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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 May 31, 1996
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 No. 0-5132
RPM, INC.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-6550857
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(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) No.)
P.O. Box 777, 2628 Pearl Road, Medina, Ohio 44258
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (330) 273-5090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
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(Title of Class)
Liquid Yield Option Notes(TM) Due 2012
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject
to the filing requirements for the past 90 days. Yes x No
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 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. ___
As of August 23, 1996, 77,471,058 Common Shares were
outstanding, and the aggregate market value of the Common Shares of the
Registrant held by non-affiliates (based upon the closing price of the Common
Shares as reported on the NASDAQ National Market on August 23, 1996) was
approximately $1,193,350,309. For purposes of this information, the 2,299,385
outstanding Common Shares which were owned beneficially as of August 23, 1996 by
executive officers and Directors of the Registrant were deemed to be the Common
Shares held by affiliates.
Documents Incorporated by Reference
Portions of the following documents are incorporated by
reference to Parts II, III and IV of this Annual Report on Form 10-K: (i)
definitive Proxy Statement to be used in connection with the Registrant's Annual
Meeting of Shareholders to be held on October 18, 1996 (the "1996 Proxy
Statement") and (ii) the Registrant's 1996 Annual Report to Shareholders for the
fiscal year ended May 31, 1996 (the "1996 Annual Report to Shareholders").
Except as otherwise stated, the information contained in this
Annual Report on Form 10-K is as of May 31, 1996.
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(TM)Merrill Lynch & Co., Inc.
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PART I
ITEM 1. BUSINESS.
THE COMPANY
RPM, Inc. ("RPM" or the "Company") was organized in 1947 as an
Ohio corporation under the name Republic Powdered Metals, Inc. On November 9,
1971, the Company's name was changed to RPM, Inc. As used herein, the terms
"RPM" and the "Company" refer to RPM, Inc. and its subsidiaries, unless the
context indicates otherwise. The Company has its principal executive offices at
2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258, and its telephone number is
(330) 273-5090.
RECENT DEVELOPMENTS
Since RPM's offering of Common Shares to the public in
September 1969, the Company has made a number of significant acquisitions that
have been described in previous reports on file with the Securities and Exchange
Commission. RPM's acquisition strategy focuses on companies with high
performance and quality products which are leaders in their respective markets.
RPM expects to continue its acquisition program, although there is no assurance
that any acquisitions will be made.
ACQUISITIONS. As part of this acquisition program, in August
1995, the Company acquired all of the outstanding shares of Star Finishing
Products, a manufacturer of furniture finishes. In addition, in September
1995, the Company completed the acquisition of Dryvit Systems, Inc. (through
the purchase of all the outstanding shares of Dryvit's non-operating parent
Narragansett/DSI Acquisition Co., Inc.), a manufacturer of coatings for
exterior wall insulating and finishing systems. In addition, in January 1996,
the Company acquired all of the outstanding shares of TCI, Inc., a
manufacturer of powdered coatings with annual sales of approximately $20
million.
Subsequent to the fiscal year-end, in June 1996, the Company
acquired all of the outstanding shares of Okura Holdings, Inc., a manufacturer
of molded and pultruded fiberglass reinforced plastic grating products, used for
pedestrian walkways, platforms, staircases and similar types of industrial
structures. In addition, in July 1996, the Company's Carboline subsidiary
purchased a majority interest in Chemrite Coatings Limited, a South African
licensee that provides industrial coatings throughout South Africa and
neighboring countries. Chemrite has manufactured and sold Carboline products
under license for 16 years.
NOTE OFFERING. On June 20, 1995, the Company privately placed
$150 million principal amount of 7.0% Senior Notes Due 2005 (the "Old Notes")
pursuant to a Purchase Agreement dated as of June 15, 1995, by and among the
Company, and Chase Securities, Inc. and Bear, Stearns & Co., Inc. Pursuant to
the terms of the Purchase Agreement, in November 1995, the Company completed an
exchange offer whereby the Old Notes were exchanged for an equal amount of
registered 7.0% Senior Exchange Notes Due 2005 (the "New Notes").
The form and term of the New Notes are the same as the form
and terms of the Old Notes except that the New Notes have been registered under
The Securities Act of 1933, and, therefore, the New Notes do not bear legends
restricting their transfer.
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BUSINESS
RPM operates principally in one business segment, the
manufacture and marketing of protective coatings. These protective coatings
products are used for both industrial and consumer applications. For industrial
applications, RPM manufactures and markets coatings for waterproofing and
general maintenance, corrosion control, and other specialty chemical
applications. For consumer applications, RPM manufactures do-it-yourself
products for the home maintenance, automotive repair, and consumer hobby and
leisure markets. RPM, through its operating companies, serves niche markets
within these broader categories, thus providing a foundation for its strategy of
growth through product line extensions.
The protective coating products manufactured by RPM are used
primarily on property which already exists. RPM is not involved to any great
degree in new construction and, therefore, is generally less affected by
cyclical movements in the economy. RPM markets its products in approximately 130
countries and operates manufacturing facilities in 56 locations in the United
States, Belgium, Canada and The Netherlands.
INDUSTRIAL PRODUCTS
RPM's industrial products represent approximately 60% of the
Company's sales. The numerous protective coatings manufactured by the Company
are used in a variety of industrial applications including waterproofing,
general maintenance, corrosion control and other specialty chemical
applications.
The Company manufactures a number of products designed for
waterproofing applications. These waterproofing products include sealants, deck
coatings, membranes and water-based coatings for commercial and industrial
maintenance produced by the Company's Mameco International, Martin Mathys,
Consolidated Coatings and ESPAN businesses.
The Company also manufactures a variety of products used for
general commercial and industrial maintenance. These products include roofing
products, such as asphaltic aluminum roof deck coating produced by RPM's
original business unit, Republic Powdered Metals, and Geoflex and Hy-Shield
premium single-ply roofing materials, as well as high-performance polymer
floors, linings and wall systems produced by Stonhard. The Company's general
maintenance product line has been expanded by recent acquisitions including the
following products: Dryvit coatings and adhesives for exterior wall insulation
and finish systems and TCI powdered coatings.
The Company's industrial product line also includes a
broad-line of high-performance corrosion control coatings. The Company's
Carboline subsidiary manufactures high-performance corrosion-resistant
protective coatings, fireproofing, tank linings and floor coatings, and markets
these products to industrial, architectural and applicator companies throughout
the world. The Company's various other corrosion-resistant coatings include the
Rust-Oleum, Plasite and Alox brands.
The Company also produces a variety of specialty chemical
products within selected niche markets. Products manufactured for specialty
chemical applications include: Day-Glo and Radiant Color fluorescent colorants
and pigments; Mohawk, Star and Chemical Coatings furniture repair and
restoration coatings; Chemspec commercial carpet cleaning solutions; ValvTect
diesel fuel additives; American Emulsions dye additives for textile dying and
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finishing; and concrete admixtures sold by Euclid Chemical, RPM's 50-50 joint
venture with Holderbank.
CONSUMER PRODUCTS
RPM's consumer products represent approximately 40% of the
Company's sales. The Company's consumer products include products designed for
the household do-it-yourself, automotive repair and hobby and leisure markets.
RPM's primary consumer do-it-yourself businesses are
Rust-Oleum, Zinsser, Kop-Coat and Bondex International. Rust-Oleum manufactures
high quality corrosion-resistant and decorative coatings for the household
maintenance and light industrial markets. Zinsser manufactures a broad line of
specialty primers and sealants and is the nation's leading producer of shellac
items used as pharmaceutical glazes, confectioner's glazes, citrus fruit
coatings and wood coatings. Kop-Coat manufactures pleasure marine coatings and
compounds and wood treatment products. Bondex International produces a
nationwide line of household patch and repair products, in addition to basement
waterproofing products. Other consumer do-it-yourself products include: fabrics,
window treatments and wall coverings sold by Design/Craft Fabric and Richard E.
Thibaut; and Wolman deck coatings, sealants and brighteners. RPM's consumer
do-it-yourself products are marketed through thousands of mass merchandise, home
center and hardware stores throughout North America.
The Company also manufactures products for the hobby and
leisure markets including: Testor's model kits and accessory products; the
Craft House line of crafts and hobby products for children, including
Paint-by-Number and pre-school activity sets; Linberg advanced model kits; and
Floquil/Polly S Color hobby, art and craft coatings. RPM's consumer hobby and
leisure products are marketed through thousands of mass merchandise, toy and
hobby stores throughout North America.
Other consumer product lines include repair and auto body
paints and specialty products for the automotive aftermarket manufactured by the
Company's Dynatron/Bondo and Mar-Hyde businesses. Products marketed by these
units include spray paints, body fillers, vinyl colors, bumper repair products
and other specialty repair products.
FOREIGN OPERATIONS
The Company's foreign operations for the year ended May 31,
1996 accounted for approximately 11.9% of its total sales, although it also
receives license fees and royalty income from numerous license agreements and
joint ventures in foreign countries. The Company has manufacturing facilities in
Canada, Belgium and The Netherlands, and sales offices or public warehouse
facilities in the Czech Republic, England, France, Iberia, Mexico, the
Philippines, Singapore and several other countries. Information concerning the
Company's foreign operations is set forth in Note I (Industry Segment and
Geographic Area Information) of Notes to Consolidated Financial Statements,
which appear elsewhere in this Annual Report on Form 10-K.
COMPETITION
The Company is engaged in a highly competitive industry and,
with respect to all of its major products, faces competition from local and
national firms. Several of the companies with which RPM competes have greater
financial resources and sales organizations than the Company. While no accurate
figures are available with respect to the size of or the Company's position in
the market for any particular product, management believes that the Company is a
major producer of
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aluminum coatings, cement-based paint, hobby paints, marine coatings, furniture
finishing repair products, automotive repair products, industrial corrosion
control products, consumer rust-preventative coatings, polymer flooring,
fluorescent coatings and pigments, exterior wall and finishing systems and
shellac-based coatings. The Company, however, does not believe that it has a
significant share of the total protective coatings market.
PATENTS, TRADEMARKS AND LICENSES
No single patent, trademark (other than the marks Day-Glo(R),
Rust-Oleum(R) and Carboline(R), which are material), name or license, or group
of these rights, is material to the Company's business.
Day-Glo Color Corp., a subsidiary of the Company, is the owner
of over 50 trademark registrations of the mark and name "DAY-GLO(R)" in numerous
countries and the United States for a variety of fluorescent products. There are
also many other foreign and domestic registrations for other trademarks of the
Day-Glo Color Corp., for a total of over 100 registrations. These registrations
are valid for a variety of terms ranging from one year to 20 years, which terms
are renewable as long as the marks continue to be used. Renewal of these
registrations is done on a regular basis.
Rust-Oleum Corporation, a subsidiary of the Company, is the
owner of over 50 United States trademark registrations for the mark and name
"RUST-OLEUM(R)" and other trademarks covering a variety of rust-preventative
coatings sold by Rust-Oleum Corporation. There are also many foreign
registrations for "RUST-OLEUM(R)" and the other trademarks of Rust-Oleum
Corporation, for a total of nearly 400 registrations. These registrations are
valid for a variety of terms ranging from one year to 20 years, which terms are
renewable for as long as the marks continue to be used. Renewal of these
registrations is done on a regular basis.
Carboline Company, a subsidiary of the Company, is the owner
of a United States trademark registration for the mark "CARBOLINE(R)." Carboline
Company is also the owner of several other United States registrations for other
trademarks. Renewal of these registrations is done on a regular basis.
The Company's product trademarks also include: ALOX(R),
ALUMANATION(R), AVALON(R), B-I-N(R) PRIMER-SEALER, BITUMASTIC(R), BONDO(R),
BONDEX(R), BULLS EYE(R) SHELLAC, COLOR DOUGH(R), CRAFT HOUSE, DRYVIT(R),
DYNALITE(R), DYNATRON(R), EASY FINISH(R), EPOXSTEEL(R), FLOQUIL(R), GEOFLEX(R),
LUBRASPIN(TM), MAR-HYDE(R), MOHAWK(R), PARASEAL(R), PERMAROOF(R), PETTIT(TM),
PLASITE, SANITILE(R), STONCLAD(R), STONHARD(R), STONLUX(R), TALSOL(R),
TESTORS(R), ULTRALITE(TM), VULKEM(R), WOOLSEY(R), ZINSSER(R) and Z-SPAR(R); and,
in Europe, RADGLO(R) and MARTIN MATHYS.
RAW MATERIALS
The Company believes that alternate sources of supply of raw
materials are available to the Company for most of its raw materials. Where
shortages of raw materials have occurred, the Company has been able to
reformulate products to use more readily available raw materials. Although the
Company has been able to reformulate products to use more readily available raw
materials in the past, there can be no assurance as to the Company's ability to
do so in the future.
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SEASONAL FACTORS
The Company's business is seasonal due to outside weather
factors. The Company historically experiences strong sales and income in its
first, second and fourth fiscal quarters comprised of the three month periods
ending August 31, November 30 and May 31, respectively, with weaker performance
in its third fiscal quarter (December through February).
CUSTOMERS
No one customer accounted for 10% or more of the Company's
total sales. The Company's business is not dependent upon any one customer or
small group of customers and is dispersed over thousands of customers.
BACKLOG
The Company historically has not had a significant backlog of
orders, nor was there a significant backlog during the last fiscal year.
RESEARCH
The Company's research and development work is performed in
various laboratory locations throughout the United States. During fiscal years
1996, 1995 and 1994, the Company invested approximately $13.7 million, $12.3
million and $11.1 million, respectively, on research and development activities.
The customer sponsored portion of such expenditures was not significant.
ENVIRONMENTAL MATTERS
Several of the Company's subsidiaries are involved in various
environmental claims or proceedings relating to facilities currently or
previously owned, operated or used by such subsidiaries, or their predecessors.
In addition, the Company or its subsidiaries, together with other parties, have
been designated as potentially responsible parties ("PRPs") under federal and
state environmental laws for the remediation of hazardous waste at certain
disposal sites (see ITEM 3. LEGAL PROCEEDINGS). In connection with its
evaluation of these PRP sites, the Company's management takes into consideration
the input of outside legal counsel, the number of parties involved at the site,
joint and several liability of other PRPs, and the level of volumetric
contribution which may be attributed to the Company relative to that
attributable to other parties at such sites. Based on the above analysis,
management estimates, to the extent possible, the restoration or other clean-up
costs and related claims for each site.
The Company's environmental-related accruals are established
and/or adjusted as information becomes available upon which more accurate
costs can be reasonably estimated. Actual costs may vary from these estimates
due to the inherent uncertainties involved. In management's opinion, based
upon information presently available, the outcome of these environmental
matters will not have a material adverse effect on the Company's financial
position, results of operations or liquidity. However, such costs could be
material to results of operations in a future period.
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EMPLOYEES
The Company employs approximately 5,300 persons, of whom
approximately 900 were represented by unions under contracts which expire at
varying times in the future. The Company believes that its relations with its
employees are good.
ITEM 2. PROPERTIES.
The Company's corporate headquarters and a plant and offices
for one subsidiary are located on an 80-acre site in Medina, Ohio, which is
owned by the Company. The Company's operations occupy a total of approximately
5.3 million square feet, with the majority, approximately 4.3 million square
feet, devoted to manufacturing, assembly and storage. Of the approximately 5.3
million square feet occupied, 4.3 million square feet are owned and 1.0 million
square feet are occupied under operating leases. The Company's facilities of
200,000 square feet or larger, as of May 31, 1996, are set forth in the table
below.
<TABLE>
<CAPTION>
APPROXIMATE
SQUARE FEET
TYPE OF OF LEASED OR
LOCATION FACILITY FLOOR SPACE OWNED
-------- -------- ----------- -----
<S> <C> <C> <C>
Pleasant Prairie, Manufacturing and 298,000 Owned
Wisconsin Warehouse (Rust-Oleum
Corporation)
Toledo, Manufacturing, Office and 280,000 Owned
Ohio Warehouse (Craft House
Corporation)
</TABLE>
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For information concerning the Company's rental obligations,
see Note E (Leases) of Notes to Consolidated Financial Statements, which appear
elsewhere in this Annual Reoprt on Form 10-K. Under all of its leases, the
Company is obligated to pay certain varying insurance costs, utilities, real
property taxes and other costs and expenses.
The Company believes that its manufacturing plants and office
facilities are well maintained and suitable for the operations of the Company.
ITEM 3. LEGAL PROCEEDINGS.
Bondex.
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Bondex International, Inc., a wholly owned subsidiary of the
Company ("Bondex"), was dismissed with prejudice from seven asbestos-related
bodily injury lawsuits which had been filed against Bondex and other corporate
defendants. The dismissals resulted from the inability of plaintiffs to produce
evidence of use of or exposure to any Bondex asbestos-containing product. One
additional such lawsuit was settled by Bondex's insurers for a nominal amount.
With the addition of 22 newly-filed cases, there are currently pending against
Bondex a total of 430 asbestos-related bodily injury lawsuits filed on behalf of
various individuals in various jurisdictions in the United States. All of these
lawsuits name numerous other corporate defendants and all allege
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bodily injury as a result of the exposure to or use of asbestos-containing
products. Bondex continues to deny liability in all of these cases and
continues to vigorously defend them. Under a cost-sharing agreement among
Bondex and its carriers effected in February 1994, the insurers are responsible
for payment of a substantial portion of defense costs and indemnity payments,
if any, with Bondex responsible for a minor portion of each.
Carboline.
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As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, Carboline Company, a wholly owned
subsidiary of the Company ("Carboline"), has been named as one of 21 corporate
defendants in Rufino O. Cavazos, et al., vs. Ceilcote Company, et al., District
Court, 73rd Judicial District, Bexar County, Texas; Cause No. 89-CI-12651, filed
in March 1990, and in similar suits subsequently filed on behalf of individuals
(and, where applicable, their spouses and children) employed at the Comanche
Peak Nuclear Plant and the South Texas Nuclear Plant. Several supplemental
petitions have been filed in Bexar County for the purpose of adding other
spouses and children of the worker plaintiffs, bringing the total number of
Bexar County plaintiffs to 10,556. Another suit with virtually identical
allegations was filed on December 29, 1993 in Rusk County, Texas. That suit,
Cause No. 93-470; Mary Gunn, et al. vs. Southern Imperial Coatings Corp., 4th
District Court, Rusk County, Texas, involves 201 worker plaintiffs and 128
spouses. All of the suits allege bodily injury as a result of exposure to
defendants' products. The litigation is continuing in the discovery stage. With
respect to the Bexar County cases, the court has indicated the summary jury
trials involving 10 plaintiffs each will be scheduled, although specific trial
dates have not been set. Carboline has denied all liability in these cases and
is conducting a vigorous defense. Several of Carboline's insurance carriers, and
Carboline, are defending the lawsuits under a cost sharing agreement.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, and as updated in the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1995, in
September 1991, Our Lady of the Lake Hospital, Inc. ("OLOL") filed suit
captioned Our Lady of the Lake Hospital, Inc. vs. Carboline Company, et al.,
Number 373,498, Division "J", Nineteenth Judicial District Court, Parish of East
Baton Rouge, State of Louisiana, alleging damages to the structural steel of the
hospital which it owns and operates in Baton Rouge, Louisiana. The petition
alleged that the damages resulted from its use of a fireproofing product known
as Pyrocrete 102 manufactured and supplied by Carboline; that Pyrocrete 102 is
extremely corrosive when applied to structural steel, contains a latent defect,
and is defective. On July 13, 1994, OLOL filed a Second Supplemental and
Amending Petition which joined as party defendants Sun Company, Inc. ("Sun") and
Carboline Company, a Missouri corporation which was merged into Sun pursuant to
a statutory merger in 1980 ("Carboline Missouri"); claimed that the product was
not fit for its intended purpose, claimed fraud, breach of contract, breach of
warranty and product liability and sought punitive damages and attorneys fees.
In July 1995, OLOL filed a motion seeking leave of court to further amend its
petition and allow it to make additional allegations of fraud, concealment,
misrepresentation, failure to warn, and breach of contract; claimed damages from
the presence of chlorides and amended its claim for punitive damages, attorneys
fees, and interest. Pursuant to an agreement between Carboline and Sun,
Carboline provided a defense for Sun in this litigation. The Petition did not
set forth the amount of damages being claimed; however, in one of the briefs
filed in the appellate court, OLOL claimed it would cost in excess of $20
million to repair the damage to the hospital building. In addition, OLOL claimed
that it suffered lost revenues, lost profits, and other damages which exceeded
the claim for repair damages.
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In August 1992, OLOL filed suit against Sun captioned Our
Lady of the Lake Hospital, Inc. vs. Sun Company, Inc., Number 384,867, Division
"I", Nineteenth Judicial District Court, Parish of East Baton Rouge, State of
Louisiana, making allegations similar to the allegations in Number 373,498,
described above, and seeking to recover alleged damages to the structural steel
of the OLOL hospital. In addition, in the original petition filed in this suit,
OLOL alleged that Carboline Missouri manufactured and supplied the Pyrocrete to
OLOL and thereafter merged with Sun in January 1980, with Sun remaining as the
surviving corporation responsible for the obligations of Carboline Missouri. On
June 29, 1993, OLOL filed a First Supplemental and Amending Petition ("Amended
Petition") which added Carboline as an additional defendant. The Amended
Petition generally alleged that Carboline damaged OLOL through fraud and also
breached a contractual obligation of service after the sale. The Amended
Petition alleged that OLOL will incur expenses and costs in excess of $20
million to repair the damages. Pursuant to an agreement between Carboline and
Sun, Carboline provided a defense for Sun in this litigation. In June 1994, the
court transferred and consolidated this suit with Case Number 373,498. On
August 30, 1995, the claims filed in Case Number 384,867 were dismissed without
prejudice on the grounds that the claims were now included in Case Number
373,498. A related suit against Sun captioned Our Lady of the Lake Hospital,
Inc. vs. Sun Company, et al., Case Number 395,932 in the same court was also
dismissed without prejudice.
Carboline denied the allegations of both OLOL's claims and
vigorously contested them. Carboline's defense was assumed by First Colonial
Insurance Company ("First Colonial"), a wholly-owned insurance subsidiary of the
Company.
In May 1995, Carboline filed a Supplemental and Amended Third
Party Demand in Case Number 373,498, against a number of its primary and excess
insurance carriers seeking, among other things, a judgment that the insurance
carriers are obligated to defend and/or indemnify Carboline against the claims
alleged by OLOL. In their Answers to Carboline's Supplemental and Amended Third
Party Complaint, the insurance carriers have raised a number of exceptions and
defenses to Carboline's claims for defense and indemnity.
On July 10, 1996, OLOL, Carboline and Sun entered into a
confidential Settlement Agreement with respect to all claims and disputes
presented in, arising out of, or relating in any way to the claims filed by OLOL
in Case Numbers 373,498; 384,867; and 395,932. The confidential settlement
payment to OLOL was primarily funded with payments and commitments from several
Carboline insurers, along with a contribution by Carboline. Pursuant to the
settlement, OLOL's petitions, as supplemented and amended, in Case Numbers
373,498; 384,867; and 395,932, were dismissed with prejudice.
