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                               II-VI INCORPORATED  
                           DEFERRED COMPENSATION PLAN  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Effective June 30, 1996  
Amended November  2 , 1996  
  
  
  
  
  
  
  
  
  
  
  
  
  
                     TABLE OF CONTENTS  
  
  
1.  Definitions . . . . . . . . . . . . . . . . . . . . .  
  
2.  Participation . . . . . . . . . . . . . . . . . . . .  
  
3.  Contributions . . . . . . . . . . . . . . . . . . . .  
  
4.  Investment of Contributions . . . . . . . . . . . . .  
  
5.  Benefits. . . . . . . . . . . . . . . . . . . . . . .   
  
6.  Distribution of Benefits  . . . . . . . . . . . . . .   
  
7.  General Provisions. . . . . . . . . . . . . . . . . .  
  
8.  Plan Execution. . . . . . . . . . . . . . . . . . . .  
  
  
  
  
  
                          INTRODUCTION  
  
  
     The Employer is establishing a nonqualified, defined contribution   
employees' retirement plan which has been designed as, and is intended  
to  
be, an unfunded plan for purposes of the Employee Retirement Income   
Security Act of 1974, as amended, and a nonqualified plan under the   
Internal Revenue Code of 1986, including any later amendments to the   
Code.  The Employer agrees to operate the plan according to the terms,   
provisions and conditions set forth in this document.  
  
     Any funds accumulated for purposes of providing benefits under this   
plan are fully available to satisfy the claims of the Employer's   
creditors.  Participants have no greater rights with regard to such fund   
than any other general creditor of the Employer.  
  
     The Plan was originally adopted by II-VI Incorporated to be   
effective as of June 30, 1996.  
  
  
  
  
  
                                   ARTICLE I  
  
                                  DEFINITIONS  
  
  
      1.01  "Account" means, for a Participant, a bookkeeping account   
that reflects the amount available for benefits under this Plan.   
Separate accounting records are kept for those parts of his Account  
that result from:  
  
            (a)  Salary Deferral Contributions.  
  
            (b)  Matching Contributions.  
  
            (c)  Discretionary Contributions.  
  
      A Participant's Account shall be reduced by any distribution of   
his Account.  A Participant's Account will participate in the earnings   
credited, expenses charged and any appreciation or depreciation of the   
deemed investments of the Plan.  His Account is subject to any minimum   
guarantees applicable under the Group Contract or other investment   
arrangements.  
  
      1.02  "Beneficiary" means the person or persons named by a   
Participant to receive any benefits under this Plan upon the   
Participant's death.  
  
      1.03  "Benefit Date" means, for a Participant, the first day of  
the   
first period for which an amount of benefit is payable to him under this   
Plan.  See Article V - BENEFITS.  
  
      1.04  "Code" means the Internal Revenue Code of 1986, as amended.  
  
      1.05  "Compensation" means the total earnings paid or made   
available to an Employee by the Employer during any specified period.  
  
      1.06  "Contributions" means, Salary Deferral Contributions,   
Matching Contributions or Discretionary Contributions, as set out in   
Article III, unless the context clearly indicates otherwise.  
  
      1.07  "Eligible Employee" means any Employee of the Employer who   
is invited to participate in the Plan and who represents a select group   
of highly-compensated or management employees, as determined by the   
Employer.  
  
      1.08  "Employee" means an individual who is employed by the   
Employer.  
  
      1.09  "Employer" means II-VI INCORPORATED or any subsidiary   
corporations which are included in a parent subsidiary controlled group   
or brother/sister controlled group of corporations under Sect. 1653 of
the Internal Revenue Code.    
  
      1.10  "Entry Date" means the date an Employee first enters the   
Plan as an Active Participant.  See Article II - PARTICIPATION.  
  
      1.11  "ERISA" means the Employee Retirement Income Security Act   
of 1974, as amended.  
  
      1.12  "Fiscal Year" means the Employer's taxable year.  The   
last day of the Fiscal Year is June 30.  
  
      1.13  "Group Contract" means the group annuity contract or   
contracts into which the Trustee enters with the Insurer for the   
investment of Contributions and the payment of benefits under this   
Plan.  The term Group Contract as it is used in this Plan is deemed   
to include the plural unless the context clearly indicates otherwise.  
  
      Any funds accumulated under the Group Contract are available to   
the general creditors of the Employer.  
  
