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SHOPSMITH, INC.
10-K REPORT
FOR THE
YEAR ENDED April 5, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 5, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________ to __________________
Commission file number 0-9318
SHOPSMITH, INC.____________________
(Exact name of registrant as specified in its charter)
Ohio____________ ____31-0811466______
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
____6530 Poe Avenue, Dayton, Ohio________ __45414____
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:_(937) 898-6070_
Securities registered pursuant to Section 12(b) of the Act:
_Title of Each Class_ Name of Each Exchange on
None _____which registered_____
None
Securities registered pursuant to Section 12(g) of the Act:
__Common Shares___
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such 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 registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 4, 1997 was $5,493,116
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of June 4, 1997. Common Shares, without par value:
2,663,975 shares.
Index to Exhibits appears beginning on page 17 of this Report.
DOCUMENTS INCORPORATED BY REFERENCE
Shopsmith, Inc. Annual Report to Shareholders for the year ended
April 5, 1997 -- Only such portions of the Annual Report as are specifically
incorporated by reference under Part I and II of this Report shall be deemed
filed as part of this Report.
Shopsmith, Inc. Proxy Statement for its Annual Meeting of Share-
holders to be held July 30, 1997 -- Definitive copies of the Proxy Statement
will be filed with the Commission within 120 days after the end of the
Company's fiscal year. Only such portions of the Proxy Statement as are
specifically incorporated by reference under Parts II and III of this Report
shall be deemed filed as part of this Report.
PART I
ITEM 1. Business
Shopsmith, Inc., an Ohio corporation organized in 1972 (the Company"),
is engaged in the production and marketing of power woodworking tools designed
primarily for the home workshop. The principal line of power tools marketed
under the name "Shopsmith," a registered trademark, dates back to 1946 and was
purchased by the Company in 1972.
The line is built around the Shopsmith MARK V, a multi-purpose tool,
and includes separate function special purpose tools which may be mounted on
the MARK V or used independently. The Company distributes these tools
directly to consumers through demonstration programs (at which orders are
solicited by sales representatives), telephone sales solicitation and mail
order. During the fiscal year ended April 5, 1997, Shopsmith branded products
accounted for substantially all of the net sales of the Company. The majority
of products sold (as measured by sales dollar volume)are manufactured by the
Company.
Shopsmith MARK V, Special Purpose Tools and Major Accessories
The Shopsmith MARK V is a compact power woodworking tool which
performs the functions of five separate tools: a table saw, a wood lathe, a
disc sander, a horizontal boring machine, and a vertical drill press. The
engineering of the MARK V is such that special purpose tools may be mounted on
and powered by the MARK V. The special purpose tools, a jointer, a
beltsander, a bandsaw, a planer, a scroll saw, and a strip sander, may also be
operated as free standing tools with a stand and power system.
Other major accessories include MARK V accessories such as a lathe
duplicator, which allows a woodworker to duplicate original turnings and a
dust collector that, when used with the appropriate fixtures for the MARK V
510 and other Shopsmith products, provides for virtually dust-free
woodworking.
The Company also offers a line of accessories to its power tool line.
These accessories, only a few of which are manufactured by the Company,
include casters, custom saw blades, and molding attachments. Shopsmith
accessories are sold directly to the consumer through the same marketing
channels used for the Shopsmith power tool line.
Seasonality and Working Capital
The Company's business is seasonal, with the rate of incoming orders
being lowest during the summer months. As a result, working capital needs are
higher during this period of the fiscal year and the Company generally
experiences a tightening of its liquidity position.
Raw Materials and Components
The principal components and materials used by the Company in the
production of its products include aluminum die castings, iron sand castings,
metal stampings, screw machine products, plastics and electric motors. The
Company relies on sole sources of supply for some of its components and
materials. To reduce costs, the Company uses foreign producers as sources for
some parts and products.
Competition
The power woodworking equipment business is highly competitive and
the MARK V and the Company's other products must compete against the single
purpose tools sold by Delta, Power Matic, Black and Decker, Sears, and other
domestic and foreign corporations.
The Company considers quality, customer service, method of marketing,
price and value to be the principal bases of competition in the power
woodworking equipment industry.
Research and Development
From time to time, the Company engages in limited research and
development programs to develop new products, and to improve existing products
and current operating methods. Research and development costs were not
material in 1997, 1996 and 1995.
Employees
The total number of persons employed by the Company (both full and
part time) as of June 3, 1997 was 104. The Company considers its employee
relations to be satisfactory, and to date the Company has not experienced a
work stoppage due to a labor dispute. The Company has no collective
bargaining contracts.
Environmental Compliance
The Company believes that it materially complies with all statutory
and administrative requirements related to the environment and pollution
control. For a discussion of certain environmental related contingencies to
which the Company is subject, reference is made to Note 9 to the Consolidated
Financial Statements which are incorporated into this Report pursuant to Item
8 below.
ITEM 2. Properties
Information concerning the principal facility of the Company, which
is leased, is set forth below.
Location Use Approximate Expiration Renewal
Square Date of Options
feet Lease
Dayton, Ohio Manufacturing, 115,000 August 1999 1- 5 year
Headquarters,
Distribution
and Retail Store
The building and the Company's machinery and equipment are well
maintained. The Company's production facility currently operates one shift
per day.
ITEM 3. Legal Proceedings
The Company is not a party to any legal proceedings other than
litigation which, under the instructions to this item, need not be described.
For a discussion of certain environmental related contingencies to which the
Company is subject, reference is made to Note 9 to the Consolidated Financial
Statements which are incorporated into this Report pursuant to Item 8 below.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
EXECUTIVE OFFICERS OF THE COMPANY
Officers are elected annually by the Board of Directors. The
executive officers of the Company are as follows:
Name Age Position
John R. Folkerth 64 Chairman of the Board, President,
Chief Executive Officer and Director
William C. Becker 48 Vice President of Finance, Treasurer
and Chief Financial Officer
Robert L. Folkerth 40 Vice President of Field Sales
John R. Folkerth is the founder of the Company and has been a
director and the Chief Executive Officer of the Company since 1972.
William C. Becker has been Vice President of Finance and Chief Financial
Officer since October 1982.
Robert L. Folkerth was named Vice President of Field Sales in April
1996. Prior to accepting that position with the Company, Mr. Folkerth was
Vice President of Finance of Digitron, a manufacturer of automotive
components, from 1991 until 1996.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The market and shareholder information required by Item 5 is set forth
under the heading "Shareholders' Information" (p. 23) in the Company's Annual
Report to Shareholders for the year ended April 5, 1997 (which report is
included as Exhibit 13.1 to this Report). Such information is incorporated
herein by reference.
There are certain debt covenant requirements described in Note 3 of
the Company's Annual Report for the year ended April 5, 1997. The Company
paid no dividends in the fiscal years ended April 5, 1997 and March 30, 1996.
ITEM 6. Selected Financial Data
The information required by Item 6 is set forth under the heading
"Selected Financial Data" (p. 22) in the Company's Annual Report to
Shareholders for the year ended April 5, 1997 and is incorporated herein by
reference.
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by Item 7 is set forth under the heading
"Management's Discussion and Analysis" (p. 20) of the Company's Annual Report
to Shareholders for the year ended April 5, 1997 and is incorporated herein by
reference.
ITEM 8. Financial Statements and Supplementary Data
The information required by Item 8 is set forth at pages 3 through 11
and under the heading "Selected Financial Data" p. 22 of the Company's Annual
Report to Shareholders for the year ended April 5, 1997 and is incorporated
herein by reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The information required by Item 10 is incorporated herein by
reference from the Company's Proxy Statement for its Annual Meeting of
Shareholders to be held July 30, 1997, except for certain information
concerning the executive officers of the Company which is set forth in Part I
of this Report.
ITEM 11. Executive Compensation
The information required by Item 11 is incorporated herein by
reference from the Company's Proxy Statement for its Annual Meeting of
Shareholders to be held July 30, 1997.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is incorporated herein by
reference from the Company's Proxy Statement for its Annual Meeting of
Shareholders to be held July 30, 1997.
ITEM 13. Certain Relationships and Related Transactions
The information required by item 13 is incorporated herein by reference
from the Company's Proxy Statement for its Annual Meeting of Shareholders to
be held July 30, 1997.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Shopsmith,
Inc. and its subsidiaries are incorporated by reference as part
of this Report at Item 8 hereof.
Report of Independent Accountants.
Consolidated Balance Sheets as of April 5, 1997 and
March 30, 1996.
Consolidated Statements of Operations for the years
ended April 5, 1997, March 30, 1996, and April 1, 1995.
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the years ended April 5, 1997, March 30,
1996, and April 1, 1995.
Consolidated Statements of Cash Flows for the years ended
April 5, 1997, March 30, 1996, and April 1, 1995.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
The following Financial Statement Schedules for the years ended
April 5, 1997, March 30, 1996, and April 1, 1995 are included in
this report.
Report of Independent Auditor
Schedule II- Valuation and Qualifying Accounts
Other schedules are omitted because of the absence of conditions
under which they are required or because the required
information is given in the financial statements or notes
thereto.
Individual financial statements of the registrant have been
omitted since the registrant is primarily an operating company
and all consolidated subsidiaries are wholly-owned.
3. Exhibits
The Exhibits which are filed with this Report are listed in the
Exhibit Index. All management contracts or compensatory plans
or arrangements are indicated on the Exhibit Index.
(b) Reports on Form 8-K
During the quarter ended April 5, 1997, the Company did not
file any reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SHOPSMITH, INC.
