1
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 2, 1995
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 1-5560
ALPHA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SYLVAN ROAD, WOBURN, MASSACHUSETTS 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 935-5150
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
COMMON STOCK, $.25 PAR VALUE AMERICAN STOCK EXCHANGE
RIGHTS TO PURCHASE COMMON STOCK AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
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. /X/
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant at May 31, 1995 was approximately $98,514,000.
The number of shares of Common Stock outstanding at May 31, 1995 was
7,750,101.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement, to be filed within 120 days of
the end of the Registrant's fiscal year are incorporated by reference into Part
III of this Report.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
PART I
ITEM 1 BUSINESS
PRODUCTS
The Company's principal products are Monolithic and Discrete Semiconductor
Devices and Components and Ceramic Devices and Components. See table below:
CORE PRODUCTS AND TECHNOLOGIES
- ---------------------------------------------------------------------------------------------------------------------------
MONOLITHIC INTEGRATED
CIRCUITS & COMPONENTS MATERIALS & PROCESSING
-------------------------------------------------------------------------------
MARKETS MICROWAVE MILLIMETER-WAVE DISCRETE
MMICS MMICS CERAMICS SEMICONDUCTORS
- ---------------------------------------------------------------------------------------------------------------------------
Wireless Communications Control, Amplify, Transceiver- Dielectric Amplifiers
Cellular Base Attenuate, Cellular Resonators Detectors
Cellular Mobile Switch & Infrastructure Filters Limiters
Wireless Local Area Network Downconvert 18-60 GHz Antennas Mixers
Paging 900 MHz-5.0 GHz Short Links Circulator Elements Oscillators
Personal Communications Network Coaxial Multipliers
Personal Communications Services Inductors Switches
Specialized Mobile Radio Resonators
- ---------------------------------------------------------------------------------------------------------------------------
Commercial Oscillators Powders Amplifiers
Direct Broadcast Satellite/ Mixers Substrates Detectors
TV Receive Only Switches Dielectric Limiters
Global Positioning Satellite Amplifiers Resonators Mixers
Other Transceivers Filters Oscillators
20-40 GHz Antennas Multipliers
Coaxial Switches
Inductors
Resonators
- ---------------------------------------------------------------------------------------------------------------------------
Military Components Oscillators Ferrite Elements Amplifiers
Military Communications Switches Mixers Phase Shifters Detectors
Radar Warning/Jamming Mixers Amplifiers Circulators Limiters
Missile Guidance Subsystems Transceivers Isolators Mixers
5-20 GHz 20-60 GHz Powders Oscillators
Dielectric Multipliers
Materials Switches
- ---------------------------------------------------------------------------------------------------------------------------
Automotive Applications Radar Receiver Substrates Amplifiers
Collision Avoidance >20GHz & Transmitter 60, Detectors
Sensors 77 & 94 GHz Limiters
Mixers
Oscillators
Multipliers
Switches
- ---------------------------------------------------------------------------------------------------------------------------
The principal customers for these products are equipment manufacturers for
commercial and defense microwave systems such as cellular telephones,
commercial telecommunications, direct broadcast satellites, automotive
collision avoidance applications and military radar, missile, and electronic
warfare.
The Company's operations are within a single segment of the electronics
industry: the development, production and sale of microwave materials, devices
and components.
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MARKETS AND DISTRIBUTION
During fiscal 1995, approximately 71% of the Company's sales were to
manufacturers of commercial products, primarily in the wireless communications
markets and include components for products such as wireless telephones and base
stations in addition to motion detectors and sensors. The remaining 29% of
sales were for use in a wide variety of defense-related systems.
Export sales to non-affiliates for fiscal years ended 1995, 1994 and 1993 were
$16,855,000, $16,471,000, and $13,229,000, respectively. This compares with
domestic sales for the same period of $54,974,000, $47,337,000, and
$50,934,000, respectively. The Company operates sales subsidiaries in the
United Kingdom and Germany, and a ceramic manufacturing operation in France.
See Note 3 to the Financial Statements on page 17 for financial information
about the Company's foreign and domestic operations.
The Company currently has approximately 1,300 customers in 30 countries. Its
sales are made through 17 independent domestic sales representatives and 21
independent international sales representatives, as well as through its own
sales force of 26 persons. Approximately 17% of the Company's sales are made
through its own direct sales force and 83% through sales representatives.
RESEARCH AND DEVELOPMENT
Research and development efforts are undertaken by the Company both on a
Company or customer sponsored basis. For customer sponsored projects, the
customer may pay all or a portion of the expenses incurred. Some of the
customer sponsored contracts are contracts which are reimbursed by the
U.S. Government. The Company's products and markets are subject to
continued technological advances. Recognizing this, the Company has maintained
a high level of R&D activities to remain competitive in certain areas and to be
an industry leader in other areas.
R&D expenditures for the last three fiscal years are detailed below (in
thousands):
1995 1994 1993
- ---------------------------------------------------------------------------
Company sponsored..................... $ 4,154 $ 3,429 $ 2,915
Customer sponsored.................... 7,583 9,439 10,982
Other*................................ 695 919 738
------- ------- -------
Total R & D Expenditures...... $12,432 $13,787 $14,635
======= ======= =======
* Non-reimbursed costs incurred by the Company on customer sponsored contracts.
RAW MATERIALS
Raw materials for the Company's products and manufacturing processes are
generally available from several sources. It is the Company's policy not to
depend on a sole source of supply.
WORKING CAPITAL
The business of the Company is not seasonal, and there are no special practices
with respect to working capital for the Company or the industry in general. The
Company provides a limited warranty on its products against defects in material
and workmanship. Payment terms are 30 days in the domestic market and generally
60 days in foreign markets.
CONTRACTS
During fiscal 1995, no one customer accounted for 10% or more of the Company's
total sales. All of the Company's sales to the United States Government and
prime contractors and subcontractors thereof are subject
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
to termination at the convenience of the Government, in which event the Company
would normally be reimbursed for costs incurred. While U.S. Government orders
are canceled in this manner, Alpha has seldom experienced any material
terminations for convenience.
COMPETITIVE CONDITIONS
All of the Company's products are subject to substantial competition. The
principal competitive factors affecting the Company's business are product
performance, price, applications support and adherence to delivery schedules.
The Company faces competition from divisions of larger, more diversified
organizations in the electronics industry with substantially greater assets and
access to larger financial resources, as well as from many smaller specialized
companies. Some of Alpha's customers could elect to develop and manufacture
internally the products they purchase from Alpha.
PATENT AND TRADEMARKS
Alpha owns a small number of patents and has other patent applications under
preparation or pending. However, the Company believes that its technological
position depends primarily on the ability to develop new innovative products
through the technical competence of its engineering personnel.
BACKLOG
The Company's backlog of undelivered orders on April 2, 1995 was approximately
$30,200,000 compared with $23,500,000 on April 3, 1994. The Company's policy is
to record commercial orders on a quarterly basis consistent with expected
customer short-term requirements. Management believes all orders in the
Company's backlog to be firm. Approximately 90% of the April 2, 1995 backlog is
anticipated to be shipped in fiscal year 1996.
ENVIRONMENTAL REGULATIONS
In the Company's opinion, compliance with federal, state, and local
environmental protection regulations does not and will not have a material
effect on the capital expenditures, earnings, and competitive position of the
Company.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company at May 31, 1995.
NAME AGE POSITION
George S. Kariotis 72 Chairman of the Board of Directors
Martin J. Reid 53 Director, President and Chief Executive Officer
David J. Aldrich 38 Vice President, Chief Financial Officer and Treasurer
Robert E. Goldwasser 50 Senior Vice President
P. Daniel Gallagher 51 Vice President
Thomas C. Leonard 60 Vice President
Joseph J. Alberici 39 Vice President, President of Trans-Tech, Inc.
Paul E. Vincent 47 Controller
All officers serve until the next Board of Directors meeting following the
Annual Stockholders Meeting scheduled for September 11, 1995, or until their
successors are elected and qualified. No officer was elected pursuant to any
arrangement or understanding.
Since the founding of the Company in 1962 through 1978, George S. Kariotis was
Chairman of the Board and Chief Executive Officer and, from January 1974 to
September 1978, he was Treasurer of the Company. From
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January 1979 to January 1983, Mr. Kariotis was the Secretary of Manpower
Development and Economic Affairs for the Commonwealth of Massachusetts. He was
re-elected Chairman of the Board in January 1983 and Chief Executive Officer in
May 1985. Mr. Kariotis resigned as Chief Executive Officer on July 24, 1986
while he campaigned for public office. He resumed his position as Chief
Executive Officer as of November 5, 1986 until May 15, 1991.
Martin J. Reid joined the Company in 1969 as an engineering group leader. In
1971 he became Division Manager of the Solid State Division. Mr. Reid was
appointed to the office of Vice President of the Company in 1975, became Senior
Vice President in 1981, was elected President and Chief Operating Officer in May
1985 and became a director in September 1985. Mr. Reid was acting Chief
Executive Officer from July 1986 to November 1986. He was elected Chief
Executive Officer May 15, 1991.
David J. Aldrich joined the Company in 1995 as Vice President, Chief Financial
Officer and Treasurer. Mr. Aldrich has held several positions at M/A-COM, Inc.
beginning in 1989 until January, 1995 including Manager Integrated Circuits
Active Products, Corporate Vice President Strategic Planning, Director of
Finance and Administration, Director of Strategic Initiatives with the
Microelectronics Division. Prior to joining M/A-COM, Inc. in 1989 Mr. Aldrich
was Controller with Adams Russell Electronics Company and a project leader for a
NASA satellite communications program with Space Communications Company (a
Fairchild Industries and Contel Inc. Partnership).
Robert E. Goldwasser was elected a Vice President in 1983 and Senior Vice
President in 1989. Dr. Goldwasser served from 1982 to 1989 as President of
Central Microwave Company, then a subsidiary of the Company. Prior to 1982, he
was Vice President of Engineering for Central Microwave Company and a professor
at Washington University, St. Louis, Missouri. Other senior technical staff
assignments held by Dr. Goldwasser included positions with Varian Associates,
M/A-COM, Inc. and Monsanto Corporation.
P. Daniel Gallagher joined the Company in March, 1989 as Director of Device
Operations of Alpha's Devices Group and was elected Vice President September 10,
1990. Previously he held a series of engineering and marketing positions at
M/A-COM, Inc. beginning with his initial assignment as a semiconductor engineer
in 1968. He was appointed a Vice President of M/A-COM, Inc., in 1980 and in his
last assignment he was the Vice President-General Manager of the M/A-COM, Inc.
Lowell Semiconductor Operation. Mr. Gallagher began his career in 1966 with ITT
UK as a semiconductor process engineer.
Thomas C. Leonard joined the Company in January, 1992 as General Manager of the
Components and Systems Division. He became the General Manager of Operations
for the Alpha Microwave Division effective January, 1994 and was elected a Vice
President July 14, 1994. Mr. Leonard has over 30 years experience in the
microwave industry having held a series of general managerial and marketing
positions at M/A-COM, Inc., from 1972 to 1992 and prior to 1972 at Varian
Associates and Sylvania.
Joseph J. Alberici joined Trans-Tech, Inc., a subsidiary of the Company, in 1987
and has held several positions with Trans-Tech, Inc., including Vice President
of Marketing and New Products, Executive Vice President and Chief Operating
Officer. He has been President of Trans-Tech, Inc. since 1992 and was elected
Vice President of the Company April 28, 1994. Prior to 1987, Mr. Alberici was
Plant Manager of the Microwave Products Division for MuRata Erie NA. In
addition, Mr. Alberici held several engineering positions with Lambda
Electronics and American Technical Ceramics.
Paul E. Vincent has held his position as Controller since he joined the Company
in 1979.
EMPLOYEES
As of April 2, 1995, the Company and its subsidiaries employed approximately 830
persons, compared with 750 as of April 3, 1994.
ITEM 2 PROPERTIES
The following information describes the major facilities owned and leased by the
Company. In the fourth quarter of fiscal 1994, the Company decided to
consolidate its semiconductor and component businesses at
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
one facility in Woburn, Massachusetts and to sell its Methuen facility. The
Company believes it has adequate productive capacity in the Woburn facility to
meet the semiconductor and component business needs for the next 12 to 18
months. However with increasing demand for its ceramics products manufactured
primarily at its Trans-Tech facility in Adamstown, Maryland, additional
productive capacity for these products may be required within the next 12 to 18
months. As described in Note 5 to the consolidated financial statements on
pages 18 through 20 several properties secure debt of the Company.
a. The Company owns a modern 158,000 square foot plant plus eight acres of
land at 20 Sylvan Road, Woburn, Massachusetts. As a result of the
consolidation, this plant is occupied by the semiconductor and
component manufacturing operations and corporate headquarters. In
addition, all semiconductor and component development activities are
conducted at this facility.
b. The Company owns a 92,000 square foot facility in Adamstown, Maryland.
This plant is occupied by the Company's wholly owned subsidiary,
Trans-Tech, Inc.
c. The Company leases a 7,200 square foot facility in Marly, France. This
plant is occupied by the Company's wholly owned subsidiary, Trans-Tech
Europe SARL.
d. The Company leases an 8,700 square foot facility in Frederick, Maryland
until May 31, 1995. Due to increased demand for ceramic filters the
Company began leasing a 21,000 square foot facility in Frederick,
Maryland in November 1994. These plants are used by the Company's
wholly owned subsidiary, Trans-Tech, Inc. to manufacture ceramic
filters.
e. The Company leases a 3,600 square foot facility in Milpitas,
California. This facility is occupied by Western Trans-Tech, a division
of Trans-Tech, Inc.
f. The Company owns an 85,000 square foot facility on 17 acres of land in
Methuen, Massachusetts. Formerly occupied by the Components Division,
this property is being held for resale.
ITEM 3 LEGAL PROCEEDINGS
The Company does not have any material pending legal proceedings other than
routine litigation incidental to its business.
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the following two sites: the Spectron, Inc.
Superfund site in Elkton, Maryland; and the Seaboard Chemical Corporation site
in Jamestown, North Carolina. In each case several hundred other companies have
also been notified about their potential liability regarding these sites. The
Company continues to deny that it has any responsibility with respect to these
sites other than as a de minimis party. Management is of the opinion that the
outcome of the aforementioned environmental matters will not have a material
effect on the Company's operations.
See also Note 11 to the Financial Statements on page 26.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fiscal
quarter ended April 2, 1995.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
See the section entitled "Quarterly Financial Data" appearing on page 15 for
information regarding Common Stock market prices. Dividends have not been paid
in either of the past two fiscal years. See Note 5 of the "Notes to Consolidated
Financial Statements" appearing on pages 18 through 20 for information
regarding dividend restrictions.
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ITEM 6 SELECTED FINANCIAL DATA
FIVE YEAR FINANCIAL SUMMARY
(In thousands, except per share amounts and financial ratios)
FISCAL YEAR
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Sales ............................... $ 78,254 $ 70,147 $ 69,543 $ 71,032 $ 66,344
Income (loss) before
extraordinary item ................. 2,847 (11,466) (2,987) 113 1,306
Extraordinary item-utilization of
net operating loss carryforward.... -- -- -- 9 504
Net income (loss) ................... 2,847 (11,466) (2,987) 122 1,810
Per share data
Income (loss) before
extraordinary item ............... .36 (1.53) (.40) .02 .18
Extraordinary item ................. -- -- -- -- .07
Net income (loss) .................. $ .36 $ (1.53) $ (.40) $ .02 $ .25
Weighted average common
shares ............................ 7,882 7,502 7,464 7,429 7,246
FINANCIAL RATIOS
Return (based on net
income-net loss)
On sales ........................... 3.6% (16.3%) (4.3%) 0.2% 2.7%
On average assets .................. 6.0% (23.4%) (5.6%) 0.2% 3.1%
On average equity .................. 11.0% (38.3%) (8.1%) 0.3% 4.9%
Current Ratio ....................... 1.68 1.64 2.26 2.90 2.11
Debt to Equity ...................... 17.1% 19.9% 11.8% 13.1% 14.0%
FINANCIAL POSITION
Working Capital ..................... $ 10,983 $ 8,981 $ 15,767 $ 17,800 $ 14,454
Additions to property, plant
and equipment ...................... 5,248 2,939 4,112 1,274 2,179
Total assets ........................ 50,167 44,430 53,777 53,211 57,071
Long-term debt ...................... 4,744 4,826 4,191 5,030 5,349
Long-term capital lease
obligations ........................ 754 892 1,032 -- --
Stockholders' equity ................ 27,674 24,261 35,565 38,456 38,233
OTHER STATISTICS
New orders (net of cancellations) ... 84,900 66,700 70,500 66,500 65,200
Backlog at year end ................. $ 30,200 $ 23,500 $ 26,900 $ 25,900 $ 30,500
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ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company continues to gain strength in its target wireless communication
markets as evidenced by fiscal 1995 increases in sales, net income and orders.
Two multi-million dollar wireless component orders for gallium arsenide
monolithic semiconductors and ceramic filters were announced during fiscal
1995. These orders are with two of the major cellular Original Equipment
Manufacturers. The ceramic filters contract represents the first major volume
production contract in our ceramics component filter business, leveraging our
core ceramic capabilities in our target wireless markets. Fiscal 1995 saw
creation of the Alpha Microwave Group resulting from the consolidation of the
semiconductor and component businesses at one facility in Woburn,
Massachusetts. The consolidation took place at the end of fiscal 1994. Both
Alpha Microwave and, Trans Tech, Inc., our ceramics product subsidiary,
continue to be successful in penetrating the wireless communication markets.
Other announcements during the year included the Alpha Microwave Group
receiving certification under the ISO 9001 Quality System Standard, achieving a
global standard of excellence that demonstrates the Company's commitment to our
customers with a focus of manufacturing excellence and product quality.
RESULTS OF OPERATIONS
Sales for fiscal 1995 totaled $78.3 million compared with fiscal 1994 sales of
$70.1 million and fiscal 1993 sales of $69.5 million. Increased shipments for
fiscal 1995 and 1994 resulted primarily from wireless communication products
such as (a) Gallium Arsenide Monolithic Integrated Circuits and components
(GaAs MMICs), (b) ceramic products for cellular telephones and base stations,
(c) discrete semiconductors for wireless products and (d) dielectric filters. As
the Company gains strength in the commercial wireless communication markets,
direct sales to the United States Defense Department continue to decline, with
29% of fiscal 1995 sales related to military subcontracts for ultimate sale to
the Defense Department or foreign governments, compared with 40% in fiscal 1994
and 49% in fiscal 1993. The decrease in defense related business is
attributable to the decline in SADARM and Longbow program activity. Even
though programs for traditional military products decline, the Company is still
interested in developmental military programs that will help enhance technology
for wireless applications, and whenever possible the Company will actively
pursue such developmental contracts as a means of developing new products.
Foreign sales increased in fiscal 1995 to $23.3 million versus $22.8 million in
fiscal 1994 and $18.6 million in fiscal 1993. The increase in foreign sales for
fiscal 1995 was primarily due to increased shipments for ceramic products for
cellular telephones and base stations. Fiscal 1994 increase in foreign sales
was due to (a)dielectric resonator filters, (b) radar detector components and
(c) components for cellular telephone systems. Domestic sales were $55.0
million for fiscal 1995 versus $47.3 million for fiscal 1994 and $50.9 million
for fiscal 1993. The fiscal 1995 increase in domestic sales is a result of
increased shipments of ceramic components and semiconductors used in wireless
communication products, whereas the decrease in domestic sales for fiscal 1994
is due to substantial reduction in military program funding.
New orders for fiscal 1995 were $84.9 million, an increase of 27% over
the same period last year. These new orders were dominated by commercial
wireless contracts and included only a small portion of the two large wireless
component orders noted above. Initial deliveries for the Motorola ceramic
filter order have been shipped and accepted; however there have been some
initial delays in production due to the Company's capacity expansion and
facility move regarding Trans Tech, Inc. leasing an additional 21,000 square
foot manufacturing facility for ceramic filters. Consequently, Motorola has
deferred a portion of the early production deliveries in order to allow for the
production ramp later in the fiscal year. The Company has met the technical
specifications on the initial deliveries and expects to establish volume
production schedules during fiscal 1996.
Backlog at the end of fiscal 1995 was $30.2 million compared with $23.5 million
in fiscal 1994 and $26.9 million in fiscal 1993. The $6.7 million increase in
fiscal 1995 backlog is the result of increased orders for wireless communication
products, whereas the $3.4 million decrease in fiscal 1994 was attributable to
the cancellation of orders related to discontinued product lines and military
programs.
Gross profit as a percent of sales increased to 30.5% in fiscal 1995 compared
with 21.0% in fiscal 1994 and 24.6% in fiscal 1993. The increase in gross
profit is the result of (a) increased sales volumes coupled with fixed costs
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remaining constant (b) greater efficiencies and reduced costs due to the
consolidation of facilities that took place in fiscal 1994 when the Company
moved several product lines to its Woburn, Massachusetts plant. The decrease in
gross profit for fiscal 1994 was the result of steadily deteriorating margins
attributable primarily to the costs of maintaining dedicated resources in the
semiconductor and component businesses for certain military programs while
revenues for these same programs declined. The facility consolidation during the
fourth quarter of fiscal 1994 also further decreased gross profits because of
business interruptions and reengineering costs. Lastly, the inventory
liquidations driven by reduced manufacturing cycles increased costs, resulting
in lower gross profit.
Research and development expenses increased $725 thousand for fiscal 1995 and
$514 thousand for fiscal 1994. Customer sponsored R&D continued to decrease
$1.9 million in fiscal 1995 and $1.5 million in fiscal 1994, particularly
customer funded programs such as SADARM and Longbow. As customer sponsored R&D
continues to decrease, the Company sponsored R&D will continue to increase,
since the Company is strongly committed to developing new wireless
communication products. However, whenever possible the Company will try to
fund its R&D through collaborative developmental contracts.
Selling and administrative expenses decreased $554 thousand, mainly as a result
of a 20% reduction in administrative personnel completed during the fourth
quarter of fiscal 1994. For fiscal 1994 and 1993, selling and administrative
expenses remained constant.
Interest expense decreased $40 thousand since certain deferred finance costs
associated with the Methuen facility were charged to the repositioning cost in
the fourth quarter of fiscal 1994. Fiscal 1994 interest expense decreased $112
thousand because fiscal 1993 included a settlement of prior tax issues that
included an interest charge.
Net income for fiscal 1995 was $2.8 million or $0.36 per share, compared to a
net loss of $11.5 million or $1.53 per share. The fourth quarter of fiscal 1994
included a repositioning charge of $5.6 million.
FINANCIAL POSITION
At April 2, 1995, working capital totaled $11.0 million and included $3.5
million in cash and cash equivalents, compared with $9.0 million of working
capital at the end of fiscal 1994. Cash increased $1.8 million during fiscal
1995 mainly as a result of proceeds from the Company's line of credit and a
Community Development Block Grant from the state of Maryland. During fiscal
1995, the Company purchased $5.2 million of equipment for semiconductor and
microwave ceramic manufacturing operations as well as various information
technology equipment. With increase demand for wireless products, the Company
expects to increase its need for equipment and capacity. During fiscal 1995,
the Company obtained a $3.0 million operating lease line and received proceeds
of $234 thousand from a $960 thousand Community Development Block Grant from
the state of Maryland. Proceeds of $130 thousand were received during fiscal
1994 under this grant. The Company has also received preliminary approval from
the state of Maryland for two grants for approximately $3 million to finance its
expansion to meet order requirements particularly for wireless products.
The Company plans significant capital expansion in order to service the
increasing requirements for its products in the wireless markets. Alternative
sources of financing are being pursued, such as increasing the amount of the
line of credit, receiving additional grant funding, capital financing through
leases, and any other sources of funding capital that may become available. At
April 2, 1995, $3.0 million was borrowed under the line of credit agreement. The
$7.5 million line of credit is available until September 5, 1995 and the
Company expects to extend the line of credit agreement at that time. As demand
for capacity increases, the Company will continue to seek alternative sources
of funding capital.
OTHER MATTERS
Inflation did not have a significant impact upon the results of operations of
the Company during the three year period ended April 2, 1995.
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ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL
STATEMENTS
PAGE
- -----------------------------------------------------------------------------------------
Consolidated Balance Sheets - April 2, 1995 and April 3, 1994................. 11
Consolidated Statements of Operations - Years ended April 2, 1995,
April 3, 1994, and March 28, 1993............................................. 12
Consolidated Statements of Cash Flows - Years ended April 2, 1995,
April 3, 1994, and March 28, 1993............................................. 13
Consolidated Statements of Stockholders' Equity - Years ended
April 2, 1995, April 3, 1994, and March 28, 1993.............................. 14
Quarterly Financial Data (unaudited) - Fiscal 1995 and Fiscal 1994............ 15
Notes to Consolidated Financial Statements.................................... 16
Independent Auditors' Report.................................................. 27
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CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
APRIL 2, APRIL 3,
1995 1994
- -------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents (Note 5)................................... $ 3,510 $ 1,691
Accounts receivable, trade, less allowance
for doubtful accounts of $783 and $945 (Note 5).................... 13,548 13,243
Inventories (Notes 4 and 5).......................................... 9,370 7,613
Prepayments and other current assets................................. 756 490
-------- --------
Total current assets............................................ 27,184 23,037
-------- --------
Property, plant and equipment (Note 5)
Land................................................................. 462 282
Building and improvements............................................ 22,148 21,412
Machinery and equipment.............................................. 51,162 47,395
-------- --------
73,772 69,089
Less-accumulated depreciation and amortization....................... 53,283 49,648
-------- --------
20,489 19,441
-------- --------
Other assets........................................................... 594 507
Property held for resale (Note 6)...................................... 1,900 1,445
-------- --------
$ 50,167 $ 44,430
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable, bank (Note 5)......................................... $ 3,000 $ 1,250
Current maturities of long-term debt (Note 5)........................ 339 354
Current maturities of capital lease obligations (Note 5)............. 370 371
Accounts payable..................................................... 5,206 5,065
Repositioning reserve (Note 6)....................................... 991 1,958
Accrued liabilities
Payroll, commissions and related expenses.......................... 4,777 4,094
Other (Note 7)..................................................... 1,518 964
-------- --------
Total current liabilities....................................... 16,201 14,056
-------- --------
Long-term debt (Note 5)................................................ 4,744 4,826
Long-term capital lease obligations (Note 5)........................... 754 892
Other long-term liabilities............................................ 794 395
-------- --------
Commitments and contingencies (Note 11)
Stockholders' equity
Common stock par value $.25 per share: authorized
30,000,000 shares; issued 7,994,495 and 7,787,689 shares
(Note 9)............................................................ 1,999 1,947
Additional paid-in capital (Note 9).................................. 27,921 27,325
Accumulated deficit (Note 5)......................................... (1,738) (4,585)
-------- --------
28,182 24,687
Less - Treasury shares 262,886 and 262,829 at cost................... 330 331
Unearned compensation-restricted stock (Note 9)..................... 178 95
-------- --------
Total stockholders' equity.......................................... 27,674 24,261
-------- --------
$ 50,167 $ 44,430
======== ========
The accompanying notes are an integral part of these financial statements.
11
12
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
YEAR ENDED
APRIL 2, APRIL 3, MARCH 28,
1995 1994 1993
- ----------------------------------------------------------------------------------------------
Sales........................................... $78,254 $ 70,147 $ 69,543
------- -------- --------
Cost of sales................................... 54,376 55,395 52,404
Research and development expenses (Note 2)...... 4,154 3,429 2,915
Selling and administrative expenses............. 15,727 16,281 16,281
Repositioning expenses (Note 6)................. -- 5,639 --
------- -------- --------
74,257 80,744 71,600
Operating income (loss)......................... 3,997 (10,597) (2,057)
------- -------- --------
Other income (expense)
Interest expense............................... (728) (768) (880)
Interest income................................ 57 64 39
Other income net............................... 23 105 111
------- -------- --------
(648) (599) (730)
------- -------- --------
Income (loss) before income taxes (Note 8)..... 3,349 (11,196) (2,787)
Provision for income taxes (Note 8)............. 502 270 200
------- -------- --------
Net income (loss)............................... $ 2,847 $(11,466) $ (2,987)
======= ======== ========
Net income (loss) per share..................... $ .36 $ (1.53) $ (.40)
======= ======== ========
The accompanying notes are an integral part of these financial statements.