Carboline has entered into confidential settlements with a
number of its insurers who have been or will be dismissed from the litigation.
Carboline's third party claims against certain non-settling insurers and other
parties remain pending in Case Number 373,498. Carboline is currently engaged in
settlement negotiations with the remaining third party defendants. The trial of
Carboline's third party claims is scheduled for March 1997.
In 1995, the Company and Carboline were joined as defendants
in La Gloria Oil & Gas Company vs. Carboline Company, et al., Cause No. 95-959-C
in the 241st Judicial District Court of Smith County, Texas. Sun is also named
as a defendant based on its prior ownership of Carboline. In that case, the
Plaintiff, an owner and operator of a petroleum refinery in Tyler, Texas,
contends that a fireproofing product previously designed and manufactured by
Carboline, Pyrocrete 102, is defective and not fit for its intended purpose.
More specifically, the Plaintiff contends that the product resulted in
deterioration and corrosion of various steel components at the refinery.
Additionally, the Plaintiff contends that Carboline has been engaged in fraud
and a civil conspiracy
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in connection with the alleged failure to disseminate information concerning
Pyrocrete 102. The Plaintiff has alleged similar claims against Sun. On July 1,
1996, Plaintiff served Answers to Carboline's First Set of Interrogatories
which allege, among other things, that Plaintiff seeks compensatory damages in
excess of $10 million as well as exemplary damages. The Company was joined in
the litigation as a defendant based upon the contention that it was also
involved in fraud and a conspiracy with respect to the subject product. The
Company filed a special appearance, contending that the Texas court did not
have personal jurisdiction over the Company. On July 19, 1996, the court
sustained the special appearance, and dismissed all claims and causes of action
against the Company. The case continues against Carboline and Sun, as well as
co-defendants Brown & Root, Inc. and Fluor Daniel, Inc., and is in the early
discovery stages. Pursuant to an agreement between Carboline and Sun, Carboline
is providing a defense for Sun in this litigation.
Carboline has denied the allegations in the litigation and
intends to vigorously defend the case. Although there has been some diminishment
of insurance policy limits available to Carboline as a result of the settlement
of the Our Lady of the Lake Hospital, Inc. vs. Carboline Company, et al.,
litigation described above, the Company believes that the ultimate resolution of
this matter will not have a material adverse effect on the Company's financial
position or results of operations.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, Carboline was, in May 1993, named
by the U.S. Environmental Protection Agency ("EPA") together with 36 other
entities as a PRP under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended ("CERCLA") in connection with the Powell Road
Landfill Site, Huber Heights, Ohio (the "Site"). Carboline is alleged to be
associated with the Site as a consequence of disposal of waste originating at
its Xenia, Ohio plant. Carboline joined with other PRPs (now totaling 45) in a
"PRP Organization Agreement" for the purpose of conducting a common response to
any claim for removal or response action asserted by the EPA or the State of
Ohio or conducting a common defense to any such claim. An intensive
investigation to identify other PRPs was conducted which identified 321
generator PRPs (296 of which contributed de minimis amounts to the Site),
several municipal generator PRPs and transporter PRPs. Between 1987 and 1991,
the owner of the Site, Waste Management, Inc., conducted a remedial
investigation ("RI") and feasibility study ("FS") and, in 1991, submitted the
RI/FS to EPA. The EPA approved the RI in March 1992 and approved the FS in March
1993. Based on the RI/FS, EPA issued its Record of Decision ("ROD") in September
1993, in which it selected the remedy for the cleanup of the Site. The ROD
estimates the remedy will cost $20.5 million and take six years to implement.
Four PRPs, including the owner of the Site (but not Carboline), have entered
into an Administrative Order on Consent with EPA to prepare the Remedial Design
for the selected remedy. The final design has been submitted to the EPA for
approval. Based upon the final design submitted, Waste Management, Inc.
estimates that the total costs for investigation, design, construction,
operation and maintenance activities at the Site will be $30.8 million. Based
upon Carboline's estimated allocated share of total waste volume at the Site
(which ranges between 0.5% to 1.552%) the Company believes that ultimate
resolution of this matter will not have a material adverse effect on the
Company's financial position or results of operations.
Mac-O-Lac.
----------
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, the Company has been identified as
a PRP under CERCLA in connection with the Rose Township Dump Site, Rose
Township, Michigan (the "Rose Township Site") and the Springfield Township Dump
Site, Springfield Township, Michigan (the "Springfield
11
<PAGE> 12
Site") as a consequence of the disposal of waste originating at Mac-O-Lac
Paints, Inc., a former subsidiary of the Company whose assets were sold in
February 1982.
With respect to the Rose Township Site, the Company and eleven
other PRPs signed a Consent Decree which, on July 18, 1989, was entered by the
Court in United States of America as AKZO Coatings of America, Inc. et al., U.S.
District Court, Eastern District of Michigan, Southern Division; Civil Action
No. 88-CV-73784-DT. Pursuant to the agreement, the PRPs established a $9 million
fund to cover costs of remediation, of which the Company's share, $300,000, has
been paid. The PRPs have installed a soil vapor extraction system as a method of
remediation to replace soil flushing which was the originally specified
remediation approach. The EPA had previously concluded that neither soil
flushing nor enhanced soil flushing would achieve target cleanup levels for
certain materials within the time frames specified in the remedial action plan
attached to the Consent Decree. It is anticipated that soil vapor extraction
will effectively perform the required cleanup.
With respect to the Springfield Site, the Company and other
PRPs have been actively engaged in negotiations with the EPA and the Michigan
Department of Natural Resources in an effort to reach agreement on mutually
acceptable remediation parameters and have negotiated Administrative Orders on
Consent Regarding Selected Response Activities and for Cost Recovery Settlement.
Based upon a July 14, 1995 decision of the United States Court
of Appeals for the Sixth Circuit in United States of America vs. Cordova
Chemical Company et al.; Case No. 92-2288, the Company believes it has no
liability under CERCLA with respect to either the Rose Township Site or the
Springfield Township Site, and therefore has declined to participate in any
further PRP efforts at either site which would require the payment of
significant additional monies by the Company. The Cordova Chemical decision is
being reconsidered by the Court of Appeals through an en banc review. In the
event the decision is reversed, the Company will reconsider its position.
Dryvit.
-------
As previously reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended February 29, 1996, Dryvit Systems, Inc.
("Dryvit"), a wholly owned subsidiary of the Company, is a co-defendant in
several separate but related lawsuits. These suits allege, under various causes
of action, that Dryvit's wall cladding product (exterior insulation finish
systems or "EIFS") is defective and has caused structural damage to the
plaintiffs' homes or buildings. In the suits enumerated below, plaintiffs seek
to certify classes comprised of owners of structures clad with EIFS products
manufactured by Dryvit and other EIFS manufacturers.
Currently, there are four actions seeking class certification:
In Re Stucco, filed in Eastern District of North Carolina (96-CV-28-BR [2]), is
a consolidation of four related cases which seeks to certify a class of owners
of homes constructed since January 1, 1986; the Handfield case, filed in U.S.
District Court in South Carolina, Charleston Division (2:96-207-21), seeks to
certify a class of owners of structures constructed since January 1, 1969; the
Morgan case, filed in U.S. District Court in Northern Florida (4:96CV127MP),
seeks to certify a class of owners of residential and commercial structures
constructed since January 1, 1969; and the Ruff case, filed in North Carolina
State Court (96-CVS-0059), seeks to certify a class of North Carolina owners of
EIFS homes or buildings constructed since January 1, 1969.
A hearing in Ruff is scheduled in August to reconsider the
court's ex-parte class certification. Plaintiffs in the Handfield case have
filed a petition with the Judicial Panel on
12
<PAGE> 13
Multi-District Litigation ("MDL") requesting that the related federal court
cases be assigned to the MDL docket and transferred to U.S. District Court in
South Carolina. The defendants, including Dryvit, are opposing the MDL
petition. The other cases are either in the discovery phase with respect to
class certification issues or are stayed pending resolution of the MDL petition.
Dryvit, through a joint defense arrangement, is conducting a
vigorous defense both contesting the class certification requests and
challenging the merits of the plaintiffs' claims. Dryvit believes that it is
fully and adequately insured against the risks posed by these claims and
Dryvit's insurance carriers are expected to defend Dryvit subject to a
reservation of rights. Dryvit has also received a notice of Civil Investigative
Demand ("CID") from the State of North Carolina Attorney General's office. The
focus of the CID seeks documents with respect to whether Dryvit has
misrepresented its EIFS products in its marketing, literature and advertising
programs. Dryvit is cooperating fully with the Attorney General's office in the
investigation and is confident of a favorable outcome.
Mohawk and Westfield.
---------------------
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, Mohawk Finishing Products, Inc.
("Mohawk") and Westfield Coatings Corporation ("Westfield"), both wholly owned
subsidiaries of the Company, were notified by EPA of their status as PRPs under
CERCLA with respect to environmental contamination at the Solvents Recovery of
New England Site (the "SRS Site") located in Southington, Connecticut. Since
June 1992, the EPA has named in excess of 1,700 entities as PRPs in connection
with the SRS Site. The EPA recently issued a volumetric list in which Mohawk was
assigned a reduced volumetric share of 0.11118% of the waste sent to the SRS
Site and Westfield was assigned a reduced volumetric share of 0.89440%. The PRPs
have not as yet agreed to any final allocation formula, whether based on volume
or otherwise. EPA has completed an early de minimis settlement with almost 1,000
PRPs who had sent less than 10,000 gallons to the SRS Site. Neither Mohawk nor
Westfield qualified for that settlement. To date, EPA and the State of
Connecticut have expended in excess of $5 million in connection with the SRS
Site but the EPA has not yet selected the final remedial action. Several hundred
PRPs, including Mohawk and Westfield, have consented to an administrative orders
to perform non-time critical removal actions to contain contaminated water in
the aquifer at the SRS Site and to perform both the Remedial Investigation and
Feasibility Study.
In January 1994, the EPA notified Westfield of its status as
one of approximately 300 PRPs at the Old Southington Landfill Superfund Site
(the "Landfill") on the basis that process wastes from the SRS Site were sent to
the Landfill prior to October 1967. The EPA has not issued a volumetric list for
the Landfill, although it has issued a volumetric list of PRPs who sent
materials to the SRS Site prior to October 1967. Westfield's share on that list
is 0.90247%. In September 1994, EPA issued a Record of Decision which selected a
source control remedy that consisted of installation of a cap on the Landfill
together with a gas collection system. The estimated cost of the source control
remedy is $16.1 million. EPA has deferred to a second operable unit the issue of
whether to actively remediate groundwater at the Landfill, but is insisting that
certain groundwater studies be performed which will likely cost several million
dollars. EPA and the PRPs are currently engaged in mediation in an attempt to
reach a settlement with respect to response costs at the Landfill.
The Company believes that the ultimate resolution of the SRS
Site and the Landfill matters will not have a material adverse effect on the
Company's financial position or results of operations.
13
<PAGE> 14
Testor.
-------
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, the Testor Corporation, a wholly
owned subsidiary of the Company ("Testor"), which had been identified by the EPA
as a PRP under CERCLA in 1985 in connection with the Acme Solvent Site in
Rockford, Illinois (the "Acme Site"), participated with other Acme Site PRPs in
a voluntary remedial action pursuant to a Sharing Agreement entered into in
1986. That remedial action, Phase I of which is completed, involved removal and
disposal of contaminated source materials from the Acme Site and a Supplemental
Technical Investigation conducted by consultants to determine actions required
for permanent remediation of soils and groundwater at the Acme Site in Phase II.
Testor's share of Phase I remedial action costs totaled approximately $965,000.
In September 1991, Testor entered into a Consent Decree with the EPA and a
Sharing Agreement with 30 other Acme Site PRPs with respect to Phase II remedial
action at the Acme Site, which also provided for reimbursement of the EPA for a
portion of its past response costs, of which Testor's share of $60,000 was paid
to the EPA in December 1991. Testor incurred and paid a sum of $206,015 toward
Phase II remediation costs during the fiscal year ending May 31, 1994. Testor
further incurred and paid the additional sums of $30,349 on July 20, 1995 and
$22,927 on June 3, 1996 toward Phase II remediation costs.
A levy has been authorized by the Executive Committee of the
Acme Site PRP group which will be payable on or about September 1, 1996.
Testor's portion of such levy is expected to be in the approximate sum of
$36,700.
Future cost estimates have been provided by the environmental
contractor working on behalf of the PRPs. Total expenditures during calendar
year 1996 at the Site are expected to total $2,479,000. During calendar year
1997 expenditures of $2,931,000 are anticipated. From calendar years 1998
through 2026 operation and maintenance costs are projected in a total sum of
$9,635,000 at a rate of $280,000 for each of the first five years and $260,000
in each of the remaining 23 years, in addition to regulatory review costs. Each
of these projections includes a contingency of 30%. Testor's share of such costs
is currently assessed at 4.5853%, but is subject to change if new members are
added to the settlor's coalition or present members withdraw.
Testor had filed a declaratory judgment action against its
primary and excess insurers which had issued comprehensive generally liability
(CGL policies) over an interval from 1962 through 1986 which sought an
adjudication of the duty to defend and indemnify it in connection with the Acme
Site. That case was settled for the sum of $2,200,000 which was received by
Testor in January 1996. Testor had previously received additional payments
toward the defense costs which it had incurred at the Site in the total amount
of $364,000. The amounts received by Testor are in total satisfaction of any
liability which the insurers may have incurred for the response costs which are
expected to terminate in the 2026. The Company believes that the amounts
received will be adequate to pay all future assessments made against Testor for
expenses arising at the Acme Site. Accordingly, for purposes hereof, this matter
is deemed finalized.
Rust-Oleum.
-----------
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1995, the EPA, in November 1979,
commenced an action captioned United States of America vs. Midwest Solvent
Recovery, Inc., et al.; United States District Court for the Northern District
of Indiana, Eastern Division; Civil No. H-79-556, pertaining to pollution
allegedly occurring at and around real property located at 7400 West Fifteenth
Street, Gary, Indiana ("MIDCO I") and 5900 Industrial Highway, Gary, Indiana
("MIDCO II") (collectively, the "MIDCO Sites"). The Complaint was subsequently
amended in January 1984 to join Rust-Oleum
14
<PAGE> 15
Corporation, a wholly owned subsidiary of the Company ("Rust-Oleum"), and other
entities as additional defendants. Rust-Oleum, one of approximately 130
identified PRPs, is alleged to be associated with the MIDCO Sites as a
consequence of disposal of waste originating at its former Evanston, Illinois
plant in the mid-1970's. The Court approved a Consent Decree in June 1992 under
which Rust-Oleum entered into a Settlement Agreement with the other settling
PRPs for the voluntary cleanup of the MIDCO Sites consistent with the EPA Record
of Decision. All surface hazardous wastes have been removed from the MIDCO Sites
and cleanup is now in the groundwater remediation stage. Remediation should be
complete by the year 2002, with monitoring continuing for an undetermined
period. Total remediation and monitoring costs are currently estimated to be $35
million. Included in the Consent Decree is an Agreement between the Settling
PRPs, including Rust-Oleum, and third parties who had been sued for contribution
by the generator PRPs, providing for payment by the third parties of their fair
share of the MIDCO Sites remedial and response costs. Third party funds have
been placed into the MIDCO Trust Fund, which has been created to fund the MIDCO
Site remedial actions. Rust-Oleum, as a settling PRP, has provided financial
assurance for its share of the cleanup costs in the form of a Letter of Credit.
In March 1988, the EPA named Rust-Oleum and 240 other entities
as PRPs under CERCLA in connection with the Ninth Avenue Site at 7537 Ninth
Avenue, Gary, Indiana (the "Ninth Avenue Site"). Rust-Oleum is alleged to be
associated with the Ninth Avenue Site as a consequence of disposal of waste
originating at its former Evanston, Illinois plant in the 1970's. Rust-Oleum has
cooperated with over twenty other PRPs in a voluntary cleanup under Phase I and
Phase II Participation Agreements and Implementation Trust Agreements. Total
Ninth Avenue Site remediation and monitoring costs are estimated to be
approximately $36 million, including past costs and the Final Site Remedy, which
includes groundwater remediation planned for completion by 1997 and ongoing
monitoring for an undetermined period. The EPA issued an Amended Record of
Decision on September 13, 1994 regarding the Final Site Remedy and an Amended
Unilateral Administrative Order to Rust-Oleum and the other participating PRPs
on December 27, 1994 to undertake the Final Site Remedy. Rust-Oleum and eighteen
other PRPs have entered into a Final Participation Agreement for Final Remedial
Action at the Ninth Avenue Site. Rust-Oleum's allocation of cost is currently
6.048%, with approximately $500,000 remaining to be paid subject, however, to
reduction to the extent settlements are made with non-participating PRPs and
funds are made available from a Trust Fund established by the EPA for de minimis
settlors. Rust-Oleum has provided financial assurance for its share of the Final
Site Remedy in the form of a Letter of Credit.
Based upon prior settlement agreements with insurance carriers
for potential costs and remediation liabilities in connection with the MIDCO
Sites and the Ninth Avenue Site, Rust-Oleum has established appropriate reserves
to cover such costs and liabilities. Accordingly, the Company believes that
ultimate resolution of these matters will not have a material adverse effect on
the Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
15
<PAGE> 16
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT*.
The name, age and positions of each executive officer of the
Company as of August 15, 1996 are as follows:
<TABLE>
<CAPTION>
Name Age Position and Offices with the Company
- ---- --- -------------------------------------
<S> <C> <C>
Thomas C. Sullivan 59 Chairman of the Board and Chief Executive Officer
James A. Karman 59 President and Chief Operating Officer
John H. Morris, Jr. 54 Executive Vice President
Frank C. Sullivan 35 Executive Vice President and Chief Financial Officer
Richard E. Klar 63 Vice President and Treasurer
Paul A. Granzier 69 Vice President, General Counsel and Secretary
Glenn R. Hasman 42 Vice President - Administration
Charles R. Brush 60 Vice President - Environmental Affairs
Keith R. Smiley 34 Controller
<FN>
- -----------------------
* Included pursuant to Instruction 3 to Item 401(b) of Regulation S-K.
</TABLE>
Thomas C. Sullivan has been Chairman of the Board and Chief
Executive Officer of the Company since October 1971. From June 1971 through
September 1978, Mr. Sullivan served as President and, prior thereto, as
Executive Vice President of the Company. Mr. Sullivan's employment with the
Company commenced in 1961, and he has been a Director since 1963. Mr. Sullivan
is employed as Chairman and Chief Executive Officer under an employment
agreement for a five-year period ending June 1, 2001. Mr. Sullivan is the father
of Frank C. Sullivan, Executive Vice President and Chief Financial Officer of
the Company.
James A. Karman has been President and Chief Operating Officer
since September 1978. From October 1982 to October 1993, Mr. Karman also was the
Chief Financial Officer of the Company. From October 1973 through September
1978, Mr. Karman served as Executive Vice President, Secretary and Treasurer,
and, prior thereto, as Vice President-Finance and Treasurer of the Company. Mr.
Karman's employment with the Company commenced in 1963, and he has been a
Director since 1963. Mr. Karman is employed as President and Chief Operating
Officer under an employment agreement for a five-year period ending June 1,
2001.
John H. Morris, Jr. has been Executive Vice President since
January 1981. Prior to that time, he was Corporate Vice President of the
Company, having been elected to that position in September 1977. Mr. Morris was
elected a Director of the Company in 1981. Mr. Morris is employed as Executive
Vice President under an employment agreement for a period ending July 31, 1997.
Frank C. Sullivan was elected Executive Vice President in
October 1995 and has been the Chief Financial Officer of the Company since
October 1993. Mr. Sullivan served as a Vice President from October 1991 to
October 1995. Prior thereto, he served as Director of Corporate Development of
the Company from February 1989 to October 1991. Mr. Sullivan served as Regional
Sales Manager, from February 1988 to February 1989, and as a Technical Service
Representative, from February 1987 to February 1988, of AGR Company, an Ohio
General Partnership owned by the Company. Prior thereto, Mr. Sullivan was
employed by First Union
16
<PAGE> 17
National Bank from 1985 to 1986 and Harris Bank from 1983 to 1985. Mr. Sullivan
is employed as Executive Vice President and Chief Financial Officer under an
employment agreement for a period ending July 31, 1997. Mr. Sullivan is the son
of Thomas C. Sullivan, Chairman of the Board and Chief Executive Officer of the
Company.
Richard E. Klar was elected Vice President in October 1981 and
has been Treasurer since July 1980. He served as Chief Accounting Officer from
July 1980 to October 1990. Mr. Klar was Treasurer of Mameco International, Inc.,
a wholly owned subsidiary which was acquired by the Company in February 1979,
from 1979 to 1980 and was Mameco's Controller prior thereto. Mr. Klar is
employed as Vice President and Treasurer under an employment agreement for a
period ending July 31, 1997.
Paul A. Granzier has served as Secretary since July 1988, and
as Vice President and General Counsel since October 1987. Prior thereto, he
served as General Counsel since he joined the Company in May 1985. Mr. Granzier
was engaged in the private practice of law from 1981 until he joined the
Company. Prior thereto, he served as Assistant Corporate Counsel and Assistant
Secretary of Midland-Ross Corporation. Mr. Granzier is employed as Vice
President, General Counsel and Secretary under an employment agreement for a
period ending July 31, 1997.
Glenn R. Hasman has served as Vice President-Administration
since October 1993. From July 1990 to October 1993, Mr. Hasman served as
Controller. From September 1982 through July 1990, Mr. Hasman served in a
variety of management capacities, most recently Vice President-Operations and
Finance, Chief Financial Officer and Treasurer, of Proko Industries, Inc., a
former wholly owned subsidiary of the Company. From 1979 to 1982, Mr. Hasman
served as RPM's Director of Internal Audit and from 1976 to 1979 he was
associated with Ciulla, Smith & Dale, LLP, independent accountants. Mr. Hasman
is employed as Vice President-Administration under an employment agreement for a
period ending July 31, 1997.
Charles R. Brush has served as Vice President-Environmental
Affairs of the Company since October 1993. From June 1991 to October 1993, he
served as the Company's Director of Environmental & Regulatory Affairs. Prior
thereto, from 1988 to June 1991, he served as Vice President-Environmental &
Risk Management of Kop-Coat, Inc., a wholly owned subsidiary of the Company.
Keith R. Smiley has served as Controller of the Company since
October 1993. From January 1992 until the present, Mr. Smiley also has served as
the Company's Internal Auditor. Prior thereto, he was associated with Ciulla,
Smith & Dale, LLP.
17
<PAGE> 18
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
RPM Common Shares, without par value, are traded on the NASDAQ
National Market. Common Share prices are quoted daily under the symbol RPOW. The
high and low sales prices for the Common Shares, and the cash dividends paid on
the Common Shares, for each quarter of the two most recent fiscal years is set
forth in the table below.