By/s/ John R. Folkerth
John R. Folkerth
Chairman of the Board
and Chief Executive Officer
June 10, 1997____________
Date
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ John R. Folkerth_________ /s/ Edward A. Nicholson_________
John R. Folkerth Edward A. Nicholson
Chairman of the Board, Director
Chief Executive Officer and June 10, 1997___________________
Director (Principal Executive Date
Officer)
June 10, 1997________________
Date /s/ John L. Schaefer____________
John L. Schaefer
Director
/s/ Robert L. Folkerth_______ June 10, 1997___________________
Robert L. Folkerth Date
Vice President of Field Sales
and Director
June 10, 1997________________ /s/ Brady L. Skinner____________
Date Brady L. Skinner
Director
June 10, 1997___________________
/s/ William C. Becker________ Date
William C. Becker
Vice President of Finance
(Principal Financial and /s/ Richard L. Snell____________
Accounting Officer) Richard L. Snell
June 10, 1997________________ Director
Date June 10, 1997___________________
Date
/s/ J. Michael Herr__________
J. Michael Herr
Director
June 10, 1997________________
Date
CROWE CHIZEK
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Shopsmith, Inc.
Dayton, Ohio
We have audited the financial statements of Shopsmith, Inc. and
Subsidiaries as of April 5, 1997 and March 30, 1996 and for the years
ended April 5, 1997, March 30, 1996 and April 1, 1995, and have issued our
report thereon dated June 3, 1997. The financial statements and report
are included in your 1996 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the financial
statement schedule of Shopsmith, Inc. and Subsidiaries listed in Item 14.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our
audit.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
/s/ Crowe, Chizek and Company LLP
Crowe, Chizek and Company LLP
Columbus, Ohio
June 3, 1997
SHOPSMITH INC. AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED April 5, 1997, March 30, 1996 AND April 1, 1995
CAPTION
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE CHARGED
AT TO COST DEDUCTIONS BALANCE
BEGINNING AND FROM AT END
DESCRIPTION OF YEAR EXPENSES RESERVE OF YEAR
Reserves deducted
from assets to
which they apply:
YEAR ENDED
April 5, 1997
Allowance for
doubtful accounts
receivable $ 235,007 $ 135,122 $ 27,512 $ 342,617
YEAR ENDED
March 30, 1996
Allowance for
doubtful accounts
receivable $ 94,728 $ 263,445 $ 123,166 $ 235,007
YEAR ENDED
April 1, 1995
Allowance for
doubtful accounts
receivable $ 241,736 $ 156,791 $ 303,799 $ 94,728
Reserve for excess
and obsolete
inventory $ 555,076 - $ 555,076 -
SHOPSMITH, INC.
INDEX TO EXHIBITS
Exhibit No. and Document
(3) Articles of Incorporation and By-laws
3.1 Amended Articles of Incorporation of Shopsmith, Inc., filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-8
(Reg. No. 33-26463). *
3.2 Amended Code of Regulations of Shopsmith, Inc., filed as Exhibit
4.2 to the Company's Registration Statement on Form S-8 (Reg.
No. 33-26463). *
(4) Instruments Defining the Rights of Security Holders, Including
Indentures
4.1 Loan and Security Agreement, dated as of September 1, 1989 among
Shopsmith, Inc., Shopsmith Woodworking Promotions, Inc.,
Shopsmith Canada Inc., and Huntington National Bank, including
the form of the Revolving Note issued in connection therewith.
Filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K
for the year ended March 31, 1990. *
4.2 First Amendment to Loan and Security Agreement, dated July 11,
1990 among Shopsmith, Inc., Shopsmith Woodworking Promotions,
Inc., Shopsmith Canada, Inc., Shopsmith Woodworking Centers Ltd.
Co., and Huntington National Bank, including the form of the
Revolving Note issued in connection therewith. Filed as Exhibit
4.2 to the Company's Annual Report on Form 10-K for the year
ended March 31, 1991. *
4.3 Second Amendment to Loan and Security Agreement, dated April 23,
1991 among Shopsmith, Inc., Shopsmith Woodworking Promotions,
Inc., Shopsmith Canada Inc., Shopsmith Woodworking Centers Ltd.
Co. and Huntington National Bank, including the form of the
Revolving Note issued in connection therewith. Filed as Exhibit
4.3 to the Company's Annual Report on Form 10-K for the year
ended March 31, 1991. *
4.4 Third Amendment to Loan and Security Agreement, dated June 21,
1993 among Shopsmith, Inc., Shopsmith Woodworking Promotions,
Inc., Shopsmith Canada Inc., Shopsmith Woodworking Centers Ltd.
Co., and Huntington National Bank, including the form of the
Revolving Note issued in connection therewith. Filed as exhibit
4.4 to the Company's Annual Report on Form 10-K for the year
ended April 3, 1993. *
4.5 Note Modification Agreement, dated as of June 21, 1993 among
Shopsmith, Inc., Shopsmith Woodworking Promotions, Inc.,
Shopsmith Canada Inc., Shopsmith Woodworking Centers Ltd. Co.
and the Huntington National Bank. Filed as exhibit 4.5 to the
Company's Annual Report on Form 10-K for the year ended April
3, 1993. *
4.6 Fourth Amendment to Loan and Security Agreement dated October
5, 1993 among Shopsmith, Inc., Shopsmith Woodworking
Promotions, Inc., Shopsmith Canada Inc., Shopsmith Woodworking
Centers Ltd. Co., and Huntington National Bank. Filed as
Exhibit 4.6 to the Company's Current Report on Form 8-K dated
November 1, 1993. *
4.7 Letter agreement dated April 26, 1994 between Huntington
National Bank and Shopsmith, Inc., Shopsmith Woodworking
Promotions, Inc., Shopsmith Canada Inc., and Shopsmith
Woodworking Centers Ltd. Co. Filed as exhibit 4.9 to the
Company's Annual Report on Form 10-K for the year ended April
2, 1994. *
4.8 Fifth Amendment to Loan and Security Agreement dated June 30,
1995 between Huntington National Bank and Shopsmith, Inc.
Filed as exhibit 4.12 to the Company's quarterly report on Form
10-Q for the quarter ended July 1, 1995. *
4.9 Sixth Amendment to Loan and Security Agreement dated July 1,
1996 between Huntington National Bank and Shopsmith, Inc.
Filed as exhibit 4.12 to the Company's quarterly report on Form
10-Q for the quarter ended September 28, 1996. *
(10) Material Contracts
Management Contracts and Compensatory Plans or Arrangements
10.1 Plan for Providing Tax Return Preparation for Chief Executive
Officer, as adopted by the Company's Board of Directors on
February 14, 1985. Filed as exhibit 10.3 to the Company's
Annual Report on Form 10-K for the year ended April 3, 1993. *
10.2 1984 Stock Option Plan, as amended on February 9, 1987 and
June 11, 1992. Filed as exhibit 10.8 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1991. *
10.3 Shopsmith, Inc. 1988 Director Option Plan, effective September
1, 1988, as amended on July 29, 1989, June 11, 1992 and July
31, 1996. **
10.4 Disability Plan for Executive Officers, as adopted by the
Company's Board of Directors on November 5, 1991. Filed as
Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year ended March 31, 1992. *
10.5 Nonstatutory Stock Option granted by the Company on June 21,
1993 to John R. Folkerth for the purchase, for a period of 10
years from the date of grant of 20,000 Common Shares of the
Company at a purchase price of $3.00 per share. Filed as
Exhibit 10.7.1 to the Company's Annual Report on Form 10-K for
the year ended April 2, 1994. *
10.6 Incentive compensation plan in effect for the fiscal year ended
April 1, 1995 (A substantially identical plan was adopted for
the fiscal years to end March 30, 1996, April 5, 1997 and April
4, 1998.). Filed as Exhibit 10.7.2 to the Company's Annual
Report on Form 10-K for the year ended April 1, 1995. *
10.7 1995 Stock Option Plan. Filed as exhibit 4.3 to the Company's
Registration Statement on Form S-8 (Reg. No. 33-64663). *
10.8 Amendment to Shopsmith, Inc. 1984 Stock Option Plan dated
November 5, 1996. **
10.9 Amendment to Shopsmith, Inc. 1995 Stock Option Plan dated
November 5, 1996. **
Other Material Contracts
10.10 Agreement of Lease, dated August 15, 1987 between Angeles
Partners XIV and the Company relating to 6530 Poe Avenue,
Dayton, Ohio property, as amended on September 28, 1990. Filed
as Exhibit 10.2 to the Company's Annual Report on Form 10-K for
the year ended March 31 1991. *
10.11 Shopsmith Inc. Savings Plan, effective April 1, 1997. Filed as
exhibit 10.11 to the Company's annual report on Form 10-K for
the year ended April 5, 1997. **
(11) Statement Re Computation of Per Share Earnings
11.1 Computation of Consolidated Earnings Per Common Share for the
Three Years Ended April 5, 1997, March 30, 1996 and April 1,
1995. **
(13) Annual Report to Security Holders
13.1 Shopsmith, Inc. Annual Report to Shareholders for the year ended
April 5, 1997. Only such portions of the Annual Report as are
specifically incorporated by reference under Parts I, II, and
IV of this Report shall be deemed filed as part of this Report.
**
(21) Subsidiaries of the Registrant
21.1 Subsidiaries of the Registrant. **
(23) Consents of Experts and Counsel
23.1 Consent of Crowe, Chizek and Company L.L.P. Independent Public
Accountants to incorporation by reference. **
(27) Financial Data Schedule
27.1 Financial Data Schedule **
(99) Additional Exhibits
99.1 Shopsmith, Inc. Employee Stock Purchase Plan. Filed as Exhibit
99.1 to the Company's Current Report on Form 8-K dated August
26, 1993. *
99.2 Creditor's Composition Agreement and Disclosure Document dated
May 19, 1994 and approved in June 1994. Filed as exhibit 99.2
to the Company's Annual Report on Form 10-K for the year ended
April 1, 1995 *
* Previously filed
** Filed herewith
SHOPSMITH, INC. EXHIBIT 10.3
1988 DIRECTOR OPTION PLAN
(As Amended July 31, 1996)
PART 1. PLAN ADMINISTRATION AND ELIGIBILITY
I. PURPOSE
The purpose of the 1988 Director Option Plan (the "Plan") of Shopsmith,
Inc. (the "Company") is to encourage ownership in the Company by outside
directors of the Company whose continued services are considered important to
the Company's progress and thus to provide them with a further incentive to
continue as directors of the Company.
