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EXHIBIT 10.42
ALPHA MICROSYSTEMS
MANAGEMENT DEFERRED
COMPENSATION PLAN
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TABLE OF CONTENTS
ARTICLE 1 - TITLE AND DEFINITIONS 1
1.1 Title 1
1.2 Definitions 1
A. Account or Accounts 1
B. Base Salary 1
C. Beneficiary or Beneficiaries 1
D. Board of Directors or Board 2
E. Bonuses 2
F. Code 2
G. Committee 3
H. Corporation 3
1. Corporation's Residual Trust Interests 3
J. Compensation 3
K. Deferral Account 3
L. Discretionary Corporation Contributions 3
M. Discretionary Corporation Contributions Account 3
14. Distributable Amount 3
O. Early Distribution 3
P. Effective Date 3
Q. Eligible Employee 4
R. Fund or Funds 4
S. Initial Election Period 4
T. Interest Rate 4
U. Net Policy Benefit 4
V. Participant 4
W. Payment Date 4
X. Plan 4
Y. Plan Year 4
Z. Policy 4
AA. Scheduled Withdrawal Date 4
BB. Trust 5
CC. Trustee 5
ARTICLE 2 - PARTICIPATION 5
ARTICLE 3 - DEFERRAL ELECTIONS 5
3.1 Elections to Defer Compensation 5
A. Initial Election Period 5
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B. General Rule 5
C. Duration of Compensation Deferral Election 6
D. Elections other than Elections during the Initial Election Period 6
3.2 Investment Elections 6
ARTICLE 4 - DEFERRAL ACCOUNTS AND TRUST FUNDING 7
4.1 Deferral Accounts 7
4.2 Discretionary Corporation Contribution Account 8
4.3 Trust Funding 9
ARTICLE 5 - VESTING 9
ARTICLE 6 - CONTRIBUTION AND DISTRIBUTIONS 10
6.1 Contribution 10
6.2 Distribution of Deferred Compensation. 10
A. Distribution Without Scheduled Withdrawal Date 10
B. Distribution with Scheduled Withdrawal Date 11
3. Hardship Withdrawals 11
D. Death Benefit 12
E. Death After Benefit Commencement 12
6.3 Early Distributions 13
6.4 Inability to Locate Participant 13
6.5 Payment of Policy Premiums 13
ARTICLE 7 - ADMINISTRATION 13
7.1 Committee 13
7.2 Committee Action 13
7.3 Powers and Duties of the Committee 14
7.4 Construction and Interpretation 15
7.5 Information 15
7.6 Compensation, Expenses and Indemnity 15
7.7 Quarterly Statements 15
7.8 Disputes 16
A. Claim 16
B. Claim Decision 16
C. Request for Review 16
D. Review of Decision 16
ARTICLE 8 - MISCELLANEOUS 17
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8.1 Unsecured General Creditor 17
8.2 Restriction Against Assignment 17
8.3 Withholding 17
8.4 Amendment, Modification, Suspension or Termination 17
8.5 Governing Law 18
8.6 Receipt or Release 18
8.7 Payment on Behalf of Persons Under Incapacity 18
8.8 Limitation of Rights and Employment Relationship 18
8.9 Headings 18
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EXHIBIT 1 - ALPHA MICROSYSTEMS DEFERRED COMPENSATION TRUST 20
EXHIBIT 2 - INVESTMENT FUNDS 21
ALPHA MICROSYSTEMS
DEFERRED COMPENSATION PLAN
WHEREAS, ALPHA MICROSYSTEMS, a California corporation ("Corporation"),
desires to establish a Deferred Compensation Plan ("Plan") to provide
supplemental retirement income benefits for a select group of management on
highly compensated employees through deferrals of salary and bonuses effective
as of November 1, 1998;
NOW, THEREFORE, effective as of November 1, 1998, the Plan is hereby
adopted to read as follows:
ARTICLE 1
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TITLE AND DEFINITIONS
1.1 Title. This Plan shall be known as the ALPHA MICROSYSTEMS MANAGEMENT
DEFERRED COMPENSATION PLAN ("Plan").
1.2 Definitions. Whenever the following words and phrases are used in
this Plan, with the first letter capitalized, they shall have the meanings
specified below.
A. Account or Accounts. Shall mean a Participant's Deferral
Account and Discretionary Corporation Contributions Account.
B. Base Salary. Shall mean a Participant's annual base salary,
excluding bonus, incentive and all other remuneration for services rendered to
Corporation and prior to reduction for any salary contributions to a plan
established pursuant to Section 125 of the Code or qualified pursuant to Section
401(k) of the Code.
