As filed with the Securities and Exchange Commission on June 17, 1997
Registration No. ______________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
PDT, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of organization)
77-0222872
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
7408 Hollister Avenue
Santa Barbara, California 93117
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
PDT, INC. 401(k) -
EMPLOYEE STOCK OWNERSHIP PLAN
- --------------------------------------------------------------------------------
(Full title of the plan)
GARY KLEDZIK, Ph.D.
Chairman and
Chief Executive Officer
PDT, Inc.
7408 Hollister Avenue
Santa Barbara, California 93117
(805) 685-9880
- --------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Copy to:
ELIZABETH A. KING, ESQ.
Bryan Cave LLP
120 Broadway, Suite 500
Santa Monica, California 90401
<PAGE>
================================================================================
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
Title of Amount Proposed Maximum
Securities of Shares Maximum Aggregate Amount of
to be to be Offering Price Offering Registration
Registered Registered per Share Price Fee
- ----------------------- ----------- -------------- ------------- ------------
Common Stock, par value
$.01 per share 300,000 $29.3751 $8,812,500(1) $2,670.46
================================================================================
(1) Estimated pursuant to Rule 457(h) solely for the purpose of calculating the
amount of the registration fee on the basis of the average of the high and
low reported sale prices of a share of Common Stock of PDT, Inc. (the
"Company" or the "Registrant") on June 13, 1997 as reported by The Nasdaq
Stock Market.
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Items 1 and 2 of Part
I of Form S-8 will be sent or given to plan participants as specified in Rule
428(b)(1) and, in accordance with the instructions to Part I, are not filed with
the Securities and Exchange Commission (the "Commission") as part of this
Registration Statement.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents and information previously filed with the
Commission are hereby incorporated by reference:
a. The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
b. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997.
c. Item 1 of the Registrant's Registration Statement on Form 8-A
(Registration No. 0-25544) filed with the Commission on February 13,
1995, pursuant to Section 12 of the Securities Exchange Act of 1934.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the date of filing such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of the Company's Common Stock registered
hereunder will be passed upon for the Company by Bryan Cave LLP, Santa Monica,
California.
Item 6. Indemnification of Directors and Officers.
Section 102(b)(7) of the Delaware General Corporation Law (the "Delaware
Law") permits a corporation to provide in its certificate of incorporation that
directors of the corporation shall not be personally liable to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for payments of unlawful dividends or unlawful stock repurchases or
<PAGE>
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation contains
such a provision.
Section 145 of the Delaware Law provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
expenses (including attorneys' 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 interests 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 is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such action, and the statute requires
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Under Section 145, a
corporation shall indemnify an agent of the corporation for expenses actually
and reasonably incurred if and to the extent such person was successful on the
merits in a proceeding or in defense of any claim, issue or matter therein.
The Registrant is presently subject to Section 2115 of the California
Corporations Code (the "California Code"), according to which Section 317 of the
California Code applies to the indemnification of officers and directors of the
Registrant. Under Section 317 of the California Code, permissible
indemnification by a corporation of its officers and directors is substantially
the same as permissible indemnification under Section 145 of the Delaware Law,
except that (i) permissible indemnification does not cover actions the person
reasonably believed were not opposed to the best interests of the corporation,
as opposed to those the person believed were in fact in the best interests of
the corporation, (ii) the Delaware Law permits advancement of expenses to agents
other than officers and directors only upon approval of the board of directors,
(iii) in a case of stockholder approval of indemnification, the California Code
requires certain minimum votes in favor of such indemnification and excludes the
vote of the potentially indemnified person, and (iv) the California Code only
permits independent counsel to approve indemnification if an independent quorum
of directors is not obtainable, while the Delaware Law permits the directors in
any circumstance to appoint counsel to undertake such determination.
The Registrant in its Bylaws has provided for indemnification of its
officers, directors, employees and other agents substantially identical to that
permitted under the California Code. Section 145 of the Delaware Law and Section
317 of the California Code provide that they are not exclusive of other
indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, shareholder vote, agreement or otherwise. The
limitation of liability contained in the Registrant's Certificate of
Incorporation and the indemnification provision included in the Registrant's
bylaws are consistent with Delaware Law Sections 102(b)(7) and 145. The
Registrant has also entered into separate indemnification agreements with its
directors and officers that could require the Registrant, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and officers and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, including liabilities that may arise under the Securities Act of
1933. In addition, the Company has purchased directors and officers insurance.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to such provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
2
<PAGE>
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit
Number
4.1 PDT, Inc. 401(k) - Employee Stock Ownership Plan
5.1 Opinion of Bryan Cave LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Bryan Cave LLP (included in Exhibit 5.1)
24.1 Power of Attorney (see page 5 of this Registration Statement)
The Registrant undertakes that it will submit the Plan and any amendment to the
Internal Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan under Section 401 of the
Internal Revenue Code.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in 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 (a)(1)(i) and (a)(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 Securities Exchange Act of 1934 that are
incorporated by reference in the 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 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.
3
<PAGE>
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) 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 foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 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 of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such 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
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
4
<PAGE>
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 Santa Barbara, State of California, on June 16, 1997.
PDT, Inc.
By: /s/ Gary S. Kledzik, Ph.D.
----------------------------------------
Gary S. Kledzik, Ph.D., Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary S. Kledzik, Ph.D. and John Philpott,
or either of them, his attorneys-in-fact and agents, each with full power of
substitution for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents full power and authority to do so and perform
each and every act and thing requisite and necessary to be done in connection
with this Registration Statement, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that either of
said attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ------------------------------ -------------------------------- --------------
/s/ Gary S. Kledzik, Ph.D. Chairman of the Board, Director, June 16, 1997
- ------------------------------ and Chief Executive Officer
Gary S. Kledzik, Ph.D. (principal executive officer)
/s/ David E. Mai Director and President June 16, 1997
- ------------------------------
David E. Mai
/s/ John M. Philpott Chief Financial Officer June 16, 1997
- ------------------------------ (principal financial officer
John M. Philpott and principal accounting
officer)
/s/ Michael D. Farney Director June 16, 1997
- ------------------------------
Michael D. Farney
/s/ Donald K. McGhan Director June 16, 1997
- ------------------------------
Donald K. McGhan
/s/ Raul E. Perez, M.D. Director June 16, 1997
- ------------------------------
Raul E. Perez, M.D.
/s/ Charles T. Foscue Director June 16, 1997
- ------------------------------
Charles T. Foscue
5
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ --------------------------------------------------------- ------------
4.1 PDT, Inc. 401(k) - Employee Stock Ownership Plan.........
5.1 Opinion of Bryan Cave LLP................................
23.1 Consent of Ernst & Young LLP............................
23.2 Consent of Bryan Cave LLP (included in Exhibit 5.1)......
24.1 Power of Attorney (see page 5 of this Registration Statement)
6
EXHIBIT 4.1
PDT, INC.
401(k)-EMPLOYEE STOCK OWNERSHIP PLAN
<PAGE>
TABLE OF CONTENTS
Section 1. Nature of the Plan.............................................. 1
(a) Nature and Purpose............................................ 1
Section 2. Definitions..................................................... 1
(a) Account....................................................... 1
(b) Affiliated Company............................................ 1
(c) Allocation Date............................................... 2
(d) Anniversary Date.............................................. 2
(e) Approved Absence.............................................. 2
(f) Beneficiary .................................................. 2
(g) Break in Service.............................................. 2
(h) Capital Accumulation.......................................... 2
(i) Code.......................................................... 2
(j) Committee..................................................... 2
(k) Company....................................................... 2
(l) Company Stock................................................. 3
(m) Compensation.................................................. 3
(n) Credited Service.............................................. 3
(o) Election Period............................................... 3
(p) Elective Contributions........................................ 4
(q) Eligible Employee............................................. 4
(r) Employee...................................................... 4
(s) Employer...................................................... 4
(t) Employer Matching Contributions............................... 4
(u) Employer Discretionary Contributions.......................... 4
(v) Entry Date.................................................... 4
(w) ERISA......................................................... 5
(x) Excess Contributions and Excess Aggregate Contributions....... 5
(y) Forfeiture.................................................... 5
(z) Highly Compensated Employee................................... 5
(aa) Hour of Service.............................................. 5
(bb) Limitation Year.............................................. 5
(cc) Participant.................................................. 5
(dd) Plan......................................................... 6
(ee) Plan Year.................................................... 6
(ff) Rollover Account............................................. 6
(gg) Service...................................................... 6
(hh) Trust........................................................ 6
(ii) Trust Agreement.............................................. 6
(jj) Trust Assets................................................. 6
(kk) Trustee...................................................... 6
(ll) Year of Service.............................................. 6
<PAGE>
Section 3. Eligibility and Participation................................... 7
(a) Eligibility and Entry......................................... 7
(b) Duration of Participation..................................... 7
Section 4. Contributions................................................... 8
(a) Elective Contributions........................................ 8
(b) Employer Matching Contributions............................... 10
(c) Employer Discretionary Contributions.......................... 10
(d) Timing of Contributions....................................... 10
(e) Conditions.................................................... 11
Section 5. Investment of Trust Assets...................................... 11
(a) Investment in Company Stock................................... 11
(b) Participant Directed Investment............................... 11
Section 6. Participants' Accounts, Allocations and limitations............. 12
(a) Participants' Accounts........................................ 12
(b) Accounting for the Plan....................................... 13
(c) Allocation of Contributions................................... 13
(d) Allocation of Earnings and Dividends.......................... 13
(e) 401(k) Limitations............................................ 14
(f) Correction of Excess Contributions............................ 15
(g) Overall Limitations........................................... 17
Section 7. Expenses of the Plan and Trust.................................. 18
(a) Administrative Expenses....................................... 18
Section 8. Disclosure to Participants...................................... 18
(a) Summary Plan Description...................................... 18
(b) Summary Annual Report......................................... 19
(c) Participant Statements........................................ 19
(d) Tax Notice.................................................... 19
(e) Additional Disclosure......................................... 19
Section 9. Retirement...................................................... 20
(a) Normal Retirement............................................. 20
(b) Disability Retirement......................................... 20
Section 10. Vesting, Break in Service and Forfeiture....................... 20
(a) Vesting Upon Retirement, Disability or Death.................. 20
(b) Vesting Upon Other Termination of Service..................... 20
(c) Forfeiture ................................................... 21
(d) Reinstatement of Accounts .................................... 21
(ii)
<PAGE>
Section 11. Credited Service and Hours of Service.......................... 21
(a) Credited Service.............................................. 21
(b) Reemployment After Break(s) in Service........................ 22
(c) Hours of Service Credited..................................... 22
Section 12. Incidents of Distribution, Hardship Withdrawals,
and Participant Loans............................................. 23
(a) Normal Distributions.......................................... 23
(b) Age 59-1/2 Distributions...................................... 23
(c) Hardship Withdrawals.......................................... 24
(d) Loans to Participants......................................... 25
Section 13. Normal Distribution Timing and Manner.......................... 25
(a) Timing of Distributions....................................... 25
(b) Manner of Distributions....................................... 26
(c) Special Transfer Elections ................................... 27
Section 14. Beneficiaries and Unlocatable Participants..................... 28
(a) Beneficiaries................................................. 28
(b) Failure to Locate............................................. 28
Section 15. No Assignment of Benefits...................................... 29
(a) Benefits Inalienable.......................................... 29
Section 16. Administration................................................. 29
(a) Plan Administrator............................................ 29
(b) Trustee....................................................... 30
(c) Employment of Advisers........................................ 30
(d) Fidelity Bonding.............................................. 30
(e) Indemnification............................................... 30
Section 17. Claims Procedure............................................... 31
(a) No Claim Required............................................. 31
(b) Claims Procedures............................................. 31
Section 18. Top Heavy Provisions........................................... 32
(a) Special Definitions........................................... 32
(b) Determination of Top-Heaviness................................ 34
(c) Determination of Super Top-Heaviness.......................... 35
(d) Calculation of Accounts to be Compared........................ 35
(e) Results of Being Top-Heavy.................................... 35
(iii)
<PAGE>
Section 19. Other Provisions-Governing Law................................. 37
(a) Limits on Liability........................................... 37
(b) No Contract of Employment..................................... 37
(c) Right to Amend................................................ 37
(d) Termination or Partial Termination............................ 38
(e) Merger, Consolidation, or Transfer of Assets.................. 39
(f) Titles No Part of Agreement................................... 39
(g) Governing Law................................................. 39
Section 20. Execution...................................................... 39
(iv)
<PAGE>
PDT, INC.