II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors of the Company. All questions of interpretation of the
Plan or of any options issued under it shall be determined by the Committee
and such determination shall be final and binding upon all persons having an
interest in the Plan.
III. PARTICIPATION IN THE PLAN
All directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
IV. SHARES SUBJECT TO THE PLAN
A. CLASS. The shares that are to be made the subject of awards granted
under the Plan shall be the Company's authorized but unissued Common Shares or
treasury Common Shares ("Common Shares" or "Shares"). In connection with the
issuance of Common Shares under the Plan, the Company may repurchase Shares in
the open market or otherwise.
B. AGGREGATE AMOUNT.
(1) The total number of Shares issuable under the Plan shall not
exceed 52,500 Shares (subject to adjustment under Section XII).
(2) If any outstanding Option under the Plan expires or is
terminated for any reason, then the Common Shares allocable to the unexercised
Option shall not be charged against the limitation of Section IV(B)(1) and may
again become the subject of an Option granted under the Plan.
PART 2. OPTIONS
V. NON-STATUTORY STOCK OPTIONS
All Options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended to date and as may be amended from time to time.
VI. TERMS, CONDITIONS AND FORM OF OPTIONS
Each Option granted under this Plan shall be evidenced by a written
agreement in such form as the Committee shall from time to time approve, which
agreements shall comply with and be subject to the following terms and
conditions:
A. OPTION GRANT DATES. Options shall be granted automatically on
January 2 (or if January 2 is not a business day, on the next succeeding
business day) of the year to any eligible director who, on or prior to June 30
of the year preceding the grant date, files with the Committee or its
designate an irrevocable election to receive an Option in lieu of retainer
fees to be earned in the following year beginning January 1 and ending
December 31 ("Plan Year").
B. OPTION FORMULA. The number of Option Shares granted to any eligible
director shall be equal to the nearest number of whole Shares determined as of
the date of grant in accordance with the following formula:
Annual Retainer Number
----------------------------- = of
Fair Market Value minus $1.00 Shares
"Annual Retainer" shall mean the amount that the director will be entitled to
receive for serving as a director in the relevant Plan Year, but shall not
include fees associated with service on any committee of the Board of
Directors nor with any other services to be provided to the Company. "Fair
Market Value" shall mean the fair market value of a Common Share and shall
equal the mean between the closing bid and asked prices on the date such value
is being determined (or, if there are not quotations on such date, the last
preceding date on which there were quotations).
C. OPTIONS NON-TRANSFERABLE. Each Option granted under the Plan by
its terms shall not be transferable by the director otherwise than by will, by
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order (as hereinafter defined) and shall be exercised during the
lifetime of the director only by him or his transferee under a Qualified
Domestic Relations Order. As used herein, Qualified Domestic Relations Order
shall mean a qualified domestic relations order as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. Except as otherwise provided herein, no
Option or interest therein may be transferred, assigned, pledged or
hypothecated by the director during his lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.
D. PERIOD OF OPTION. Options become exercisable on the first
anniversary of the date upon which they were granted; provided, however, that
any Option granted pursuant to the Plan shall become exercisable in full upon
the death of the director or retirement because of age in accordance with
Company policy or retirement because of total and permanent disability.
Options shall terminate upon the expiration of ten years from the date upon
which such Options were granted (subject to prior termination as hereinafter
provided).
E. EXERCISE OF OPTIONS. Options may be exercised (in full or in part)
only by written notice to the Company at its principal office accompanied by
payment, in cash, of the full consideration for the Shares as to which they
are exercised.
F. TERMINATION OF OPTIONS. All rights of a director or his transferee
under a Qualified Domestic Relations Order in any Option that is currently
exercisable shall expire three months after the date of the director's
termination as a director for any reason including the removal, resignation or
retirement of the director; provided, however, that in the event of death of
the director, the provisions of the following paragraph shall govern. In the
event a director ceases to be a director for any reason other than the death
of the director or retirement because of age in accordance with Company policy
or retirement because of total and permanent disability, all rights of the
director or his transferee under a Qualified Domestic Relations Order in any
Option that is not currently exercisable shall expire to the extent that any
portion of such Option is attributable to a portion of the director's Annual
Retainer that was not earned due to termination.
G. DEATH OF DIRECTOR. Any Option granted to the director under the
Plan and outstanding on the date of his death may be exercised by the personal
representative of the director's estate or by the person or persons to whom
the Option is transferred pursuant to the director's will, in accordance with
the laws of descent and distribution or pursuant to a Qualified Domestic
Relations Order, at any time prior to the specified expiration date of such
Option or the first anniversary of the director's death, whichever is the
first to occur. Upon the occurrence of the earlier event, the Option shall
then terminate.
H. CANCELLATION OF OPTIONS. In the event any Acquisition Transaction
(as hereinafter defined) is authorized or approved by either the Board or the
shareholders of the Company, the Committee shall have the authority in its
sole discretion to cancel, effective upon not less than 30 days' notice, any
Option granted under the Plan. Promptly after such cancellation, the Company
shall pay in cash to the holder of each canceled Option an amount equal to the
excess of the aggregate Fair Market Value on the effective date of such
cancellation of the Shares then subject to the Option (whether or not the
Option is then fully exercisable) over the aggregate Option price of such
Shares. As used herein, "Acquisition Transaction" means (1) any sale or
disposition of a majority of the assets of the Company, (2) any merger or
consolidation to which the Company is a party and in which either the Company
is not the surviving corporation or the Shares are reclassified or
recapitalized, (3) any sale or other disposition, in a single transaction or a
series of related transactions, of 90% or more of the outstanding shares of
the Company, or (4) the liquidation of the Company.
VII. OPTION PRICE
The Option price per share for the Shares covered by each Option shall be
$1.00.
PART 3. GENERAL PROVISIONS
VIII. PAYMENT OF BROKERAGE FEES
Upon the request of a director, the Company shall pay all brokerage fees
associated with the director's sale of Shares that were acquired upon the
exercise of an Option.
IX. ASSIGNABILITY
The rights and benefits under this Plan shall not be assignable or
transferable by the director other than by will, by the laws of descent and
distribution or pursuant to a Qualified Domestic Relations Order, and during
the lifetime of the director Options granted under the Plan shall be
exercisable only by him or his transferee under a Qualified Domestic Relations
Order.
X. TIME FOR GRANTING OPTIONS
No Options may be granted under this Plan after September 1, 1998 (or if
September 1, 1998 is not a business day, after the next succeeding business
day).
XI. LIMITATION OF RIGHTS
A. NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an Option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Company will retain a director for any period of time, or at
any particular rate of compensation.
B. NO SHAREHOLDERS' RIGHTS FOR OPTIONS. A director shall have no
rights as a shareholder with respect to the Shares covered by his Options
until the date of the issuance to him of a share certificate therefor, and no
adjustment will be made for dividends or other rights for which the record
date is prior to the date such certificate is issued.
XII. ADJUSTMENTS TO SHARE
In the event any change is made to the Common Shares subject to the Plan
or subject to any outstanding award granted under the Plan (whether by reason
of merger, consolidation, reorganization, recapitalization, stock dividend,
stock split, combination of shares, exchange of shares, change in corporate
structure or otherwise), then appropriate adjustments shall be made to the
maximum number of Shares subject to the Plan and the number of Shares and
price per Share subject to outstanding Options.
XIII. EFFECTIVE DATE OF THE PLAN
The Plan shall take effect ten days after the date of adoption by the
shareholders of the Company.
XIV. AMENDMENT OF THE PLAN
The Board of Directors of the Company may suspend or discontinue the Plan
or revise or amend it in any respect whatsoever; provided, however, that
without approval of the shareholders no revision or amendment shall change the
number of Shares subject to the Plan (except as provided in Section XII),
change the designation of the class of directors eligible to receive Options,
materially increase the benefits accruing to participants under the Plan or
alter or impair any rights or obligations of any Option previously granted
without the consent of the director holding such Option.
XV. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Ohio and construed accordingly.
1988 DIRECTOR OPTION PLAN
AMENDMENT TO EXHIBIT 10.8
SHOPSMITH, INC.
1984 STOCK OPTION PLAN
The undersigned, J. Michael Herr, Secretary of Shopsmith, Inc., an
Ohio corporation (the "Company"), hereby certifies that the following are the
amendments made to the Company's 1984 Stock Option Plan (the "Plan"), as
authorized by the Board of Directors of the Company on November 5, 1996:
1. The following definitions are added to Section 2 of the Plan:
(l) "Family Members" means children, stepchildren, grandchildren,
parents, stepparents, grandparents, spouse, siblings (including
half-brothers and -sisters), nephews, nieces and in-laws.
(m) "Grantee" means the person who received the option and any
related Stock Appreciation Right from the Company.
(n) "Holder" means the person(s) or entity who owns the option and
any related Stock Appreciation Right, whether the Grantee, Transferee,
heir or other beneficiary.
(o) "Transferee" means the person who received the option and any
related Stock Appreciation Right from the Grantee during the Grantee's
lifetime in accordance with the Plan.
2. The first paragraph of Section 4 of the Plan is amended in its
entirety to read as follows:
"The Plan shall be administered by a Committee of the Board."