C. Beneficiary or Beneficiaries. Shall mean the person or
persons, including a trustee, personal representative or other fiduciary, last
designated in writing by a Participant in accordance with procedures established
by the Committee to receive the benefits specified hereunder in the event of the
Participant's death (other than the death benefits described in Article 6.2(D)
unless such person is also designated as a beneficiary under the Policy
described therein). No beneficiary shall become effective until it is filed with
the Committee. Any designation shall be revocable at any time through a written
instrument filed by the Participant with the Committee with or without the
consent of the previous Beneficiary. If there is no Beneficiary designation in
effect, then the person designated to receive the death benefit specified in
Article 6.2(D) shall be the Beneficiary. However, no designation of a
Beneficiary other than the Participant's spouse shall be valid unless consented
to in writing by Participant's spouse. If there is no such designation or if
there is no surviving designated Beneficiary, then the Participant's surviving
spouse shall be the Beneficiary. If there is no surviving spouse to receive any
benefits payable in accordance with the preceding sentence, the duly appointed
and currently acting personal representative of the Participant's estate (which
shall include either the Participant's probate estate or living trust) shall be
the Beneficiary. In any case where there is no such personal representative of
the Participant's estate duly appointed and acting in that capacity within
ninety (90) days after the Participant's death (or such extended period as the
Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed one hundred eighty (180) days
after the Participant's death), then Beneficiary shall mean the person or
persons who can verify by affidavit or court order to the satisfaction of the
Committee that they are legally entitled to receive the benefits specified
hereunder. In the event any amount is payable under the Plan to a minor, payment
shall not be made to the minor, but instead be paid (i) to that person's living
parent(s) to act as custodian, (ii) if that person's parents are then divorced,
and
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one parent is the sole custodial parent, to such custodial parent, or (iii) if
no parent of that person is then living, to a custodian selected by the
Committee to hold the funds for the minor under the Uniform Transfers or Gifts
to Minors Act in effect in the jurisdiction in which the minor resides. If no
parent is living and the Committee decides not to select another custodian to
hold the funds for the minor, then payment shall be made to the duly appointed
and currently acting guardian of the estate for the minor or, if no guardian of
the estate for the minor is duly appointed and currently acting within sixty
(60) days after the date the amount becomes payable, payment shall be deposited
with the court having jurisdiction over the estate of the minor. Payment by the
Corporation pursuant to any unrevoked Beneficiary designation, or to the
Participant's estate if no such designation exists, of all benefits owed
hereunder shall terminate any and all liability of Corporation.
D. Board of Directors or Board. Shall mean the Board of Directors
of ALPHA MICROSYSTEMS, a California corporation.
E. Bonuses. Shall mean such additional amounts of income as
Corporation may determine to pay to an employee, as determined in the sole and
absolute discretion of the Corporation. Bonuses shall be deemed earned at such
time as Corporation communicates its determination of bonuses to the affected
eligible employee.
F. Code. Shall mean the Internal Revenue Code of 1986, as
amended.
G. Committee. Shall mean the Committee appointed by the Board to
administer the Plan in accordance with Article 7.
H. Corporation. Shall mean ALPHA MICROSYSTEMS, a California
corporation, and any successor corporations. Corporation shall include each
corporation which is a member of a controlled group of corporations (within the
meaning of Section 414(b) of the Code) of which is a component member, if the
Board provides that such corporation shall participate in the Plan.
I. Corporation's Residual Trust Interest. Shall mean the
accumulated cash surrender value of the Policy obtained pursuant to this Plan.
J. Compensation. Shall mean solely Base Salary and/or Bonuses
that the Participant is entitled to receive for services rendered to the
Corporation.
K. Deferral Account. Shall mean the bookkeeping account
maintained by the Committee for each Participant that is credited with amounts
equal to (i) the portion of the Participant's Compensation that Participant
elects to defer; and (ii) interest pursuant to Article 4.1.
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L. Discretionary Corporation Contributions. Shall mean
contributions made by Corporation, in its discretion, to Trust on behalf of an
Eligible Employee apart from and in addition to elective deferral contributions
by Eligible Employee in accordance with this Plan.
M. Discretionary Corporation Contributions Account. Shall mean
the bookkeeping account maintained by the Committee for each Participant that is
credited with amounts equal to Discretionary Corporation Contributions, if any,
and interest pursuant to Article 4.2.
N. Distributable Amount. Shall mean the balance in the
Participant's Deferral Account and the vested balance in the Participant's
Discretionary Corporation Contributions Account.
O. Early Distribution. Shall mean an election by a Participant in
accordance with Article 6.2, to receive a withdrawal of vested amounts from
Participant's Deferral Account and Discretionary Corporation Contributions
Account prior to the time in which such Participant would otherwise be entitled
to such amounts.
P. Effective Date. Shall mean November 1, 1998.
Q. Eligible Employee. Shall mean such management or highly
compensated employees as are designated by the Corporation for participation in
this Plan.
R. Fund or Funds. Shall mean one or more of the investment funds
selected by the Committee pursuant to Article 3.2(B).
S. Initial Election Period. The Initial Election Period for an
Eligible Employee shall mean the thirty (30) day period ending on November 1,
1998; or the thirty (30) day period following the time an employee shall be
designated by the Corporation as an Eligible Employee.
T. Interest Rate. Shall mean, for each Fund, an amount equal to
the net rate of gain or loss on the assets of such Fund during each month.
U. Net Policy Benefit. Shall mean the Death Benefit or the face
value of the Policy reduced by Corporation's Residual Trust Interest.
V. Participant. Shall mean any Eligible Employee who becomes a
Participant in accordance with Article 2.1.
W. Payment Date. Shall mean the time as soon as practicable after
the earlier of (i) the first day of the month following the end of the calendar
quarter in which the Participant's employment terminates for any reason, or (ii)
the Scheduled Withdrawal Date.