12
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- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
YEAR ENDED
APRIL 2, APRIL 3, MARCH 28,
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) OPERATIONS:
Net income (loss).......................................................... $ 2,847 $(11,466) $ (2,987)
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization of property, plant, and equipment.......... 4,106 4,521 4,681
Amortization of unearned compensation - restricted stock................. 64 44 42
Unearned compensation.................................................... -- (11) (11)
Loss (gain) on sales and retirements of property, plant, and equipment... 26 -- (13)
Loss on property, plant and equipment due to repositioning............... -- 2,479 --
Increase in other assets................................................. (536) (69) (109)
Increase (decrease) in other liabilities and long-term benefits.......... 399 (70) 115
Issuance of treasury stock to ESOP....................................... 12 -- --
Change in assets and liabilities
Accounts receivable..................................................... (305) 706 (610)
Inventories............................................................. (1,757) 2,331 647
Prepayments and other current assets.................................... (266) 482 123
Accounts payable........................................................ 141 912 677
Accrued liabilities..................................................... 1,237 (349) (173)
Repositioning reserve................................................... (967) 1,958 --
-------- -------- --------
Net cash provided by operations.......................................... 5,001 1,468 2,382
-------- -------- --------
CASH USED IN INVESTMENTS:
Additions to property, plant and equipment................................. (4,971) (2,630) (2,763)
Proceeds from sale of property, plant and equipment........................ 68 33 86
-------- -------- --------
Net cash used in investments............................................. (4,903) (2,597) (2,677)
-------- -------- --------
CASH PROVIDED BY (USED IN) FINANCING:
Proceeds from notes payable................................................ 1,983 131 1,892
Payments on notes payable.................................................. (330) (623) (319)
Payments on capital lease obligations...................................... (416) (311) (84)
Deferred charges related to long-term debt................................. (6) 68 17
Exercise of stock options.................................................. 391 45 --
Proceeds from sale of stock................................................ 99 84 65
-------- -------- --------
Net cash provided by (used in) financing................................. 1,721 (606) 1,571
-------- -------- --------
Net increase (decrease) in cash and cash equivalents....................... 1,819 (1,735) 1,276
Cash and cash equivalents, beginning of year............................... 1,691 3,426 2,150
-------- -------- --------
Cash and cash equivalents, end of year..................................... $ 3,510 $ 1,691 $ 3,426
======== ======== ========
Supplemental disclosures:
Capital lease obligations of $277, $309 and $1,349 were incurred during the
years ended April 2, 1995, April 3, 1994, and March 28, 1993, respectively,
when the Company entered into leases for new equipment.
The accompanying notes are an integral part to these financial statements.
13
14
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
RETAINED UNEARNED
ADDITIONAL EARNINGS COMPENSATION
COMMON STOCK PAID-IN (ACCUMULATED) TREASURY RESTRICTED
SHARES PAR VALUE CAPITAL (DEFICIT) STOCK STOCK
- -------------------------------------------------------------------------------------------------------------------------------
Balance March 29, 1992.................... 7,690 $1,923 $27,085 $ 9,868 $(264) $(156)
Net loss.................................. -- -- -- (2,987) -- --
Employee Stock Purchase Plan.............. 31 8 57 -- -- --
Issuance of restricted shares............. 15 3 51 -- -- (54)
Amortization of unearned
compensation restricted stock............ -- -- -- -- -- 42
Repurchase 17,000 shares of
restricted stock......................... -- -- -- -- (46) 35
----- ------ ------- -------- ----- -----
Balance March 28, 1993.................... 7,736 1,934 27,193 6,881 (310) (133)
Net loss.................................. -- -- -- (11,466) -- --
Employee Stock Purchase Plan.............. 29 7 77 -- -- --
Issuance of restricted shares............. 5 1 15 -- -- (16)
Amortization of unearned compensation.....
restricted stock......................... -- -- -- -- -- 44
Repurchase 8,333 shares of
restricted stock......................... -- -- -- -- (21) 10
Exercise of stock options................. 17 5 40 -- -- --
----- ------ ------- -------- ----- -----
Balance April 3, 1994..................... 7,787 1,947 27,325 (4,585) (331) (95)
Net income................................ -- -- -- 2,847 -- --
Employee Stock Purchase Plan.............. 29 7 92 -- -- --
Issuance of restricted stock.............. 31 8 139 -- -- (147)
Amortization of unearned compensation
restricted stock......................... -- -- -- -- -- 64
Issuance 1,110 treasury shares to ESOP.... -- -- 11 -- 1 --
Exercise of stock options................. 147 37 354 -- -- --
----- ------ ------- -------- ----- -----
Balance April 2, 1995..................... 7,994 $1,999 $27,921 $ (1,738) $(330) $(178)
===== ====== ======= ======== ===== =====
The accompanying notes are an integral part of these financial statements.
14
15
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL DATA
(unaudited)
(In thousands except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
- --------------------------------------------------------------------------------------------------------------
FISCAL 1995
Sales............................. $18,675 $18,253 $ 19,359 $ 21,967 $ 78,254
Gross profit...................... 5,618 5,397 5,865 6,998 23,878
Net income........................ 603 659 774 811 2,847
Per share data
Net income....................... .08 .08 .10 .10 .36
Market price range:
High............................ 4-1/2 6-7/8 7-3/8 11-5/8 11-5/8
Low............................. 3 3-7/8 5-1/4 6-3/8 3
FISCAL 1994
Sales............................. $18,909 $16,693 $ 17,760 $ 16,785 $ 70,147
Gross profit (loss)............... 5,092 4,882 4,808 (30) 14,752
Net income (loss)................. 279 170 40 (11,955) (11,466)
Per share data
Net income (loss)................ .04 .02 -- (1.59) (1.53)
Market price range:
High............................ 3-5/8 6-3/8 6 4-9/16 6-3/8
Low............................. 2-5/8 3 4 3-1/8 2-5/8
The Company's common stock is traded on the American Stock Exchange, symbol AHA.
The number of stockholders of record as of May 31, 1995 was approximately 1,200.
15
16
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation. The Company's fiscal year ends on the
Sunday closest to March 31, there were 52 weeks in fiscal 1995, 53 weeks in
fiscal 1994, and 52 weeks in fiscal 1993.
Revenue Recognition:
Revenue is recognized when a product is shipped and services are performed.
Contract revenue is recognized on the percentage-of-completion method,
which is primarily measured on the ratio of units shipped to the total
contract number of units. Provisions for estimated losses, if any, on
uncompleted contracts are made in the period in which such losses are
determined.
Foreign Currency Translation:
The accounts of foreign subsidiaries are translated in accordance with the
Financial Accounting Standards Board Statement No. 52. Foreign operations
are remeasured as if the functional currency were the U.S. dollar. Monetary
assets and liabilities are translated at the year end rates of exchange.
Revenues and expenses (except cost of sales and depreciation) are
translated at the average rate for the period. Non-monetary assets,
equity, cost of sales and depreciation are remeasured at historical rates.
Remeasurement gains and losses are reflected currently in operations and
are not material.
Research and Development Expenditures:
Research and development expenditures are charged to income as incurred
unless they are reimbursed under specific contracts. Losses incurred on the
equity basis in the Company's two joint ventures are included in research
and development.
Cash and Cash Equivalents:
Cash and cash equivalents include cash deposited in demand deposits at
banks and temporary investments. The Company considers temporary
investments as those with original maturities of less than 90 days.
Inventories:
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market.
Property, Plant and Equipment:
Property, plant and equipment are carried at cost. Depreciation is provided
on the straight-line method for financial reporting and accelerated methods
for tax purposes.
Estimated useful lives used for depreciation purposes are 8 to 30 years for
buildings and improvements and 3 to 10 years for machinery and equipment.
Income Taxes:
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 109, "Accounting for Income Taxes."
Statement 109 requires a change from the deferred method of accounting for
income taxes of APB Opinion 11 to the asset and liability method of
accounting for income taxes. Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. In addition, Statement 109 requires the recognition
of future tax benefits such as net operating loss carryforwards, to the
extent that realization of such benefits is more likely than not. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
The Company adopted Statement 109 on March 29, 1993. There was no
cumulative effect on earnings from the change in the method of accounting
for income taxes.
16
17
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Income Per Share:
Net income per share of common stock for fiscal 1995 is computed on the
basis of the weighted average shares of common stock outstanding plus
common equivalent shares arising from the effect of dilutive stock options
and warrants, using the treasury stock method. In fiscal 1994 and 1993
stock options did not impact net income per share as they were either
insignificant or antidilutive. The weighted average number of shares of
common stock and common equivalent shares outstanding for the calculation
of primary earnings per share was 7,882,000 in fiscal 1995, 7,502,000 in
fiscal 1994, and 7,464,000 in fiscal 1993.
NOTE 2 JOINT VENTURES
In fiscal year 1984 the Company and Aerojet ElectroSystems Company formed a
joint venture, and in fiscal year 1987 the Company entered into a similar
arrangement with Martin Marietta Corporation. These ventures were formed for the
purpose of developing and producing certain millimeter wave monolithic
integrated circuits. Each joint venture may be terminated by either party at any
time.
The Company's joint ventures with Aerojet ElectroSystems Company and Martin
Marietta Corporation were created to share research and development expenses in
order to develop technology for millimeter wave monolithic integrated circuits.
In the case of the Aerojet/Alpha venture, this partnership has been dormant
since 1987. The partnership has no remaining assets or liabilities. As for the
Martin/Alpha venture, the only assets or liabilities that exist are the original
capitalization of $5,000 and the amounts due to/due from the partners. The
technical goal established by this partnership is near completion and this
partnership will cease activity by the end of calendar year 1995. The Company's
share of the joint venture's research and development expenses are recorded in
the Company's consolidated statements of operations. The Company has no
investment recorded on its consolidated balance sheet for either joint venture.
The Company's share of losses incurred by the joint ventures is recorded on the
equity basis and included in research and development expenses. The losses were
approximately $895,000, $856,000, and $1,618,000 in fiscal years 1995, 1994, and
1993, respectively.
NOTE 3 COMPANY OPERATIONS
The Company operates in one industry segment: the development, production and
sale of microwave materials, devices and components. Sales include export sales
primarily to Europe and Southeast Asia of $16,855,000, $16,471,000, and
$13,229,000, in fiscal years 1995, 1994, and 1993, respectively.
During fiscal year 1994, one customer accounted for 15% of the Company's total
sales.
The Company operates sales subsidiaries in the United Kingdom and Germany, and a
ceramic manufacturing operation in France. The following table shows certain
financial information relating to the Company's operations in various geographic
areas (in thousands):
17
18
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 COMPANY OPERATIONS (CONTINUED)
1995 1994 1993
- ---------------------------------------------------------------------------------------
Sales
United States
Customers............................. $ 67,495 $ 61,963 $ 64,163
Intercompany.......................... 4,668 5,753 3,534
Europe
Customers............................. 10,759 8,184 5,380
Eliminations........................... (4,668) (5,753) (3,534)
-------- -------- --------
Net Sales............................... 78,254 70,147 69,543
-------- -------- --------
Income (loss) before taxes
United States.......................... 2,723 (11,767) (2,731)
Europe................................. 626 571 (56)
-------- -------- --------
Income (loss) before taxes.............. 3,349 (11,196) (2,787)
-------- -------- --------
Assets
United States.......................... 44,896 40,454 50,814
Europe................................. 5,271 3,976 2,963
-------- -------- --------
Total Assets............................ $ 50,167 $ 44,430 $ 53,777
======== ======== ========
Transfers between geographic areas are made at terms that allow for a
reasonable profit to the seller.
NOTE 4 INVENTORIES
APRIL 2, APRIL 3,
Inventories consisted of the following (in thousands): 1995 1994
- ---------------------------------------------------------------------------------
Raw materials.................................... $ 3,186 $ 2,402
Work-in-process.................................. 4,950 3,570
Finished goods................................... 1,234 1,641
------- -------
$ 9,370 $ 7,613
======= =======
Work-in-process inventory has been reduced by allowances for estimated losses to
be sustained on completion of certain contracts. These allowances totaled
$117,000 and $593,000 in fiscal years 1995 and 1994, respectively.
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS
LINE OF CREDIT
The Company has a line of credit with Silicon Valley Bank for $7.5 million which
expires on September 5, 1995. The line of credit is collateralized by various
receivables, inventories and equipment. Interest payments are due monthly at a
rate of 1 1/2% above prime (prime was 9.0% at April 2, 1995). At April 2, 1995,
and April 3, 1994, $3.0 million and $1.25 million, respectively, had been
borrowed under this line of credit.
18
19
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS (CONTINUED)
LONG-TERM DEBT
APRIL 2, APRIL 3,
Long-term debt consisted of the following (in thousands): 1995 1994
- ---------------------------------------------------------------------------------------------
9-1/2% Mortgage Note Payable (a)............................ $ 80 $ 120
Industrial Revenue Bonds (b)................................ 3,878 4,046
UDAG Loan (c)............................................... 438 540
French Government Sponsored and Start-up Loans (d).......... 323 343
CDBG Grant (e).............................................. 364 131
------ ------
5,083 5,180
Less - current maturities................................... 339 354
------ ------
$4,744 $4,826
====== ======
a. The mortgage note payable is collateralized by land and buildings having a
net book value of $5,666,000 at April 2, 1995. Principal installments of
$3,333, plus interest, are due monthly until March 1997.
b. On November 20, 1990, the Company's $3.1 million Industrial Revenue Bond
was sold to a financial investment company. The bond will mature in July
2004. The bond bears interest at a rate of 10.25% payable semi-annually. The
Company is required to maintain $158,000 in escrow which is included in cash
and cash equivalents.
The Company has two other Industrial Revenue Bonds. The first bond was due in
quarterly payments of $19,135 until December 1994 and bore interest at a rate
of 10.25%. The second bond was sold on December 9, 1993, to the Farmers and
Mechanics National Bank. The interest rate on this bond is prime and
quarterly principal payments of $27,777 are due until March, 2002.
The bonds are secured by various property, plant and equipment with a net
book value of $9,758,000 at April 2, 1995 and a pledge of lease revenues of
its Methuen facility.
c. The City of Lawrence, Massachusetts lent the Company $989,000 in proceeds
it acquired from an Urban Development Action Grant (UDAG). Monthly payments
of $10,491 representing principal and interest at 5% on the unamortized
balance are required until January 1999.
d. The Company has three unsecured government sponsored and start-up business
loans. The first loan is at an interest rate of 8.75% and requires annual
payments of $36,000 beginning December 1994 through December 1998. The second
loan is at an interest rate of 5% and requires interest payments only until
February 1995. Starting in February 1995 and through February 2000 quarterly
principal and interest payments of $8,300 are due. The third loan is at an
interest rate of 9.0% and requires principal and interest payments of $3,500
through January 1998.
e. The Company obtained a ten year $960,000 loan from the State of Maryland
under the Community Development Block Grant program. At April 2, 1995 the
Company had received total funding of $364,000. Quarterly payments will be
due beginning June 1996 through December 2003 and will represent principal
and interest at 5% of the unamortized balance.
19
20
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS (CONTINUED)
Aggregate annual maturities of long-term debt are as follows (in thousands):
FISCAL YEAR
- -------------------------------------------------------------------------------
1997.................................... $ 407
1998.................................... 334
1999.................................... 317
2000.................................... 183
Thereafter.............................. 3,503
-------
$ 4,744
=======
Capital Lease Obligations
At April 2, 1995, included in property, plant and equipment are the following
capitalized leases (in thousands):
Machinery and equipment $ 1,850
Accumulated depreciation and amortization 742
-------
$ 1,108
=======
Future minimum lease payments under the capitalized lease obligations at April
2, 1995 were as follows (in thousands):
FISCAL YEAR
- -------------------------------------------------------------------------------
1996.......................................... $ 427
1997.......................................... 343
1998.......................................... 219
1999.......................................... 22
2000.......................................... 14
Thereafter.................................... 194
------
Total minimum lease payments........................ 1,219
Less: Amount representing interest................. 95
------
Present value of net minimum lease payments......... 1,124
Less: Current maturities.......................... 370
------
Long-term maturities................................ $ 754
======
Cash payments for interest were $635,000, $740,000, and $899,000, in fiscal
years 1995, 1994, and 1993, respectively.
The bonds and line of credit include various covenants that require maintenance
of certain financial ratios and balances and restrict creation of funded debt
and payment of dividends. Under the most restrictive covenants the Company may
not pay dividends except restricted payments in an amount not to exceed $400,000
in connection with the redemption of certain common stock repurchase rights.
20
21
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 REPOSITIONING CHARGES
On January 25, 1994, the Company announced the transfer of certain component
product lines manufacturing from a facility in Methuen, Massachusetts to the
Company's headquarters facility in Woburn, Massachusetts. These component
product lines were used principally by military customers. Faced with a
continued decline in defense business, the Company determined the need for
further consolidations to reduce operating costs and enhance its competitive
position in commercial electronics markets, principally wireless communications.
In the fourth quarter of fiscal year 1994, the Company recorded a repositioning
charge of $5.6 million which included charges for employee severance costs of
$2.2 million, the write-down of $2.6 million to reduce the carrying value of the
Methuen, Massachusetts plant to its estimated net realizable value and costs
related to the consolidation of the facilities of $800 thousand. During fiscal
1995 the Company paid severance costs of $600 thousand and consolidation costs
of $300 thousand. Severance costs of $500 thousand and consolidation costs of
$600 thousand were paid in fiscal 1994. The $2.6 million write-down of the
Methuen plant includes $1.2 million for carrying and selling costs through the
expected date of disposal. The Methuen plant was valued at $1.9 million at April
2, 1995 and $1.4 million at April 3, 1994. During fiscal 1995, the Company paid
$500 thousand in carrying costs related to the Methuen plant.
NOTE 7 OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following (in thousands):
APRIL 2, APRIL 3,
1995 1994
- ----------------------------------------------------------------------------------------------
Income taxes.................................... $ 411 $ 215
Professional services........................... 172 161
Interest........................................ 171 114
Miscellaneous................................... 764 474
------- --------
$ 1,518 $ 964
======= ========
NOTE 8 INCOME TAXES
Income (loss) before income taxes consisted of (in thousands):
1995 1994 1993
- ---------------------------------------------------------------------------------------------
Domestic........................................ $ 2,723 $(11,767) $(2,731)
Foreign......................................... 626 571 (56)
------- -------- -------
$ 3,349 $(11,196) $(2,787)
======= ======== =======
The provision for income taxes consisted of (in thousands):
1995 1994 1993
- ---------------------------------------------------------------------------------------------
Current income taxes
Federal........................................ $ 75 $ -- $ --
State.......................................... 217 126 151
Foreign........................................ 210 144 49
------- -------- -------
$ 502 $ 270 $ 200
======= ======== =======
21
22
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 INCOME TAXES (CONTINUED)
The provision for income taxes is different from that which would be obtained by
applying the statutory Federal income tax rate to income (loss) before income
taxes. The items causing this difference are as follows (in thousands):
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
Tax expense (benefit) at U.S. statutory rate...... $ 1,139 $ (3,807) $ (948)
State income taxes, net of Federal benefit........ 143 83 100
Operating loss not currently benefited............ -- 4,044 980
Change in valuation allowance..................... (763) -- --
Other (net)....................................... (17) (50) 68
------- -------- --------
$ 502 $ 270 $ 200
======= ======== ========
1995 1994
- --------------------------------------------------------------------------------------------------------
Deferred tax assets (in thousands):
Accounts receivable due to bad debt..................................... $ 293 $ 351
Inventories due to reserves and inventory capitalization................ 407 1,027
Accrued liabilities..................................................... 1,475 1,812
Deferred compensation................................................... 243 192
Other................................................................... 4 55
Net operating loss carryforward......................................... 9,374 9,500
Charitable contribution carryforward.................................... 33 26
Short-term capital loss carryforward.................................... 160 160
Minimum tax credits and state tax credit carryforwards.................. 203 --
-------- --------
Total gross deferred tax assets...................................... 12,192 13,123
Less valuation allowance............................................. (9,196) (9,959)
-------- --------
Net deferred tax assets.............................................. 2,996 3,164
-------- --------
Deferred tax liabilities (in thousands):
Property, plant and equipment due to depreciation....................... (2,989) (3,140)
Other................................................................... (7) (24)
-------- --------
Total gross deferred tax liability................................... (2,996) (3,164)
-------- --------
Net deferred tax..................................................... $ 0 $ 0
======== ========
The valuation allowance for deferred tax assets as of April 2, 1995, was
$9,196,000. The net change in the total valuation allowance for the year ended
April 2, 1995 was a decrease of $763,000.
Cash payments for income taxes were $157,000, $111,000, and $194,000 in fiscal
years 1995, 1994, and 1993, respectively. As of April 2, 1995, the Company has
available for income tax purposes approximately $25,500,000 in federal net
operating loss carryforwards which may be used to offset future taxable income.
These tax benefits begin to expire in fiscal year 2004. The Company also has
minimum tax credit carryforwards of approximately $10,000 which are available to
reduce future federal regular income taxes, if any, over an indefinite period.
In addition, the Company has state tax credit carryforwards of $193,000 of which
$135,000 is available to reduce state income taxes over an indefinite period.
22
23
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 INCOME TAXES (CONTINUED)
The Company has not recognized a deferred tax liability of approximately
$734,000 for the undistributed earnings of its 100 percent owned foreign
subsidiaries that arose in 1995 and prior years because the Company currently
does not expect those unremitted earnings to reverse and become taxable to the
Company in the foreseeable future. A deferred tax liability will be recognized
when the Company expects that it will recover those undistributed earnings in a
taxable manner, such as through receipt of dividends or sale of the investments.
As of April 2, 1995, the undistributed earnings of these subsidiaries were
approximately $2,158,000.
NOTE 9 COMMON STOCK
LONG-TERM INCENTIVE PLAN
The Company has a Long-Term Incentive Plan adopted in 1986 pursuant to which
stock options, with or without stock appreciation rights, may be granted and
restricted stock awards and book value awards may be made.
Common Stock Options
These options may be granted in the form of incentive stock options or
non-qualified stock options. The option price may vary at the discretion
of the Compensation Committee but shall not be less than the greater of
fair market value or par value. The option term may not exceed ten
years. The options may be exercised in cumulative annual increments
commencing one year after the date of grant.
Restricted Stock Awards
For fiscal years 1995, 1994, and 1993, respectively, a total of 31,000,
5,000, and 15,000, restricted shares of the Company's common stock were
granted to certain employees.
The market value of shares awarded were $147,000, $16,000, and $54,000,
for fiscal 1995, 1994, and 1993, respectively. These amounts were
recorded as unearned compensation - restricted stock and are shown as a
separate component of stockholders' equity. Unearned compensation is
being amortized to expense over the five year vesting period and
amounted to $64,000, $44,000, and $42,000 in fiscal 1995, 1994, and
1993, respectively.
LONG-TERM COMPENSATION PLAN
On October 1, 1990, the Company adopted a Supplemental Executive Retirement Plan
(SERP) for certain key executives. Benefits payable under this plan are based
upon the participant's base pay at retirement reduced by proceeds from the
exercise of certain stock options. Options vest over a five year period.
Benefits earned under the SERP are fully vested at age 55, however, the full
amount of accrued benefit will not usually begin until age 65. Compensation
expense related to the plan was $68,000, $130,000, and $115,000, in fiscal 1995,
1994, and 1993, respectively. Total benefits accrued under these plans were
$453,000 at April 2, 1995, $385,000 at April 3, 1994, and $255,000 at March 28,
1993.
23
24
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 COMMON STOCK (CONTINUED)
A summary of stock option and restricted stock award transactions follows:
NUMBER OF SHARES OPTION
UNDER OPTIONS AND PRICES
RESTRICTED STOCK AWARDS PER SHARE
- -----------------------------------------------------------------------------------
Balance, March 29, 1992............ 742,138 $ 2.375-$8.75
-------- --------------
FISCAL YEAR 1993 TRANSACTIONS
Granted........................... 364,000 2.75 - 3.625
Exercised......................... -- --
Cancelled......................... (121,394) 2.375- 5.75
-------- --------------
Balance, March 28, 1993............ 984,744 2.375- 8.75
-------- --------------
FISCAL YEAR 1994 TRANSACTIONS
Granted........................... 49,500 3.25 - 3.625
Exercised/vested.................. (33,554) 2.50 - 3.75
Cancelled......................... (30,126) 2.50 - 8.75
-------- --------------
Balance, April 3, 1994............. 970,564 2.375- 8.75
-------- --------------
FISCAL YEAR 1995 TRANSACTIONS
Granted........................... 87,000 3.875- 10.25
Exercised......................... (166,590) 2.50 - 4.625
Cancelled......................... (21,749) 2.50 - 10.25
-------- --------------
Balance, April 2, 1995............. 869,225 $ 2.375-$10.25
======== ==============
NUMBER OF NUMBER OF SHARES
SHARES RESERVED FOR
EXERCISABLE FUTURE GRANTS
- ------------------------------------------------------------------------------------
April 2, 1995...................... 401,370 285,631
STOCK PURCHASE WARRANTS
In April, 1994, the Company amended its line of credit agreement and issued
50,000 stock purchase warrants to Silicon Valley Bank. The warrants are
exercisable at $3.75 per share.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On September 12, 1994, the shareholders approved a Non-Qualified Stock Option
Plan for Non-Employee Directors. A total of 50,000 options may be granted under
this plan. The option price is the greater of the fair market value of the
shares of Common Stock at the time the option is granted or four dollars
($4.00). Options are exercisable 20% per year. During fiscal 1995, each of the
three directors received 5,000 non-qualified stock options issued at $5.875 per
share.
24
25
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 COMMON STOCK (CONTINUED)
STOCK PURCHASE PLAN
In December, 1989, the Company adopted an employee stock purchase plan. The
plan was amended in October 1992 to provide for six month offering periods.
Under the plan eligible employees may purchase common stock through payroll
deductions of up to 10% of compensation. The price per share is the lower of
85% of the market price at the beginning or end of the offering period. The plan
provides for purchases by employees of up to an aggregate of 300,000 shares
through December 31, 1995. Shares of 28,875, 29,313, and 30,556, were purchased
under this plan in fiscal years 1995, 1994, and 1993, respectively.
SHAREHOLDER RIGHTS PLAN
In November 1986, the Board of Directors of the Company declared a dividend
distribution of one right for each outstanding share of common stock. Each
right entitles the registered holder to purchase from the Company one common
share at an exercise price of $30 per share. A right will also be issued with
each common share that is issued prior to the time the rights become
exercisable or expire.
The rights are not exercisable until after a person or group acquires 10% or
more of the Company's common stock or announces a tender offer for 10% or more
of the common stock except with respect to persons who already hold 10% in which
case the threshold is any additional shares. In such events, each holder shall
be entitled to purchase that number of shares of the Company's common stock
having a market value equal to two times the $30 per share exercise price. In
lieu of such right, the Board of Directors may issue one share of common stock
for each right held by everyone except the acquiring person or group. In the
event that the Company is acquired in a merger or other business combination
transaction or more than 50% of its assets or earning power are sold, each
holder shall thereafter have the right to receive, upon exercise of each right,
that number of shares of common stock of the acquiring company which at the time
of such transaction would have a market value of two times the $30 per share
exercise price.
The Company is entitled to redeem the rights at five cents per right at any time
before the rights are exercisable. The rights will expire on December 5, 1996
unless earlier redeemed by the Company.
NOTE 10 EMPLOYMENT BENEFIT PLAN
In 1985, the Company adopted a 401(k) Plan which is intended to provide the
Company's employees with retirement and other benefits. All of the Company's
employees who are at least 21 years old and have completed one year of service
(1,000 hours in a 12 month period) with the Company were eligible to receive a
Company matching contribution. The Company contributed $.50 for each $1.00
contributed by employees, up to a maximum Company matching contribution of $500
for fiscal 1995, 1994, and 1993. For fiscal years 1995, 1994, and 1993 the
Company contributed $232,000, $281,000, and $212,000, respectively.
25
26
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 EMPLOYMENT BENEFIT PLAN (CONTINUED)
On March 31, 1995, the Company merged its Employee Stock Ownership Plan into the
Alpha Industries, Inc. Saving and Retirement Plan also known as the 401(K) plan.
All of the Company's employees who are at least 21 years old and have completed
six months of service (1,000 hours in a 12 month period) with the Company are
eligible to receive a Company contribution. Company contributions are
determined by the Company and may be in the form of cash or the Company's stock.
Under the previous Employee Stock Ownership Plan contributions were determined
by the Board of Directors and contributed to a trust created to acquire shares
of the Company's common stock and other assets for the exclusive benefit of the
participants. The Company accrued a contribution of $226,000 for fiscal 1995
that is expected to be distributed during fiscal 1996. No contributions were
made for fiscal years 1994 and 1993.
NOTE 11 COMMITMENTS AND CONTINGENCIES
The Company has various operating leases for manufacturing and engineering
equipment and buildings. Rent expense amounted to $1,255,000, $1,418,000, and
$1,348,000, in fiscal years 1995, 1994, and 1993, respectively. Purchase
options may be exercised at various times for some of these leases. Future
minimum rent expense under these leases is as follows (in thousands):
FISCAL YEAR
- --------------------------------------------------------------------------------
1996 $ 826
1997 748
1998 523
1999 58
2000 58
Thereafter 465
-------
$ 2,678
=======
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the following two sites: the Spectron, Inc.
Superfund site in Elkton, Maryland; and the Seaboard Chemical Corporation site
in Jamestown, North Carolina. In each case several hundred other companies have
also been notified about their potential liability regarding these sites. The
Company continues to deny that it has any responsibility with respect to these
sites other than as a de minimis party. Management is of the opinion that the
outcome of the aforementioned environmental matters will not have a material
effect on the Company's operations.
The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.
26
27
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Stockholders
Alpha Industries, Inc.:
We have audited the consolidated financial statements of Alpha Industries, Inc.
and subsidiaries as listed in the accompanying index under Item 8. In
connection with our audits of the consolidated financial statements, we have
also audited the financial statement schedule as listed in the accompanying
index under Item 14. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alpha Industries,
Inc. and subsidiaries at April 2, 1995 and April 3, 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended April 2, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, present fairly, in all material respects, the information set forth
therein.