3. The references in Section 6(b) to the "optionee" are amended to
be references to the "Grantee."
4. The first sentence of Section 7 is amended in its entirety to
read as follows:
"An option granted under the Plan may be exercised by the Holder
giving written notice of exercise to the Committee or to an officer of
the Company designated by the Committee."
5. The word "optionee" in the fourth sentence of Section 7 is
deleted and replaced with the word "Holder."
6. The references in Section 8(a) to the "optionee" are amended to
be references to the "Holder." The last sentence of Section 8(a) is
deleted in its entirety.
7. Section 8(b) of the Plan is amended in its entirety to read as
follows:
"(b) Restriction on Exercise. A Stock Appreciation Right shall be
exercisable only at such times as the related option is exercisable (and
to the extent that the related option is then exercisable) and only at
such times that the Fair Market Value of a Share exceeds the Option Price
under the related option."
8. The references in Section 8(c) and Section 8(d) to the
"optionee" are amended to be references to the "Holder."
9. Section 9 of the Plan is amended in its entirety to read as
follows:
"Section 9. Transferability.
"(a) General Rule. Except as otherwise provided in this Section 9,
options and Stock Appreciation Rights may not be sold, pledged, assigned,
hypothecated or transferred other than by will or the laws of descent and
distribution upon the Holder's death, and may be exercised during the
lifetime of the Grantee only by such Grantee or by his guardian or legal
representative. All grants under the Plan, with the exception of
Incentive Stock Options and any Stock Appreciation Rights relating
thereto, may be transferred pursuant to a Qualified Domestic Relations
Order.
"(b) Permitted Transfers. Subject to this Section 9 and except as
the Committee may otherwise prescribe from time to time, the Committee
may act to permit the transfer or assignment of an option (together with
any related Stock Appreciation Right) by a Grantee for no consideration
to the Grantee's Family Members, trusts for the sole benefit of the
Grantee's Family Members or partnerships whose only partners are Family
Members of the Grantee; provided, however, that any such permitted
transfer or assignment shall not apply to an option that is an Incentive
Stock Option (but only if nontransferability is necessary in order for
the option to qualify as an Incentive Stock Option) and to any Stock
Appreciation Rights related to an Incentive Stock Option. Any permitted
transfer or assignment of an option and any Stock Appreciation Right
related thereto shall only be effective upon receipt by the Committee or
an officer of the Company designated by the Committee of an instrument
acceptable in form and substance to the Committee that effects the
transfer or assignment and that contains an agreement by the Transferee
to accept and comply with all the terms and conditions of the stock
option award and this Plan. A Transferee shall possess all the same
rights and obligations as the Grantee under the Plan, except that the
Transferee can subsequently transfer such option and any related Stock
Appreciation Rights only by (i) will or the laws of descent and
distribution, or (ii) a transfer to a beneficiary or partner if the
Transferee is a trust or partnership, respectively.
"Unless the Committee otherwise prescribes, upon the exercise of a
Nonstatutory Option or its related Stock Appreciation Rights by a
Transferee, when and as permitted in accordance with this Section 9, the
Grantee is required to satisfy the applicable withholding tax obligations
by paying cash to the Company with respect to any income recognized by
the Grantee upon the exercise of such option or Stock Appreciation Right
by the Transferee. If the Grantee does not satisfy the applicable
withholding tax obligations on the exercise date of the option or related
Stock Appreciation Right, the Company shall, in the case of the exercise
of an option, retain from the Shares to be issued to the Transferee upon
the exercise of the option a number of Shares having a Fair Market Value
on the exercise date equal to the mandatory withholding tax payable by
the Grantee or, in the case of the exercise of a Stock Appreciation
Right, deduct from the cash to be delivered to the Transferee such amount
as is equal to the mandatory withholding taxes payable by the Grantee."
IN WITNESS WHEREOF, the undersigned has executed this instrument as
of the 5th day of November, 1996.
______________________________
J. Michael Herr
Secretary
1984 Stock Option Plan Amendment
AMENDMENT TO EXHIBIT 10.9
SHOPSMITH, INC.
1995 STOCK OPTION PLAN
The undersigned, J. Michael Herr, Secretary of Shopsmith, Inc., an
Ohio corporation (the "Company"), hereby certifies that the following are the
amendments made to the Company's 1995 Stock Option Plan (the "Plan"), as
authorized by the Board of Directors of the Company on November 5, 1996:
1. The following definitions are added to Section 2 of the Plan:
(p) "Family Members" means children, stepchildren, grandchildren,
parents, stepparents, grandparents, spouse, siblings (including
half-brothers and -sisters), nephews, nieces and in-laws.
(q) "Grantee" means the person who received the option and any
related Stock Appreciation Right from the Company.
(r) "Holder" means the person(s) or entity who owns the option and
any related Stock Appreciation Right, whether the Grantee, Transferee,
heir or other beneficiary.
(s) "Transferee" means the person who received the option and any
related Stock Appreciation Right from the Grantee during the Grantee's
lifetime in accordance with the Plan.
2. The first paragraph of Section 4 of the Plan is amended in its
entirety to read as follows:
"The Plan shall be administered by a Committee of the Board."
3. The reference in Section 6(b)(4) to the "optionee" is amended to
be a reference to the "Grantee."
4. Section 6(b)(5) of the Plan is amended in its entirety to read
as follows:
"At the time an option is granted, or at such other time as the
Committee may determine, the Committee may provide that, if the Grantee
ceases to be employed by the Company for any reason (including retirement
or disability) other than death, the option will continue to be
exercisable by the Holder for such additional period (not to exceed the
remaining term of the option) after such termination of employment as the
Committee may provide."
5. Section 6(b)(6) of the Plan is amended in its entirety to read
as follows:
"At the time an option is granted, or at such other time as the
Committee may determine, the Committee may provide that, if the Grantee
dies while employed by the Company or while the Holder is entitled to the
benefits of any additional exercise period established by the Committee
with respect to Section 6(b)(5), then the option will continue to be
exercisable (to the extent it was exercisable on the date of death) by the
person or persons (including the Grantee's estate) to whom the Grantee's
rights with respect to such option have passed by will or by the laws of
descent and distribution or, if applicable, by any other Holder permitted
by Section 11, for such additional period after death (not to exceed the
remaining term of such option) as the Committee may provide."
6. Section 6(b)(7) of the Plan is amended by capitalizing the word
"holder."
7. Section 6(b)(10)(ii) of the Plan is amended in its entirety to
read as follows:
"(ii) if the amendment would adversely affect the rights of the
Holder, the consent of the Holder to such amendment must be obtained."
8. The first sentence of Section 8 is amended in its entirety to
read as follows:
"An option granted under the Plan may be exercised by the Holder
giving written notice of exercise to the Committee or to an officer of the
Company designated by the Committee."
9. The word "optionee" in the fourth sentence of Section 8 is
deleted and replaced with the word "Holder."
10. The references in Section 9 to "holder" or "holder of the
option" are amended to be references to the "Grantee."
11. The references in Section 10(a) to the "optionee" are amended
to be references to the "Holder." The last sentence of Section 10(a) is
deleted in its entirety.
12. Section 10(b) of the Plan is amended in its entirety to read as
follows:
"(b) Restriction on Exercise. A Stock Appreciation Right shall be
exercisable only at such times as the related option is exercisable (and
to the extent that the related option is then exercisable) and only at
such times that the Fair Market Value of a Share exceeds the Option Price
under the related option."
13. The references in Section 10(c) and Section 10(d) to the
"optionee" are amended to be references to the "Holder."
14. Section 11 of the Plan is amended in its entirety to read as
follows:
"Section 11. Transferability.
"(a) General Rule. Except as otherwise provided in this Section
11, options and Stock Appreciation Rights may not be sold, pledged,
assigned, hypothecated or transferred other than by will or the laws of
descent and distribution upon the Holder's death, and may be exercised
during the lifetime of the Grantee only by such Grantee or by his guardian
or legal representative. All grants under the Plan, with the exception of
Incentive Stock Options and any Stock Appreciation Rights relating
thereto, may be transferred pursuant to a Qualified Domestic Relations
Order.
"(b) Permitted Transfers. Subject to this Section 11 and except as
the Committee may otherwise prescribe from time to time, the Committee may
act to permit the transfer or assignment of an option (together with any
related Stock Appreciation Right) by a Grantee for no consideration to the
Grantee's Family Members, trusts for the sole benefit of the Grantee's
Family Members or partnerships whose only partners are Family Members of
the Grantee; provided, however, that any such permitted transfer or
assignment shall not apply to an option that is an Incentive Stock Option
(but only if nontransferability is necessary in order for the option to
qualify as an Incentive Stock Option) and to any Stock Appreciation Rights
related to an Incentive Stock Option. Any permitted transfer or
assignment of an option and any Stock Appreciation Right related thereto
shall only be effective upon receipt by the Committee or an officer of the
Company designated by the Committee of an instrument acceptable in form
and substance to the Committee that effects the transfer or assignment and
that contains an agreement by the Transferee to accept and comply with all
the terms and conditions of the stock option award and this Plan. A
Transferee shall possess all the same rights and obligations as the
Grantee under the Plan, except that the Transferee can subsequently
transfer such option and any related Stock Appreciation Rights only by (i)
will or the laws of descent and distribution, or (ii) a transfer to a
beneficiary or partner if the Transferee is a trust or partnership,
respectively.
