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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
Commission file number 0-4217
ACETO CORPORATION
_______________________________________________________
(Exact name of the company as specified in its charter)
NEW YORK 11-1720520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
One Hollow Lane, Suite 201 11042
LAKE SUCCESS, NEW YORK
(Address of principal (Zip Code)
executive offices)
Company's telephone number, including area code: (516) 627-6000
Securities registered pursuant to Section 12 (b) of the Act:
TITLE OF EACH CLASS Name of each exchange
ON WHICH REGISTERED
None
___________________________________________________________________
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.01
_______________________________________________________
(Title of Class)
_______________________________________________________
Indicate by check mark whether the company (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No_____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
6,698,907
The aggregate market value of the voting stock of the company held by
non-affiliates of the company as of September 1, 1998 was $88,120,346.
Documents incorporated by reference: The Company's Proxy Statement for
the annual meeting of the Company's shareholders to be held on December 10,
1998. (See Part III herein).
PART I
ITEM 1. BUSINESS
The Company, which was incorporated in 1947, is primarily engaged in the
marketing of fine and industrial chemicals used principally in the
agricultural, color producing, pharmaceutical and surface coating industries.
The Company sells over 600 chemicals used in these and other fields.
Most of the chemicals distributed by the Company are purchased abroad
mainly for sale throughout the United States; to a minor extent, some chemicals
are sold abroad.
During the fiscal year ended June 30, 1998 approximately 50% of the
Company's purchases of chemicals came from Europe and approximately 35% from
Asia.
There were no significant changes in the kinds of products sold by the
Company or in the markets served or methods of distribution used by it.
The chemical industry is highly competitive. Most of the chemicals that
the Company sells are in competition with the products of chemical
manufacturers, including the largest chemical companies, who have substantially
greater resources than the Company. However, in the Company's opinion, based
on reports from its customers and suppliers, its competitive position is
enhanced by the following: the chemical products that it offers are prime
quality products, many produced by major chemical companies, some of whom are
the largest chemical companies in Europe and Asia, which products are offered
by the Company at attractive and competitive prices. For the most part the
Company warehouses the inventories of the chemicals which it sells at public
warehouses strategically located throughout the United States, and can
therefore fill orders rapidly from inventory. The Company has developed ready
access to key purchasing, research and technical executives of both its
customers and suppliers, and therefore one of its salient competitive strengths
is its ability to obtain quick decisions, when necessary, because of such
access. The technical support and services that the Company provides to its
customers is also a strength. The Company does not consider itself to be a
significant factor in the chemical industry taken as a whole.
One of the Company's products accounted for 15% of revenues in fiscal
1998; no product accounted for as much as 10% of revenues in fiscal 1997 or
1996. One of the Company's customers, DuPont Pharmaceuticals Company,
purchasing primarily the aforementioned product, also accounted for 15% of
revenues in fiscal 1998. Again, no customer accounted for as much as 10% of
revenues in fiscal 1997 or 1996. One of the Company's suppliers accounted for
25%, 22% and 25% of total purchases in fiscal 1998, 1997 and 1996,
respectively.
Certain of the chemicals purchased by the Company are supplied to it on
an exclusive basis, including the aforementioned pharmaceutical product. Based
on its relationships with its vendors, the Company believes its vendors will
continue to supply such chemicals on an exclusive basis.
The Company holds no patents, trademarks, licenses, franchises or
concessions which it considers to be material to its operations.
Sales of certain of the Company's chemicals are higher in the last six
months of the fiscal year. For the most part, the Company warehouses the
products that it sells and fills orders from inventory. It, therefore, does
not consider information concerning backlogs to be applicable.
A subsidiary of the Company markets certain agricultural chemicals and
contracts for the manufacture of other agricultural chemicals which are subject
to the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). FIFRA
requires that test data be provided to the Evironmental Protection Agency (EPA)
to register, obtain and maintain approved labels for pesticide products. The
EPA requires that follow-on registrants of these products compensate the
initial registrant for the cost of producing the necessary test data on a basis
prescribed in the FIFRA regulations. Follow-on registrants do not themselves
generate or contract for the data. However, when FIFRA requirements mandate
the generation of new test data to enable all registrants to continue marketing
a pesticide product, often both the initial and follow-on registrants establish
a task force to jointly undertake the testing effort. The Company is presently
a member of two such task force groups. The Company estimates the cost of test
data at the time it is first required, which estimates are amortized over a
period of up to five years, updated annually; and are included in cost of
sales.
Liability under FIFRA would arise if the Company failed to compensate the
initial registrant for the cost of producing the necessary test data. Since
the Company markets no pesticide products which are not registered, and
compensates initial registrants for the cost of producing test data, it
believes it does not subject itself to contingent liabilities in such regard.
Compliance with Federal, State and local provisions which have been
enacted or adopted regulating the discharge of materials into the environment
will have no material effect on the capital expenditures and competitive
position of the Company. During fiscal 1993 the Company announced the closing
of its manufacturing subsidiary located in Carlstadt, New Jersey. At the same
time an environmental consultant was engaged by the Company to determine the
extent of contamination on the site and develop a plan of remediation. Based
on the initial estimates from the consultant a liability was established in
fiscal 1993 for $1.5 million. During fiscal 1997, after additional testing was
completed, the Company received a revised estimate from the consultant. As a
result, the Company recorded an additional liability of $800,000 in the quarter
ended September 30, 1996. At June 30, 1998 the remaining liability was $1.4
million. The Company believes it is possible that such amount may not be
sufficient to cover future environmental remediation but does not believe there
will be a material adverse effect on the financial position or liquidity of the
company. However, depending on the amount and timing of any required
remediation over and above the liability established, it is possible that the
Company's future results could be materially affected in a particular reporting
period. Other than the aforementioned remediation, the Company is not aware of
any material environmental liabilities.
At June 30, 1998, the Company employed approximately 75 persons, none of
whom were covered by a collective bargaining agreement.
ITEM 2. PROPERTIES
The Company's general headquarters and main sales office occupy
approximately 20,000 square feet of leased space in a modern office building in
Lake Success, New York. The present lease expires in April 2001.
The Company's former manufacturing facility is located on an 11-acre
parcel in Carlstadt, New Jersey, owned by the Company. This parcel contains
one building with approximately 5,000 square feet of office space. The
property is held for sale.
At June 30, 1998, the Company owned two parcels in Long Island City, New
York, with buildings totaling 10,000 square feet. One parcel of 5,000 square
feet was sold in July 1998 and the other is held for sale.
In January, 1997 the Company sold a parcel it owned in Long Island City,
New York. This parcel was comprised of a 5,000 square foot building.
ITEM 3. LEGAL PROCEEDINGS.
(None)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(None)
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is traded in the National Market System of
NASDAQ (Symbol: ACET) and was quoted at prices* ranging as follows:
FISCAL 1998 HIGH LOW
First Quarter 12 7/8 9 1/2
Second Quarter 13 5/8 12 1/8
Third Quarter 15 1/4 13 1/8
Fourth Quarter 16 1/2 14 1/4
FISCAL 1997 HIGH LOW
First Quarter 10 1/2 8 1/8
Second Quarter 9 5/8 8 1/2
Third Quarter 9 5/8 8 3/8
Fourth Quarter 10 8 1/2
*The above prices represent high and low prices for actual transactions.
A 3 for 2 stock split was paid in April 1998. The above prices have been
adjusted for the split and dividend, as appropriate.
A cash dividend of $0.13 per common share was paid in June 1998. Cash
dividends of $0.18 per common share were paid in January 1998, June 1997 and
January 1997.
As of September 1, 1998, there were approximately 700 holders of record of the
Company's common stock.
Shares held by the nominee of the Depository Trust Company, the country's
principal central depository, were approximately 5,300,000 shares and counted
as owned by one holder. Additional individual holdings in "street name" result
in a sizable number of beneficial owners represented on our records as owned by
various banks and stockbrokers.
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
YEARS ENDED JUNE 30 1998 1997 1996 1995 1994
Net sales $182,954 $169,387 $183,163 $164,783 $149,847
Net income 7,557 (1)(2)6,228 7,154 7,756 6,994
Net income per common $1.08 (1)(2)$0.82 $0.88 $0.92 $0.82
share (3)
Total assets 84,379 86,145 87,302 86,116 81,798
Working capital 54,423 48,927 50,907 48,289 43,606
Long-term debt - 500 1,000 1,500 2,000
Redeemable preferred 750 750 750 821 821
stock
Shareholders' equity 63,261 60,434 63,161 60,143 56,846
Number of common 6,699 6,981 7,782 7,985 8,259
shares outstanding
at year end (3)
Book value per common $ 9.44 $ 8.66 $ 8.12 $ 7.53 $ 6.88
share (3)
Cash dividends per $ 0.31 $ 0.36 $ 0.36 $ 0.36 $ 0.32
common share
(1) Includes an after-tax charge of $187 ($.03/share)(3)in final settlement
of a complaint by the U.S. Department of Justice sent to the Company on
February 10, 1995. The complaint alleged violation of the Resource
Conservation and Recovery Act (RCRA) by a then wholly owned subsidiary
in Waterbury, CT. This subsidiary was sold on June 19, 1996.
(2) Includes an after-tax charge of $480 ($.06/share)(3)to cover a revised
estimate for remediation of the Company's former manufacturing site in
Carlstadt, NJ.
(3) Adjusted for stock split and dividend, as appropriate.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources:
The Company's primary source of liquidity is cash provided from operating
activities; $8.6 million in fiscal 1998 and $5.8 million in fiscal 1997. Cash
and short-term investments totaled $21.0 and $14.2 million and working capital
was $54.4 and $48.9 million at June 30, 1998 and 1997, respectively. In
addition, the Company's long-term investments totaled $8.0 and $11.2 million
for the same periods. These investments are highly liquid and can be used for
working capital if needed. The Company has sufficient lines of credit available
with banks, should any additional funds be required.
Some components of working capital had significant changes. Inventory decreased
$4.4 million to $26.8 million at June 30, 1998 from $31.2 million at June 30,
1997. This resulted in a decrease of $2.8 million in the total of drafts and
acceptances payable, accounts payable and accrued merchandise purchases. These
decreases were due primarily to the timing of merchandise purchases and were
not the result of a change in the trend of business. Cash and cash equivalents,
short-term investments and long-term investments increased by a total of $3.6
million to $29.0 million at June 30, 1998 from $25.4 million at June 30, 1997.
The increase was due to current earnings and the lower inventory level,
partially offset by the repurchase of the Company's common stock for $3.6
million during fiscal 1998. Accrued compensation was $2.5 million at June 30,
1998 compared to $3.5 million at June 30, 1997. The retirement of three senior
executives on June 30, 1997 was the primary reason for the decrease.
The Company's stock buyback program resulted in the repurchase of 250,000
shares for $3.6 million during fiscal 1998 and 552,000 shares for $7.4 million
during fiscal 1997. The Company announced a 3 for 2 stock split on March 18,
1998 with a record date of March 30, 1998, paid April 13, 1998.