As discussed in Note 1 to the consolidated financial statements, the Company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Accounting Standards No. 109, "Accounting for Income Taxes" in fiscal 1994.
KPMG Peat Marwick LLP
Boston, Massachusetts
May 12, 1995
27
28
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the section entitled "Election of Directors" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
11, 1995, to be filed within 120 days of the end of the Company's fiscal year,
which section is incorporated herein by reference, and the section entitled
"Executive Officers" under Item 1 of this Annual Report on Form 10-K.
ITEM 11 EXECUTIVE COMPENSATION
See the section entitled "Executive Compensation" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
11, 1995, which section is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the section entitled "Securities Beneficially Owned by Certain Persons"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 11, 1995, which section is incorporated
herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the section entitled "Certain Relationships and Related Transactions"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 11, 1995, which section is incorporated
herein by reference.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Index to Financial Statements
The financial statements filed as part of this report are listed on the
index appearing on page 10 .
2. Index to Financial Statement Schedules
The following financial statement schedule is filed as part of this
report (page references are to this report):
Schedule II Valuation and Qualifying Accounts (page 34)
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.
3. Exhibits
(3) Certificate of Incorporation and By-laws.
(a) Composite Certificate of Incorporation dated May 26, 1966 as
amended March 21, 1967 and October 27, 1967 (Filed as
Exhibits 3(a), (b) and (c) to Registrant's Registration
Statement on
28
29
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
Form S-1 (Registration No. 2-27685)*, October 6, 1978 (Filed
as Exhibit A to Proxy Statement dated July 27, 1978)*,
October 22, 1979 (Filed as Exhibit (a)(3)(3) to Annual Report
on Form 10-K for fiscal year ended March 31, 1981)*,
September 30, 1981 (Filed as Exhibit 20(b) to Quarterly
Report on Form 10-Q for quarter ended September 30, 1981)*,
February 8, 1983 (Filed as Exhibit 19(a) to Quarterly Report
on Form 10-Q for quarter ended December 31, 1983)*, December
3, 1985 (Filed as Exhibit 3(a) to Annual Report on Form 10-K
for the year ended March 31, 1986)* and October 20, 1986
(Filed as Exhibit 3(a) to Annual Report on Form 10-K for the
year ended March 31, 1987)*.
(b) Amended and restated By-laws of the Corporation dated April
30, 1992 (Filed as Exhibit 3(b) to the Annual Report on Form
10-K for the year ended March 29, 1992)*.
(4) Instruments defining rights of security holders, including
indentures.
(a) Specimen Certificate of Common Stock (Filed as Exhibit 4(a)
to Registration Statement on Form S-1 (Registration No.
2-25197))*.
(b) Frederick County Industrial Development Revenue Bond, Deed of
Trust, Loan Agreement and Guaranty and Indemnification
Agreement dated June 17, 1982 (Filed as Exhibit 4(g) to the
Registration Statement on Form S-8 filed July 29, 1982)*.
Bond and Loan Document Modification Agreement dated December
9, 1993 (Filed as Exhibit 4(c) to the Quarterly Report on
Form 10-Q for the quarter ended December 26, 1993)*.
(c) Methuen, Massachusetts Industrial Revenue Mortgage, Indenture
of Trust and Agreement among Massachusetts Industrial Finance
Agency, Registrant and The First National Bank of Boston, as
Trustee; Guaranty Agreement among Registrant, The First
National Bank of Boston, as Trustee and Massachusetts
Industrial Finance Agency dated as of August 1, 1984 and
amended on November 20, 1990; and Agreement between
Massachusetts Industrial Finance Agency and Registrant dated
August 1, 1984 and amended November 20, 1990 (Original
Agreement filed as Exhibit 4(b) to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1984)*
(Amendment filed as Exhibit 4(e) to the Quarterly Report on
Form 10-Q for the quarter ended December 30, 1990)*.
(d) Line of Credit Agreement between Registrant and Silicon
Valley Bank dated as of November 20, 1990 (Original Agreement
filed as Exhibit 4(f) to the Quarterly Report on Form 10-Q
for the quarter ended December 30, 1990)*; amended September
1, 1991 (Filed as Exhibit 4(f) to the Quarterly Report on
Form 10-Q for the quarter ended September 29, 1991)*; amended
September 8, 1992 (Filed as Exhibit 4(e) to the Quarterly
Report on Form 10-Q for the quarter ended September 27,
1992)*; amended February 18, 1993 (Filed as Exhibit 4(e) to
the Annual Report on Form 10-K for the year ended March 28,
1993)*, amended June 18, 1993 (Filed as Exhibit 4(e) to the
Quarterly Report on Form 10-Q for the quarter ended October
2, 1994)*; amended September 3, 1993 (Filed as Exhibit 4(e)
to the Quarterly Report on Form 10-Q for the quarter ended
September 26, 1993)*; amended April 1, 1994 (Filed as Exhibit
4(e) to the Quarterly Report on Form 10-Q for the quarter
ended July 3, 1994)* and further amended September 5, 1994
(Filed as Exhibit 4(e) to the Quarterly Report on Form 10-Q
for the quarter ended October 2, 1994)*.
(e) Loan Contract dated January 21, 1985, First Amendment to Loan
Contract dated October 11, 1985 and Second Amendment to Loan
Contract dated December 19, 1986 each between Registrant, the
City of Lawrence and the Lawrence Redevelopment Authority;
Guaranty Agreement dated January 21, 1985 and First Amendment
to Guaranty Agreement dated October 11, 1985, each between
Registrant and the Lawrence Redevelopment Authority; and
Urban Development Action Grant (UDAG) (Grant Number:
B-84-AA-25-0142) and
29
30
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
Amendment thereto, each dated April 6, 1984 and each between
the City of Lawrence and the United States Department of
Housing and Urban Development (Filed as Exhibit 4(k) to the
Annual Report on Form 10-K for the fiscal year ended March
31, 1986)*.
(f) Amended and Restated Rights Agreement dated as of November
24, 1986, as amended and restated July 3, 1990 and as further
amended September 9, 1990 and September 24, 1990, between
Registrant and The First National Bank of Boston, as Rights
Agent (The July 3, 1990 restatement and the September 9, 1990
and September 24, 1990 amendments were filed as Exhibit 4 to
the Current Report on Form 8-K dated July 3, 1990 and
Exhibits 4(a) and 4(b) to the Current Report on Form 8-K
dated September 18, 1990, respectively)*.
(g) Loan and Security Agreement dated December 15, 1993 between
Trans-Tech, Inc., and County Commissioners of Frederick
County (Filed as Exhibit 4(h) to the Quarterly Report on Form
10-Q for the quarter ended July 3, 1994)*.
(h) Stock Purchase Warrant for 50,000 shares of the Registrant's
Common Stock issued to Silicon Valley Bank as of April 1,
1994 (Filed as Exhibit 4(i) to the Quarterly Report on Form
10-Q for the quarter ended July 3, 1994)*.
(i) Mortgage, Fixture Financing Statement and Assignment of
Leases and Rents dated September 16, 1994 between The First
National Bank of Boston, as Trustee, and Registrant and First
Amendment to Mortgage, Fixture Financing Statement and
Assignment of Leases and Rents dated October 12, 1994 between
The First National Bank of Boston, as Trustee, and
Registrant. Amendment No. 1 to Amended and Restated Guaranty
Agreement dated September 16, 1994 between The First National
Bank of Boston, as Trustee, The First National Bank of Boston
and the Massachusetts Industrial Finance Agency (Filed as
Exhibit 4(j) to the Quarterly Report on Form 10-Q for the
quarter ended October 2, 1994)*.
(10) Material Contracts.
(a) Alpha Industries, Inc., 1986 Long-Term Incentive Plan as
amended (Filed as Exhibit 10(a) to the Quarterly Report on
Form 10-Q for the quarter ended October 2, 1994)*. (1)
(b) Alpha Industries, Inc., Employee Stock Purchase Plan as
amended October 22, 1992 (Filed as Exhibit 10(b) to the
Annual Report on Form 10-K for the fiscal year ended March
28, 1993)*. (1)
(c) SERP Trust Agreement between the Registrant and the First
National Bank of Boston as Trustee dated April 8, 1991 (Filed
as Exhibit 10(c) to the Annual Report on Form 10-K for the
fiscal year ended March 31, 1991)*. (1)
(d) Digital Business Agreement between Digital Equipment
Corporation and Registrant dated April 2, 1990. Master Lease
Addendum (Ref. No. 6260) to Digital Business Agreement No.
3511900 between Digital Equipment Corporation and Registrant
dated April 2, 1990 (Filed as Exhibit 10(g) to the Annual
Report on Form 10-K for the fiscal year ended March 29,
1992)*.
(e) Common Stock Purchase Agreement dated November 8, 1990
between Registrant and Shamie Management Corporation (Filed
as Exhibit 10(h) to the Annual Report on Form 10-K for the
fiscal year ended March 29, 1992)*. (1)
30
31
- -----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(f) Alpha Industries, Inc., Long-Term Compensation Plan dated
September 24, 1990 (Filed as Exhibit 10(i) to the Annual
Report on Form 10-K for the fiscal year ended March 29,
1992)*; amended March 28, 1991 (Filed as Exhibit 10 (a)
to the Quarterly Report on Form 10-Q for the quarter ended
June 27, 1993)* and as further amended October 27, 1994. (1)
(g) Master Equipment Lease Agreement between AT&T Commercial
Finance Corporation and the Registrant dated June 19, 1992
(Filed as Exhibit 10(j) to the Annual Report on Form 10-K for
the fiscal year ended March 28, 1993)*.
(h) Employment Agreement dated October 1, 1990 between the
Registrant and Martin J. Reid, as amended March 26, 1992 and
amended January 19, 1993 (Filed as Exhibit 10(k) to the
Annual Report on Form 10-K for the fiscal year ended March
28, 1993)* and amended August 10, 1993 (Filed as Exhibit
10(j) to the Quarterly Report on Form 10-Q for the quarter
ended July 3, 1994)*. (1)
(i) Employment Agreement dated October 1, 1990 between the
Registrant and George S. Kariotis, as amended May 15, 1991
and amended January 22, 1993 (Filed as Exhibit 10(l) to the
Annual Report on Form 10-K for the fiscal year ended March
28, 1993)* and amended August 10, 1993 (Filed as Exhibit
10(k) to the Quarterly Report on Form 10-Q for the quarter
ended July 3, 1994)*. (1)
(j) Employment Agreement dated October 1, 1990 between the
Registrant and Patrick Daniel Gallagher, as amended March 24,
1992 and amended by Second Amendment dated September 29, 1992
and Third Amendment dated January 20, 1993 (Filed as Exhibit
10(m) to the Annual Report on Form 10-K for the fiscal year
ended March 28, 1993)* and Fourth Amendment dated August 3,
1994 (Filed as Exhibit 10(l) to the Quarterly Report on Form
10-Q for the quarter ended October 2, 1994)*. (1)
(k) Employment Agreement dated April 28, 1994 between the
Registrant and Joseph J. Alberici. (Filed as Exhibit 10(o)
to the Annual Report on Form 10-K for the fiscal year ended
April 3, 1994)*; and further amended August 3, 1994 (Filed as
Exhibit 10(n) to the Quarterly Report on Form 10-Q for the
quarter ended October 2, 1994)*. (1)
(l) Consulting Agreement dated August 13, 1992 between the
Registrant and Sidney Topol. (Filed as Exhibit 10(p) to the
Annual Report on Form 10-K for the fiscal year ended April 3,
1994)*. (1)
(m) Employment Agreement dated August 3, 1994 between the
Registrant and Thomas C. Leonard (Filed as Exhibit 10(p) to
the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994)*. (1)
(n) Master Lease Agreement between Comdisco, Inc. and the
Registrant dated September 16, 1994 (Filed as Exhibit 10(q)
to the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994)*.
(o) Alpha Industries, Inc., 1994 Non-Qualified Stock Option Plan
for Non-Employee Directors (Filed as Exhibit 10(r) to the
Quarterly Report on Form 10-Q for the quarter ended October
2, 1994)*. (1)
31
32
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
(p) Alpha Industries Executive Compensation Plan dated January 1,
1995 and Trust for the Alpha Industries Executive
Compensation Plan dated January 3, 1995. (1)
(q) Letter of Employment dated January 24, 1995 between the
Registrant and David J. Aldrich. (1)
(r) Alpha Industries, Inc. Savings and Retirement Plan dated
March 31, 1995. (1)
(11) Statement re computation of per share earnings.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Securities
and Exchange Commission on January 30, 1995 reporting under
Item 5 - Other Events the resignation of Gerald T. Cameron,
Sr. as director effective January 4, 1995.
- ------------------
*Not filed herewith. In accordance with Rule 12b-32 promulgated pursuant to the
Securities Exchange Act of 1934, as amended, reference is hereby made to
documents previously filed with the Commission, which are incorporated by
reference herein.
(1) Management Contracts.
32
33
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.
ALPHA INDUSTRIES, INC.
(REGISTRANT)
By: /s/ MARTIN J. REID
-----------------------------------------------
Martin J. Reid, President
Date: June 30, 1995
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 indicated on June 30, 1995.
SIGNATURE AND TITLE SIGNATURE AND TITLE
- ------------------- -------------------
/s/ GEORGE S. KARIOTIS /s/ ARTHUR PAPPAS
- ----------------------------- ------------------------------
George S. Kariotis Arthur Pappas
Chairman of the Board Director
/s/ MARTIN J. REID /s/ RAYMOND SHAMIE
- ----------------------------- ------------------------------
Martin J. Reid Raymond Shamie
Chief Executive Officer Director
President and Director
/s/ DAVID J. ALDRICH /s/ SIDNEY TOPOL
- ----------------------------- ------------------------------
David J. Aldrich Sidney Topol
Chief Financial Officer Director
Principal Financial Officer
/s/ PAUL E. VINCENT
- -----------------------------
Paul E. Vincent
Controller
Chief Accounting Officer
33
34
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES-----------------------------------------
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
CHARGED
BALANCE AT TO COSTS BALANCE AT
BEGINNING AND END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR
- -----------------------------------------------------------------------------------------------------------
Year ended April 2, 1995
Allowance for doubtful accounts................ $ 945 $ 60 $ 222 $ 783
Allowance for estimated losses on contracts.... $ 593 $ -- $ 476 $ 117
Year ended April 3, 1994
Allowance for doubtful accounts................ $ 293 $ 663 $ 11 $ 945
Allowance for estimated losses on contracts.... $ 448 $ 145 $ -- $ 593
Year ended March 28, 1993
Allowance for doubtful accounts................ $ 295 $ 70 $ 72 $ 293
Allowance for estimated losses on contracts.... $ 899 $ -- $ 451 $ 448
34
1
AMENDMENT TO ALPHA INDUSTRIES, INC.
LONG-TERM COMPENSATION PLAN EXHIBIT 10(f)
This is an amendment dated as of this 27th day of October, 1994 of the
Alpha Industries, Inc. Long-Term Compensation Plan.
INTRODUCTION
The Board of Directors of Alpha Industries, Inc. adopted a Long-Term
Compensation Plan dated September 24, 1990 to provide an integrated executive
compensation strategy for senior executives which Plan was amended March 28,
1991. Questions of interpretation have come up which have been considered by
the Board of Directors. In order to clarify the Plan, the Board has agreed to
amend the Plan effective as of the date of adoption in the manner set forth
below.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Plan is hereby amended as follows:
1. The definition of "Annuity Equivalent of Stock Options" in Section 1.3 is
amended by deleting the same in its entirety and substituting the following:
"Annuity Equivalent of Stock Options" means the annual benefit payable
under a single life annuity, with payment commencing at the Participant's
Normal Retirement Date, which could be purchased using the Option Exercise
Proceeds for all Options previously exercised by the Participant and/or
available for exercise by the Participant upon his retirement plus, in a
case of Participants who have separated from employment, all options
available for exercise by the Participant on the date of termination and,
in the case of a Change of Control, all Options available for exercise by
the Participant on the effective date of the Change of Control.
2. The definition of "Option Exercise Proceeds" in Section 1.3 is amended by
adding a new subsection as follows:
"(iv) the expiration date of any Options not exercised."
3. The definition of "Years of Service" in Section 1.3 is amended by adding
thereto the following sentences: "A Participant who is on an approved leave
of absence or is working less than full time on an approved basis shall be
given credit for a partial year of service on a pro rata basis based on the
number of hours worked during the relevant twelve month period. Any
benefits measured by "Years of Service" shall be adjusted to reflect the
Participant's partial Year(s) of Service, if any.
Date of approval by the Board of Directors: October 27, 1994
ATTEST:
/s/ DONALD E. PAULSON
- ----------------------------------
Donald E. Paulson, Secretary
1
Exhibit 10(p)
ALPHA INDUSTRIES EXECUTIVE COMPENSATION PLAN
ARTICLE 1. - INTRODUCTION
1.1. PURPOSE OF PLAN
The Employer has adopted the Plan set forth herein to provide a means by which
certain employees may elect to defer receipt of designated percentages or
amounts of their Compensation and to provide a means for certain other deferrals
of compensation.
1.2. STATUS OF PLAN
The Plan is intended to be "a plan which is unfunded and is maintained by an
employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" within the meaning
of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"). To the extent possible, it shall be interpreted and
administered in a manner consistent with that intent.
ARTICLE 2. - DEFINITIONS
Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:
2.1. ACCOUNT means, for each Participant, the account established for his or
her benefit under Section 5.1.
2.2. ADDITIONAL EMPLOYER CONTRIBUTION means a discretionary contribution made
by The Employer, as described in Section 4.2.
2.3. CHANGE OF CONTROL means (a) the purchase or other acquisition in one or
more transactions other than from the Employer, by any individual, entity or
group of persons, within the meaning of section 13(d)(3) or 14(d) of the
Securities Exchange Act of 1934 or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13d-3 of Securities Exchange
Act of 1934) of 30 percent or more of either the outstanding shares of common
stock or the combined voting power of the Employer's then outstanding voting
securities entitled to vote generally, or (b) the approval by the stockholders
of the employer of a reorganization, merger, or consolidation, in each case,
with respect to which persons who were stockholders of the Employer immediately
prior to such reorganization, merger or consolidation do not immediately
thereafter own more than 50 percent of the combined voting power of the
reorganized, merged or consolidated Employer's then outstanding securities that
are entitled to vote generally in the election of directors or (c) the sale of
substantially all of the Employer's assets.
2.4. CODE means the Internal Revenue Code of 1986, as amended from time to
time. Reference to any section or subsection of the Code includes reference to
any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such section or subsection.
2.5. COMPENSATION with regard to Participant means his or her wages,
salaries, fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer or an Affiliate
to the extent that the amounts are includable in gross income, including,
2
but not limited to, commissions paid to salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements, and expense allowances, but only to
the extent that such amounts are included in income, and not including those
items excludable from the definition of compensation under Treas. Reg., Section
1.415-2(d)(3), or any successor or replacement provision.
2.6. COMPENSATION COMMITTEE means the Board of Directors or such person or
persons as may be designated by the Board of Directors to serve as the
Compensation Committee hereunder.
2.7. EFFECTIVE DATE means January 1, 1995.
2.8. ELECTION FORM means the participation election form as approved and
prescribed by the Plan Administrator.
2.9. ELECTIVE DEFERRAL means the portion of Compensation which is deferred by
a Participant under Section 4.1.
2.10. ELIGIBLE EMPLOYEE means, on the Effective Date or on any Entry Date
thereafter, each key employee of the Employer selected by the Compensation
Committee.
2.11. EMPLOYER means Alpha Industries, Inc., located at 20 Sylvan Rd., Woburn,
MA 01801, any successor to all or a major portion of the Employer's assets or
business which assumes the obligations of the Employer, and each other entity
that is affiliated with the Employer which adopts the Plan with the consent of
the Employer.
2.12. ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any legislation
which amends, supplements or replaces such section or subsection.
2.13. INSOLVENT means either (i) the Employer is unable to pay its debts as
they become due, or (ii) the Employer is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
2.14. PARTICIPANT means any individual who participates in the Plan in
accordance with Article 3.
2.15. PLAN means this Plan as it may be amended from time to time.
2.16. PLAN ADMINISTRATOR means the Employer, or such person as the Employer
designates, from time to time, in a writing attached to this Plan.
2.17. PLAN YEAR means the calendar year.
2.18. RETIREMENT AGE means 55 years of age.
2.19. TOTAL AND PERMANENT DISABILITY means the inability of a Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months, and the permanence and degree of which shall be
supported by medical evidence satisfactory to the Plan Administrator.
3
2.20. TRUST means the trust established by the Employer that identifies the
Plan as a plan with respect to which assets are to be held by the Trustee.
2.21. TRUST AGREEMENT means the agreement between the Employer and the Trustee
establishing the Trust.
2.22. TRUSTEE means the trustee or trustees under the Trust.
2.23. YEAR OF SERVICE means a computation period and service requirement that
may be established by the Employer with notice to the Participants.
ARTICLE 3. - PARTICIPATION
3.1. COMMENCEMENT OF PARTICIPATION
Any individual who elects to defer part of his or her compensation in accordance
with Section 4.1 shall become a Participant in the Plan as of the date such
deferrals commence in accordance with Section 4.1.
Any individual who is not already a Participant and whose Account is credited
with an Additional Employer Contribution shall become a Participant as of the
date such amount is credited.
3.2. CONTINUED PARTICIPATION
A Participant in the Plan shall continue to be a Participant so long as any
amount remains credited to his or her Account.
ARTICLE 4. - ELECTIVE AND ADDITIONAL EMPLOYER CONTRIBUTIONS
4.1. ELECTIVE DEFERRALS
An individual who is an Eligible Employee on the Effective Date may, by
completing an Election Form and filing it with the Plan Administrator within 30
days following the Effective Date, elect to defer a percentage or dollar amount
of one or more payments of Compensation, on such terms as the Plan Administrator
pay permit, which are payable to the Participant after the date on which the
individual files the Election Form. Any individual who becomes an Eligible
Employee after the Effective Date may, be completing an Election Form and filing
it with the Plan Administrator within 30 days following the date on which the
Plan Administrator gives such individual written notice that the individual is
an Eligible Employee, elect to defer a percentage or dollar amount of one or
more payments of Compensation, on such terms as the Plan Administrator may
permit, which are payable to the Participant after the date on which the
individual files the Election Form. Any eligible Employee who has not otherwise
initially elected to defer compensation in accordance with this paragraph 4.1
may elect to defer a percentage or dollar amount of one or more payments of
Compensation, on such terms as the Plan Administrator may permit, commencing
with compensation paid in the next succeeding Plan Year, by completing an
Election Form prior to the first day of such succeeding Plan Year. In addition,
a Participant may defer all or part of the amount of any elective deferral or
matching contribution made on his or her behalf to the Employer's 401(i) plan
for the prior Plan Year but treated as an excess deferral, an excess
contribution or otherwise limited by the application of the limitations of
sections 401(k), 401(m), 415 or 402(q) of the code, so long as the Participant
so indicates on an Election Form. A Participant's Compensation shall be reduced
in accordance with the Participant's election hereunder and amounts deferred
hereunder shall be paid by the
4
employer to the trust as soon as administratively feasible and credited to the
Participant's Account as of the date the amounts are received by the Trustee.
An election to defer a percentage or dollar amount of Compensation for any Plan
Year shall apply for subsequent Plan Years unless changed or revoked. A
Participant may change or revoke his or her deferral election as of the first
day of any Plan Year by giving written notice to the Plan Administrator before
such first day (or any such earlier date as the Plan Administrator may
prescribe).
4.2. ADDITIONAL EMPLOYER CONTRIBUTIONS
The Employer may, in its sole discretion, make Additional Employer Contributions
to the account of Eligible Employees on such terms as the Employer shall specify
at the time it makes the contribution. To the extent that they conflict with
the provisions of this Plan, the terms specified by the Employer shall supersede
any other provision of this Plan with regard to such Additional Employer
Contributions, and earnings or losses with respect thereto. If the Employer
does not specify a method of distribution, the Additional Employer Contribution
shall be distributed in a manner consistent with the election last made by the
particular Participant prior to the year in which the Additional Employer
Contribution is made. The Employer, in its discretion, may permit the
Participant to designate a distribution schedule for a particular Additional
Employer Contribution provided that such designation is made prior to the time
that the Employer finally determines that the Participant will receive the
Additional Employer Contribution.
ARTICLE 5. - ACCOUNTS
5.1. ACCOUNTS
The Plan Administrator shall establish an Account for each participant
reflecting Elective Deferrals, and Additional Employer Contributions, if any,
made for the Participant's benefit together with any adjustments for income,
gain or loss and any payments from the Account. In its discretion, the Plan
Administrator may solicit recommended investments from each Participant and may
maintain records of the income, gain or loss attributable to the Participant's
account in accordance with the performance of such recommended investments or
such other investments as the Plan Administrator may select. In its discretion,
the Plan Administrator may cause the Trustee to maintain and invest separate
asset accounts corresponding to each Participant's Account. The Plan
Administrator shall establish sub-accounts for each Participant that has more
than one election in effect under Section 7 and such other subaccounts as are
necessary for the proper administration of the Plan. As of the last business
day of each calendar quarter, the Plan Administrator shall provide the
Participant with a statement of his or her Account reflecting the income, gains
and losses (realized and unrealized), amounts of deferrals, and distributions of
such Account since the prior statement.
5.2. INVESTMENTS
So long as the Employer is not insolvent, and subject to the provisions of the
Trust Agreement, the assets of the Trust shall be invested in such investments
as the Company shall determine. In the Company's discretion, it may designate
one or more agents in writing to the Trustee, which agents may be designated
with respect to all or a portion of the assets held by the Trustee for the
purpose of making such investments.
ARTICLE 6. - VESTING
5
Subject to the provisions of Section 10.1, a Participant shall have a vested
right to all Elective Deferrals and all income and gain attributable thereto,
reduced by losses, if any, as are credited to his or her Account. If the
Employer chooses to make Additional Employer Contributions, then each
Participant's right to the portion of his or her Account attributable to
Additional Employer Contributions and income and gain attributable thereto,
reduced by losses, if any, shall be in accordance with terms determined by the
Employer and provided to the Participant.
ARTICLE 7. - PAYMENTS
7.1. ELECTION AS TO TIME AND FORM OF PAYMENT
A Participant shall elect (on the election Form used to elect to defer
Compensation under Section 4.1) the date at which the Elective Deferrals and
vested Additional Employer Contributions, if any, including any earnings
attributable thereto, reduced by losses, if any, will be paid to the
Participant. The Participant shall also elect thereon for payment to be paid in
either:
a. a single lump-sum payment; or
b. annual installments over a period elected by the Participant up to
10 years, the amount of each annual installment to equal the then
balance of all of the Participant's Account attributable to Elective
Deferrals and any earnings attributable thereto, reduced by losses,
if any, and the vested portion of any Additional Employer
Contributions and earnings attributable thereto, reduced by losses,
if any, as determined immediately prior to the payment of the
installment, and divided by the number of installments then remaining
to be paid.
Each such election will be effective for the Plan Year for which it is made and
succeeding Plan Years, unless changed by the Participant. Except as explicitly
provided herein, any change will be effective only for Elective Deferrals and
Additional Employer Contributions made for the first Plan Year beginning after
the date on which the Election Form containing the change is filed with the Plan
Administrator. Notwithstanding the preceding sentence, the payments due in any
calendar year pursuant to this Section 7.1 shall be paid in the first full
calendar month immediately following the actual date that the Participant ceases
being an employee of the Employer, or the twelve month period commencing in that
month, rather than the month or year originally selected, if the Participant
makes an election in such form as the Plan Administrator may require, and the
election is filed with the Plan Administrator prior to the calendar year in
which the payment otherwise would have been made. Except as provided in
Sections 7.2, 7.3, 7.4 or 7.5, or any schedule provided by the Employer to the
Participant for Additional Employer Contributions and income or gain
attributable thereto, reduced by losses, if any, payment of a Participant's
Account shall be made in accordance with the Participant's elections as provided
in this Section 7.1.
7.2. CHANGE OF CONTROL
Unless (i) the Board of Directors of the Employer shall vote to continue this
Plan on substantially the same terms not later than 60 days after a Change in
Control and send notice of such vote to each Participant, then (ii) as soon as
possible following a Change of Control of Employer, each Participant shall be
paid all of the Participant's Account attributable to Elective Deferrals and any
earnings attributable thereto, reduced by losses, if any, and all of any
Additional Employer Contributions and earnings attributable thereto, reduced by
losses, if any, (whether or not considered vested for any other purpose
hereunder) in a single lump sum.
7.3. TERMINATION OF EMPLOYMENT; TOTAL AND PERMANENT
6
DISABILITY
Except as provided in Section 7.2, upon termination of a Participant's
employment prior to the Retirement Age, for any reason other than death or
Permanent and Total Disability, all of the Participant's Account attributable to
Elective Deferrals and any earnings attributable thereto, reduced by losses, if
any, and the vested portion of any Additional Employer Contributions and
earnings attributable thereto, reduced by losses, if any, shall be paid to the
Participant in a single lump sum as soon as practicable following the date of
such termination. If a Participant suffers permanent and total disability,
whether or not employed by the Employer at that time, the Plan Administrator, in
its sole discretion, may pay out all of the Participant's Account attributable
to Elective Deferrals and any earnings attributable thereto, reduced by losses,
if any, and the vested portion of any Additional Employer Contributions and
earnings attributable thereto, reduced by losses, if any, in a lump sum, or in
annual installments, regardless of any election made by the Participant and
regardless of whether payments have already commenced under Section 7.1.