"Unless the Committee otherwise prescribes, upon the exercise of a
Nonstatutory Option or its related Stock Appreciation Rights by a
Transferee, when and as permitted in accordance with this Section 11, the
Grantee is required to satisfy the applicable withholding tax obligations
by paying cash to the Company with respect to any income recognized by the
Grantee upon the exercise of such option or Stock Appreciation Right by
the Transferee. If the Grantee does not satisfy the applicable
withholding tax obligations on the exercise date of the option or related
Stock Appreciation Right, the Company shall, in the case of the exercise
of an option, retain from the Shares to be issued to the Transferee upon
the exercise of the option a number of Shares having a Fair Market Value
on the exercise date equal to the mandatory withholding tax payable by the
Grantee or, in the case of the exercise of a Stock Appreciation Right,
deduct from the cash to be delivered to the Transferee such amount as is
equal to the mandatory withholding taxes payable by the Grantee."
IN WITNESS WHEREOF, the undersigned has executed this instrument as
of the 5th day of November, 1996.
______________________________
J. Michael Herr
Secretary
1995 Stock Option Plan Amendment
EXHIBIT 10.11
TABLE OF CONTENTS
1. Adoption Agreement
2. Summary Plan Description
3. Basic Plan Document
4. IRS Determination Letter
5. Action of the Board of Directors
6. Funding Policy and Proprietary Funds Letter
7. Loan Policy
8. Service Agreement
9. Specimen Signatures
10. Notice to Interested Parties
03/24/95
Basic Plan Document # 05
Plan # 002
IRS Letter Serial No.: D363689a
PRISM (registered trademark) PROTOTYPE RETIREMENT PLAN & TRUST
401(k) Profit Sharing Plan
(Nonstandardized)
Adoption Agreement1
The Employer(2), designated below, hereby establishes a profit-sharing
plan (optionally including a cash or deferred arrangement (as defined in
401(k) of the Internal Revenue Code)) for all Eligible Employees as defined
in this Adoption Agreement pursuant to the terms of the PRISM(registered
trademark) Prototype Retirement Plan & Trust Basic Plan Document # 05.
A. Employer Information:
1. Name: Shopsmith Inc.
2. Address: 6530 Poe Avenue
3. Address: Dayton, Ohio 45414
4. Attention: Chuck Hofmann Telephone: (937) 898-6070
5. Employer Taxpayer Identification Number(3): 31-0811366
B. Basic Plan Provisions:
1. Plan Name (select one):
a. [ ] This plan is established effective ,
19 , (the "Effective Date") as a profit
sharing plan and trust (optionally with a
"cash or deferred arrangement" as defined in
Code 401(k)) to be known as Plan and
Trust (the "Plan") in the form of the PRISM
(registered trademark) Prototype Retirement
Plan & Trust.
- -----------
1 Footnotes in this Adoption Agreement are not to be construed as part of
the Plan provisions but are explanatory only. To the extent a footnote
is inconsistent with the provisions of the Basic Plan Document or
applicable law, the provisions of the Plan shall be construed in
conformity with the Basic Plan Document or law.
2 Terms that are capitalized are defined in the PRISM (registered
trademark) Prototype Retirement Plan & Trust Basic Plan Document.
3 The Plan will have an individual TIN, distinct from the Employer TIN.
b. [X] This plan is an amendment and restatement in the form of
the PRISM(registered trademark) Prototype Retirement Plan
& Trust, effective April 1, 1997, (the "Effective Date")
of the Shopsmith Inc. Savings Plan and Trust (the "Plan"),
originally effective as of April 1, 1984 (the "Original
Effective Date").
2. Employer's Three Digit Plan Number: 002
3. Committee Members(4):
John R. Folkerth Sr., Willam C. Becker, Chuck Hofmann
4. Definitions:
a. Compensation for allocation purposes:
i Will be determined over the following applicable period
(select only one):
(a) [ ] the Plan Year
(b) [X] the period of Plan participation during the
Plan Year
(c) [ ] a consecutive 12 month period commencing on
and ending with, or within, the Plan Year.
ii [X] If selected, Compensation will include Employer
contributions made pursuant to a Salary Reduction
Agreement, or other arrangement, which are not includible
in the gross income of the Employee under 125, 402(e)(3),
402(h)(1)(B) or 403(b) of the Internal Revenue Code.
iii Shall not include (select as many as desired):
(a) [ ] Bonuses
(b) [ ] Commissions
(c) [ ] Taxable fringe benefits identified below:
(d) [ ] Other items of remuneration identified below:
iv Shall be limited to $ , which shall be the maximum
amount of compensation considered for plan allocation
purposes (but not for testing purposes), and may not be
an amount in excess of the Internal Revenue Code
- ---------
4 Committee members direct the day to day operation of the Plan.
Committee members serve at the pleasure of the Employer. See 11.4 for
changes in Committee membership. If no Committee members are specified,
the Employer shall assume responsibility for the operations of the Plan.
401(a)(17) limit in effect for the Plan Year(5). If no
amount is specified, Compensation shall be limited to the
Internal Revenue Code 401(a)(17) amount, as adjusted by
the Secretary of the Treasury from time to time.
b. Early Retirement Date:
i [X] is not applicable to this Plan
ii [ ] is the latter of the date on which the Participant
attains age (not less than 55) and the date on
which the Participant completes Years of
Service.
c. Hour of Service shall be determined on the basis of the method
selected below. Only one method may be selected. The method
shall be applied to all Employees covered under the Plan as
follows (select only one):
i [X] On the basis of actual hours for which an
Employee is paid, or entitled to be paid.
ii [ ] On the basis of days worked. An Employee shall be
credited with ten (10) Hours of Service if under
1.1(U) of the Plan such Employee would be credited
with at least one (1) Hour of Service during the
day.
iii [ ] On the basis of weeks worked. An Employee shall
be credited with forty- five (45) Hours of
Service if under 1.1(U) of the Plan such Employee
would be credited with at least one (1) Hour of
Service during the week.
iv [ ] On the basis of semi-monthly payroll periods. An
Employee shall be credited with ninety-five (95)
Hours of Service if under 1.1(U) of the Plan
such Employee would be credited with at least one
(1) Hour of Service during the semi- monthly
payroll period.
v [ ] On the basis of months worked. An Employee shall
be credited with one hundred ninety (190) Hours
of Service if under 1.1(U) of the Plan such
Employee would be credited with at least one (1)
Hour of Service during the month.
d. Limitation Year shall mean the 12 month period
commencing on April 1 and ending on March 31.
- ----------
5 If no amount is specified, the maximum amount of Compensation allowed
under Code 401(a)(17)(the "$150,000 limit"("$200,000 limit" prior to the
Plan Year beginning before January 1, 1994)), as adjusted from time to
time, shall be used.
e. Normal Retirement Date for each Participant shall
mean (select one):
i [X] the date the Participant attains age: 60
(not to exceed 65)
ii [ ] the latter of the date the Participant attains
age (not to exceed 65) or the (not to
exceed 5th) anniversary of the participation
commencement date. If for the Plan Years
beginning before January 1, 1988, Normal
Retirement Date 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 be ginning 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.
Notwithstanding any other provisions of the
Plan, the participant commencement date is
the first day of the first Plan Year in which
the Participant commenced participation in
the Plan.
f. Permitted Disparity Level, for purposes of allocating Employer
Contributions, shall mean (select only one):
i [X] Not applicable - the Plan does not use permitted
disparity.
ii [ ] The Taxable Wage Base, which is the contribution
and benefit base under section 230 of the Social
Security Act at the beginning of the year.
iii [ ] % (not greater than 100%) of the Taxable Wage
Base as defined in B(4)(f)(ii) above.
iv [ ] $ , provided that the amount does not
exceed the Taxable Wage Base as defined in
B(4)(f)(ii) above.
g. Plan Year shall mean (select and complete only one of the
following):
i [X] the 12-consecutive month period which coincides
with the Limitation Year. The first Plan Year
shall be the period commencing on the Effective
Date and ending on the last day of the Limitation
Year.
ii [ ] the 12-consecutive month period commencing on
, 19 , and each annual anniversary thereof.
iii [ ] the calendar year (January 1 through December 31).
h. Qualified Distribution Date, for purposes of making
distributions under the provisions of a Qualified Domestic
Relations Order (as defined in Internal Revenue Code 414(p)),
shall shall not be the date the order is determined to be
qualified. If shall is selected, the Alternate Payee will be
entitled to an immediate distribution of benefits as directed by
the Qualified Domestic Relations Order. If shall not is
selected, the Alternate Payee may only take a distribution on
the earliest date that the Participant is entitled to a
distribution.
i. Spouse:
[ ] If selected, Spouse shall mean only that person who has
actually been the Participant's spouse for at least one
year.
j. Year of Service shall mean:
i For eligibility purposes (select one of the following):
(a) [X] the 12 consecutive months during which an
Employee is credited with 1000 (not more than 1000)
Hours of Service.
(b) [ ] a Period of Service (using the elapsed time method
of counting Service, as described in 1.1(N)(3) of
the Plan).
ii For allocation accrual purposes (select one of the
following):
(a) [X] the 12 consecutive months during which an Employee
is credited with 1000 (not more than 1000) Hours
of Service.
(b) [ ] a Period of Service (using the elapsed time
method of counting Service, as described in
1.1(N)(3) of the Plan).
iii For vesting service purposes (select one of the
following):
(a) [X] the 12 consecutive months during which an Employee
is credited with 1000 (not more than 1000) Hours
of Service.
(b) [ ] a Period of Service (using the elapsed time
method of counting Service, as described in
1.1(N)(3) of the Plan).
iv For purpose of computing Years of Service in plans where
Year of Service is defined in terms of Hours of Service),
the consecutive 12 month period shall be:
(a) For eligibility purposes, the first Year of Service
shall be computed using the 12 month period
commencing on the Employee's date of hire and ending
on the first annual anniversary of the Employee's
date of hire (the "Initial Computation Period"). In
the event an employee does not complete an
eligibility Year of Service during this initial
computation period, the computation period shall be
(select only one):
(1) [ ] the period commencing on each annual
anniversary of the Employee's date of hire and
ending on the next annual anniversary of the
Employee's date of hire.