The former site of Arsynco, Inc., one of the Company's closed manufacturing
facilities, requires environmental remediation. In October 1996 the Company's
environmental consultant completed its investigation of the property and
estimated a cost of $1.5 million to complete the remediation. In the quarter
ended September 30, 1996 the Company increased the current environmental
remediation liability by $800,000 thereby adjusting the liability to the
revised estimate. At June 30, 1998 the remaining liability was $1.4 million.
Any funds required for additional stock buybacks and environmental remediation
will be funded by the aforementioned sources of liquidity.
Results of Operations:
Net sales increased 8% in fiscal 1998, to $183.0 million from $169.4 million in
fiscal 1997. Virtually all the sales increase can be attributed to higher sales
of a new pharmaceutical product introduced in fiscal 1997. The 8% sales
decrease in fiscal 1997 from 1996 resulted primarily from lower sales of
agrochemicals and bulk pharmaceuticals to the generic industry.
Volume increased by 12% from 1997 to 1998, compared with a 6% decrease from
1996 to 1997. Selling prices across many of our product areas tended to decline
in 1998, more than offsetting the effect on volume of the increase in sales of
a relatively high-priced product, the aforementioned pharmaceutical. These
price declines explain the greater increase in volume than sales in fiscal
1998. During fiscal 1997, selling prices remained relatively stable, but the
decrease in sales of bulk pharmaceuticals, which tend to be higher priced,
accounted for the slightly greater decrease in sales than volume.
Gross margins as a percentage of sales decreased to 12.2% in fiscal 1998 from
12.6% in fiscal 1997 and 13.0% in fiscal 1996. Increased freight and
warehousing costs, in addition to the significant sales of the aforementioned
product, which is low margin business, accounted for the decline in 1998. The
decrease in fiscal 1997 can be attributed to increased competition in the dye
and pigment intermediates business.
Selling, general and administrative expenses increased slightly in fiscal 1998
compared to 1997. Selling expenses increased by $500,000 to $1.5 million from
$1.0 million. This was the result of an increase in the cost of business travel
along with the continued development of our international sales activities.
Consulting fees increased by $300,000 primarily due to consulting agreements
with recently retired senior executives. In addition, there were modest
increases in bank fees, office and telephone expenses. Offsetting most of these
increases was a decrease in compensation expense resulting from the
aforementioned retirees, and a decrease in medical and business insurance
expense. Selling, general and administrative expenses were down 5% in fiscal
1997 compared to 1996. Several components increased, including the cost of
medical insurance, selling expenses, legal expense and consulting fees. These
increases were more than offset by the elimination of selling, general and
administrative expenses of $1.3 million from the former Pfaltz & Bauer, Inc.
subsidiary.
Interest expense, which primarily relates to long-term debt, was $59,000,
$110,000 and $157,000 in fiscal 1998, 1997 and 1996, respectively. The interest
on long-term debt continues to decline as scheduled payments reduce the
principal balance.
Other income decreased to $2.3 million in fiscal 1998 compared to $2.5 million
in fiscal 1997. Lower cash available for investments during the fiscal year due
to the Company's continuing stock repurchase program, along with lower interest
rates, caused a significant decrease in interest income on investments. This
was partially offset by an increase in commission income. The sale of property
held by a subsidiary resulted in a $200,000 gain during fiscal 1997. There were
many factors that accounted for a $1.0 million increase in other income in
comparing fiscal 1997 to 1996. In conjunction with the aforementioned sale of a
subsidiary in June 1996, inventory was transferred to the new ownership and the
Company has received and will continue to be entitled to a portion of the
proceeds from the sale of this inventory for a period of up to three years from
the date of transfer. This totaled $170,000 in fiscal, 1997. Also, relating to
this transaction, the Company earned approximately $70,000 in interest on two
notes. Royalty income increased by $100,000 and higher average cash balances
available for investment resulted in an increase of $130,000 in interest
income. In addition, during fiscal 1996, a loss of $250,000 was realized on the
sale of certain assets of Pfaltz & Bauer, Inc.
The effective tax rates were 35.6%, 38.9% and 39.4% in fiscal 1998, 1997 and
1996, respectively. Significant payments from the Company's non-qualified
retirement plan, which are deductible for tax purposes on the date of
distribution, caused an unusually low tax rate for the year ended June 30,
1998.
Impact of New Accounting Pronouncements:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income" ("Statement
130"), which is effective for fiscal years beginning after December 15, 1997.
Statement 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. Management of the Company does not believe that the
implementation of Statement 130 will have a significant impact on its financial
position or results of operations.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and
Related Information" ("Statement 131"). Statement 131 established standards to
report information about operating segments and related discussions about
products and services, geographic areas and major customers. Statement 131 also
is effective for financial statements for fiscal years beginning after December
15, 1997. This statement permits early application and requires restatement for
all prior periods. The Company is currently evaluating the requirements of
Statement 131 and believes that the adoption of the statement will not have a
material impact on previously reported information.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" ("Statement 133"). Statement 133 established accounting and
reporting standards for derivative instruments embedded in other contracts, and
for hedging activities. Statement 133 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. Early application of all the
provisions of this Statement is encouraged but is permitted only as of the
beginning of any fiscal quarter that begins after issuance of this Statement.
Management of the Company does not believe that the implementation of Statement
133 will have a significant impact on its financial position or results of
operations.
Year 2000 Disclosure:
During fiscal 1998, the Company determined that it needed to modify or replace
significant portions of its customized software so that its information systems
will function properly with respect to dates in the year 2000 and beyond. In
addition, the Company is in the process of assessing all the third party
hardware and software it uses for Year 2000 compliance. The Company also has
initiated discussions with its significant suppliers, customers, and financial
institutions to ascertain that those parties have appropriate plans to
remediate Year 2000 issues where their systems interface with the Company's
systems or otherwise impact its operations. The Company is assessing the extent
to which its operations are vulnerable should those organizations fail to
properly remediate their computer systems. The Company's Year 2000 team
includes both internal and external staff. The team's activities are designed
to ensure that there is no adverse effect on the Company's core business
operations and that transactions with customers, suppliers, and financial
institutions are fully supported. The Company has commenced testing its major
computer systems and anticipates its information systems transformation for
Year 2000 compliance will be completed in early calendar 1999. While the
Company believes its planning efforts are adequate to address its Year 2000
concerns, there can be no guarantee that the systems of other companies on
which the Company's systems and operations rely will be converted on a timely
basis. The Company believes it unlikely that there will be a material effect on
the Company.
The Company estimates that its total cost of its Year 2000 initiative will be
approximately $100,000.
Market Risk:
The Company maintains foreign currency contracts solely to hedge open purchase
commitments. It has established policies, procedures and internal processes
governing the management of this hedging to reduce market risks inherent in
foreign exchange. As of June 30, 1998, the exposure to these market risks is
not considered material.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required by this item 8 are set forth at the end of
this report. The following is the applicable supplementary data:
The following is a summary of the unaudited quarterly results of operations for
the years ended June 30, 1998
and 1997.
QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands except per share amounts)
Year ended June 30, 1998
Quarter Ended
Sept.30,1997 Dec.31,1997 Mar.31,1998 June 30,1998
Net sales $43,764 $40,671 $50,453 $48,065
Gross profit 5,169 5,528 5,690 5,921
Net income 1,533 1,974 2,112 1,938
Net income per
common share* 0.22 0.28 0.30 0.28
Year ended June 30, 1997
Quarter Ended
Sept.30,1996 Dec.31,1996 Mar.31,1997 June 30,1997
Net sales $39,184 $35,850 $47,361 $46,992
Gross profit 4,379 4,931 5,812 6,211
Net income 511(1)(2) 1,662 2,075 1,981
Net income per
common share* 0.07(1)(2) 0.22 0.28 0.27
(1) Includes an after-tax charge of $480 ($.06/share)* to cover a revised
estimate for remediation of the Company's former manufacturing site in
Carlstadt, New Jersey.
(2) Includes an after-tax charge of $187 ($.03/share)* in final settlement of
a complaint by the U.S. Department of Justice sent to the Company on
February 10, 1995. The complaint alleged violation of the Resource
Conservation and Recovery Act (RCRA) by a then wholly owned subsidiary
in Waterbury, CT. This subsidiary was sold on June 19, 1996.
* Adjusted for stock split, as appropriate.
Cost of sales during interim periods is determined by gross profit rates based
upon the mix of products sold during each quarter.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Company's proxy statement relating to the annual meeting of the Company's
shareholders to be held on December 10, 1998, which will be filed with the
Commission not later than 120 days after the end of the fiscal year covered by
this Form 10-K (the "Proxy Statement"), is hereby incorporated by reference.
Based solely on its review of the copies of such forms received by it,
the Company believes that during the fiscal year covered by this Form 10-K all
filing requirements applicable to its officers, directors, and greater than
ten-percent beneficial owners were complied with.
Item 11. Executive Compensation.
The Company's Proxy Statement is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Company's Proxy Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
The Company's Proxy Statement is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) See Index to Consolidated Financial Statements and Schedules
included elsewhere herein.
(b) No reports on Form 8-K were filed during the three
months ended June 30, 1998.
(c) Exhibits
3(i) Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4(a)(iii) to Registration
Statement No. 2-70623 on Form S-8 ("S-8 2-70623")).
3(ii) Certificate of Amendment dated November 21, 1985 to
Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(ii) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1986 ("1986 10-K")).
3(iii) By-laws (incorporated by reference to Exhibit 3(iii)
to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1981).
3(iii)(a) By-laws (incorporated by reference to Exhibit 1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1991).
3(iii)(b) By-laws (incorporated by reference to Exhibit 3(iii)b
to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996 ("1996 10-K")).
3(iii)(c) By-laws, currently in effect.
10(i) Note Agreement dated December 10, 1987 with the
Prudential Insurance Company of America (incorporated
by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1987).
10(ii) Profit Sharing Plan, as amended and restated effective
July 1, 1984 (incorporated by reference to Exhibit
10(ii) to 1986 10-K).
10(ii)(a) Profit Sharing Plan, as amended and restated
effective July 1, 1989 (incorporated by reference to
Exhibit 10(iii)(a) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995).
10(iii) 401(k) Plan, effective August 1, 1997.
10(iv) Excess Benefit Plan, effective June 30, 1985
(incorporated by reference to Exhibit 10(iv) to
the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1985).
10(iv)(a) Supplemental Executive Retirement Plan, effective
June 30, 1985, as amended and restated, effective
July 1, 1992 (incorporated by reference to Exhibit
10(iv)(a) to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993 ("1993 10-
K")).
10(v) 1980 Stock Option Plan (incorporated by reference to
Item 4(a)(ii) of S-8 2-70623).
10(v)(a) 1980 Stock Option Plan (as amended and restated
effective as of September 19, 1990) (incorporated
by reference to exhibit 4(c) to Registration Statement
No. 33-38679 on Form S-8).
10(v)(b) Aceto Corporation Stock Option Plan (as Amended and
Restated effective as of September 19, 1990) (and as
further Amended effective June 9, 1992) (incorporated
by reference to Exhibit 10(v)(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended
June 30, 1992).