401(k)-EMPLOYEE STOCK OWNERSHIP PLAN
Section 1.........Nature of the Plan.
(a) Nature and Purpose
The purpose of this Plan, effective January 1, 1997, is to enable
participating Employees to share in the growth of the Company and to provide
Participants with an opportunity to accumulate capital for their future economic
security. The Plan is intended to do this through a combination of elective
salary deferrals on the part of Employees and Employer discretionary and/or
matching contributions on the part of the Company. This Plan is intended to be a
stock bonus plan under Section 401(a) of the Code and to qualify as a "cash or
deferred arrangement" under Section 401(k) of the Code.
All Trust Assets held under the Plan will be administered, distributed,
forfeited and otherwise governed by the provisions of this Plan and its related
Trust Agreement. The Plan is administered by the Company for the exclusive
benefit of Participants (and their beneficiaries).
Section 2.........Definitions.
In the text of this document hereafter, the term "Plan" is used to
refer to the PDT, Inc. 401(k)-Employee Stock Ownership Plan unless indicated in
the context to the contrary.
In this Plan, whenever the context so indicates, the singular or plural
number and the masculine, feminine or neuter gender will be deemed to include
the other. The terms "he", "his" and "him" will refer to a Participant, and the
capitalized terms will have the following meanings:
(a) Account
One of the several accounts maintained to record the various
interests of a Participant under the Plan. See Section 6.
(b) Affiliated Company
Any business under common control with the Company, under the
provisions of Section 414(b) or (c) of the Code or any company
deemed to be an affiliated service group with the Company by
virtue of Section 414(m).
Page 1 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(c) Allocation Date
A date no less frequent than annually as of the Anniversary
Date of each year (generally, as of the last day of each
fiscal quarter) as of which valuations and allocations are
performed. The frequency of Allocation Dates will be
determined by the Committee.
(d) Anniversary Date
December 31st, the last day of each Plan Year.
(e) Approved Absence
A leave of absence granted to an Employee by an Employer under
its established leave policy.
(f) Beneficiary
The person (or persons) entitled to receive any benefit under
the Plan in the event of a Participant's death. See Section 14.
(g) Break in Service
A Plan Year during which a Participant is credited with less
than 501 Hours of Service and on the last day of which he is
not an Employee.
(h) Capital Accumulation
A Participant's vested (nonforfeitable) interest in his
Accounts under the Plan.
(i) Code
The Internal Revenue Code of 1986, as amended.
(j) Committee
The Committee appointed by the Board of Directors of the
Company to direct the Trustee and assist in administration of
the Plan. See Section 16.
(k) Company
PDT, Inc., a Delaware corporation, as well as its subsidiaries
and Affiliated Companies whose Employees participate in this
Plan.
Page 2 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(l) Company Stock
Readily tradable common stock of PDT, Inc.
(m) Compensation
(1) In General - The gross amount of salary and wages of an
Employee for a Plan Year as reportable on Form W-2, including
overtime, commissions, and bonuses in cash or in kind paid by
the Company. Pursuant to Code Section 401(a)(17), Compensation
of an employee for any plan year may not exceed $150,000 as
that amount may be adjusted from time to time for lost of
living.
In the event a Plan Year is a period of less than 12 months
for any reason, then Compensation for the short period shall
not exceed the pro rata portion of this limit created by
multiplying a fraction which is the number of months in the
short period divided by twelve times the annual Compensation
limit.
(2) For Testing - For purposes of the anti- discrimination
tests and the determination of Excess and Excess Aggregate
Contributions in Section 6 of this Plan, Compensation will
also include all Elective Contributions which are made by the
Company on behalf of Employees to a cafeteria plan, cash or
deferred arrangement or tax-sheltered annuity and which
amounts are not includible in the gross income of such
Employees.
(3) For Plan Years beginning after 1997, - Compensation - for
all purposes herein shall include amounts paid by the company
on behalf of an employee to a cafeteria plan, cash or deferred
arrangement or tax-sheltered annuity even though, such amounts
are not included in the gross-income of such employee.
(n) Credited Service
The number of Years of Service for vesting purposes earned by
an Employee as further described in Section 11.
(o) Election Period
In general, Election Periods will include each 30 day period
ending on the 15th day before each Entry Date. In addition,
however, Election Periods may include such periods as the
Committee may determine to be necessary in order to provide
Employees an adequate, non-discriminatory opportunity to
participate.
Page 3 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(p) Elective Contributions
Payments made to the Trust by the Company pursuant to
Participant elections under Section 4(a).
(q) Eligible Employee
An employee who has met the eligibility requirements of
Section 3(a).
(r) Employee
Any common-law employee of the Company or any individual
deemed to be an Employee by virtue of Section 414(m) or 414(o)
of the Code. A leased employee as defined in Section 414(n) of
the Code shall not be an Employee for purposes of this Plan.
(s) Employer
The Company, and each Affiliated Company which has been
designated by the Company as an Employer under the Plan and
which has adopted the Plan for the benefit of its Employees.
(t) Employer Matching Contributions
Payments made to the Trust by an Employer as matching on
Participants' Elective Contributions pursuant to Section 4(b)
hereof.
(u) Employer Discretionary Contributions
Payments made to the Trust by an Employer as Discretionary
Contributions pursuant to Section 4(c) hereof.
(v) Entry Date
For purposes of entry into the Plan and Elections as required
hereunder, Entry Date refers to the January 1st, April 1st,
July 1st, or October 1st, following the date: i) for purposes
of eligibility to participate, he completes the eligibility
requirements described in Section 3 hereof provided he is an
Employee on his Entry Date or ii) for purposes of Elections
hereunder, he submits appropriate forms to the Employer during
an Election Period.
If special Election Periods are determined to be necessary for
any the Plan Year in order to provide for non-discriminatory
participation, then Entry Date will also include the first day
upon which a Participant's properly submitted salary deferral
election can be implemented. See Section 3(a).
Page 4 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(w) ERISA
The Employee Retirement Income Security Act of 1974, as amended.
(x) Excess Contributions and Excess Aggregate Contributions
Amounts allocated for a Plan Year on behalf of Highly
Compensated Employees which are in excess of the limitations
described in Section 6 of this Plan.
(y) Forfeiture
Any portion of a Participant's Accounts which does not become
a part of his Capital Accumulation when participation ceases
pursuant to Section 3(b) hereof and which will no longer be
subject to reinstatement upon the occurrence of five (5)
consecutive Breaks in Service.
(z) Highly Compensated Employee
Highly Compensated Employee shall only include:
(1) An Employee who is a 5% owner during either the
current or preceding Plan Year, or
(2) An Employee who earned in excess of $80,000 (as
such may be adjusted by the IRS for future cost of
living) during the preceding Plan Year.
At the election of the Company, criterion (ii) above may be
modified to include only such individuals as were also in the
top 20% of employees in terms of Compensation.
(aa) Hour of Service
Each hour of service for which an Employee is credited under
the Plan, as further provided in Section 11(c).
(bb) Limitation Year
The Plan Year (ending each June 30th) shall be the limitation
year for purposes of the limitations on contributions and
benefits imposed by Section 415 of the Code.
(cc) Participant
An Eligible Employee who has elected to make Elective
Contributions to this Plan or has received an allocation of
Employer Discretionary Contributions or Forfeitures.
Page 5 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(dd) Plan
This PDT, Inc. 401(k)-Employee Stock Ownership Plan.
(ee) Plan Year
The twelve-month period ending on each Anniversary Date and
coinciding with the fiscal year of the Company.
(ff) Rollover Account
An Account of a Participant established to reflect his balance
transferred to this Plan from another qualified retirement
plan.
(gg) Service
Employment with the Company or with an Affiliated Company.
(hh) Trust
The PDT, Inc. 401(k)-Employee Stock Ownership Trust created
by the Trust Agreement entered into by and between the Company
and the Trustee.
(ii) Trust Agreement
The Agreement between the Company and the Trustee (or any
successor Trustee) establishing the Trust and specifying the
duties of the Trustee.
(jj) Trust Assets
The assets held in the Trust for the benefit of Participants.
(kk) Trustee
The Trustee appointed by the Company's Board of Directors to
hold and invest the Trust Assets.
(ll) Year of Service
For all purposes under this Plan, Year of Service refers to a
twelve month computation period during which a Participant is
credited with at least one thousand (1000) Hours of Service.
For purposes of eligibility, a Year of Service shall be
computed within the 12 month period following the date an
Employee is first credited with an hour of Service. For all
other purposes under this Plan the computation period for a
year of service shall be the 12 month period corresponding to
the Plan Year.
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
Section 3. Eligibility and Participation.
(a) Eligibility and Entry
(a)(1) Any Employee who is a Participant in the Company's existing
qualified Plan (the PDT, Inc. 401(k) Plan) shall automatically be a
Participant in this Plan as of the first Entry Date.
(a)(2) Thereafter, an Employee will first become eligible to
participate in the Plan on the Entry Date following his completion of
three (3) months of service for eligibility and attainment of age
twenty-one (21), provided he is an Eligible Employee on his Entry Date.