(2) [X] the Plan Year, commencing with the Plan Year
in which the Initial Computation Period ends.
(b) For vesting purposes, Years of Service shall be
computed on the basis of:
(1) [ ] the period commencing on each annual
anniversary of the Employee's date of hire and
ending on the next annual anniversary of the
Employee's date of hire.
(2) [X] the Plan Year, commencing with the first Plan
Year an Employee completes an Hour of Service.
(c) For allocation accrual purposes, Year of Service shall
be computed on the basis of the Plan Year.
v [ ] For eligibility purposes, Years of Service with the
following Predecessor Employers shall count in fulfilling
the eligibility requirements for this Plan:
vi [ ] For vesting purposes, Years of Service with the
following Predecessor Employers shall count for
purposes of determining the nonforfeitable amount of a
Participant's account:
5. Coverage:
This Plan is extended by the Employer to the following Employees
who have met the eligibility requirements (select as many as
appropriate):
i [ ] All Employees
ii [ ] Salaried Employees
iii [ ] Sales Employees
iv [ ] Hourly Employees
v [ ] Leased Employees
vi [X] All Employees except (select as applicable):
(a) [X] those who are members of a unit of Employees covered
by a collective bargaining agreement between the
Employer and Employee representatives, if retirement
benefits were the subject of good faith bargaining and
if two percent or less of the Employees who are
covered pursuant to that agreement are professionals
as defined in Section 1.410(b)-9 of the Regulations.
For this purpose, the term "Employee representative"
does not include any organization more than half of
whose members are Employees who are owners, officers,
or executives of the Employer.
(b) [X] those who are nonresident aliens (within the meaning
of Internal Revenue Code 7701(b)(1)(B)) and who receive
no earned income (within the meaning of Internal
Revenue Code 911(d)(2)) from the Employer which
constitutes income from sources within the United
States (within the meaning of Internal Revenue Code
861(a)(3)).
vii [ ] Union Employees (who are members of the following
unions or union affiliates:
viii [ ] Other Employees, described as follows:
6. Eligibility:
An Employee covered by the Plan may become a Participant upon
completion of the following eligibility requirements:
a. Service(6):
i [ ] There shall be no minimum service requirement for an
Employee to become a Participant.
- ----------
6 If a fractional year is elected, the elapsed time method of computing
service shall be used fro the fractional year. Eligibility provisions
for optional cash or deferred arrangements are contained in Item C of
this Adoption Agreement.
ii [X] The Employee must complete 1 of Service (not more than
2 years) to be a Participant for purposes of receiving
allocations of Employer Profit Sharing Contributions.
b. Age:
i [ ] There shall be no minimum age requirement for an
Employee to become a Participant.
ii [X] The Employee must attain age 21 (not more than 21) to be
a Participant in the Plan.
c. Waiver of Age and Service Requirements:
i [X] Notwithstanding the provisions of Items B(6)(a) and (b),
Employees who have not satisfied the age and service
requirements, but would otherwise be eligible to
participate in the plan, shall be eligible to
participate on the Effective Date.
ii [ ] For new Plans, notwithstanding the provisions of
Items B(6)(a) and (b), Employees who have not satisfied
the age and service requirements, but would otherwise
be eligible to participate in the plan, shall be
eligible to participate on the Effective Date.
d. Entry Dates:
Upon completion of the eligibility requirements, an Employee
shall commence participation in the Plan (select only one):
i [ ] As soon as practicable under the payroll practices
utilized by the Employer, and consistently applied
to all Employees, or if earlier, the first day of the
Plan Year7.
ii [ ] As of the first day of the month following the
completion of the eligibility requirements.
iii[X] As of the earliest of the first day of the Plan Year,
fourth, seventh or tenth month of the Plan Year
next following completion of the eligibility requirements.
iv [ ] As of the earliest of the first day of the Plan Year or
seventh month of the Plan Year next following completion
of the eligibility requirements.
v [ ] As of the first day of the Plan Year next following
completion of the eligibility requirements (may only
be selected if the eligibility year of service
requirement is 6 months or less).
- ----------
7 Notwithstanding the foregoing, an Employee who has met the eligibility
requirements may not enter the Plan later than six months following the
date on which the Employee first completes the eligibility requirements.
7. Vesting:
a. The percentage of a Participant's Employer Contribution
Account (attributable to Employer Profit Sharing
Contributions) to be vested in him or her upon termination
of employment prior to attainment of the Plan's Normal
Retirement Date shall be(8):
Completed Years of Service
1 2 3 4 5 6 7
i [ ] 100%
ii [ ] 100%
iii [ ] 20% 40% 60% 80% 100%
iv [ ] 20% 40% 60% 80% 100%
v [ ] 10% 20% 30% 40% 60% 80% 100%
vi [X] 20% 40% 60% 80% 100%
vii [ ] 100%
vii [ ] Full and immediate vesting upon entry into the Plan(9)
Notwithstanding anything to the contrary in the Plan, the amount
inserted in the blanks above shall not exceed the limits
specified in Code 411(a)(2).
b. For purposes of computing a Participant's vested account
balance, Years of Service for vesting purposes [X] shall
[ ] shall not include Years of Service before the Employer
maintained this Plan or any predecessor plan, and [X] shall
[ ] shall not include Years of Service before the Employee
attained age 18.
c. Notwithstanding the provisions of this Item B(7)(c) of the
Adoption Agreement, a Participant shall become fully vested in
his Participant's Em ployer Contribution if:(10)
i [ ] the Participant's job is eliminated without the
Participant being offered a comparable position elsewhere
with the Employer.
ii [ ] for such reason as is described below:
- ----------
8 Notwithstanding the selection made in this Item B(7)(a), a Participant
shall be fully vested in his or her Employer Contribution Accounts if the
Participant dies or becomes Disabled while in the employ of the Employer.
9 If more than one Year of Service is an eligibility requirement, Item viii
must be selected
10 The provision of this section will be administered by the Employer on a
consistent and nondiscriminatory basis.
8. Employer Profit Sharing Contributions:
a. Contributions:
i [X] In its discretion, the Employer may contribute
Employer Profit Sharing Contributions to the Plan.
ii [ ] The Employer shall contribute Employer Profit Sharing
Contributions to the Plan in the amount of % of
the Compensation of all Eligible Participants under the
Plan.
iii [X] If selected, the Employer may make Employer Profit
Sharing Contributions without regard to current or
accumulated Net Profits of the Employer for the
taxable year ending with, or within the Plan Year.
iv [ ] If selected, the Employer may designate all or any
part of the Employer Profit Sharing Contributions as
Qualified Nonelective Contributions, provided, however,
that contributions so designated will be subject to the
same vesting, distribution, and withdrawal
restrictions as Before Tax Contributions(11).
b. Allocations:
Employer Profit Sharing Contributions shall be allocated to the
accounts of eligible Participants according to the following
selected allocation formula:
i [X] The Employer Profit Sharing Contributions shall be
allocated to each eligible Participant's account in
the ratio which the Participant's
Compensation bears to the Compensation of all
eligible Participants. Employer Profit Sharing Plan
Contributions, shall be allocated to the accounts of
Par ticipants who have completed a Year of Service12
(select one):
(a) [ ] as of the last day of the month preceding
the month in which the contribution
was made.
(b) [ ] as of the last day of the Plan quarter
preceding the quarter in which the
contribution was made.
(c) [X] as of the last day of the Plan Year.
- ----------
11 Amounts designated as Qualified Nonelective Contributions will be
allocated pursuant to 3.1(A)(14) of the Basic Plan Document.
12 In the event contributions are allocated on a basis other than a full
plan year, the Year of Service shall be based on the elapsed time
method of calculation, and a Participant shall be deemed to have
completed an appropriate Period of Service for allocation purposes
if Participant has completed a pro-rata Period of Service corresponding
to the interval on which contributions are allocated.
ii [ ] The Employer Profit Sharing Contributions shall be
allocated in accordance with the following formula:
(a) If the Plan is Top-Heavy, the contribution shall
be first credited to each eligible
Participant's Account in the ratio which
the Participant's Compensation bears to the
total Compensation of all eligible
Participants, up to 3% of each Participant's
Compensation.
(b) If the Plan is Top-Heavy, any Employer Profit
Sharing Contribution remaining after the
allocation in (a) above shall be credited to
each eligible Participant's account in the ratio
which the Participant's Excess Compensation(13)
bears to the total Excess Compensation of all
eligible Participants, up to 3% of each
eligible Participant's Excess Compensation.
(c) Any contributions remaining after the allocation
in (b) above shall be credited to each
eligible Participant's account in the ratio
which the sum of the Participant's to tal
Compensation and Excess Compensation bears to
the sum of the total Compensation and Excess
Compen sation of all eligible Participants, up
to an amount equal to the maximum Excess
Percentage times the sum of the Participant's
Compensation and Excess Compensation. If the Plan
is Top-Heavy, the maximum Excess
Percentage is % (insert percentage). If the
Plan is not Top-Heavy, the maximum Excess
Percentage is % (insert percentage, which shall
not exceed the prior Excess Percentage
limitation specified by more than 3).
Note: If the Permitted Disparity Level defined
at Item B(4)(f) is the Taxable Wage Base
(which is the contribution and benefit base
under section 230 of the Social Security Act at
the beginning of the year), then the maximum
Excess Percentage should be 2.7% if the Plan is
Top- Heavy and 5.7% if the Plan is not Top- Heavy.
If the Permitted Disparity Level defined at
Item B(4)(f) is greater than 80% but less than
100% of the Taxable Wage Base, then the
maximum Excess Percentage should be 2.4% if the
Plan is Top-Heavy and 5.4% if the Plan is not
Top-Heavy.