      1.14  "Insurer" means Principal Mutual Life Insurance Company   
and any other insurance company or companies named by the Trustee or   
Employer.  
  
      1.15  "Monthly Date" means each Yearly Date and the same day of   
each following month during the Plan Year beginning on such Yearly Date.  
  
      1.16  "Participant" means an Eligible Employee who is actively   
participating in the Plan.  
  
      1.17  "Plan" means the nonqualified retirement plan of the  
Employer   
set forth in this document, including any later amendments to it.  
  
      1.18  "Plan Administrator" means the person or persons who   
administer the Plan.  The Plan Administrator is the Employer.  
  
      1.19  "Plan Year" means a period beginning on a Yearly Date and   
ending on the day before the next Yearly Date.  
  
      1.20  "Qualified Plan" means The II-VI Incorporated Employees   
Profit Sharing Plan.  
  
      1.21  "Reentry Date" means the date a former Participant reenters   
the Plan.  See Article II - PARTICIPATION.  
  
      1.22  "Retirement Date" means his retirement date under the   
Qualified Plan.  
  
      1.23  "Totally and Permanently Disabled" means that a Participant  
 is disabled to the extent he is unable 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 be of   
long-continued and indefinite duration, pursuant to Code Section   
72(m)(7), and, as a result of such condition, the Participant's   
employment with the Employer terminates.  
  
      1.24  "Trust" means an agreement of trust between the Employer and   
Trustee established for the purpose of holding and distributing the  
Trust   
Fund under the provisions of the Plan and conforming to the terms of the   
model trust, as described in Revenue Ruling 92-64.  The Trust may  
provide   
for the investment of all or any portion of the Trust Fund in the Group   
Contract.  
  
      1.25  "Trust Fund" means the total funds held under the Trust for   
the purpose of providing benefits for Participants.  These funds result  
from Contributions made under the Plan which are forwarded to the   
Trustee to be deposited in the Trust Fund.  
  
      1.26  "Trustee" means the trustee or trustees under the Trust.    
The term Trustee as it is used in this Plan is deemed to include the   
plural unless the context clearly indicates otherwise.  
  
      1.27  "Yearly Date" means June 30, 1996, and each following July  
1.  
  
  
  
  
  
  
                                  ARTICLE II  
  
                                PARTICIPATION  
  
  
      An Employee shall first become a Participant (begin active   
participation in the Plan) on the earliest Yearly Date on or after June   
30, 1996, on which he is an Eligible Employee.  This date is his Entry   
Date.  
  
      A former Participant shall again become a Participant (resume   
active participation in the Plan) on the date he again performs an hour   
of service as an Eligible Employee.  This date is his Reentry Date.  
  
      A Participant shall cease to be a Participant on the date he is no   
longer an Eligible Employee and the value of his Account is zero.  
  
  
  
  
  
  
                                  ARTICLE III  
  
                                 CONTRIBUTIONS  
  
  
      3.01  Employer Contributions.  Employer Contributions for each   
Plan Year will be equal to the Employer Contributions as described  
below.  
  
            (a)  Salary Deferral Contributions.  The amount of each   
Salary Deferral Contribution for a Participant shall be equal to any   
percentage of his Compensation for the pay period as elected in his or   
her deferral agreement.  An Employee who is eligible to participate in   
the Plan may file a deferral agreement with the Employer.  Except as   
otherwise provided in this Section 3.01, the deferral agreement to start   
Salary Deferral Contributions must be effective on the 1st day of  
January   
immediately following a Participant's Entry Date (Reentry Date, if   
applicable) or any following Yearly Date.  The Participant shall make  
any   
change or terminate the deferral agreement by filing a new deferral   
agreement.  A Participant's deferral agreement making a change may be   
effective on any date a deferral agreement to start Salary Deferral   
Contributions could be effective.  A Participant' deferral agreement to   
stop Salary Deferral Contributions may be effective on any date.  
  
            Except as otherwise provided in this Section, to be  
effective   
the deferral agreement must be in writing and filed with the Employer   
before the beginning of the calendar year in which Salary Deferral   
Contributions are to start, change or stop.  In the year that the Plan  
is   
first implemented, a Participant's deferral agreement may be filed with   
the Employer and become effective for the current calendar year within   
thirty (30) days after the Plan is effective.  In the first year in  
which   
a Participant becomes eligible to participate in the Plan, such   
Participant's deferral agreement may be filed with the Employer and   
become effective for the current calendar year within thirty (30) days   
after the date on which such Participant becomes eligible to participate   
in the Plan.  
  