7.4. DEATH
If a Participant dies prior to the complete distribution of his or her Account,
all of the Participant's Account attributable to Elective Deferrals and any
earnings attributable thereto, reduced by losses, if any, and the vested portion
of any Additional Employer Contributions and earnings attributable thereto,
reduced by losses, if any, shall be paid as soon as practicable to the
Participant's designated beneficiary or beneficiaries, in the form elected by
the Participant under either of the following options:
a. a single lump-sum payment; or
b. annual installments over a period elected by the Participant up to
10 years, the amount of each annual installment to equal the then
balance of all of the Participant's Account attributable to Elective
Deferrals and any earnings attributable thereto, reduced by losses if
any, and the vested portion of any Additional Employer Contributions
and earnings attributable thereto, reduced by losses, if any, as
determined immediately prior to the payment of the installment, and
divided by the number of installments then remaining to be paid.
Any designation of beneficiary and form of payment to such beneficiary shall be
made by the Participant on an Election form filed with the Plan Administrator
and may be changed by the participant at any time by filing another Election
Form containing the revised instructions. If no beneficiary is designated or no
designated beneficiary survives the Participant, payment shall be made to the
Participant's surviving spouse, or, if none, to his or her issue per stripes, in
a single payment. If no spouse or issue survives the Participant, payment shall
be made in a single lump sum to the Participant's estate.
7.5. UNFORESEEN EMERGENCY
If a Participant suffers an unforeseen emergency, as defined herein, the Plan
Administrator, in its sole discretion, may pay to the Participant up to and
including the total of that portion, if any, of all of the Participant's Account
attributable to Elective Deferrals and any earnings attributable thereto,
reduced by losses, if any, and the vested portion of any Additional Employer
Contributions and earnings attributable thereto, reduced by losses, if any. The
determination of the amount to be paid shall equal that amount which the Plan
Administrator determines, in its sole discretion, is necessary to satisfy the
emergency need, including any amounts necessary to pay any federal, state or
local income taxes reasonably anticipated to result from the distribution. A
Participant requesting an emergency payment shall apply for the payment in
writing in a form approved by the Plan Administrator and shall provide such
additional information as the Plan
7
Administrator may require. For purposes of this paragraph, "unforeseen
emergency" means an immediate and heavy financial need resulting from any of the
following:
a. expenses which are not covered by insurance and which the Participant
or his or her spouse or dependent has incurred as a result of, or is
required to incur in order to receive, medical care;
b. the need to prevent eviction of a Participant from his or her
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
c. any other circumstance that is determined by the Plan Administrator
in its sole discretion to constitute an unforeseen emergency which
is not covered by insurance and which cannot reasonably be relieved
by the liquidation of the Participant's assets.
7.6. FORFEITURE OF NON-VESTED AMOUNTS
Any amounts credited to a Participant's Account which are attributable to the
non-vested portion of any Additional Employer Contributions, and earnings
attributable thereto, reduced by losses, if any, not vested at the time payments
are commenced pursuant to Sections 7.1, 7.3 or 7.4, shall be forfeited by the
Participant at the time payment begins under such Sections, and may be applied
by the Company as it sees fit, which may include satisfying the Employer's
obligation to make contributions to the Trust.
7.7. TAXES
The Plan Administrator shall withhold or otherwise appropriately provide for all
federal, state or local taxes that the Plan Administrator determines are
required to be withheld or otherwise provided for from any payments made
pursuant to this Article 7.
ARTICLE 8. - PLAN ADMINISTRATOR
8.1. PLAN ADMINISTRATION AND INTERPRETATION
The Plan Administrator shall oversee the administration of the Plan. The Plan
Administrator shall have complete control and authority to determine the rights
and benefits of any and all Participants. Any determinations may be made on a
case-by-case basis or a plan wide basis, as determined by the Plan Administrator
in its sole discretion, including all claims, demands and actions arising out of
the provisions of the Plan of any Participant, beneficiary, deceased
Participant, or other person having or claiming to have any interest under the
Plan. The Plan Administrator shall have complete discretion to interpret the
Plan and to decide all matters under the Plan. Such interpretation and decision
shall be final, conclusive and binding on all Participants and any person
claiming under or through any Participant. Any individual who is a Participant
and who is serving as Plan Administrator or part of a committee comprising the
Plan Administrator will not vote or act on any matter relating solely to himself
or herself. When making a determination or calculation, the Plan Administrator
shall be entitled to rely on information furnished by a Participant, a
beneficiary, the employer or the Trustee, or such other persons, as it sees fit.
The Plan Administrator shall have the responsibility for complying with any
reporting and disclosure requirements of ERISA.
8.2. POWERS, DUTIES, PROCEDURES, ETC.
The Plan Administrator shall have such powers and duties, may adopt such rules
and tables, may act in accordance with such procedures, may appoint such
officers or agents, may delegate such
8
powers and duties, may receive such reimbursements and compensation, and shall
follow such claims and appeal procedures with respect to the Plan as it may
establish.
8.3. INDEMNIFICATION OF PLAN ADMINISTRATOR
The Employer agrees to indemnify and to defend to the fullest extent permitted
by law any officer(s) or employee(s) who serve as Plan Administrator (including
any such individual who formerly served as Plan Administrator) against all
liabilities, damages, costs and expenses (including attorneys' fees and amounts
paid in settlement of any claims approved by the Employer) occasioned by any act
or omission to act in connection with the Plan, if such act or omission is in
good faith.
ARTICLE 9. - AMENDMENT AND TERMINATION
9.1. AMENDMENTS
The Employer shall have the right to amend the Plan from time to time, subject
to Section 9.3, by an instrument in writing which has been executed on the
employer's behalf by its duly authorized officer.
9.2. TERMINATION OF PLAN
This Plan is strictly a voluntary undertaking on the part of the employer and
shall not be deemed to constitute a contract between the Employer and any
eligible Employee (or any other employee) or a consideration for, or an
inducement or condition of employment for, the performance of the services by
any eligible employee (or other employee). The employer reserves the right to
terminate the Plan at any time, subject to Section 9.3, by an instrument in
writing which has been executed on the Employer's behalf by its duly authorized
officer. Upon termination, the employer may (a) elect to continue to maintain
the Trust to pay benefits hereunder as they become due as if the Plan had not
terminated or (b) direct the Trustee to pay promptly to Participants (or their
beneficiaries) all of the Participant's Account attributable to Elective
Deferrals and any earnings attributable thereto, reduced by losses, if any, and
the vested portion of any Additional Employer Contributions and earnings
attributable thereto, reduced by losses, if any,. After Participants and their
beneficiaries are paid all Plan benefits to which they are entitled, all
remaining assets of the Trust shall be returned to the Employer.
9.3. EXISTING RIGHTS
No amendment or termination of the Plan shall adversely affect the rights of any
Participant with respect to all of the Participant's Account attributable to
Elective Deferrals and any earnings attributable thereto, reduced by losses, if
any, and the vested portion of any Additional Employer Contributions and
earnings attributable thereto, reduced by losses, if any, on the date of such
amendment or termination.
ARTICLE 10. - MISCELLANEOUS
10.1. PARTICIPANTS ARE UNSECURED CREDITORS
The Plan constitutes a mere promise by the Employer to make payments in
accordance with the terms of the Plan and Participants and beneficiaries shall
have the status of general unsecured creditors of the Employer. Nothing in the
Plan will be construed to give any employee or any other person rights to any
specific assets of the Employer or of any other person. In all events, it is
the intent of the Employer that the Plan be treated as unfunded for tax purposes
and for purposes of ERISA.
9
10.2. NON-ASSIGNABILITY
The benefits, payments, proceeds or claims of any Participant or beneficiary are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumberance, attachment, or garnishment by creditors of any
Participant or any beneficiary of any Participant, nor shall any Participant or
beneficiary have any right to anticipate, sell, transfer, assign, pledge, or
encumber any of the benefits or payments or proceeds which he or she may expect
to receive, contingently or otherwise, under the Plan.
10.3. LIMITATION OF PARTICIPANTS' RIGHTS
Nothing contained in the Plan shall confer upon any person a right to be
employed or to continue in the employ of the Employer, or interfere in any way
with the right of the Employer to terminate the employment of a Participant in
the Plan at any time, with or without cause.
10.4. PARTICIPANTS BOUND
Any action with respect to the Plan taken by the Plan Administrator or the
Employer or the Trustee or any action authorized by or taken at the direction of
the Plan Administrator, the employer or the Trustee shall be conclusive upon all
Participants and beneficiaries entitled to benefits under the Plan.
10.5. RECEIPT AND RELEASE
Any payment to any Participant or beneficiary in accordance with the provisions
of the Plan shall, to the extent thereof, be in full satisfaction of all claims
against the employer, the Plan Administrator and the Trustee under the Plan, and
the Plan Administrator may require such Participant or beneficiary, as a
condition precedent to such payment, to execute a receipt and release to such
effect. If any Participant or beneficiary is determined by the Plan
Administrator to be incompetent by reason of physical or mental disability
(including minority) to give a valid receipt and release, the Plan Administrator
may cause the payment or payments becoming due to such person to be made to
another person for his or her benefit without responsibility on the part of the
Plan Administrator the employer or the Trustee to follow the application of such
funds.
10.6. GOVERNING LAW
The Plan shall be construed, administered, and governed in all respects under
and by the laws of the Commonwealth of Massachusetts. If any provision shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
10.7. HEADINGS AND SUBHEADINGS
Headings and subheadings in this Plan are inserted for convenience only and are
not to be considered in the construction of the provisions hereof.
10
Exhibit 10(p)
TRUST FOR THE ALPHA INDUSTRIES EXECUTIVE COMPENSATION PLAN
This Agreement made this day of January 3, 1995 by and between Alpha
Industries, Inc. ("Company") and Merrill Lynch, an Illinois corporation
(Trustee);
WHEREAS, Company has adopted a nonqualified deferred compensation Plan with
the name "The Alpha Industries Executive Compensation Plan".
WHEREAS, Company has incurred or expects to incur liability under the terms
of such Plan with respect to the individuals participating in such Plan.
WHEREAS, Company wishes to establish a trust (the "Trust") and to contribute
to the Trust assets that shall be held therein, subject to the claims of
Company's Insolvency, as herein defined, until paid to Plan participants and
their beneficiaries in such manner and at such time as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall constitute
an unfunded arrangement and shall not affect the status of the Plan as an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees for purpose of
Title I of the Employee Retirement Income Security Act of 1974.
WHEREAS, it is the intention of Company to make contributions to the Trust to
provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a.) Company hereby deposits with Trustee in trust such cash and/or
marketable securities, if any, listed in Appendix A, which shall become the
principal of the Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
(b.) The Trust hereby established is revocable; it shall become irrevocable
upon a Change in Control, as defined herein.
(c.) The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d.) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Plan participants and general creditors as herein set
forth. Plan participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held by the Trust
11
will be subject to the claims of Company's general creditors under federal and
state law in the event of Insolvency, as defined in Section 3(a) herein.
(e.) Company, in its sole discretion, may at any time, or from time to time,
make additional deposits of cash or other property in trust with Trustee to
augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
(f.) Trustee shall not be obligated to receive property unless prior thereto
Trustee has agreed that such property is acceptable to Trustee and Trustee has
received such reconciliation, allocation, investment or other information
concerning, or representation with respect to, the property as Trustee may
require. Trustee shall have no duty or authority to (a) require any deposits to
be made under the Plan or to Trustee, (b) compute any amount to be deposited
under the Plan to Trustee, or (c) determine whether amounts received by Trustee
comply with the Plan. Assets of the Trust may, in Trustee's discretion, be held
in an account with an affiliate of Trustee.
Section 2. Accounting for and Payments to Plan Participants and Their
Beneficiaries.
(a.) At the request of the Company, the Trustee shall maintain and invest
separate asset accounts corresponding to each participant, and such sub-accounts
thereunder as may be requested by the Company. As of the last business day of
each calendar quarter, the Trustee shall provide the Company with a statement of
each participant's account reflecting the income, gains and losses (realized and
unrealized), amounts of deferrals, and distributions of such account since the
prior statement.
(b.) With respect to each Plan participant Company shall deliver to Trustee a
schedule (the "Payment Schedule") that indicates the amounts payable in respect
of the participant (and his or her beneficiaries), that provides a formula or
other instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available under
the Plan), and the time of commencement for payment of such amounts. The
Payment Schedule shall be delivered to Trustee not more than 30 business days
not fewer than 15 business days prior to the first date on which a payment is to
be made to the Plan participant. Any change to a Payment Schedule shall be
delivered to Trustee not more than 30 days nor fewer than 15 days prior to the
date on which the first payment is to be made in accordance with the changed
Payment Schedule. Except as otherwise provided herein, Trustee shall make
payments to Plan participants and their beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provisions for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid by Company, it
being understood among the parties hereto that (1) Company shall on a timely
basis provide Trustee specific information as to the amount of taxes to be
withheld and (2) Company shall be obligated to receive such withheld taxes from
Trustee and properly pay and report such amounts to the appropriate taxing
authorities.
(c.) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan shall be determined by Company or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
12
(d.) Company may make payment of benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the Plan, Company
shall notify Trustee of its decision to make payment of benefits directly prior
to the time amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Plan, Company shall make the balance of each payment as it falls due. Trustee
shall notify Company where principal and earnings are not sufficient.
(e.) Trustee shall have no responsibility to determine whether the Trust is
sufficient to meet the liabilities under the Plan, and shall not be liable for
payments or Plan liabilities in excess of the value of the Trust's assets.
Section 3. Trustee Responsibility Regarding Payments to Trust Beneficiary
When Company Is Insolvent.
(a.) Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
(b.) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1.) The Board of Directors and the Chief Executive Officer of Company (or,
if there is no Chief Executive Officer, the highest ranking officer) shall have
the duty to inform Trustee in writing of Company's Insolvency. If a person
claiming to be a creditor of Company alleges in writing to Trustee that Company
has become Insolvent, Trustee shall promptly notify Company of such allegation,
shall determine whether Company is Insolvent, and, pending such determination,
Trustee shall discontinue payment of benefits to Plan participants or their
beneficiaries.
(2.) Unless Trustee has actual knowledge of Company's Insolvency, or has
received notice from Company or a person claiming to be a creditor alleging that
Company is Insolvent, Trustee shall have no duty to inquire whether company is
Insolvent. Trustee may in all events rely on such evidence concerning Company's
solvency as may be furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning Company's solvency.
(3.) If at any time Trustee has determined that Company is Insolvent, Trustee
shall discontinue payments to Plan participants or their beneficiaries and shall
hold the assets of The Trust for the benefit of Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of Plan
participants or their beneficiaries to pursue their rights as general creditors
of Company with respect to benefits due under the Plan or otherwise.
(4.) Trustee shall resume the payment of benefits to Plan participants or
their beneficiaries in accordance with Section 2 of this Trust Agreement only
after Trustee has determined that Company is not Insolvent (or is no longer
Insolvent).
13
(c.) Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants provided for hereunder during any such period of discontinuance;
provided that Company has given Trustee the information with respect to such
payments made during the period of discontinuance prior to resumption of
payments by Trustee.
Section 4. Payments to Company.
Except as provided in Section 3 hereof, after the Trust becomes irrevocable,
Company shall have no right or power to direct Trustee to return to Company or
to divert to others any of the Trust assets before all payment of benefits have
been made to Plan participants and their beneficiaries pursuant to the terms of
the Plan.
Section 5. Investment Authority.
(a.) Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by Company. All rights associated with assets of
the Trust shall be exercised by Trustee or the person designated by Trustee, and
shall in no event be exercised by or rest with Plan participants, except that
voting rights with respect to Trust assets will be exercised by Company unless
an investment adviser has been appointed pursuant to Section 5(c) and voting
authority has been delegated to such investment adviser.
(b.) Company shall have the right at anytime, and from time to time in its
sole discretion, to substitute assets of equal fair market value for any asset
held by the Trust. This right is exercised by Company in a non fiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(c.) Trustee may appoint one or more investment advisers who are registered
as investment advisers under the Investment Advisers Act of 1940, who may be
affiliates of Trustee, to provide investment advice on a discretionary or
non-discretionary basis with respect to all or a specified portion of the assets
of the Trust.
(d.) Only for the purpose of carrying out the directions of the Company, or
the directions of one or more agents designated in writing by the Company to the
Trustee, which agents may be designated with respect to a portion of the assets
held by the Trustee, the Trustee, or Trustee's designee, is authorized and
empowered:
(1.) To invest and reinvest Trust assets, together with the income
therefrom, in common stock, preferred stock, convertible
preferred stock, bonds, debentures, convertible debentures and
bonds, mortgages, notes, commercial paper and other evidences of
indebtedness (including those issued by Trustee), shares of
mutual funds (which funds may be sponsored, managed or offered by
an affiliate of Trustee), guaranteed investment contracts, bank
investment contracts, other securities, policies of life
insurance, annuity contracts, options, options to buy or sell
securities or other assets, and all other property of any type
(personal, real or mixed and tangible or intangible);
14
(2.) To deposit or invest all or any part of the assets of the Trust
in savings accounts or certificates of deposit or other deposits
in a bank or saving and loan association or other depository
institution, including Trustee or any of its affiliates, provided
with respect to such deposits with Trustee or an affiliate the
deposits bear a reasonable interest rate;
(3.) To hold, manage, improve, repair and control all property, real
or personal, forming part of the Trust; to sell, convey,
transfer, exchange, partition, lease for any term, even extending
beyond the duration of this Trust, and otherwise dispose of the
same from time to time;
(4.) To hold in cash, without liability for interest, such portion of
the Trust as is pending investments, or payment of expenses, or
the distribution of benefits;
(5.) To take such actions as may be necessary or desirable to protect
the Trust from loss due to the default on mortgages held in the
Trust including the appointment of agents or trustees in such
other jurisdictions as may seem desirable, to transfer property
to such agents or trustees, to grant to such agents such powers
as are necessary or desirable to protect the Trust, to direct
such agent or trustee, or to delegate such power to direct, and
to remove such agent or trustee;
(6.) To settle, compromise or abandon all claims and demands in favor
of or against the Trust;
(7.) To exercise all of the further rights, powers. options and
privileges granted, provided for, or vested in trustees generally
under the laws of the state in which Trustee is incorporated as
set forth above, so that the powers conferred upon Trustee herein
shall not be in limitation of any authority conferred by law, but
shall be in addition thereto:
(8.) To maintain accounts at, and execute transactions through, any
brokerage or other firm, including any firm which is an affiliate
of Trustee.
(9.) to register securities, or any other property, in its name or in
the name of any nominee, including the name of any affiliate or
the nominee name designated by any affiliate, with or without
indication of the capacity in which property shall be held, or to
hold securities in bearer form and to deposit any securities or
other property in an depository or clearing corporation;
(10.) to make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other
instruments in writing necessary or appropriate for the
accomplishment of any of the powers listed in this Trust
Agreement; and
(11.) generally to do all other acts necessary or appropriate for the
protection of the property held by the Trust.
15
Section 6. Additional Powers of Trustee. To the extent necessary or which
it deems appropriate to implement its powers under Section 5 or otherwise to
fulfill any of its duties and responsibilities as trustee of the Trust, Trustee
shall have the following additional powers and authority This is former
subsection (b). to designate and engage the services of, and to delegate powers
and responsibilities to, such agents, representatives, advisers, counsel and
accountants ("Agents") as Trustee considers necessary or appropriate, any of
whom may be an affiliate of Trustee or a person who renders services to such an
affiliate, and, as a part of its expenses under this Trust Agreement, to pay
their reasonable expenses and compensation, provided that the Trustee shall not
retain any Agent without the prior consent of the Company, unless either (i)
there are exigent circumstances that require the action before it would be
reasonably practical for the Trustee to first obtain the Company's approval, or
(ii) if the Company is insolvent, as provided in Section 3(a).
Section 7. Disposition of Income.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 8. Accounting by Trustee.
(a.) Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 90 days following the close of each calendar year
and within 90 days after removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be. Trustee may satisfy its obligation under this Section 8 by
rendering to Company monthly statements setting forth the information required
by this Section separately for the month covered by the statement.
Section 9. Responsibility and Indemnity of Trustee.
(a.) Trustee shall act with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no
liability to any person for any action taken pursuant to a direction, request or
approval given by Company which is contemplated by, and in conformity with, the
terms of the Plan and this Trust and is given in writing by Company. Trustee
shall also incur no liability to any person for any failure to act in the
absence of direction, request or approval from Company which is contemplated by,
and in conformity with, the terms of this Trust. In the event of a dispute
between Company and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
16
(b.) Company hereby indemnifies Trustee and each of its affiliates
(collectively, the "Indemnified Parties") against, and shall hold them harmless
from, any and all loss, claims, liability, and expense, including reasonable
attorneys' fees, imposed upon or incurred by any Indemnified Party as a result
of any acts taken, or any failure to act, in accordance with the directions from
Company or any designee of Company, or by reason of the Indemnified Party's good
faith execution of its duties with respect to the Trust, including, but not
limited to, its holding of assets of the Trust, Company's obligations in the
foregoing regard to be satisfied promptly by Company, provided such act or
failure to act does not arise from the negligence, gross negligence, or willful
misconduct of the Trustee. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain payment from the
Trust.
(c.) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d.) Trustee may hire agents, accounts, actuaries, investment advisors,
financial consultants or other professionals to assist it in performing any of
its duties or obligations hereunder.
(e.) Trustee shall have, without exclusion, all powers conferred on Trustee
by applicable law, unless expressly provided otherwise herein, provided,
however, that if an insurance policy is held as an asset of the Trust, Trustee
shall have no power to name a beneficiary of the policy other than the Trust, to
assign the policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person the proceeds
of any borrowing against such policy.
(f.) However, notwithstanding the provisions of Section 9(e) above, Trustee
may loan to Company the proceeds of any borrowing against an insurance policy
held as an asset of the Trust.
(g.) Notwithstanding any powers to Trustee pursuant to this Trust Agreement
or to applicable law, Trustee shall not have any power that could give this
Trust the objective of carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
Section 10. Compensation and Expenses of Trustee.
Company shall pay all administrative expenses, but if not so paid, after
written notice by Trustee to Company, the expenses shall be paid from the Trust.
Section 11. Resignation and Removal of Trustee.
(a.) Trustee may resign at any time by written notice to Company, which shall
be effective 30 days after receipt of such notice unless Company and Trustee
agree otherwise.
(b.) Trustee may be removed by Company on 30 days notice or upon shorter
notice accepted by Trustee.
17
(c.) Upon resignation or removal of Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor Trustee.
The transfer shall be completed within 60 days after receipt of notice of
resignation, removal or transfer, unless Company extends the time limit, and
provided that Trustee is provided assurance by Company reasonably satisfactory
to Trustee that all fees and expenses reasonably anticipated will be paid.
(d.) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 12 hereof, by the effective date or resignation or
removal under paragraph(s) (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
(e.) Upon settlement of the account and transfer of the Trust assets to the
successor Trustee, all rights and privileges under this Trust Agreement shall
vest in the successor Trustee and all responsibility and liability of Trustee
with respect to the Trust and assets thereof shall terminate subject only to the
requirement that Trustee execute all necessary documents to transfer the Trust
assets to the successor Trustee.
Section 12. Appointment of Successor.
(a.) If Trustee resigns or is removed in accordance with Section 11(a) or (b)
hereof, Company may appoint any third party, such as a bank trust department or
other party that may be granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation or removal. The appointment shall
be effective when accepted in writing by the new Trustee, who shall have all of
the fights and powers of the former Trustee, including ownership rights in the
Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by Company or the successor Trustee to evidence the
transfer.
(b.) The successor Trustee need not examine the records and act of any prior
Trustee and may retain or dispose of existing Trust assets, subject to Sections
7 and 8 hereof. The successor Trustee shall not be responsible for and Company
shall indemnify and defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes successor Trustee.
Section 13. Amendment or Termination.
(a.) This Trust Agreement may be amended by a written instrument executed by
Trustee and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable since the
Trust is irrevocable in accordance with Section 1(b) hereof.
(b.) The Trust shall not terminate until the date on which Plan participants
and their beneficiaries are no longer entitled to benefits pursuant to the terms
of the Plan. Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c.) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Company may terminate
this Trust prior to the time all benefit
18
payments under the Plan have been made. All assets in the Trust at termination
shall be returned to Company.
Section 14. Miscellaneous.
(a.) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b.) Benefits payable to Plan participants and their beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c.) This Trust Agreement shall be governed by and construed in accordance
with the laws of the state in which Trustee is incorporated as set forth above.
(d.) The provisions of Sections 2(d), 3(b)(3), 9(b) and 15 of this Agreement
shall survive termination of this Agreement.
(e.) The rights, duties, responsibilities, obligations and liabilities of
Trustee are as set forth in this Trust Agreement, and no provision of the Plan
or any other documents shall affect such rights, responsibilities, obligations
an liabilities. If there is a conflict between provisions of the Plan and this
Trust Agreement with respect to any subject involving Trustee including but not
limited to the responsibility, authority, or powers of Trustee, the provisions
of this Trust Agreement shall be controlling.
(f.) For purposes of this Trust, Change of Control shall mean: The purchase
or other acquisition by any person, entity or group of persons, within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
("Act"), or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of
either the outstanding shares of common stock or the combined voting power of
Company's then outstanding voting securities entitled to vote generally, or the
approval by the stockholders of Company of a reorganization, merger, or
consolidation, in each case, with respect to which persons who were stockholders
of Company immediately prior to such reorganization, merger or consolidation do
not immediately thereafter, own more than 50 percent of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company's then outstanding securities, or a
liquidation or dissolution of Company or of the sale of all or substantially all
of Company's assets.
Section 15. Arbitration.
- Arbitration is final and binding on the parties.
- The parties waiving their right to seek remedies in court, including
the right to jury trial.
- Pre-arbitration discovery is generally more limited than and different
from court proceedings.
19
- The arbitrators' award is not required to include factual findings or
level reasoning and any party's right to appeal or seek modification of
rulings by the arbitrators is strictly limited.
- The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Company agrees that all controversies which may arise between Company and either
or both the Trustee and its affiliate Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S") in connection with the Trust, including, but not limited
to, those involving any transactions, or the construction, performance, or
breach of this or any other agreement between Company and either or both the
Trustee and MLPF&S, whether entered into prior, on, or subsequent to the date
hereof, shall be determined by arbitration. Any arbitration under this
agreement shall be conducted only before the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., or arbitration facility provided by any other
exchange of which MLPF&S is a member, the National Association of Securities
Dealers, Inc., or the Municipal Securities Rulemaking Board, and in accordance
with its arbitration rules then in force. Company may elect in the first
instance whether arbitration shall be conducted before the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., other exchange of which
MLPF&S is a member, the National Association of Securities Dealers. Inc. or the
Municipal Securities Rulemaking Board, but if Company fails to make such
election, by registered letter or telegram addressed to Merrill Lynch Trust
Company, Employee Benefit Trust Operations, P.O. Box 30532, New Brunswick, New
Jersey 08989-0532, before the expiration of five days after receipt of a written
request from MLPF&S and/or the Trustee to make such election then MLPF&S and/or
the Trustee may make such election. Judgment upon the award of arbitrators may
be entered in any court, state or federal, having jurisdiction. No person shall
bring a putative or certified class action to arbitration, nor seek to enforce
any pre-dispute arbitration agreement against any person who has initiated in
court a putative class action; who is a member of putative class who has not
opted out of the class with respect to any claims encompassed by the putative
class action until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii) the customer is excluded from the class by the court. Such
forbearance to enforce an agreement to arbitrate shall not constitute a waiver
of any rights under this agreement except to the extent stated herein.
Section 16. Effective Date.
The effective date of this Trust Agreement shall be January 3, 1995.
IN WITNESS WHEREOF, Company and the Trustee have executed this Trust
Agreement each by action of a duly authorized person,
By signing this Agreement, the undersigned Company acknowledges (1) that, in
accordance with Section 15 of this Agreement, Company is agreeing in advance to
arbitrate any controversies which may arise with either or both the Trustee or
LPF&S (2) receipt of a copy of this Agreement.
20
(Company) Alpha Industries, Inc.
----------------------------
By:
----------------------------
Name/Title: John A. Hanna, Jr./Treasurer
----------------------------
(Trustee)
----------------------------
By:
----------------------------
Name/Title: Chris Rosin/Trust Officer
----------------------------
1
[ALPHA INDUSTRIES, INC. LETTERHEAD]
EXHIBIT 10(q)
January 24, 1995
Mr. David Aldrich
81 Cross Street
Andover, MA 01810
Dear Dave:
It is with great pleasure that I make this offer of employment to you as the
Chief Financial Officer of Alpha Industries, Inc.
This is an exempt position and as a senior member of my management team, you
will report directly to me. You will be compensated at the rate of $2,500.00
per week, and will be eligible for an annual performance review each year on or
about your anniversary date.