RANGE OF SALES PRICES
---------------------
<TABLE>
<CAPTION>
Dividends Paid
Fiscal 1996 High Low Per Share
------------- ---- --- ---------
<S> <C> <C> <C> <C>
1st Quarter * $ 16-11/16 $ 15-1/2 $0.112
2nd Quarter * 17-3/16 15-5/16 0.120
3rd Quarter 17-1/4 14-3/4 0.120
4th Quarter 6-5/8 14-1/2 0.120
Dividends Paid
Fiscal 1995 High Low Per Share
----------- ---- --- ---------
1st Quarter * $ 14-5/8 $ 13 $0.104
2nd Quarter * 15-11/16 14 0.112
3rd Quarter * 15-3/8 14-1/8 0.112
4th Quarter * 16-1/2 14-1/2 0.112
<FN>
- --------------------
* Restated for the 25% stock dividend on December 8, 1995.
</TABLE>
Source: The Wall Street Journal
Cash dividends are payable quarterly, upon authorization of
the Board of Directors. Regular payment dates are approximately the 30th day of
July, October, January and April. RPM maintains a Dividend Reinvestment Plan
whereby cash dividends, and a maximum of an additional $5,000 per month, may be
invested in RPM Common Shares purchased in the open market at no commission cost
to the participant.
The number of holders of record of RPM Common Shares as of
August 23, 1996 was approximately 37,736.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected consolidated financial
data of the Company for each of the five years during the period ended May 31,
1996 including the fiscal 1996 acquisition of TCI, Inc., which was accounted for
on a pooling-of-interests basis. The data was derived from the annual
Consolidated Financial Statements of the Company which have been audited by
Ciulla, Smith & Dale, LLP, independent accountants.
18
<PAGE> 19
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
--------------------------
1996 1995* 1994* 1993 1992
---- ----- ----- ---- ----
RESTATED RESTATED
<S> <C> <C> <C> <C> <C>
(Amounts in thousands except per share
data)
Net sales $1,136,396 $1,030,736 $825,292 $768,372 $680,091
Income before income taxes 119,886 108,492 89,207 66,136 61,101
Net income 68,929 62,616 53,753 39,498 38,481
Return on sales % 6.1 6.1 6.5 5.1 5.7
Primary earnings per share 0.90 0.85 0.74 0.59 0.58
Fully diluted earnings per share 0.86 0.81 0.70 0.57 0.57
Shareholders' equity 445,833 350,469 316,444 243,899 233,360
Shareholders' equity per share 5.82 4.76 4.33 3.66 3.54
Return on shareholders' equity % 17.3 18.8 19.2 16.6 17.1
Average shares outstanding 76,548 73,660 73,003 66,584 65,988
Cash dividends paid 35,597 31,259 27,949 22,370 20,685
Cash dividends per share 0.47 0.44 0.41 0.38 0.35
Retained earnings 231,896 199,527 169,687 146,852 129,846
Working capital 275,722 271,635 231,684 191,872 205,419
Total assets 1,155,076 965,523 665,966 648,524 623,346
Long-term debt 447,654 407,041 233,969 258,712 273,871
Depreciation and amortization 42,562 37,123 26,050 22,283 20,436
<FN>
- ---------------
All per share data has been restated to reflect the 25% stock dividend
on December 8, 1995.
*Data for fiscal years 1995 and 1994 have been restated to include
the fiscal 1996 acquisition of TCI, Inc.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The information required by this item is set forth at pages
20 through 21 of the 1996 Annual Report to Shareholders, which information is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is set forth at pages
22 through 32 of the 1996 Annual Report to Shareholders, which information is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
19
<PAGE> 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item as to the Directors of the
Company appearing under the caption "Election of Directors" in the Company's
1996 Proxy Statement is incorporated herein by reference. Information required
by this item as to the Executive Officers of the Company is included as Item 4A
of Part I of this Annual Report on Form 10-K as permitted by Instruction 3 to
Item 401(b) of Regulation S-K. Information required by Item 405 of Regulation
S-K is set forth in the 1996 Proxy Statement under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance," which information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is set forth in the 1996
Proxy Statement under the heading "Executive Compensation," which information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this item is set forth in the 1996
Proxy Statement under the heading "Share Ownership of Management," which
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is set forth in the 1996
Proxy Statement under the heading "Election of Directors," which information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this 1996 Annual Report
on Form 10-K:
1. FINANCIAL STATEMENTS. The following consolidated financial
statements of the Company and its subsidiaries and the report of independent
auditors thereon, included in the 1996 Annual Report to Shareholders on pages
22 through 32, are incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Balance Sheets - May 31, 1996 and 1995
Consolidated Statements of Income -
years ended May 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders'
Equity - years ended May 31, 1996, 1995
and 1994
20
<PAGE> 21
Consolidated Statements of Cash Flows -
years ended May 31, 1996, 1995 and 1994
Notes to Consolidated Financial
Statements (including Unaudited Quarterly
Financial Information)
2. FINANCIAL STATEMENT SCHEDULES. The following consolidated financial
statement schedule of the Company and its subsidiaries and the report of
independent auditors thereon are filed as part of this Annual Report on Form
10-K and should be read in conjunction with the consolidated financial
statements of the Company and its subsidiaries included in the 1996 Annual
Report to Shareholders:
<TABLE>
<CAPTION>
Schedule Page No.
-------- --------
<S> <C>
Independent Auditors' Report S-1
Schedule II - Valuation and Qualifying S-2
Accounts and Reserves
</TABLE>
All other schedules have been omitted because they are not applicable
or not required, or because the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits.
--------
See the Index to Exhibits at page E-1 of this Annual Report on
Form 10-K.
(b) Reports on Form 8-K.
-------------------
There were no Current Reports on Form 8-K filed during the
fourth fiscal quarter ended May 31, 1996.
21
<PAGE> 22
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.
RPM, INC.
Date: August 29, 1996 By: /s/ Thomas C. Sullivan
------------------------
Thomas C. Sullivan
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature and Title
- -------------------
<S> <C>
Chairman of the Board of
/s/ Thomas C. Sullivan Directors and Chief Execu-
- --------------------------------- tive Officer (Principal
Thomas C. Sullivan Executive Officer)
/s/ James A. Karman President and Chief Operating
- --------------------------------- Officer and a Director
James A. Karman
/s/ Frank C. Sullivan Executive Vice President and Chief
- --------------------------------- Financial Officer (Principal
Frank C. Sullivan Financial Officer) and a Director
/s/ Glenn R. Hasman Vice President-Administration
- --------------------------------- (Principal Accounting Officer)
Glenn R. Hasman
/s/ Max D. Amstutz Director
- ---------------------------------
Max D. Amstutz
/s/ Edward B. Brandon Director
- ---------------------------------
Edward B. Brandon
/s/ Lorrie Gustin Director
- ---------------------------------
Lorrie Gustin
/s/ Roy H. Holdt Director
- ---------------------------------
Roy H. Holdt
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
/s/ E. Bradley Jones Director
- ---------------------------------
E. Bradley Jones
/s/ Donald K. Miller Director
- ---------------------------------
Donald K. Miller
/s/ John H. Morris, Jr. Executive Vice President
- --------------------------------- and a Director
John H. Morris, Jr.
/s/ Kevin O'Donnell Director
- ---------------------------------
Kevin O'Donnell
/s/ William A. Papenbrock Director
- ---------------------------------
William A. Papenbrock
</TABLE>
Date: August 29, 1996
23
<PAGE> 24
RPM, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C> <C>
3.1 Amended Articles of Incorporation, as amended...........................................
3.2 Amended Code of Regulations ............................................................
4.1 Specimen Certificate of Common Shares, without par value, of RPM,
Inc..................................................................................... (B)
4.2 Specimen LYONs(TM)Certificate .......................................................... (A)
4.3 Specimen Note Certificate for 7.0% Senior Notes Due 2005................................ (D)
4.4 Indenture, dated as of June 1, 1995, between RPM, Inc. and The First National Bank of
Chicago, as trustee, with respect to the 7.0% Senior Notes Due 2005..................... (D)
4.5 Indenture, dated as of September 15, 1992, between RPM, Inc. and The First National
Bank of Chicago, as trustee, with respect to the LYONs ................................. (A)
*10.1 Amended Employment Agreement, dated as of July 22, 1981, by and between RPM, Inc. and
Thomas C. Sullivan, Chairman of the Board and Chief Executive Officer ..................
*10.1.1 Amendment to Amended Employment Agreement, dated as of July 17, 1996, by and between
RPM, Inc. and Thomas C. Sullivan, Chairman of the Board and Chief Executive Officer ....
*10.2 Amended Employment Agreement, dated as of July 22, 1981, by and between RPM, Inc. and
James A. Karman, President and Chief Operating Officer .................................
*10.2.1 Amendment to Amended Employment Agreement, dated as of July 17, 1996, by and between
RPM, Inc. and James A. Karman, President and Chief Operating Officer ...................
*10.3 Employment Agreement, dated as of July 15, 1992, by and between RPM, Inc. and Frank C.
Sullivan, Executive Vice President and Chief Financial Officer ......................... (F)
*10.4 Form of Employment Agreement entered into by and between RPM, Inc. and each of John H.
Morris, Jr., Executive Vice President, Richard E. Klar, Vice President and Treasurer,
Paul A. Granzier, Vice President, General Counsel and Secretary, and Glenn R. Hasman,
Vice President - Administration ........................................................
*10.4.1 Form of Amendments to Employment Agreements, dated as of July 17, 1996, by and between
RPM, Inc. and each of John H. Morris, Jr., Executive Vice President, Richard E. Klar,
Vice President and Treasurer, Paul A. Granzier, Vice President, General Counsel and
Secretary, Glenn R. Hasman, Vice President - Administration, and Frank C. Sullivan,
Executive Vice President and Chief Financial Officer ...................................
*10.5 RPM, Inc. 1979 Stock Option Plan, as amended, and form of Stock Option Agreements
used in connection therewith ...........................................................
*10.6 RPM, Inc. 1989 Stock Option Plan, as amended, and form of Stock Option Agreements to be
used in connection therewith ...........................................................
*10.7 RPM, Inc. Retirement Savings Trust and Plan, as amended ................................
*10.8 RPM, Inc. Benefit Restoration Plan .....................................................
</TABLE>
E-1
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C> <C>
*10.9 RPM, Inc. Board of Directors' Deferred Compensation Agreement, as
amended and restated .................................................................. (C)
*10.10 RPM, Inc. Deferred Compensation Plan for Key Employees ................................. (C)
*10.11 RPM, Inc. Incentive Compensation Plan...................................................
*10.12 Form of Indemnification Agreement entered into by and between the Company and each of
its Directors and Executive Officers ...................................................
10.13 Credit Agreement, dated as of December 14, 1993, by and between RPM, Inc., RPOW
(France) S.A., RPM Europe B.V., Radiant Color, N.V., Credit Lyonnais Chicago Branch,
Credit Lyonnais Cayman Island Branch and Credit Lyonnais Belgium ....................... (C)
10.14 Credit Facility, dated as of June 23, 1994, by and among RPM, Inc., National City Bank
and The First National Bank of Chicago, as Co-Agents, and The Chase Manhattan Bank
(National Association), as Administration Agent......................................... (E)
10.15 Amendment No. 1, dated August 2, 1995, to the Credit Facility, dated as of June 23,
1994, by and among RPM, Inc., National City Bank and the First National Bank of
Chicago, as Co-Agents, and The Chase Manhattan Bank (National Association) as
Administration Agent. ..................................................................
11.1 Computation of Net Income per Common Share..............................................
13.1 Financial Statements contained in 1996 Annual Report to Shareholders....................
21.1 Subsidiaries of the Company ............................................................
23.1 Consent of Independent Certified Public Accountants ....................................
27.1 Financial Data Schedule ................................................................
<FN>
- ------------------------------
*Management contract or compensatory plan or arrangement identified
pursuant to Item 14(c) of this Form 10-K.
(A) Incorporated herein by reference to the appropriate exhibit
to the Company's Registration Statement on Form S-3 (Reg. No. 33-50868).
(B) Incorporated herein by reference to the appropriate exhibit
to the Company's Registration Statement on Form S-3 (Reg. No. 33-39849).
(C) Incorporated herein by reference to the appropriate exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1994.
(D) Incorporated herein by reference to the appropriate exhibit
to the Company's Registration Statement on Form S-4 as filed with the Commission
on August 3, 1995.
(E) Incorporated herein by reference to the appropriate exhibit
to the Company's Current Report on Form 8-K dated as of June 28, 1994.
(F) Incorporated herein by reference to the appropriate exhibit
to the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1992.
</TABLE>
E-2
<PAGE> 26
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To The Board of Directors and
Shareholders
RPM, Inc. and Subsidiaries
Medina, Ohio
The audits referred to in our report to the Board of Directors and Shareholders
of RPM, Inc. and Subsidiaries dated July 3, 1996, relating to the consolidated
financial statements of RPM, Inc. and Subsidiaries included the audit of the
schedule listed under Item 14 of Form 10-K for each of the three years in the
period ended May 31, 1996. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based upon our audits.
In our opinion such financial statement schedule presents fairly, in all
material respects, the information set forth therein.
Ciulla, Smith & Dale, LLP.
S-1
<PAGE> 27
Schedule II
RPM, INC. AND SUBSIDIARIES
--------------------------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
----------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
Additions
Charged To
Balance at Selling and Balance at
Beginning General and End
Of Period Administrative Acquisitions Deductions Of Period
--------- -------------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended May 31, 1996
- -----------------------
Allowance for doubtful accounts $ 9,813 $ 3,448 $ 721 $ 3,989 (1) $ 9,993
======== ======== ======== ======== ========
Accrued loss reserves $ 23,897 $ 12,771 $ 9,096 $ 12,033 (2) $ 33,731
======== ======== ======== ======== ========
Year Ended May 31, 1995 (Restated)
- -----------------------
Allowance for doubtful accounts $ 8,198 $ 3,247 $ 1,248 $ 2,880 (1) $ 9,813
======== ======== ======== ======== ========
Accrued loss reserves $ 12,978 $ 12,767 $ 5,420 $ 7,268 (2) $ 23,897
======== ======== ======== ======== ========
Year Ended May 31, 1994 (Restated)
- -----------------------
Allowance for doubtful accounts $ 6,935 $ 4,275 $ 70 $ 3,082 (1) $ 8,198
======== ======== ======== ======== ========
Accrued loss reserves $ 13,753 $ 7,312 $ $ 8,087 (2) $ 12,978
======== ======== ======== ======== ========
<FN>
(1) Uncollectible accounts written off, net of recoveries
(2) Primarily claims paid during the year
</TABLE>
S-2
<PAGE> 1
EXHIBIT 3.1
RECEIPT AND CERTIFICATE
RPM, INC. formerly REPUBLIC POWDERED METALS, INC.
- -------------------------------------------------
NAME
202203
------
NUMBER
<TABLE>
<S> <C>
DOMESTIC CORPORATIONS MISCELLANEOUS FILINGS
ARTICLES OF INCORPORATION ANNEXATION/INCORPORATION--CITY
OR VILLAGE
AMENDMENT
MERGER/CONSOLIDATION RESERVATION OF CORPORATE NAMES
DISSOLUTION REGISTRATION OF NAME
AGENT REGISTRATION OF NAME RENEWALS
RE-INSTATEMENT REGISTRATION OF NAME--CHANGE
OF REGISTRANTS ADDRESS
CERTIFICATES OF CONTINUED
EXISTENCE TRADE MARK
MISCELLANEOUS TRADE MARK RENEWAL
SERVICE MARK
FOREIGN CORPORATIONS SERVICE MARK RENEWAL
MARK OF OWNERSHIP
LICENSE
MARK OF OWNERSHIP RENEWAL
AMENDMENT
EQUIPMENT CONTRACT/CHATTEL
SURRENDER OF LICENSE MORTAGE
APPOINTMENT OF AGENT
POWER OF ATTORNEY
CHANGE OF ADDRESS OF AGENT
SERVICE OF PROCESS
CHANGE OF PRINCIPAL OFFICE
MISCELLANEOUS
RE-INSTATEMENT
ASSIGNMENT--TRADE MARK, MARK
FORM 7 OF OWNERSHIP, SERVICE MARK,
PENALTY REGISTRATION OF NAME
</TABLE>
I certify that the attached document was received and filed in the
office of TED W. BROWN, Secretary of State, at Columbus, Ohio, on the 9th
------
day of November A.D. 1971, and recorded on Roll B772 at Frame 725 of
-------------- -- ---- ---
the RECORDS OF INCORPORATION and MISCELLANEOUS FILINGS.
/s/ TED W. BROWN
-----------------------
TED W. BROWN,
Secretary of State
Filed by and Returned To: Calfee, Halter, Calfee, Griswold & Sommer
-----------------------------------------------
1800 Central Nztional Bank Building
-----------------------------------------------
Cleveland, Ohio 44114 Att: Richard N. Ogle
-----------------------------------------------
FEE RECEIVED: $1275.00
NAME: RPM, INC. formerly REPUBLIC POWDERED METALS, INC.
-------------------------------------------------
<PAGE> 2
CERTIFICATION OF ADOPTION OF
AMENDED ARTICLES OF INCORPORATION OF
REPUBLIC POWDERED METALS, INC.
(hereafter to be known as RPM, Inc.)
Charter No. 202203
Thomas C. Sullivan, President, and Louis J. Gillich, Secretary of
Republic Powdered Metals, Inc. an Ohio corporation, do hereby certify that a
meeting of the holders of all of the shares of Republic Powdered Metals, Inc.
was duly called and held on the 20th day of October, 1971, at which meeting a
quorum of such shareholders was present in person or by proxy at all times, and
that by the affirmative vote of the holders of shares entitling them to
exercise more than eighty percent (80%) of the voting power of said corporation
the Resolutions attached hereto were adopted for the purpose of adopting the
attached Amended Articles of Incorporation of said corporation.
IN WITNESS WHEREOF, said Thomas C. Sullivan, President and
Louis J. Gillich, Secretary of Republic Powdered Metals, Inc., acting for
and on behalf of said corporation have hereunto subscribed their names this
9th day of November, 1971.
- ---
/s/ Thomas C. Sullivan
---------------------------------
Thomas C. Sullivan, President
/s/ Louis J. Gillich
---------------------------------
Louis J. Gillich, Secretary
<PAGE> 3
RESOLUTIONS ADOPTED AT
SPECIAL MEETING OF SHAREHOLDERS OF
REPUBLIC POWDERED METALS, INC.
October 20, 1971
----------------------------------
"RESOLVED, That new Amended Articles of Incorporation of this Corporation in
the form in which the same were communicated to the shareholders of this
Corporation as Exhibit A to the Proxy Statement dated September 30, 1971, which
accompanied the Notice of this Meeting, and as attached to these Resolutions as
Exhibit A, be and the same are hereby adopted to supersede and take the place
of the Corporation's existing Amended Articles of Incorporation.
"BE IT FURTHER RESOLVED, That the President and the Secretary of this
Corporation be and they are hereby authorized and directed to file as promptly
as possible in the Office of the Secretary of State of Ohio an appropriate
Certificate of Adoption of Amended Articles of Incorporation and to take such
other action as may be appropriate in order to render effective said Amended
Articles of Incorporation and carry out the purpose of these Resolutions."
<PAGE> 4
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
(Formerly Republic Powered Metals, Inc.)
FIRST: The name of the Corporation is RPM, Inc.
SECOND: The place in the State of Ohio where its principal office is
located is Brunswick Hills Township, in Medina County.
THIRD: The purpose or purposes of the Corporation are as follows:
(a) To manufacture, compound, mix, buy, sell and otherwise
deal in paints, enamels, varnishes, shellacs, lacquers and protective
and decorative coatings and coverings of every kind and description,
together with every kind and variety of ingredients thereof, and, in
general, to manufacture, purchase, use and sell goods, wares and
merchandise of every kind and description.
(b) To purchase, acquire, apply for, register, hold, use,
hypothecate, exchange, assign, lease, grant licenses or sublicenses in
respect of, sell, deal in, and dispose of letters patent of the United
States or any foreign country, patent rights, privileges, inventions,
improvements, processes, designs, formulae, copyrights, trademarks,
trade names, and rights analogous thereto, necessary, useful, or
convenient in connection with any business of the Corporation.
(c) To purchase, lease or otherwise acquire, own, hold, use,
maintain, operate, develop, sell, lease, encumber, convey, exchange or
otherwise dispose of real and personal property, or interests therein,
and to construct, equip, occupy, improve, use, operate, sell, lease,
exchange or otherwise dispose of buildings, factories, plants,
storehouses, offices and structures of all kinds, necessary, useful, or
convenient in connection with any business of the Corporation.
(d) To purchase or otherwise acquire all or any part of the
business, good will, rights, property and assets and to assume all or
any part of the liabilities of any corporation, association,
partnership or individual engaged in any business in which any
corporation organized under the General Corporation Act of the State of
Ohio is entitled to engage.
(e) To acquire by purchase, subscription, exchange, or otherwise,
to guarantee, to invest in or hold for investment or otherwise, and to
trade, deal in and with, use, sell, pledge, or otherwise dispose of the
stock, bonds, and other evidences of indebtedness or obligations of any
corporation, domestic or foreign, and to issue in exchange or in
payment therefor its own stock, bonds, or other evidences of
indebtedness, and, while owner of any such stock, bonds, and evidences
of indebtedness, to possess and exercise all the rights, powers and
privileges of ownership, including the right to vote thereon for any
and all purposes; to acquire by purchase, subscription, exchange, or
otherwise and to deal in and with, use, sell, pledge or otherwise
dispose of the bonds and other evidences of indebtedness or obligations
of any public or municipal corporation, domestic or foreign, and of any
government, state, governmental authority, or governmental
1
<PAGE> 5
subdivision, domestic or foreign; and to do any and all acts or things
deemed advisable for the preservation, protection, improvement, or
enhancement in value of any stock; bonds, or other evidences of
indebtedness or securities, and to do any and all acts and things
designed to accomplish any such purpose.
(f) To join, merge, or consolidate with and to enter into
agreements and cooperative relations, not in contravention of law, with
any corporation, association, partnership, or individual in and about
the carrying out of all or any of its purposes.
(g) To borrow money or otherwise use its credit for its corporate
purposes; to make, accept, endorse, execute, and issue promissory
notes, bills of exchange, bonds, debentures, and other obligations and
evidences of indebtedness; and to secure the payment of any such
obligations by mortgage, pledge, deed of trust, or otherwise.