            Salary Deferral Contributions may include contributions the   
Employee would have made to the Qualified Plan of the Employer under its   
contribution formula but for the additional restrictions imposed by such   
Plan to meet the qualification requirements of the Internal Revenue  
Code.  
  
             (b)  Matching Contributions.  The amount of each Matching   
Contribution made by the Employer for a Participant shall be equal to a   
percentage as determined by the Employer, of the Participant's Salary   
Deferral Contributions for the pay period.  Said percentage shall be   
uniform for all Participants.  
  
             However, Salary Deferral Contributions in excess of the   
percentage of Compensation as provided in the Qualified Plan will not be   
matched.  
  
             (c)  Discretionary Contributions.  The amount of each   
Discretionary Contribution made by the Employer for the Participant   
shall be determined by the Employer and shall be made on a uniform   
basis for all Participants.  
  
      3.02  Allocation.  The following Contributions for each Plan   
Year shall be allocated among all eligible persons:  
  
                    Discretionary Contributions  
  
      The eligible persons are all Participants who the Employer   
determines are eligible for an allocation for the Plan Year.  The   
amount allocated to such a person shall be determined below.    
  
      The following Contributions for each Plan Year shall be   
allocated to each Participant for whom such Contributions were made   
under the EMPLOYER CONTRIBUTIONS SECTION of Article III:  
  
                         Salary Deferral Contributions  
  
                            Matching Contributions  
  
      These Contributions shall be allocated when made and credited   
to the Participant's Account.  
  
      Discretionary Contributions and Matching Contributions shall be   
allocated in a uniform manner by the Employer.  
  
  
  
  
  
  
  
                                   ARTICLE IV  
  
                           INVESTMENT OF CONTRIBUTIONS  
  
  
   
  
      4.01 The Participants' Accounts shall be valued at current fair   
market value as of the last day of the last calendar month ending in   
the Plan Year and, at the discretion of the Plan Administrator, may be   
valued more frequently.   The Account of a Participant shall be   
considered a deemed investment of the Plan and shall be credited with   
its share of the deemed gains and losses of the deemed investments of   
the Plan.     
  
      4.02 The Plan at all times shall be considered unfunded both for   
tax purposes and for purposes of Title I of the ERISA.  Any funds   
invested hereunder shall continue for all purposes to be part of the   
general assets of the Employer and available to its general creditors   
in the event of bankruptcy or insolvency.  This Plan constitutes a mere   
promise by the Employer to make benefit payments in the future to   
Participants or to Participants' beneficiaries.    
  
  
  
  
  
                                   ARTICLE V  
  
                                   BENEFITS  
  
  
      5.01  Retirement Benefits.  On a Participant's Retirement Date,   
his Account shall be distributed to him according to the distribution of   
benefits provisions of Article VI.  This date shall be a Participant's   
Benefit Date.  
  
      5.02  Death Benefits.  If a Participant dies before his Retirement   
Date, his Account shall be distributed according to the distribution of   
benefits provisions of Article VI.  This date shall be a Participant's   
Benefit Date.  
  
      5.03  Disability Benefits.  If a Participant becomes Totally and   
Permanently Disabled before his Retirement Date causing the termination   
of his employment with the Employer, his Account  shall be distributed   
according to the distribution of benefits provisions of Article VI.  The   
date of such Participant's termination of employment shall be a   
Participant's Benefit Date.  
  
      5.04  Termination Benefits.  A Participant will receive a   
distribution of his Account according to the distribution provisions of   
Article VI, if he ceases to be an Employee before his Retirement Date,   
provided he has not again become an Employee.  This date shall be a   
Participant's Benefit Date.  
  
      5.05  Withdrawal Privileges.  Before he ceases to be an Employee,   
a Participant may withdraw up to 90% of the value of his Account in the   
event of an unforeseeable emergency.  The Participant's request for a   
withdrawal shall include his statement that such an unforeseeable   
emergency exists and explain its nature.  To qualify as an unforeseeable   
emergency withdrawal, it must be determined that the amount of the   
withdrawal is to meet a severe financial hardship to the Participant and   
the amount of the withdrawal is not reasonably available from other   
resources of the Participant.  Examples of severe financial hardship may   
include a sudden and unexpected illness or accident of the Participant  
or   
a dependent of the Participant, loss of the Participant's property due  
to   
casualty, or other similar extraordinary and unforeseeable circumstances   
arising as a result of events beyond the control of the Participant.   
The   
Plan Administrator will establish uniform, nondiscriminatory guidelines   
to use in determining if such a condition of undue financial hardship   
exists.  The Plan Administrator's determination shall be final.  The   
Participant has no legal or equitable right to such a withdrawal.  
  