In addition, you will participate in the Management Incentive Compensation Plan
(MICP) on an equal basis as the other top managers of Alpha. The MICP is meant
to measure your performance against very specific criteria and has the potential
to generate additional income if plan goals are met. You will be granted a
Non-Qualified Stock Option for 20,000 shares. The price of these shares will be
determined by the market price of the stock as of your Date of Hire.
If within two (2) years from your Date of Hire, your employment should be
terminated (other than for cause or, except as provided in subparagraph a below,
other than as a voluntary termination on your part), then you shall be eligible
for salary continuation for two (2) years in accordance with Company Policy 228
(SALARY CONTINUATION), but without regard to the references in that policy to
years of continuous service or a thirteen (13) week maximum.
PROVIDED, further, that you shall not be eligible for such salary
continuation during any period in which you are engaged in activities or
enterprises, either on your own behalf or on behalf of others, which are
directly competitive with any business activities of the Company.
a. If termination (including a voluntary termination on your part) should
occur both within two (2) years from your Date of Hire and within four
(4) months following (i) a change in control of the Company or (ii) the
acquisition of the Company, then you shall be eligible for salary
continuation as provided above.
2
[ALPHA INDUSTRIES, INC. LOGO]
Mr. David J. Aldrich
Page 2
January 24, 1995
b. For the purposes of this Paragraph 4, a "change in control" shall be
deemed to have occurred if a majority of the Board of Directors shall
consist of members who are neither (i) members as of the date of this
letter ("the continuing directors") nor (ii) members who have been
recommended for a position on the Board by a majority of the continuing
directors on the Board at such time.
Your employee benefits will include medical, dental, life and accidental death
and dismemberment insurance, long and short term disability, participation in
Alpha's Employee Stock Ownership Plan, and Savings and Retirement 401K Plan.
These benefits will be explained to you in greater detail when you joint the
Company.
I look forward to your acceptance and believe that should you decide to join us,
you will make a significant contribution to Alpha. If you should have any
questions, please call either myself or George LeVan.
Sincerely,
ALPHA INDUSTRIES, INC.
/s/ Martin J. Reid
- -------------------------------------
Martin J. Reid
President and Chief Executive Officer
MJR:kat
1
EXHIBIT 10(r)
The ALPHA INDUSTRIES, INC. SAVINGS & RETIREMENT PLAN
2
INTRODUCTION
WHEREAS, the Alpha Industries, Inc. Savings & Retirement Plan was established
as of April 1, 1986 by Alpha Industries, Inc. as a profit sharing plan with a
qualified cash or deferred arrangement within the meaning of section 401(k) of
the Internal Revenue code of 1986, as amended (the "Plan");
WHEREAS, effective March 31, 1995 the Plan has been amended and restated as set
forth in this plan document in order to incorporate the merger of the Alpha
Industries, Inc. Employee Stock Ownership Plan into the Plan as of that date;
WHEREAS, the provisions of this restated Plan shall apply only after March 30,
1995 and only with respect to employees who are employed after that date, so
that all Plan rights and benefits of former employees shall be determined in
accordance with the Plan provisions in effect upon the date that their
employment terminated;
NOW THEREFORE, Alpha Industries, Inc. hereby establishes and adopts the
following March 31, 1995 restatement of the Alpha Industries, Inc. Savings &
Retirement Plan.
3
TABLE OF CONTENTS
PAGE
I. Definitions
1.1 Account 1
1.2 Anniversary Date 1
1.3 Associated Controlled Group 1
1.4 Beneficiary 1
1.5 Break in Service 1
1.6 Code 2
1.7 Compensation 2
1.8 Computation Period 2
1.9 Disability 2
1.10 Effective Date 3
1.11 Eligible Class 3
1.12 Employee 3
1.13 Employer 3
1.14 Employer Contribution 3
1.15 Employer Stock
1.16 Employment Commencement Date 3
1.17 Entry Date 3
1.18 Highly Compensated Employee 3
1.19 Hour of Service 5
1.20 Leased Employee 6
1.21 Limitation Year 6
1.22 Named Fiduciary 6
1.23 Normal Retirement Age 6
1.24 Normal Retirement Benefit 6
1.25 Normal Retirement Date 6
1.26 Participant 7
1.27 Person 7
1.28 Plan 7
1.29 Plan Administrator 7
1.30 Plan Year 7
1.31 Qualified Joint and Survivor Annuity 7
1.32 Reemployment Commencement Date 7
1.33 Spouse 8
1.34 Trust 8
1.35 Trustee 8
1.36 Year of Service 8
1.37 Valuation Date 8
1.38 Gender 8
II. Eligibility and Participation 9
2.1 Eligibility 9
2.2 Waiver of Participation 9
(i)
4
PAGE
2.3 Termination of Participation 10
2.4 Recommencement of Participation 10
2.5 Transfers Among Employers of an Associated
Controlled Group 10
III. Contributions and Allocations 11
3.1 Employer Contributions 11
3.2 Dollar Limitation on Salary Reduction
Contributions 12
3.3 Special Restrictions on Salary Reduction
Contributions 13
3.4 Distribution of Excess Contributions 15
3.5 Special Restrictions on Matching Employer
Contributions 16
3.6 Distribution of Excess Aggregate Contributions 19
3.7 Limits and Timing of Employer Contributions 20
3.8 Allocation of Employer Contributions 20
3.9 Forfeitures 21
3.10 Rollover Contributions 21
IV. Limitation on Allocations 23
V. Investment of Contributions and Individual Accounts 31
5.1 Individual Accounts 31
5.2 Valuation and Allocation of Accounts 31
5.3 No Claim to Specific Assets 31
5.4 Investment Elections 32
VI. Hardship Distributions 33
VII. Retirement, Death, and Disability 34
7.1 Distribution Upon Retirement 34
7.2 Distribution Upon Death 40
7.3 Designation of Beneficiary and Settlement Upon
Death 42
7.4 Qualified Election 43
7.5 Notice Requirements 44
7.6 Overriding Provisions 45
7.7 Distribution at age 59 1/2 45
7.8 Distribution in Employer Stock 44
VIII. Vesting: Termination of Employment 46
8.1 Vested Interest Upon Termination 46
8.2 Amended Vesting Schedule 46
8.3 Non-forfeiture of Minimum Contribution 47
(ii)
5
PAGE
8.4 Distribution 47
8.5 Consent to Distribution 48
IX. Duties of Plan Administrator and Trustee 49
9.1 Duties of Plan Administrator 49
9.2 Multiple Fiduciaries 50
9.3 Administration of Investments 50
9.4 Investment Manager 51
9.5 Expenses 52
9.6 Accounting 52
X. Plan Amendment and Termination 54
10.1 Amendment by Employer's Board of Directors 54
10.2 Amendment Restrictions 54
10.3 Voluntary Termination of Plan 54
10.4 Involuntary Termination of Plan 55
10.5 Distribution Upon Plan Termination 55
XI. Miscellaneous 56
11.1 Taxes 56
11.2 Employment Relationship 56
11.3 Non-alienation of Benefits 56
11.4 Reversion of Employer Contributions 56
11.5 Reversion of Assets 57
11.6 Merger or Consolidation of Plan 57
11.7 Claims Review 57
11.8 Notice to Interested Parties 58
11.9 Transfer of Assets 58
11.10 Waiver of Required Notice 59
XII. Top-Heavy Plan Requirements 60
12.1 Superseding Article 60
12.2 Limit on Compensation 60
12.3 Minimum Contributions 60
12.4 Modifications to Limitation on Allocations 61
12.5 Definitions 61
XIII. Direct Rollover 66
13.1 Effective Date 66
13.2 Election 66
13.3 Definitions 66
13.4 Minimum Direct Rollover Portion 67
13.5 Waiver of Notice 67
(iii)
6
PAGE
XIV. Merger of Alpha Industries, Inc. Employee
Stock Ownership Plan 68
14.1 Merger of Plans 68
14.2 ESOP Accounts 68
14.3 Voting Rights 70
XV. Participant Loans 72
XVI. Provisions Applicable to Directors and Officers 75
16.1 Scope and Application of this Article 75
16.2 Penalty for In Service Withdrawal 75
16.3 Intra-Plan Transfers 75
16.4 Six Month Holding Period 75
(iv)
7
ARTICLE I
PLAN DEFINITIONS
1.1 "Account": A record of a separate account maintained for
each Participant consisting of his allocated share of all
Employer Contributions, Rollover Contributions and amounts
held in his ESOP Account (including the current year's
contribution) and the income, gains, losses, payments,
withdrawals and expenses allocated to such account under
the Plan.
1.2 "Anniversary Date": The first day of each Plan Year.
1.3 "Associated Controlled Group": Shall mean the Employer, its
wholly-owned subsidiary, Trans Tech, Inc. and all other
members of a controlled group of corporations (as defined in
Section 414(b) of the Internal Revenue Code), commonly
controlled trades or businesses (as defined in Section
414(c), or affiliated service groups (as defined in Section
414(m)) of which the adopting Employer is a part, or any
other entity required to be aggregated with the Employer
pursuant to Code Section 414(o) and the regulation
thereunder.
1.4 "Beneficiary": Any Person designated by a Participant in
accordance with Section 7.3 to receive any benefits payable
at such Participant's death. Payments may be made to a
Beneficiary designated by a court order, provided that such
payments will not adversely affect the qualification of the
Plan.
1.5 "Break in Service": A Computation Period during which the
Participant does not complete more than 500 hours of service
with the Employer. Solely for purposes of determining
whether a Break in Service has occurred in a Computation
Period, an individual who is absent from work for maternity
or paternity reasons shall receive credit for at least 500
hours.
For purposes of this Section, an absence from work for
maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of
the birth of a child of the individual, (3) by reason of the
placement of a child with the individual in connection with
the adoption of such child by such individual, or (4) for
purposes of caring for such child for a period beginning
immediately following such birth or placement.
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8
1.6 "Code": Shall mean the Internal Revenue Code of 1986, as
amended.
1.7 "Compensation": Compensation shall mean all of a
Participant's wages as defined in Code Section 3401(a) for
the purposes of income tax withholding at the source. For
purposes of Article III, Compensation shall also include any
compensation which is not currently includible in the
Participant's gross income by reason of the application of
Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b) of the
Code.
For years beginning after December 31, 1988, the Annual
Compensation of each Participant taken into account under
the Plan for any year shall not exceed $200,000. This
limitation shall be adjusted by the Secretary at the same
time and in the same manner as under section 415(d) of the
Code, except that the dollar increase in effect on January 1
of any Calendar Year is effective for years beginning in
such Calendar Year and the first adjustment to the $200,000
limitation is effected on January 1, 1990. For Plan Years
beginning after December 31, 1993, the limit on Annual
Compensation shall be $150,000 indexed as set forth in Code
Section 401(a)(17). If a Plan determines Compensation on a
period of time that contains fewer than 12 calendar months,
then the Annual Compensation limit is an amount equal to the
Annual Compensation Limit for the Calendar Year in which the
Compensation period begins, multiplied by the ratio obtained
by dividing the number of full months in the period by 12.
In determining the compensation of a Participant for
purposes of this limitation, the rules of Section 414(q)(6)
of the Code shall apply, except that in applying such rules,
the term "Family" shall include only the spouse of the
Participant and any lineal descendants of the Participant
who have not attained age 19 before the close of the year.
If, as a result of the application of such rules the
applicable adjusted limitation is exceeded, then the
limitation shall be prorated among the affected individuals
in proportion to each such individual's compensation as
determined under this section prior to the application of
this limitation.
1.8 "Computation Period": The period of time for determining
complete Years of Service and Breaks in Service for purposes
of eligibility shall be the 12 consecutive month period
commencing on the Employment Commencement Date and each
subsequent 12 consecutive month period.
1.9 "Disability": A Participant's inability to engage in any
substantial gainful activity by reason of any medically
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9
determinable physical or mental impairment which can be
expected to result in death or to be of long-continued and
indefinite duration. Notwithstanding the foregoing, a
Participant's entitlement to receive disability benefits
under the Federal Social Security Act shall be deemed
medical evidence satisfactory to the Employer that he is
disabled.
1.10 "Effective Date": March 31, 1995, except as otherwise
expressly provided herein and except that, for the AESOP
which is merged into this Plan and incorporated herein by
reference as of this date, the provisions required by
TRA'86, as amended, subsequent federal pension legislation,
and the regulations issued thereunder shall be effective for
such AESOP as of the respective dates required by said
legislation.
1.11 "Eligible Class": All Employees.
1.12 "Employee": Any individual employed by the Associated
Controlled Group, including any Leased Employees required to
be treated as an Employee of the Employer under Code Section
414(n) or Code Section 414(o) and the regulations
thereunder.
1.13 "Employer": Alpha Industries, Inc. or members of the
Associated Controlled Group.
1.14 "Employer Contribution": The sum of the Salary Reduction
Contributions and the Matching Employer Contributions, and
any Profit-Sharing Contributions contributed on behalf of
any Participant under the Plan.
1.15 "Employer Stock": The common capital stock of Alpha
Industries, Inc.
1.16 "Employment Commencement Date": The first day in which the
Employee performs an Hour of Service.
1.17 "Entry Date": The first day of each month.
1.18 "Highly Compensated Employee": shall mean any Employee
(including a former Employee) who, during the look-back year
(A) received Compensation from the Employer in excess of
$100,000 (or such larger amounts as may be prescribed by the
Secretary of Treasury, or his delegate, pursuant to Code
Section 415(d)), (B) received Compensation from the Employer
in excess of $66,000 (or such larger amounts as may be
prescribed by the Secretary of Treasury, or his delegate,
pursuant to Code Section 415(d)) and was in the top-paid
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group of Employees for such year, or (C) was at any time an
officer and received Compensation greater than 50% of the
amount in effect under Code Section 415(b)(1)(A) for such
year and who otherwise satisfies the requirements of Code
section 414(q) and the regulations thereunder. The term
Highly Compensated Employee also includes: (i) Employees
who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back
year" and the Employee is one of the 100 Employees who
received the most Compensation from the Employer during the
determination year; and (ii) Employees who are 5% owners at
any time during the look-back year or determination year.
If no officer has satisfied the Compensation requirement of
(C) above during either a determination year or look-back
year, the highest paid officer for such year shall be
treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan
Year. The look-back year shall be the twelve-month period
immediately preceding the determination year.
A highly compensated former Employee includes any Employee
who separated from service (or was deemed to have separated)
prior to the determination year, performs no service for the
Employer during the determination year, and was a highly
compensated active Employee for either the separation year
or any determination year ending on or after the Employee's
55th birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a 5% owner who is an active
or former employee or a Highly Compensated Employee who is
one of the 10 most Highly Compensated Employees ranked on
the basis of Compensation paid by the Employer 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 contributions equal to the sum of
such Compensation and contributions 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.
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
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11
number of Employees treated as officers and the Compensation
that is considered, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
1.19 "Hour of Service":
A. Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for the
Employer. These hours shall be credited to the
Employee for the Computation Period or Periods in
which the duties are performed; and
B. Each hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period of
time during which no duties are performed
(irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness,
incapacity (including Disability), layoff, jury duty,
military duty or leave of absence. No more than 501
Hours of Service shall be credited under this
paragraph for any single continuous period (whether or
not such period occurs in a single Computation
Period). Hours under this paragraph shall be
calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
C. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer. The same Hours of Service shall not
be credited both under paragraph (A) or paragraph (B)
as the case may be, and under this paragraph (C).
These hours shall be credited to the Employee for the
Computation Period or Periods to which the award or
agreement pertains rather than the Computation Period
in which the award, agreement or payment is made.
D. Hours of Service will be credited for employment with
all members of the Associated Controlled Group.
E. Hours of Service will also be credited for any
individual considered a Leased Employee, or required
to be considered an Employee under Section 414(o) of
the Code and the regulations thereunder.
F. Hours of Service shall be determined on the basis of
actual hours for which an Employee is paid or is
entitled to payment.
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12
1.20 "Leased Employee": Any leased employee shall be treated as
an Employee of the recipient Employer. However,
contributions or benefits provided by the leasing
organization which are attributable to the services
performed for the recipient Employer shall be treated as
provided by the recipient. The preceding sentences shall
not apply to any leased employee (A) if such Employee is
covered by a money purchase pension plan providing: (1) a
non-integrated employer contribution rate of at least 10% of
compensation as defined in Section 415(c)(3) of the Code,
but including amounts contributed by the Employer pursuant
to salary reduction agreement which are excludable from the
Employee's gross income under Section 125, Section
402(a)(8), Section 402(h) or Section 403(b) of the Code, (2)
immediate participation, and (3) full and immediate vesting,
and (B) Leased Employees do not constitute more than 20% of
the recipient's non-highly compensated workforce. For
purposes of this paragraph, the term "Leased Employee" means
any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for
the recipient or for the recipient and related persons
(determined in accordance with Section 414(n)(6) of the
Code) on a substantially full-time basis for a period of at
least one year and such services are of a type historically
performed by employees in the business field of the
recipient Employer.
1.21 "Limitation Year": The Plan Year. If the Employer has
another plan with a different Limitation Year, it must be
amended to conform with this 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.
The period ending immediately before the new Limitation Year
shall be designated as a Short Limitation Year.
1.22 "Named Fiduciary": Alpha Industries, Inc. and, if not such
entity, then the Trustee and the Plan Administrator shall be
Named Fiduciaries of the Plan.
1.23 "Normal Retirement Age": Age 65.
1.24 "Normal Retirement Benefit": The benefit payable to a
Participant pursuant to Section 7.1A at his Normal
Retirement Date.
1.25 "Normal Retirement Date": The first day of the month next
following the Participant's attainment of age 65.
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1.26 "Participant": An Employee who has commenced participation
in the Plan pursuant to Article II. For purposes of Article
III, "Participant" means an Employee who is eligible to
participate in the Plan.
1.27 "Person": An individual, committee, trust, estate,
partnership, association, company, or corporation.
1.28 "Plan": THE Alpha Industries, Inc. Savings & Retirement
Plan adopted by the Employer pursuant to this agreement and
document for the exclusive benefit of participating
Employees and their Beneficiaries.
The Plan was effective April 1, 1986 and is intended to
qualify as a profit sharing plan with a qualified cash or
deferred arrangement under Section 401(a) and 401(k) of the
Internal Revenue Code. The Plan has been amended and
restated as of March 31, 1995 in order to incorporate the
merger of the Alpha Industries, Inc. Employee Stock
Ownership Plan (the "ESOP") into the Plan as of March 31,
1995, except that the provisions applicable to a profit
sharing plan with a qualified cash or deferred arrangement
which are required by the Tax Reform Act of 1986, subsequent
federal legislation and the regulations thereunder, shall be
effective with respect to the Plan as of the respective
effective dates required by said legislation and
regulations. The provisions of this restated Plan shall
apply only after March 30, 1995 and only to Employees who
are employed after that date. All rights and benefits of
former Employees shall be determined in accordance with the
provisions of the Plan in effect on the date their
employment terminated.
1.29 "Plan Administrator": The Employer or such Committee or
such other Person so designated by the Employer who agrees
to serve in such capacity.
1.30 "Plan Year": The calendar year.
1.31 "Qualified Joint and Survivor Annuity": An immediate
annuity for the life of the Participant with a survivor
annuity for the life of the Spouse which is one-half the
amount of the annuity payable during the joint lives of the
Participant and the Spouse and which is the actuarial
equivalent of the value of the Participant's Account.
1.32 "Reemployment Commencement Date": First day in which the
Employee performs an Hour of Service following a Break in
Service.
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1.33 "Spouse": The spouse or surviving spouse of the
Participant, except that a former spouse will be treated as
the spouse or surviving spouse, and a current spouse will
not be treated as the spouse or surviving spouse, to the
extent provided for under a qualified domestic relations
order as described in Section 414(p) of the Code.
1.34 "Trust": The Trust Agreement as entered into by Alpha
Industries Inc. and Investors Bank & Trust Company as
Trustee, and/or any other trust entered into by the Employer
for the purpose of holding the assets of the Plan.
1.35 "Trustee": The Person or Persons executing the Trust as
trustee for the Plan or, with respect to a successor
trustee, a person who accepts his appointment and
acknowledges his responsibility under the Plan as Trustee in
writing.
1.36 "Year of Service":
A. A completed Year of Service shall mean a Computation
Period during which the Employee completes at least
1,000 Hours of Service. No minimum number of Hours of
Service shall be required to receive credit for a
fractional Year of Service.
Fractional periods of a year shall be expressed in
terms of days.
B. Included Service:
All Years of Service with other members of an
Associated Controlled Group that includes the Employer
shall be credited for purposes of determining an
Employee's eligibility to participate or the
non-forfeitable percentage of his Account under the
Plan. In addition, where the Employer maintains the
plan of a predecessor employer, service for such
predecessor employer shall be treated as service for
the Employer.
1.37 "Valuation Date": The last day of each month.
1.38 The masculine, feminine, and neuter genders shall each be
deemed to denote the masculine, feminine, and neuter; the
singular to denote the plural, and the plural to denote the
singular, where appropriate.
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15
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility:
An Employee shall be eligible to participate in the Plan
commencing on the first Entry Date upon which he belongs to
the Eligible Class and has attained the age of 21 and
completed six months of service.
In the event an Employee who was not a member of the
Eligible Class becomes a member of the Eligible Class, such
Employee shall participate immediately if such Employee has
attained the requisite age and completed the minimum number
of Years of Service, as indicated in the previous paragraph.
In the event an Employee who has terminated employment is
rehired as a member of the Eligible Class, such Employee
shall participate immediately if he has attained the
requisite age and completed the minimum number of Years of
Service, as indicated in the first paragraph of this Section
and would have previously become a Participant had he been
employed by the Employer in the Eligible Class.
A Leased Employee who is a member of the Eligible Class
shall participate immediately if such Leased Employee has
attained the requisite age and completed the minimum number
of Years of Service, as indicated in the first paragraph of
this Section and would have previously become a Participant
had he been an Employee, rather than a Leased Employee, of
the Employer.
2.2 Waiver of Participation:
An eligible Employee shall begin participation on the
appropriate date stated in Section 2.1. A Participant may
give written notice to the Plan Administrator that he will
not execute a Salary Reduction Agreement as set forth in
Section 3.1A. An Employee who initially makes such an
election shall not have an opportunity to execute a Salary
Reduction Agreement until the Entry Date next following his
giving written assent to execute such an Agreement.
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2.3 Termination of Participation:
In the event a Participant ceases to be a member of the
Eligible Class, whether by separation from service or
otherwise, his participation in the Plan shall cease. The
former Participant's Account shall not be distributed until
he retires, dies or otherwise separates from service with
the Employer or, if appropriate, the Associated Controlled
Group. If the former Participant separates from service
with the Employer, before death, Disability, or retirement,
his non-forfeitable right to the Account shall be determined
under Section 8.1.
2.4 Recommencement of Participation:
In the event a Participant ceases to participate because he
is no longer a member of the Eligible Class, whether by
termination of employment or otherwise, such Employee shall
participate again immediately upon his return to the
Eligible Class.
2.5 Transfers Among Employers of an Associated Controlled Group:
In the event an Employee was previously employed by an
employer not maintaining the Plan, and the Employee was a
participant in a defined contribution plan maintained by the
previous employer, the Employee shall immediately commence
participation in the Plan. The Employee's account under the
prior plan shall be transferred and shall become the
Employee's initial Account under the Plan. This Section
shall apply only if, at the time of transfer, the Employee's
former employer belongs to an Associated Controlled Group
which includes the Employer and the eligibility and vesting
provisions of the former plan are similar to those of the
Plan.
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ARTICLE III
CONTRIBUTIONS AND ALLOCATIONS
3.1 Employer Contributions:
For each Plan Year, the Employer shall make a contribution
determined in accordance with the following provisions:
A. Each Participant may elect to execute a salary
reduction agreement with the Employer to reduce his
Compensation by a specified percentage. The election
shall specify a whole number multiple of one (1)
percent, which shall be not more than 15% of
Compensation. Such agreement shall become effective
on the next payroll period for which the Employer can
reasonably process the request. The Employer shall
make a Salary Reduction Contribution on behalf of the
Participant corresponding to the amount of said
reduction, subject to the restrictions provided below
in Sections 3.2 and 3.3.
A Participant may elect to change or discontinue the
percentage by which his Compensation is reduced as of
the first day of a Plan quarter by notice to the
Employer at least ten days prior to such date. Any
such change or discontinuance shall be effective with
the next payroll period for which the Employer can
reasonably process the request. After a Participant's
discontinuance of salary reductions, a Participant may
execute a new salary reduction agreement, but such new
agreement shall not be effective until the next Entry
Date which is at least 10 days following its
execution.
In order to ensure compliance with the provisions of
Code Section 401(k) and the terms of Section 3.3, the
Employer may from time to time limit the amount by
which the Compensation of a Participant who is a
Highly Compensated Employee shall be reduced. The
Salary Reduction Contribution to the Plan on behalf of
any Participant shall not exceed the amount by which
his Compensation has been reduced.
B. The Employer shall make a Matching Employer
Contribution, in the form of cash or Employer Stock
(as determined in the sole discretion of the
Employer), on behalf of each Participant who had
Salary Reduction Contributions made on his behalf
during the year, in an amount equal to 50% of the
- 11 -
18
first $1,000 of such salary reduction contributions.
The amount of the Matching Employer Contribution shall
be subject to the restrictions provided below in this
Article III and Article IV. Matching Employer
Contributions shall be remitted on at least a
quarterly basis.
C. For each Plan Year, the Employer may make a Profit-
Sharing Contribution, in the form of cash or Employer
Stock (as determined in the sole discretion of the
Employer), in an amount determined by the Employer's
Board of Directors, by a resolution adopted on or
before the last day specified by the Code for making
deductible contributions for such Plan Year. If a
Profit Sharing Contribution is made during the 1995
Plan Year and is designated as a contribution with
respect to the merged AESOP, it shall be allocated as
of March 31, 1995 in accordance with the terms of the
AESOP in effect immediately prior to the merger. Any
other Profit Sharing Contribution made shall be
allocated on behalf of each Participant who was a
member of the Eligible Class during any portion of the
Plan Year and who is employed on the last day of the
Plan Year. Profit Sharing Contributions, if any,
shall be allocated to each such Participant based on
the ratio that such Participant's Compensation bears
to the total Compensation paid to all Participants.
See Section 10.2B restricting the amendment of this
subsection C.
3.2 Dollar Limitation on Salary Reduction Contributions:
A. No Employee shall be permitted during any calendar
year to have Salary Reduction Contributions made under
this Plan, or any other plan maintained by the
Employer or a member of the Associated Control Group,
in excess of $7000 multiplied by the cost of living
adjustment factor provided by the Secretary of the
Treasury under Code Section 415(d). The Employee's
written salary reduction agreement shall be deemed to
be limited to the extent necessary to comply with this
paragraph.
B. Notwithstanding any other provision of the Plan,
Excess Salary Reduction Contributions, plus any income
and minus any loss allocable thereto, shall be
distributed no later than the next April 15, to
Participants to whose Accounts Excess Salary Reduction
Contributions were allocated for the preceding
calendar year or who claim Excess Salary Reduction
- 12 -
19
Contributions for such calendar year. Excess Salary
Reduction Contributions shall mean Salary Reduction
Contributions made on behalf of a Participant in
excess of the dollar limitation described in Section
3.2A. Excess Salary Reduction Contributions shall be
treated as Annual Additions under the Plan.
C. The Participant's claim of Excess Salary Reduction
Contributions shall be in writing; shall be submitted
to the Plan Administrator not later than March 1st;
shall specify the amount of the Participant's Excess
Salary Reduction Contributions for the preceding
calendar year; and shall be accompanied by the
Participant's written statement that if such amounts
are not distributed, such Excess Salary Reduction
Contributions, when added to amounts deferred under
other plans or arrangements described in Sections
401(k), 408(k) or 403(b) of the Code, will exceed the
limit imposed on the Participant by Section 402(g) of
the Code for the year in which the Excess Salary
Reduction Contributions occurred.
D. The income or loss allocable to Excess Salary
Reduction Contributions shall be equal to the income
or loss allocable to the Participant's Salary
Reduction Contribution Account for the calendar year
multiplied by a fraction, the numerator of which is
the Excess Salary Reduction Contributions on behalf of
the Participant for the calendar year and the
denominator of which is the Participant's Account
attributable to Salary Reduction Contributions on the
last day of the calendar year, without regard to any
income or loss occurring during such calendar year.
3.3 Special Restrictions on Salary Reduction Contributions:
A. Salary Reduction Contributions for Highly Compensated
Employees must comply with one of the following
limitations:
(1) the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
Actual Deferral Percentage for Participants who
are non-highly compensated employees for the Plan
Year multiplied by 1.25; or
(2) the Average Actual Deferral Percentage for
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
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20
Actual Deferral Percentage for Participants who
are non-highly compensated employees for the Plan
Year multiplied by 2, provided that the Average
Actual Deferral Percentage for 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 (2) percentage points.
B. For purposes of Section 3.3A, the term "Actual
Deferral Percentage" shall mean the ratio (expressed
as a percentage), of Salary Reduction Contributions on
behalf of the Participant for the Plan Year to the
Participant's Compensation for the Plan Year. For
purposes of computing Actual Deferral Percentages, an
Employee who would be a Participant but for the
failure to make Salary Reduction Contributions shall
be treated as a Participant on whose behalf no Salary
Reduction Contribution is made. The term "Average
Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Actual Deferral
Percentages of the Participants in a group for the
Plan Year.