(h) In general, to carry on any lawful business whatsoever in
connection with or incidental to the foregoing, or which has for its
object the promotion, directly or indirectly, of the general interests
of the Corporation, or the protection, improvement, preservation, or
enhancement of the value of its properties and rights, and to do
whatever it may deem necessary, useful, convenient, or proper for the
accomplishment of any one or more of the purposes of the Corporation,
and, to the same extent and as fully as any natural person might
lawfully or could do, to do all and every lawful act and thing and to
enter into and perform contracts of every kind and description with any
person, firm, association, corporation, municipality, county, state,
body politic, or government, or subdivision thereof, without limitation
as to amount, necessary, suitable, or convenient for the accomplishment
of any of the purposes of the Corporation or incident to any of the
powers hereinbefore enumerated, the enumeration of specific powers not
being a limitation or restriction in any manner of the general powers
of the Corporation.
(i) To do all or any of such acts and things and exercise any of
such powers in any state of the United States, in any district,
territory, colony, protectorate, or possession thereof, and in any and
all foreign countries, and to maintain such offices, branches, plants,
properties, and establishments in any or all thereof as may be deemed
advisable by the Corporation.
FOURTH: The maximum number of shares which the Corporation is
authorized to have outstanding is Two Million (2,000,000) shares, all of which
shall be Common Shares, without par value.
FIFTH: The Corporation, by action of its Directors and without action
by its shareholders, may purchase its own shares in accordance with the
provisions of the General Corporation Law of Ohio. Such purchases may be made
either in the open market or at public or private sale, in such manner and
amounts, from such holder or holders of outstanding shares of the Corporation,
and at such prices as the Directors shall from time to time determine.
SIXTH: No holder of shares of the Corporation of any class, as such,
shall have any preemptive right to purchase or subscribe for shares of the
Corporation, of any class, or other securities of the Corporation, of any
class, whether now or hereafter authorized.
SEVENTH: Notwithstanding any provisions of the laws of the State of
Ohio now or hereafter in force requiring for any action the affirmative vote of
the holders of shares entitling them to exercise a
2
<PAGE> 6
designated proportion (but less than all) of the voting power of the
Corporation or of any class or classes of shares thereof, such action may be
taken by the affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power of the Corporation or of such class or
classes, except that affirmative vote of the holders of shares entitling them
to exercise two-thirds of the voting power of the Corporation or of such class
or classes shall be necessary:
(a) to approve the lease, sale, exchange, transfer or other
disposition by the Corporation of all, or substantially all, of its
assets; or
(b) to effect a merger, consolidation, majority share acquisition
or combination other than a combination to which subparagraph (a) of
this Article Seventh applies, as such terms are defined under the
General Corporation Law of Ohio, if the holders of shares of the
Corporation entitling them to exercise all of the voting power of the
Corporation in the election of Directors immediately prior to
consummation of such transaction shall, upon consummation thereof,
thereafter be entitled to exercise less than two-thirds of the voting
power of the Corporation, or of the surviving or new corporation (in
the case of a merger or consolidation), in the election of Directors;
or
(c) to adopt any amendment to the Amended Articles of
Incorporation of the Corporation which changes the provisions of this
Article Seventh.
EIGHTH: These Amended Articles of Incorporation supersede and take the
place of the existing Amended Articles of Incorporation of the Corporation.
3
<PAGE> 7
THE STATE OF OHIO
[LOGO]
DEPARTMENT OF STATE
TED W. BROWN
Secretary of State
CERTIFICATE
202203
IT IS HEREBY CERTIFIED that the Secretary of State of Ohio has custody of the
Records of Incorporation and Miscellaneous Filings; that said records show the
filing and recording of: AMD AGS CHL of RPM, Inc.
---------------
UNITED STATES OF AMERICA Recorded on Roll E014 at Frame 1849 of the
STATE OF OHIO ---- ----
Office of the Secretary of State Records of Incorporation and Miscellaneous
Filings
[SEAL] Witness my hand and the seal of the Secretary of
State, at the City of Columbus, this 29TH day of
OCTOBER, A.D. 1974
/s/ TED W. BROWN
----------------------
TED W. BROWN
Secretary of State
<PAGE> 8
CERTIFICATE OF AMENDMENT TO
AMENDED ARTICLES OF INCORPORATION OF
RPM, INC.
Charter No. 202203
Thomas C. Sullivan, President, and James A. Karman, Secretary,
of RPM, Inc., an Ohio corporation, do hereby certify that a meeting of the
holders of all of the common shares of RPM, Inc. was duly called and held on the
27th day of September, 1974, at which meeting a quorum of such shareholders was
present in person or by proxy at all times, that by the affirmative vote of the
holders of shares entitling them to exercise more than two-thirds (2/3) of the
voting power of said corporation the Resolutions attached hereto as Exhibit A
were adopted for the purpose of amending Articles SECOND and SEVENTh, inserting
a new Article EIGHTH and renumbering existing Article EIGHTH as Article NINTH,
of the Amended Articles of Incorporation of said corporation, and that as a
result of said action said Articles SECOND, SEVENTH, EIGHTH and NINTH shall
henceforth read in their entirety as set forth in Exhibit B attached hereto.
IN WITNESS WHEREOF, said Thomas C. Sullivan, President and
James A. Karman, Secretary, of RPM, Inc., acting for and on behalf of said
corporation, have hereunto subscribed their names this 21st day of October,
1974.
/s/ Thomas C. Sullivan
-----------------------------
Thomas C. Sullivan, President
/s/ James A. Karman
-----------------------------
James A. Karman, Secretary
<PAGE> 9
SHAREHOLDER RESOLUTIONS
RPM, INC.
RESOLVED: That Article Second of the Company's Amended Articles of Incorporation
be amended to read as set forth in Exhibit B to the Proxy Statement dated August
20, 1974 which accompanied the Notice of this Meeting, the relevant portion of
which Exhibit is incorporated into these resolutions by reference.
BE IT FURTHER RESOLVED: That the President and the Secretary of the Company be
and they are hereby authorized and directed to file promptly in the Office of
the Secretary of State of Ohio an appropriate Certificate of Amendment, and to
take such other action as may be appropriate, in order to render effective the
foregoing amendment and carry out the purpose of these resolutions.
RESOLVED: That Article Seventh of the Company's Amended Articles of
Incorporation be amended in the manner and to the extent indicated in Exhibit B
to the Proxy Statement dated August 20, 1974 which accompanied the Notice of
this Meeting, the relevant portions of which Exhibit are incorporated by
reference into these resolutions, that a new Article Eighth to the Company's
Amended Articles of Incorporation as set forth in said Exhibit be adopted, and
that the provision of said Amended Articles heretofore designated as Article
Eighth be redesignated as Article Ninth.
BE IT FURTHER RESOLVED: That the President and the Secretary of the Company be
and they are hereby authorized and directed to file as promptly as possible in
tile Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoing amendments and carry out the purpose of these
resolutions.
<PAGE> 10
ARTICLES SECOND, SEVENTH, EIGHTH AND NINTH
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
SECOND: The place in the State of Ohio where its principal
office is located is the City of Cleveland, Cuyahoga County.
SEVENTH: Notwithstanding any provisions of the laws of the State
of Ohio now or hereafter in force requiring for any action the affirmative vote
of the holders of shares entitling them to exercise a designated proportion (but
less than all) of the voting power of the Corporation or of any class or classes
of shares thereof, and subject to the requirements of Article Eighth of these
Amended Articles of Incorporation, such action may be taken by the affirmative
vote of the holders of shares entitling them to exercise a majority of the
voting power of the Corporation or of such class or classes, except that the
affirmative vote of the holders of shares entitling them to exercise two-thirds
of the voting power of the Corporation or of such class or classes shall be
necessary:
(a) to approve the lease, sale, exchange, transfer or other
disposition by the Corporation of all, or substantially all, or its
assets; or
(b) to effect a merger, consolidation, majority share
acquisition or combination other than a combination to which sub-paragraph (a)
of this Article Seventh applies, as such terms are defined under the General
Corporation law of Ohio, if the holders of shares of the Corporation entitling
them to exercise all of the voting power of the Corporation in the election of
Directors immediately prior to consummation of such transaction shall, upon
consummation thereof, thereafter be entitled to exercise less than two-thirds of
the voting power of the Corporation, or of the surviving or new Corporation (in
the case of a merger or consolidation), in the election of Directors; or
(c) to adopt any amendment to the Amended Articles of In-
corporation of the Corporation which changes the provisions of this Article
Seventh.
<PAGE> 11
EIGHTH: If a shareholder vote is required by law, then except as
provided in the last paragraph of this Article Eighth the affirmative vote of
the holders of shares entitling them to exercise 80% of the voting power of the
Corporation, given in person or by proxy at a meeting called for the purpose,
shall be necessary:
(a) to approve the lease, sale, exchange, transfer or other
disposition by the Corporation of all, or substantially all, of its assets or
business to a related company or an affiliate of a related company; or the
consolidation of the Corporation with or its merger into a related company or an
affiliate of a related company; or the merger into the Corporation or a
subsidiary of the Corporation of a related company or an affiliate of a related
company; or a combination or majority share acquisition in which the Corporation
is the acquiring corporation and its voting shares are issued or transferred to
a related company or an affiliate of a related company or to shareholders of a
related company or an associated person; or
(b) to approve any agreement, contract or other arrangement with
a related company or an affiliate of a related company or an associated person
providing for any of the transactions described in sub-paragraph (a) above; or
(c) to adopt any amendment of the Amended Articles of
Incorporation of the Corporation which changes the provisions of this Article
Eighth.
For the purpose of this Article Eighth, a "related company" in
respect of a given transaction shall be any person, partnership, corporation or
firm which, together with its affiliates and associated persons, owns of record
or beneficially, directly or indirectly, 5% or more of the shares of any
outstanding class of shares of the Corporation entitled to vote upon such
transaction, as of the record date used to determine the shareholders of the
Corporation entitled to vote upon such transaction; an "affiliate" of a related
company shall be any person, individual, joint venture, trust, partnership or
corporation which, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the related
company; an "associated person" of a related company shall be any Officer or
Director or any beneficial owner, directly or indirectly, of 10% or more of any
class of equity security of such related company or any of its affiliates; and
the terms "person", "combination" , "majority share acquisition" and "acquiring
corporation" shall have the same meaning as that contained in Section 1701.01 of
the Ohio General Corporation Law or any similar provision hereafter enacted. The
determination of the Board of Directors of the Corporation, based on information
known to the Board of Directors and made in good faith, shall be conclusive as
to whether any person, partnership, corporation or firm is a related company or
affiliate or associated person as defined in this Article Eighth.
-2-
<PAGE> 12
The provisions of this Article Eighth shall not apply to any
proposal submitted to shareholders if (i) such proposal has been approved and
recommended by written resolution of the Board of Directors of the Corporation
adopted prior to the acquisition of the 5% interest in shares of the
Corporation, as aforesaid, by the related company or its affiliates or
associated persons, and (ii) with respect to any transaction of the type
described in subparagraphs (a) and (b) of this Article Eighth, the terms of any
inducements made to officers or Directors of the Corporation, if any, which are
not made available to all shareholders, have been disclosed to all shareholders.
NINTH: These Amended Articles of Incorporation supersede
and take the place of existing Amended Articles of Incorporation of the
Corporation.
-3-
<PAGE> 13
UNITED STATES OF AMERICA, |
STATE OF OHIO, }
OFFICE OF THE SECRETARY OF STATE. |
I, TED W. BROWN,
Secretary of State of the State of Ohio, do hereby certify that the foregoing
is an exemplified copy, carefully compared by me with the original record now
in my official custody as Secretary of State, and found to be true and correct,
of the
CERTIFICATE OF AMENDMENT
TO
AMEND ARTICLES OF INCORPORATION
OF
RPM, INC.
filed in this office on the 24th day of September A.D. 1976.
and recorded on (in) Roll (Volume) E 0198, Frame (Page) 0710 of
the Records of Incorporations.
[SEAL] WITNESS my hand and official seal at
Columbus, Ohio, this 29th day
of September A.D. 1976.
/S/ TED W. BROWN
----------------------
TED W. BROWN
Secretary of State
<PAGE> 14
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
Charter No. 202203
Thomas C. Sullivan, Presidcnt, and James A. Karman, Secretary, of RPM,
Inc., an Ohio corporation, do hereby certify that a meeting of the holders of
all the Common Shares, without par value, of RPM, Inc. was duly called and held
on September 24, 1976, at which meeting a quorum of such Shareholders was
present in person or by proxy at all times, and that by the affirmative vote of
the holders of shares entitling them to exercise a majority of the voting power
of said corporation, the following Resolutions were adopted for the purpose of
amending Article FOURTH of the Amended Articles of Incorporation of said
corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles of
Incorporation be amended in its entirety to read as follows:
FOURTH: The maximum number of shares which the
Corporation is authorized to have outstanding is Five
Million (5,000,000) shares, all of which shall be Common
Shares, without par value.
BE IT FURTHER RESOLVED, That the President and the Secretary of the
Company be and they are hereby authorized and directed to file promptly in
the Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoin g amendment and carry out the purposes of
these Resolutions.
<PAGE> 15
IN WITNESS WHEREOF, said Thomas C. Sullivan, President, and James A.
Karman, Secretary, of RPM, ILnc., acting for and on behalf of said corporation,
have hereunto subscribed their names this 24th day of September, 1976.
/s/ Thomas C. Sullivan
------------------------------------
Thomas C. Sullivan, President
/s/ James A. Karman
------------------------------------
James A. Karman, Secretary
(SEAL)
<PAGE> 16
UNITED STATES OF AMERICA, |
STATE OF OHIO, }
OFFICE OF THE SECRETARY OF STATE. |
I, TED W. BROWN,
Secretary of State of the State of Ohio, do hereby certify that the foregoing
is an exemplified copy, carefully compared by me with the original record now
in my official custody as Secretary of State, and found to be true and correct,
of the
CERTIFICATE OF AMENDMENT
TO ARTICLES OF INCORPORATION
OF
RPM, INC.
filed in this office on the 30th day of September A.D. 1977.
and recorded on (in) Roll (Volume) E 0324, Frame (Page) 0608 of
the Records of Incorporations.
[SEAL] WITNESS my hand and official seal at
Columbus, Ohio, this 4th day
of October A.D. 1977.
/S/ TED W. BROWN
----------------------
TED W. BROWN
Secretary of State
<PAGE> 17
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
Charter No. 202203
Thomas C. Sullivan, President, and James A. Karman, Secretary, of RPM,
Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders
of RPM, Inc. was duly called and held on September 29, 1977, at which meeting a
quorum of such Shareholders was present in person or by proxy at all times, and
that by the affirmative vote of the holders of shares entitling them to exercise
a majority of the voting power of said corporation, the following resolutions
were adopted for the purpose of amending Article FOURTH of the Amended Articles
of Incorporation of said corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles of
Incorporation be amended to read in its entirety as follows:
FOURTH: The maximum number of shares which the Corporation is
authorized to have outstanding is Ten Million (10,000,000) shares, all
of which shall be Common Shares, without par value.
BE IT FURTHER RESOLVED, That the President and the Secretary of the
Company be and they are hereby authorized and directed to file promptly in
the Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoing amendment and carry out the purposes of
these resolutions.
IN WITNESS WHEREOF, said Thomas C. Sullivan, President, and James A.
Karman, Secretary, of RPM, Inc., acting for and on behalf of said corporation,
have hereunto subscribed their names this 29th day of September, 1977.
/s/ Thomas C. Sullivan
-----------------------------
Thomas C. Sullivan, President
/s/ James A. Karman
-----------------------------
James A. Karman, Secretary
(SEAL)
<PAGE> 18
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, Inc.
Charter No. 202203
James A. Karman, President, and Julius K. Nemeth, Secretary, of RPM,
Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders
of RPM, Inc. was duly called and held on October 13, 1983, at which meeting a
quorum of such Shareholders was present in person or by proxy at all times, and
that by the affirmative vote of the holders of shares entitling them to exercise
a majority of the voting power of said corporation, the following resolutions
were adopted for the purpose of amending Article FOURTH of the Amended Articles
0oe Incorporation of said corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles
of Incorporation be amended to read in its entirely as follows:
FOURTH: The maximum number of shares which the Corporation is
authori:ed to have outstanding is Twenty Million (20,000,000) shares, all of
which shall be Common Shares, without par value.
BE IT FURTHER RESOLVED, That the President and the Secretary of
the Company be and they are hereby authorized and directed to file promptlv in
the Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoing amendment and carry out the purposes of these
resolutions.
IN WITNESS WHEREOF, said James A. Karman, President, and Julius K.
Nemeth, Secretary, of RPM, Inc., acting for and on behalf of said corporation,
have hereunto subscribed their names this 13th day of October, 1983.
/s/ James A. Karman
------------------------------
James A. Karman, President
/s/ Julius K. Nemeth
------------------------------
Julius K. Nemeth, Secretary
(SEAL)
<PAGE> 19
STATE OF OHIO SHERROD BROWN
[LOGO] DEPARTMENT OF STATE Secretary of State
DATE 10/16/86 NUMBER 202203 RECEIPT NO. 32650
G016-1993 0059
RECEIVED OF CALFEE, HALTER & GRISWOLD
OR FILED BY __________________________________________________________________
THE SUM OF $75,035.00 FOR FILING AMD INC OF RPM, INC.
--------- -------
RETURNED TO: 32650 AMD $75,035.00
CALFEE, HALTER & GRISWOLD INC ----------
ATT: A.L. WACHS RECEIPT ----------
1800 SOCIETY BLDG. ----------
CLEVELAND, OH 44114-2688 ----------
----------
NAME: TOTAL FEE: $75,035.00
RPM, INC. ----------
<PAGE> 20
DEPARTMENT OF STATE
THE STATE OF OHIO
SHERROD BROWN
Secretary of State
202203
CERTIFICATE
IT IS HEREBY CERTIFIED that the Secretary of State of Ohio has custody of the
Records of Incorporation and Miscellaneous Filings; that said records show the
filing and recording of: AMD of RPM, Inc.
-------
UNITED STATES OF AMERICA Recorded on Roll G016 at Frame 1995 of the
STATE OF OHIO ---- ----
OFFICE OF THE SECRETARY OF STATE Records of Incorporation and Miscellaneous
Filings.
[SEAL] WITNESS MY HAND AND THE SEAL OF THE SECRETARY
OF STATE, AT THE CITY OF COLUMBUS, OHIO, THIS
9TH DAY OF OCT, A.D. 1986.
--- --- --
/s/ SHERROD BROWN
----------------------
SHERROD BROWN
Secretary of State
<PAGE> 21
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
Charter No. 202203
Thomas C. Sullivan, Chairman, and Julius K. Nemeth, Secretary,
of RPM, Inc., an Ohio corporation, do hereby certify that a meeting of the
Shareholders of RPM, Inc. was duly called and held on October 9, 1986, at which
meeting a quorum of such Shareholders was present in person or by proxy at all
times, and that by the affirmative vote of the holders of shares entitling them
to exercise a majority of the voting power of said corporation, the following
resolutions were adopted for the purpose of amending Article FOURTH of the
Amended Articles of Incorporation of said corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles
of Incorporation be amended to read in its entirety as follows:
FOURTH: The maximum number of shares which the Corporation
is authorized to have outstanding is Fifty Million (50,000,000)
shares, all of which shall be Common Shares, without par value.
BE IT FURTHER RESOLVED, That the Chairman and the Secretary of
the Company be and they are hereby authorized and directed to file
promptly in the Office of the Secretary of State of Ohio an
appropriate Certificate of Amendment, and to take such other action as
may be appropriate, in order to render effective the foregoing
amendment and carry out the purposes of these resolutions.
IN WITNESS WHEREOF, said Thomas C. Sullivan, Chairman, and
Julius k. Nemeth, Secretary, of RPM, Inc., acting for and on behalf of said
corporation, have hereunto subscribed their names this 9th day of October, 1986.
/s/ Thomas C. Sullivan
----------------------------
Thomas C. Sullivan, Chairman
/s/ Julius K. Nemeth
----------------------------
Julius K. Nemeth, Secretary
(SEAL)
<PAGE> 22
CERTIFICATE OF AMENDMENT
TO
AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
Charter No. 202203
Thomas C. Sullivan, Chairman, and Julius K. Nemeth, Secretary,
of RPM, Inc., an Ohio corporation, do hereby certify that a meeting of the
Shareholders of RPM, Inc. was duly called and held on October 9, 1986, at which
meeting a quorum of such Shareholders was present in person or by proxy at all
times, and that by the affirmative vote of the holders of shares entitling them
to exercise a majority of the voting power of said corporation, the following
resolutions were adopted for the purpose of amending Article FOURTH of the
Amended Articles of Incorporation of said corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles
of Incorporation be amended to read in its entirety as follows:
FOURTH: The maximum number of shares which the Corporation
is authorized to have outstanding is Fifty Million (50,000,000)
shares, all of which shall be Common Shares, without par value.
BE IT FURTHER RESOLVED, That the Chairman and the Secretary of
the Company be and they are hereby authorized and directed to file
promptly in the Office of the Secretary of State of Ohio an
appropriate Certificate of Arnendment, and to take such other action
as may be appropriate, in order to render effective the foregoing
amendment and carry out the purposes of these resolutions.
IN WITNESS WHEREOF, said Thomas C. Sullivan, Chairman, and
Julius K. Nemeth, Secretary, of RPM, Inc., acting for and on behalf of said
corporation, have hereunto subscribed their names this 9th day of October, 1986.
/s/ Thomas C. Sullivan
----------------------------
Thomas C. Sullivan, Chairman
/s/ Julius K. Nemeth
----------------------------
Julius K. Nemeth, Secretary
(SEAL)
<PAGE> 23
APPROVED
CERTIFICATE OF AMENDMENT
TO OCT 91992
AMENDED ARTICLES OF INCORPORATION
OF BOB TAFT
RPM, INC. SECRETARY OF STATE
Charter No. 202203
Thomas C. Sullivan, Chairman, and Paul A. Granzier, Secretary, of RPM,
Inc., an Ohio corporation, do hereby certify that a meeting of the Shareholders
of RPM, Inc. was duly called and held on October 9, 1992, at which meeting a
quorum of such Shareholders was present in person or by proxy at all times, and
that by the affirmative vote of the holders of shares entitling them to exercise
a majority of the voting power of said corporation, the following resolutions
were adopted for the purpose of amending Article FOURTH of the Amended Articles
of Incorporation of said corporation:
RESOLVED, That Article FOURTH of the Company's Amended Articles of
Incorporation be amended to read in its entirety as follows:
FOURTH: The maximum number of shares which the Corporation
is authorized to have outstanding is One Hundred Million
(100,000,000) shares, all of which shall be Common Shares,
without par value.
BE IT FURTHER RESOLVED, That the Chairman and the Secretary of the
Company be and they are hereby authorized and directed to file promptly in
the Office of the Secretary of State of Ohio an appropriate Certificate of
Amendment, and to take such other action as may be appropriate, in order to
render effective the foregoing amendment and carry out the purposes of
these resolutions .
IN WITNESS WHEREOF, said Thomas C. Sullivan, Chairman, and Paul A.
Granzier, Secretary, of RPM, Inc., acting for and on behalf of said corporation,
have hereunto subscribed their names this 9th day of October, 1992.