For this purpose, three (3) months of service refers to three (3)
months measured from an employee's date of hire during which he is
credited with at least 250 hours of service.
(a)(3) Any Employee who has met the service requirement but has not
become a Participant due to minimum age shall become a Participant as
of the Entry Date next following his attainment of the minimum age
specified above, and in no event may any Employee be required to
complete an age or Service requirement which would cause him to become
a Participant later than the earlier of the first day of the Plan Year
following his completion of a Year of Service for eligibility and
attainment of age 21 or the six (6) month anniversary of such
completion or, if later, the day he becomes an Eligible Employee.
(a)(4) Any Employee whose terms of Service are covered by a collective
bargaining agreement in which retirement benefits were the subject of
good faith bargaining, whether or not such Employees are covered by a
comparable plan, will not participate in this Plan unless the
collective bargaining agreement specifically provides for his
participation in the Plan.
(a)(5) A former Employee who has previously satisfied the eligibility
requirements of sub-section (a)(1) of this Section 3 and is reemployed
by an Employer will become an Eligible Employee as of the date of his
reemployment provided he is then in the class of Employees eligible to
participate in the Plan.
(a)(6) A former Employee who has not previously satisfied the
eligibility requirements of sub-section (a)(1) of this Section 3 and is
reemployed by an Employer will be treated as a new Employee for all
purposes under the Plan.
(b) Duration of Participation
(b)(1) An Eligible Employee will begin participation for the Plan Year
in which occurs his initial Entry Date. In order to participate in
Employer Matching and Discretionary Contributions, a Participant must
be credited with a Year of Service (or the pro rata equivalent of a
Year of Service in the case of more frequent than annual allocation
cycles) and be an Employee on the Allocation Date (the last day of each
allocation cycle). Participation with respect to Elective Contributions
Page 7 of 39
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
will begin on the Entry Date coincident with or next following the
submission of a deferral election form provided by the Committee during
an Election Period. An election once filed will remain active until
revoked by the Participant.
(b)(2) Participation in the Plan will continue thereafter until the
earlier of:
(i) the complete distribution of a Participant's Capital
Accumulation following termination of Service, or
(ii) the occurrence of his fifth consecutive Break in Service
following termination of service, but in no event prior to the
complete distribution of his Capital Accumulation.
(b)(3) A Participant who transfers Service from an Employer to an
Affiliated Company which has adopted this Plan for its Employees will
continue as a Participant, based upon his Compensation received from
each Employer. A Participant who transfers from an Employer to an
Affiliated Company which has not adopted this Plan for its Employees
will continue as a Participant based solely upon his Compensation
received from an Employer. In addition, an Employee who transfers from
eligible to ineligible status according to the provisions of this Plan
will have his participation for all purposes determined with reference
to his employment as an Eligible Employee only. In either case, the
Participant's Accounts will be maintained without curtailment until
such time as participation ceases pursuant to Section 3(b)(2).
(b)(4) An Employee who is on Approved Absence will not become a
Participant until the end of his Approved Absence, but a Participant
who is on Approved Absence will continue as a Participant during the
period of his Approved Absence. Any Employee who fails to return to
Service with the Company within 90 days of the last day of an Approved
Absence will be deemed to have terminated Service as of the date his
Approved Absence should have ended, and his participation in the Plan
will cease according to the provisions of Section 3(b)(2).
Section 4. Contributions.
This Plan may receive any of several types of contributions on behalf of
Participants provided that all contributions of whatever type will be subject to
limitations as provided in the Code and described in Section 6 hereof.
(a) Elective Contributions
(a)(1) Each eligible Employee may elect as of each Election Period to
have a portion of his regular salary or wages withheld by the Company
and contributed to the Trust on his behalf (as Elective Contributions)
in lieu of his being paid such amount currently by the Company.
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
(a)(2) Such elections shall be effective as of the next following Entry
Date, and may be made only in whole percentages and, subject to
determination by the Committee as necessary to assure compliance with
relevant discrimination tests, such percentages may range from one
percent (1%) to six percent (6%) of gross compensation before salary
reduction.
(a)(3) Such elections (and any changes thereof) will normally only be
allowed during an Election Period and will be made on the form provided
by the Committee for this purpose and in accordance with administrative
rules and procedures established by the Committee.
(a)(4) A Participant may terminate his salary deferral election at any
time during the Plan Year by filing a cease deferral form with the
Committee. Deferrals will then cease as of the next pay period for
which cessation can be implemented.
(a)(5) Elective Contributions under the provisions of this Section 4
will be considered for purposes of the limitations of Section 6 for a
Plan Year only if they relate to Compensation that either would have
been received by the Employee in the Plan Year (but for the deferral
election) or if they are attributable to services performed by the
Employee in the Plan Year and would have been received by the Employee
within 2 1/2 months after the close of the Plan Year (but for the
deferral election).
(a)(6) Elective Contributions will be allocated to the respective
Accounts of Participants as of a date within the Plan Year during which
the Compensation would otherwise have been received.
(a)(7) For this purpose, an Elective Contribution is considered
allocated as of a date within a Plan Year if the allocation is not
contingent on participation or performance of services after such date
and the Elective Contribution is actually paid to the Trust no later
than 12 months after the Plan Year to which the contribution relates.
(a)(8) The provisions of this Section 4(a) with respect to salary
deferral elections and Election Periods may be adjusted by the
Committee for each Plan Year as and to the extent necessary to satisfy
the nondiscrimination standards of Section 401(a)(4) or Section
401(k)(3) of the Code and the allocation limits of Section 415(c) of
the Code.
(a)(9) The Board of Directors may determine in its sole discretion to
make special contributions on behalf of all or some non-Highly
Compensated Employees (provided such determination is made in a uniform
and non-discriminatory manner) as necessary to satisfy the
discrimination tests of actual deferral percentage as provided by
Section 401(k)(3) of the Code and do not violate the requirements of
Section 401(a)(4) of the Code and related regulations. Such special
contributions, if any, will be deemed to be Elective Contributions for
all purposes under this Plan.
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
(b) Employer Matching Contributions
(b)(1) For each Plan Year, Participant Accounts will be credited with
Employer Matching Contributions in an amount as determined by the
Company's Board of Directors. Employer Matching Contributions for the
1997 Plan Year, beginning July 1, 1997, will be equal to 50% of the
Employee's Elective Contributions for the period. Thereafter, Employer
Matching Contributions may be made either as a uniform percentage of
Participants' Elective Contributions (which may be limited to a ceiling
as appropriate) or a stated dollar amount to be allocated in a
non-discriminatory manner among Participants' Accounts, based on their
relative Elective Contributions, (which may again be limited to a
ceiling as determined to be necessary in order to provide for the
qualification of all contributions).
(b)(2) The terms of Employer Matching Contributions, if any, for a
given Plan Year will be determined by the Board at a regular meeting
and announced in advance of the beginning of the year to which the
matching provisions apply.
(b)(3) The matching formula, if any, for a given year may include and
be based upon such considerations as the Board may deem relevant
provided that matching will be at least as favorable to non-Highly
Compensated Employees as Highly Compensated Employees.
(b)(4) The Board of Directors may determine, in its sole discretion, to
make additional Employer Matching Contributions only to non-Highly
Compensated Employees if necessary to assure compliance with tests of
actual deferral percentage as described in Section 6(f).
(b)(5) Employer Matching Contributions under the provisions of this
Section 4(b) will be considered for purposes of the limitations of
Section 6 with regard to the Plan Year of the Participants' Elective
Contributions upon which the match is based. In addition, such Matching
Contributions will be allocated to the respective Accounts of
Participants for the same Plan Year and paid to the Trust no later than
the end of the twelfth month following the close of such Plan Year.
(c) Employer Discretionary Contributions
(c)(1) For each Plan Year, the Board may determine to make Employer
Discretionary Contributions to the Trust in such amounts (or under such
formula), as may be determined by the Company's Board of Directors,
provided that contributions may not be made such that the limitations
described in Section 6 will be violated.
(d) Timing of Contributions
(d)(1) Elective Contributions will be paid to the Trustee by the
Company in cash within thirty (30) days after amounts are withheld
under Section 4(a). In the event that any Elective Contributions are
paid to the Trust by reason of a mistake of fact, such Elective
Contributions may be returned to the Company by the
Page 10 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
Trustee (upon direction of the Committee) within one month of
notification of mistake of fact.
(d)(2) Employer Discretionary and Matching Contributions, if any, will
generally be paid to the Trust as of the last day of each calendar
quarter in an amount determined based on the Elective Deferrals for the
quarter. In any event, such contributions will be paid to the Trust not
later than the due date for filing the Company's Federal income tax
return for the applicable Plan Year, including any extensions of such
due date. Such contributions may be paid to the Trust in cash or such
other property as the Company's Board of Directors determines. In the
event Employer Discretionary or Matching Contributions are paid to the
Trust by reason of a mistake of fact, such contributions may be
returned to the Employer by the Trustee (upon direction of the
Committee) within one year after the payment to the Trust.
(e) Conditions
(e)(1) Contributions to this Plan are conditioned upon the accuracy of
facts used to determine the contribution and the deductibility of
contributions to all Company qualified plans under Section 404 of the
Code.
(e)(2) In the event either Contributions are made to this Plan based on
a mistake in fact or the Employer's tax deduction for Contributions is
disallowed, then such Contributions may be returned to the Employer but
only to the extent of the amount of the mistake in fact or the
disallowed deduction not increased by any earnings thereon but reduced
by any losses, and any such return to the Employer must be made no
later than 1 year following the payment to the Trust of the mistaken
Contribution or the disallowance of the deduction.
Section 5. Investment of Trust Assets.
(a) Investment in Company Stock
(a)(1) Since the Plan is intended to be an employee stock ownership
plan, the Committee will generally direct the Trustee to invest 100% of
Trust Assets (except for any roll-over accounts which may be received)
in shares of any class of capital stock of the Employer which is
readily tradeable on an established market and/or the Committee may
determine to make any Discretionary or Matching Contributions in the
form of such stock.
(a)(2) In general, Participants' Elective Contributions and Employer
Matching and Discretionary Contributions received by the Trustee shall
be invested by the Trustee in Company Stock as directed by the
Committee on the close of the third business day following the
Trustee's receipt thereof.
(b) Participant Directed Investments
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<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(b)(1) Except as provided in Section 5(b)(3), a Participant's election
to make Elective Contributions to this Plan shall be deemed by the
Trustee to be a directive to invest such amounts in Company Stock.
(b)(2) In addition, upon specific resolution of the Board of Directors
each Participant may be given the right to elect to have any or all of
his Elective Contributions, Employer Matching Contributions, Employer
Discretionary Contributions and Rollover Accounts invested among such
other diversified investment funds (and in such proportions) as the
Committee will from time to time make available.