C. The Actual Deferral Percentage for any Participant who
is a Highly Compensated Employee for the Plan Year and
who is eligible to have Salary Reduction Contributions
allocated to his account under two or more plans or
arrangements described in Section 401(k) of the Code
that are maintained by the Employer or an Associated
Controlled Group shall be determined as if all such
Salary Reduction Contributions were made under a
single arrangement. If a Highly Compensated Employee
participates in two or more plans or arrangements
described in Code Section 401(k) that have different
Plan Years, all such plans or arrangements ending with
or within the same calendar year shall be treated as a
single arrangement.
D. In the event that this Plan satisfies the requirements
of Sections 401(k), 401(a)(4), or 410(b) of the Code
only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this
Plan, then this section shall be applied by
determining the Actual Deferral Percentages of
Employees as if all such plans were a single plan.
For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section
- 14 -
21
401(k) of the Code only if they have the same Plan
Year.
E. For purposes of determining the Actual Deferral
Percentage of a Participant who is a 5% owner or one
of the 10 most highly compensated Highly Compensated
Employees, the Salary Reduction Contributions and
Compensation of such Participants shall include the
Salary Reduction Contributions, and Compensation of
family members (as defined in Code section 414(q)(6))
and such family members shall be disregarded as
separate Employees in determining the Actual Deferral
Percentage for Participants who are non-highly
compensated employees and for Participants who are
Highly Compensated Employees.
F. For purposes of determining the Actual Deferral
Percentage of the Participants, Salary Reduction
Contributions must be made before the last day of the
twelve-month period immediately following the Plan
Year to which contributions relate.
G. The Employer shall maintain records sufficient to
demonstrate satisfaction of Section 3.3A.
H. The determination and treatment of the Actual Deferral
Percentage amounts of any Participant shall satisfy
such other requirements as may be prescribed by the
Secretary of the Treasury or his delegate.
3.4 Distribution of Excess Contributions:
A. Notwithstanding any other provision of the Plan,
Excess Contributions plus any income, and minus any
loss, allocable thereto shall be distributed no later
than the last day of each Plan Year, to Participants
on whose behalf such Excess Contributions were made
for the preceding Plan Year. If such distribution is
made more than 2-1/2 months after the last day of the
Plan Year in which the Excess Contributions arose, a
ten (10%) percent excise tax will be imposed on the
Employer maintaining the Plan with respect to said
amounts. For purposes of this section, "Excess
Contributions" shall mean the amount of Salary
Reduction Contributions, in excess of the restrictions
described in Section 3.3 (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).
Excess Contributions shall be allocated to
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Participants who are subject to the family members
aggregation rules of Section 414(q)(6) of the Code in
the manner prescribed by regulations. Excess
Contributions shall be treated as Annual Additions
under the Plan.
B. The income or loss allocable to Excess Contributions
shall be equal to the income or loss allocable to the
Participant's Salary Reduction Contribution Account
for the Plan Year multiplied by a fraction, the
numerator of which is the Excess Contributions on
behalf of the Participant for the Plan Year and the
denominator of which is the Participant's Account
attributable to Salary Reduction Contributions on the
last day of the Plan Year.
C. The Excess Contributions which would otherwise be
distributed to the Participant shall be adjusted for
income or loss; shall be reduced, in accordance with
regulations, by the amount of Excess Salary Reduction
Contributions distributed to the Participant under
Section 3.2; and shall, if there is a loss allocable
to the Excess Contributions, in no event be less than
the lesser of the Participant's Account under the Plan
or the Participant's Salary Reduction Contributions
for the Plan Year.
3.5 Special Restrictions on Matching Employer Contributions:
A. Matching Employer Contributions, for Highly
Compensated Employees must comply with one of the
following limitations:
(1) the Average Contribution Percentage for
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are
non-highly compensated employees for the Plan
Year multiplied by 1.25; or
(2) the Average Contribution Percentage for
Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are
non-highly compensated employees for the Plan
Year multiplied by two, provided that the Average
Contribution Percentage for Participants who are
Highly Compensated Employees does not exceed the
Average Contribution Percentage for Participants
- 16 -
23
who are non-highly compensated employees by more
than two (2) percentage points.
Special Rule:
Multiple Use: if one or more Highly Compensated
Employees participate in both a plan subject to
Code Section 401(k) and a plan subject to Code
Section 401(m) maintained by the Employer and the
sum of the Average Actual Deferral Percentage and
Average Contribution Percentage of those Highly
Compensated Employees subject to either or both
tests exceeds the Aggregate Limit, then the
Average Contribution Percentage of those Highly
Compensated Employees who also participate in a
plan subject to Code Section 401(k) will be
reduced (beginning with such Highly Compensated
Employee whose Average Contribution Percentage is
the highest) so that the limit is not exceeded.
The amount by which each Highly Compensated
Employee's Contribution Percentage is reduced
shall be treated as an Excess Aggregate
Contribution. The Average Actual Deferral
Percentage and Average Contribution Percentage of
the Highly Compensated Employees are determined
after any corrections required to meet the Actual
Deferral Percentage and Average Contribution
Percentage tests. Multiple use does not occur if
either the Actual Deferral Percentage or the
Average Contribution Percentage of the Highly
Compensated Employees does not exceed 1.25
multiplied by the Average Actual Deferral
Percentage or the Average Contribution
Percentage, respectively, of the non-highly
compensated employees.
For purposes of this special rule, "Aggregate
Limit" shall mean the sum of (i) 125% of the
greater of the Average Actual Deferral Percentage
of the non-highly compensated employees for the
Plan Year or the Average Contribution Percentage
of non-highly compensated employees under the
plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of
the plan subject to Code Section 401(k) and (ii)
the lesser of 200% or two plus the lesser of such
Average Actual deferral Percentage or Average
Contribution Percentage. "Lesser" is substituted
for "greater" in "(i)" above, and "greater" is
substituted for "lesser" after "two plus the" in
- 17 -
24
"(ii)" if it would result in a larger Aggregate
Limit.
B. For purposes of Section 3.5A, the term "Contribution
Percentage" shall mean the ratio (expressed as a
percentage) of Matching Employer Contributions and
(after application of Sections 3.2 and 3.4) on behalf
of the Participant for the Plan Year to the
Participant's Compensation for the Plan Year (whether
or not the Employee was a Participant for the entire
Plan Year). The term "Average Contribution
Percentage" shall mean the average (expressed as a
percentage) of the Contribution Percentages of the
Participants in a group for the Plan Year.
C. For purposes of this Section 3.5, the Contribution
Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have
Matching Employer Contributions allocated to his
Account, under two or more plans described in Section
401(a) of the Code, or arrangements described in
Section 401(k) of the Code, that are maintained by the
Employer, shall be determined as if the total of such
Matching Employer Contributions was made under each
plan. If a Highly Compensated Employee participates
in two or more plans or arrangements subject to Code
Section 401(k) that have different plan years, all
such plans or arrangements ending with or within the
same calendar year shall be treated as a single
arrangement.
D. In the event that this Plan satisfies the requirements
of Sections 401(m), 401(a)(4) or 410(b) of the Code
only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this
Plan, then this Section 3.6 shall be applied by
determining the Contribution Percentages of
Participants as if all such plans were a single plan.
For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section
401(m) of the Code only if they have the same Plan
Year.
E. For purposes of determining the Contribution
Percentage of a Participant who is a 5% owner or one
of the 10 most highly paid Highly Compensated
Employees, the Matching Employer Contributions and
Compensation of such Participant shall include the
Matching Employer Contributions and Compensation of
- 18 -
25
family members (as defined in Code Section 414(q)).
Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees
in determining the Average Contribution Percentage
both for Participants who are non-highly compensated
employees and for Participants who are Highly
Compensated Employees.
F. Matching Employer Contributions will be considered
made for a Plan Year if made no later than the end of
the twelve-month period beginning on the day after the
close of the Plan Year.
G. The Employer shall maintain records sufficient to
demonstrate satisfaction of Section 3.5A.
H. The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of
the Treasury.
3.6 Distribution of Excess Aggregate Contributions:
A. Notwithstanding any other provision of this Plan,
Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited,
if forfeitable, or if not forfeitable, distributed no
later than the last day of each Plan Year to
Participants to whose Accounts Excess Aggregate
Contributions were allocated for the preceding Plan
Year. If such Excess Aggregate Contributions are
distributed more than 2-1/2 months after the last day
of the Plan Year in which such excess amounts arose, a
ten percent (10%) excise tax will be imposed on the
Employer maintaining the Plan with respect to those
amounts. For purposes of this Section 3.6, "Excess
Aggregate Contributions" shall mean the amount of
Matching Employer Contributions and in excess of the
restrictions described in Section 3.5. Excess
Aggregate Contributions shall be allocated to
Participants who are subject to the family member
aggregation rules of Section 414(q)(6) of the Code in
the manner prescribed by regulations. Excess
Aggregate Contributions shall be treated as Annual
Additions under the Plan.
B. The income or loss allocable to Excess Aggregate
Contributions shall be equal to the income or loss
allocable to the Participant's Matching Employer
Contributions for the Plan Year multiplied by a
- 19 -
26
fraction, the numerator of which is the Excess
Aggregate Contributions on behalf of the Participant
for the Plan Year and the denominator of which is the
Participant's Account attributable to Matching
Employer Contributions on the last day of the Plan
Year, without regard to any income or loss occurring
during such Plan Year.
C. Forfeitures of the portion of the Excess Aggregate
Contributions that are allocable to Matching Employer
Contributions will serve to reduce Employer
Contributions. Amounts forfeited by Highly
Compensated Employees under this Section 3.6C shall be
treated as Annual Additions under the Plan.
D. Excess Aggregate Contributions shall be forfeited if
otherwise forfeitable under the terms of the Plan or,
if not forfeitable then distributed from the
Participant's Matching Employer Contribution Account,
in proportion to the Participant's Matching Employer
Contributions for the Plan Year.
E. The determination of the Excess Aggregate
Contributions shall be made after first determining
the Excess Salary Reduction Contributions under
Section 3.2, and then determining the Excess
Contributions under Section 3.4.
3.7 Limits and Timing of Employer Contributions:
The Employer Contribution for any Plan Year or Short Plan
Year shall not exceed 15% of the annual Compensation
otherwise paid by the Employer to all the Participants for
the Employer's fiscal year, increased by such amounts as may
be carried forward under the provisions of section
404(a)(3)(A) of the Code, as in existence at the date of the
contribution, but not to exceed the maximum deductible
amount.
The Employer may make a payment, or payments, of its
contribution for a Plan Year or Short Plan Year on any date,
or dates, it elects, provided that the total amount of the
Employer Contribution for any Plan Year or Short Plan Year
shall be paid in full at the close of said Plan Year or
Short Plan Year, or within such period thereafter as may be
permissible under the appropriate deduction provisions of
the Code.
3.8 Allocation of Employer Contributions:
- 20 -
27
The Plan Administrator shall establish an Account for each
Participant and credit this Account with that portion of the
Employer Contribution allocated to such Participant.
Alpha Industries, Inc. shall contribute only on behalf of
Participants who are Employees of any participating
Employer.
Contributions allocated on behalf of a Participant shall be
subject to the limitations in Article IV.
Separate Accounts for Salary Reduction Contributions,
Matching Employer Contributions, Profit-Sharing
Contributions and Rollover Contributions will be maintained
for each Participant. Each Account will be credited with
the applicable contributions and earnings thereon.
3.9 Forfeitures:
Forfeitures occurring under the Plan shall be applied to
reduce future Employer Contributions (including
administrative expenses) to the Plan. Forfeitures resulting
from termination of employment with one employer who has
adopted the Plan shall not be reallocated to reduce the
contribution of any other employer.
3.10 Rollover Contributions:
Any Employee may file a request in writing to the Plan
Administrator that the Trustee accept a Rollover
Contribution. The Plan Administrator, in accordance with a
uniform and non-discriminatory policy, shall determine
whether or not such Rollover Contribution shall be accepted.
Any such request shall state the amount of the Rollover
Contribution, the nature of the property constituting the
Rollover Contribution, and include a statement that such
contribution qualifies as a Rollover Contribution as defined
in this Section 3.10. In addition, the Plan Administrator
may require the Employee to submit such other evidence and
documentation as it or the Trustee deems necessary to
determine that the contribution qualifies as a Rollover
Contribution. If the Trustee accepts the Rollover
Contribution at the direction of the Plan Administrator, it
shall liquidate the property constituting the Rollover
Contribution and invest it pursuant to the terms of the
Plan. A "Rollover Contribution" means cash or property
representing a qualified rollover amount under Sections
402(a)(5), 403(a)(4), or 408(d)(3) of the Code.
A Participant shall at any time, upon 30 days written notice
to the Plan Administrator, be able to withdraw up to the
- 21 -
28
current value of Rollover Contributions. Once withdrawn,
Rollover Contribution cannot be recontributed to this Plan.
No forfeitures will occur solely as a result of a
Participant's withdrawal of his Rollover Contributions.
- 22 -
29
ARTICLE IV
LIMITATION ON ALLOCATIONS
4.1 For purposes of Article IV, the following terms shall be
defined as follows:
A. "Annual Additions": The sum of the following amounts
allocated on behalf of a Participant for the
Limitation Year:
(1) all Employer Contributions,
(2) amounts reapplied to reduce Employer
Contributions under Section 4.2,
(3) amounts allocated, after March 31, l984, to an
individual medical account, as defined in Section
415(1)(2) of the Code, which is part of a pension
or annuity plan maintained by the Employer, and
(4) amounts derived from contributions paid or
accrued after December 31, l985, in taxable years
ending after such date which are attributable to
post-retirement medical benefits allocated to the
separate account of a Key Employee, as defined in
Code Section 419A(d)(3), under a welfare benefit
fund, as defined in Code Section 419(e),
maintained by the Employer.
B. "Compensation": A Participant's earned income, wages,
salaries, and fees for professional services and other
amounts received for personal services actually
rendered in the course of employment with the Employer
maintaining the plan (including, but not limited to,
commissions, compensation for services on the basis of
a percentage of profits, tips and bonuses), and
excluding the following:
(1) employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in
which contributed, or employer contributions
under a simplified employee pension plan to the
extent such contributions are deductible by the
employee, or any distributions from a plan of
deferred compensation;
- 23 -
30
(2) amounts realized from the exercise of a
non-qualified stock option, or when restricted
stock (or property) held by the Employee either
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified
stock option; and
(4) other amounts which received special tax
benefits, or contributions made by the employer
(whether or not under a salary reduction
agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether
or not the amounts are actually excludable from
the gross income of the employee).
For purposes of applying the limitations of this
Article, Compensation for a limitation year is
the Compensation actually paid or includible in
gross income during such year.
C. "Defined Contribution Plan Fraction": A fraction, the
numerator of which is the sum of the Annual Additions
to the Participant's Account under all the defined
contribution plans (whether or not terminated)
maintained by the Employer for the current and all
prior Limitation Years (including the Annual Additions
attributable to the Participant's non-deductible
employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all welfare
benefit funds, as defined in Section 419(e) of the
Code and individual medical accounts, as defined in
Section 415(1)(2) of the Code, maintained by the
Employer), and the denominator of which is the sum of
the maximum aggregate amounts for the current and all
prior Limitation Years of service with the Employer
(regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate
amount in any Limitation Year is the lesser of 125% of
the dollar limitation determined under Sections 415(b)
and (d) of the Code in effect under Section
415(c)(1)(A) of the Code or 35% of the Participant's
compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined contribution
- 24 -
31
plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this
fraction will be adjusted if the sum of this fraction
and the Defined Benefit Plan Fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0 times (2)
the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation
Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions
of the plans made after May 5, 1986, but using the
Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning
before January 1, 1987, shall not be recomputed to
treat all employee contributions as Annual Additions.
D. "Defined Benefit Plan Fraction": A fraction, the
numerator of which is the sum of the Participant's
projected annual benefits at the close of the
Limitation Year for the Participant under all the
defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of
which is the lesser of 125% of the dollar limitation
determined for the Limitation Year under Sections
415(b) and (d) of the Code or 140% of the highest
average compensation, including any adjustments under
Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than
125% of the sum of the annual benefits under such
plans which the Participant had accrued as of the
close of last Limitation Year beginning before January
1, 1987, disregarding any changes in the terms and
conditions of the plans after May 5, 1986. The
preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Section 415 for all Limitation Years
beginning before January 1, 1987.
- 25 -
32
The term "highest average compensation" as used herein
shall mean the average compensation for the three
consecutive years of service with the Employer that
produce the highest average, as defined in the
Employer's defined benefit plan.
The term projected annual benefit as used herein shall
mean the annual retirement benefit from the Employer's
defined benefit plan (adjusted to an actuarially
equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity
[or Qualified Joint and Survivor Annuity)] to which
the Participant would be entitled under the terms of
said plan assuming:
(1) The Participant will continue employment until
normal retirement age under said plan (or current
age, if later), and
(2) The Participant's compensation for the current
Limitation Year and all other relevant factors
used to determine benefits under said plan will
remain constant for all future Limitation Years.
E. "Excess Amount": The excess of the Participant's
Annual Additions for the Limitation Year over the
Maximum Permissible Amount, less loading and other
administrative charges allocable to such excess.
F. "Maximum Permissible Amount": The lesser of (1)
$30,000 (or if greater, 1/4 of the defined benefit
dollar limitation set forth in Section 415(b)(1) of
the Code as in effect for the Limitation Year) or (2)
25% of the Participant's compensation for the
Limitation Year. The compensation limitation referred
to in (2) above shall not apply to any contribution
for medical benefits within the meaning of Section
401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition under Section
415(l)(1) or 419A(d)(2) of the Code. If a Short
Limitation Year is created because of an amendment
changing the Limitation Year to a different 12
consecutive month period, the Maximum Permissible
Amount will not exceed the limitation described in (1)
above, multiplied by the following fraction:
Number of months in the Short Limitation Year
(12)
- 26 -
33
4.2 A. If the Participant does not participate in, and has
never participated in, any other qualified plan
maintained by the Employer or a welfare benefit fund
as defined in Section 419(e) of the Code, maintained
by the Employer, or an individual medical account, as
defined in Section 415(1)(2) of the Code, maintained
by the Employer, which provides an Annual Addition as
defined in Section 4.1A, the amount of Annual
Additions which may be allocated under this Plan on a
Participant's behalf for a Limitation Year shall not
exceed the lesser of the Maximum Permissible Amount or
any other limitation contained in this Plan. If the
Employer Contribution that would otherwise be
allocated to the Participant's Account would cause the
Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount allocated will
be reduced so that the Annual Additions for the
Limitation Year will equal the Maximum Permissible
Amount.
B. Prior to the determination of the Participant's actual
compensation for the Limitation Year, the Maximum
Permissible Amount may be determined on the basis of a
reasonable estimation of the Participant's
compensation for such Limitation Year. Such estimated
compensation shall be uniformly determined for all
Participants similarly situated. Any Employer
Contributions based on estimated compensation shall
be reduced by any Excess Amounts carried over from
prior years.
C. As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount
for such Limitation Year shall be determined on the
basis of the Participant's actual compensation for
such Limitation Year.
D. If, pursuant to subsection (C) there is an Excess
Amount with respect to a Participant for a Limitation
Year, such Excess Amount shall be disposed of as
follows:
(1) In the event that the Participant is in the
service of the Employer which is covered by the
Plan at the end of the Limitation Year, then such
Excess Amounts must not be distributed to the
Participant, but shall be reapplied to reduce
future Employer Contributions under this Plan for
the next Limitation Year and for each succeeding
Limitation Year, as necessary, for such
- 27 -
34
Participant, so that in each such year the sum of
actual Employer Contributions plus the reapplied
amount shall equal the amount of Employer
contributions which would otherwise be allocated
to each Participant's Account.
(2) In the event that the Participant is not in the
service of the Employer which is covered by the
Plan at the end of the Limitation Year, then such
Excess Amounts must not be distributed to the
Participant, but shall be held unallocated in a
suspense account. The suspense account will be
applied to reduce future Employer Contributions
for all remaining Participants under this Plan
for the next Limitation Year and each succeeding
Limitation Year, as necessary.
(3) If a suspense account is in existence at any time
during the Limitation Year pursuant to this
section, it will not participate in the
allocation of the Plan's investment gains and
losses. If a suspense account is in existence at
any time during a particular Limitation Year, all
amounts in the suspense account must be allocated
and reallocated to Participant's Accounts before
any Employer Contributions may be made to the
Plan for that Limitation Year. Excess amounts
may not be distributed to Participants or former
Participants.
4.3 A. If, in addition to this Plan, the Participant is
covered under another qualified defined contribution
plan maintained by the Employer, or a welfare benefit
fund (as defined in Section 419(e) of the Code,
maintained by the Employer, or an individual medical
account, as defined in Section 415(1)(2) of the Code
maintained by the Employer, which provides an Annual
Addition as defined in Section 4.1A), the amount of
Annual Additions which may be allocated under this
Plan on a Participant's behalf for a Limitation Year,
shall not exceed the Maximum Permissible Amount
reduced by the Annual Additions allocated to a
Participant's Account under the other plans and
welfare benefit funds for the same Limitation Year.
If the Annual Additions with respect to the
Participant under other defined contribution plans
and welfare benefit funds maintained by the Employer
are less than the Maximum Permissible Amount and the
employer contribution that would otherwise be
allocated to the Participant's Account under this Plan
- 28 -
35
would cause the Annual Additions for the Limitation
Year to exceed this limitation, the amount allocated
will be reduced so that the Annual Additions under all
such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the annual
additions with respect to the Participant under such
other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be
contributed or allocated to the Participant's account
under this Plan for the Limitation Year.
B. Prior to the determination of the Participant's actual
compensation for the Limitation Year, the Maximum
Permissible Amount for the Limitation Year shall be
determined in the manner described in Section 4.2B.
C. As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount
for the Limitation Year shall be determined on the
basis of the Participant's actual compensation for
such Limitation Year.
D. If, pursuant to Section 4.3C or as a result of the
allocation of forfeitures, a Participant's Annual
Additions under this Plan and such other plans would
result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions
attributable to a welfare benefit fund or individual
medical account will be deemed to have been allocated
first regardless of the actual allocation date.
E. If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with
an allocation date of another plan, the Excess Amount
attributed to this Plan will be the product of:
(1) the total Excess Amount allocated as of such
date, times
(2) the ratio of (a) the Annual Additions allocated
to the Participant for the Limitation Year as of
such date under this Plan, to (b) the total
Annual Additions allocated to the Participant for
the Limitation Year as of such date under this
and all other qualified defined contribution
plans.
- 29 -
36
F. Any Excess Amounts attributed to this Plan shall be
disposed of in the manner described in Section 4.2D.
4.4 If, in addition to this Plan, the Employer maintains, or at
any time maintained, any qualified defined benefit plan, the
sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed 1.0 in
any Limitation Year.
4.5 All Employees of the Associated Controlled Group shall be
treated as employed by a single employer for purposes of
applying the limitations of Article IV.
- 30 -
37
ARTICLE V
INVESTMENT OF CONTRIBUTIONS AND INDIVIDUAL ACCOUNTS
5.1 Individual Accounts:
The Plan Administrator shall maintain an individual Account
for each Participant reflecting the amount in his Account.
A Participant's Account shall reflect (i) the total amount
of his Employer Contributions under Section 3.1, Rollover
Contributions under Section 11.9 and his ESOP Account under
Section 14.2, together with the earnings thereon and any
increases or decreases thereof, and (ii) any payments and
withdrawals on his behalf.
5.2 Valuation and Allocation of Accounts:
The value on any Valuation Date of a Participant's Account
shall be equal to the value of his Account as of the
preceding Valuation Date plus investment increases or
decreases of such previous value, plus the amount of any
contributions made on behalf of or by each Participant, and
less any Participant withdrawals since the last Valuation
Date. On such date, the earnings and losses of the trust
will be allocated to each Participant's Account in the ratio
that such Account balance bears to all Account balances or,
if applicable, as set forth in section 5.4. The value of
the Trust and the funds invested thereunder shall be equal
to the fair market value of such funds on the appropriate
date. The determination of each Participant's Account as
finally established which takes place on each Valuation Date
shall be made part of a report which will be provided to
each Participant, as directed by the Employer, indicating
the amounts added to and deducted from such Accounts during
the preceding allocation period. Such determination shall
constitute the value of the Participant's Account as of the
Plan quarter the determination is made.
5.3 No Claim to Specific Assets:
The establishment or maintenance of an Account under this
Plan on behalf of a Participant shall not give any Employer,
Participant, Beneficiary, or other person any right to, or
interest in, any specific assets of the Plan, except as may
be expressly set forth herein.
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38
5.4 Investment Elections:
The following investment options are available to hold
contributions and earnings under the Plan:
(1) Employer Stock
(2) John Hancock Stable Value Fund
(3) John Hancock Diversified Stock Fund
(4) John Hancock Special Equities Fund.
(5) Fidelity Puritan Fund.
Each Participant may direct the investment of any
Contributions made on his behalf under the Plan in one or
more of the options described in the previous paragraph
except that no Participant may elect to invest in option
(1) pertaining to Employer Stock.
To the extent that each Participant retains investment
direction over Contributions made on his behalf as described
above, a Participant may elect to transfer from one
investment fund to another investment fund (each such
transfer shall be credited with earnings or losses
attributable to its particular investment option) and shall
determine the investment of contributions made on his behalf
in whole percentages of not less than 10%, provided that no
Participant may elect to transfer from any of the above
options (1) through (5), or other such options as may be
added by the Employer or Plan Administrator, into Employer
Stock. A Participant may elect to transfer and/or change
investment direction at least once every quarter, provided
that the Plan Administrator may impose reasonable
restrictions, on a uniform and nondiscriminatory basis, upon
a Participant's transfer from Employer Stock, such as, but
not limited to, limitations on the percentage or number of
shares in a Participant's Account that the Participant may
liquidate each quarter to accommodate thin trading or other
legitimate concerns.
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39
ARTICLE VI
HARDSHIP DISTRIBUTIONS
6.1 Withdrawal of Contribution:
A. Upon a showing of hardship by a Participant, the Plan
Administrator may approve, once in any six-month
period, the Participant's withdrawal, in cash only, of
such portion of his vested Account as the Plan
Administrator shall deem necessary to alleviate such
hardship. Hardship distributions are subject to the
spousal consent requirements contained in Code
Sections 401(a)(11) and 417.
B. Funds shall be withdrawn in the following order from
the Participant's account described in Section 5.1 as
necessary to alleviate the hardship:
(1) Salary Reduction Contributions and interest,
gain, or loss thereon.
(2) Profit-Sharing Contributions, if any, and
interest, gain, or loss thereon.
(3) Matching Employer Contributions and interest,
gain or loss thereon.
(4) Amounts credited to the ESOP Account.
6.2 For purposes of this Article VI, "hardship" shall refer to
(1) medical expenses (as defined in Code Section 213(d))
incurred by the Participant or his spouse or dependants, (2)
the purchase (excluding mortgage payments) of a principle
residence of the Participant, (3) the payment of next
semester's tuition for post-secondary education of the
Participant or his spouse or dependents, or (4) the need to
prevent eviction of the Participant from his principal
residence or foreclosure on a mortgage on the Participant's
principle residence.
6.3 Restrictions on Hardship Withdrawals:
A Participant may withdraw funds in accordance with this
Article VI only if (1) the distribution does not exceed the
amount needed on account of the hardship as described in
Section 6.2 and (2) the Participant has obtained all
distributions and loans currently available under all
qualified plans maintained by the Employer.
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ARTICLE VII
RETIREMENT, DEATH AND DISABILITY
7.1 Distribution Upon Retirement:
A. Retirement Benefit:
The retirement benefit payable to a Participant under
the Plan is provided by the value of his Account on
his retirement date after separation from service. A
retiring Participant shall be completely vested in his
Account on his Normal Retirement Age and his
participation herein shall cease on his actual
retirement date.
B. Retirement Dates:
(1) Normal Retirement:
Except as provided below in Section 7.1B(2) or
7.1B(3) a Participant shall retire on his Normal
Retirement Date as described in Section 1.24.
(2) Disability Requirement:
A Participant may retire before his Normal
Retirement Date and shall be completely vested if
he terminates employment because he has incurred
a Disability. The Plan Administrator shall
determine, pursuant to objective and
non-discriminatory rules applied in a uniform
manner, whether a Disability has been incurred.
(3) Deferred Retirement:
Notwithstanding Section 7.1A above, if a
Participant continues employment after his Normal
Retirement Date, contributions on his behalf
shall continue.
C. Qualified Joint and Survivor Annuity:
Notwithstanding Section 7.1D, a married Participant
who retires under the Plan shall receive his benefit
in the form of a Qualified Joint and Survivor Annuity
and an unmarried Participant shall receive his benefit
in the form of a life annuity, unless the Participant
- 34 -
41
has elected an optional form of benefit, pursuant to a
Qualified Election (as defined in Section 7.4), within
the 90 day period ending on the Annuity Starting Date.