10(vi) Lease between Aceto Corporation and M. Parisi & Son
Construction Co., Inc. for office space at One
Hollow Lane, Lake Success, New York dated May 24, 1990
(incorporated by reference to Exhibit 10(vi) to the
Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990).
10(vii) Arsynco, Inc. Severance Plan for employees not
covered by the Collective Bargaining Agreement
dated January 1993 (incorporated by reference to
Exhibit 10(vii) to 1993 10-K).
10(viii) Consulting agreement dated July 1, 1996 between the
Company and Robert E. Parsont (incorporated by
reference to Exhibit 10(viii) to 1996 10-K).
10(ix) Consulting agreement dated July 1, 1997 between the
Company and Arnold J. Frankel (incorporated by
reference to Exhibit 10(ix) to 1997 10-K).
21 Subsidiaries of the Company (incorporated by reference
to Exhibit 21 to 1993 10-K).
24 Consent of KPMG Peat Marwick LLP.
Exhibit 3(iii)(c)
BY-LAWS OF ACETO CORPORATION
ARTICLE I
MEETING OF SHAREHOLDERS
SEC. 1. ANNUAL MEETINGS. Meetings of shareholders shall be held at the
principal office of the Corporation, or at such place within or without the
State of New York as the Board of Directors shall authorize. The Annual
Meeting of the Shareholders shall be held within six (6) months from the date
of the close of the Corporation's fiscal year, at such place and time as the
Board of Directors shall authorize. The meeting shall be for the purpose of
electing officers and for the transaction of such business as may be brought
before it. Notice of such meeting shall be given by the Secretary as required
by law; by serving personally or mailing not less than ten (10) days and not
more than fifty (50) days previous to such meeting, postage prepaid, a copy of
such notice, addressed to each shareholder entitled to vote at such meeting.
Any and all notices of such meeting may be waived by any shareholder by written
waiver or by attendance thereat, whether in person, or by proxy.
SEC. 2. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the Board of Directors or by the President, and shall be called by
the Chairman of the Board, the President or the Secretary at the request in
writing of a majority of the Board of Directors or at the request in writing by
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purposes of the proposed meeting. Business
transacted at a Special meeting shall be confined to the purposes stated in the
notice.
SEC. 3. NOTICE OF MEETING OF SHAREHOLDERS. Written notice of the time,
place, purpose or purposes of every meeting of shareholders shall be given not
less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail to each shareholder of record entitled to
vote at the meeting.
When a meeting is adjourned to another time or place, it shall not be necessary
to give notice of the adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting. However, if after the
adjournment the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder
of record on the new record date entitled to notice.
SEC. 4. FIXING THE RECORD DATE. For the purpose of determining the
shareholders entitled to notice or to vote in any meeting of shareholders, or
at any adjournment thereof, or for the purpose of determining shareholders
entitled to receive payment of any dividend, or the allotment of any right, or
for the purpose of any other action, the Board shall fix, in advance, a date as
the record date for such determination of shareholders. Such date shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting nor more than sixty (60) days prior to any other action.
SEC. 5. VOTING LIST. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make and certify a complete
list of the shareholders entitled to vote at a shareholders' meeting or any
adjournment thereof.
Such list shall (i) be produced at the time and place of the meeting, (ii) be
subject to the inspection of any shareholder during the whole time of the
meeting, and (iii) be prima facia evidence as who are the shareholders entitled
to examine such list or to vote at any meeting.
SEC. 6. PROXIES. Every shareholder entitled to vote at a meeting of
shareholders may authorize another person or persons to act for such
shareholder by proxy. Every proxy shall be revocable at the pleasure of the
shareholder executing it, providing that the shareholder shall file written
notice of such revocation with the Secretary of the meeting prior to the vote
of such proxy.
SEC. 7. QUORUM. At any meeting of the shareholders, the holders of one-
third of the shares entitled to vote thereat shall constitute a quorum for the
transaction of any business, provided that when a specified item of business is
required to be voted on by a class or series, voting as a class, the holders of
one-third of the shares of such class or series shall constitute a quorum for
the transaction of such specified item of business. When a quorum is once
present to organize a meeting, it is not thereby broken by the subsequent
withdrawal of any shareholders. The shareholders present may adjourn the
meeting despite the absence of a quorum.
SEC. 8. SELECTION OF INSPECTORS.
(a) The person presiding at a shareholders' meeting may, and on the request
of any shareholder entitled to vote thereat, shall appoint one or more
inspectors to act at the meeting or any adjournment thereof.
(b) The requirement for inspectors at any shareholders' meeting is waived
unless compliance therewith is requested by a shareholder entitled to vote at
such meeting.
(c) Each inspector before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting.
(d) No person shall be elected a Director at a meeting at which he or she has
served as an inspector.
SEC. 9. DUTIES OF INSPECTORS. The inspectors shall determine the number
of shares outstanding; the shares represented at the meeting; the existence of
a quorum; the validity and effect of proxies; and shall receive votes or
consents; hear and determine all challenges and questions arising with the
right to vote; count and tabulate all votes or consents; determine the result;
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders.
SEC. 10. ELECTION OF DIRECTORS. Directors shall be elected by a plurality
of the votes cast at an election, votes for Directors shall be non-cumulative.
SEC. 11. ORDER OF BUSINESS. The order of business at all meetings of
shareholders shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Designation of inspectors.
4. Reading of minutes of preceding meetings, unless such reading
is waived by the votes of a majority of shareholders present at
the meeting.
5. Reports of officers.
6. Election of directors.
7. Unfinished business.
8. New business.
ARTICLE II
DIRECTORS
SEC. 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of ten (10) directors, unless and until otherwise
determined by vote of a majority of the entire Board of Directors. The number
of Directors shall not be less than three (3). Directors need not be
shareholders.
SEC. 2. HOW ELECTED. At the annual meeting the persons duly elected by
the votes cast at the election held thereat shall become Directors for the
ensuing year.
SEC. 3. TERM OF OFFICE. The term of office of each of the Directors shall
be one year, and thereafter until his successor has been elected.;
SEC. 4. DUTIES OF DIRECTORS. The Board of Directors shall have control
and general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, regularly convened, by a majority
and they may adopt such rules and regulations for the conduct of their meetings
and the management of the Corporation, as they may deem proper, not
inconsistent with these By-Laws and the Laws of the State of New York. The
Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an Executive Committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in much
resolution. Each such committee shall serve all the pleasure of the Board.
SEC. 5. DIRECTORS' MEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the stockholders, and
at such other times as the Board of Directors may determine. Special meetings
of the Board of Directors may be called by the Chairman of the Board or the
President at any time, and shall be called by the Chairman of the Board, the
President or the Secretary upon the written request of 2 Directors.
SEC. 6. NOTICE OF MEETINGS. Notice of meetings, other than the regular
annual meeting shall be given by service upon each Director in person or by
mailing to him or her at his or her last known Post Office address, at least 10
days before the date therein designated for such meeting, including the day of
mailing, of a written or printed notice thereof specifying the time and place
of such meeting, and the business to be brought before the meeting and no
business other than that specified in such notice shall be transacted at any
special meeting. At any meeting at which every member of the Board of
Directors shall be present, although held without notice, any business may be
transacted which might have been transacted if the meeting had been duly
called.
SEC. 7. QUORUM. At any meeting of the Board of Directors, a majority of
the Board shall constitute a quorum for the transaction of business; but in the
event of a quorum not being present, a less number may adjourn the meeting to
some future time, not more than 30 days later.
SEC. 8. VOTING. At all meetings of the Board of Directors, each
Director is to have one vote, irrespective of the number of shares of stock
that he or she may hold.
SEC. 9. VACANCIES. Whenever a vacancy shall occur in the Board of
Directors by death, resignation, removal or otherwise, the same shall be filled
without undue delay by a majority vote by ballot of the remaining members of
the Board at a Special Meeting which shall be called for that purpose. Such
election shall be held within sixty days after the occurrence of such
vacancy. The person so chosen shall hold office until the next annual
meeting or until his or her successor shall have been chosen at a
special meeting of the stockholders.
SEC. 10. REMOVAL OF DIRECTORS. Any one or more of the Directors may be
removed either with or without cause, at any time by a vote of the stockholders
holding 51% of the stock, at any special meeting called for the purpose, or at
the annual meeting.
SEC. 11. DIRECTOR ACTION BY CONFERENCE TELEPHONE. Any one or more members
of the Board of Directors or of any Committee of the Board of Directors may
participate in a meeting of such Board or Committee by means of a conference
telephone or similar equipment which allows all persons participating in the
meeting to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
SEC.12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation
shall indemnify any person, made a party to an action by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she, his or her testator or intestate, is or was a director, officer, or
employee of the Corporation, against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him or her in connection
with the defense of such action, or in connection with an appeal therein,
except in relation to matters as to which such director, officer, or employee
is adjudged to have breached his or her duty to the Corporation. The
Corporation shall indemnify any person, made, or threatened to be made, a party
to an action or proceeding other than one by or in the right of the Corporation
to procure a judgment in its favor, whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind,
domestic or foreign, which any director, officer, or employee of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he or she, his or her testator or intestate, was a director,
officer, or employee of the Corporation, or served such other Corporation in
any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein, if
such director, officer, or employee acted, in good faith, for a purpose which
he or she reasonably believed to be in the best interests of the Corporation
and, in criminal actions or proceedings, in addition, had no reasonable cause
to believe that his or her conduct was unlawful. The foregoing right of
indemnification shall not be exclusive of other rights to which he or she may
be entitled.
The Corporation is empowered to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director of another corporation against any liability asserted against him or
her and incurred by him or her in any such capacity or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of section 722
and 717 of the Business Corporation Law.
ARTICLE III
OFFICERS
SEC. 1. NUMBER OF OFFICERS. The Officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a Vice Chairman, a President,
a First Vice-President, one or more Vice Presidents, a Treasurer, and a
Secretary, and any Officer may hold more than one office, except the same
person may not hold the offices of President and Secretary.
The Board of Directors may appoint such other officers, agents and employees as
in their sole discretion they shall deem advisable, who shall be subject to
recall at all times by a majority vote of the Board of Directors.
SEC. 2. ELECTION OF OFFICERS. The Officers of the Corporation shall be
elected annually by the Board of Directors at its meeting held immediately
after the annual meeting of shareholders and shall hold office for one year and
until their successors have been duly elected and qualified.
SEC. 3. REMOVAL OF OFFICERS. Any officer elected by the Board of
Directors may be removed, with or without cause, and a successor elected, by
vote of the Board of Directors, regularly convened at a regular or special
meeting.
SEC. 4. CHAIRMAN OF THE BOARD. The Chairman of the Board shall, if
present, preside at all meetings of the Board of Directors and at all meetings
of shareholders.
SEC. 5. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall have
general charge of the business, affairs and property of the Corporation, and
shall have general supervision of its officers and agents. He may do and
perform all acts incident to the office of Chief Executive Officer of the
Corporation.