- ---------
13 Excess Compensation means a Participant's Compensation in excess of the
Permitted Disparity Level specified in the Definitions section of this
Adoption Agreement.
If the Permitted Disparity Level defined at
Item B(4)(f) is greater than the greater of
$10,000 or 20% of the Taxable Wage Base, but not
more than 80%, then the maximum Excess
Percentage should be 1.3% if the Plan is
Top-Heavy and 4.3% if the Plan is not Top-Heavy.
(d) Any remaining Employer Profit Sharing
Contribution shall be allocated among
eligible Partici pants' accounts in the ratio
which the Participant's Compensation bears to
the total Compensation of all Participants.
iii [X] If selected, and the Employer has elected to allocate
Employer Profit Sharing Plan Contributions as of
the last day of the Plan Year, a Participant must be
employed by the Employer on the last day of the Plan
Year in order to re ceive an allocation(14).
iv [X] A Participant who terminates before the end of the
period for which contributions are allocated shall
share in the allocation of Employer Profit Sharing
Contributions if termination of employment was the
result of (select all that apply):
(a) [X] retirement
(b) [X] disability
(c) [X] death
(d) [ ] other, as specified below:
9. Rollover & Transfer Contributions (select one):
a. [X] Subject to policies, applied in a consistent and
nondiscriminatory manner, adopted by the Committee, each
Employee, who would otherwise be eligible to participate
in the Plan except that such Employee has not yet met
the eligibility requirements, and each Participant
may make a Rollover Contribution as described in
Internal Revenue Code 402(a)(5), 403(a)(4) or 408(d)(3).
b. Subject to policies, applied in a consistent and
nondiscriminatory manner, adopted by the Committee,
each Participant may make a Rollover Contribution as
described in Internal Revenue Code 402(a)(5),
403(a)(4) or 408(d)(3).
c. No Employee shall make Rollover Contributions to the Plan.
10. Distributions:
- ----------
14 This option shall only be effective if Item 8(b)(i)(c) has been selected.
Even if this Item is selected, the provisions of 4.8 of the Basic Plan
Document may supersede this requirement if necessary to satisfy Code
Sections 401(a)(26) and 410(b).
a. Distributions Upon Separation from Service:
The Normal Form of Benefit under the Plan shall be a single lump
sum distribution, made [X] (if selected) as soon as
administratively practical after receipt of a distribution
request from a Participant entitled to a distribution or
[ ] (if selected) upon the Participant's attainment of the Plan's
Early Retirement Date or the Plan's Normal Retirement Date,
whichever is earlier.
In addition to the Normal Form of Benefit, the Participant
shall be entitled to select from among the following optional
forms of benefit specified by the employer (select as many as
apply):
i [ ] Installment payments
ii [X] Such other forms as may be specified below:
To the extent that a Participant's Account
is invested in Investment Funds, the assets of
which are distributable in- kind by the Trustee,
a Participant may elect to receive payment of
benefits in the form of an in-kind distribution
of assets held in an Investment Fund.
b. In-Service Distributions (select as may be appropriate):
i [ ] There shall be no in-service distribution of
Participant account bal ances derived from
Employer Profit Sharing Contributions.
ii [X] Participants may request an in- service
distribution of their account balance attributable
to Employer Profit Sharing Contributions, for the
following reasons:
(a) [X] For purposes of satisfying a financial
hardship, as deter mined in accordance
with the uniform nondiscriminatory
policy of the Committee;
(b) [X] Attainment of age 59 1/2 by the
Participant; or
(c) [X] Attainment of the Plan's Normal Retirement
Date by the Participant.
11. Forfeitures:
a. Forfeitures of amounts attributable to Employer Profit
Sharing Contributions shall be reallocated as of:
i [X] the last day of the Plan Year in which the
Forfeiture occurred.
ii [ ] the last day of the Plan Year following the
Plan Year in which the Forfeiture occurred.
iii [ ] the last day of the Plan Year in
which the Participant suffering the Forfeiture
has incurred five consecutive One Year Breaks in
Service.
b. Forfeitures of Employer Profit Sharing Contributions shall be
reallocated as follows:
i [ ] Not applicable as Employer Profit Sharing
Contributions are always 100% vested and
nonforfeitable.
ii [ ] Used first to pay the expenses of administering
the Plan, and then allocated pursuant to
one of the following two options15:
iii [ ] Forfeitures shall be allocated to Participant's
accounts in the same manner as Employer
Profit Sharing Contributions, Employer
Matching Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions,
in the discretion of the Employer, for the year in
which the Forfeiture arose.
iv [X] Forfeitures shall be applied to reduce the
Employer Profit Sharing Contributions, Employer
Matching Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions,
in the discretion of the Employer, for the
Plan Year following the Plan Year in which the
Forfeiture arose.
12. Limitations on Allocations:
If the Employer maintains or ever maintained another qualified
retirement plan in which any Participant in this Plan is (or was)
a participant, or could possibly become a participant, the
Employer must complete the following:
a. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer other
than a Master or Prototype Plan:
i [X] The provisions of this Plan shall apply as if the
other plan were a Master or Prototype plan; or,
ii [ ] The following provisions will be effective to
limit the total Annual Additions to the Maximum
Permissible Amount, and will properly reduce any
Excess Amounts, in a manner that precludes
Employer discretion:
- ----------
15 If this option is selected, iii or iv must be selected to reallocate
Forfeitures of Employer Profit Sharing Contributions remaining after
expenses of administering the plan have been paid.0
b. If the Participant is or ever has been a participant
in a qualified defined benefit plan maintained by the
Employer, the following provisions will be effective to
satisfy the 1.0 limitation of Internal Revenue Code 415(e),
in a manner that precludes Employer discretion:
13. Internal Revenue Code 411(d)(6) Protected Benefits:
[ ] If selected, the Plan has Internal Revenue Code
411(d)(6) Protected Benefits from a prior plan
that this Plan amends, that must be protected.
14. Top-Heavy Plan Provisions:
For each Plan Year in which the Plan is a Top-Heavy
Plan the following provisions will apply:
a. The percentage of a Participant's Employer Contribution
Account to be vested in him upon termination of
employment prior to retirement shall be:
i [ ] a percentage determined in accordance with the
following schedule:
Years of Service Percentage
Less than two 0
Two but less than three 20
Three but less than four 40
Four but less than five 60
Five but less than six 80
Six or more 100;
ii [ ] 100% vesting after (not to exceed 3) Years of
Service; provided, however, that Years of Service may
not exceed two (2) if the service requirement for
eli gibility exceeds 1 year; or
iii [ ] computed in accordance with the vesting schedule
selected by the Em ployer in Items B(7)(a) or
C(4)(d), as long as the benefits under the vesting
schedule in Items B(7)(a) or C(4)(d) vest at
least as rapidly as the two options specified in
this Item B(14)(a), above.
If the vesting schedule under the Plan shifts in or out of
the schedules above for any Plan Year because of the Plan's
Top-Heavy status, such shift is an amendment to the vesting
schedule and the election in 2.2 of the Basic Plan
Document applies.
b. For purposes of minimum Top-Heavy allocations,
contributions and forfeitures equal to 3 % (not less than
3%) of each Non-key Employee's Compensation will be
allocated to each Participant's Contribution Account when
the Plan is a Top-Heavy Plan, except as otherwise provided in
the Basic Plan Document.This Item 14 will not apply to any
Participant to the extent the Participant is covered under
any other plan or plans of the Employer and the Employer
completes the following: (Insert the name of the plan or
plans which will meet the minimum allocation or benefit
requirement applicable to Top-Heavy plans.)
c. The Valuation Date as of which account balances or accrued
benefits are valued for purposes of computing the
Top-Heavy Ratio shall be the last day of each Plan Year.
d. If the Employer maintains or has ever maintained one or more
defined benefit plans which have covered or could cover a
Participant in this Plan, complete the following:
Present Value: For purposes of establishing Present Value
to compute the Top-Heavy Ratio, any benefit shall be discounted
only for mortality and interest based on the following:
Interest rate % Mortality table
15. Investments:
a. Investments made pursuant to the investment direction
provisions of the Basic Plan Document shall be made into any
appropriate Investment Fund as selected by the Employer.
In addition, investment of Plan assets is expressly authorized,
as required by Revenue Ruling 81-100, in each of the following
common or collective funds sponsored by the Trustee, or an
affiliate of the Trustee(16):
KEY TRUST COMPANY EB MANAGED GUARANTEED INCOME CONTRACT FUND,
THE KEY TRUST COMPANY MULTIPLE INVESTMENT TRUST FOR EMPLOYEE
BENEFIT TRUSTS, AND OTHER COLLECTIVE TRUSTS EXEMPT FROM
TAX UNDER IRC 501 AND AS DESCRIBED IN REV. RUL. 81- 100.
b. [ ] If selected, an Employer Stock Fund shall be available as
an Investment Fund pursuant to the terms of the Basic Plan
Document.
[ ] If selected, and an Employer Stock Fund is available
as an Investment Fund, Participants will have the
right, notwithstanding any other provisions of the
Plan, to direct that a portion of the Plan assets held
for their benefit and invested in the Employer Stock
- ----------
16 This Item is for use in identifying collective trust funds, which,
pursuant to Revenue Ruling 81-100 must be specifically referenced in
the Plan. Actual Investment Funds are referenced on the Investment
Fund Designation form attached to this Adoption Agreement.