/s/ Thomas C. Sullivan
----------------------------
Thomas C. Sullivan, Chairman
/s/ Paul A. Granzier
----------------------------
Paul A. Granzier, Secretary
(SEAL)
<PAGE> 1
Exhibit 3.2
RPM, INC.
AMENDED CODE OF REGULATIONS
(AS AMENDED ON OCTOBER 14, 1987)
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING.
The Annual Meeting of Shareholders of the Company for the
election of Directors, the consideration of financial statements and other
reports to be laid before such meeting, and the transaction of such other
business as may be brought before such meeting shall be held at such date and
time during the month of September or October of each year as shall be
designated by the Board of Directors. If no other date is designated by the
Board of Directors, the Annual Meeting shall be held at 2:00 o'clock P.M. on the
fourth Thursday in October of each year, if not a legal holiday, or, if a legal
holiday, then on the next succeeding business day. Upon due notice there may
also be considered and acted upon at an Annual Meeting any matter which could
properly be considered and acted upon at a Special Meeting.
SECTION 2. SPECIAL MEETINGS.
Special Meetings of Shareholders of the Company may be held on
any business day when called by the Chairman of the Board, or the President, or
by the Board of Directors acting at a meeting, or a majority of the Directors
acting without a meeting, or by shareholders holding at least forty-five percent
(45%) of all shares outstanding and entitled to vote thereat. Special Meetings
may convene only between the hours of 9:00 o'clock A.M. and 4:00 o'clock P.M.
Upon request in writing delivered either in person or by registered mail to the
President or the Secretary by any persons entitled to call a meeting of
shareholders, such officer shall in accordance with the provisions of Section 4
of this Article I, forthwith cause to be given to the shareholders entitled
thereto the requisite notice of a meeting to be held on a date not less than
seven (7) nor more than sixty (60) days after receipt of such request, as such
officer may fix. If such notice is not given within thirty (30) days after the
delivery or mailing of such request, the persons calling the meeting may fix the
date and time of the meeting and give notice thereof in the manner provided by
law and these Regulations, or cause such notice to be given by any designated
representative. Calls for Special Meetings shall specify the purpose or purposes
thereof, and no business shall be considered at any such meeting other than that
specified in the call therefor.
<PAGE> 2
SECTION 3. PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office
of the Company in the State of Ohio unless the Board of Directors acting at a
meeting or a majority of the Directors acting without a meeting, designates some
other place either within or without the State of Ohio and causes the notice
thereof to so specify.
SECTION 4. NOTICE OF MEETINGS AND WAIVER.
(a) Not less than seven (7) nor more than sixty (60) days
before the date fixed for a meeting of shareholders, written notice stating the
time, place and purposes of such meeting shall be given by or at the direction
of the Chairman of the Board, the President, the Secretary, an Assistant
Secretary, or any other person required or permitted by these Regulations to
give such notice. The notice shall be given by personal delivery or by mail to
each shareholder entitled to notice of the meeting who is of record as of the
date next preceding the day on which notice is given, or, if another record date
therefor is duly fixed, of record as of said date. If mailed, such notice shall
be addressed to the shareholders at their respective addresses as they appear on
the records of the Company, and such notice shall be deemed to have been given
on the date on which it was deposited in the mail. If said record date shall
fall on a holiday, the record date shall be taken as of the close of business on
the next preceding day which is not a holiday.
(b) Notice of the time, place and purposes of any meeting of
shareholders may be waived by any shareholder in writing, either before or after
the holding of such meeting, which writing shall be filed with or entered upon
the records of the meeting. The attendance of a shareholder at any such meeting
without protesting, prior to or at the commencement of such meeting, the lack of
proper notice shall be deemed to be a waiver by him of notice of such meeting.
SECTION 5. QUORUM AND ADJOURNMENT.
(a) At any meeting of shareholders, the holders of shares
entitling them to exercise a majority of the voting power of the Company,
present in person or by proxy, shall constitute a quorum for such meeting;
provided, however, that no action required by law, the Amended Articles of
Incorporation or these Regulations to be authorized or taken by the holders of a
designated proportion of shares of any particular class or of each class of the
Company may be authorized or taken by a lesser proportion; and provided further,
that the holders of a majority of the voting shares represented at a meeting,
whether or not a quorum is present, may adjourn such meeting from time to time.
-2-
<PAGE> 3
(b) If any meeting is adjourned, notice of adjournment need
not be given if the time and place to which it is adjourned are fixed and
announced at such meeting, except as otherwise provided in Article IV.
SECTION 6. ORGANIZATION OF MEETINGS.
(a) The President or in his absence such officer as shall be
designated by the Board of Directors, or lacking such designation any Vice
President, shall call to order all meetings of shareholders and act as chairman
thereof.
(b) The Secretary, or in his absence an Assistant Secretary,
shall act as secretary and keep the minutes of all meetings of shareholders, and
in the absence of both, the officer acting as chairman of the meeting shall
appoint any other officer to perform such duties.
(c) At each meeting an alphabetically arranged list or
classified list of shareholders of record who are entitled to vote as of the
applicable record date, showing their respective addresses and the number and
class of shares held by each, shall be produced by the Secretary, Assistant
Secretary or the particular agent having charge of the transfer of the shares.
This list, when certified by such officer or agent, shall be prima facie
evidence of the ownership or the facts shown therein.
SECTION 7. INSPECTORS OF ELECTION.
(a) The Directors, in advance of any meeting of shareholders,
may appoint inspectors of election to act at such meeting or any adjournments
thereof. If inspectors are not so appointed, the officer or person acting as
chairman of any such meeting may, and on the request of any shareholder or his
proxy shall, make such appointment.
(b) In case any person appointed as inspector fails to appear
or act, the vacancy may be filled by appointment made by the Directors in
advance of the meeting, or at the meeting by the officer or person acting as
chairman.
(c) If there are three (3) or more inspectors, the decision,
act or certificate of a majority of them shall be effective in all respects as
the decision, act or certificate of all.
(d) The inspectors shall determine the number of shares
outstanding, the voting rights with respect to each, the shares represented at
the meeting, the existence of a quorum, and the authenticity, validity and
factual effect of proxies; receive votes, ballots, consents, waivers or
releases; hear and determine all matters of challenges, ownership and questions
arising in connection with the voting; count and tabulate all votes, consents,
-3-
<PAGE> 4
waivers and releases; determine and announce the result; and do such other acts
as are proper to conduct the election or vote with fairness to all shareholders.
(e) On request, the inspectors shall make a report in writing
of any challenge, question or matter determined by them and execute a
certificate of any fact found by them. The certificate of the inspectors shall
be prima facie evidence of the facts stated therein and of the results of the
voting as certified by them.
SECTION 8. VOTING.
Except as otherwise provided by statute, the Amended Articles
of Incorporation or these Regulations, every shareholder entitled to vote shall
be entitled to cast one vote, in person or by proxy, on each proposal submitted
to the meeting for each share held of record by him on the record date for the
determination of the shareholders entitled to vote at such meeting. At any
meeting at which a quorum is present all questions and business which shall come
before the meeting shall be determined by the vote of the holders of a majority
of such voting shares as are represented in person or by proxy at such meeting,
except when a greater proportion is required by law, the Amended Articles of
Incorporation or these Regulations.
SECTION 9. PROXIES.
A person who is entitled to attend a shareholders' meeting, to
vote thereat or to execute consents, waivers or releases, may be represented at
such meeting or vote thereat, and execute consents, waivers and releases, and
exercise any of his rights by proxy or proxies appointed by a writing signed by
such person or his duly authorized agent, as provided by the laws of the State
of Ohio.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS.
Except where the law, the Amended Articles of Incorporation or
these Regulations require action to be authorized or taken by shareholders, all
of the authority of the Company shall be exercised by the Board of Directors.
SECTION 2. NUMBER OF DIRECTORS.
The Board of Directors of the Company, none of whom need be
shareholders, shall consist of not less than nine (9) nor more than fifteen (15)
members. Without amendment of these Regulations, the number of Directors within
the above limitation
-4-
<PAGE> 5
may be fixed or changed at any Annual or Special Meeting of Shareholders called
for that purpose at which a quorum is present, by the affirmative vote of the
holders of a majority of the shares which are represented at the meeting and
entitled to vote on such proposal; provided, however, that the number of
Directors fixed at any meeting may not be greater by more than one Director than
the number fixed or authorized at the next preceding Annual Meeting of
Shareholders, and provided further, that no reduction in the number of Directors
shall of itself have the effect of shortening the term of any incumbent
Director. Whenever the shareholders shall have so fixed the number of Directors,
such number shall thereafter continue to be the authorized number of Directors
until the same shall be changed by vote of the shareholders as above provided.
SECTION 3. CLASSIFICATION OF DIRECTORS.
The Board of Directors shall be divided into three classes,
with each class consisting of not less than three (3) Directors. Each Class
shall consist of an equal number of Directors, except that in the event the
total number of Directors is not divisible by three (3), an extra Director shall
be assigned to Class I if there is one (1) extra Director to be assigned among
the classes, and an extra Director shall be assigned to each of Classes I and II
if there are two (2) extra Directors to be assigned among the classes. Neither
the repeal nor any amendment of the provisions of this Section 3 shall have the
effect of shortening the term of any incumbent Director.
SECTION 4. ELECTION OF DIRECTORS.
The Directors shall be elected at the Annual Meeting of
Shareholders, or if the Annual Meeting is not held or Directors are not elected
thereat, at a Special Meeting of Shareholders called and held for that purpose.
A separate election shall be held for each class of Directors. At a meeting of
shareholders at which Directors are to be elected, only persons nominated as
candidates shall be eligible for election as Directors, and the candidates
receiving the greatest number of votes shall be elected.
SECTION 5. TERM OF OFFICE AND VACANCIES.
(a) The term of office of those Directors elected to Class III
at the meeting of shareholders at which this subparagraph (a) is adopted shall
expire at the Annual Meeting of Shareholders next ensuing; the term of office of
those Directors elected to Class II at the meeting of shareholders at which this
subparagraph (a) is adopted shall expire at the second Annual Meeting next
ensuing; and the term of office of those Directors elected to Class I at the
meeting of shareholders at which this Section 5 is adopted shall expire at the
third Annual Meeting next ensuing. The foregoing notwithstanding, each Director
shall serve until his successor shall have been duly elected, or until his
earlier resignation, removal from office, or death. At each Annual Meeting
-5-
<PAGE> 6
of Shareholders held after the first election of Directors by class, Directors
chosen to succeed those whose terms expire shall be identified as belonging to
the same class as the Directors they succeed and shall be elected for a term
ending at the third Annual Meeting of Shareholders next following their election
or until their earlier resignation, removal from office, or death.
(b) Any Director may resign at any time by oral statement to
that effect made at a meeting of the Board or in a writing to that effect
delivered to the President or Secretary, such resignation to take effect
immediately or at such other time as the Directors may specify.
(c) In the event of the occurrence of any vacancy or vacancies
in the Board of Directors, irrespective of the reason therefor, the remaining
Directors, though less than a majority of the whole authorized number of
Directors, may by the vote of a majority of their number fill such vacancy or
vacancies for the remainder of the unexpired term.
SECTION 6. MEETINGS, NOTICE AND WAIVER.
(a) As soon after each Annual Meeting of Shareholders (or
Special Meeting held in lieu thereof) as practicable, the Directors shall hold
an organizational meeting for the purpose of electing officers and the
transaction of any other business. Other meetings of the Board may be held at
any time upon the call of the Chairman of the Board, the President, or any two
(2) Directors. Meetings of the Board may be held within or without the State of
Ohio. Written notice of the time and place of each meeting of the Board shall be
given to each Director either by personal delivery, mail, telegram or cablegram
at least two (2) days before the meeting, which notice need not specify the
purposes of the meeting. Unless otherwise specifically stated in the notice
thereof any business may be transacted at any meeting of the Board.
(b) Notice of any meeting of the Board may be waived by any
Director in writing, either before or after such meeting, or by his attendance
at any such meeting without protesting the lack of proper notice prior to or at
the commencement of such meeting. If any meeting is adjourned, notice of the
adjournment need not be given if the time and place to which it is adjourned are
fixed and announced at such meeting.
SECTION 7. QUORUM AND VOTING.
(a) At any meeting of the Board of Directors, not less than
one-half of the Directors then in office shall be necessary to constitute a
quorum for the transaction of business at such meeting, provided that a majority
of the Directors at a meeting duly held, whether or not a quorum exists, may
adjourn such meeting from time to time.
-6-
<PAGE> 7
(b) At any meeting of the Board of Directors at which a quorum
is present, all acts, questions and business which may come before the meeting
shall be determined by a majority vote of those Directors present, unless the
vote or act of a greater number is required by the Amended Articles of
Incorporation or these Regulations.
SECTION 8. ACTION OF DIRECTORS WITHOUT A MEETING.
Any action which may be authorized or taken at a meeting of
the Board of Directors may be authorized or taken without a meeting if approved
and authorized by a writing or writings signed by all the Directors, which
writing or writings shall be filed with or entered upon the records of the
Company.
SECTION 9. COMMITTEES.
(a) The Board of Directors may from time to time appoint
certain of its members (but not less than three (3)) to act as a Committee or
Committees of Directors, and, subject to the provisions of this Section, may
delegate to any such Committee any of the authority of the Board, however
conferred, other than that of filling vacancies among the Directors or in any
Committees of Directors. The Board of Directors may likewise appoint one or more
Directors as alternate members of any such Committee, who may take the place of
any absent member or members at any meeting of such Committee. Each such member
and each such alternate shall serve in such capacity at the pleasure of the
Board of Directors.
(b) In particular, the Board of Directors may create an
Executive Committee in accordance with the provisions of this Section. If
created, the Executive Committee shall possess and may exercise all of the
powers of the Board in the management and control of the business of the Company
during the intervals between meetings of the Board subject to the provisions of
this Section. The chairman of the Executive Committee shall be determined by the
Board of Directors from time to time. All action taken by the Executive
Committee shall be reported in writing to the Board of Directors at its first
meeting thereafter.
(c) Each such Committee shall serve at the pleasure of the
Board of Directors, shall act only in the intervals between meetings of the
Board, and shall be subject to the control and direction of the Board. Each
Committee shall keep regular minutes of its proceedings and shall report the
same to the Board when required.
(d) An act or authorization of any act by any such Committee
within the authority delegated to it shall be effective for all purposes as the
act or authorization of the Board of Directors. In every case the affirmative
vote of a majority of its members at a meeting, or the written consent of all of
the members
-7-
<PAGE> 8
of any such Committee without a meeting, shall be necessary for the taking or
approval of any action.
(e) Each such Committee may prescribe such rules as it shall
determine for calling and holding meetings and its method of procedure, subject
to the provisions of this Section and any rules prescribed by the Board of
Directors.
SECTION 10. COMPENSATION.
For his attendance at each meeting of the Board of Directors
or of a Committee of Directors, or for other services rendered, each Director
shall receive such reasonable compensation, reimbursement for expenses, and
other benefits as the Board shall from time to time determine and irrespective
of any personal interest of any of them.
ARTICLE III
OFFICERS
SECTION 1. GENERAL PROVISIONS, POWERS AND DUTIES.
(a) The Board of Directors, at its organization meeting, shall
elect a President, a Secretary and a Treasurer, and, in its discretion, may
elect a Chairman of the Board, one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers, and such other officers as the Board may from
time to time deem necessary. The Chairman of the Board, if any, and the
President, shall be chosen from among the members of the Board; however, none of
the other officers need be a Director. Any two (2) or more of such offices may
be held by the same person, but no officer shall execute, acknowledge, attest or
verify any instrument in more than one capacity if such instrument is required
to be executed, acknowledged, attested or verified by two (2) or more officers.
(b) All officers, as between themselves and the Company, shall
respectively have such authority and perform such duties as are customarily
incident to their respective offices and as may be specified from time to time
by the Board of Directors regardless of whether such authority and duties are
customarily incident to such offices. In the absence of any officer of the
Company, or for any other reason the Board may deem sufficient, the Board may
delegate from time to time the powers or duties of such officer, or any of them,
to any other officer or to any Director. The Board may from time to time
delegate to any officer authority to appoint and remove subordinate officers and
to prescribe their authority and duties.
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<PAGE> 9
SECTION 2. TERM OF OFFICE, REMOVAL AND VACANCIES.
Each elected officer of the Company shall hold office until
the next organizational meeting of the Board of Directors and until his
successor is elected, or until his earlier resignation, death, removal from
office or retirement. The Board of Directors may remove any officer at any time,
with or without cause, by a majority vote of the members of the Board then in
office. Any vacancy in any office may be filled by the Board of Directors.
SECTION 3. CHIEF EXECUTIVE OFFICER.
If no Chairman of the Board is elected, the President shall be
the Chief Executive Officer of the Company. If a Chairman of the Board is
elected, the Board shall designate either the Chairman of the Board or the
President as Chief Executive Officer. Subject to the direction of the Board, the
Chief Executive Officer of the Company shall have general executive supervision
over and direction of the Company's business, affairs and property, and over its
several officers, in addition to his duties set forth in Section 4 and 5 of this
Article III, as the case may be, and shall see that all orders and resolutions
of the Board are carried into effect.
SECTION 4. CHAIRMAN OF THE BOARD.
The Chairman of the Board, if one is elected, shall preside at
all meetings of the Board of Directors, may execute any documents in the name of
the Company, and shall have such authority and perform such other duties as may
be prescribed by the Board.
SECTION 5. PRESIDENT.
The President shall preside at all meetings of shareholders,
and, unless there shall be a Chairman of the Board so presiding in accordance
with Section 4 of this Article, at all meetings of the Board of Directors. The
President shall have general and active supervision of the operations of the
Company, subject to the direction of the Board of Directors. In the absence or
incapacity of the Chairman of the Board, or if one shall not have been elected,
the President shall perform all duties and functions of the Chairman of the
Board. He may execute any documents in the name of the Company and shall have
such other authority and perform such other duties as may be prescribed by the
Board.
SECTION 6. VICE PRESIDENTS.
The Vice President or Vice Presidents, if any are elected,
shall have such authority and shall perform such duties as may be prescribed by
the Board of Directors or as may be delegated to them by the Chairman of the
Board or the President from time to time.
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<PAGE> 10
SECTION 7. SECRETARY.
The Secretary shall keep the minutes of the meetings of
Shareholders and of the Board of Directors. He shall keep such books and records
as may be required by the Board of Directors, give such notice of Shareholders'
meetings and Board meetings as may be required by law or these Regulations, or
otherwise, and perform such other duties as the Board may prescribe.
SECTION 8. TREASURER.
The Treasurer shall be the chief financial officer, and if
there is no Controller, the chief accounting officer of the Company. He shall
receive and have charge of all moneys, bills, notes, bonds, stocks in other
corporations, and similar property belonging to the Company, and shall do with
the same as shall be ordered by the Board of Directors. He shall keep accurate
financial accounts and hold the same open for inspection and examination by the
Directors, and shall have such authority and shall perform such other duties as
may be prescribed by the Board of Directors.
SECTION 9. CONTROLLER.
The Controller, if one is elected, shall be the chief
accounting officer of the Company. He shall prepare such accounting statistics,
records and reports as may be prescribed by the Board of Directors and generally
do and perform all such other duties as may be prescribed by the Board.
SECTION 10. ASSISTANT OFFICERS.
Assistant Secretaries, Assistant Treasurers and/or Assistant
Controllers, if any, shall have such powers and perform such duties as shall be
delegated and directed by their respective principal officers or as the Board
may prescribe.
SECTION 11. OTHER OFFICERS.
All other officers shall have such powers and perform such
duties as the Board of Directors may prescribe.
SECTION 12. DELEGATION OF AUTHORITY AND DUTIES.
The Board of Directors is authorized to delegate the authority
and duties of any officer to any other officer and generally to control the
action of the officers and to require the performance of duties in addition to
those mentioned herein.
SECTION 13. COMPENSATION.
The Board of Directors is authorized to establish officers'
compensation for services to the Company, or to provide
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the method of determining such compensation, which may include pensions,
disability and death benefits or other benefits, and may be by way of fixed
salary, or on the basis of earnings of the Company, or any combination thereof,
or otherwise, or the Board may delegate such authority to a committee of the
Board or to any one or more officers or Directors.
ARTICLE IV
RECORD DATES
For any lawful purpose including without limitation the
determination of the Shareholders who are entitled to: (1) receive notice of or
to vote at a meeting of Shareholders; (2) receive payment of any dividend or
distribution; (3) receive or exercise rights of purchase of or subscription for,
or exchange or conversion of, shares or other securities, subject to contract
rights with respect thereto; or (4) participate in the execution of written
consents, waivers or releases; the Board of Directors may fix a record date
which shall not be a date earlier than the date on which the record date is
fixed and, in the cases provided for in clauses (1), (2), and (3) above, shall
not be more than sixty (60) days preceding the date of the meeting of
shareholders, or the date fixed for the payment of any dividend or distribution,
or the date fixed for the receipt or the exercise of rights, as the case may be.
The record date for the purpose of the determination of the shareholders who are
entitled to receive notice of or to vote at a meeting of shareholders shall
continue to be the record date for all adjournments of such meeting, unless the
Board of Directors or the persons who shall have fixed the original record date
shall, subject to the limitations set forth in this Article, fix another date.
In case a new record date is so fixed, notice thereof and of the date to which
the meeting shall have been adjourned shall be given to shareholders of record
as of such date in accordance with the same requirements as those applying to a
meeting newly called. The Board of Directors may close the share transfer books
against transfers of shares during the whole or any part of the period provided
for in this Article, including the date of the meeting of shareholders and the
period ending with the date, if any, to which adjourned.
ARTICLE V
CERTIFICATES FOR SHARES
SECTION 1. FORM OF CERTIFICATES AND SIGNATURES.
Each holder of shares is entitled to one or more certificates,
signed by the Chairman of the Board or the President or a Vice President and by
the Secretary or Assistant Secretary or the Treasurer or Assistant Treasurer of
the Company, which shall
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<PAGE> 12
certify the number and class of shares held by such shareholder in the Company,
but no certificates for shares shall be executed or delivered until such shares
are fully paid. When such a certificate is countersigned by an incorporated
transfer agent or registrar, the signature of any of said officers of the
Company may be a facsimile, engraved, stamped or printed. Although any officer
of the Company whose manual or facsimile, engraved, stamped or printed signature
is affixed to such a certificate ceases to be such officer before the
certificate is delivered, such certificate shall be effective in all respects
when delivered.
SECTION 2. TRANSFER OF SHARES.
Shares of the Company shall be transferable upon the books of
the Company by the holder thereof in person or by his duly authorized attorney,
upon surrender and cancellation of certificates for a like number of shares of
the same class or series, with duly executed assignment and power of transfer
endorsed thereon or attached thereto, and with such proof of authenticity of the
signatures to such assignment and power of transfer as the Company or its agents
may reasonably require.
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES.