  
            A request for withdrawal shall be in writing on a form   
furnished for that purpose and delivered to the Plan Administrator  
before   
the withdrawal is to occur.  
  
            Any Participant who chooses to exercise this option shall  
not   
be allowed to make Salary Deferral Contributions to this Plan for a   
period of one year from the time such withdrawal is received by the   
Participant.  
  
  
  
  
  
  
  
                                  ARTICLE VI  
  
                           DISTRIBUTION OF BENEFITS  
  
  
      6.01  Automatic Forms of Distribution.  The automatic form of   
benefit payable to or on behalf of a Participant is determined as   
follows:  
  
            The automatic form of benefit shall be a lump sum payment   
or a series of installments for periods of 2, 5 or 10 years as chosen   
by the Participant to begin at any time on or within thirty (30) days   
after his Benefit Date, provided that beginning with the year in which   
the Participant turns age 70 1/2, a minimum payment each year shall   
apply.  The minimum payment will be based on a period equal to the joint   
and last survivor expectancy of the Participant and the Participant's   
spouse, if any, where the joint and last survivor expectancy is   
recalculated.  The election shall be irrevocable and must be made by the   
Participant in his first written deferral agreement effective for a   
specific calendar year.  
  
  
  
	  
  
  
  
  
  
                                   ARTICLE VII  
  
                                GENERAL PROVISIONS  
  
  
      7.01  Amendments.  The Employer may amend this Plan at any time,   
including any remedial retroactive changes (within the specified period   
of time as may be determined by Internal Revenue Service regulations) to   
comply with the requirements of any law or regulation issued by any   
governmental agency to which the Employer is subject.  
  
      7.02  Employment Status.  Nothing contained in this Plan gives an   
Employee the right to be retained in the Employer's employ or to   
interfere with the Employer's right to discharge any Employee.  
  
      7.03  Rights to Plan Assets.  No Employee shall have any right to   
or interest in any assets of the Plan upon termination of his employment   
or otherwise except as a general unsecured creditor of the Employer.  
  
            Any final payment or distribution to a Participant or his   
legal representative or to any Beneficiaries or spouse of such   
Participant under the Plan provisions shall be in full satisfaction of   
all claims against the Plan, the Plan Administrator and the Employer   
arising under or by virtue of the Plan.   
  
      7.04  Nonalienation of Benefits.  Benefits payable under the Plan   
are not subject to the claims of any creditor of any Participant,   
Beneficiary or spouse.  A Participant, Beneficiary of spouse does not   
have any rights to alienate, anticipate, commute, pledge, encumber or   
assign any of such benefits.  The preceding sentences shall also apply  
to   
the creation, assignment, or recognition of a right to any benefit   
payable with respect to a Participant according to a domestic relations   
order, unless such order is determined by the Plan Administrator to be a   
qualified domestic relations order, as defined in ERISA Act Section   
206(d), or any domestic relations order entered before January 1, 1985.  
  
      7.05  Legal Actions.  The Plan and the Plan Administrator  are the   
necessary parties to any action or proceeding involving the assets held   
with respect to the Plan or administration of the Plan or Trust.  No   
person employed by the Employer, no Participant, former Participant or   
their Beneficiaries or any other person having or claiming to have an   
interest in the Plan is entitled to any notice of process.   A final   
judgment entered in any such action or proceeding shall be binding and   
conclusive on all persons having or claiming to have an interest in the   
Plan.  
   
      7.06  Word Usage.  The masculine gender, where used in this Plan,   
shall include the feminine gender and the singular words as used in this   
Plan may include the plural, unless the context indicates otherwise.  
  
  
  
  
  
      By executing this Plan, the  Employer acknowledges having  
counseled   
to the extent necessary with selected legal and tax advisors regarding   
the Plan's legal and tax implications.  
  
  
      Executed this 2nd day of November, 1996.  
  
   
                                      II-VI INCORPORATED  
  
  
  
                                      By:    /s/ Francis J. Kramer   
                                         ----------------------------  
                                         Francis J. Kramer, President  
   
  
  
  
   
  
   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  


