination of any question of construction which
may arise or for instructions, and the only necessary parties defendant
to such action or proceeding shall be the Company and the Committee,
except that the Trustees may, if the Trustees so elects, bring in as
parties defendant any other person or persons.
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ARTICLE XV
----------
MISCELLANEOUS PROVISIONS
------------------------
15.01 Disposition of Unclaimed Benefits
---------------------------------
In the event that any check in payment of benefits under the Plan
remains outstanding at the expiration of six months from the date of
mailing of such check to the last known address of the payee, the
Trustees, upon written notification from the Committee, shall stop
payment of all such outstanding checks and shall suspend the issuance of
any further checks, if any, to such payee. If, during the three-year
period from the date of mailing of the first such check, the Committee
cannot establish contact with the payee by taking such action as it
deems appropriate and the payee does not make contact with the
Committee, the Committee shall notify the Trustees to dispose of such
unpaid benefits in the manner prescribed by the Plan.
15.02 Severability
------------
Should any provisions of this Agreement or any regulation adopted
hereunder be deemed or held to be unlawful or invalid for any reason,
such fact shall not adversely affect the other provisions herein or
regulations hereunder contained unless such invalidity shall render
impossible or impractical the functioning of this Agreement and, in such
case, the appropriate parties shall immediately adopt a new provision or
regulation to take the place of the one held illegal or invalid.
15.03 Titles, Headings, Number, and Gender
------------------------------------
The titles and headings of the Sections in this instrument are for
convenience of reference only and, in the event of any conflict, the
text of this instrument, rather than such titles and headings, shall
control. Wherever used, the masculine pronoun shall include the feminine
and the feminine pronoun shall include the masculine and the singular
shall include the plural and the plural shall include the singular.
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15.04 Counterparts as Original
------------------------
This Agreement may be executed in counterparts, in which case each
counterpart so executed shall be construed as original.
IT WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed this _____ day of _____________________ 1996.
ATTEST: ASTROPOWER, INC.
___________________________ By:_____________________________
President
WITNESSED:
___________________________ ________________________________
Trustee Robert B. Hall
___________________________ ________________________________
Trustee Cheryl Keith
___________________________ ________________________________
Trustee Thomas J. Stiner
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
AstroPower, Inc.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Form S-8.
______________________
KPMG Peat Marwick LLP
Wilmington, Delaware
December 15, 1998