The Annuity Starting Date is the first day of the
first period for which an amount is paid as an annuity
or other form.
D. Optional Settlement Modes:
Subject to Section 7.1C, every retiring Participant
may elect, in writing, to receive his retirement
benefit in one of the following forms of payment:
(1) a lump sum payment;
(2) a Qualified Joint and Survivor Annuity (as
defined in Section 1.31);
(3) an annuity payable only for his lifetime; or
(4) an annuity payable for his lifetime with a
minimum guarantee of 10 years of payments.
If a Participant's benefit is to be distributed over
(1) a period not extending beyond the life expectancy
of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's
designated Beneficiary, or (2) a period not extending
beyond the life expectancy of the designated
Beneficiary, the amount required to be distributed for
each calendar year beginning with the first
distribution calendar year, must be at least equal to
the quotient obtained by dividing the Participant's
benefit by the applicable life expectancy. For
calendar years beginning before January 1, 1989, if
the Participant's Spouse is not the designated
Beneficiary, the method of distribution selected must
assure that at least 50% of the present value of the
amount available for distribution is paid within the
life expectancy of the Participant. For calendar
years beginning after December 31, 1988, the amount to
be distributed each year, beginning with distributions
for the first distribution calendar year shall not be
less than the quotient obtained by dividing the
Participant's benefit by the lesser of: (1) the
applicable life expectancy, or (2) if the
Participant's Spouse is not the designated
Beneficiary, the applicable divisor determined from
the table set forth in Q & A-4 of Section
1.401(a)(9)-2 of the Income Tax Regulations.
- 35 -
42
Distributions after the death of the Participant shall
be distributed using the applicable life expectancy as
the relevant divisor without regard to Regulations
Section 1.401(a)(9)-2.
The minimum distribution required for the
Participant's first distribution calendar year must be
made on or before the date dictated in Section 7.1F.
The minimum distribution for other calendar years,
including the minimum distribution for the
distribution calendar year in which the date dictated
in Section 7.1F occurs, must be made on or before
December 31 of that distribution calendar year.
If the Participant's benefit is distributed in the
form of an annuity purchased from an insurance
company, distributions thereunder shall be made in
accordance with the requirements of Section 401(a)(9)
of the Code and the regulations thereunder.
E. Payment of Retirement Benefits:
When benefits are payable, the Plan Administrator
shall commence the payment of retirement benefits
pursuant to the settlement mode elected by the
Participant.
Unless the Participant otherwise elects in writing,
distribution of benefits will begin no later than the
60th day after the later of the close of the Plan Year
or Short Plan Year in which:
(1) such Participant attains the age 65;
(2) Participant terminates his service with the
Associated Controlled Group.
Any annuity contract distributed herefrom shall be
endorsed so that it is non-transferable.
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.
F. Timing of Distributions:
(1) Notwithstanding Sections 7.1B and 7.1E,
distribution of a Participant's entire interest
shall commence no later than his required
beginning date, which shall be the April 1st
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43
following the calendar year in which the
Participant attains age 70 1/2.
The minimum distribution required for the
Participant's first distribution calendar year
must be made on or before the Participant's
required beginning date. The minimum
distribution for other calendar years, including
the minimum distribution for the distribution
calendar year in which the Participant's required
beginning date occurs, must be made on or before
December 31st of that distribution calendar year.
(2) Section 7.1F(1) does not apply to a Participant
who meets the following requirements:
(1) The distribution by the Plan is one which
would not have disqualified such Plan under
Section 401(a)(9) of the Code as in effect
prior to amendment by the Deficit Reduction
Act of l984.
(2) The distribution is in accordance with a
method of distribution designated by the
Participant whose interest in the Plan is
being distributed or, if the Participant is
deceased, by a Beneficiary of the
Participant.
(3) Such designation was in writing, was signed
by the Participant or Beneficiary, and was
made before January 1, 1984,
(4) The Participant had accrued a benefit under
the Plan as of December 31, 1983,
(5) The method of distribution designated by the
Participant or the Beneficiary specifies the
time at which distribution will commence,
the period over which distributions will be
made, and in the case of any distribution
upon the Participant's death, the
Beneficiaries of the Participant listed in
order of priority.
A distribution upon death will not be covered by
this section unless the information in the
designation contains the required information
described above with respect to the distributions
to be made upon the death of the Participant.
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44
For any distribution which commences before
January 1, 1984, but continues after December 31,
1983, the Participant, or the Beneficiary, to
whom such distribution is being made, will be
presumed to have designated the method under
which the distribution is being made if the
method of distribution was specified in writing
and the distribution satisfies the requirements
in subsections (a) and (e) above.
If a designation is revoked, any subsequent
distribution must satisfy the requirements of
Section 401(a)(9) of the Code and the regulations
thereunder. If a designation is revoked
subsequent to the date distributions are required
to begin, the Trust must distribute by the end of
the calendar year following the calendar year in
which the revocation occurs the total amount not
yet distributed which would have been required to
have been distributed to satisfy Section
401(a)(9) of the Code and the regulations
thereunder, but for the Section 242(b)(2)
election. For calendar years beginning after
December 31, 1988, such distributions must meet
the minimum distribution incidental benefit
requirements in Section 1.401(a)(9)-2 of the
Income Tax Regulations. Any changes in the
designation will be considered to be a revocation
of the designation. However, the mere
substitution or addition of another Beneficiary
(one not named in the designation) under the
designation will not be considered to be a
revocation of the designation so long as such
substitution or addition does not alter the
period over which distributions are to be made
under the designation, directly or indirectly
(for example, by altering the relevant measuring
life). In the case in which an amount is
transferred or rolled over from one plan to
another, the rules in Q & A J-2 and J-3 shall
apply.
G. The following definitions shall apply for purposes of
this Section 7.1:
(1) "Applicable life expectancy" shall be the life
expectancy (or joint and last survivor
expectancy) calculated using the attained age of
the Participant (or designated Beneficiary) as of
the Participant's (or designated Beneficiary's)
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45
birthday in the applicable calendar year reduced
by one for each calendar year which has elapsed
since the date life expectancy was first
calculated. If life expectancy is being
recalculated, the applicable life expectancy
shall be the life expectancy as so recalculated.
The applicable calendar year shall be the first
distribution calendar year, and if life
expectancy is being recalculated, such calendar
year.
(2) "Distribution calendar year" shall be a calendar
year for which a minimum distribution is
required. For distributions beginning before the
Participant's death, the first distribution
calendar year is the calendar year immediately
preceding the calendar year which contains the
Participant's required beginning date. For
distributions beginning after the Participant's
death, the first distribution calendar year is
the calendar year in which distributions are
required to begin pursuant to Section 7.2 below.
(3) Life expectancy and joint and last survivor
expectancy are computed by use of the expected
return multiples in Title V and VI of Section
1.72-9 of the income tax regulations. Life
expectancies of a Participant or Spouse shall be
recalculated annually. The life expectancy of a
non-spouse Beneficiary shall not be recalculated.
(4) A Participant's benefit shall be his Account
balance as of the last Valuation Date in the
calendar year immediately preceding the
distribution calendar year (valuation calendar
year) increased by the amount of any
contributions allocated to the Account balance as
of dates in the valuation calendar year after the
Valuation Date and decreased by distributions
made in the valuation calendar year after the
Valuation Date. For purposes of the above, if
any portion of the minimum distribution for the
distribution calendar year is made in the second
distribution calendar year, on or before the
required beginning date, the amount of the
minimum distribution made in the second
distribution calendar year shall be treated as if
it had been made in the immediately preceding
distribution calendar year.
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46
7.2 Distribution Upon Death:
A. If a Participant dies prior to his termination of
employment, he shall be completely vested in his
Account. The Plan Administrator may always require
proof of death for payment of death benefits.
B. The benefit payable upon the death of a Participant
shall be provided pursuant to this section:
(1) If so elected by the Participant, the
Participant's benefit shall be paid to his
Beneficiary in a lump sum payment as soon as
practicable after the Plan Administrator receives
the required proof of death.
(2) In the event a married Participant dies before
the Annuity Starting Date (as defined in Section
7.1C), the Participant's Account shall be applied
toward the purchase of a Qualified Pre-retirement
Survivor Annuity, unless an optional form of
benefit has been elected within the election
period pursuant to a Qualified Election (as
defined in Section 7.4).
A Qualified Pre-retirement Survivor Annuity is an
annuity for the life of the surviving Spouse
which is the actuarial equivalent of the Account
payable upon the Participant's death. The
surviving Spouse may elect to have such annuity
distributed within a reasonable period after the
Participant's death, and to receive the actuarial
equivalent of such annuity in any of the forms of
payment indicated in Section 7.1D.
The election period begins on the first day of
the Plan Year in which the Participant attains
age 35 and ends on the date of the Participant's
death. If a Participant separates from service
prior to the first day of the Plan Year in which
age 35 is attained, the election period shall
begin on the date of separation.
If the Participant is not married, such benefit
shall be paid to the designated Beneficiary or,
if none, to the Participant's estate. The
Participant's Beneficiary or, if none, his estate
may elect any of the forms of payment indicated
in Section 7.1D.
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(3) In the event a Participant dies after the Annuity
Starting Date the remaining retirement benefit,
if any, shall be distributed to the Beneficiary
at least as rapidly as under the method of
distribution being used prior to the
Participant's death.
C. (1) (a) Notwithstanding Section 7.2B(2), if the
Participant dies before distribution of his
or her interest begins, distribution of the
Participant's entire interest shall be
completed by December 31st of the calendar
year containing the fifth anniversary of the
Participant's death except to the extent
that an election is made to receive
distributions in accordance with (i) or (ii)
below:
(i) if any portion of the Participant's
interest is payable to a designated
Beneficiary, distributions may be
made over the life or over a period
certain not greater than the life
expectancy of the designated
Beneficiary commencing on or before
December 31st of the calendar year
immediately following the calendar
year in which the Participant died;
(ii) if the designated Beneficiary is
the Participant's surviving Spouse,
the date distributions are required
to begin in accordance with (i)
above shall not be earlier than the
later of (1) December 31st of the
calendar year immediately following
the calendar year in which the
Participant died and (2) December
31st of the calendar year in which
the Participant would have attained
age 70-1/2.
(b) If the Participant has not made an election
pursuant to this Section 7.2C(1) by the time
of his or her death, the Participant's
designated Beneficiary must elect the method
of distribution no later than the earlier of
(a) December 31st of the calendar year in
which distributions would be required to
begin under this section, or (b) December
- 41 -
48
31st of the calendar year which contains the
fifth anniversary of the date of death of
the Participant. If the Participant has no
designated beneficiary, or if the designated
beneficiary does not elect a method of
distribution, distribution of the
Participant's entire interest must be
completed by December 31st of the calendar
year containing the fifth anniversary of the
Participant's death.
(c) For purposes of this section, if the
surviving Spouse dies after the Participant,
but before payments to such Spouse begin,
the provisions of this section with the
exception of paragraph (ii) herein, shall be
applied as if the surviving Spouse were the
Participant.
(2) For purposes of this Section 7.2C, any amount
paid to a child of the Participant will be
treated as if it had been paid to the surviving
Spouse if the amount becomes payable to the
surviving Spouse when the child reaches the age
of majority.
(3) Sections 7.2C(1) and 7.2C(2) do not apply to any
Employee who was a Participant with an accrued
benefit on or before December 31, 1983, and who
completed the necessary election form used to
waive these distribution requirements as
described in Section 7.1F(2).
(4) For the purposes of this Section 7.2,
distribution of a Participant's interest is
considered to begin on the Participant's required
beginning date (or, if Section 7.2C(1)(c) above
is applicable, the date distribution is required
to begin to the surviving spouse pursuant to
Section 7.2C(1)(a) above). If distribution in
the form of an annuity irrevocably commences to
the Participant before the required beginning
date, the date distribution is considered to
begin is the date distribution actually
commences.
7.3 Designation of Beneficiary and Settlement Upon Death:
Every Participant shall designate on a form satisfactory to
the Plan Administrator a Beneficiary of any benefits or
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49
proceeds under the Plan which may become payable at his
death. A Participant's Spouse will be deemed to be the
designated Beneficiary, unless the Participant elects
otherwise and the Spouse consents to the designation in
accordance with Section 7.4. Every Participant may also
elect (pursuant to a Qualified Election as defined in
Section 7.4) any optional settlement mode other than the
Qualified Joint and Survivor Annuity or the Qualified
Pre-retirement Survivor Annuity permitted hereunder for such
proceeds or benefits. A Participant may change a prior
election by notifying the Plan Administrator in writing. If
a Participant has not designated a Beneficiary pursuant to
this section, the Trustee shall make payment of any death
benefits to the Participant's Spouse, or, if none, to the
Participant's estate.
7.4 Qualified Election
For purposes of this Article, a Qualified Election shall
mean waiver of a Qualified Joint and Survivor Annuity or a
Qualified Pre-retirement Survivor Annuity. Any waiver of a
Qualified Joint and Survivor Annuity or a Qualified
Pre-retirement Survivor Annuity shall not be effective
unless: (a) the Participant's spouse consents in writing to
the election; (b) the election designates a specific
Beneficiary, including any class of beneficiaries or any
contingent beneficiaries, which may not be changed without
spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal
consent); (c) the Spouse's consent acknowledges the effect
of the election; and (d) the Spouse's consent is witnessed
by a Plan representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor
Annuity shall not be effective unless the election
designates a form of benefit payment which may not be
changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction
of a Plan representative that there is no Spouse or that the
Spouse cannot be located, a waiver will be deemed a
Qualified Election.
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be
obtained) shall be effective only with respect to such
Spouse. A consent that permits designations by the
Participant without any requirement of further consent by
such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific beneficiary, and a specific
form of benefit where applicable, and that the Spouse
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50
voluntarily elects to relinquish either or both of such
rights. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time
before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under
this provision shall be valid unless the Participant has
received notice as provided in Section 7.5 below.
7.5 Notice Requirements:
In the case of a Qualified Joint and Survivor Annuity as
described in Section 7.1C, the Plan Administrator shall
provide each Participant no less than 30 days and no more
than 90 days prior to the Annuity Starting Date a written
explanation of: (i) the terms and conditions of a Qualified
Joint and Survivor Annuity; (ii) the Participant's right to
make and the effect of an election to waive the Qualified
Joint and Survivor Annuity form of benefit; (iii) the rights
of a Participant's Spouse; and (iv) the right to make, and
the effect of, a revocation of a previous election to waive
the Qualified Joint and Survivor Annuity.
In the case of a Qualified Pre-retirement Survivor Annuity
as described in Section 7.2B, the Plan Administrator shall
provide each Participant within the applicable period a
written explanation of the Qualified Pre-retirement Survivor
Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the above
requirements applicable to a Qualified Joint and Survivor
Annuity. The applicable period for a Participant is
whichever of the following periods ends last: (i) the
period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (ii) a reasonable period ending
after the individual becomes a Participant; (iii) a
reasonable period ending after this article first applies to
the Participant. Notwithstanding the foregoing, notice must
be provided within a reasonable period ending after
separation of service in case of a Participant who separates
from service before attaining age 35.
For purposes of the preceding paragraph, a reasonable period
ending after the enumerated events described in (ii) and
(iii) is the end of the two year period beginning one year
prior to the date the applicable event occurs and ending one
year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35
is attained, notice shall be provided within the two year
period beginning one year prior to separation and ending one
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51
year after separation. If such a Participant thereafter
returns to employment with the Employer, the applicable
period for such Participant shall be redetermined.
7.6 Overriding Provisions:
The provisions of this Article VII shall take precedence
over any conflicting provisions in this Plan.
7.7 Distribution at age 59-1/2:
A Participant who is fully vested in his Employer
Contribution Account and who has attained age 59-1/2 shall
be eligible to receive, once in any Plan Year, a
pre-retirement distribution equal to all or part of the full
value of his Employer Contribution Account, calculated as of
the Valuation Date next following the date the Sponsor
receives notice from the Employer of such request.
7.8 Distribution in Employer Stock
A. Except for a Hardship Distribution under Article VI of
this Plan, a Participant who (i) is entitled to any
other distribution under the Plan and (ii) properly
elects to receive such distribution in the form of a
lump sum, may elect to receive the distribution in
whole shares of Employer Stock, to the extent of
Employer Stock held in his Account at the time of the
distribution.
B. If a Participant receives a Plan distribution
consisting of Employer Stock under section 7.8A, the
Put Option set forth in section 14.2C shall apply.
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52
ARTICLE VIII
VESTING: TERMINATION OF EMPLOYMENT
8.1 Vested Interest Upon Termination:
A. A Participant's vested or non-forfeitable right to a
benefit under this Plan shall mean his claim to a part
or all of an immediate or deferred Plan benefit which
arises from his employment, which right is
unconditional and legally enforceable against the
Plan. The extent of such vested or non-forfeitable
right in his Account shall be determined at the date
on which he terminated his employment with the
Employer or, if appropriate, the Associated Controlled
Group, for any reason other than retirement, death, or
Disability. A Participant shall always have a
non-forfeitable right to the portion of his Account
attributable to Salary Reduction Contributions,
Matching Employer Contributions, any Profit-Sharing
Contributions and any Rollover Contributions.
B. A Participant's Account subject to the provisions of
Section 8.1A shall include amounts due but not yet
allocated to the Participant's Account upon
termination. For purposes of this paragraph, the
Account shall be valued after the notification of the
Employer, but not later than the later of (i) 60 days
after the notification, or (ii) the last day of the
Plan Year in which such notification occurred.
8.2 Amended Vesting Schedule:
A. If the Plan's vesting schedule is amended, or the Plan
is amended in any way that directly or indirectly
affects the computation of the Participant's
non-forfeitable percentage may elect, within a
reasonable period after the adoption of the amendment
or change, to have the non-forfeitable percentage
computed under the Plan without regard to such
amendment or change. Furthermore, if the vesting
schedule of the Plan is amended, in the case of an
Employee who is a Participant as of the later of the
date such amendment is adopted, or the date it becomes
effective, the non-forfeitable percentage (determined
as of such date) of such Employee's right to his
Employer-derived benefit will not be less than his
percentage computed under the Plan without regard to
such amendment.
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53
The period during which the election may be made shall
commence with the date the amendment is adopted or
deemed to be made and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written
notice of the amendment by the Employer or Plan
Administrator.
8.3 Non-forfeiture of Minimum Contribution
The Minimum Contribution required (to the extent required to
be non-forfeitable under Section 416(b) of the Code) may not
be forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of
the Code.
8.4 Distribution:
A. The Plan Administrator shall direct the Trustee to
distribute the Participant's vested interest in the
Account. The distribution shall be in the form of
lump sum or an annuity contract depending on the
Participant's election(s).
B. A Participant who:
(1) terminates service shall be subject to Section
7.1C regardless of when benefits commence;
(2) terminates service and dies before benefits
commence shall be subject to Section 7.2B(2).
C. Notwithstanding this Section 8.4, the provisions of
Section 7.1F(1) shall apply unless the Employee was a
Participant with an accrued benefit on or before
December 31, 1983 and who has met the requirements
specified in Section 7.1F(1).
D. If a Participant properly elects to receive his
distribution in a lump sum, the distribution may be in
cash or in kind, including whole shares of Employer
Stock to the extent such Stock is then allocated to
the Participant's Account. A Participant shall have
the right to receive a distribution in Employer Stock
in accordance with Section 7.8.
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54
8.5 Consent to Distribution:
If the value of a Participant's vested Account balance
derived from Employer and Employee contributions exceeds (or
at the time of any prior distribution exceeded) $3,500, the
Participant and the Participant's Spouse (or where either
the Participant or the Spouse has died, the survivor) must
consent to any distribution of such Account balance. The
consent of the Participant and the Participant's Spouse
shall be obtained in writing within the 90-day period ending
on the Annuity Starting Date. The Annuity Starting Date is
the first day of the first period for which an amount is
paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any distribution
until the Participant's Normal Retirement Age. Such
notification shall include a general description of the
material features, and an explanation of the relative values
of, the optional forms of benefit available under the plan
in a manner that would satisfy the notice requirements of
Section 417(a)(3) of the Code and shall be provided no less
than 30 days and no more than 90 days prior to the Annuity
Starting Date.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of
a Qualified Joint and Survivor Annuity. Neither the consent
of the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is required to
satisfy Section 401(a)(9) or Section 415 of the Code.
For purposes of determining the applicability of the
foregoing consent requirements to distributions made before
the first day of the first plan year beginning after
December 31, 1988, the Participant's vested Account balance
shall not include amounts attributable to accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code.
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55
ARTICLE IX
DUTIES OF PLAN ADMINISTRATOR AND TRUSTEE
9.1 Duties of Plan Administrator:
The Plan Administrator will control and manage the operation
and administration of the Plan. The Plan Administrator's
primary responsibilities in this regard shall include, but
are not limited to, the following:
A. Administer the Plan by the general rules in the Plan
document on a uniform basis so as not to discriminate
in favor of any Participant, and for the exclusive
benefit of the Participants and their Beneficiaries;
B. Resolve all questions relating to Employee
participation and the payment of benefits under the
Plan;
C. Maintain all necessary records for the administration
of the Plan and pay all associated costs for the
administration of the Plan;
D. Serve as the agent for the service of legal process
with respect to the Plan;
E. Notify, counsel, and assist Participants and
Beneficiaries regarding any rights, benefits, or
elections available under the Plan;
F. Prepare and file proper forms for tax qualification
status and any reports and tax forms as may be
required from time to time by any governmental agency;
G. Implement the claims review procedure under Section
11.7;
H. Appoint agents or employ Persons to assist in
administering the Plan;
I. Review and administer any request by a Participant who
chooses to exercise his right to direct investments
under Section 9.3;
J. Administer the federal income tax withholding
requirements for Plan distributions to Participants
and provide Participant election forms for determining
withholding status.
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56
K. Perform plan related duties with respect to a
qualified domestic relations order as required by
section 414(p) of the Code.
L. Provide written explanation of rollover treatments
when making a qualifying rollover distribution.
If the Employer appoints another Person as Plan
Administrator, such appointment must be in writing. The
Employer may make a written revocation of his selection of
the Plan Administrator. The resignation of the Plan
Administrator must be in writing.
9.2 Multiple Fiduciaries:
Any Person or Persons may serve in more than one fiduciary
capacity with respect to the Plan (including service both as
Trustee and Plan Administrator). Where more than one Person
serves as Plan Administrator, such Persons may agree in
writing to allocate among themselves the various powers and
duties prescribed in Section 9.1, provided all such Persons
sign such agreement. A copy of any such agreement shall be
retained with the other Plan documents.
9.3 Administration of Investments:
The Trustee shall receive all contributions to this Plan,
and shall hold and, except to the extent an investment
manager is given such authority, manage such amounts,
together with the income therefrom, as a fund in trust
according to the terms of the Trust. The Trustee shall
invest and reinvest the funds of this Plan, and shall keep
funds invested, without distinction between principal and
income, in such property, real or personal, as he shall deem
advisable, including but not limited to common and preferred
stocks, bonds, mortgages, mutual funds, other evidences of
indebtedness or ownership, and annuity contracts as provided
under this Plan. The Trustee shall establish and maintain a
funding policy to carry out the objectives of the Plan,
except to the extent that an investment manager has been
appointed under Section 9.4, in which event the Trustee
shall be subject to the direction of the investment manager.
In making investments, the Trustee has wide latitude in the
selection of investments. However, the Trustee shall
exercise the judgment and care under the circumstances then
prevailing, which men of prudence, discretion, and
intelligence familiar with such matters exercise in a like
situation and shall diversify such investments so as to
minimize the risk of large losses. If two or more Persons
are designated as Trustee, each is required to use
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reasonable care to insure that his fellow Trustees do not
breach their responsibilities.
Notwithstanding the provisions of the last paragraph, each
Participant may determine how all of his Account shall be
invested. Such an election to direct investments shall be
subject to the following terms and conditions:
A. Each Participant may, upon completion of such forms as
the Plan Administrator may require, direct the Trustee
to invest his Account, or the applicable portion
thereof, on an allocated basis, into such investments
as the Participant so elects.
B. If a Participant chooses to exercise his right to
direct investments but fails to comply with all the
requirements established by the Plan Administrator,
the Participant's Account shall not be subject to this
paragraph.
C. Upon the Participant's completion of all the acts
required by the Plan Administrator, the Trustee shall
then carry out the instructions of the Participant
within a reasonable amount of time. The right to
direct investments shall not be construed as creating
any additional rights in such portion of an Account
and such portion shall only be vested and distributed
in accordance with the provisions of the Plan.
D. If a Participant elects to direct investments in
accordance with this paragraph, the entire portion of
his Account in which he retains investment direction,
as described in Section 5.4, must be so invested.
The funding policy specified in this section shall not apply
to those accounts which are being invested in accordance
with the instructions of the Participant exercising his
right to direct investments. Neither the Plan Administrator
nor Trustee shall be responsible for the nature of any
directed investments.
If any Participant elects to direct investments, the assets
of the Plan for all Participants must be purchased and held
on an allocated account basis. Each Participant who does
not direct the investment of his Account shall have a
ratable interest in all assets of the trust not subject to
such directed investment.
9.4 Investment Manager:
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The Employer may appoint and retain an investment manager to
manage part or all of the assets of the Plan (including the
power to acquire and dispose of such assets). No such
appointment shall become effective until the investment
manager enters into a signed agreement with the Employer
accepting such appointment. If an investment manager is
appointed pursuant to this section, it shall be his
responsibility to establish and maintain a funding policy
for the Plan as well as to direct the Trustee in investing
Plan assets under its charge in accordance with Section 9.3.
The responsibilities of the investment manager as specified
in this section shall not apply to those Accounts, or
portions thereof, which are being invested in accordance
with the instructions of the Participant exercising his
right to direct investments.
9.5 Expenses:
The Employer may reimburse the Trustee, Plan Administrator
and investment manager, if any, for all reasonable expenses
incurred by them because of the Plan's operation. The
Trustee, Plan Administrator and investment manager, if any,
may receive reasonable compensation for services rendered to
the Plan and may be reimbursed for all expenses reasonably
incurred in performing their duties hereunder. However, if
any of these Persons already receives full-time compensation
from the Employer, or from an association of Employers whose
Employees are Participants herein, or from an Employee
organization whose members are Participants herein, such
Person shall be reimbursed only for expenses properly and
actually incurred, and not receive any additional
compensation. Such expenses and compensation shall be
charged against the trust unless they shall previously have
been paid directly by the Employer.
The Employer may pay all the administrative costs of the
Trust in addition to the contribution determined pursuant to
Article III.
If the Employer elects not to pay any of the reasonable
expenses of the Plan or trust, such expenses shall be paid
by the Plan.
9.6 Accounting:
The Plan Administrator shall keep accurate and detailed
accounts of all transactions made with respect to the Plan's
funds or Plan's operation. All books, records and other
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material relating to such transactions may be inspected at
any time by any Person authorized by the Employer. Not more
than once during any Plan Year, the Plan Administrator
shall, upon receipt of a request in writing from any
Participant or Beneficiary, furnish to such Participant or
Beneficiary the latest available information concerning his
total accrued benefits and his vested accrued benefits, if
any, or the earliest date on which such benefits will become
vested.
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ARTICLE X
PLAN AMENDMENT AND TERMINATION
10.1 Amendment by Employer's Board of Directors:
Subject to Section 10.2, the Board of Directors of the
Employer at a regularly constituted Board Meeting in
accordance with the Board's established procedures for
conducting business may elect to amend the Plan at any time.
10.2 Amendment Restrictions:
A. No Plan amendment may:
(1) Cause a reversion of funds to the Employer,
except to the extent provided in Section 10.5 or
Section 11.4;
(2) Have any retroactive effect which deprives any
Participant of any portion of his Account, or
eliminates an optional form of distribution,
except where the amendment is required in order
to conform to Federal or State laws, regulations,
or rulings; or
(3) Increase the duties or responsibilities of the
Trustee, investment manager, or Plan
Administrator without their written consent.
B. Notwithstanding anything to the contrary contained in
this Plan, the provisions of Section 3.1C. of this
Plan pertaining to the amount, price and timing of
awards under that Section of this Plan may not be
amended more than once every six months, other than to
comport with changes in the Internal Revenue Code,
ERISA, or the rules thereunder. For this purpose an
"award" of the Employer Stock means the allocation to
Participants' Accounts of Employer Stock under Section
3.1.C.
10.3 Voluntary Termination of Plan:
Although the Employer intends to continue this Plan and to
make regular contributions hereunder, the Employer reserves
the right to terminate the Plan at any time, and its
continuance is not guaranteed. Termination of the Plan
shall be effective upon delivery of the Employer's written
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notice of such termination to the Plan Administrator and
Trustee.
10.4 Involuntary Termination of Plan:
This Plan shall terminate if the Employer shall be
dissolved, declared bankrupt or insolvent or shall be merged
with another company, except that any successor in business
may continue the Plan by assuming its obligations.
10.5 Distribution Upon Plan Termination:
In the event of the termination, partial termination, or
complete discontinuance of contributions hereunder, the
Account of each affected Participant shall be
non-forfeitable. The Plan Administrator shall, after paying
any expense properly chargeable to the Plan's assets,
distribute the assets in accordance with the Account of each
affected Participant upon the Participant's separation from
service, death or disability, or if the Plan is terminated
without the establishment of another defined contribution
plan. The Plan Administrator's determination with respect
to any distribution made hereunder shall be final and
conclusive upon all parties claiming beneficial interests
hereunder.