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X. Plan. Shall mean this ALPHA MICROSYSTEMS MANAGEMENT DEFERRED
COMPENSATION PLAN as set forth herein, now in effect, or as amended from time to
time ("Plan").
Y. Plan Year. Shall mean the twelve (12) consecutive month period
beginning on each January 1 and ending on December 31, except for the Short Plan
Year for implementation of this Plan which shall be from November 1, 1998 to
December 31, 1998.
Z. Policy. Shall mean an insurance policy purchased in accordance
with the terms of this Plan ("Policy").
AA. Scheduled Withdrawal Date. Shall mean the distribution date
elected by the Participant for an in-service withdrawal of all amounts of
Compensation deferred in a given Plan Year, and earnings and losses attributable
thereto, as set forth on the election form for such Plan Year.
BB. Trust. Shall mean the ALPHA MICROSYSTEMS DEFERRED
COMPENSATION Trust, effective November 1, 1998 ("Trust"), attached hereto and
incorporated herein as Exhibit "1".
CC. Trustee. Shall mean the Trustee under the Trust.
ARTICLE 2
PARTICIPATION
An Eligible Employee shall be specifically selected for participation by
the Committee. An Eligible Employee shall become a Participant in the Plan by
(i) electing to defer a portion of Eligible Employee's Compensation in
accordance with Article 3.1, (ii) filing a life insurance application form along
with Eligible Employee's deferral election form, and (iii) complying with such
medical underwriting requirements as determined by the life insurance carrier
selected by the Corporation. An Eligible Employee who completes the requirements
of the preceding sentence shall commence participation in this Plan as of the
first day of the month in which Compensation is deferred. In the event it is
determined by the Committee, that the proposed life insurance policy cannot be
obtained in a cost efficient manner after medical underwriting requirements have
been met, the Participant shall not be eligible to receive death benefits in
accordance with Article 6.2(D), of this Plan. Notwithstanding any provision to
the contrary, if it is determined or reasonably believed, based on a judicial or
administrative determination or an opinion of Corporation's legal counsel that a
Plan Participant is not a management or highly compensated employee, such
individual shall cease to be a Participant and Participant's Distributable
Amount shall be paid to Participant in a lump sum as soon as practicable after
the determination is made that Participant is not a management or highly
compensation employee.
ARTICLE 3
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DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation.
A. Initial Election Period. Subject to the provisions of Article
2, each Eligible Employee may elect to defer Base Salary and/or Bonuses by
filing with the Committee an election that conforms to the requirements of this
Article 3.1, on a form provided by the Committee, no later than the last day of
Eligible Employee's Initial Election Period, as defined in Article 1.2(S) of
this Plan
B. General Rule. The amount of Compensation which an Eligible
Employee may elect to defer is such Compensation earned on or after the time at
which the Eligible Employee elects to defer in accordance with Articles 1.2(S)
and 3.1(A) and shall be a flat dollar amount or percentage which shall not
exceed FIFTY PERCENT (50%) of the Eligible Employee's Base Salary, ONE HUNDRED
PERCENT (100%) of Bonuses, annual or otherwise; provided, that the total amount
deferred by a Participant shall be limited in any calendar year, if necessary,
to satisfy Social Security tax (including Medicare), income tax and employee
benefit plan withholding requirements as determined in the sole and absolute
discretion of the Committee. The minimum contribution which may be made in any
Plan Year by an Eligible Employee shall not be less than FIVE THOUSAND DOLLARS
($5,000), provided, such minimum contribution can be satisfied from any
combination of either Base Salary, or Bonus.
C. Duration of Compensation Deferral Election. Subject to Article
1.2(S), an Eligible Employee's initial election of Deferrals must be filed
within the thirty (30) day period following the time an employee shall be
designated by the Corporation as an Eligible Employee. Such election shall be
for the remainder of the Plan Year, in the event the Plan Year has commenced. A
Participant may not suspend Participant's election during the Plan Year. A
Participant may increase, decrease or terminate a deferral election with respect
to Deferrals for any subsequent Plan Year by filing a new election on or before
December 15th which election shall be effective on the first day of the next
following Plan Year.
D. Elections other than Elections during the Initial Election
Period. Subject to the limitations of Article 3.1(B) above, any Eligible
Employee who fails to elect to defer Compensation during Eligible Employee's
Initial Election Period may subsequently become a Participant, and any Eligible
Employee who has terminated a prior Deferral election may elect to again defer
Compensation, by filing an election, on a form provided by the Committee, to
defer Compensation as described in Articles 3.1(B) and 3.1(C) above. An election
to defer Compensation must be filed on or before December 15th and will be
effective from Compensation earned during pay periods beginning on or after the
following January 1st in a timely manner in accordance with Article 3.1(C).
3.2 Investment Elections.
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A. At the time of making the deferral elections described in
Article 3.1, the Participant shall designate, on a form provided by the
Committee, the types of investment funds the Participant's Account will be
deemed to be invested in for purposes of determining the amount of earnings to
be credited to that Account.
1. Initial investment funds available for designation are
included as Exhibit "2" to this Plan.