The Company may issue a new certificate for shares in place of
any certificate or certificates theretofore issued by the Company alleged to
have been lost, stolen or destroyed and upon the making of an affidavit of that
fact by the person claiming the certificate to have been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion, and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representatives, to give the Company a
bond in such sum and containing such terms as the Board may direct as indemnity
against any claim that may be made against the Company with respect to the
certificate or certificates alleged to have been lost, stolen or destroyed.
SECTION 4. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint, or revoke the appointment
of, transfer agents and registrars and may require all certificates for shares
to bear the signatures of such transfer agents and registrars or any of them.
SECTION 5. ADDITIONAL BOARD AUTHORITY.
The Board of Directors shall have authority to make all such
rules and regulations consistent with any applicable laws, the Amended Articles
of Incorporation and these Regulations, as it may deem necessary or desirable
concerning the issuance, execution and
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<PAGE> 13
delivery, transfer and registration, surrender and cancellation of certificates
for shares of the Company.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
TRUSTEES, EMPLOYEES AND AGENTS
SECTION 1. IN GENERAL.
Upon the submission of a reasonably timely written request for
indemnification setting forth the facts of and reasons for such request, the
Company shall indemnify any person who was or is a party or is threatened to be
made a party, to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative, other
than an action brought by or in the right of the Company, if his involvement in
such action, suit or proceeding arises by reason of the fact that he is or was a
Director, Officer, employee, or agent of the Company, or is or was serving at
the request of the Company as a Director, Trustee, Officer, employee, or agent
of any other corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines, decrees,
penalties, amounts paid with the written consent of the Company upon a plea of
nolo contendere, and amounts paid in settlement, which are actually imposed upon
or reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, if he had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere,
or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any criminal
action or proceeding, that he had reasonable cause to believe that his conduct
was unlawful.
SECTION 2. ACTIONS BY THE COMPANY AND DERIVATIVE ACTIONS.
Upon the submission of a reasonably timely written request for
indemnification setting forth the facts of and reason for such request, the
Company shall indemnify any person who was or is a party, or is threatened to be
made a party to any threatened, pending or completed action or suit brought by
or in the right of the Company to procure a judgment in the Company's favor, if
his involvement in such action or suit arises by reason of the fact that he is
or was a Director, Officer, employee or agent of the Company, or is or was
serving at the request of the Company as a Director, Trustee, Officer, employee,
or agent of any other
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<PAGE> 14
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company, except that no indemnification shall be made in
respect of (a) any claim, issue or matter as to which such person is adjudged to
be liable for negligence or misconduct in the performance of his duties to the
Company, unless and only to the extent that the Court of Common Pleas, or the
Court in which such action or suit was brought, determines upon application
that, despite the adjudication of liability for negligence or misconduct, but in
view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Common Pleas
or such other Court shall deem proper, or (b) any action or suit in which the
only liability asserted against a Director is pursuant to Section 1701.95 of the
Ohio Revised Code.
SECTION 3. MERITORIOUS OR OTHERWISE SUCCESSFUL DEFENSES.
Notwithstanding the standards of conduct established in
Sections 1 and 2 of this Article VI, to the extent that a Director, Trustee,
Officer, employee, or agent has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in Sections 1 and 2 of
this Article VI, or in defense of any claim, issue, or matter therein, he shall
be indemnified against expenses (including attorneys' fees), actually and
reasonably incurred by him in connection with the action, suit or proceeding.
SECTION 4. APPLICATION OF STANDARDS OF CONDUCT.
Any indemnification under Sections 1 or 2 of this Article VI,
unless ordered by a Court, shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of the Director,
Trustee, Officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VI. Such determination shall be made as follows: (a) by a majority vote
of a quorum consisting of Directors of the Company who were not and are not
parties to or threatened with any such action, suit or proceeding, or (b) if
such a quorum is not obtainable or if a majority vote of a quorum of
disinterested Directors so directs, in a written opinion by independent legal
counsel other than an attorney or a firm having associated with it an attorney
who has been retained by or who has performed services for the Company or any
person to be indemnified within the past five years, or (c) by the shareholders,
or (d) by the Court of Common Pleas or the Court in which such action, suit, or
proceeding was brought. Any determination made by the disinterested Directors or
by independent legal counsel under this Section 4 shall be promptly communicated
to any person who threatened or brought an
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<PAGE> 15
action or suit by or in the right of the Company under Section 2 of this Article
VI.
SECTION 5. ADVANCE OF EXPENSES.
In the case of an action, suit or proceeding
involving a Director, unless the only liability asserted against such Director
in a proceeding referred to in Sections 1 or 2 of this Article VI is pursuant to
Section 1701.95 of the Ohio Revised Code, the Company shall pay expenses
(including attorneys' fees) incurred by a Director in defending such action,
suit or proceeding as they are incurred in advance of the final disposition of
such action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the Director in which such Director agrees to both (a) repay such amount if
it is proven by clear and convincing evidence in a Court of competent
jurisdiction that his action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard to the best interests of the Company, and (b) reasonably
cooperate with the Company concerning the action, suit or proceeding.
Expenses (including attorneys' fees) incurred by a Director,
Trustee, Officer, employee, or agent in defending any action, suit or proceeding
referred to in Sections 1 or 2 of this Article VI shall be paid by the Company
as they are incurred, in advance of the final disposition of the action, suit or
proceeding as authorized by the Directors in the specific case upon receipt of
an undertaking by or on behalf of the Director, Trustee, Officer, employee or
agent to repay such amount, if it is determined that such person is not entitled
to be indemnified by the Company.
SECTION 6. OTHER REMEDIES.
The indemnification authorized by this Article VI shall not be
exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the Company's Amended Articles of Incorporation,
other provisions of these Regulations, any agreement, any insurance purchased by
the Company, any vote of the Company's shareholders or disinterested Directors,
or otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, Trustee, Officer, employee or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person. The Company, through appropriate action by its Officers, Directors
and/or shareholders, is hereby specifically authorized to take any and all
further action to effectuate any indemnification of any person which any Ohio
corporation may have power to take.
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<PAGE> 16
SECTION 7. INSURANCE.
In the discretion of the Board of Directors, the Company may
purchase and maintain insurance or furnish similar protection, including but not
limited to trust funds, letters of credit, or self-insurance, on behalf of or
for any person who is or was a Director, Officer, employee, or agent of the
Company, or is or was serving at the request of the Company as a Director,
Trustee, Officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Company
otherwise would have the power to indemnify him against such liability.
Insurance may be purchased from or maintained with a person in which the Company
has a financial interest.
SECTION 8. SCOPE OF AUTHORITY.
The Company's authority to indemnify persons pursuant to
Sections 1 or 2 of this Article VI does not limit the payment of expenses as
they are incurred, indemnification, insurance or other protection that may be
provided pursuant to Sections 5, 6 or 7 of this Article; Sections 1 and 2 of
this Article VI do not create any obligation to repay or return payments made by
the Company pursuant to Sections 5, 6 or 7 of this Article VI.
SECTION 9. LIMITATION OF LIABILITY.
(a) No person shall be found to have violated his duties to
the Company as a Director of the Company in any action brought against such
Director (including actions involving or affecting any of the following: (i) a
change or potential change in control of the Company; (ii) a termination or
potential termination of his service to the Company as a Director; (iii) his
service in any other position or relationship with the Company), unless it is
proved by clear and convincing evidence that the Director has not acted in good
faith, in a manner he reasonably believes to be in or not opposed to the best
interests of the Company, or with the care that an ordinarily prudent person in
a like position would use under similar circumstances. Notwithstanding the
foregoing, nothing contained in this subsection (a) limits relief available
under Section 1701.60 of the Ohio Revised Code.
(b) In performing his duties, a Director shall be entitled to
rely on information, opinions, reports or statements, including financial
statements and other financial data, that are prepared or presented by: (i) one
or more Directors, officers or employees of the Company whom the Director
reasonably believes are reliable and competent in the matters prepared or
presented; (ii) counsel, public accountants, or other persons as to matters that
the Director reasonably believes are within the person's professional or expert
competence; or (iii) a committee of the
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<PAGE> 17
Directors upon which he does not serve, duly established in accordance with the
provisions of these Amended Code of Regulations, as to matters within its
designated authority, which committee the Director reasonably believes to merit
confidence.
(c) A Director in determining what he reasonably believes to
be in the best interests of the Company shall consider the interests of the
Company's shareholders and, in his discretion, may consider (i) the interests of
the Company's employees, suppliers, creditors and customers; (ii) the economy of
the state and nation; (iii) community and societal considerations; and (iv) the
long-term as well as short-term interests of the Company and its shareholders,
including the possibility that these interests may be best served by the
continued independence of the Company.
(d) A Director shall be liable in damages for any action he
takes or fails to take as a Director only if it is proved by clear and
convincing evidence in a court of competent jurisdiction that his action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the Company or undertaken with reckless disregard for the best
interests of the Company. Notwithstanding the foregoing, nothing contained in
this subsection (d) affects the liability of Directors under Section 1701.95 of
the Ohio Revised Code or limits relief available under Section 1701.60 of the
Ohio Revised Code.
SECTION 10. DEFINITIONS.
As used in this Article VI, references to "Company" shall
include the new or surviving corporation in a consolidation or merger and any
constituent corporation absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its Directors, Trustees, Officers, employees or agents, so that any
person who is or was a Director, Officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a Director, Trustee, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article VI with respect to the new or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued; provided, however, that the
Board of Directors of the new or surviving corporation may, in its sole
discretion, authorize the new or surviving corporation to indemnify any
Director, Trustee, Officer, employee or agent of such constituent corporation to
the same extent otherwise permitted by Sections 1 through 9 of this Article VI.
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<PAGE> 18
ARTICLE VII
FISCAL YEAR
The fiscal year of the Company shall end on May 31 of each
year and shall remain as herein fixed until changed by resolution of the Board
of Directors from time to time.
ARTICLE VIII
SEAL
The corporate seal of this Company shall be in circular form
and shall contain the name of the Company. Failure to affix the corporate seal
to any instrument executed on behalf of the Company shall not affect the
validity of such instrument.
ARTICLE IX
CONSISTENCY WITH AMENDED ARTICLES OF INCORPORATION
If any provision of these Regulations shall be inconsistent
with the Company's Amended Articles of Incorporation (and as they may be amended
from time to time), such Amended Articles (as so amended at the time) shall
govern.
ARTICLE X
EMERGENCY REGULATIONS
The Directors may adopt, either before or during an emergency,
as that term is defined by the General Corporation Law of Ohio, any emergency
regulations permitted by the General Corporation Law of Ohio which shall be
operative only during such an emergency. In the event the Board of Directors
does not adopt any such emergency regulations, the special rules provided in the
General Corporation Law of Ohio shall be applicable during an emergency as
therein defined.
ARTICLE XI
AMENDMENTS
Except as set forth in the immediately succeeding sentence,
this Amended Code of Regulations of the Company may be amended or new
regulations may be adopted by the shareholders at a meeting held for such
purpose by the affirmative vote of the holders of shares entitling them to
exercise a majority of the voting power of the Company on such proposal, or
without a meeting
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by the written consent of holders of shares entitling them to exercise
two-thirds of the voting power on such proposal; provided, however, that if an
amendment is or new regulations are adopted by written consent, the Secretary
shall enter the amendment or new regulations, as the case may be, in the records
of the Company, and mail a copy thereof to each shareholder of record who would
have been entitled to vote thereon and did not participate in the adoption
thereof. Any amendment or any new regulation which repeals, alters or in any way
modifies or affects the provisions of Article II relating to the number,
classification and election of Directors, their respective terms of office, or
the provisions of this sentence, shall require for adoption at a meeting held
for such purpose the affirmative vote of the holders of shares entitling them to
exercise 80% of the voting power of the Company on such proposal.
This Amended Code of Regulations is effective as of the date
of adoption by the Company and supersedes all Regulations and amendments thereto
heretofore adopted.
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<PAGE> 1
Exhibit 10.1
AMENDED EMPLOYMENT AGREEMENT
----------------------------
THIS AGREEMENT made as of the 22nd day of July, 1981, between
RPM, INC., an Ohio corporation (the "Company"), and THOMAS C. SULLIVAN
("Sullivan").
WHEREAS, Sullivan has been employed by the Company for more than
twenty (20) years and is currently Chairman of the Board and Chief Executive
Officer of the Company; and
WHEREAS, Sullivan possesses an intimate knowledge
of the business and affairs of the Company, its policies,
methods and personnel; and
WHEREAS, the Board of Directors of the Company recognizes that
Sullivan's contribution as Chairman of the Board and Chief Executive Officer to
the growth and success of the Company has been substantial and desires to assure
the Company and its shareholders of Sullivan's continued employment in an
executive capacity and to compensate him therefor; and
WHEREAS, Sullivan is desirous of committing him-
self to serve the Company on the terms herein provided;
NOW, THEREFORE, in consideration of the foreoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees
to continue to employ Sullivan, and Sullivan hereby agrees
to continue to serve the Company, on the terms and conditions
<PAGE> 2
set forth herein for the period commencing retroactive to June 1, 1981 (the
"Effective Date"), and expiring on the fifth anniversary of the Effective Date
(unless sooner terminated as hereinafter set forth).
2. POSITION AND DUTIES. Sullivan shall serve as Chairman of the
Board and Chief Executive Officer reporting to the Board of Directors of the
Company and shall have supervision and control over, and responsibility for, the
general management and operation of the Company, and shall have such other
powers and duties as may from time to time be assigned by the Board of Directors
of the Company, provided that such duties are consistent with his present duties
and with his position as Chairman of the Board and Chief Executive Officer of
the Company in charge of the general management of the Company. Sullivan shall
devote substantially all his working time and efforts to the business and
affairs of the Company.
3. PLACE OF EMPLOYMENT. In connection with his employment by
the Company, Sullivan shall not be required to relocate or move from his
existing principal residence in Fairview Park, Ohio, and shall not be required
to perform services which would make the continuance of his principal residence
in Fairview Park, Ohio, unreasonably difficult or inconvenient for him. The
Company will give Sullivan at least six months' advance notice of any proposed
relocation of its principal executive offices to a location more than
2
<PAGE> 3
twenty-five miles from Brunswick, Ohio, and, if Sullivan in his sole discretion
chooses to relocate his principal residence, the Company will promptly pay (or
reimburse him for) all reasonable relocation expenses incurred by him relating
to a change of his principal residence in connection with any such relocation of
the Company's principal executive offices.
4. COMPENSATION.
(a) BASE SALARY. Sullivan shall receive a base salary at the rate of not
less than One Hundred and Eighty Thousand Dollars ($180,000.00) per annum ("Base
Salary"), payable in substantially equal monthly installments at the end of each
month during the period of Sullivan's employment hereunder. It is contemplated
that annually in July of each year, the Compensation Committee of the Board of
Directors will review Sullivan's Base Salary and other compensation during the
period of his employment hereunder and, at the discretion of the Compensation
Committee, it may increase his Base Salary and other compensation based upon his
performance, then generally prevailing industry salary scales, the Company's
results of operation, and other relevant factors. Any increase in Base Salary
or other compensation shall in no way limit or reduce any other obligation of
the Company hereunder and, once established at an increased specified rate,
Sullivan's Base Salary hereunder shall not be reduced without his written
consent.
3
<PAGE> 4
(b) INCENTIVE COMPENSATION/BONUS. In addition to his Base
Salary, Sullivan shall be entitled to receive such annual incentive compensation
payment or bonus as the Compensation Committee of the Board of Directors of the
Company may determine in their discretion based upon the Company's results of
operation and other relevant factors. At the election of Sullivan, such annual
incentive compensation payment or bonus may be received by Sullivan as soon as
possible, but no later than ninety (90) days after the close of the Company's
fiscal year for which such payment or bonus is granted, or the payment may be
deferred provided Sullivan gives written notice to the Chairman of the
Compensation Committee of the Board of Directors that he elects to defer
payment, which notice shall also state the date(s) on which he desires to be
paid, but in no event later than May 31 of the current fiscal year.
In addition, Sullivan shall have the right in any year to
receive as an advance an amount equal to fifty percent (50%) of his prior year's
bonus award, if any. This right may be exercised by Sullivan after the six (6)
months results of operation for the period ending November 30 are known to
management and based upon such results a good faith determination is made by
Sullivan that he can reasonably expect the Compensation Committee to award him a
bonus at the July review referred to in paragraph 4(a) above in an
4
<PAGE> 5
amount at least equal to his prior year's bonus; provided, however, that in the
event any bonus subsequently awarded to Sullivan is less than the amount
received by Sullivan as an advance, then Sullivan shall immediately repay any
such difference to the Company.
(c) EXPENSES. During the term of his employment hereunder,
Sullivan shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by him (in accordance with his past practice) in
performing services hereunder, provided that Sullivan properly accounts therefor
in accordance with either Company policies or guidelines established by the
Internal Revenue Service if such are less burdensome.
(d) PARTICIPATION IN BENEFIT PLANS. Sullivan shall be entitled
to continue to participate in or receive benefits under all the Company's
employee benefit plans and arrangements in effect on the date hereof or made
available in the future to the executives and key management employees of the
Company (including, but not limited to, stock option plans, pension or profit
sharing plans, group insurance plans, and medical and health insurance plans),
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid or awarded to
Sullivan under any plan or arrangement presently in effect or made available in
the
5
<PAGE> 6
future shall reduce or be deemed to be in lieu of compensation to Sullivan
pursuant to any other provision of this Section 4.
(e) VACATIONS. Sullivan shall be entitled to the same number of
paid vacation days in each calendar year determined by the Company from time to
time for its other senior executive officers, but not less than four (4) weeks
in any calendar year to be taken at such time or times as is desired by Sullivan
(prorated in any calendar year during which Sullivan is employed hereunder for
less than the entire such year in accordance with the number of days in such
calendar year during which he is so employed). Sullivan shall also be entitled
to all paid holidays given by the Company to its other salaried employees.
(f) OTHER BENEFITS. Sullivan shall be entitled to continue to
receive the fringe benefits appertaining to the position of Chairman of the
Board and Chief Executive Officer of the Company in accordance with present
practice, including the use of the most recent model of a full-sized U.S. made
automobile. In the event of Sullivan's death during the period of his employment
hereunder, the Company hereby agrees to pay Sullivan's spouse, or if he has no
spouse surviving him, to his estate, the sum of Five Thousand Dollars ($5,000)
in addition to any other compensation provided Sullivan or his spouse by the
Company. Said payment shall be a death benefit under Section 101(b) of the
6
<PAGE> 7
Internal Revenue Code. At all times during the term of this Agreement, Sullivan
shall be entitled to the full-time use of his present office and furniture at
the Company's principal executive offices in Brunswick, Ohio, and shall be
entitled to the full-time use of a secretary of his choice paid by the Company.
5. TERMINATION.
(a) DISABILITY. If, as a result of his incapacity due to
physical or mental illness, Sullivan shall have been absent from his duties
hereunder on a full-time basis for one hundred and eighty (180) consecutive
days, and within thirty (30) days after written notice of termination is given
shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Sullivan's employment hereunder.
(b) CAUSE. The Company may terminate Sullivan's employment
hereunder for Cause. For the purposes of this Agreement, the Company shall have
"Cause" to terminate Sullivan's employment hereunder only (A) for willful and
intentional acts of dishonesty or gross neglect of duty by Sullivan, or (B) if
Sullivan shall have participated in a Competitive Operation (as defined in
Section 8).
(c) TERMINATION BY SULLIVAN. Sullivan may terminate his
employment hereunder (i) for Good Reason (as hereinafter defined), or (ii) if
his health should become impaired to an extent that makes the continued
performance of his
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<PAGE> 8
duties hereunder hazardous to his physical or mental health or his life, or
(iii) in the event of a Change in Control of the Company (as hereinafter
defined).
For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to Sullivan of any duties other than those contemplated by, or any
limitation of the powers of Sullivan in any respect not contemplated by, Section
2 hereof, (B) any removal of Sullivan from or any failure to re-elect Sullivan
to the positions indicated in Section 2 hereof, except in connection with
termination of Sullivan's employment for Cause, (C) a reduction in Sullivan's
rate of compensation, or (D) failure by the Company to comply with Section 3
hereof.
For purposes of this Agreement, "Change in Control" shall
include any of the following events: (A) a filing under any federal or state law
in connection with any offer to purchase a controlling block of Common Shares of
the Company (which shall be defined as a block of shares sufficient in amount to
elect a majority of the Company's then existing Board of Directors pursuant to
the cummulative voting procedure under Ohio corporation law as if all Directors
were to be elected without classification at a single meeting of shareholders)
pursuant to a tender offer or otherwise (other than an offer by the Company or
any of its subsidiaries to purchase such Common Shares); (B) unless unanimously
approved by the Company' s Board of Directors,
8
<PAGE> 9
the execution of any agreement for the reorganization, merger or consolidation
of the Company into or with another corporation or for the sale of substantially
all the assets of the Company to another corporation, or an agreement which
provides that the Company will become a subsidiary of another corporation, any
of which agreements, if consummated, would result in a change in control of the
Company; (C) the filing under Regulation 14A of the rules and regulations of the
Securities and Exchange Commission of a proxy statement which solicits proxies
for the election of a slate of Directors for any class of Directors of the
Company in opposition to the slate of Directors nominated by the then existing
Board of Directors of the Company and which states that control of the Company's
Board of Directors and/or the Company is or may be the eventual objective of the
person or persons responsible for the proxy solicitation and which, if
successful, would result in a change of control of the Company of a nature that
would be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation A promulgated under the Securities Exchange Act of 1934 (the "1934
Act"); or (D) the consummation of any of the transactions or events described in
(A), (B) and (C) above. Sullivan shall have sixty (60) days after the latest of
the events of Change in Control to elect to terminate his employment.
(d) Any termination by the Company pursuant to subsection (a) or
(b) above or by Sullivan pursuant to sub-
9
<PAGE> 10
section (c) above shall be communicated by written notice of termination to the
other party hereto, which shall state in reasonable detail the facts upon which
the termination has occurred.
6. COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(a) DISABILITY. During any period that Sullivan fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, Sullivan shall continue to receive his full Base Salary until his
employment is terminated pursuant to Section 5(a) hereof, or until Sullivan
terminates his employment pursuant to Section 5(c)(ii) hereof, whichever first
occurs. After termination, Sullivan shall be paid 100% of his Base Salary at the
rate then in effect for one year and, thereafter, an annual amount equal to 50%
of his Base Salary at the rate then in effect until the fifth anniversary of the
Effective Date, plus any disability payments otherwise payable by or pursuant to
plans provided by the Company.
(b) CAUSE. If Sullivan's employment shall be terminated for
Cause pursuant to Section 5(b) hereof, the Company shall pay Sullivan his full
Base Salary through the date on which his employment is terminated at the rate
in effect at the time notice of termination is given. The Company shall then
have no further obligations to Sullivan under this Agreement.