Excess allocations determined in accordance with Section
4.2, to the extent that such excess allocations have not
been used to reduce Employer contributions at the time of
plan termination, shall be returned to the Employer provided
that the Employer has made all contributions required under
the Plan.
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ARTICLE XI
MISCELLANEOUS
11.1 Taxes:
All taxes of whatever nature that may be levied or assessed
under present or future laws against the Plan and Trust with
respect to this Plan by any jurisdiction shall be paid by
the Plan Administrator from the Plan assets in such manner
as he shall determine. However, any such taxes that are
chargeable to any Participant's Account shall be allocated
to it. If no allocation is possible or necessary, any tax
levied or assessed shall be charged pro rata to all
Participants' Accounts.
11.2 Employment Relationship:
No Plan provision shall be construed as creating or
modifying any contract between the Employer and any
Employee, or have any effect upon the terms or conditions of
any employment relationship.
11.3 Non-alienation of Benefits:
No benefit or interest provided by this Plan will be subject
to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to
the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to
be a qualified domestic relations order, as defined in
Section 414(p) of the Code, or any domestic relations order
entered before January 1, l985.
11.4 Reversion of Employer Contributions:
Application to the Internal Revenue Service for a
determination letter shall be made by the Plan Administrator
as soon as practicable. Notwithstanding any other provision
in this Plan, if the Internal Revenue Service should
determine that the Plan does not continue to qualify under
Section 401(a) of the Code, the Trustee shall return to the
Employer within one (1) year after the date of such denial
of qualification all contributions made by the Employer less
any administrative expense incurred by the Plan
Administrator or Trustee, but only if the application for
continued qualification is made by the time prescribed by
law for filing the Employer's return for the taxable year in
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which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe.
Further, if an Employer Contribution is disallowed at any
time as a deduction pursuant to Section 404 of the Code,
such contribution may be returned to the Employer to the
extent disallowed, less any administrative expenses incurred
by the Plan Administrator and Trustee, within one (1) year
after disallowance. Further, if an Employer Contribution is
made by reason of a mistake of fact, the amount of the
mistaken payment may be returned to the Employer within one
(1) year of the mistaken payment of the contribution.
Every Participant and Beneficiary shall have those rights as
stated in this Plan, but such rights will be subject to the
Employer's right of reversion as stated herein.
11.5 Reversion of Assets:
The assets of the Plan, including all amounts contributed
and any increments thereon, shall never inure to the benefit
of the Employer and shall be held for the exclusive purposes
of providing benefits to Participants and to their
Beneficiaries as well as defraying the reasonable expenses
of administering the Plan, except as provided in Sections
10.5 and 11.4.
11.6 Merger or Consolidation of Plan:
In the case of any merger or consolidation with, or transfer
of assets or liabilities to any other plan, each Participant
will be entitled to receive (if the Plan then terminated) a
benefit immediately after such merger, consolidation, or
transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the
merger, consolidation, or transfer (if the Plan had then
been terminated).
11.7 Claims Review:
A claim or request for a Plan benefit must be filed in
writing with the Plan Administrator. If a claim is denied,
in whole or in part, the Plan Administrator shall notify the
claimant in writing of the reasons for the denial within 90
days after the claim was filed. The Plan Administrator may
have 90 additional days in special circumstances, if the
Participant is notified. Such notice shall refer to the
pertinent Plan provisions on which the denial is based;
describe and explain the need for any additional material or
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information necessary to perfect the claim; and call
attention to or explain the Plan's claim review procedure.
A claimant, or his duly authorized representative, may
appeal the denial of a claim by submitting a written request
for a review to the Plan Administrator within 120 days after
the notice of denial has been received by the claimant. In
the course of such a review, the claimant, or his
representative, may review pertinent documents and may
submit issues and comments in writing to the Plan
Administrator.
The Plan Administrator shall notify the claimant of its
decision within 60 days after the Plan Administrator's
receipt of the request for review. The decision shall be in
writing and shall include specific reasons for the decision
and specific references to the provisions of the Plan on
which the decision is based. The time for a decision may be
extended to 120 days in special circumstances, if the
Participant is so notified.
11.8 Notice to Interested Parties:
When the Employer submits this Plan to the Internal Revenue
Service for an advance determination letter regarding its
qualification, such Employer shall notify in the appropriate
manner all Employees who are employed at the time of such
submission.
11.9 Transfer of Assets:
The Employer may cause to be transferred to the Trustee all
or any of the assets held in respect of any other plan or
trust which satisfies the applicable requirements of the
Code relating to qualified plans and trusts, which is or was
maintained by the Employer for the benefit of its Employees
provided such transfer does not violate Code Section 411(d).
Any such assets so transferred shall be accompanied by
written instructions from the Employer or the Trustee or
custodian holding such assets, setting forth the
Participants for whose benefit such assets have been
transferred and showing separately the respective
contributions by the Employer and by the Participants and
the current value of the assets attributable thereto. Upon
receipt of such assets and instructions, the Trustee shall
thereafter proceed in accordance with the provisions of this
Plan.
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11.10 Waiver of Required Notice
With respect to a distribution exceeding $3500 as described
in Code section 411(a)(11) and with respect to the written
explanation regarding the direct rollover provisions of Code
section 401(a)(31), a Participant may waive the required 30
day notice provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the
notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution
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ARTICLE XII
TOP-HEAVY PLAN REQUIREMENTS
12.1 Superseding Article:
If the Plan is or becomes Top-Heavy or Super Top-Heavy in
any Plan Year, the provisions of this Article will supersede
any conflicting provisions in the Plan.
12.2 Limit on Compensation:
For any Plan Year in which the Plan is Top-Heavy or Super
Top-Heavy, only the first $150,000 (or such larger amount as
may be prescribed by the Secretary of the Treasury or his
delegate) of a Participant's annual Compensation shall be
taken into account for purposes of determining Employer
Contributions under the Plan.
12.3 Minimum Contributions:
The following requirement shall apply for any Plan Year in
which the Plan is Top-Heavy or Super Top-Heavy:
A. Except as otherwise provided in Sections 12.3C below,
a Minimum Contribution shall be allocated on behalf of
any Participant who is not a Key Employee in an amount
not less than the lesser of 3% of such Employee's
Compensation, or in a case when the Employer has no
defined benefit plan designating this Plan to satisfy
Code Section 401, the largest percentage of Employer
Contributions and forfeitures, as a percentage of the
first $150,000 of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year.
The Minimum Contribution is determined without regard
to any Social Security contribution and without regard
to any Matching Employer Contribution made on behalf
of an Employee who is not a Key Employee. The Minimum
Contribution shall be made for an Employee even
though, under other Plan provisions, the Employee
would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation
for the year.
B. For purposes of computing the Minimum Contribution,
Compensation will mean Compensation as defined in
Section 4.1B.
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C. The provision in Section 12.3A above shall not apply
to any Participant who was not employed by the
Employer on the last day of the Plan Year.
D. If the Employer maintains a defined benefit pension
plan, "5%" shall be substituted for "3%" in Section
12.3A.
E. If the Employer maintains another qualified retirement
plan, and the provisions of Section 12.3D do not
apply, "4%" shall be substituted for "3%" in Section
12.3A.
12.4 Modifications to Limitation on Allocations:
If the Plan is Super Top-Heavy, 100% will be substituted for
125% in Section 4.1C and in Section 4.1D.
12.5 Definitions:
For purposes of this Article XII, the following definitions
shall apply:
A. "Determination Date": For any Plan Year subsequent to
the first Plan Year, the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the
last day of that Plan Year.
B. "Former Key Employee": Shall mean a Participant
(including a Beneficiary of such Participant) who is a
Non-Key Employee with respect to the current Plan
Year, but who was a Key Employee with respect to the
Plan during a prior Plan Year.
C. "Key Employee": Any Employee or former Employee (and
the Beneficiaries of such Employee) who at any time
during the determination period was an officer of the
Employer, or Associated Controlled Group, if such
individual's annual compensation exceeds 50% of the
dollar limitation under Section 415(b)(1)(A) of the
Code, an owner (or considered an owner under section
318 of the Code) of both more than a 1/2% interest and
one of the ten largest interests in the Employer or
Associated Controlled Group, if such individual's
compensation exceeds 100% of the dollar limitation
under Section 415(c)(1)(A), a 5% owner of the
Employer, or a 1% owner of the Employer who has an
annual compensation of more than $150,000. The
determination period is the Plan Year containing the
Determination Date and the 4 preceding Plan Years.
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Annual compensation means compensation as defined in
Section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a Salary
Reduction Agreement which are excludable from the
Employee's gross income under Section 125, Section
402(a)(8), Section 402(h) and Section 403(b) of the
Code. The determination of who is a Key Employee will
be made in accordance with Section 416(i)(1) of the
Code and the regulations thereunder.
D. "Non-Key Employee": Shall mean any Employee or former
Employee (including a Beneficiary of such Employee)
who is not a Key Employee.
E. "Permissive Aggregation Group": The Required
Aggregation Group of plans plus any other plan or
plans of the Employer which, when considered as a
group with the Required Aggregation Group, would
continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
F. "Required Aggregation Group": (A) Each qualified plan
of the Employer in which at least one Key Employee
participates or participated at any time during the
determination period (regardless of whether the plan
has terminated), and (B) any other qualified plan of
the Employer which enables a plan described in (A) to
meet the requirements of Sections 401(a)(4) or 410 of
the Code.
G. "Super Top-Heavy": For any Plan Year, this Plan is
deemed to be Super Top-Heavy if any of the following
conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 90%
and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group
of plans,
(2) If this Plan is a part of a Required Aggregation
Group of plans (but which is not part of a
Permissive Aggregation Group) and the Top-Heavy
Ratio for the group of plans exceeds 90%, or
(3) If this Plan is a part of a Required Aggregation
Group of plans and part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 90%.
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H. "Top-Heavy": For any Plan Year, this Plan is deemed
to be Top-Heavy if any of the following conditions
exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60%,
but does not exceed 90%, and this Plan is not
part of any Required Aggregation Group or
Permissive Aggregation Group of plans,
(2) If this Plan is a part of a Required Aggregation
Group of plans (but which is not part of a
Permissive Aggregation Group) and the Top-Heavy
Ratio for the group of plans exceeds 60%, but
does not exceed 90%, or
(3) If this Plan is a part of a Required Aggregation
Group of plans and part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%, but
does not exceed 90%.
I. "Top Heavy Ratio":
(1) If the Employer maintains one or more defined
contribution plans (including any Simplified
Employee Pension Plan) and the Employer has not
maintained any defined benefit plan which during
the 5-year period ending on the Determination
Date(s) has or has had accrued benefits, the
Top-Heavy Ratio for this Plan alone or for the
Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which
is the sum of the Account balances of all Key
Employees as of the Determination Date(s)
(including any part of any Account balance
distributed in the 5-year period ending on the
Determination Date(s)), and the denominator of
which is the sum of all Account balances
(including any part of any Account balance
distributed in the 5-year period ending on the
Determination Date(s)), both computed in
accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased
to reflect any contribution not actually made as
of the Determination Date, but which is required
to be taken into account on that date under
Section 416 of the Code and the regulations
thereunder.
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(2) If the Employer maintains one or more defined
contribution plans (including any Simplified
Employee Pension Plan) and the Employer maintains
or has maintained one or more defined benefit
plans which during the 5-year period ending on
the Determination Date(s) has or has had any
accrued benefits, the Top-Heavy Ratio for any
Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which
is the sum of Account balances under the
aggregated defined contribution plan or plans for
all Key Employees, determined in accordance with
(1) above, and the present value of accrued
benefits under the aggregated defined benefit
plan or plans for all Key Employees as of the
Determination Date(s), and the denominator of
which is the sum of the Account balances under
the aggregated defined contribution plan or plans
for all Participants, determined in accordance
with (1) above, and the present value of accrued
benefits under the defined benefit plan or plans
for all Participants as of the Determination
Date(s), all determined in accordance with
Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined
benefit plan in both the numerator and
denominator of the Top-Heavy Ratio are increased
for any distribution of an accrued benefit made
in the five-year period ending on the
Determination Date.
(3) For purposes of (1) and (2) above the value of
Account balances and the present value of accrued
benefits will be determined as of the most recent
valuation date that falls within or ends with the
12-month period ending on the Determination Date,
except as provided in Section 416 of the Code and
regulations thereunder for the first and second
Plan Years of a defined benefit plan.
The Account balances and accrued benefits of a
Participant (a) who is not a Key Employee but who was
a Key Employee in a prior year, or (b) who has not
been credited with at least one Hour of Service from
any Employer maintaining the Plan at any time during
the 5-year period ending on the Determination Date
will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will
be made in accordance with Section 416 of the Code and
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the regulations thereunder. Deductible Employee
contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of Account balances and
accrued benefits will be calculated with reference to
the Determination Dates that fall within the same
calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer,
or (b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
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ARTICLE XIII
DIRECT ROLLOVER
13.1 Effective Date
This Article applies to Eligible Rollover Distributions made
from the Plan on or after January 1, 1993.
13.2 Election
Notwithstanding any Plan provision to the contrary which
would otherwise limit a Participant's election under this
Article XIII, a Participant may elect to have all or any
portion of an Eligible Rollover Distribution paid directly
to an Eligible Retirement Plan. The Participant's election
shall be made at the time and in the manner prescribed by
the Plan Administrator. As applicable, a Participant's
Spouse may elect under this section.
13.3 Definitions
Definitions for purposes of this Article XIII.
A. Eligible Rollover Distribution. Any distribution of
all or any portion of a Participant's Account is an
Eligible Rollover distribution, except for (i) a
distribution that is less than $200; (ii) a
distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life or life expectancy of the
Participant or the joint lives or joint life
expectancies of the Participant and a designated
beneficiary or for a specified period of ten years or
more; (iii) a distribution required under Code section
401(a)(9); and (iv) any portion of a distribution that
is not includible in a Participant's gross income for
federal income tax purposes.
B. Eligible Retirement Plan. Any qualified plan, an
individual retirement account, or an individual
retirement annuity, that accepts rollover
distributions, except that a surviving spouse may
elect a direct rollover only to an individual
retirement account or an individual retirement
annuity.
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13.4 Minimum Direct Rollover Portion
A Participant may elect to make a direct rollover of a
portion of an Eligible Rollover Distribution and to receive
the balance provided that the direct rollover portion is
$500 or more.
13.5 Waiver of Notice
A Participant may waive the required notice with respect to
a written explanation of the direct rollover provisions as
set forth in section 11.10.
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ARTICLE XIV
MERGER OF PLANS
14.1 Merger of Plans
The Alpha Industries, Inc. Employee Stock Ownership
Plan (the ESOP) has been merged into this Plan
effective March 31, 1995 (the "Merger") and such ESOP
is incorporated into the Plan by this reference. The
provisions applicable to an employee stock ownership
plan which are required by the Tax Reform Act of 1986,
subsequent federal legislation and the regulations
thereunder, shall be effective with respect to the
ESOP as of the respective effective dates required by
said legislation and regulations.
14.2 ESOP Accounts
With respect to the accounts of participants held
under the ESOP and now held in this Plan as a result
of and as of the effective date of the Merger (the
"ESOP Accounts"), the following special provisions
shall apply from and after the effective date of the
Merger:
A. Segregation of ESOP Accounts. The ESOP Accounts
shall be separately maintained and accounted for.
Each ESOP Account will be credited with the
appropriate earnings (and debited with any
losses) thereon. Notwithstanding the foregoing,
the assets of the ESOP Accounts may be commingled
with other assets held under the Plan.
B. Withdrawal Election. Each Participant who has
attained age 55 and who has completed at least
ten years of participation in the ESOP and/or
this Plan (a "Qualified Participant") shall be
permitted to elect withdrawal of up to 25% of the
value of his ESOP Account attributable to
Employer Stock that was acquired by the ESOP
after 1986. This right may be exercised any time
within 90 days after the last day of each Plan
Year during the period of six Plan Years that
begins with the Plan Year in which the
Participant first becomes a Qualified
Participant, considering for these purposes Plan
Years under both the ESOP and this Plan. The
portion of the Participant's ESOP Account balance
attributable to Employer Stock acquired by the
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ESOP after 1986 shall be determined by
multiplying the number of shares of such Employer
Stock held in the ESOP Account by a fraction, the
numerator of which is the number of shares
acquired by the ESOP after 1986 and the
denominator of which is the total number of
shares held by the ESOP or this Plan on the date
the individual became a Qualified Participant.
In lieu of such distribution, a Qualified
Participant may direct the Plan to transfer the
portion of the Participant's ESOP Account covered
by the election to another qualified plan of the
Employer which accepts such transfers, provided
that such plan permits employee-directed
investment and does not invest in Employer Stock
to a substantial degree. Such transfer shall be
made not later than 90 days after the last day of
the period during which the election can be made.
However, the foregoing rights shall not apply if
the value of such Employer Stock as of the latest
Anniversary Date is $500 or less.
C. Put Option. If common capital stock of the
Employer acquired by a Participant under the ESOP
and held in an ESOP Account prior to the
effective date of the Merger (the "Company
Stock") is not readily tradeable on an
established market, or is subject to a trading
restriction (as defined in Reg. 54.4975-7(b)(10))
when distributed, a Participant (or Beneficiary)
shall be granted by the Plan Administrator at the
time of distribution an option to "put" the
shares, or any part of them, to the Employer;
however, the Trustee shall have the option, at
its discretion, to assume the rights and
obligations of the Employer with respect to the
put option at the time it is exercised. The put
option shall provide that the Participant or
Beneficiary shall have the right to have the
employer purchase such shares at their fair
market value as determined in accordance with
Reg. Section 54.4975-11(d)(5), for a period of at
least 60 days after the date the Company Stock is
distributed to said Participant (or Beneficiary)
and, if the put option is not exercised within
such 60-day period, for an additional period of
at least 60 days in the following Plan Year.
This put option may be exercisable only by a
Participant, by the Participant's donees, or by a
Beneficiary. The terms of payment for the
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76
purchase of such shares shall be as set forth in
the put and may either be a lump sum or
installments commencing 30 days after the date
the put is exercised (with interest on the unpaid
balance), all as determined by the Plan
Administrator acting in a uniform, non-
discriminatory manner and in accordance with the
regulations under Section 4975 of the Code. The
provisions of this Section shall be
nonterminable.
In the case of a distribution of Company Stock which
was acquired by the Plan after 1986, and which is not
readily tradable on an established securities market,
the put option shall provide that if an Employee
exercises the put option, the Employer, or the Plan if
the Trustee elects, shall repurchase the Company Stock
as follows:
(i) If distribution of the entire balance of Company
Stock to the credit of an Employee is to be made
within one taxable year of the Employee (a "Total
Distribution"), payment of the fair market value
of the Participant's ESOP Account balance
consisting of Company Stock shall be made in five
or fewer substantially equal annual payments.
The first installment shall be paid not later
than 30 days after the Participant exercises the
put option. The Plan will pay a reasonable rate
of interest and provide adequate security on
amounts not paid after 30 days.
(ii) If the distribution does not constitute a Total
Distribution, the Plan shall pay the Participant
an amount equal to the fair market value of the
Company Stock repurchased no later than 30 days
after the Participant exercises the put option.
14.3 Voting Rights
As this Plan is a successor to the AESOP, the following
rules shall apply to all Employer Stock allocated to any
Participant's Account: All such allocated Employer Stock,
including fractional shares, shall be voted by the Trustee
in accordance with instructions of the Participant. In the
case of fractional shares, the Trustee shall combine such
shares (or the rights thereto) to the extent possible to
reflect the direction of the respective Participants
entitled to vote the same. Within a reasonable time before
any voting rights are to be exercised (but in no event less
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77
than the period of time which, under the Employer's bylaws,
stockholders are entitled to notice), the Trustee shall
notify Participants of such right and provide Participants
with all information distributed to shareholders of the
Employer regarding the exercise of such right. If a
Participant does not instruct the Trustee in whole or in
part with respect to the exercise of voting rights, such
rights shall be exercised in the same proportion and in the
same manner as are exercised the voting rights in the
Employer Stock for which Participant directions have been
received. Nothing contained herein shall prohibit the
solicitation and exercise of Participants' voting rights by
management or others under a proxy provision applicable to
all security holders. In the event there should be any
unallocated shares held by the Trust, these shall be voted
by the Trustee in accordance with instructions received from
the Plan Administrator. The provisions of this Section
shall also apply to the exercise of rights respecting
Employer Stock other than voting rights.
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78
ARTICLE XV
PARTICIPANT LOANS
15.1 Participant loans may be granted under this Plan on a
uniform and non-discriminatory basis, subject to the
following terms and conditions:
A. Loans shall be made available to all active
Participants on a reasonably equivalent basis. Loans
shall not be made available to Highly Compensated
Employees in an amount greater than the amount
available to other Participants. The minimum amount
of each loan shall be $1000.00. The maximum number of
loans outstanding to each Participant at any one time
shall not exceed two.
B. An application for a loan shall be made in writing by
the Participant to the Plan Administrator. If, as of
the date of the loan, the Participant has elected one
of the optional annuity forms of payment described in
Section 7.1E, the Participant must obtain the consent
of his or her Spouse, if any, to use of the Account
balance as security for the loan. Spousal consent
shall be obtained no earlier than the beginning of the
90-day period that ends on the date on which the loan
is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be
witnessed by a Plan representative or notary public.
Such consent shall thereafter be binding with respect
to the consenting Spouse or any subsequent Spouse with
respect to that loan. A new consent shall be required
if the Account balance is used for renegotiation,
extension, renewal, or other revision of the loan.
If a valid spousal consent has been obtained, then,
notwithstanding any other provision of this Plan, the
portion of the Participant's vested Account balance
used as a security interest held by the plan by reason
of a loan outstanding to the Participant shall be
taken into account for purposes of determining the
amount of the Account balance payable at the time of
death or distribution, but only if the reduction is
used as repayment of the loan. If less than 100% of
the Participant's vested Account balance (determined
without regard to the preceding sentence) is payable
to the surviving Spouse, then the Account balance
shall be adjusted by first reducing the vested Account
balance by the amount of the security used as a
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79
repayment of the loan, and then determining the
benefit payable to the surviving Spouse.
C. All loans made pursuant to this Article VI shall be
amortized in level payments. For active participants,
such loans, shall be repaid through payroll deductions
made by the Employer. For inactive participants, such
loans shall be repaid in full within 3 months of
termination or the loan shall be in default and shall
be treated as a premature distribution.
D. No loan to any Participant shall be made to the extent
that such a loan, when added to the highest
outstanding balance of all other loans to the
Participant, would exceed the lesser of (a) $50,000,
reduced by the excess, if any, of the highest
outstanding balance during the prior twelve (12) month
period over the outstanding balance on the date on
which the new loan is made, or (b) one-half the
present value of the Participant's vested Account.
E. All loans from all plans of the Employer and other
members of an Associated Controlled Group shall be
aggregated for purposes of the limitations described
in Section 6.1D.
F. Loans must be adequately secured by the present value
of the Participant's vested Account and bear a
reasonable interest rate.
G. The period for repayment of any loan shall not exceed
5 years or extend beyond the Participant's Normal
Retirement Date. The period may exceed 5 years and
extend up to 10 years if the loan is used to acquire
or construct a dwelling unit which within a reasonable
time (determined at the time the loan is made) will be
used as the principal residence of the Participant.
Each loan shall be evidenced by a written promissory
note stating the amount of the loan and bearing a
fixed rate of interest commensurate with the current
interest rates available through loan institutions on
a similar basis.
H. All loans shall be deemed to be investments directed
by the Participant for his Account. Loans against a
Participant's Account are to be credited to a separate
account on the book of the trust; and all repayments,
including interest thereon, shall be applied to said
account and reinvested as soon as practicable for the
Participant's Account in the trust.
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80
I. In the event of default, foreclosure on the note and
attachment of security will not occur until a
distributable event occurs under the Plan.
J. The denial of a Participant's application for a loan
under the Plan shall be treated as a denial of a claim
for benefits subject to the requirements of Section
11.7.
K. The administrator of the loan program shall be the
Employer.
L. The Plan may charge a reasonable fee for the
processing of a loan application and an annual amount
for maintenance of a loan account.
M. All loans may be prepaid in whole without penalty as
of any Valuation Date.
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81
ARTICLE XVI
PROVISIONS APPLICABLE TO DIRECTORS AND OFFICERS
16.1 Scope and Application of this Article.
The provisions of this Article shall be applicable to any
person who is subject to section 16 of the Securities
Exchange Act of 1934, as amended (a "Restricted Person").
With respect to Restricted Persons, to the extent that any
provision of this Article XVI conflicts with any other
provision of this Plan, the provisions of this Article XVI
shall govern.
16.2 Penalty for In Service Withdrawals.
Except as provided in this Section 16.2, in the event that a
Participant who is a Restricted Person makes a withdrawal
from his or her Account (other than a withdrawal from the
Participant's ESOP Account), of Employer Stock contributed
under Section 3.1B (Matching Employer Contribution), such
Participant shall hold the withdrawn shares of Employer
Stock for a period of six (6) months before any disposition.
For purposes of this Section 16.2, a "withdrawal" is deemed
to occur upon any distribution of Employer Stock to the
Participant. The foregoing provisions applicable to
withdrawals shall not apply to (i) extraordinary
distributions of all of the Employer Stock held by the Plan
such as upon Plan termination; (ii) distributions in
connection with death, retirement, disability, or
termination of employment; or (iii) distributions in
connection with a "Qualified Domestic Relations Order," as
defined in the Code or ERISA.
16.3 Intra-Plan Transfers.
Transfers between the Employer Stock fund and any other fund
in the Plan by or for the account of Restricted Persons may
be made no more than once during any six (6) month period
and only during the window period beginning on the third
business day following the release of the Employer's
quarterly or annual financial information, and ending on the
twelfth business day following such release of information.
16.4 Six Month Holding Period.
Restricted Persons may not dispose of any Employer Stock
allocated to the Account pursuant to Section 3.1C of this
Plan for a period of at least six months from the date the
shares of Employer Stock are allocated to their Account.
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82
EXECUTION
IN WITNESS WHEREOF, The Company has caused its appropriate officer to affix its
corporate name and seal hereto on this 31st day of March, 1995.
ALPHA INDUSTRIES, INC.
By:_________________________
John A. Hanna, Jr.
Name:_______________________
Treasurer
Title:______________________
[SEAL]
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1
- ----------------------------------------ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
COMPUTATION OF PER SHARE DATA
(In thousands, except per share dollar amounts)
FISCAL YEAR ENDED
APRIL 2, APRIL 3, MARCH 28,
1995 1994 1993
- -------------------------------------------------------------------------------------------------
PRIMARY COMPUTATION
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . . . 7,607 7,502 7,464
Weighted average number of common
stock equivalents . . . . . . . . . . . . . . . . . 275 -- --
------ -------- -------
Weighted average number of common shares and
common share equivalents outstanding . . . . . . . . 7,882 7,502 7,464
====== ======== =======
FULLY DILUTED COMPUTATION
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . . . 7,607 7,502 7,464
Weighted average number of common
stock equivalents . . . . . . . . . . . . . . . . . 287 -- --
------ -------- -------
Weighted average number of common shares and
common share equivalents outstanding . . . . . . . . 7,894 7,502 7,464
====== ======== =======
Net income (loss) primary and fully diluted . . . . . $2,847 $(11,466) $(2,987)
====== ======== =======
Net income (loss) per common share primary
and fully diluted . . . . . . . . . . . . . . . . . $ .36 $ (1.53) $ (.40)
====== ======== =======
For fiscal 1995, common stock equivalents related to shares issuable under
options outstanding did affect the per share amount and, accordingly were
included in the computation. Common stock equivalents related to shares issuable
under options outstanding did not significantly affect the per share amount and,
accordingly, were not included in the computation for fiscal 1994 and 1993.
35
1
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES----------------------------------------
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NAME JURISDICTION OF INCORPORATION
Alpha Industries Limited England
Alpha Industries GmbH Germany
Alpha Securities Corporation Massachusetts
CFP Holding Company, Inc. Washington
Trans-Tech, Inc. Maryland
Trans-Tech Europe SARL France
36
1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Alpha Industries, Inc.:
We consent to incorporation by reference in the registration statements (No.
33-32957, No. 33-11356 and No. 33-47901) on Form S-8 of Alpha Industries, Inc.
of our report dated May 12, 1995, relating to the consolidated balance sheets
of Alpha Industries, Inc. and subsidiaries as of April 2, 1995 and April 3,
1994, and the related consolidated statements of operations, stockholders'
equity, and cash flows and related schedule for each of the years in the
three-year period ended April 2, 1995, which report appears in the April 2,
1995 annual report on Form 10-K of Alpha Industries, Inc.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
June 27, 1995
5
1,000
12-MOS
APR-02-1995
APR-02-1995
3,510
0
14,331
783
9,370
27,184
73,772
53,283
50,167
16,201
5,498
1,999
0
0
25,675
50,167
78,254
78,254
54,376
74,257
(23)
60
671
3,349
502
2,847
0
0
0
2,847
0.36
0.36