2. In making the designation pursuant to this Article 3.2, the
Participant may specify that all or any multiple of Participant's Deferral
Account and Discretionary Corporation Contributions Account (in whole percentage
increments) be deemed to be invested in one or more of the types of investment
funds provided under the Plan as communicated from time to time by the
Committee. Effective as of the end of any calendar month, a Participant may
change the designation made under this Article 3.2 by filing an election, on a
form provided by the Committee, at least five (5) days prior to the end of such
month. Notwithstanding anything to the contrary in this Article 3.2(A),
Participant may make a separate investment election with respect to Compensation
indicated to Participant's Deferral Account for each and every Plan Year.
3. If a Participant fails to elect a type of fund under this
Article 3.2, Participant shall be deemed to have elected the Money Market type
of investment fund.
B. Although the Participant may designate the type of
investments, the Committee shall not be bound by such designation. The Committee
shall select from time to time, in the Committee's sole discretion, commercially
available investments of each of the types communicated by the Committee to the
Participant pursuant to Article 3.2(A) above to be the Funds. The Interest Rate
of each such commercially available investment fund shall be used to determine
the amount of earnings or losses to be credited to Participant's Account under
Article 4.
ARTICLE 4
DEFERRAL ACCOUNTS AND TRUST FUNDING
4.1 Deferral Accounts. The Committee shall establish and maintain a
Deferral Account for each Participant under the Plan. Each Participant's
Deferral Account shall be further divided into separate subaccounts ("investment
fund subaccounts"), each of which corresponds to an investment fund elected by
the Participant pursuant to Article 3.2(A). A Participant's Deferral Account
shall be credited as follows:
A. As of the fifth business day following each payroll date, the
Committee shall credit the investment fund subaccounts of the Participants
Deferral Account with an amount equal to Compensation deferred by the
Participant during each pay period ending in that month in accordance with the
Participant's election under Article 3.2(A); that is, the portion of the
Participant's deferred Compensation that the Participant has elected to be
deemed to be invested
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in a certain type of investment fund shall be credited to the investment fund
subaccount corresponding to that investment fund;
B. As of the last day of each month, each investment fund
subaccount of a Participant's Deferral Account shall be adjusted with earnings
or losses in an amount equal to that determined by multiplying the balance
credited to such investment fund subaccount as of the last day of the preceding
month plus Compensation deferred during the current month commencing on the date
such deferred Compensation is credited to the investment fund subaccount by the
Interest Rate for the corresponding fund selected by the Corporation pursuant to
Article 3.2(B).
C. As of the last day of each month, each investment fund
subsequent of a Participant's Deferral Account shall be charged reasonable
expenses and fees in connection with the administration of this Plan. Such
expenses and fees may include, but shall not be limited to: monthly
administration fee, monthly cost of insurance, a charge on each month's
deferrals not to exceed five percent (5%), and applicable policy surrender
charges. Such expenses and fees may be subject to charge fees time to time by
the Committee, and shall be disclosed to Participants on the election form
provided by the Committee to Participants, pursuant to Article 3.1(D) of this
Plan.
D. In the event that a Participant elects for a given Plan Year's
deferral of Compensation to have a Scheduled Withdrawal Date, all amounts
attributed to the deferral of Compensation for such Plan Year shall be accounted
for in a manner which allows separate accounting for the deferral of
Compensation and investment gains and losses associated with such Plan Year's
deferral of Compensation.
4.2 Discretionary Corporation Contributions Account. The Committee shall
establish and maintain a Discretionary Corporation Contributions Account for
each Participant under the Plan. Each Participant's Discretionary Corporation
Contributions Account shall be further divided into separate subaccounts
("investment fund subaccount"), each of which correspond to the investment fund
elected by the Participant pursuant to Article 3.2(a). A Participant's
Discretionary Corporation Contributions Account shall be credited as follows:
A. As of the fifth business day following the payroll date during
each Plan Year, the Committee shall credit the investment fund subaccounts of
the Participant's Discretionary Corporation Contributions Account with an amount
equal to the Discretionary Corporation Contributions, if any, applicable to that
Participant, that is, the proportion of the Participant's Discretionary
Corporation Contributions, if any, which the Participant elected to be deemed to
be invested in a certain type of investment fund shall be credited to the
corresponding investment fund subaccount; and
B. As of the last day of each month, each investment fund
subaccount of a Participant's Discretionary Corporation Contributions Account
shall be adjusted with earnings or losses in an amount equal to that determined
by multiplying the balance credited to such
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investment fund subaccount as of the last day of the preceding month plus
Discretionary Corporation Contributions during the current month commencing on
the date such contributions are credited to the investment fund subaccount, by
the Interest Rate for the corresponding fund selected by the Corporation
pursuant to Article 3.2(a).
C. In the event that a Participant elects for a given Plan Year's
Discretionary Corporation Contributions to have a Scheduled Withdrawal Date, all
amounts attributed to the Discretionary Corporation Contributions for such Plan
Year shall be accounted for in a manner which allows separate accounting for the
Discretionary Corporation Contributions and investment gains and losses
associated with such Plan Year's Discretionary Corporation Contributions.
4.3 Trust Funding. The Corporation has created a Trust with FIRST
AMERICAN TRUST COMPANY serving as initial trustee. The Corporation shall cause
the Trust to be funded each year pursuant to Article 2 of the Trust Agreement.