10
<PAGE> 11
(c) GOOD REASON. If the Company shall terminate Sullivan's
employment other than pursuant to Sections 5(a) or 5(b) hereof or if Sullivan
shall terminate his employment for Good Reason, then in lieu of any further
salary payments to Sullivan for periods subsequent to the date on which
Sullivan's employment is terminated, the Company shall pay as liquidated damages
and/or severance pay to Sullivan (i) no later than the tenth day following such
date, a lump sum amount equal to the product of Sullivan's annual Base Salary in
effect as of such date multiplied by the number of years (including partial
years on a pro rata basis) remaining in the term of employment hereunder or (ii)
if Sullivan shall so elect, the Company shall continue to pay him his annual
Base Salary in effect on such date in the manner specified in Section 4(a)
hereof until the fifth anniversary of the Effective Date.
(d) CHANGE IN CONTROL. If Sullivan shall terminate his
employment in the event of a Change in Control of the Company, then in lieu of
any further salary payments to Sullivan for periods subsequent to the date on
which his employment is terminated, the Company shall pay to Sullivan as
liquidated damages and/or severance pay (i) no later than the tenth day
following such date, a lump sum amount equal to the product of Sullivan's annual
Base Salary in effect as
11
<PAGE> 12
of such date multiplied by five (5) or (ii) if Sullivan shall so elect, the
Company shall continue to pay him his annual Base Salary in effect on such date
in the manner specified in Section 4(a) hereof until the fifth anniversary of
the date on which his employment is terminated. If Sullivan elects to receive
payments pursuant to (ii) above, such period of time as he continues to receive
payments shall be considered service with the Company (and he shall be
considered an employee) for purposes of continued credits under any of the
Company's employee benefit plans he participates in as of the date on which his
employment is terminated.
7. BINDING AGREEMENT.
This Agreement and all obligations of the Company hereunder
shall be binding upon the successors and assigns of the Company. This Agreement
and all rights of Sullivan hereunder shall inure to the benefit of and be
enforceable by Sullivan's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Sullivan should die while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Sullivan's
devisee, legatee, or other designee or, if there be no such designee, to
Sullivan's estate.
8. NON-COMPETITION. During the term of employment
provided for in Section 1 hereof, Sullivan will not, directly
12
<PAGE> 13
or indirectly, own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer, employee,
partner or director with, or have any financial interest in, any business which
is in substantial competition with any business conducted by the Company or by
any group, division or subsidiary of the Company, in any area where such
business is being conducted at the time of such termination (a "Competitive
Operation"). Ownership of five percent (5%) or less of the voting stock of any
corporation which is required to file periodic reports with the Securities and
Exchange Commission under the 1934 Act shall not constitute a violation hereof.
9. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been fully given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid
addressed as follows:
If to Sullivan:
Thomas C. Sullivan
18897 N. Valley Drive
Fairview Park, Ohio 44126
If to the Company:
RPM, Inc.
2628 Pearl Road
Medina, Ohio 44256
Attn: Secretary
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<PAGE> 14
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. It is hereby
agreed between the parties that this Agreement acts as a termination of and
replaces in its entirety the Employment Agreement dated October 9, 1980, between
the Company and Sullivan.
11. WITHHOLDING. All payments required to be made by the Company
hereunder to Sullivan or his estate or beneficiaries, shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
12. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, and is signed by Sullivan and by another executive officer
of the Company. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with
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<PAGE> 15
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Ohio.
13. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. HEADINGS. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
IN THE PRESENCE OF: RPM, INC.
By: /s/ James A. Karman
_______________________ _______________________
James A. Karman, President
And: /s/ Richard E. Klar
_______________________ _______________________
Richard E. Klar, Secretary
The "Company"
/s/ Thomas C. Sullivan
________________________ _______________________
Thomas C. Sullivan
"Sullivan"
15
<PAGE> 1
Exhibit 10.1.1
AMENDMENT TO AMENDED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDMENT is made and entered into on this 17th day
of July, 1996 at Medina, Ohio, by and between RPM, INC.
(hereinafter referred to as the "Company") and THOMAS C. SULLIVAN
(hereinafter referred to as "Sullivan"):
W I T N E S S E T H:
--------------------
WHEREAS, Sullivan is considered a key employee of the
Company; and
WHEREAS, Sullivan and the Company entered into a certain
Amended Employment Agreement, originally dated as of July 22, 1981 and last
amended as of July 18, 1995 (the "Employment Agreement"), to insure Sullivan's
continued employment with the Company; and
WHEREAS, it is the desire of the Company and Sullivan to
further amend the Employment Agreement in accordance with the terms hereof;
and
WHEREAS, Paragraph 12 of the Employment Agreement requires
that any such Amendment be in writing and properly executed;
NOW, THEREFORE, in consideration of the premises and the
mutual understandings of the parties, IT IS AGREED, as follows:
1. EMPLOYMENT TERM. Paragraph 1 of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
<PAGE> 2
TERM OF EMPLOYMENT. The Company hereby agrees to
continue to employ Sullivan, and Sullivan hereby agrees to
continue to serve the Company, on the terms and conditions set
forth herein for the period commencing retroactive to June 1,
1996 (the "Effective Date"), and expiring the fifth
anniversary of the Effective Date (unless sooner terminated
as hereinafter set forth).
2. COMPENSATION. Paragraph 4(a) of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
BASE SALARY. Sullivan shall receive a base salary at
the rate of not less than Seven Hundred Forty-Five Thousand
Dollars ($745,000) per annum ("Base Salary"), payable in
substantially equal monthly installments at the end of each
month during the period of Sullivan's employment hereunder. It
is contemplated that annually in July of each year the
Compensation Committee of the Board of Directors will review
Sullivan's Base Salary and other compensation during the
period of his employment hereunder and, at the discretion of
the Compensation Committee, it may increase his Base Salary
and other compensation based upon his performance, then
generally prevailing industry salary scales, the Company's
results of operations, and other relevant factors. Any
increase in Base Salary or other compensation shall in no way
limit or reduce any other obligation of the Company hereunder
and, once established at an increased specified rate,
Sullivan's Base Salary hereunder shall not be reduced without
his written consent.
3. EFFECTIVE DATE. The effective date of this
Amendment shall be June 1, 1996, and as such, the increase in compensation set
forth in Paragraph 2 shall be retroactively applied.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this
Amendment to the Employment Agreement on the date and at the place
first above written.
IN THE PRESENCE OF: RPM, INC.
By: /s/ James A. Karman
____________________________ _________________________________
James A. Karman, President
And: /s/ Paul A. Granzier
________________________________
Paul A. Granzier, Secretary
The "Company"
/s/ Thomas C. Sullivan
- ---------------------------- -------------------------------------
Thomas C. Sullivan
"Sullivan"
-3-
<PAGE> 1
Exhibit 10.2
AMENDED EMPLOYMENT AGREEMENT
----------------------------
THIS AGREEMENT made as of the 22nd day of July, 1981, between
RPM, INC., an Ohio corporation (the "Company"), and JAMES A. KARMAN ("Karman").
WHEREAS, Karman has been employed by the Company for more than
eighteen (18) years and is currently President and Chief Operating Officer of
the Company; and
WHEREAS, Karman possesses an intimate knowledge of the business
and affairs of the Company, its policies, methods, operations and personnel; and
WHEREAS, the Board of Directors of the Company recognizes that
Karman's contribution as President and Chief Operating Officer to the growth
and success of the Company has been substantial and desires to assure the
Company and its shareholders of Karman's continued employment in an executive
capacity and to compensate him therefor; and
WHEREAS, Karman is desirous of committing himself
to serve the Company on the terms herein provided;
NOW, THEREFORE, in consideration of the foreoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees
to continue to employ Karman, and Karman hereby agrees to
continue to serve the Company, on the terms and conditions
set forth herein for the period commencing retroactive to
<PAGE> 2
June 1, 1981 (the "Effective Date"), and expiring on the fifth anniversary of
the Effective Date (unless sooner terminated as hereinafter set forth).
2. POSITION AND DUTIES. Karman shall serve as President and
Chief Operating Officer reporting to the Chief Executive Officer and the Board
of Directors of the Company and shall have supervision and control over, and
responsibility for, the general operation of the Company, and shall have such
other powers and duties as may from time to time be assigned by the Chief
Executive Officer and the Board of Directors of the Company, provided that such
duties are consistent with his present duties and with his position as President
and Chief Operating Officer of the Company in charge of the general operation of
the Company. Karman shall devote substantially all his working time and efforts
to the business and affairs of the Company.
3. PLACE OF EMPLOYMENT. In connection with his employment by the
Company, Karman shall not be required to relocate or move from his existing
principal residence in Hudson, Ohio, and shall not be required to perform
services which would make the continuance of his principal residence in Hudson,
Ohio, unreasonably difficult or inconvenient for him. The Company will give
Karman at least six months' advance notice of any proposed relocation of its
principal executive offices to a location more than twenty-five miles from
Brunswick, Ohio, and, if Karman in his sole discretion chooses to relocate his
principal residence, the Company
2
<PAGE> 3
will promptly pay (or reimburse him for) all reasonable relocation expenses
incurred by him relating to a change of his principal residence in connection
with any such relocation of the Company's principal executive offices.
4. COMPENSATION.
(a) BASE SALARY. Karman shall receive a base salary at the rate of not
less than One Hundred and Fifty Thousand Dollars ($150,000.00) per annum ("Base
Salary"), payable in substantially equal monthly installments at the end of each
month during the period of Karman's employment hereunder. It is contemplated
that annually in July of each year, the Compensation Committee of the Board of
Directors will review Karman's Base Salary and other compensation during the
period of his employment hereunder and, at the discretion of the Compensation
Committee, it may increase his Base Salary and other compensation based upon his
performance, then generally prevailing industry salary scales, the Company's
results of operation, and other relevant factors. Any increase in Base Salary or
other compensation shall in no way limit or reduce any other obligation of the
Company hereunder and, once established at an increased specified rate, Karman's
Base Salary hereunder shall not be reduced without his written consent.
(b) INCENTIVE COMPENSATION/BONUS. In addition to his Base Salary,
Karman shall be entitled to receive such annual incentive compensation payment
or bonus as the
3
<PAGE> 4
Compensation Committee of the Board of Directors of the Company may determine in
their discretion based upon the Company's results of operation and other
relevant factors. At the election of Karman, such annual incentive compensation
payment or bonus may be received by Karman as soon as possible, but no later
than ninety (90) days after the close of the Company's fiscal year for which
such payment or bonus is granted, or the payment may be deferred provided Karman
gives written notice to the Chairman of the Compensation Committee of the Board
of Directors that he elects to defer payment, which notice shall also state the
date(s) on which he desires to be paid, but in no event later than May 31 of the
current fiscal year.
In addition, Karman shall have the right in any year to receive as an
advance an amount equal to fifty percent (50%) of his prior year's bonus award,
if any. This right may be exercised by Karman after the six (6) months results
of operation for the period ending November 30 are known to management and based
upon such results a good faith determination is made by Karman that he can
reasonably expect the Compensation Committee to award him a bonus at the July
review referred to in paragraph 4(a) above in an amount at least equal to his
prior year's bonus; provided, however, that in the event any bonus subsequently
awarded to Karman is less than the amount received by Karman as an
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<PAGE> 5
advance, then Karman shall immediately repay any such difference to the Company.
(c) EXPENSES. During the term of his employment hereunder,
Karman shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by him (in accordance with his past practice) in
performing services hereunder, provided that Karman properly accounts therefor
in accordance with either Company policies or guidelines established by the
Internal Revenue Service if such are less burdensome.
(d) PARTICIPATION IN BENEFIT PLANS. Karman shall be entitled to
continue to participate in or receive benefits under all the Company's employee
benefit plans and arrangements in effect on the date hereof or made available in
the future to the executives and key management employees of the Company
(including, but not limited to, stock option plans, pension or profit sharing
plans, group insurance plans, and medical and health insurance plans), subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid or awarded to Karman
under any plan or arrangement presently in effect or made available in the
future shall reduce or be deemed to be in lieu of compensation to Karman
pursuant to any other provision of this Section 4.
(e) VACATIONS. Karman shall be entitled to the same number of
paid vacation days in each calendar year determined by the Company from time to
time for its other
5
<PAGE> 6
senior executive officers, but not less than four (4) weeks in any calendar year
to be taken at such time or times as is desired by Karman (prorated in any
calendar year during which Karman is employed hereunder for less than the entire
such year in accordance with the number of days in such calendar year during
which he is so employed). Karman shall also be entitled to all paid holidays
given by the Company to its other salaried employees.
(f) OTHER BENEFITS. Karman shall be entitled to continue to
receive the fringe benefits appertaining to the position of President and Chief
Operating Officer of the Company in accordance with present practice, including
the use of the most recent model of a full-sized U.S. made automobile. In the
event of Karman's death during the period of his employment hereunder, the
Company hereby agrees to pay Karman's spouse, or if he has no spouse surviving
him, to his estate, the sum of Five Thousand Dollars ($5,000) in addition to any
other compensation provided Karman or his spouse by the Company. Said payment
shall be a death benefit under Section 101(b) of the Internal Revenue Code. At
all times during the term of this Agreement, Karman shall be entitled to the
full-time use of his present office and furniture at the Company's principal
executive offices in Brunswick, Ohio, and shall be entitled to the full-time use
of a secretary of his choice paid by the Company.
6
<PAGE> 7
5. TERMINATION.
(a) DISABILITY. If, as a result of his incapacity due to
physical or mental illness, Karman shall have been absent from his duties
hereunder on a full-time basis for one hundred and eighty (180) consecutive
days, and within thirty (30) days after written notice of termination is given
shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate Karman's employment hereunder.
(b) CAUSE. The Company may terminate Karman's employment
hereunder for Cause. For the purposes of this Agreement, the Company shall have
"Cause" to terminate Karman's employment hereunder only (A) for willful and
intentional acts of dishonesty or gross neglect of duty by Karman, or (B) if
Karman shall have participated in a Competitive Operation (as defined in Section
8), or (C) for other acts or omissions which are deemed to be detrimental to the
Company as determined in good faith by and in the exercise of the business
judgment of the Chairman of the Board, Thomas C. Sullivan, plus all of the
Directors of the Company who are not also employees of the Company either by
unanimous written action of such Directors without a meeting or by unanimous
affirmative vote of such Directors at a meeting of the Board of Directors.
(c) TERMINATION BY KARMAN. Karman may terminate his employment
hereunder (i) for Good Reason (as hereinafter defined), or (ii) if his health
should become impaired to an
7
<PAGE> 8
extent that makes the continued performance of his duties hereunder hazardous to
his physical or mental health or his life, or (iii) in the event of a Change in
Control of the Company (as hereinafter defined).
For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to Karman of any duties other than those contemplated by, or any
limitation of the powers of Karman in any respect not contemplated by, Section 2
hereof, (B) any removal of Karman from or any failure to re-elect Karman to the
positions indicated in Section 2 hereof, except in connection with termination
of Karman's employment for Cause, (C) a reduction in Karman's rate of
compensation, or (D) failure by the Company to comply with Section 3 hereof.
For purposes of this Agreement, "Change in Control" shall
include any of the following events: (A) a filing under any federal or state law
in connection with any offer to purchase a controlling block of Common Shares of
the Company (which shall be defined as a block of shares sufficient in amount to
elect a majority of the Company's then existing Board of Directors pursuant to
the cummulative voting procedure under Ohio corporation law as if all Directors
were to be elected without classification at a single meeting of shareholders)
pursuant to a tender offer or otherwise (other than an offer by the Company or
any of its subsidiaries to purchase such Common Shares); (B) unless unanimously
approved by the Company's Board of Directors,
8
<PAGE> 9
the execution of any agreement for the reorganization, merger or consolidation
of the Company into or with another corporation or for the sale of substantially
all the assets of the Company to another corporation, or an agreement which
provides that the Company will become a subsidiary of another corporation, any
of which agreements, if consummated, would result in a change in control of the
Company; (C) the filing under Regulation 14A of the rules and regulations of the
Securities and Exchange Commission of a proxy statement which solicits proxies
for the election of a slate of Directors for any class of Directors of the
Company in opposition to the slate of Directors nominated by the then existing
Board of Directors of the Company and which states that control of the Company's
Board of Directors and/or the Company is or may be the eventual objective of the
person or persons responsible for the proxy solicitation and which, if
successful, would result in a change of control of the Company of a nature that
would be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation A promulgated under the Securities Exchange Act of 1934 (the "1934
Act"); or (D) the consummation of any of the transactions or events described in
(A), (B) and (C) above. Karman shall have sixty (60) days after the latest of
the events of Change in Control to elect to terminate his employment.
(d) Any termination by the Company pursuant to subsection (a)
or (b) above or by Karman pursuant to sub-section (c) above shall be
communicated by written notice of
9
<PAGE> 10
termination to the other party hereto, which shall state in reasonable detail
the facts upon which the termination has occurred.
6. COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(a) DISABILITY. During any period that Karman fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, Karman shall continue to receive his full Base Salary until his
employment is terminated pursuant to Section 5(a) hereof, or until Karman
terminates his employment pursuant to Section 5(c)(ii) hereof, whichever first
occurs. After termination, Karman shall be paid 100% of his Base Salary at the
rate then in effect for one year and, thereafter, an annual amount equal to 50%
of his Base Salary at the rate then in effect until the fifth anniversary of the
Effective Date, plus any disability payments otherwise payable by or pursuant to
plans provided by the Company.
(b) CAUSE. If Karman's employment shall be terminated for Cause
pursuant to Section 5(b) hereof, the Company shall pay Karman his full Base
Salary through the date on which his employment is terminated at the rate in
effect at the time notice of termination is given. The Company shall then have
no further obligations to Karman under this Agreement.
(c) GOOD REASON. If the Company shall terminate Karman's
employment other than pursuant to Sections 5(a) or
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<PAGE> 11
5(b) hereof or if Karman shall terminate his employment for Good Reason, then in
lieu of any further salary payments to Karman for periods subsequent to the date
on which Karman's employment is terminated, The Company shall pay as liquidated
damages and/or severance pay to Karman (i) no later than the tenth day following
such date, a lump sum amount equal to the product of Karman's annual Base
Salary in effect as of such date multiplied by the number of years (including
partial years on a pro rata basis) remaining in the term of employment hereunder
or (ii) if Karman shall so elect, the Company shall continue to pay him his
annual Base Salary in effect on such date in the manner specified in Section
4(a) hereof until the fifth anniversary of the Effective Date.
(d) CHANGE IN CONTROL. If Karman shall terminate his employment
in the event of a Change in Control of the Company, then in lieu of any further
salary payments to Karman for periods subsequent to the date on which his
employment is terminated, the Company shall pay to Karman as liquidated damages
and/or severance pay (i) no later than the tenth day following such date, a lump
sum amount equal to the product of Karman's annual Base Salary in effect as of
such date multiplied by five (5) or (ii) if Karman shall so elect, the Company
shall continue to pay him his annual Base Salary in effect on such date in the
manner specified in Section 4(a) hereof until the fifth anniversary of the date
on which his employment is terminated. If Karman elects to receive payments
pursuant to (ii) above, such
11
<PAGE> 12
period of time as he continues to receive payments shall be considered service
with the Company (and he shall be considered an employee) for purposes of
continued credits under any of the Company's employee benefit plans he
participates in as of the date on which his employment is terminated.
7. BINDING AGREEMENT.
This Agreement and all obligations of the Company hereunder
shall be binding upon the successors and assigns of the Company. This Agreement
and all rights of Karman hereunder shall inure to the benefit of and be
enforceable by Karman's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Karman should die while any amounts would still be payable to him hereunder if
he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Karman's
devisee, legatee, or other designee or, if there be no such designee, to
Karman's estate.
8. NON-COMPETITION. During the term of employment provided for
in Section 1 hereof, Karman will not, directly or indirectly, own, manage,
operate, control or participate in the ownership, management, operation or
control of, or be connected as an officer, employee, partner or director with,
or have any financial interest in, any business which is in substantial
competition with any business conducted by the Company or by any group, division
or subsidiary of the Company, in any area where such business is being conducted
12
<PAGE> 13
at the time of such termination (a "Competitive Operation"). Ownership of five
percent (5%) or less of the voting stock of any corporation which is required to
file periodic reports with the Securities and Exchange Commission under the 1934
Act shall not constitute a violation hereof.
9. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been fully given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid
addressed as follows:
If to Karman:
James A. Karman
48 Cohasset Drive
Hudson, Ohio 44236
If to the Company:
RPM, Inc.
2628 Pearl Road
Medina, Ohio 44256
Attn: Secretary
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. TERMINATION OF PRIOR EMPLOYMENT AGREEMENT. It is hereby agreed
between the parties that this Agreement acts as a termination of and replaces in
its entirety the Employment Agreement dated October 9, 1980 between the Company
and Karman.
13
<PAGE> 14
11. WITHHOLDING. All payments required to be made by the Company
hereunder to Karman or his estate or beneficiaries, shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may reasonably determine it should withhold pursuant
to any applicable law or regulation.
12. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, and is signed by Karman and by another executive officer of the
Company. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio.
13. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14
<PAGE> 15
14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
15. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year first above written.
IN THE PRESENCE OF: RPM, I C.
/s/ M. K. Hall By: /s/ Thomas C. Sullivan
---------------------- ---------------------------
Thomas C. Sullivan,
Chairman
/s/ Mary Ann Peterman And: /s/ Richard E. Klar
---------------------- --------------------------
Richard E. Klar, Secretary
The "Company
/s/ Teresa A. Merkle /s/ James A. Karman
---------------------- ------------------------------
James A. Karman
"Karman"
-15-
<PAGE> 1
Exhibit 10.2.1
AMENDMENT TO AMENDED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDMENT is made and entered into on this 17th day
of July, 1996 at Medina, Ohio, by and between RPM, INC.
(hereinafter referred to as the "Company") and JAMES A. KARMAN
(hereinafter referred to as "Karman"):
W I T N E S S E T H:
--------------------
WHEREAS, Karman is considered a key employee of the
Company; and
WHEREAS, Karman and the Company entered into a certain Amended
Employment Agreement, dated as of July 22, 1981 and last amended as of July 18,
1995 (the "Employment Agreement"), to insure Karman's continued employment with
the Company; and
WHEREAS, it is the desire of the Company and Karman to
amend the Employment Agreement in accordance with the terms hereof;
and
WHEREAS, Paragraph 12 of the Employment Agreement requires
that any such Amendment be in writing and properly executed;
NOW, THEREFORE, in consideration of the premises and the
mutual understandings of the parties, IT IS AGREED, as follows:
1. EMPLOYMENT TERM. Paragraph 1 of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
<PAGE> 2
TERM OF EMPLOYMENT. The Company hereby agrees to
continue to employ Karman, and Karman hereby agrees to
continue to serve the Company, on the terms and conditions set
forth herein for the period commencing retroactive to June 1,
1996 (the "Effective Date"), and expiring on the fifth
anniversary of the Effective Date (unless sooner terminated as
hereinafter set forth).