Fund be diversified pursuant to the provisions of 10.7(F)
of the Basic Plan Document.
c. Participants may make changes of existing account balances
and future contributions from among the Investment Funds
offered:
i [X] Once during each business day that the Trustee and
the New York Stock Exchange are open.
ii [ ] Once during each calendar month.
iii [ ] Once during each quarter of the Plan Year.
iv [ ] Once during each rolling day period.
d. [ ] If selected, the Participant shall be restricted in
making changes of existing account balances from any
Investment Fund, as specified in the terms or conditions
of such Investment Fund, and the Employer shall
attach an addendum specifying such restriction.
e. The Participant will designate into which Investment
Funds all contributions to their accounts are made,
except the following:
i [X] Employer Profit Sharing Contributions
ii [ ] Employer Mandatory Matching Contributions
iii [X] Employer Discretionary Matching Contributions
iv [X] Qualified Matching Contributions
v [X] Qualified Nonelective Contributions
f. [ ] If selected, and to the extent a selection is made above,
the Employer shall attach an Investment Direction
Addendum specifying how the contributions so specified
shall be invested among the Investment Fund.
g. [X] If selected, the Participant shall be restricted in
the use of the Employer Stock Fund as an Investment
Fund for designating the investment of contributions
in the Participant's account, as follows:
i [X] The Participant may not direct the investment of
Plan assets held in their account into the
Employer Stock Fund.
ii [ ] The Participant may direct % of the following
contributions into the Employer Stock Fund:
(a) [ ] Employer Profit Sharing Contributions
(b) [ ] Employer Mandatory Matching
Contributions
(c) [ ] Employer Discretionary Matching
Contributions
(d) [ ] Qualified Matching Contributions
(e) [ ] Qualified Nonelective Contributions
iii [ ] % of the following contributions
will be invested into the Employer Stock Fund,
with the balance invested among:
(a) [ ] the other Investment Funds,
including the Employer Stock Fund
(b) [ ] the other Investment Funds, not
including the Employer Stock Fund
16. Loans (select one):
a. [X] Loans may be made from the Plan in accordance with
the Basic Plan Document and such policies and procedures
as the Committee may adopt and apply on a consistent
and nondiscriminatory basis(17).
b. [ ] No loans shall be made from the Plan.
17. Trustee:
The Trustee of this Plan shall be Key Trust Company of Ohio, N.A.
(a bank or trust company affiliated with KeyCorp within the
meaning of Internal Revenue Code 1504).
18. Effective Date Addendum:
[ ] If selected, the following provisions shall
have the specified effective dates (which are
different from the date specified in Item
B(1)):
- ----------
17 If this option is selected, the Employer must establish appropriate
procedures for implementation of the Plan's loan program.
C. 401(k) Plan Provisions:
1. Service:
An Eligible Employee shall be required to fulfill the following
eligibility service requirements in order to participate in the
Plan through a salary reduction agreement and for purposes of
receiving an allocation of Employer Matching Contributions:
a. [X] The Employee must complete 1 of Service (not more
than 1 year) to be a Participant for purposes of
receiving allocations of Employer Matching Contributions.
b. [X] The Employee must complete 1 of Service (not more than
1 year) to be a Participant for purposes of entering
into a Salary Reduction Agreement and having Employee
Before Tax Contributions or Employee After Tax
Contributions contributed to the Plan on the Employee's
behalf.
2. Employee Salary Deferrals:
a. [X] Participants shall be entitled to enter into a Salary
Reduction Agreement providing for Before Tax
Contributions to be made to the Plan.
i The minimum Before Tax Contribution shall be 1 % of
the Participant's Compensation.
ii The maximum Before Tax Contribution shall be 15 % of
the Participant's Compensation.
b. [ ] Participants shall be entitled to enter into a Salary
Reduction Agreement providing for After Tax Contributions
to be made to the Plan.
i The minimum After Tax Contribution shall be %
of the Participant's Compensation.
ii The maximum After Tax Contribution shall be %
of the Participant's Compensation.
iii [ ] If selected, notwithstanding the above, a
Participant shall not be able to enter into
a Salary Reduction Agreement providing for After
Tax Contributions to be made to the Plan unless
the Participant has entered into a Salary
Reduction Agreement that provides for Before Tax
Contributions to be made to the Plan in an
amount of at least % of the
Participant's Compensation.
c. [ ] If selected, a Participant shall be entitled to
enter into a Salary Reduction Agreement providing that
any extraordinary item of compensation, not yet
payable (including bonuses), be withheld from the
Participant's Compensation and contributed to the Plan as
either a Before Tax Contribution, or After Tax
Contribution (provided such contributions are
authorized above, and to the extent that such
contribution, when aggregated with either the
Participants other Before Tax Contributions or After Tax
Contri butions do not exceed the limitations
specified above, on an annual basis).
3. Contribution Changes:
a. Participants may increase or decrease the amount
of contributions made to the Plan pursuant to a Salary
Reduction Agreement once each:
i [ ] Plan Year
ii [ ] Semi-annual period, based on the Plan Year
iii [X] Quarter, based on the Plan Year
iv [ ] Month
v [ ] Other, as specified below (provided that
it is at least once per year):
b. Claims for returns of Excess Before Tax
Contributions for the Participant's preceding taxable
year must be made in writing, and submitted to the
Committee by March 1 (specify a date between March 1 and April
15).(18)
4. Employer Matching Contributions(19):
a. Mandatory Matching Contributions:
The Employer shall make contributions to the Plan, in an amount
as specified below:
i [ ] An amount, equal to % of each Participant's
Before Tax Contributions, however, no match shall
be made on Participant's Before Tax Contributions
in excess of % (or $ ) of the Participant's
Compensation.
ii [ ] An amount, equal to % of each Participant's
After Tax Contributions, but not to exceed %
of the Par ticipant's Compensation, or $ .
iii [ ] An amount, equal to % of each Participant's
contributions made pursuant to a Salary Reduction
Agreement (including both Before Tax Contributions and
After Tax Contributions), but only if the Participant
has entered into a Salary Reduction Agreement
providing for Before Tax Contributions of at least %
of the Participant's Com pensation, but not to
exceed % of the Participant's Compensation, or $ .
iv [ ] An amount equal to the sum of the following:
(a) % of the first % of the
Participant's Compensation deferred pursuant
to a Salary Reduction Agreement; plus,
(b) % of the next % of the
Participant's Compensation deferred pursuant
to a Salary Reduction Agreement; plus,
(c) % of the next % of the
Participant's Compensation deferred pursuant
to a Salary Reduction Agreement, but not to
exceed % of the Participant's Compensation, or
$ .
v [ ] An amount equal to $ , for each Participant who
enters into a Salary Reduction Agreement providing
for Before Tax Contributions, After Tax
Contributions, or either Before Tax Contributions or
After Tax Contributions (or a combination of both)
equal to or exceeding % of the Participant's
Compensation. Such contributions shall be made and
allocated:
(a) [ ] only during the first Plan Year the Plan
is in effect, or if a restatement, for
the first Plan Year beginning with, or
containing the re statement Effective
Date.
(b) [ ] each Plan Year that a Participant has
in force a Salary Reduction Agreement
meeting the criteria specified above.
(c) [ ] during the first Plan Year that the
Participant participates through a Salary
Reduction Agreement meeting the criteria
specified above.
b. Discretionary Matching Contributions:
[X] The Employer shall make contributions to the Plan, in
an amount determined by resolution of the Board of
Directors on an annual basis. The Board resolution shall
provide for the percentage and/or amount of Before
Tax Contributions and/or After Tax Contributions to be
matched and the maximum percentage and/or amount of
Before Tax Contributions and/or After Tax Contributions
eligible for matching.
c. Allocation of Matching Contributions:
Employer Matching Contributions shall be allocated
pursuant to the terms of the Basic Plan Document,
notwithstanding the foregoing:
i [X] A Participant who terminates before the end of
the period for which contributions are allocated
shall share in the allocation of Employer Matching
Contributions if termination of employment was
the result of (select all that apply):
(a) [X] retirement
(b) [X] disability
(c) [X] death
(d) [ ] other, as specified below:
ii [X] Employer Matching Contributions shall be allocated
to the accounts of Participants (select one):
(a) [ ] as of each pay period for which a
contribution was made pursuant to a Salary
Reduction Agreement.
(b) [ ] semi-monthly.
(c) [ ] as of the last day of the month preceding
the month in which the contribution was
made.
(d) [ ] as of the last day of the Plan quarter
preceding the quarter in which the
contribution was made.
(e) [X] as of the last day of the Plan year.
iii [X] If selected, the Employer may make Employer Matching
Contributions without regard to current or
accumulated Net Profits of the Employer for the
taxable year ending with, or within the Plan
Year(20).
d. The percentage of a Participant's Employer Matching
Contribution Account(21) (attributable to Employer Matching
Contributions) to be vested in him or her upon termination of
employment prior to attainment of the Plan's Normal
Retirement Date shall be(22):
Completed Years of Service
1 2 3 4 5 6 7
i [ ] 100%
ii [ ] 100%
iii [ ] 20% 40% 60% 80% 100%
iv [ ] 20% 40% 60% 80% 100%
v [ ] 10% 20% 30% 40% 60% 80% 100%
vi [X] 20% 40% 60% 80% 100%
vii [ ] 100%
vii [ ] Full and immediate vesting upon entry into the Plan
Notwithstanding anything to the contrary in the Plan, the amount
inserted in the blanks above shall not exceed the limits specified
in Code 411(a)(2).
e. Notwithstanding the provisions of this Item C(4)(e) of
the Adoption Agreement, a Participant shall become fully vested
in his Participant's Employer Matching Contribution Account
if(23):
i [ ] the Participant's job is eliminated without the
Participant being offered a comparable position
elsewhere with the Employer.
ii [ ] for such reason as is described below:
- ----------
20 Net Profits will never be required for the contribution of Before Tax
Contributions, After Tax Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions.
21 Notwithstanding anything in the Adoption Agr