The Corporation shall contribute to the Trust an amount equal to the amount
deferred by each Participant for the Plan Year. The Corporation may also
contribute such additional amounts as it shall deem necessary or appropriate.
Although the principal of the Trust and any earnings thereon
shall be held separate and apart from other funds of Corporation and shall be
used exclusively for the uses and purposes of Plan Participants and
Beneficiaries as set forth therein, neither the Participants nor Participants
Beneficiaries shall have any preferred claim on, or any beneficial ownership in,
any assets of the Trust prior to the time such assets are paid to the
Participants or Beneficiaries as benefits; and all rights created under this
Plan shall be unsecured contractual rights of Plan Participants and
Beneficiaries against the Corporation. Any assets held in the Trust will be
subject to the claims of Corporation's general creditors under federal and state
law in the event of insolvency as defined in Article 5 of the Trust.
ARTICLE 5
VESTING
A Participant's Deferral Account shall be ONE HUNDRED PERCENT
(100%) vested at all times. Provided, however, Discretionary Corporation
Contributions pursuant to Article 6.1 below may be subject to a different
vesting schedule (as put forth by the Committee) than elective Deferrals.
ARTICLE 6
CONTRIBUTIONS, DISTRIBUTIONS AND TERMINATION
6.1 Contributions. Minimum elective deferral contributions and
Discretionary Corporation Contributions under this Plan shall be made in
accordance with Article 3 of the Trust Agreement.
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6.2 Distribution of Deferred Compensation and Discretionary Corporation
Contributions.
A. Distribution Without Scheduled Withdrawal Date. In the case of
a Participant who terminates employment with Corporation and has an Account
balance of more than FIFTY THOUSAND DOLLARS ($50,000), the Distributable Amount
shall be paid to the Participant (and after Participant's death to Participant's
Beneficiary) as elected by the Participant on the form provided by the Committee
during Participant's Initial Election Period. The normal of distribution shall
be a lump sum. The Participant may elect to receive his or her distribution in
substantially equal quarterly installments over five (5) years, payable pursuant
to terms elected on the form.
1. A Participant may modify the optional form of benefit that
Participant has previously elected, provided such modification occurs at least
one (1) year before the Participant terminates employment with Corporation.
2. The election to receive payment of deferrals at termination of
employment is irrevocable.
3. In the event a Participant fails to elect an optional form of
benefit during Participant's Initial Election Period, the Participant's
Distributable Amount will be distributed in a lump sum beginning on
Participant's Payment Date.
4. In the case of a Participant who terminates employment with
Corporation and has an Account balance of FIFTY THOUSAND DOLLARS ($50,000) or
less, the Distributable Amount shall be paid to the Participant (and after
Participant's death to Participant's Beneficiary) in a lump sum distribution on
the Participant's Payment Date.
5. The Participant's Account shall continue to be credited with
earnings pursuant to Article 4.1 of this Plan until all amounts credited to
Participant's Account under the Plan have been distributed.
B. Distribution with Scheduled Withdrawal Date. In the case of a
Participant who has elected a Scheduled Withdrawal Date for a distribution while
still employed by Corporation, such Participant shall receive Participant's
Distributable Amount, but only with respect to those deferrals of Compensation
vested Discretionary Corporation Contributions and earnings on such deferrals of
Compensation and vested Discretionary Corporation Contributions as shall have
been elected by the Participant to be subject to the Scheduled Withdrawal Date
as defined in Article 1.2(AA) of this Plan. The distribution shall be a lump sum
payment. If the distribution is more that FIFTY THOUSAND DOLLARS ($50,000), the
Participant may elect to receive the distribution in equal annual installments
over a two (2), three (3), four (4) or five (5) year period.
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1. A Participant's Scheduled Withdrawal Date with respect to
amounts of Compensation and vested Discretionary Corporation Contributions
deferred in a given Plan Year can be no earlier than two (2) years from the last
day of the Plan Year for which the deferrals of Compensation are made.
2. A Participant may extend the scheduled Withdrawal Date for the
deferral of Compensation and vested Discretionary Corporation Contributions for
any Plan Year, provided such extension occurs at least one (1) year before the
Scheduled Withdrawal Date and is for a period of not less than two (2) years
from the Scheduled Withdrawal Date.
3. The Participant shall have the right to twice modify any
Scheduled Withdrawal Date, provided the second such modification shall only be
effective with the consent of Corporation.
4. In the event a Participant terminates employment with
Corporation prior to a Scheduled Withdrawal Date, other than by reason of death,
the portion of the Participant's Account associated with Scheduled Withdrawal
Dates which have not occurred prior to such termination shall be distributed in
a lump sum.
C. Hardship Withdrawals. Hardship withdrawals may be permitted
without penalty, subject to approval by the Committee. The following reasons
will be considered as hardships:
1. Participant or dependants illness or accident,
2. Casualty loss of Participant's property, and
3. Other similar circumstances existing out of events beyond the
control of Participant.