SEC. 6. VICE CHAIRMAN. The Vice Chairman shall in the absence or
inability to act of the Chairman of the Board, if present, preside at all
meetings of shareholders and at all meetings of the Board of Directors.
SEC. 7. PRESIDENT. The President shall be the Chief Operating Officer of
the Corporation and shall have general charge of the operations thereof,
subject to the direction of the Board of Directors, and shall have general
supervision over its operating officers and agents. He shall, if present,
preside at all meetings of the Board of Directors or shareholders in the
absence of the Chairman of the Board and Vice Chairman. He may do and perform
all acts incident to the office of President. In the absence or inability of
the Chief Executive Officer to act, the President shall perform the duties and
exercise the powers of the Chief Executive Officer.
SEC. 8. VICE-PRESIDENTS. In the absence of or inability of the President
to act, the First Vice-President, and if there be no First Vice President, any
Vice President designated by the Board shall perform the duties and exercise
the powers of the President and shall perform such other functions as the Board
of Directors may from time to time designate.
SEC. 9. SECRETARY. The Secretary shall: a) Keep the minutes of the
meetings of the Board of Directors and of the shareholders in appropriate
books; b) Give and serve all notice of all meetings of the Corporation; c) Be
custodian of the records and of the seal of the Corporation and affix the
latter to such instruments or documents as may be authorized by the Board of
Directors; d) Do and perform all other duties incident to the office of
Secretary.
SEC. 10. TREASURER. The Treasurer shall: a) Have the care and custody of
and be responsible for all of the funds and securities of the Corporation and
deposit of funds in the name and to the credit of the Corporation in such banks
and safe deposit vaults as the Directors may designate; b) Exhibit at all
reasonable times his books and accounts to any Director or shareholder of the
Corporation upon application at the office of the Corporation during business
hours; c) Render a statement of the condition of the finances of the
Corporation at each stated meeting of the Board of Directors if called upon to
do so. He shall keep at the office of the Corporation correct books of account
of all of its business and transactions and such books of account as the Board
of Directors may require. He shall do and perform all other duties incident to
the office of Treasurer.
SEC. 11. DUTIES OF OFFICERS MAY BE DELEGATED. In the case of the
absence of any officer of the Corporation, or for any reason the Board or Chief
Executive Officer may deem sufficient, the Board or Chief Executive Officer
may, except as otherwise provided in these By-Laws, delegate the powers or
duties of such officers to any other officer or any Director for the time
being.
SEC. 12. VACANCIES - HOW FILLED. Should any vacancy in any office occur by
death, resignation, inability of an officer to act, or otherwise, the same
shall be filled, without undue delay, by the Board of Directors at its next
annual meeting, or at a special meeting called for that purpose.
SEC. 13. COMPENSATION OF OFFICERS. The Officers shall receive such
salary or compensation as may from time tfo time be fixed and determined by the
Board of Directors. Any Officer may, with the concurrence of the Board of
Directors, work less than full time, or serve as a consultant to the
Corporation, upon such terms and such salaries, other compensation or
consultant's fees as may from time to time be fixed and determined by the Board
of Directors.
ARTICLE IV
SEC. 1. SEAL. The seal of the Corporation shall be circular in form and
bear the name of the Corporation, and the words "Seal 1947 New York". The
Seal may be used by causing it to be impressed directly on the instrument or
writing to be sealed, or upon adhesive substance affixed thereto. The seal on
the certificates for shares or on any corporate obligation for the payment of
money may be a facsimile, engraved or printed.
ARTICLE V
CERTIFICATE OF STOCK
SEC. 1. ISSUE OF CERTIFICATES REPRESENTING SHARES. The Corporation shall
cause to be issued to each shareholder one or more certificates, under the seal
of the Corporation, signed by the Chairman of the Board, (or President) and
the Treasurer (or Secretary) certifying the number of shares owned by such
shareholder in the Corporation.
SEC. 2. TRANSFER OF STOCK. (a) Transfer of shares of the Corporation shall
be made on the share records of the corporation only by the holder of record
thereof, in person or by duly authorized attorney, upon surrender for
cancellation of the certificate or certificates representing such shares, with
an assignment or power of transfer endorsed thereon or delivered therewith,
duly executed, with such proof of the authenticity of the signature and of
authority to transfer and of payment of transfer taxes as the Corporation or
its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
ARTICLE VI
DIVIDENDS
SEC. 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient
for such dividends to be declared.
ARTICLE VII
BILLS, NOTES, ETC.
SEC. 1. HOW MADE. All bills payable, notes, checks or other negotiable
instruments of the Corporation shall be made in the name of the Corporation,
and shall be signed by such officer or officers as the Board of Directors shall
from time to time direct. No officer or agent of the Corporation, either
singly or jointly with others, shall have the power to make any bill payable,
note, check, draft or warrant or other negotiable instrument, or endorse the
same in the name of the Corporation, or contract or cause to be contracted any
debt or liability in the name or in behalf of the Corporation, except as herein
expressly prescribed and provided.
ARTICLE VIII
AMENDMENTS
SEC. 1. HOW AMENDED. These By-Laws may be amended, altered or added to by
the vote of the Board of Directors of this Corporation at any regular meeting
of said Board, or at a special meeting of Directors called for that purpose
provided a quorum of the Directors is present at such regular or special
meeting. These By-Laws, and any amendments thereto and new By-Laws added by
the Directors may be amended, altered or replaced by the stockholders at any
annual or special meeting of the stockholders. Whenever any provision of these
By-Laws or any amendment thereto shall conflict with a provision in the
Certificate of Incorporation ( and amendment thereto then in effect), the
applicable provisions in such certificate (so amended) shall prevail and
control.
EXHIBIT 10(III)
401(K) PLAN
ARTICLE I - DEFINITIONS
As used in this Plan, each of the following terms shall have the meaning for
that term set forth in this Article l:
1.1 ACCOUNT: A separate Elective Deferrals Account, Employer Contributions
Account, Rollover Contribution Account, and Transferred Account, as the case
may be.
1.2 ACCOUNT BALANCE: The value of an Account determined as of the
applicable Valuation Date.
1.3 ACTUAL DEFERRAL PERCENTAGE: The ratio (expressed as a percentage), of
(A) Elective Deferrals made on behalf of an Eligible Participant for the Plan
Year (including Excess Elective Deferrals of Highly Compensated Employees, but
excluding (1) Excess Elective Deferrals of Non-highly Compensated Employees
that arise solely from Elective Deferrals made under the Plan or plans of the
Employer or an Affiliate and (2) Elective Deferrals that are taken into account
in the ACP Test (provided the ADP Test is satisfied with or without the
exclusion of such Elective Deferrals) to (B) the Participant's CODA
Compensation for the Plan Year (whether or not the Eligible Employee was a
Participant for the entire Plan Year). The Actual Deferral Percentage of an
Eligible Participant who would be a Participant but for the failure to make an
Elective Deferral is zero.
1.4 ADJUSTMENT FACTOR: The cost of living adjustment factor prescribed by
the Secretary of the Treasury under Code Section 415(d) for years beginning
after December 31, 1987, as applied to such items and in such manner as the
Secretary shall provide.
1.5 ADMINISTRATOR: The Employer, unless otherwise specified by duly
authorized action by the Employer.
1.6 ADP TEST: The Average Actual Deferral Percentage test set forth in
Section 3.4.2(B) of the Plan.
1.7 AFFILIATE: Any corporation or unincorporated trade or business (other
than the Employer) while it is:
(A) a member of a Controlled group of corporations (within the meaning of Code
Section 414(b)) of which the Employer is a member;
(B) a member of any trade or business under "common control" (within the
meaning of Code Section 414(c)) with the Employer;
(C) a member of an Affiliated service group (as that term is defined in Code
Section 414(m)) which includes the Employer; or
(D) any other entity required to be aggregated with the Employer pursuant to
Code Section 414(o). With respect to Section 3.6, Affiliate status shall be
determined in accordance with Code Section 415(h).
1.8 ANNUITY CONTRACT: An individual or group annuity contract issued by an
insurance company providing periodic benefits, whether fixed, variable or both,
the benefits or value of which a Participant or Beneficiary cannot transfer,
sell, assign, discount, or pledge as collateral for a loan or as security for
the performance of an obligation, or for any other purpose, to any person other
than the issuer thereof. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
1.9 AVERAGE ACTUAL DEFERRAL PERCENTAGE: For any group of Eligible
Participants, the average (expressed as a percentage) of the Actual Deferral
Percentages for each of the Eligible Participants in that group, including
those not making Elective Deferrals.
1.10 AVERAGE CONTRIBUTION PERCENTAGE: For any group of Eligible
Participants, the average (expressed as a percentage) of the Contribution
Percentages for each of the Participants in that group.
1.11 BENEFICIARY: A person or persons entitled to receive any payment of
benefits pursuant to Article VII.
1.12 BENEFIT COMMENCEMENT DATE: The first day, determined pursuant to
Article V, for which a Participant or Beneficiary receives or begins to receive
payment in any form of distribution as a result of death, Disability,
termination of Employment, Early Retirement, Plan termination or upon or after
Normal Retirement Age or age 70-1/2.
1.13 CODA: A cash or deferred arrangement pursuant to Code Section 401(k)
which is part of a profit sharing plan and under which an Eligible Participant
may elect to make Elective Deferrals in accordance with Section 3.3.1.
1.14 CODA COMPENSATION: Solely for purposes of determining the Actual
Deferral Percentage and the Contribution, CODA Compensation shall be
Compensation including elective contributions.
1.15 CODE: The Internal Revenue Code of 1986, as now in effect or as
amended from time to time. A reference to a specific provision of the Code
shall include such provision and any applicable regulation pertaining thereto.
1.16 COMPENSATION: For purposes of contributions, Compensation shall be
limited to the amount paid to the Employee by the Employer as regular salary
and wages, overtime pay, bonuses, and commissions, and as defined in Section
3.6.1(H), subject to the following modifications:
(A) For a Self-Employed Individual, Compensation means his or her Earned
Income, provided that if the Self-Employed Individual is not a Participant for
an entire Plan Year, his or her Compensation for that Plan Year shall be his or
her Earned Income for that Plan Year multiplied by a fraction the numerator of
which is the number of days he or she is a Participant during the Plan Year and
the denominator of which is the number of days in the Plan Year.
Elective Deferral or an Employee Thrift Contribution shall be treated as an
Eligible Participant on behalf of whom no such contributions are made.
1.19 DEFINED BENEFIT PLAN: A plan of the type defined in Code Section
4l4(j) maintained by the Employer or Affiliate, as applicable.
1.20 DEFINED CONTRIBUTION PLAN: A plan of the type defined in Code Section
414(i) maintained by the Employer or Affiliate, as applicable.
1.21 DISABILITY: Disability shall mean a condition which results in the
Participant's qualification for Social Security disability benefits. The
permanence and degree of such impairment shall be supported by medical
evidence.