(b)(3) After attaining the age of 55 and after ten (10) years of
participation in the Plan, a Participant shall have the right to elect
to have any or all assets in his Accounts invested among other
diversified investment funds. Such investment elections by
Participants, if permitted, shall comply with the requirement of
Section 401(a)(28) of the Code and will be made in writing in
accordance with administrative rules and procedures established by the
Committee, and each Participant may change his investment election only
in accordance with said rules and procedures.
(b)(4) Investment elections, if any, will be permitted only during the
Election Period preceding each Entry Date.
Section 6. Participants' Accounts, Allocations and Limitations.
(a) Participants' Accounts
Separate Accounts will be maintained to reflect Participants' interests under
the Plan.
(a)(1) An Elective Contribution Account will be established for each
Participant. It will be credited with the amount of Elective
Contributions made on his behalf under Section 4 and with his share of
the net income of the Trust attributable to such Account.
(a)(2) Employer Matching and Discretionary Accounts will also be
established to reflect Participants' interests in contributions,
Forfeitures and earnings from Employer Matching and Discretionary
Contributions.
(a)(3) All such Accounts will generally be vested according to the
schedule in Section 10 hereof.
(a)(4) The Committee will also cause to be established special Rollover
Accounts to record the Participants' assets attributable to
participation in a previous qualified retirement plan or to receive
other qualified roll-over distributions provided only that such
accounts may not be established to receive assets which would cause
this Plan to become subject to distribution or form of benefit
requirements not otherwise authorized by this Plan.
Page 12 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(a)(5) Participant shall have the right to direct the Trustee with
respect to the voting of shares of Company Stock allocated to his
Accounts.
(b) Accounting for the Plan
(b)(1) The Committee will adopt accounting procedures for the purpose
of making the allocations to Participants' Accounts provided for in
this Section. From time to time, the Committee may modify the
accounting procedures for the purpose of achieving equitable and
nondiscriminatory allocations among the Accounts of Participants in
accordance with the general concepts of the Plan, the provisions of
this Section and the requirements of the Code and ERISA.
(c) Allocation of Contributions
(c)(1) Allocation of Elective Contributions will be made to the
Participant's Elective Contribution Account in the amounts withheld
from his otherwise payable Compensation pursuant to his salary deferral
elections. Such allocations shall initially be made in cash which shall
be converted to Company Stock and cash based on the pro rata number of
shares of Company Stock purchased for such Participant by the Trustee.
(c)(2) Allocation of Employer Matching Contributions will be made to
Participants' Employer Matching Contributions Accounts based on their
Elective Contributions and the matching formula, if any, as determined
by the Board of Directors pursuant to Section 4 of the Plan.
(c)(3) Allocation of Employer Discretionary Contributions, if any, will
be made to the Accounts of Eligible Employees who meet the requirement
in Section 6(c)(4) in the ratio that each such Eligible Employee's
individual Compensation bears to the total of all Compensation for all
such Eligible Employees.
(c)(4) In order to share in the allocation of Employer Matching
Contributions under Section 6(c)(2) or Employer Discretionary
Contributions under Section 6(c)(3) above, a Participant must have
completed a Year of Service (or the pro rata equivalent in the case of
more frequent than annual allocation cycles) and be an Eligible
Employee on the appropriate Allocation Date.
(d) Allocation of Earnings and Dividends
(d)(1) The net income (or loss) of the Trust will be determined as of
each Allocation Date. Each Participant's share of the net income (or
loss) will be allocated to his Accounts in the ratio which each of his
Account balances on the Allocation Date (after posting the amount of
any distribution of Capital Accumulation from such Account since the
last Allocation Date) bears to the sum of like Account balances for all
Participants as of that date.
(d)(2) To the extent that Participant directed investment options are
Page 13 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
made available, income (or loss) will be allocated separately among the
various options with respect to Participants electing each option.
(d)(3) The net income (or loss) of the Trust includes the increase (or
decrease) in the fair market value of Trust Assets, interest income,
dividends and other income and gains (or losses) attributable to Trust
Assets since the preceding Allocation Date, reduced by any expenses
charged to such Trust Assets since that Allocation Date.
(d)(4) All dividends attributable to shares of Company Stock allocated
to a Participant's Accounts will be reinvested on behalf of such
Participant in accordance with the terms of the Plan.
(e) 401(k) Limitations
(e)(1) The total of Elective Contributions from any Participant for a
given calendar year will in no event exceed the dollar limit provided
($9,500 for 1997 and such other amount as the Secretary of the Treasury
may from time to time prescribe pursuant to section 402(g) of the
Code).
(e)(2) The actual deferral percentage of the group of Eligible
Employees who are Highly Compensated Employees (within the meaning of
Section 414(q) of the Code) will not exceed the greater of:
(i)125% of the percentage determined with respect to all other
Eligible Employees, or
(ii) 200% of the percentage determined with respect to all
other Eligible Employees provided that the result is no more
than the percentage for all other Eligible Employees plus two
(2) percentage points.
(e)(3) For purposes of the test in paragraph (e)(2) above, actual
deferral percentage means the percentage for a group of Employees which
is the average of the ratios (calculated separately for each Eligible
Employee) of:
(i) the amount of Elective Contributions actually paid to the
Trust on behalf of an Employee pursuant to a deferral election
(plus amounts designated by the Board of Directors as fully
vested and described under section 401(k)(3)(D)(ii) of the
Code and authorized by Section 4(a)(9) of the Plan; to
(ii) such Employee's Compensation for that period.
(e)(4) In satisfying the standards of paragraph (e)(3) above, the
determination of the actual deferral percentage for the group of Highly
Compensated Employees may be made without regard to amounts distributed
pursuant to section 401(k)(8) of the Code and Sections 6(f) and (g) of
this Plan.
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<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(e)(5) Furthermore, in determining the contribution percentage for all
other Eligible Employees, amounts paid to the Trust under Section
4(a)(9) of the Plan (i.e. special, fully vested contributions on behalf
of non-Highly Compensated Employees) may be deemed Employer Matching
Contributions to the extent that their application was not required to
satisfy the non-discrimination standards applicable to Elective
Contributions.
(e)(6) In the case of a Highly Compensated Employee who is either a 5%
owner or one of the ten most Highly Compensated Employees and who is
thereby subject to the family aggregation rules of Code Section
414(q)(6), the actual deferral percentage and contribution percentage
for the family group (which is treated as one Highly Compensated
Employee) will be used for purposes of the tests in paragraphs (e)(2)
and (e)(5) above.
Such percentage will be the greater of:
(i) the percentage determined by combining the contributions
and Compensation of all eligible family members who are highly
compensated without regard to family aggregation, and
(ii) the percentage determined by combining the contributions
and Compensation of all eligible family members.
(e)(7) Except to the extent taken into account in the preceding
sentence, the contributions and Compensation of all family members are
disregarded in determining the percentages for the groups of Highly
Compensated Employees and non-Highly Compensated Employees.
(e)(8) For purposes of calculating the actual deferral and contribution
percentages, the ratio for a Highly Compensated Employee will be
determined by treating all plans subject to Code Sections 401(k)(3) and
401(m)(2) under which such Highly Compensated Employee is eligible as a
single plan.
(e)(9) The tests of average deferral percentage and average
contribution percentage may be made with regard to the Highly
Compensated Employee's relevant percentage for the current year as
compared to the Non-highly Compensated Employee's relevant percentage
for the prior year. Also, for years beginning after January 1, 1997,
the provisions above related to family aggregation of benefits Sections
(e)(6) and (e)(7) for this purpose will no longer apply.
(f) Correction of Excess Contributions
(f)(1) If the limitations described in subsection (e) above would
otherwise be exceeded, the Committee may determine to correct (or
avoid) the creation of an excess in any or a combination of the
following manners:
(i) The Committee may limit the participation of Highly
Compensated Employees such that the tests are met.
Page 15 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(ii) The Committee may make special qualifying non- elective
Employee contributions which shall be fully vested and
otherwise treated as Elective Contributions for this purpose
in such manner as determined by the Committee including making
such contributions on behalf of all or any non-highly
compensated Employees until the test is met.
(iii) The Committee may direct the distribution of Excess
Elective Contributions to Highly Compensated Employees and, in
the case of Excess Matching or Aggregate Contributions, the
reallocation to other participants, distribution or forfeiture
(to the extent non-vested) of such excess.
(f)(2) In the event a distribution or Forfeiture is elected as the
correction method, any income attributable to such Excess Contributions
and Excess Aggregate Contributions will be included in the distribution
(or forfeiture, if applicable) thereof.
(f)(3) The income includes both income for the Plan Year for which the
Excess and Excess Aggregate Contributions were made and income for the
period between the end of the Plan Year and the date of distribution
(or forfeiture) which will be calculated in accordance with the
applicable provisions of the I.
T. Regulations.
(f)(4) Any distributions or forfeitures of Excess or Excess Aggregate
Contributions which are required pursuant to this Section will be
applied with respect to a Highly Compensated Employee in the same
proportion as the overall excess may be attributed to his
participation. Accordingly, adjustment will be made by leveling the
highest actual deferral or contribution percentages of Highly
Compensated Employees until the tests in Section 6(e) of this Plan are
satisfied.
(f)(5) For the purpose of the adjustment described above, first, the
percentage of the Highly Compensated Employee with the highest
percentage is reduced to the extent necessary to satisfy the tests or
cause his percentage to equal the percentage of the Highly Compensated
Employee with the next highest percentage. This process is repeated
until the tests are satisfied.
(f)(6) The distribution (or forfeiture, if applicable) of excess
amounts will be made on the basis of the respective portions of such
amounts attributable to each Highly Compensated Employee.
(f)(7) In no event will Excess Contributions be corrected by forfeiture
if such Contributions are not otherwise forfeitable under the terms of
the Plan.
(f)(8) Any amount which cannot be allocated as Employer Matching
Contributions by virtue of this Section 6(g) may be deemed to be
Employer Discretionary Contributions for the Plan Year and allocated
accordingly.
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<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(g) Overall Limitations
(g)(1) In no event may a Participant's annual additions (i.e. the sum
of contributions from all sources and Forfeitures) to all defined
contribution plans maintained by the Employer and allocated to a
Participant's Accounts in a given Plan Year exceed the lesser of:
(i) Twenty-five percent (25%) of his Compensation; or
(ii) $30,000, (as may be adjusted for cost of living increases
pursuant to Sections 415(b)(1)(A), 415(d)(1) and 415(d)(3) of
the Code).
(g)(2) For purposes of those limits, Compensation will mean a
Participant's earned income, wages, salaries, and fees for professional
services, and other amounts received for personal services actually
rendered in the course of employment with the employer maintaining the
Plan (including, but not limited to, commissions paid salesmen,
compensation for services on a basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses) paid to or
includable in the income of a Participant for a Limitation Year.