D. Death Benefit. In the case of a Participant who dies while
employed by the Corporation, the following benefits shall be provided:
1. That portion of the death benefit of any life insurance
policy purchased to insure the life of the Participant and which is subject to
the particular "Split-Dollar Life Insurance Agreement" of Participant with the
Trust under this Plan, which is the Net Benefit, equal to the Death Benefit in
the face value of such Policy reduced by Corporation's Residual Trust Interest
as defined at Article 1.2(I) of this Plan, shall be distributed directly to
Participant's Beneficiary as designated in the Policy. Such distributions shall
be considered as proceeds from Participant's life insurance Policy for tax
purposes. Any such Policy shall be subject to certain conditions set forth in
the particular "Split-Dollar Life Insurance Agreement" between a specific Plan
Participant and Trustee, pursuant to which the Participant may designate a
beneficiary with respect to the portion of the Policy proceeds described in this
Article 6.2(D) in the event the Participant dies prior to terminating employment
with the Corporation. The Participant shall have the right to designate and
change such beneficiary (which need not be Participant's Beneficiary)
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at any time on a form provided by and filed with the insurance company. If no
such form is on file with the insurance company, the insurance proceeds
designated in this paragraph (1) shall be paid to the Beneficiary. The benefit
playable pursuant to this paragraph (1) shall only be paid if the insurance
company agrees that the Participant is insurable and shall be subject to all
conditions and exceptions set forth in the applicable insurance policy.
Notwithstanding the provision of this Plan or any other document to the
contrary, the Corporation shall not have any obligation to pay the Participant
or Participant's beneficiary any amounts described in this Article 6.2(D). Any
amounts due pursuant to this Article 6.2(D) shall be payable solely from the
proceeds of the Policy, if any, remitted to the Trustee pursuant to the Trust
and the particular "Split-Dollar Life Insurance Agreement" of Participant with
the Trust. Furthermore, the Corporation is not obligated to maintain the Policy;
no death benefit shall be payable hereunder if the Policy has been discontinued
for any reason for the Participant. In addition, no Policy shall be allocated to
any Account.
2. The Account balance of Participant shall be distributed
to Participant's Beneficiary as designated in the Plan, by Corporation or
through Trust, at the sole discretion of Corporation, in a lump sum
distribution. Participant's Beneficiary designated under the Policy may be
different from Participant's Beneficiary designated under this Plan. Such
Account balance distributions shall be considered Deferred Compensation payments
to Participant for tax purposes.
E. Death After Benefit Commencement. In the event a Participant
dies after Participant has retired from the employ of the Corporation and still
has a balance in Participant's Account, the balance shall continue to be paid
for the remainder of the period as elected by the Participant.
6.3 Early Distributions. A Participant may be permitted to elect an
Early Distribution from Participant's Deferral Account prior to the Payment
Date, subject to approval by the Committee. Provided, however such Early
Distribution shall be subject to a ten percent (10%) forfeiture of the gross
amount of the distribution. The distribution will be in the form of a single
lump sum payment. If a Participant receives an Early Distribution of all or part
of his or her Deferral Account and vested Discretionary Corporation
Contributions Account, the Participant will be ineligible to participate in the
Plan for the balance of the Plan Year and for the following Plan Year.
6.4 Inability to Locate Participant. In the event that the Committee is
unable to locate a Participant or Beneficiary with two (2) years following the
required Payment Date, the amount allocated to the Participant's Deferral
Account, shall be forfeited. If, after such forfeiture, the Participant or
Beneficiary later claims such benefit, such benefit shall be reinstated without
interest or earnings.
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6.5 Payment of Policy Premiums. Premiums on a Policy of Participant
shall be paid pursuant to the Trust and the particular "Split-Dollar Life
Insurance Agreement" of Participant with the Trust.
ARTICLE 7
ADMINISTRATION
7.1 Committee. A committee shall be appointed by, and serve at the
pleasure of, the Board of Directors. The number of members comprising the
Committee shall be determined by the Board which may from time to time vary the
number of members. A member of the Committee may resign by delivering a written
notice of resignation to the Board. The Board may remove any member by
delivering a certified copy of the Board's resolution of removal to such member.
Vacancies in the membership of the Committee shall be filed promptly by the
Board.
7.2 Committee Action. The Committee shall act at meetings by affirmative
vote of a majority of the members of the Committee. Any action permitted to be
taken at a meeting may be taken without a meeting if, prior to such action, a
written consent to the action is signed by all members of the Committee and such
written consent is filed with the minutes of the proceedings of the Committee. A
member of the Committee shall not vote or act upon any matter which relates
solely to said member as a Participant. The Chairman or any other member or
members of the Committee designated by the Chairman may execute any certificate
or other written direction on behalf of the Committee.
7.3 Powers and Duties of the Committee.
A. The Committee, on behalf of the Participants and Participants'
Beneficiaries, shall enforce the Plan in accordance with the Plans terms, shall
be charged with the general administration of the Plan, and shall have all
powers necessary to accomplish the Plan's purposes, including, but not by way of
limitation, the following:
1. To select the Funds in accordance with Article 3.2(B)
hereof;
2. To construe and interpret the terms and provisions of
this Plan;
3. To compute and certify to the amount and kind of
benefits payable to Participants and Participants' Beneficiaries;
4. To maintain all records that may be necessary for the
administration of the Plan;
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5. To provide for the disclosure of all information and
the filing or provision of all reports and statements to Participants,
Beneficiaries or governmental agencies as shall be required by law;
6. To make and publish such rules for the regulation of
the Plan and procedures for the administration of the Plan as are not
inconsistent with the terms hereof;
7. To appoint a plan administrator or any other agent, and
to delegate to plan administrator such powers and duties in connection with the
administration of the Plan as the Committee may form time to time prescribe;
8. To take all actions necessary for the administration of
the Plan, including determining whether to hold or discontinue the Policies; and
9. If a Policy is discontinued or a Participant has
terminated employment with the Corporation for a reason other than death, (i) to
notify the insurance company that no death benefits are payable to the
beneficiaries of the applicable Participant under the Policy (and that neither
the Participant nor Participant's beneficiary has any rights under the Policy or
to any benefits under the Policy) and (ii) to file an new beneficiary
designation with the insurance company naming the Corporation as beneficiary or
to cash in the Policy.