1.22 EARLY RETIREMENT: An actively employed Participant is eligible for
Early Retirement upon terminating employment prior to Normal Retirement Age and
having attained Age 55.
1.23 EARLY RETIREMENT DATE: The Participant's benefit Commencement Date
following his or her termination of Employment on or after satisfying the
requirements for Early Retirement and prior to Normal Retirement Age.
1.24 EARNED INCOME: The "net earnings from self-employment" within the
meaning of Code Section 401(c)(2) of a Self-Employed Individual from the trade
or business with respect to which the Plan is established, but only if the
personal services of the Self-Employed Individual are a material income
producing factor in that trade or business. Net earnings will be determined
without regard to items not included in gross income and the deductions
properly allocable to or chargeable against such items and are to be reduced by
contributions by the Employer or Affiliate to a Qualified Plan to the extent
deductible under Code Section 404. Where this Plan refers to Earned Income in
the context of a trade or business other than that with respect to which the
Plan is adopted, the term Earned Income means such net earnings as would be
Earned Income as defined above if that trade or business was the trade or
business with respect to which the Plan is adopted.
Net earnings shall be determined with regard to the deduction allowed to the
Employer by Code Section 164(f) for taxable years beginning after December 31,
1989.
1.25 ELECTIVE DEFERRALS: Contributions made to the Plan during the Plan
Year by the Employer, at the election of the Participant, in lieu of cash
compensation and shall include contributions that are made pursuant to a 401(k)
Election.
A Participant's Elective Deferral in any taxable year is the sum of all
Employer and Affiliate contributions pursuant to an election to defer under any
qualified cash or deferred arrangement, any simplified employee pension plan or
deferred arrangement as described in Code Section 402(h)(1)(B), any eligible
deferred compensation plan under Code Section 457, any plan as described under
Code Section 501(c)(18), and any Employer contributions made on behalf of a
Participant for the purchase of an annuity under Code Section 403(b) pursuant
to a salary reduction agreement. Such contributions are nonforfeitable when
made and are not distributable under the terms of the Plan to Participants or
their Beneficiaries earlier than the earlier of:
(A) termination from Employment, death or Disability of the Participant;
(B) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate,
(C) disposition by the Employer or Affiliate to an unrelated corporation of
substantially all of its assets used in a trade or business if such unrelated
corporation continues to maintain this Plan after the disposition but only with
respect to Employees who continue employment with the acquiring unrelated
entity. The sale of 85% of the assets used in a trade or business will be
deemed a sale of "substantially all" the assets used in a trade or business;
(D) sale by the Employer or Affiliate to an unrelated entity of its interest in
an Affiliate if such unrelated entity continues to maintain the Plan but only
with respect to Employees who continue employment with such unrelated entity.
Elective Deferrals shall not include any deferrals properly distributed as an
Excess Amount pursuant to Section 3.6.2.
1.26 ELECTIVE DEFERRALS ACCOUNT: The Account established for a Participant
pursuant to Section 3.5.1.
1.27 ELIGIBLE EMPLOYEE: All Employees except Employees included in a unit
of Employees covered by a collective bargaining agreement between the Employer
or a Participating Affiliate and the Employee representatives (not including
any organization more than half of whose member are Employees who are owners,
officers, or executives of the Employer or Participating Affiliate) in the
negotiation of which retirement benefits were the subject of good faith
bargaining, unless the bargaining agreement provides for participation in the
Plan.
1.28 ELIGIBLE PARTICIPANT: An Eligible Employee who has met the eligibility
requirements set forth in the Adoption Agreement whether or not he or she makes
Elective Deferrals and/or Employee Thrift Contributions.
1.29 EMPLOYEE: A Self-Employed Individual, or any individual who is
employed by the Employer in the trade or business with respect to which the
Plan is adopted and any individual who is employed by an Affiliate. Each
Leased Employee shall also be treated as an Employee of the recipient Employer.
The preceding sentence shall not apply, however, to any Leased Employee who is
(A) covered by a money purchase pension plan maintained by the Leasing
organization referred to in Section 1.54 which provides, with respect to such
Leased Employee, a nonintegrated Employer contribution rate of at least 10% of
Limitation Compensation, but including amounts contributed pursuant to a salary
reduction agreement which are excluded from the Employee's gross income under
Code Section 402(a)(8), Code Section 402(h) or Code Section 403(b), immediate
participation, and full and immediate vesting and (B) such Leased Employees do
not constitute mote than 20% of the Employer's and Affiliates' non-highly
compensated workforce. For purposes of the Plan, all Employees will be treated
as employed by a single employer.
1.30 EMPLOYER: Aceto Corporation. For all purposes relating to
eligibility, participation, contributions, vesting and allocations, Employer
includes all Participating Affiliates.
1.31 EMPLOYER ACCOUNT: The Employer Contributions Account.
1.32 EMPLOYER CONTRIBUTIONS: Any contributions made by the Employer for the
Plan Year on behalf of a Participant in accordance with Section 3.1 of the
Plan.
1.33 EMPLOYER CONTRIBUTIONS ACCOUNT: The Account established for a
Participant pursuant to Section 3.5.2.
1.34 EMPLOYMENT: An Employee's employment or self-employment with the
Employer, Affiliate or a Leasing organizations referred to in Section 1.48 or,
to the extent required under Code Section 414(a)(2) or as otherwise specified
by the Administrator on a uniform and nondiscriminatory basis, any predecessor
of any of them. If any of them maintains a plan of a Predecessor employer
(within the meaning of Code Section 414(a)(1)) employment or self-employment
with the Predecessor employer will be treated as Employment. Additionally, if
the trade or business conducted by a Self-Employed Individual becomes
incorporated, all employment with that trade or business or with any Affiliate
shall be treated as Employment with the Employer.
1.35 ENTRY DATE: For purposes of making elective deferrals, the first day
of the Plan Year and the first day of the seventh month of the Plan Year
following the date the Employee has performed one Hour of Service for the
Employer or a Participating Affiliate. For purposes of sharing in the
allocation of the Employer's Profit Sharing Contribution, the Entry Date shall
be determined as follows:
Any Eligible Employee who has an Hour of Service prior to
January 1 shall have an Entry Date on the June 30th
immediately following, provided they are still an Eligible
Employee. Any Eligible Employee who does not have an Hour
of Service until after December 31st will have an Entry Date
on the July 1st immediately following, provided that he is
an Eligible Employee at that time.
1.36 ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time. Reference to a specific provision of ERISA shall include
such provision and any applicable regulation pertaining thereto.
1.37 EXCESS AGGREGATE CONTRIBUTIONS: With respect to any Plan Year, the
excess of:
(A) The aggregate Contribution Percentage Amounts, taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Highly Compensated Employees for such Plan Year, over (B) The maximum
Contribution Percentage Amounts permitted by the ACP Test (determined by
reducing contributions made on behalf of Highly Compensated Employees in the
order of their Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
1.38 EXCESS CONTRIBUTIONS: With respect to any Plan Year, the aggregate
amount of Elective Deferrals actually paid over to the Trust Fund on behalf of
Highly Compensated Employees for such Plan Year, over the maximum amount of
such contributions permitted by the ADP Test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of the
Actual Deferral Percentages, beginning with the highest of such percentages).
1.39 EXCESS ELECTIVE DEFERRALS: The amount of Elective Deferrals for a
Participant's taxable year that are includible in the gross income of the
Participant to the extent that such Elective Deferrals exceed the Code Section
402(g) dollar limitation and which the Participant allocates to this Plan
pursuant to the procedure set forth in Section 3.3.2. Excess Elective
Deferrals shall be treated as an Annual Addition pursuant to Section 3.6,
unless such amounts are distributed no later than the first April 15th
following the close of the Participant's taxable year.
1.40 FAMILY MEMBER: An individual described in Code Section 414(q)(6)(B).
1.41 401(K) CONTRIBUTIONS ACCOUNTS: The Participant's Elective Deferral
Account.
1.42 401(K) ELECTION: The election by a Participant to make Elective
Deferrals in accordance with Section 3.3.1.
1.43 FULLY VESTED SEPARATION: Termination of Employment, by reason other
than death, of a Participant whose vested percentage in each Employer Account
is 100%.
1.44 HIGHLY COMPENSATED EMPLOYEE: The term Highly Compensated Employee
includes highly compensated active Employees and highly compensated former
employees.
(A) A highly compensated active Employee includes any Employee who performs
service for the Employer or Affiliate during the Plan Year and who, during the
look-back year (the twelve-month period immediately preceding the Plan Year):
(i) received Compensation from the Employer or Affiliate in excess of $75,000
(as adjusted by the Adjustment Factor);
(ii) received Compensation from the Employer or Affiliate in excess of $50,000
(as adjusted by the Adjustment Factor) and was a member of the top paid group
for such year; or
(iii) was an officer of the Employer or Affiliate and received Compensation
during such year that is greater than 50% of the Defined Benefit Dollar
Limitation.
(B) The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if the term
"Plan Year" is substituted for the term "Look-back years" and the Employee is
one of the 100 Employees who received the most Compensation from the Employer
or Affiliate during the Plan Year; and
(ii) Employees who are 5% owners at any time during the Look-back year or Plan
Year.
(C) If no officer has received Compensation that is greater than 50% of the
Defined Benefit Dollar Limitation in effect during either the Plan Year or
Look-back year, the highest paid officer of such year shall be treated as a
Highly Compensated Employee.
(D) A highly compensated former employee includes any Employee who terminated
Employment (or was deemed to have terminated) prior to the Plan Year, performs
no service for the Employer or Affiliate during the Plan Year, and was a highly
compensated active employee for either the separation year or any Plan Year
ending on or after the Employee's 55th birthday.
(E) If an Employee is, during a Plan Year or Look-back year, a Family Member of
either (i) a 5% owner who is an active or former Employee or (ii) a Highly
Compensated Employee who is one of the ten most highly compensated employees
ranked on the basis of Compensation paid by the Employer or Affiliate during
such year, then the Family Member and the 5% owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
5% owner or top-ten Highly Compensated Employee shall be treated as a single
Employee receiving Compensation and plan contributions or benefits equal to the
sum of such Compensation and contributions or benefits of the Family Member and
5% owner or top-ten Highly Compensated Employee. For purposes of this section,
Family Member includes the Spouse, lineal ascendants and descendants of the
Employee or former employee and the spouses of such lineal ascendants and
descendants.
(F) The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group;
the top 100 Employees; the number of Employees treated as officers; and the
Compensation that is considered will be made in accordance with Code Section
414(q).
An Hour of Service is an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an Affiliate. In
addition to service with an Affiliate, Hours of Service will also be credited
for any individual considered an Employee for purposes of this Plan under Code
Section 414(n).
1.45 IMMEDIATELY DISTRIBUTABLE: A Participant's Account is Immediately
Distributable if any part of such Account could be distributed to the
Participant or Participant's Surviving Spouse before the Participant attains
(or would have attained if not deceased) Normal Retirement Age.
1.46 INVESTMENT MANAGER: Any person appointed by the Trustee or, with
respect to Participant-Directed Assets, by the Participant or Beneficiary
having the power to direct the investment of such assets, to serve as such in
accordance with Section 10.8.