Compensation for this purpose will exclude:
(i) Amounts realized from the exercise of a non- qualified
stock option, or when restricted stock (or property) held by
the employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture;
(ii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(iii) Except as provided in (i) above, other amounts which
received special tax benefits, or contributions made by the
employer (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in Section 403(b)
of the Code (whether or not the amounts are actually
excludible from the gross income of the employee).
(g)(3) If the limitation would be exceeded as to any Participant for
any Plan Year, the allocation to his Accounts for the Limitation Year
will be reduced to an amount which would limit the total "annual
additions" to the maximum permitted. Such reduction, if necessary, will
be applied in the following order:
(i) Where this Plan is operated in conjunction with another
defined contribution plan of the Employer, allocations to that
plan shall be reduced first until the limit is met.
(ii) In the event there is no other plan of the Employer or if
reduction of the other plan to zero is not sufficient to meet
these limits, then Employer Discretionary Contributions and
Forfeitures in this Plan will be reduced
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
first until the limit is met.
(iii) If Employer Discretionary Contributions and Forfeitures
are reduced to zero and the limit would still be exceeded,
then Employer Matching Contributions and Forfeitures will be
reduced second until the limit is met.
(iv) If the limit would still be exceeded, then Elective
Contributions will be refunded to the Participant no later
than September 15th in the next Plan Year to the extent
necessary for the limit to be met.
(g)(4) The limits described in this Section apply to all qualified
defined contribution plans sponsored by the employer in aggregate.
(g)(5) Any amount by which Employer contributions for a Participant
must be reduced under Section (g)(3)(i) or (ii) above will be
reallocated to the Accounts of the remaining Participants (under
sub-sections (c) and (d) of this Section 6) to the extent possible
without exceeding the limitation with respect to any other Participant.
(g)(6) In no event may Employer contributions (of whatever nature) be
made such that they cannot be allocated to any Participant pursuant to
these limitations.
(g)(7) Any Forfeitures which cannot be allocated to any Participant's
Accounts by reason of this limitation will be treated (for allocation
purposes) as Forfeitures and allocated first for the next succeeding
Plan Year (or Years, if necessary,) until exhausted provided that any
such amounts will be held in a suspense account which does not share in
gains and losses of the Trust.
Section 7. Expenses of the Plan and Trust.
(a) Administrative Expenses
(a)(1) All expenses of administering the Plan and Trust will be charged
to and paid out of Employer Matching and/or Discretionary Contributions
and earnings thereon, if any.
(a)(2) In the event the Board of Directors determines to provide
Participants the right to direct the investment of all or part of their
Accounts, any expenses related to a particular investment choice may be
charged only to the Accounts of Participants choosing that investment.
Section 8. Disclosure to Participants.
(a) Summary Plan Description
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<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(a)(1) The Committee will furnish each Participant with a summary plan
description of the Plan, as required by Sections 102(a)(1) and
104(b)(1) of ERISA. The summary plan description will be updated from
time to time as required under ERISA and Department of Labor
regulations thereunder.
(b) Summary Annual Report
(b)(1) Within a reasonable time after each Anniversary Date, the
Committee will furnish each Participant with the summary annual report
of the Plan required by Section 104(b)(3) of ERISA, in the form
required by Department of Labor regulations.
(c) Participant Statements
(c)(1) No less frequently than following each Anniversary Date, the
Committee will furnish to each Participant a statement including but
not limited to the following information:
(i) His Account balance (if any) as of the preceding report
date.
(ii) The amount of Elective, Employer Matching and/or
Discretionary Contributions (and Forfeitures) allocated to his
Accounts for that Plan Year.
(iii) The adjustments to his Accounts to reflect his share of
the net income (or loss) of the Trust for that Plan Year.
(iv) The new balance in his Account as of the applicable
report date.
(v) His number of years of Credited Service and his vested
percentage in his Account balances as of the report date.
(d) Tax Notice
(d)(1) Within two (2) weeks of the date a distribution occurs, the
Committee will furnish each Participant receiving a distribution from
the Plan with a notice of the tax consequences of his distribution. The
notice will be in accordance with language provided by the Internal
Revenue Service and Code Section 402(f).
(e) Additional Disclosure
(e)(1) The Committee will make available for examination by any
Participant copies of the Plan, the Trust Agreement and the latest
annual report of the Plan filed (on Form 5500) with the Internal
Revenue Service. Upon written request of any Participant, the Committee
will furnish copies of such documents, and may make a reasonable charge
to cover the cost of furnishing such copies, as provided in Department
of Labor regulations.
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401(k)-Employee Stock Ownership Plan
Section 9. Retirement.
A Participant will be treated as having retired under the Plan if his Service
terminates by reason of any of the following:
(a) Normal Retirement
(a)(1) A Participant's normal retirement date is the date he attains
the age of fifty-nine and one-half (59 1/2). Termination of Service on
or after a Participant's normal retirement date constitutes retirement
under the terms of this Plan.
(b) Disability Retirement
(b)(1) If the Committee determines (on the basis of a physician's
certificate satisfactory to the Committee) that a Participant has
become totally and permanently disabled (while an Employee), he will be
granted disability retirement under the Plan without regard to his age
or Credited Service.
Section 10. Vesting, Break in Service and Forfeiture.
(a) Vesting Upon Retirement, Disability or Death
(a)(1) When a Participant reaches his normal retirement date while an
Employee or terminates Service due to retirement, disability or death,
his Capital Accumulation will be the total of his Account balances
(100% vested).
(b) Vesting Upon Other Termination of Service
(b)(1) Participants' Elective Contributions Accounts and Rollover
Accounts (including all earnings thereon) shall at all times be fully
100% vested and non-forfeitable.
(b)(2) Participants' Employer Matching Contributions and Discretionary
Contributions Accounts shall be vested upon termination of Service
according to the following schedule:
Years of Nonforfeitable
Credited Service Percentage
at Termination of Accounts
---------------- --------------
less than 2 years 0%
2 years 10%
3 years 30%
4 years 60%
5 or more years 100%
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(c) Forfeiture
(c)(1) Any portion of the final balances in a Participant's Accounts
which is not vested and which does not become part of his Capital
Accumulation upon his termination of Service will become a Forfeiture
and be reallocated to other Participants in the same manner as the
Contributions from which such Forfeitures were generated.
(c)(2) Amounts which are subject to Forfeiture due to a Participant's
termination of Service prior to attainment of 100% vesting under the
Plan (i.e. non-vested Account balances of Participants who have
terminated Service with the Company) will be reallocated to other
Participants as of a date no earlier than the Anniversary Date
coincident with or following the date participation ceases pursuant to
Section 3(b)(2) above and in no event later than the date upon which
the fifth consecutive Break in Service occurs.
(d) Reinstatement of Accounts
(d)(1) If a Participant terminates and is reemployed by the Company
prior to the occurrence of five (5) consecutive Breaks in Service, any
amount which did not become part of his Capital Accumulation and which
was subject to Forfeiture upon his termination will be reinstated.
(d)(2) Any such reinstated Account, if required, will be maintained
separately until he becomes one hundred percent (100%) vested. His
Capital Accumulation ("X") attributable to such separate Accounts will
be determined (prior to 100% vesting), at the time his participation in
the Plan subsequently terminates, in accordance with the following
formula:
X = P(AB + D) - D
For purposes of applying this formula, P is the vested percentage at the time of
the subsequent termination; AB is the total of such Account balances at the
time; and D is the amount of the Capital Accumulation previously distributed.
Section 11. Credited Service and Hours of Service.
(a) Credited Service
(a)(1) For purposes of vesting in Accounts, a Participant's Credited
Service will include the number of Plan Years during which he is
credited with 1000 or more Hours of Service.
(a)(2) Credited Service will include all Service with the Company and
any Affiliated, or successor Company, and Plan Years will include, for
this purpose, all such twelve (12) month periods from and after the
Plan Year which includes,
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the later of his date of hire or the effective date of the Plan.
(b) Reemployment After Break(s) in Service
(b)(1) If reemployed after the occurrence of a Break(s) in Service,
a former Participant will again become an Eligible
Employee in the Plan as of the date of his reemployment, and the following rules
will apply in determining his Credited Service:
(i) New Accounts will be established to reflect his interest
in the Plan attributable to his Service after the Break(s) in
Service.
(ii) Credited Service after the Break(s) in Service will not
increase his vested interest in his Accounts attributable to
Service prior to the Break(s) in Service, except as provided
in Section 10 for a Participant who is reemployed prior to the
occurrence of five (5) consecutive Breaks in Service and who
has a non-vested Account balance that is reinstated.
(iii) After he completes one Plan Year of Credited Service
following his reemployment, his Credited Service with respect
to his new Accounts will include his Credited Service, if any,
prior to the Break(s) in Service with the following exception:
(A) In the case of a Participant who incurs five or
more consecutive Break(s) in Service prior to
attaining a vested interest under Section 10, his
Service prior to the Breaks in Service will not be
included in determining his Credited Service with
respect to his new Accounts if the consecutive number
of Break in Service years equals or exceeds his
Credited Service accumulated prior to the Break(s) in
Service.
(c) Hours of Service Credited
(c)(1) For purposes of determining Hours of Service to be credited to
an Employee under the Plan, the following rules will be applied:
(i) Hours of Service will generally include:
(A) each Hour of Service for which an Employee is paid
(or entitled to payment) for the performances of duties;
(B) each Hour of Service for which an Employee is paid (or
entitled to payment) for a period during which no duties are
performed due to vacation, holiday, illness, incapacity
(including disability), lay-off, jury duty, military duty, or
paid leave of absence; and
(C) each additional Hour of Service for which back pay is
either
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awarded or agreed to, irrespective of mitigation of damages
provided such Hours have not already been credited under (A)
or (B) above.
(c)(2) The crediting of Hours of Service will comply with DOL Reg.
Section 2530.200b-2, and no more than 501 Hours of Service are to be
credited for one continuous period during which an Employee does not
perform duties.
(c)(3) An Employee compensated on an hourly basis will be credited for
each Hour of Service, as described above.
(c)(4) Unless the Committee maintains records of actual Hours of
Service, or if such records are unavailable, a salaried Employee who
completes at least one Hour of Service during his applicable payroll
period will be credited for each such period with:
(i) 10 Hours of Service per day, if paid on a daily basis;
(ii) 45 Hours of Service per week, if paid on a weekly basis;
(iii) 95 Hours of Service per semimonthly period, if paid on
a semimonthly basis; or
(iv) 190 Hours of Service per month, if paid on a monthly
basis.