7.4 Construction and Interpretation. The Committee shall have full
discretion to construe and interpret the terms and provisions of this Plan,
which interpretations or construction shall be final and binding on all parties,
including but not limited to the Corporation and any Participant or Beneficiary.
The Committee shall administer such terms and provisions in a uniform and
nondiscriminatory manner and in full accordance with any and all laws applicable
to the Plan.
7.5 Information. To enable the Committee to perform the Committee's
functions, the Corporation shall supply full and timely information to the
Committee on all matters relating to the Compensation of all Participants, the
Participant's death or other events which cause termination of Participant's
participation in this Plan, and such other pertinent facts as the Committee may
require.
7.6 Compensation, Expenses and Indemnity.
A. The members of the Committee shall serve without compensation
for the members' services hereunder.
B. The Committee is authorized at the expense of the Corporation
to employ such legal counsel as it may deem advisable to assist in the
performance of the Committee's duties hereunder. Expenses and fees in connection
with the administration of this Plan shall be allocated to Participant's
sub-account pursuant to Article 4.1(C) of this Plan.
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C. To the extent permitted by applicable state law, the
Corporation shall indemnify and save harmless the Committee and each member
thereof, the Board of Directors and any delegate of the Committee who is an
employee of the Corporation against any and all expenses, liabilities and
claims, including legal fees to defend against such liabilities and claims
arising out of their discharge in good faith of responsibilities under or
incident to the Plan, other than expenses and liabilities arising out of willful
misconduct. This indemnity shall not preclude such further indemnities as may be
available under insurance purchased by the Corporation or provided by the
Corporation under any bylaw, agreement or otherwise, as such indemnities are
permitted under state law.
7.7 Quarterly Statements. Under procedures established by the Committee,
a Participant shall receive a statement with respect to such Participant's
Accounts on a quarterly basis as of each March 31, June 30, September 30 and
December 31.
7.8 Disputes.
A. Claim. A person who believes that said person is being denied
a benefit to which said person is entitled under this Agreement (hereinafter
referred to as "Claimant") must file a written request for such benefit with the
Corporation, setting forth Claimant's claim. The request must be addressed to
the President of the Corporation at the Corporation's then principal place of
business.
B. Claim Decision. Upon receipt of a claim, the Corporation shall
advise the Claimant that a reply will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within such period. The Corporation may,
however, extend the reply period for an additional ninety (90) days for special
circumstances.
If the claim is denied in whole or in part, the
Corporation shall inform the Claimant in writing, using language calculated to
be understood by the Claimant, setting forth: (i) the specified reason or
reasons for such denial; (ii) the specific reference to pertinent provisions of
this Agreement on which such denial is based; (iii) a description of any
additional material or information necessary for the Claimant to perfect
Claimant's claim and an explanation of why such material or such information is
necessary; (iv) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review; and (v) the time limits for
requesting a review under subsection (C).
C. Request for Review. Withing sixty (60) days after the receipt
by the Claimant of the written opinion described above, the Claimant may request
in writing that the Committee review the determination of the Corporation. Such
request must be addressed to the Secretary of the Corporation, at the
Corporation's then principal place of business. The Claimant or Claimant's duly
authorized representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the Committee. If the
Claimant
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does not request a review within such sixty (60) day period, Claimant shall be
barred and estopped from challenging the Corporation's determination.
D. Review of Decision. Within sixty (60) days after the
Committee's receipt of a request for review, after considering all materials
presented by the Claimant, the Committee will inform the Participant in writing,
in a manner calculated to be understood by the Claimant, the decision setting
forth the specific reasons for the decision containing specific references to
the pertinent provisions of this Agreement on which the decision is based. If
special circumstances require that the sixty (60) day time period be extended,
the Committee will so notify the Claimant and will render the decision as soon
as possible, but no later than one hundred twenty (120) days after receipt of
the request for review.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. Participants and Participants'
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, claims, or interest in any specific property or assets of the
Corporation. No assets of the Corporation shall be held in any way as collateral
security for the fulfilling of the obligations of the Corporation under this
Plan. Any and all of the Corporation's assets shall be, and remain, the general
unpledged, unrestricted assets of the Corporation. The Corporation's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of the
Corporation to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. It
is the intention of the Corporation that this Plan be unfunded for purposes of
the Code and for purposes of Title 1 of ERISA.