1.47 KEY EMPLOYEE: Any Employee or former Employee (and the beneficiaries
of such Employee) who at any time during the Determination period' was (A) an
officer of the Employer or Affiliate, having an annual Compensation greater
than 50% of the Defined Benefit Dollar Limitation for any Plan Year within the
Determination period.; (B) an owner (or considered an owner under Code Section
318) of one of the ten largest interests in the Employer or Affiliate if such
individual's Compensation exceeds 100% of the dollar limitation under Code
Section 415(c)(1)(A); (C) a "5% owner" (as defined in Code Section 416(i)) of
the Employer or Affiliate, or (D) a "1% owner" (as defined in Code Section
416(i)) of the Employer or Affiliate who has an annual compensation of more
than $150,000. Annual compensation means compensation as defined in Code
Section 415(c)(3), but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's gross
income under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or
Code Section 403(b). The "determination period" is the Plan Year containing
the determination date and the four preceding Plan Years. The determination
date for the first Plan Year is the last day of that Plan Year, and for any
subsequent Plan Year is the last day of the preceding Plan Year. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i).
1.48 LEASED EMPLOYEE: Any individual (other than an Employee of the
recipient Employer or Affiliate) who, pursuant to an agreement between the
Employer or Affiliate and any other person (the Leasing organization) has
performed services for the Employer (or for the Employer or Affiliate and
related persons determined in accordance with Code Section 414(n)(6)) on a
substantially full-time basis for a period of at least one year, which services
are of a type historically performed, in the business field of the recipient
Employer or Affiliate, by employees. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable to services
performed for the recipient Employer or Affiliate shall be treated as provided
by the recipient Employer.
1.49 LIMITATION YEAR: The Limitation Year is the Plan Year. All Qualified
Plans maintained by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.
1.50 NET PROFITS: The current and accumulated profits of the Employer from
the trade or business of the Employer with respect to which the Plan is
established, as determined by the Employer before deductions for federal, state
and local taxes on income and before contributions under the Plan or any other
Qualified Plan.
1.51 NON-HIGHLY COMPENSATED EMPLOYEE: An Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member.
1.52 NONVESTED SEPARATION: Termination of Employment of a Participant whose
vested percentage in each Employer Account is 0%.
1.53 NORMAL RETIREMENT AGE: Age 65. If, for Plan Years beginning before
January 1, 1988, Normal Retirement Age was determined with reference to the
anniversary of the participation commencement date (more than 5 but not to
exceed 10 years), the anniversary date for Participants who first commenced
participation under the Plan before the first Plan Year beginning on or after
January 1, 1988, shall be the earlier of (A) the tenth anniversary of the date
the Participant commenced participation in the Plan (or such anniversary as had
been elected by the Employer, if less than 10) or (B) the fifth anniversary of
the first day of the first Plan Year beginning on or after January 1, 1988.
1.54 OWNER-EMPLOYEE: An individual who is a sole proprietor, if the
Employer is a sole proprietorship, or if the Employer is a partnership, a
partner owning more than 10% of either the capital interest or the profits
interest in the Employer; provided that where this Plan refers to any Owner-
Employee in the context of a trade or business other than the trade or business
with respect to which the Plan is adopted, the term Owner-Employee means a
person who would be an Owner-Employer as defined above if that other trade or
business was the Employer.
1.55 PARTIALLY VESTED SEPARATION: Termination of Employment of a
Participant whose vested percentage in any Employer Account is less than 100%
but greater than 0%.
1.56 PARTICIPANT: An Employee who has commenced, but not terminated,
participation in the Plan as provided in Article II.
1.57 PARTICIPANT-DIRECTED ASSETS: The assets of an Account which are
invested, as described in Section 10.5.1, according to the direction of the
Participant or the Participant's Beneficiary, as the case may be, in either
individually selected investments or in commingled funds or in shares of
regulated investment companies.
1.58 PARTICIPATING AFFILIATE: Any Affiliate or any other employer
designated as such by the Employer, and, by duly authorized action, that has
adopted the Plan with the consent of the Employer and has not withdrawn
therefrom.
1.59 PERIOD OF SEVERANCE: For purposes of the hourly records method, a
Period of Severance is a period equal to the number of consecutive Plan Years
or, with respect to eligibility, the applicable computation period under the
definition of Year of Service, in which an Employee has 500 Hours of Service or
less. The Period of Severance shall be determined on the basis of Hours of
Service and shall commence with the First Plan Year in which the Employee has
500 Hours of Service or less. With respect to any period of absence during
which a Period of Severance does not commence, the Participant shall be
credited with the Hours of Service (up to a maximum of 501 Hours of Service in
a Plan Year) which would otherwise have been credited to him or her but for
such absence, or if such Hours of Service cannot be determined, 8 Hours of
Service for each day of absence.
For purposes of the elapsed time method, A Period of Severance is a continuous
period of at least 12 consecutive months during which an individual's
Employment is not continuing, beginning on the date an Employee retires, quits
or is discharged or, if earlier, the first 12-month anniversary of the date
that the individual is otherwise first absent from service (with or without
pay) for any other reason, and ending on the date the individual again performs
an Hour of Service.
Anything in the definition thereof to the contrary notwithstanding, a Period of
Severance shall not commence if the Participant is:
(A) On an authorized leave of absence in accordance with standard personnel
policies applied in a nondiscriminatory manner to all Employees similarly
situated and returns to active Employment by the Employer or Affiliate
immediately upon the expiration of such leave of absence;
(B) On a military leave while such Employee's reemployment rights are protected
by law and returns to active Employment within ninety days after his or her
discharge or release (or such longer period as may be prescribed by law); or
(C) Absent from work by reason of (i) the pregnancy of the Employee, (ii) the
birth of a child of the Employee, or (iii) the placement of a child with the
Employee in connection with the adoption of such child by such Employee, or
(iv) the care of such child for a period beginning immediately following such
birth or placement. In determining when such a Participant's Period of
Severance begins, the Participant will be credited with (i) for purposes of the
elapsed time method, the 12-consecutive month period beginning on the first
anniversary of the first date of such absence; or (ii) for purposes of the
hourly records method, the Hours of Service he or she would normally have had
but for such absence, or if such Hours cannot be determined, eight Hours of
Service for each day of such absence; provided, however, that such Hours of
Service shall not exceed 501 and shall be credited only in the year in which
such absence began if such crediting would prevent the Participant from
incurring a Period of Severance in that year, or in any other case, shall be
credited in the immediately following year.
1.60 PLAN: The plan established and executed by the Employer in the form of
this Plan. The Plan shall have the name of the Aceto Corporation 401(k) Plan.
1.61 PLAN YEAR: Each 12-consecutive month period ending on the 30th day of
June during any part of which the Plan is in effect.
1.62 QUALIFIED NONELECTIVE CONTRIBUTIONS: Contributions (other than
Elective Deferrals), if any, made by the Employer which the Participant may not
elect to receive in cash until distributed from the Plan, which are
nonforfeitable when made, and which are not distributable under the terms of
the Plan to Participants or their Beneficiaries earlier than the earlier of:
(A) termination of Employment, death, or Disability of the Participant;
(B) attainment of the age 59-1/2 by the Participant;
(C) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(D) disposition by the Employer or Participating Affiliate to an unrelated
corporation of substantially all of its assets used in a trade or business if
such unrelated corporation continues to maintain this Plan after the
disposition but only with respect to Employees who continue employment with the
acquiring unrelated entity. The sale of 85% of the assets used in a trade or
business will be deemed a sale of "substantially all" the assets used in a
trade or business,
(E) sale by the Employer to an unrelated entity of its interest in an Affiliate
if such unrelated entity continues to maintain the Plan but only with respect
to Employees who continue employment with such unrelated entity; and
(F) effective for Plan Years beginning before January 1, 1989, upon the
hardship of the Participant.
1.63 QUALIFIED NONELECTIVE CONTRIBUTIONS ACCOUNT: The Account established
for a Participant pursuant to Section 3.5.3.
1.64 QUALIFIED PLAN: A Defined Benefit Plan or Defined Contribution Plan.
1.65 QUALIFYING EMPLOYER SECURITIES: Employer securities, as that term is
defined in ERISA Section 407(d)(5).
1.66 ROLLOVER CONTRIBUTION: A contribution described in Section 3.2.
1.67 ROLLOVER CONTRIBUTIONS ACCOUNT: The Account established for a
Participant pursuant to Section 3.5.4.
1.68 SELF-EMPLOYED INDIVIDUAL: An individual who has Earned Income for the
Plan Year involved from the trade or business for which the Plan is
established, or who would have had such Earned Income but for the fact that the
trade or business with respect to which the Plan is established had no Net
Profits for that Plan Year.
1.69 SOCIAL SECURITY RETIREMENT AGE: Age 65 in the case of a Participant
attaining age 62 before January 1, 2000 (I.E., born before January 1, 1938),
age 66 for a Participant attaining age 62 after December 31, 1999, and before
January 1, 2017 (I.E., born after December 31, 1937, but before January 1,
1955), and age 67 for a Participant attaining age 62 after December 31, 2016
(I.E., born after December 31, 1954).
1.70 SPONSOR: The Employer.
1.71 SPOUSE: The person married to a Participant, provided that a former
spouse will be treated as the Spouse to the extent provided under a "qualified
domestic relations order" (or a "domestic relations order" treated as such) as
referred to in Section 12.6.
1.72 SURVIVING SPOUSE: The person married to a Participant on the earliest
of:
(A) the date of the Participant's death; (B) the Participant's Benefit
Commencement Date. Anything contained herein to the contrary notwithstanding,
a former spouse will be treated as the Surviving Spouse to the extent provided
under a "qualified domestic relations order" (or a "domestic relations order"
treated as such) as referred to in Section 12.6.
1.73 TAXABLE WAGE BASE: The maximum amount of earnings which may be
considered "wages" for the Plan Year involved under Code Section 3121(a)(1).
1.74 TRANSFERRED ACCOUNT: The Account established for a Participant
pursuant to Section 3.5.5.
1.75 TRUST: The trust established under the Plan to which Plan
contributions are made and in which Plan assets are held.
1.76 TRUST FUND: The assets of the Trust held by or in the name of the
Trustee.
1.77 TRUSTEE: The person appointed as Trustee pursuant to Article X and any
successor Trustee.
1.78 VALUATION DATE: Daily, or determined pursuant to Section 10.6, if
applicable, and each other date as may be determined by the Administrator.
1.79 VESTING SERVICE: The Years of Service credited to a Participant under
Article IV for purposes of determining the Participant's vested percentage in
any Employer Account established for the Participant.
1.80 YEARS OF SERVICE: An Employee shall be credited with one Year of
Service for each Plan Year in which he or she has 1,000 Hours of Service.
Solely for purposes of eligibility to participate, an Employee shall be
credited with a Year of Service on the last day of the 12-consecutive month
period which begins on the first day on which he or she has an Hour of Service,
if he or she has at least 1,000 Hours of Service in that period.