(c)(5) In the case of a leave of absence or termination of Service due
to maternity, paternity or adoption (including: (i) pregnancy of the
individual, (ii) birth of a child of the individual, (iii) placement of
a child with the individual in connection with an adoption, or (iv)
caring for a child described in (ii) or (iii) immediately following
such birth or placement), solely for the purposes of determining if a
Break in Service has occurred, 501 Hours of Service will automatically
be granted to the Participant in the first Plan Year in which a Break
in Service would otherwise occur.
Section 12. Incidents of Distribution, Hardship Withdrawals, and Participant
Loans.
(a) Normal Distributions
(a)(1) Distribution of a terminated Participant's Capital Accumulation
will normally be made in a lump sum as soon as may be administratively
feasible in accordance with Section 13 of the Plan.
(b) Age 59-1/2 Distributions
(b)(1) A Participant who has not yet terminated Service will be
entitled to request a distribution of the entire vested balance of his
Accounts under the Plan after he has attained age 59-1/2.
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(b)(2) Such a distribution will be permitted only once (while a
Participant remains an Employee).
(b)(3) A Participant receiving such a distribution may continue to
participate under the Plan subject to rules established by the
Committee.
(c) Hardship Withdrawals
(c)(1) Upon specific resolution of the Committee, Participants may be
entitled to request a hardship withdrawal of a portion of their
Elective Contribution Accounts. Such withdrawal will be available only
if necessary in light of immediate and heavy financial needs of the
Participant, as determined by the Committee in accordance with I. T.
Reg. Section 1.401(k)-1 which provides that a distribution will be
deemed to be made on account of an immediate and heavy financial need
of the Employee if the distribution is on account of:
(i) Medical expenses described in Code Section 213(d) incurred
by the Employee, the Employee's spouse, or any dependents of
the Employee (as defined in Code Section 152);
(ii)Purchase (excluding mortgage payments) of a principal
residence for the Employee;
(iii)Payment of tuition for the next semester or quarter
of post-secondary education for the Employee, his or her
spouse, children, or dependents;
(iv) Need to prevent the eviction of the Employee from his
principal residence or foreclosure on the mortgage of the
Employee's principal residence.
(v) Any additional circumstances announced by the Commissioner
of the Internal Revenue Service through the publication of
revenue rulings, notices, and other documents of general
applicability, rather than on an individual basis.
(c)(2) The determination of whether an Employee has an immediate and
heavy financial need is to be made on the basis of all relevant facts
and circumstances. A financial need will not fail to qualify as
immediate and heavy merely because such need was reasonably foreseeable
or voluntarily incurred by the Employee.
(c)(3) A hardship distribution is not permitted to the extent it
exceeds the amount necessary to relieve the need or to the extent the
need may be satisfied from other resources reasonably available to the
Employee.
(c)(4) The determination of financial hardship and the amount to be
withdrawn will be made by the Committee in accordance with the
foregoing policy in a uniform and nondiscriminatory manner.
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(d) Loans to Participants
(d)(1) In its sole discretion and by specific resolution, the Board of
Directors may determine to grant loans to Participants from all
Accounts which are maintained under this Plan, provided that all such
loans for a given Participant will not in aggregate exceed the lesser
of fifty percent (50%) of the aggregate vested balance of the
Participant's Accounts or $50,000.
(d)(2) The limitation of $50,000 will be reduced by the excess (if any)
of the highest outstanding loan balance during the prior twelve month
period ending on the day before the loan is made, over the outstanding
loan balance on the date the new loan is made.
(d)(3) Loans of up to $10,000 in aggregate may be granted regardless
of these limitations.
(d)(4) All Participant loans will be granted in a uniform and
nondiscriminatory manner, evidenced by a promissory note with level
amortization and repayable on a regular schedule with at least
quarterly payments at reasonable interest.
(d)(5) All loans, except those for which the purpose is the purchase of
a primary residence of the Participant, will be repayable within five
(5) years including any refinancing or renegotiations thereof.
(d)(6) To the extent that a Participant's loan is secured by all or
part of his Accounts, no loan under this subsection may be granted to a
married Participant unless the Participant's spouse consents in writing
to such use (such consent properly witnessed before a Plan
representative or Notary Public) within the ninety (90) day period
ending upon the date of the loan's collateralization.
(d)(7) In the event of the death of a Participant, such Participant's
Accounts will be reduced by any security interest held by the Plan by
reason of any loan outstanding on the date of death.
Section 13. Normal Distribution Timing and Manner.
(a) Timing of Distributions
(a)(1) The Trustee will make distributions from the Trust only upon the
direction of the Committee.
(a)(2) In the event of a Participant's retirement, disability, death or
other termination of Service, his Capital Accumulation will normally be
distributed in a single distribution as soon as practicable following
the next succeeding Allocation Date.
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(a)(3) At the request of the Participant, the distribution of his
Capital Accumulation may be deferred until after the occurrence of
one or more Breaks in Service but in no event greater than five.
(a)(4) Notwithstanding the foregoing, where a Participant's Capital
Accumulation exceeds $3,500.00, a distribution will be made only if the
Participant (and, if applicable, the Participant's spouse) consents to
such distribution.
(a)(5) Distribution of a Participant's Capital Accumulation will in no
event commence later than sixty (60) days after the Anniversary Date
coinciding with or next following his normal retirement date (or his
termination of Service, if later).
(a)(6) Distribution of the account balance of an employee who is a 5%
or greater owner of the Company shall commence not later than the April
1st following the end of the calendar year in which the Employee
attains age 70 1/2 and each December 31st thereafter. Such distribution
shall be no less than the minimum required distribution pursuant to
Code Section 401(a)(9).
(a)(7) In the event a Participant dies before benefits commence, the
Participant's benefit may be paid in the form of a single distribution
to the Participant's surviving spouse or in immediate installments
payable for the spouse's life or over a period not exceeding the
spouse's life expectancy. If a Participant dies before benefits
commence and the surviving spouse is not the Beneficiary, the entire
remaining interest must be distributed to the Participant's Beneficiary
or Beneficiaries within five years. However, if distributions have
commenced to the Participant before the Participant's death,
distributions to the Participant's surviving spouse, Beneficiaries or
estate will continue to be distributed at least as rapidly as the
period selected by the Participant. Such distribution will be made in
cash or in kind on a nondiscriminatory basis, provided that said
distribution was for term certain. In the event of distribution due to
the death of a Participant, the amount to which a Beneficiary is
entitled will be 100% of the Participant's Capital Accumulation.
(a)(8) A Participant whose Service terminates at a time when his vested
interest in the Plan equals $0 will be deemed to have had a
distribution of his vested benefits as of the Anniversary Date upon
which he first incurs a Break in Service.
(a)(9) If the amount of a Participant's Capital Accumulation cannot be
ascertained by the Committee by the date on which such distribution is
to commence, distribution of his Capital Accumulation will commence
within sixty (60) days after the date on which his Capital Accumulation
is able to be ascertained.
(b) Manner of Distributions
(b)(1) Distribution of Participants' Capital Accumulations will
normally be made in a single distribution of shares or, at the request
of the Participant subject to
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the approval of the Committee, a payment of cash for the full fair
market value of shares determined as of the date of the distribution
amount.
(b)(2) In regard to all distributions from the Trust, the Trustee will
comply with the withholding requirements of Code Sections 3405 and
402(f).
(c) Special Transfer Elections
(c)(1) Notwithstanding any provision of the plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
plan administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(c)(2) For purposes of this Subsection, the following special
definitions shall apply:
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the
Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(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 distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse 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
distributee.
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Section 14. Beneficiaries and Unlocatable Participants.
(a) Beneficiaries
(a)(1) A Participant may designate and/or change a Beneficiary (and
contingent Beneficiaries) to receive his benefits under the Plan in the
event of his death by filing a written designation with the Committee.
(a)(2) A married Participant must have the written consent of his
spouse to designate a Beneficiary other than his spouse, and any
subsequent changes in the named Beneficiary or form of benefit payable
to such Beneficiary which are made by a married Participant will be
deemed void absent the written consent of the Participant's spouse.
Such spousal consent will:
(i) be executed in the presence of a representative
of the Plan or a duly-authorized Notary Public, and
(ii) acknowledge the effect of such designation.
(a)(3) Upon the death of a Participant, if there is no designated
Beneficiary then living, the Participant's Beneficiary will be his
surviving spouse, or if none, his surviving issue per stirpes, or if
none, his estate.
(b) Failure to Locate
(b)(1) In the event a Participant eligible for a distribution of
benefits from the Plan is not locatable after a reasonable effort to
locate (including mailing to the last known address, questioning of
fellow workers, notification of Social Security Administration, and
such other measures, if any, as the Committee may formally adopt as
included in the procedure), then the amount otherwise due will be
reallocated to other participants in the same manner as Employer
Matching Contributions for that period.
(b)(2) In the event a Participant whose balance has been so reallocated
returns and claims his distribution, the amount so due (without regard
to intervening interest) shall be reinstated from similar amounts to be
reallocated for the Plan Year in which he returns.
(b)(3) In the event such amounts are insufficient to reinstate the
Accounts, then the Employer shall make such additional special
contributions as are necessary, and amounts so contributed shall not be
considered annual additions for the year in which the reinstatement
occurs.
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Section 15. No Assignment of Benefits.
(a) Benefits Inalienable
(a)(1) Except as provided in Sections 12 and 13(a)(6) hereof and
Section 15(a)(2) below, a Participant is not entitled to any payment,
withdrawal or distribution under the Plan during his Service; nor may
his interest in the Plan as a Participant, or after his participation
has ended, or that of his Beneficiary, be assigned or alienated by
voluntary or involuntary assignment. Any attempt by a Participant to
assign or alienate his interest in the Plan, or any attempt to make his
interest in the Plan subject to attachment, execution, garnishment or
other legal or equitable process will be void.
(a)(2) The Trustee, when directed by the Committee, may, however, make
such assignments or distributions of benefits as may be required by a
Qualified Domestic Relations Order as defined in Section 414(p) of the
Code.
Section 16. Administration.
(a) Plan Administrator
(a)(1) The Company is the Plan Administrator under Section 414(g)
of the Code and under Section 3(16)(A) of ERISA.
(a)(2) The Board of Directors shall appoint a Committee composed of
individuals to serve at its pleasure and without compensation. The
Committee members will be named fiduciaries with authority to control
and manage all aspects of the operation and administration of the Plan
and to direct the Trustee as to all matters. Any Committee member may
also serve as a Trustee of the Plan, if so designated by the Company's
Board of Directors.
(a)(3) All acts and decisions of the Committee will be by vote of a
majority of the members at a meeting or in writing without a meeting.
Minutes of each meeting of the Committee will be kept.
(a)(4) The Committee will make such rules, regulations, computations,
interpretations, and decisions, and will maintain such records and
accounts as may be necessary to administer the Plan in a
nondiscriminatory manner for the exclusive benefit of the Participants
and their Beneficiaries.