8.2 Restriction Against Assignment. The Corporation shall pay all
amounts payable hereunder only to the person or persons designated by the Plan
and not to any other person or corporation. No part of a Participant's Accounts
shall be liable for the debts, contracts, or engagements of any Participant, or
Participant's Beneficiary, or successors in interest, nor shall a Participant's
Accounts be subject to execution by levy, attachment, or garnishment or by any
other legal or equitable proceeding, nor shall any such person have any right to
alienate, anticipate, sell, transfer, commute, pledge, encumber, or assign any
benefits or payments hereunder in any manner whatsoever. If any Participant,
Beneficiary or successor in interest is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, commute, assign, pledge, encumber or
charge an distribution or payment from the Plan, voluntarily or involuntarily,
the Committee, in the Committee's discretion, may cancel such distribution or
payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Committee shall
direct.
8.3 Withholding. There shall be deducted from each payment made under
the Plan or any other Compensation payable to the Participant (or Beneficiary)
all taxes which are required to be withheld by the Corporation in respect to
such payment or this Plan. The Corporation shall
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have the right to reduce any payment (or compensation) by the amount of cash
sufficient to provide the amount of said taxes.
8.4 Amendment, Modification, Suspension or Termination. The Committee
may amend, modify, suspend or terminate the Plan in whole or in part, except
that no amendment, modification, suspension or termination shall have any
retroactive effect to reduce any amounts allocated to a Participant's Accounts
(neither the Policies themselves, nor the death benefit described in Article
6.2(D) shall be treated as allocated to Accounts). In addition, the Committee
has the right to amend or terminate Article 6.2(D). In the event that this Plan
is terminated, the amounts allocated to a Participant's Accounts shall be
distributed to the Participant or, in the event of Participants death,
Participant's Beneficiary in a lump sum within thirty (30) days following the
date of termination.
8.5 Governing Law. This Plan shall be construed, governed and
administered in accordance with the laws of the State of California.
8.6 Receipt or Release. Any payment to a Participant or the
Participant's Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims against the
Committee and the Corporation. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.
8.7 Payment on Behalf of Persons Under Incapacity. In the event that any
amount becomes payable under the Plan to a person who, in the sole judgment of
the Committee, is considered by reason of physical or mental condition to be
unable to give a valid receipt therefore, the Committee may direct that such
payment be made to any person found by the Committee, in the Committee's sole
judgment, to have assumed the care of such person. Any payment made pursuant to
such determination shall constitute a full release and discharge of the
Committee and the Corporation.
8.8 Limitation of Rights and Employment Relationship. Neither the
establishment of the Plan and Trust nor any modification thereof, nor the
creating of any fund or account, nor the payment of any benefits shall be
construed as giving to any Participant or other person any legal or equitable
right against the Corporation or the trustee of the Trust except as provided in
the Plan and Trust; and in no event shall the terms of employment of any
Employee or Participant be modified or in any way be affected by the provisions
of the Plan and Trust.
8.9 Headings. Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the construction
of the provisions hereof.
* * *
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IN WITNESS WHEREOF, the Corporation has caused this document to be
executed by the Corporation's duly authorized officer effective the 1st day of
November, 1998.
WITNESSES: ALPHA MICROSYSTEMS, a
California corporation
___________________________ By: __________________________________
First Witness DOUGLAS J. TULLIO
Its: President
___________________________
Second Witness
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EXHIBIT "1"
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EXHIBIT "2"
INVESTMENT FUNDS
Participant may specify that their Deferral Account be invested in one or more
of the following investment funds:
MONEY MARKET Manufacturers Money Market Portfolio
BOND Manufacturers Capital Growth Bond Portfolio
Miller Anderson & Sherrerd High Yield Portfolio
Oechsle International Global Government Bond Portfolio
Salomon Brothers Strategic Bond Portfolio
Salomon Brothers U.S. Govt. Securities Portfolio
Wellington Investment Quality Bond Portfolio
BALANCED Fidelity Conservative Asset Allocation Portfolio
Fidelity Moderate Asset Allocation Portfolio
Fidelity Aggressive Asset Allocation Portfolio
Manufactures Lifestyle Conservative 280 Portfolio
Manufactures Lifestyle Moderate 460 Portfolio
Manufactures Lifestyle Balanced 640 Portfolio
Manufactures Lifestyle Growth 820 Portfolio
Manufactures Lifestyle Aggressive 1000 Portfolio
Founders Balanced Portfolio
GROWTH AND INCOME Manufactures Equity Index Portfolio
Miller Anderson & Sherrerd Value Portfolio
T. Rowe Price Equity-Income Portfolio
Wellington Growth and Income Portfolio
GROWTH Fidelity Equity Portfolio
Founders Growth Portfolio
Manufacturers Quantitative Equity Portfolio
Rosenberg Small Company Value Portfolio
T. Rowe Price Blue Chip Growth Portfolio
AGGRESSIVE GROWTH Alger Small/Mid Cap Portfolio
Pilgrim Baxter Growth Portfolio
T. Rowe Price Science & Technology Portfolio
Warburg, Pincus Emerging Growth Portfolio
INTERNATIONAL EQUITY Founders International Small Cap Portfolio
Founders Worldwide Growth Portfolio
J.P. Morgan International Growth and Income Portfolio
Manufacturers Pacific Rim Emerging Markets Portfolio
Morgan Stanley Global Equity Portfolio
Rowe Price-Fleming International Stock Portfolio
SPECIALTY Manufacturers Real Estate Securities Portfolio
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