If an Employee fails to be credited with a Year of Service on such date, he or
she shall be credited with a Year of Service on the last day of each succeeding
12-consecutive month period in which her or she is credited with at least 1,000
Hours of Service.
Service with a predecessor employer, determined in the manner in which the
rules of this Plan would have credited such service had the Participant earned
such service under the terms of this Plan, may be included in Years of Service,
to the extent required by Code Section 414(a).
ARTICLE II - PARTICIPATION
2.1 ADMISSION AS A PARTICIPANT
2.1.1 An Eligible Employee shall become a Participant on the Entry Date
coincident with or next following the date on which he or she performs an Hour
of Service, provided, however that:
(A) an Eligible Employee who has met the eligibility requirements as of the
first day of the Plan Year in which the Plan is adopted as a new Plan shall
become a Participant as of such date;
(B) an Eligible Employee who had met the eligibility requirements of a plan
that is restated and/or amended to become this Plan shall become a Participant
as of the date this Plan is adopted; and
2.1.2 An Employee who did not become a Participant on the Entry Date
coincident with or next following the day on which he or she met the
eligibility requirements because he or she was not then an Eligible Employee
shall become a Participant on the first day on which he or she again becomes an
Eligible Employee unless determined otherwise in accordance with Section 2.3.1
of the Plan.
2.1.3 An Eligible Employee shall become a Participant upon filing his or her
401 (k) Election with the Administrator.
2.1.4 An individual who has ceased to be a Participant and who again becomes
an Eligible Employee shall become a Participant immediately upon reemployment
as an Eligible Employee unless determined otherwise in accordance with Section
2.3.1 of the Plan.
2.2 ROLLOVER MEMBERSHIP AND TRUST TO TRUST TRANSFER
An Eligible Employee who makes a Rollover Contribution or a trust to trust
transfer shall become a Participant as of the date of such contribution or
transfer even if he or she had not previously become a Participant. Such an
Eligible Employee shall be a Participant only for the purposes of such Rollover
Contribution or transfer and shall not be eligible to share in contributions
made by the Employer until he or she has become a Participant in accordance
with Section 2.1.
2.3 CREDITING OF SERVICE FOR ELIGIBILITY PURPOSE
2.3.1 For purposes of eligibility to participate, an Eligible Employee or
Participant without any vested interest in any Employer Account and without an
Elective Deferrals Account who terminates Employment shall lose credit for his
or her Years of Service prior to such termination of Employment if his or her
Period of Severance equals or exceeds five years or, if greater, the aggregate
number of Years of Service.
2.3.2 For purposes of eligibility to participate, a Participant who has a
vested interest in any Employer Account and who terminates Employment shall
retain credit for his or her Years of Service prior to such termination of
Employment without regard to the length of his or her period of Severance. In
the event such Participant returns to Employment, he or she shall participate
immediately.
2.3.3 A former Eligible Employee who was not a Participant who again becomes
an Eligible Employee with no Years of Service to his or her credit shall be
treated as a new Employee.
2.4 TERMINATION OF PARTICIPATION
A Participant shall cease to be a Participant:
(A) upon his or her death;
(B) upon the payment to him or her of all nonforfeitable benefits due to him or
her under the Plan, whether directly or by the purchase of an Annuity Contract;
or
(C) upon his or her Nonvested Separation.
2.5 LIMITATION FOR OWNER-EMPLOYEE
2.5.1 If the Plan provides contributions or benefits for one or more
Owner-Employees who control the trade or business for which this Plan is
established and who also control as an Owner-Employee or as Owner-Employees one
or more other trades or businesses, this Plan and the plan established for each
such other trade or business must, when looked at as a single plan, satisfy the
requirements of Code Sections 401(a) and (d) with respect to the employees of
this and all of such other trades or businesses.
2.5.2 If the Plan provides contributions or benefits for one or more Owner-
Employees who control as an Owner-Employee or as Owner-Employees one or more
other trades or businesses, the employees of the other trades or businesses
must be included in a plan which satisfies the requirements of Code Sections
401(a) and (d) and which provides contributions and benefits for the employees
of such other trades or businesses not less favorable than the contributions
and benefits provided for Owner-Employees under this Plan.
2.5.3 If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for such individual under the most favorable
plan of the trade or business which is not controlled.
2.5.4 For purposes of the preceding three subsections, an Owner-Employee, or
two or more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together
(A) own the entire interest in an unincorporated trade or business, or
(B) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees, shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
2.6 CORRECTIONS WITH REGARD TO PARTICIPATION
2.6.1 If in any Plan Year an Eligible Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by the Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Eligible Employee in the amount which would have contributed with
respect to such Eligible Employee had he or she not been omitted. Such
contribution shall be made whether or not it is deductible in whole or in part
in any taxable year under applicable provisions of the Code. It shall be the
responsibility of the Employer and Administrator to take any and all actions as
required by this Section 2.6.1.
2.6.2 If in any Plan Year any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made,
the amount contributed on behalf of such ineligible person shall constitute a
forfeiture for the Plan Year in which the discovery is made. It shall be the
responsibility of the Employer and Administrator to take any and all actions as
required by this Section 2.6.2
2.7 PROVISION OF INFORMATION
Each Employee shall execute such forms as may reasonably be required by the
Administrator, and shall make available to the Administrator any information
the Administrator may reasonably request in this regard. By virtue of his or
her participation in this Plan, an Employee agrees, on his or her own behalf
and on behalf of all persons who may have or claim any right by reason of the
Employee's participation in the Plan, to be bound by all provisions of the
Plan.
ARTICLE III - CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
3.1 EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
3.1.1 The Employer will contribute cash and/or Qualifying Employer Securities
to the Trust Fund, in such amount, if any, as determined by the Employer and
with respect to Qualifying Employer Securities as is consistent with Sections
10.4.2 and 10.4.3. Net Profits are not necessary for an Employer to make
contributions. Employer Contributions for a Plan Year will be allocated no
later than the last day of the Plan Year to the Employer Contributions Account
of Participants eligible for an allocation in the manner specified in Section
3.1.3.
3.1.2 For purposes of the Plan, contributions provided by the Leasing
organizations referred to in Section 1.50 of a Leased Employee which are
attributable to services performed for the Employer shall be treated as
provided by the Employer.
3.1.3. Employer contributions will be allocated among the Employer
Contribution Accounts of the Participants as follows:
(A) A dollar amount, equal to 3.8% multiplied by a Participant's Compensation
for the Plan Year up to the Compensation Base for that year shall be allocated
to each Participant's account.
(B) If the Employer does not contribute an amount equal to the above stated
percentage of Compensation up to the Compensation Base for all Participants,
each Participant will be allocated a share of the contribution in the same
proportion that his Compensation, up to the Compensation Base, bears to the
total Compensation up to the Compensation Base, of all Participants for that
year.
(C) The balance of the Employer's contribution over the amount allocated under
subparagraph (1) hereof shall be allocated to each Participant's account in a
dollar amount equal to 6.5% multiplied by a Participant's Compensation for the
Plan Year in excess of the Compensation Base for the year (herein referred to
as "Excess Compensation"). If the Employer does not contribute an amount equal
to the above stated percentage of "Excess Compensation" for all Participants,
each Participant will be allocated a share of the contribution in the same
proportion that his "Excess Compensation" bears to the total "Excess
Compensation" of all Participants for that year.
(D) For purposes of this section, "Compensation Base" shall be $60,600.
3.1.4 Any Participant who terminated employment during the Plan Year for
reasons other than death, disability, or retirement, shall not receive an
allocation under 3.1, but shall share only in the earnings and losses of the
Participant's Employer Contribution Account.
3.2 ROLLOVER CONTRIBUTIONS AND TRUST TO TRUST TRANSFERS
3.2.1 Any Eligible Employee or Participant may make a Rollover Contribution
under the Plan. A Rollover Contribution shall be in cash or in other property
acceptable to the Trustee and shall be a contribution attributable to (a) a
"qualified total distribution" (as defined in Code Section 402(a)(5)),
distributed to the contributing Employee under Code Section 402(a)(5) from a
Qualified Plan or distributed to the Employee under Code Section 403(a)(4) from
an "employee annuity" or referred to in that section, or (b) a payout or
distribution to the Employee referred to in Code Section 408(d)(3) from an
"individual retirement account" or an "individual retirement annuity"
described, respectively, in Code Section 408(a) or Section 408(b) consisting
exclusively of amounts attributable to "qualified total distributions" (as
defined in Code Section 402(a)(5)) from a Qualified Plan.
The Plan shall not accept a Rollover Contribution attributable to any
accumulated deductible employee contributions as defined by Code Section
72(o)(5)(B). The Trustee may condition acceptance of a Rollover Contribution
upon receipt of such documents as it may require. In the event that an
Employee makes a contribution pursuant to this Section 3.2 intended to be a
Rollover Contribution but which did not qualify as a Rollover Contribution, the
Trustee shall distribute to the Employee as soon as practicable after that
conclusion is reached the entire Account balance in his or her Rollover
Contributions Account deriving from such contributions determined as of the
valuation date coincident with or immediately preceding such discovery.
3.2.2 Any Eligible Employee or Participant may direct the Administrator to
direct the Trustee to accept a transfer to the Trust Fund from another trust
established pursuant to another Qualified Plan of all or any part of the assets
held in such other trust. The Plan shall not accept a direct transfer
attributable to accumulated deductible employee contributions as defined by
Code Section 72(o)(5)(B). The Trustee may condition acceptance of such a trust
to trust transfer upon receipt of such documents as it may require.
3.3 SECTION 401(K) CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
3.3.1 ELECTIVE DEFERRALS
(A) AMOUNT OF ELECTIVE DEFERRALS
Subject to the limitations contained in Section 3.3.2, the Employer will
contribute cash to the Trust Fund in an amount equal to, as specified on the
Participant's 401(k) Election form, the specific dollar amount, or the deferral
percentage multiplied by each such Participant's Compensation.
(B) The amount elected by a Participant pursuant to a 401(k) Election shall not
exceed 10% of the Participant's compensation. The 401(k) Election shall be
made on a form provided by the Administrator but no election shall be effective
prior to approval by the Administrator. The Administrator may reduce the
amount of any 401(k) Election, or make such other modifications as necessary,
so that the Plan complies with the provisions of the Code. A Participant's
401(k) Election shall remain in effect until modified or terminated.
Modification or termination of a 401(k) Election shall be made quarterly,
effective as of the first payroll period coincident or next following the first
day of the applicable quarter.
3.3.2 LIMITATION ON ELECTIVE DEFERRALS
(A) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS AND DISTRIBUTION OF EXCESS ELECTIVE
DEFERRALS
(i) No Participant shall be permitted to have Elective Deferrals made under
this Plan, or any other Qualified Plan maintained by the Employer, during any
calendar year in excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of the Participant's taxable year.