(a)(5) The decision of the Committee on all individual matters will
be final.
(a)(6) The Committee will give instructions to the Trustee with respect
to matters, which require instructions, as provided in the Plan and the
Trust Agreement. The Committee members may allocate their fiduciary
responsibilities among themselves and may designate other persons
(including the Trustee) to carry out fiduciary responsibilities under
the Plan.
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(a)(7) In the event that the Committee specifically designates the
Trustee to perform any of the Committee's fiduciary responsibilities,
then any specific instructions otherwise required by the Plan or Trust
Agreement from the Committee to the Trustee with respect to such
designated fiduciary responsibilities will not be required.
(b) Trustee
(b)(1) Subject only to acceptance, the Board of Directors will appoint
a Trustee to serve at its pleasure. Such Trustee may be an
institutional Trustee, or an individual or group of individuals
including, if the Board so determines, individuals who are Employees of
the Company and/or Participants in the Plan.
(b)(2) The specific duties of the Trustee will be as described in the
Plan and the Trust Agreement including but not limited to the
following:
(i) The Trustee will be responsible for holding and investing
all Trust Assets under the Plan.
(ii) If so directed by the Committee (or if no direction is
received from the Committee), the Trustee will establish a
funding policy and method for acquiring assets for the Trust
in a manner that is consistent with the provisions of the Plan
and Trust Agreement and the requirements of ERISA.
(b)(3) In any case, the Trustee will be a named fiduciary with
responsibility for the management and investment of Trust Assets at the
direction of the Committee or the Participants pursuant to Section 5
above.
(c) Employment of Advisers
(c)(1) The Trustee and Committee are specifically empowered, on behalf
of the Plan, to employ investment advisers, accountants, legal counsel
and other agents to assist them in the performance of their duties
under the Plan.
(d) Fidelity Bonding
(d)(1) The Committee will secure fidelity bonding for fiduciaries of
the Plan, as required by Section 412 of ERISA.
(e) Indemnification
(e)(1) The Company will indemnify the Trustee and each member of the
Committee against any personal liability or expense arising out of or
in connection with their performance of duties under the Plan except
such liability as may result from his own negligence or willful
misconduct.
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Section 17. Claims Procedure.
(a) No Claim Required
(a)(1) Distributions of Capital Accumulations under the Plan will
normally be made without a Participant (or Beneficiary) having to file
a claim for benefits.
(a)(2) A Participant (or Beneficiary) who does not receive a
distribution to which he believes he is entitled may present a claim to
the Committee for any unpaid benefits. All questions and claims
regarding benefits under the Plan will be acted upon by the Committee.
(b) Claims Procedures
(b)(1) Each Participant (or Beneficiary) who wishes to file a claim for
benefits with the Committee will do so in writing, addressed to the
Committee or the Company.
(b)(2) If the claim for benefits is wholly or partially denied, the
Committee will notify the Participant (or Beneficiary) in writing of
such denial of benefits within ninety (90) days after the Committee
initially received the benefit claim.
(b)(3) Any notice of a denial of benefits will advise the Participant
(or Beneficiary) of:
(i) the specific reason or reasons for the denial;
(ii) the specific provisions of the Plan on which the denial
is based;
(iii) any additional material information necessary for the
Participant (or Beneficiary) to perfect his claim and
an explanation of why such material or information is
necessary; and
(iv) the steps which the Participant (or Beneficiary) must
take to have his claim for benefits reviewed.
(b)(4) Each Participant (or Beneficiary) whose claim for benefits has
been denied will have the opportunity to file a written request for a
full and fair review of his claim by the Committee, to review all
documents pertinent to his claim and to submit a written statement
regarding issues relative to his claim.
(b)(5) Such written request for review of his claim must be filed by
the Participant (or Beneficiary) within sixty (60) days after receipt
of written notification of the denial of his claim.
(b)(6) The Committee will schedule an opportunity for a full and fair
hearing of the issue within the next thirty (30) days.
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(b)(7) The decision of the Committee will be made within thirty (30)
days thereafter and will be communicated in writing to the claimant.
Such written notice will set forth the specific reasons and specific
Plan provisions on which the Committee based its decision.
(b)(8) All notices by the Committee denying a claim for benefits, and
all decisions on requests for a review of the denial of a claim for
benefits, will be written in a manner calculated to be understood by
the Participant (or Beneficiary) filing the claim or requesting the
review.
Section 18. Top Heavy Provisions.
(a) Special Definitions
For purposes of this Section 18, the following definitions will apply, to be
interpreted in accordance with the provisions of section 416 of the Code and the
regulations thereunder:
(a)(1) Aggregation Group means a plan or group of plans which includes
all plans maintained by the Employers 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 Code section 401(a)(4) or Code
section 410, as well as all other plans selected by the Company for
permissive aggregation inclusion of which would not prevent the group
of plans from continuing to meet the requirements of such Code
sections.
(a)(2) Compensation will have the meaning set forth in Section 6(h),
and as defined in Section 415 of the Code.
(a)(3) Cumulative Account means the sum of the amount of an Employee's
accounts under a defined contribution plan (for an unaggregated plan)
or under all defined contribution plans included in an Aggregation
Group (for aggregated plans) determined as of the most recent plan
valuation date within a 12-month period ending on the Determination
Date, and for plans subject to Section 412 of the Code, increased by
any contributions due after such valuation date and before the
Determination Date.
(a)(4) Cumulative Accrued Benefit means the sum of the present value of
an Employee's accrued benefits under a defined benefit plan (for an
unaggregated plan) or under all defined benefit plans included in an
Aggregation Group (for aggregated plans), determined under the
actuarial assumptions set forth in such plan or plans, as of the most
recent plan valuation date within a 12-month period ending on the
Determination Date as if the Employee voluntarily terminated service as
of such valuation date.
(a)(5) Determination Date means, with respect to any plan year:
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(i) the last day of the preceding plan year, or
(ii) in the case of the first plan year of any plan, the
last day of such plan year.
(a)(6) Employee means, for purposes of this Section, any person
employed by an Employer and will also include any beneficiary of such
person.
(a)(7) Employer means any corporation which is a member of a controlled
group of corporations (as defined in Code section 414(b) which includes
the Company or any trades or businesses (whether or not incorporated)
which are under common control (as defined in Code section 414(c)) with
the Company or a member of an affiliated service group (as defined in
Code section 414(m)) which includes the Company.
(a)(8) Key Employee means any Employee, former Employee, or Beneficiary
of an Employee who is, at any time during the plan year, or was, during
any one of the four preceding plan years any one or more of the
following:
(i) An officer of an Employer with annual Compensation greater
than 50% of the dollar amount in Code Section 415(b)(1)(A).
(For this purpose no more than 50 Employees (or, if less, the
greater of three (3) or 10% of all Employees) will be treated
as officers.)
(ii) One of the ten (10) persons employed by an Employer
having annual Compensation greater than the limitation in
effect under code section 415(c)(1)(A), and owning (or
considered as owning within the meaning of Code section 318)
the largest interests in the Employers. For this purpose, if
two Employees have the same interest, the one with the greater
Compensation will be treated as owning the larger interest.)
(iii) Any person owning (or considered as owning within the
meaning of Code section 318) more than five percent (5%) of
the outstanding stock of an Employer or stock possessing more
than five percent (5%) of the total combined voting power of
such stock.
(iv) A person who would be described in paragraph (iii) above
if "one percent" were substituted for "five percent" each
place it appears in paragraph (iii) above, and who has annual
Compensation of more than $150,000. (For purposes of
determining ownership under this subsection (iv), Code section
318 (a)(2)(C) will be applied by substituting five percent
(5%) for 50 percent.)
(v) For purposes of the foregoing definition of Key Employee,
Compensation will include all Elective Contributions which are
made by the Company on behalf of Employees to a cafeteria
plan, cash or deferred arrangement or tax-sheltered annuity
and which amounts are not
Page 33 of 39
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
includible in the gross income of such Employees as reportable
on Form W-2.
(vi) The rules of subsections (b), (c) and (m) of section 414
of the Code will not apply for purposes of determining
ownership under this subsection (a)(8).
(a)(9) Member refers to all Participants who have not separated from
service at the end of the Plan Year including, without limitation,
individuals who declined to elect to make contributions to the Plan.
For purposes of the Code Section 416(c) minimum benefits and the
minimum contributions described in subsection (e)(3) of this Section,
Member also includes any Employee who is not a Participant solely
because he has:
(i) failed to complete 1,000 Hours of Service (or the
equivalent),
(ii) declined to make mandatory contributions to the plan, or
(iii) been excluded from the plan because his Compensation is
less than a stated amount.
(a)(10) Non-Key Employee will mean any Employee not described in
subparagraph (8) above.
(b) Determination of Top-Heaviness
The determination of whether a plan is Top Heavy will be made as
follows:
(b)(1) A plan will be Top Heavy and an Aggregation Group will be a Top
Heavy Group with respect to any plan year as of the Determination Date
if the sum as of the Determination Date of the Cumulative Accrued
Benefits and the Cumulative Accounts of Employees who are Key Employees
for the plan year exceeds 60 percent of a similar sum determined for
all Employees, excluding former Key Employees.
(b)(2) If the Plan is not required to be included in an Aggregation
Group with other plans, then it will be Top Heavy only if, when
considered by itself, it is a Top Heavy Plan and it is not included in
a permissive Aggregation Group that is not a Top Heavy Group.
(b)(3) If the Plan is required to be included in an Aggregation Group
with other plans, it will be Top Heavy only if the Aggregation Group,
including any permissively aggregated plans, is Top Heavy.
(b)(4) If a plan is not a Top Heavy Plan and is not required to be
included in an Aggregation Group, then it will not be Top Heavy even if
it is permissively aggregated in an Aggregation Group which is a Top
Heavy Group.
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
(c) Determination of Super Top-Heaviness
(c)(1) A plan will be a Super Top Heavy Plan if it would be a Top Heavy
Plan under the provisions of subsection (b) if "90 percent" were
substituted for "60 percent" in the ratio tests in subsection (b)
above.
(d) Calculation of Accounts to be Compared
(d)(1) Accounts and benefits will be calculated to include all amounts
attributable to both Employer and Employee contributions but excluding
amounts attributable to voluntary deductible Employee contributions.
(d)(2) Accounts and benefits will be increased by the aggregate
distributions during the five-year period ending on the Determination
Date made with respect to an Employee under the plan or plans as the
case may be or under a terminated plan which, if it had not been
terminated, would have been required to be included in the Aggregation
Group.
(d)(3) In accordance with Section 416(g)(4)(E) of the Code, any
accounts and benefits for individuals not employed by the Employer at
any time during the five year period ending on the Determination Date
will not be taken into account.