(ii) Notwithstanding any other provision of the Plan, Excess Elective Deferrals
made to this Plan or assigned to this Plan, plus any income and minus any loss
allocable thereto, shall be distributed no later than each April 15, to
Participants to whose account Excess Elective Deferrals were designated for the
preceding calendar year and who claim Excess Elective Deferrals for such
taxable year. Excess Elective Deferrals shall be treated as Annual Additions.
(iii) CLAIMS. A Participant may designate to this Plan any amount of his or
her Elective Deferrals as Excess Elective Deferrals during his or her taxable
year. A Participant's claim shall be in writing, shall be submitted to the
Administrator no later than March 1, shall specify the Participant's Excess
Elective Deferral for the preceding calendar year, and shall be accompanied by
the Participant's written statement that if such amounts are not distributed,
such Excess Elective Deferred, when added to amounts deferred under other plans
or arrangements described in Code Section 401(k), Code Section 408(k), Code
Section 403(b) or Code Section 457, exceeds the limit imposed on the
Participant by Code Section 402(g) for the year in which the deferral occurred.
A Participant is deemed to notify the Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective Deferrals made
to this Plan and any other plans of the Employer or an Affiliate.
(iv) DETERMINATION OF INCOME OR LOSS. Excess Elective Deferrals shall be
adjusted for income or loss up to the date of distribution. The income or loss
allocable to Participant's Excess Elective Deferrals is the sum of: (1) the
income or loss allocable to the Participant's Elective Deferrals Account for
the Participant's taxable year multiplied by a fraction, the numerator of which
is the Participant's Excess Elective Deferrals for the Participant's taxable
year and the denominator of which is the Account Balance of the Participant's
Elective Deferrals Account without regard to any income or loss occurring
during such taxable year; and (2) ten percent of the amount determined under
(1) multiplied by the number of whole calendar months between the end of the
Participant's taxable year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
Anything in the preceding paragraph of this Section 3.3.2(A)(iv) to the
contrary notwithstanding, any reasonable method for computing the income or
loss allocable to Excess Elective Deferrals may be used, provided that such
method is used consistently for all Participants and for all corrective
distributions under the Plan, and is used by the Plan for allocating income or
loss to Participants' Accounts. Income or loss allocable to the period between
the end of the taxable year and the date of distribution may be disregarded in
determining income or loss.
(B) ADP TEST
The Average Actual Deferral Percentage for Highly Compensated Employees for
each Plan Year and the Average Actual Deferral Percentage for Non-highly
Compensated Employees for the same Plan Year must satisfy one of the following
tests:
(i) The Average Actual Deferral Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Eligible Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Eligible Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by 2.0; provided that the
Average Actual Deferral Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed the Average Actual Deferral Percentage
for Participants who are Non-highly Compensated Employees by more than two
percentage points.
(C) SPECIAL ACTUAL DEFERRAL PERCENTAGE RULES
(i) The Actual Deferral Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferrals and Qualified Matching Contributions or Qualified Nonelective
Contributions, or both, if treated as Elective Deferrals for purposes of the
ADP Test, allocated to his or her accounts under two or more plans or
arrangements described in Code Section 401 (k) that are maintained by the
Employer shall be determined as if all such Elective Deferrals, Qualified
Matching Contributions and Qualified Nonelective Contributions were made under
a single arrangement. If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(ii) In the event that this Plan satisfies the requirements of Code Section
401(k), Code Section 401(a)(4) or Code Section 410(b) only if aggregated with
one or more other qualified plans, or if one or more other qualified plans
satisfy the requirements of such Code Sections only if aggregated with this
Plan, then this Section shall be applied by determining the Actual Deferral
Percentage of Employees as if all such qualified plans were a single qualified
plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Code Section 401(k) only if they have the same
plan year.
(iii) For purposes of determining the Actual Deferral Percentage of an Eligible
Participant who is a 5% owner or one of the ten most highly paid Highly
Compensated Employees, the Elective Deferrals (and Qualified Matching
Contributions or Qualified Nonelective Contributions, or both, if treated as
Elective Deferrals for purposes of one of the tests referred to in Section
3.3.2(B)) and CODA Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Matching Contributions, Qualified
Nonelective Contributions) and CODA Compensation for the Plan Year of Family
Members. Family Members with respect to such Highly Compensated Employees
shall be disregarded as separate employees in determining the Actual Deferral
Percentage both for Eligible Participants who are Non-highly Compensated
Employees and for Eligible Participants who are Highly Compensated Employees.
(iv) For purposes of determining the ADP Test, Elective Deferrals, Qualified
Matching Contributions, and Qualified Nonelective Contributions must be made
before the last day of the 12-month period immediately following the Plan Year
to which such contributions relate.
(v) The Employer shall maintain records sufficient to demonstrate satisfaction
of the ADP Test and the amount of Qualified Nonelective Contributions and/or
Qualified Matching Contribution used in such test.
(vi) The determination and treatment of the Elective Deferrals, Qualified
Matching Contributions, and Qualified Nonelective Contributions, used in the
ADP Test shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(D) DISTRIBUTION OF EXCESS CONTRIBUTIONS
(i) In General: Notwithstanding any other provision of the Plan except Section
3.3.2(E), Excess Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of each Plan Year
beginning after December 31, 1987, to Participants to whose Accounts Elective
Deferrals, Qualified Matching Contributions, and Qualified Nonelective
Contributions were allocated for the preceding Plan Year. Excess Contributions
of Participants who are subject to the Family Member aggregation rules shall be
allocated among the Family Members in proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of each Family Member that is combined
to determine the combined Actual Deferral Percentage. Excess Contributions
shall be treated as Annual Additions.
(ii) Determination of Income or Loss. Excess Contributions shall be adjusted
for any income or loss up to the date of distribution. The income or loss
allocable to Excess Contributions is the sum of: (1) the income or loss
allocable to the Participant's Elective Deferrals Account (and, if applicable,
the Qualified Nonelective Contributions Account or the Qualified Matching
Contributions Account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Contributions for the year and
the denominator of which is the Account Balances of Participant's Elective
Deferrals Account, Qualified Nonelective Contributions Account and Qualified
Matching Contributions Account if any of such contributions are included in the
ADP Test, without regard to any income or loss occurring during such Plan Year;
and (2) 10% of the amount determined under (i) multiplied by the number of
whole calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs after
the 15th of such month.
Anything in the preceding paragraph of this Section 3.3.2(D)(ii) to the
contrary notwithstanding, any reasonable method for computing the income or
loss allocable to Excess Contributions may be used, provided that such method
is used consistently for all Participants and for all corrective distributions
under the Plan for the Plan Year, and is used by the Plan for allocating income
or loss to Participant's Accounts. Income or loss allocable to the period
between the end of the Plan Year and the date of distribution may be
disregarded in determining income or loss.
(iii) Accounting for Excess Contributions. Amounts distributed under this
Section 3.3.2(D) shall first be distributed from the Participant's Elective
Deferrals Account and Qualified Matching Contributions Account in proportion to
the Participant's Elective Deferrals and Qualified Matching Contributions (to
the extent used in the ADP Test) for the Plan Year. Excess Contributions shall
be distributed from the Participant's Qualified Nonelective Contributions
Account only to the extent that such Excess Contributions exceed the balance in
the Participant's Elective Deferrals Account and Qualified Matching
Contributions Account.
(E) In lieu of distributing Excess Contributions pursuant to the preceding
Section 3.3.2(D), and as specified in the Adoption Agreement, the Employer may
make special Qualified Nonelective Contributions on behalf of Non-highly
Compensated Employees that are sufficient to satisfy the ADP Test.
(F) In lieu of distributing Excess Contributions, the Participant may treat his
or her Excess Contributions as an amount distributed and then re-contributed by
such Participant. Recharacterized amounts are 100% nonforfeitable and subject
to the same distribution requirements as Elective Deferrals. Amounts may not
be characterized by a Highly Compensated Employee to the extent that such
amount in combination with other amounts made to the Participant's Participant
Contributions Account would exceed any stated limit on such contributions, as
specified in the Adoption Agreement. If Excess Contributions are
re-characterized, they must be so no later than two and one half months after
the last day of the Plan Year in which such Excess Contributions arose and they
are deemed to occur no earlier than the date the last Highly Compensated
Employee is informed in writing of the amount re-characterized and the
consequences thereof. Recharacterized amounts are taxable to the Participant
for the tax year in which he or she would have received such contributions in
cash.
(G) Under no circumstances may Elective Deferrals, Qualified Matching
Contributions and Qualified Nonelective Contributions be contributed and
allocated to the Trust later than the last day of the 12-month period
immediately following the Plan Year to which such contributions relate.
3.4 TREATMENT OF FORFEITURES
3.4.1 Forfeitures, if any, shall be allocated as of the last day of the Plan
Year to the Employer Accounts of those Participants who are eligible to share
in the allocation of contributions to that particular Employer Account (whether
or not a contribution was made for that Plan Year) for that Plan Year in that
particular Employer Account category with respect to which such forfeitures are
attributable.
3.5 ESTABLISHING OF ACCOUNTS
3.5.1 An Elective Deferrals Account shall be established for each Eligible
Participant who makes a 401(k) Election to which the Administrator shall
credit, or cause to be credited, Elective Deferrals allocable to each such
Participant, plus earnings or losses thereon.
3.5.2 An Employer Contributions Account shall be established for each
Participant to which the Administrator shall credit or cause to be credited
Employer contributions pursuant to Section 3.1, and forfeitures attributable to
such contributions, if any, plus earnings or losses thereon.
3.5.3 A Qualified Nonelective Contributions Account shall be established for
each Participant for when Qualified Nonelective Contributions are made, to
which the Administrator shall credit, or cease to be credited, all amounts
allocable to each such Participant, plus earnings or losses thereon.
3.5.4 A Rollover Contributions Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.2 to which the
Administrator shall credit, or cause to be credited, Rollover Contributions
made by the Participant, plus earnings or losses thereon.
3.5.5 A Transferred Contributions Account shall be established for each
Participant for whom assets are transferred from another Qualified Plan, to
which the Administrator shall credit, or cause to be credited, transferred
assets, plus earnings or losses thereon.
3.6 LIMITATION ON AMOUNT OF ALLOCATIONS
3.6.1 As used in this Section 3.6, each of the following terms shall have the
meaning for that term set forth in this Section 3.6.1:
(A) ANNUAL ADDITIONS means, for each Participant, the sum of the following
amounts credited to the Participant's Accounts for the Limitation Year:
(i) Employer Contributions within the meaning of IRS regulation 1.415-6(b);
(ii) Employee Contributions;
(iii) forfeitures;
(iv) allocation under a simplified employee pension; and
(v) any Excess Amount applied under a Defined Contribution Plan in the
Limitation Year to reduce Employer Contributions will also be considered as
part of the Annual Additions for such Limitation Year.
Amounts allocated after March 31, 1984, to an "individual medical benefit
account" as defined in Code Section 415(1)(2) ("Individual Medical Benefit
Account") which is part of a pension or annuity plan maintained by the Employer
or Affiliate are treated as Annual Additions to a Defined Contribution Plan.
Also, amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after that date, which are attributable to post-
retirement