(d)(4) Rollovers and direct plan-to-plan transfers will be handled as
follows:
(i) If the transfer is initiated by the Employee and made from
a plan maintained by the Employer to a plan maintained by an
unrelated employer, the transferring plan continues to count
the amount transferred under the rules for counting
distributions. The receiving plan does not count the amount if
accepted after December 31, 1983, but does count it if
accepted prior to December 31, 1983.
(ii) If the transfer is made between plans maintained by the
Employers, the transferring plan will no longer count the
amount transferred and the receiving plan will count the
amount transferred.
(iii) For purposes of this subsection (d), all Employers
aggregated under the rules of sections 414(b), (c) and (m) of
the Code will be considered a single employer.
(e) Results of Being Top-Heavy
For any Plan Year in which the Plan is a Top Heavy Plan, the requirements of
this Section must be met in accordance with section 416 of the Code and the
regulations thereunder and the following rules will apply:
(e)(1) Compensation Limit. Annual Compensation of any Employee will not
be taken into account under the Plan in excess $150,000 (as such amount
to be adjusted annually for increases in the cost of living in
accordance with Section
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
401(a)(17) of the Code).
(e)(2) Special Vesting. A Member who is credited with an Hour of
Service while the Plan is Top Heavy will not be subject to special
accelerated vesting as all amounts in this Plan are vested at least as
rapidly at all times under its regular terms as required with regard to
a Top Heavy Plan.
Any amount which is accrued and vested while a Plan is Top Heavy may not be
forfeited even if the Plan later ceases to be Top Heavy nor may such amount be
forfeited under the provisions of Code sections 411(a)(3)(B) (relating to
suspension of benefits upon reemployment) or 411(a)(3)(D) (relating to
forfeitures upon withdrawal of mandatory contributions). Such accrued benefit
will include benefits accrued before the Plan becomes Top Heavy. Notwithstanding
any other provision of this Plan to the contrary, once the vesting requirements
of this subsection (e)(2) become applicable, they will remain applicable even if
the Plan later ceases to be Top Heavy.
(e)(3) Minimum Contributions. Minimum Employer contributions for
a Member who is not a Key Employee will be required under the Plan for
the Plan Year as follows:
(i) The amount of the minimum contribution will be an amount
which added to Forfeitures equals the lesser of three (3)
percent or the highest percentage at which such contributions
and Forfeitures are made under the Plan for the Plan Year on
behalf of a Key Employee (including, if applicable, salary
deferral contributions).
(ii) For purposes of this subsection, all defined contribution
plans required to be included in an Aggregation Group will be
treated as one plan.
(iii) The minimum amount in subparagraph (i) of this
subsection will be a full three (3) percent if the Plan is
required to be included in an Aggregation Group and the Plan
enables a defined benefit plan required to be included in the
Aggregation Group to meet the requirements of sections
401(a)(4) or 410 of the Code.
(iv) Members who have not separated from Service at the end of
the Plan Year must receive the defined contribution plan
minimum.
(v) If this Plan is aggregated with another defined
contribution plan which provides the minimum contributions,
this subsection (e)(3) will not apply with respect to Members
who are Participants in both plans.
(e)(4) Special Treatment Where a Member is also a Participant in a
Defined Benefit Plan. If any Plan Member other than a Key Employee is
also a participant under a defined benefit plan of the Employer which
is a Top Heavy Plan, but not a Super Top Heavy Plan, and if the defined
benefit plan has not provided the Code section 416 minimum benefits for
each Non-Key Employee
Page 36 of 39
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
participating in both plans, then subsection (e)(3)(i) will not apply
and the required minimum annual contribution for such Member under
this Plan will be seven and one-half percent (7 1/2%) of such Member's
Compensation. Such contribution will be made without regard to the
amount of contributions, if any, to the Plan on behalf of Key
Employees.
(e)(5) Special Combined Plan Limit Where the Plan is Super Top-Heavy.
If in any Plan Year the Plan is a Super Top Heavy Plan, then for
purposes of the limitations on contributions and benefits under section
415 of the Code, the dollar limitations in the defined benefit plan
fraction and the defined contribution plan fractions will be multiplied
by 1.0 rather than 1.25 subject to the following transitional rule
provided in Code Section 416(h)(3):
(i) If the application of the provisions of this subsection
would cause any individual to exceed the combined Code section
415 limitations on contributions and benefits, then the
application of the provisions of this subsection (e)(5) will
be suspended as to such individual until such time as he no
longer exceeds the combined Code section 415 limitations as
modified by this subsection.
(ii) During the period of any suspension under sub- section
(e)(5)(i) above, there will be no Employer contributions,
forfeitures or voluntary nondeductible contributions allocated
to such individual under this or any other defined
contribution plan of the Employers and there will be no
accruals for such individual under any defined benefit plan of
the Employers.
Section 19. Other Provisions-Governing Law.
(a) Limits on Liability
All Capital Accumulations will be paid only from the Trust Assets and neither
the Company nor the Committee nor the Trustee nor any Employer will have any
duty or liability to furnish the Trust with any funds, securities or other
assets, except as expressly provided in the Plan.
(b) No Contract of Employment
The adoption and maintenance of the Plan will not be deemed to constitute a
contract of employment or otherwise between an Employer and any Employee, or to
be a consideration for, or an inducement or condition of, any employment.
Nothing contained in this Plan will be deemed to give an Employee the right to
be retained in the Service of an Employer nor to limit an Employer's right to
discharge, with or without cause, any Employee at any time.
Page 37 of 39
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PDT, Inc.
401(k)-Employee Stock Ownership Plan
(c) Right to Amend
The Company specifically reserves the right to amend the Plan and Trust
Agreement at any time (including but not limited to retroactively) in order to
satisfy the requirements of ERISA and Section 401(a) of the Code.
(d) Termination or Partial Termination
(d)(1) As future conditions cannot be foreseen, the Company reserves
the right to amend or terminate the Plan and the Trust Agreement at any
time, by action of its Board of Directors.
(d)(2) Each Employer reserves the right to terminate its participation
as an Employer under this Plan.
(d)(3) Neither amendment nor termination will retroactively reduce the
vested rights of Participants nor permit any part of the Trust Assets
to be diverted or used for any purpose other than for the exclusive
benefit of the Participants (and their Beneficiaries).
(d)(4) If the Plan is terminated (or partially terminated) by the
Company (or by an Employer), participation of all Participants will
cease as of the later of the date of such termination or the
distribution of their Capital Accumulations. All amounts held in
accounts of Participants as of the date of termination shall become
fully vested and non-forfeitable, and no Employee's rights to benefits
hereunder shall be curtailed in any way solely as a result of the
termination.
(d)(5) The Account balances, if any, of all Participants who are
Participants as of the date of the termination or partial termination
and who are affected by the termination or partial termination will
become nonforfeitable as of the date of termination or partial
termination.
(d)(6) A complete discontinuance of Employer Contributions will be
deemed a termination of the Plan for this purpose.
(d)(7) If the Plan is terminated, the Trust will be maintained until
the Capital Accumulations of all Participants have been distributed.
(d)(8) If the Plan is terminated, Capital Accumulations may be
distributed as soon as practicable following termination or
distributions may be made or commenced as provided in Section 13, as
the Company may determine provided that until all Capital Accumulations
have been distributed, the administrative provisions of this Plan will
remain in effect.
Page 38 of 39
<PAGE>
PDT, Inc.
401(k)-Employee Stock Ownership Plan
(e) Merger, Consolidation, or Transfer of Assets
(e)(1) In the event of a merger or consolidation of this Plan with
another plan or the transfer of Trust Assets or liabilities to another
plan, the Account balances of each Participant immediately after such
merger, consolidation or transfer must be at least as great as
immediately before such merger, consolidation or transfer (as if the
Plan had then terminated).
(f) Titles No Part of Agreement
(f)(1) Titles used herein are for convenience only and are not to be
construed as stating, changing, nor interpreting any provision of the
Plan as described in the text of this document.
(g) Governing Law
(g)(1) The provisions of this Plan will be construed, administered and
enforced in accordance with applicable State laws to the extent such
laws are not superseded by ERISA.
(g)(2) All Employer contributions to the Trust will be deemed to take
place in the State of California.
Section 20. Execution.
To record the adoption of this Plan, the Company has caused it to be executed
this ______________ day of ______________, 19_____, effective as of January 1,
1997.
COMPANY:
PDT, Inc.
--------------------------------
Chief Financial Officer
--------------------------------
Secretary
Page 39 of 39
EXHIBIT 5.1
BRYAN CAVE LLP
120 BROADWAY, SUITE 500
SANTA MONICA, CALIFORNIA 90401
(310) 576-2100
FACSIMILE (310) 576-2200
June 16, 1997
PDT, Inc.
7408 Hollister Avenue
Santa Barbara, CA 93117
Re: PDT, Inc. - Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for PDT, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended, to be filed with the Securities and Exchange Commission (the
"Commission") on June 17, 1997, in connection with the registration of an
aggregate of 300,000 shares of the Company's Common Stock, par value $.01 per
share (collectively, the "Shares"), purchased under the Company's 401(k) -
Employee Stock Ownership Plan (the "Plan").
In connection with the preparation of the Registration
Statement and the proposed issuance and sale of the Shares in accordance with
the Plan and the Form S-8 prospectus to be delivered to participants in the
Plan, we have made certain legal and factual examinations and inquiries and
examined, among other things, such documents, records, instruments, agreements,
certificates and matters as we have considered appropriate and necessary for the
rendering of this opinion. We have assumed for the purpose of this opinion the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies, and the
genuineness of the signatures thereon. As to various questions of fact material
to this opinion, we have, when relevant facts were not independently
established, relied, to the extent deemed proper by us, upon certificates and
statements of officers and representatives of the Company.
Based on the foregoing and in reliance thereon, it is our
opinion that the Shares have been duly authorized, and, when issued and sold in
accordance with the Plan and the prospectus to be delivered to participants in
the Plan, the Shares will be validly issued, fully paid and nonassessable.
<PAGE>
PDT, Inc.
June 16, 1997
Page 2
We hereby consent to the inclusion of our opinion as Exhibit
5.1 to the Registration Statement and further consent to the reference to this
firm in the Registration Statement. In giving this consent, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Commission thereunder.
This opinion is rendered solely for your benefit in accordance
with the subject transaction and is not to be otherwise used, circulated, quoted
or referred to without our prior written consent. We are opining herein only as
to the internal (and not the conflict of law) laws of the States of California
and Delaware, and we assume no responsibility as to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction.
Very truly yours,
/S/ BRYAN CAVE LLP
BRYAN CAVE LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) relating to the 401(k)-Employee Stock Ownership Plan of PDT, Inc. of
our report dated February 5, 1997, with respect to the consolidated financial
statements and schedules of PDT, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Woodland Hills, California
June 16, 1997