2. COMPENSATION. Paragraph 4(a) of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
BASE SALARY. Karman shall receive a base salary at
the rate of not less than Five Hundred Ninety Thousand Dollars
($590,000) per annum ("Base Salary"), payable in substantially
equal monthly installments at the end of each month during the
period of Karman's employment hereunder. It is contemplated
that annually in July of each year the Compensation Committee
of the Board of Directors will review Karman's Base Salary and
other compensation during the period of his employment
hereunder and, at the discretion of the Compensation
Committee, it may increase his Base Salary and other
compensation based upon his performance, then generally
prevailing industry salary scales, the Company's results of
operations, and other relevant factors. Any increase in Base
Salary or other compensation shall in no way limit or reduce
any other obligation of the Company hereunder and, once
established at an increased specified rate, Karman's Base
Salary hereunder shall not be reduced without his written
consent.
3. EFFECTIVE DATE. The effective date of this
Amendment shall be June 1, 1996, and as such, the increase in compensation set
forth in Paragraph 2 shall be retroactively applied.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this
Amendment to the Employment Agreement on the date and at the place
first above written.
IN THE PRESENCE OF: RPM, INC.
By: /s/ Thomas C. Sullivan
____________________________ ________________________________
Thomas C. Sullivan, Chairman
and Chief Executive Officer
And: /s/ Paul A. Granzier
_______________________________
Paul A. Granzier, Secretary
The "Company"
/s/ James A. Karman
- ---------------------------- -----------------------------------
James A. Karman
"Karman"
-3-
<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT made as of the 16th day of July, 1991, between
RPM, INC., an Ohio corporation (the "Company"), and
WHEREAS, has been employed by the Company since 19 and
is currently of the Company; and
WHEREAS, possesses valuable knowledge of the
of the Company; and
WHEREAS, the Board of Directors of the Company recognizes the
importance of 's continuing contribution as to the future
growth and success of the Company and desires to assure the Company and its
shareholders of 's continued employment in an executive capacity and
to compensate him therefor; and
WHEREAS, is desirous of committing himself to continue
to serve the Company on the terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to continue
to employ , and hereby agrees to continue to serve the Company,
on the terms and conditions set forth herein for the period commencing
retroactive to June 1, 1991 (the "Effective Date"), and expiring on July 31,
1992 (unless sooner terminated as hereinafter set forth).
2. POSITION AND DUTIES. shall serve as reporting
to the President of the Company and shall have responsibility for the Company's
accounting and internal auditing
<PAGE> 2
functions, and shall have such other powers and duties as may from time to time
be assigned by the President, Chairman of the Board, or the Board of Directors
of the Company; provided, however, that such duties are consistent with his
present duties and his position as of the Company. shall devote
substantially all his working time and efforts to the continued success of the
business and affairs of the Company.
3. PLACE OF EMPLOYMENT. In connection with his employment by
the Company, shall not be required to relocate or move from his existing
principal residence in , Ohio, and shall not be required to perform services
which would make the continuance of his principal residence in , Ohio,
unreasonably difficult or inconvenient for him. The Company will give at
least six (6) months' advance notice of any proposed relocation of its Medina,
Ohio offices to a location more than twenty-five miles from Medina, Ohio and,
if in his sole discretion chooses to relocate his principal residence,
the Company will promptly pay (or reimburse him for) all reasonable relocation
expenses incurred by him relating to a change of his principal residence in
connection with any such relocation of the Company's offices in Medina, Ohio.
4. COMPENSATION.
(a) BASE SALARY. shall receive a base salary at the rate
of not less than ($ ) per annum ("Base Salary"), payable in
substantially equal monthly installments at the end of each month during the
period of 's employment hereunder. It is contemplated that annually
in July of
-2-
<PAGE> 3
each year, the Compensation Committee of the Board of Directors will review
's Base Salary and other compensation during the period of his
employment hereunder and, at the discretion of the Compensation Committee, it
may increase his Base Salary and other compensation based upon his performance,
then generally prevailing industry salary scales, the Company's results of
operation, and other relevant factors. Any increase in Base Salary or other
compensation shall in no way limit or reduce any other obligation of the
Company hereunder and, once established at an increased specified rate, 's
Base Salary hereunder shall not be reduced without his written consent.
(b) INCENTIVE COMPENSATION/BONUS. In addition to his Base
Salary, shall be entitled to receive such annual incentive compensation
payment or bonus as the Compensation Committee of the Board of Directors of the
Company may determine in their sole discretion based upon the Company's results
of operation and other relevant factors. At the election of , such
annual incentive compensation payment or bonus may be received by as soon
as possible, but no later than ninety (90) days after the close of the
Company's fiscal year for which such payment or bonus is granted, or the
payment may be deferred provided gives written notice to the Chairman
of the Compensation Committee of the Board of Directors that he elects to
defer payment, which notice shall also state the date(s) on which he desires to
be paid, but in no event later than May 31 of the current fiscal year.
In addition, shall have the right in any
year to request as an advance an amount equal to fifty percent (50%) of his
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<PAGE> 4
prior year's bonus award, if any. This request may be made by after the
six (6) months results of operation for the period ending November 30 are known
to management, and based upon such results a determination is made by the
Chairman of the Board or President that it can be reasonably expected that the
Compensation Committee will award him a bonus at the July review referred to in
paragraph 4(a) above in an amount at least equal to his prior year's bonus;
provided, however, that in the event any bonus subsequently awarded to is
less than the amount received by as an advance, then shall
immediately repay any such difference to the Company.
(c) EXPENSES. During the term of his employment hereunder,
shall be entitled to receive prompt reimbursement for all reasonable
business expenses incurred by him (in accordance with his past practice) in
performing services hereunder, provided that properly accounts therefor
in accordance with either Company policies or guidelines established by the
Internal Revenue Service if such are less burdensome.
(d) PARTICIPATION IN BENEFIT PLANS. shall be entitled to
continue to participate in or receive benefits under all the Company's employee
benefit plans and arrangements in effect on the date hereof or made available in
the future to the executives and key management employees of the Company
(including, but not limited to, stock option plans, pension or profit sharing
plans, group insurance plans, and medical and health insurance plans), subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and
-4-
<PAGE> 5
arrangements. Nothing paid or awarded to under any plan or arrangement
presently in effect or made available in the future shall reduce or be deemed
to be in lieu of compensation to pursuant to any other provision of this
Section 4.
(e) VACATIONS. shall be entitled to the same number of
paid vacation days in each fiscal year determined by the Company from time to
time for its other senior executive officers, but not less than four (4) weeks
in any fiscal year, to be taken at such time or times as is desired by after
consultation with the President or Chairman of the Board to avoid scheduling
conflicts (prorated in any fiscal year during which is employed hereunder for
less than the entire such year in accordance with the number of days in such
fiscal year during which he is so employed). shall also be entitled to all
paid holidays given by the Company to its other salaried employees.
(f) OTHER BENEFITS. shall be entitled to continue to
receive the fringe benefits appertaining to the position of of the Company in
accordance with present practice, including the use of the most recent model
of a full-sized U.S. made automobile. In the event of 's death during the
period of his employment hereunder, the Company hereby agrees to pay 's
spouse, or if he has no spouse surviving him, to his estate, the sum of Five
Thousand Dollars ($5,000) in addition to any other compensation provided
or his spouse by the Company. Said payment shall be a death benefit under
Section 101(b) of the Internal Revenue Code. At all times during the term of
this Agreement, shall be entitled to the full-time use
-5-
<PAGE> 6
of his present office and furniture at the Company's offices in Medina, Ohio,
and shall be entitled to the full-time use of a secretary paid by the Company.
5. TERMINATION.
(a) DISABILITY. If, as a result of his incapacity due to
physical or mental illness, shall have been absent from his duties
hereunder on a full-time basis for one hundred and eighty (180) consecutive
days, and within thirty (30) days after written notice of termination is given
shall not have returned to the performance of his duties hereunder on a
full-time basis, the Company may terminate 's employment hereunder.
(b) CAUSE. The Company may terminate 's employment
hereunder for Cause. For the purposes of this Agreement, the Company shall
have "Cause" to terminate 's employment hereunder only (A) for willful
and intentional acts of dishonesty or gross neglect of duty by , or
(B) if shall have participated in a Competitive Operation (as defined
in Section 8).
(c) TERMINATION BY . may terminate his
employment hereunder in the event of a Change in Control of the Company (as
hereinafter defined).
For purposes of this Agreement, "Change in Control" shall
include any of the following events: (A) a filing under any federal or state law
in connection with any offer to purchase a controlling block of Common Shares of
the Company (which shall be defined as a block of shares sufficient in amount to
elect a majority of the Company's then existing Board of Directors pursuant
-6-
<PAGE> 7
to the cumulative voting procedure under Ohio corporation law as if all
Directors were to be elected without classification at a single meeting of
shareholders) pursuant to a tender offer or otherwise (other than an offer by
the Company or any of its subsidiaries to purchase such Common Shares) which has
not been approved by the Company's Board of Directors; (B) unless approved by
the Company's Board of Directors, the execution of any agreement for the
reorganization, merger or consolidation of the Company into or with another
corporation or for the sale of substantially all the assets of the Company to
another corporation, or an agreement which provides that the Company will become
a subsidiary of another corporation, any of which agreements, if consummated,
would result in a change in control of the Company; or (C) the consummation of
any of the transactions or events described in (A) and (B) above. shall
have sixty (60) days after the latest of the events of Change in Control to
elect to terminate his employment.
(d) Any termination by the Company pursuant to subsection (a)
or (b) above or by pursuant to subsection (c) above shall be communicated
by written notice of termination to the other party hereto, which shall state in
reasonable detail the facts upon which the termination has occurred.
6. COMPENSATION DURING DISABILITY OR UPON TERMINATION.
(a) DISABILITY. During any period that fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, shall continue to receive his full Base Salary until his
employment is terminated pursuant to Section 5(a) hereof.
-7-
<PAGE> 8
(b) CAUSE. If 's employment shall be terminated for Cause
pursuant to Section 5(b) hereof, the Company shall pay his full Base Salary
through the date on which his employment is terminated at the rate in effect at
the time notice of termination is given. The Company shall then have no further
obligations to under this Agreement except such as may be required by law.
(c) TERMINATION WITHOUT CAUSE. If the Company shall terminate
's employment other than pursuant to Section 5(a) or 5(b) hereof, then
in lieu of any further salary payments to for periods subsequent to the
date on which 's employment is terminated, the Company shall pay as
liquidated damages and/or severance pay to no later than the tenth
(10th) day following such date, a lump sum amount equal to 100% of 's Base
Salary in effect as of such date.
(d) CHANGE IN CONTROL. If shall terminate his employment
in the event of a Change in Control of the Company which has not been approved
by the Board of Directors, then in lieu of any further salary payments to
for periods subsequent to the date on which his employment is terminated, the
Company shall pay to as liquidated damages and/or severance pay (i) no
later than the tenth (10th) day following such date, a lump sum amount equal to
the product of 's Base Salary in effect as of such date multiplied by
three (3), or (ii) if shall so elect, the Company shall continue to pay
him his Base Salary in the manner specified in Section 4(a) hereof until the
third anniversary of the date on which his employment is terminated. If
-8-
<PAGE> 9
elects to receive payments pursuant to (ii) above, such period of time as he
continues to receive payments shall be considered services with the Company, and
he shall be considered an employee for purposes of continued credits under any
of the Company's employee benefit plans he participates in as of the date on
which his employment is terminated.
7. BINDING AGREEMENT. This Agreement and all obligations of
the Company hereunder shall be binding upon the successors and assigns of the
Company. This Agreement and all rights of hereunder shall inure to the
benefit of and be enforceable by 's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If should die while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to 's devisee, legatee, or other designee or, if there be
no such designee, to 's estate.
8. NON-COMPETITION. During the term of employment provided for
in Section 1 hereof and during any further period provided for in Section 6
hereof while the Company is making payments to , will not, directly or
indirectly, own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer, employee,
partner or director with, or have any financial interest in, any business which
is in substantial competition with any business conducted by the Company or by
any group, division or
-9-
<PAGE> 10
subsidiary of the Company, in any area where such business is being conducted at
the time of such termination (a "Competitive Operation"). Ownership of five
percent (5%) or less of the voting stock of any corporation which is required to
file periodic reports with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 shall not constitute a violation hereof.
9. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been fully given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid
addressed as follows:
If to :
If to the Company:
RPM, Inc.
P.O. Box 777
2628 Pearl Road
Medina, Ohio 44256
Attn: Secretary
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. WITHHOLDING. All payments required to be made by the
Company hereunder to or his estate or beneficiaries, shall be subject to
the withholding of such amounts, if any, relating to tax and other payroll
deductions as the Company may
-10-
<PAGE> 11
reasonably determine it should withhold pursuant to any applicable law or
regulation.
11. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, and is signed by and by another executive officer of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Ohio.
12. VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. HEADINGS. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
-11-
<PAGE> 12
15. NO ASSIGNMENT. This Agreement may not be assigned by
either party without the prior written consent of the other party.
16. ENFORCEMENT COSTS. The Company is aware that upon the
occurrence of a change in control the Board of Directors or a shareholder of the
Company may then cause or attempt to cause the Company to refuse to comply with
its obligations under this Agreement, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Agreement declared unenforceable, or may take, or attempt to take, other action
to deny the benefits intended under this Agreement. In these circumstances,
the purpose of this Agreement could be frustrated. It is the intent of the
Company that not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation or other legal
action because the cost and expense thereof would substantially detract from
the benefits intended to be extended to hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
expenses. Accordingly, if following a change in control it should appear to
that the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any litigation
or other legal action designed to deny, diminish or to recover from, the
benefits intended to be provided to hereunder, and that has
complied with all of his obligations under this
-12-
<PAGE> 13
Agreement, the Company irrevocably authorizes from time to time to
retain counsel of his choice at the expense of the Company as provided in this
Section 16, to represent in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to entering into an attorney-client relationship with such
counsel, and in that connection the Company and agree that a
confidential relationship shall exist between and such counsel. The
reasonable fees and expenses of counsel selected from time to time by
as hereinabove provided shall be paid or reimbursed to by the Company on a
regular, periodic basis upon presentation by of a statement or
statements prepared by such counsel in accordance with its customary practices,
up to a maximum aggregate amount of $500,000.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
IN THE PRESENCE OF: RPM, INC.
____________________________ By:_____________________________
Thomas C. Sullivan, Chairman
____________________________ And:____________________________
Paul A. Granzier, Secretary
The "Company"
- ----------------------------- --------------------------------
" "
-14-
<PAGE> 1
Exhibit 10.4.1
AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------
THIS AMENDMENT is made and entered into on this 17th day
of July, 1996 at Medina, Ohio, by and between RPM, INC. (hereinafter
referred to as the "Company") and __________________________
(hereinafter referred to as "______________"):
W I T N E S S E T H:
--------------------
WHEREAS, _____________ is considered a key employee of the
Company; and
WHEREAS, ____________ and the Company entered into a certain
Employment Agreement, originally dated as of July 15, 1992 and last amended as
of July 18, 1995 (the "Employment Agreement"), to insure _____________'s
continued employment with the Company; and
WHEREAS, it is the desire of the Company and _____________ to
amend the Employment Agreement in accordance with the terms hereof;
and
WHEREAS, Paragraph 11 of the Employment Agreement requires
that any such Amendment be in writing and properly executed;
NOW, THEREFORE, in consideration of the premises and the
mutual understandings of the parties, IT IS AGREED, as follows:
1. EMPLOYMENT TERM. Paragraph 1 of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
<PAGE> 2
TERM OF EMPLOYMENT. The Company hereby agrees
to continue to employ ___________, and ___________
hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein for the
period commencing retroactive to June 1, 1996 (the
"Effective Date"), and expiring on the fifth
anniversary of the Effective Date (unless sooner
terminated as hereinafter set forth).
2. COMPENSATION. Paragraph 4(a) of the Employment
Agreement shall be deleted in its entirety and amended and restated
to provide in its entirety as follows:
BASE SALARY. Sullivan shall receive a base salary at
the rate of not less than _________________________________
Dollars ($__________) per annum ("Base Salary"), payable in
substantially equal monthly installments at the end of each
month during the period of ________'s employment hereunder. It
is contemplated that annually in July of each year the
Compensation Committee of the Board of Directors will review
_____________'s Base Salary and other compensation during the
period of his employment hereunder and, at the discretion of
the Compensation Committee, it may increase his Base Salary
and other compensation based upon his performance, then
generally prevailing industry salary scales, the Company's
results of operation, and other relevant factors. Any increase
in Base Salary or other compensation shall in no way limit or
reduce any other obligation of the Company hereunder and, once
established at an increased specified rate, ___________'s Base
Salary hereunder shall not be reduced without his written
consent.
3. EFFECTIVE DATE. The effective date of this
Amendment shall be June 1, 1996, and as such, the increase in
compensation set forth in Paragraph 2 shall be retroactively
applied.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this
Amendment to the Employment Agreement on the date and at the place
first above written.
IN THE PRESENCE OF: RPM, INC.
____________________________ By:____________________________________
Thomas C. Sullivan, Chairman
and Chief Executive Officer
And:___________________________________
Paul A. Granzier, Secretary
The "Company"
- ---------------------------- ---------------------------------------
"__________"
-3-
<PAGE> 1
Exhibit 10.5
RPM, INC.
1979 NON-QUALIFIED STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The Plan is intended to provide a niethod of providing key
employees of RPM, Inc. (the 'Company") and its subsidiaries with greater
incentive to serve and promote the interests of the Company and its
shareholders. The premise of the Plan is that, if such key employees acquire a
proprietary interest in the business of the Company or increase such proprietary
interest as they may already hold, then the incentive of such key employees to
work toward the Company's continued success will be commensurately increased.
Accordingly, the Company will, from time to time during the effective period
of the Plan, grant to such employees as may be selected to participate in the
Plan options to purchase Common Shares, without par value ("Shares"), of the
Company on the terms and subject to the conditions set forth in the Plan.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee of
the Board of Directors or by such other Committee composed of no fewer than
three (3) members of the Board of Directors of the Company as may be designated
by the Board of Directors (the "Committee"), provided that the Committee shall
not include any person who has been eligible to receive options under the Plan
or under any other plan of the Company entitling the participants therein to
acquire Shares, options to purchase Shares, or stock appreciation rights of the
Company at any time within the 12-month period immediately preceding the date on
which such person becomes a member of the Committee. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, or acts approved in writing by all of
the members, shall be the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have
full and final authority, in its absolute discretion, (a) to determine the
employees to be granted options under the Plan, (b) to determine the number of
Shares subject to each option, (c) to determine the time or times at which
options will be granted, (d) to determine the option price of the Shares subject
to each option, which price shall not be less than the minimum specified in
Section 6 of the Plan, (e) to determine the time or times when each option
becomes exercisable and the duration of the exercise period, (f) to determine
the terms and conditions under which the Committee shall accept the surrender of
an option or any portion thereof pursuant to Section 9 of the Plan and to
determine the form in which payment for such surrendered option or portion
thereof shall be made, (g) to prescribe the form or forms of the instruments
evidencing any options granted under the Plan (which forms shall be consistent
with the Plan), (h) to adopt, amend and rescind such rules and regulations as,
in the Committee's opinion, may be advisable in the administration of the Plan,
and (i) to construe and interpret
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<PAGE> 2
the Plan, the rules and regulations and the instruments evidencing options
granted under the Plan and to make all other determinations deemed necessary or
advisable for the administration of the Plan. Any decision made or action taken
by the Committee in connection with the administration, interpretation, and
implementation of the Plan and of its rules and regulations, shall, to the
extent permitted by law, be conclusive and binding upon all optionees under the
Plan and upon any person claiming under or through such an optionee.
3. SHARES AVAILABLE FOR OPTIONS
Subject to the provisions of Section 10 of the Plan, the
aggregate number of Shares for which options may be granted under the Plan shall
not exceed four hundred thousand (400,000).
The Shares to be delivered upon exercise of options under the
Plan shall be made available, at the discretion of the Board of Directors,
either from the authorized but unissued Shares of the Company or from Shares
held by the Company as treasury shares, including Shares purchased in the open
market.
If an option granted under the Plan shall expire or terminate
unexercised as to any Shares covered thereby, such Shares shall thereafter be
available for the granting of other options under the Plan. If, however, an
option granted under the Plan shall be accepted for surrender pursuant to terms
and conditions determined by the Committee under Section 9, any Shares covered
thereby shall not thereafter be available for the granting of other options
under the Plan.
4. ELIGIBILITY
Options will be granted only to persons who are employees of the
Company or of a subsidiary of the Company. The term "subsidiary" as used herein
shall mean any corporation, a majority of the stock of which having normal
voting rights is owned directly or indirectly by the Company. The term
"employees" shall include officers as well as all other employees of the Company
and its subsidiaries and shall include Directors who are also employees of the
Company or of a subsidiary of the Company. Neither the members of the Committee
nor any other member of the Board of Directors who is not an employee of the
Company (or of a subsidiary of the Company) shall be eligible to receive an
option under the Plan.
In selecting the persons to whom options shall be granted under
the Plan, as well as in determining the number of Shares subject to and the type
and terms and provisions of each option, the Committee shall weigh such factors
as it shall deem relevant to accomplish the purpose of the Plan, namely, to
enhance the incentive of those key employees of the Company and its subsidiaries
who exert authority over and are responsible for the management and conduct of
the Company's business. A person who has been granted an option under the Plan
may be granted an additional option or options if the Committee shall so
determine.
5. TERM OF OPTIONS
The full term of each option granted under the Plan shall be
such period as the Committee shall determine, but shall not be more than ten
years from the date of granting thereof.
A-2
<PAGE> 3
Each option shall be subject to earlier termination as provided in Paragraphs
(c) and (d) of Section 8 and in Section 9 of the Plan.
The Committee may, with the concurrence of the affected
optionee, cancel any option granted under the Plan and authorize the grant of a
new option or options to buy Shares in such number and at such price as the
Committee shall determine, subject to the provisions of the Plan.
6. OPTION PRICE
The option price shall be determined by the Committee at the
time any option is granted but shall not be less than 100 per cent of the fair
market value of the Shares covered thereby at the time the option is granted,
such fair market value to be determined in accordance with procedures to be
established by the Committee.
7. NON-TRANSFERABILITY OF OPTION
No option granted under the Plan shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution, and
such option may be exercised during the optionee's lifetime only by the optionee
or by his guardian or legal representative.
8. EXERCISE OF OPTIONS
(a) Each option granted under the Plan shall be exercisable on
such date or dates and during such period and for such number of Shares as shall
be set forth in the instrument evidencing such option.
(b) A person electing to exercise an option shall give written
notice to the Company of such election and the number of Shares such person has
elected to purchase and shall, at the time of exercise, tender the full purchase
price of the Shares such person has elected to purchase. Until such person has
been issued a certificate or certificates for the Shares so purchased, such
person shall possess no rights of a record holder with respect to any such
Shares.
(c) No option shall be affected by any change of duties or position of
the optionee (including transfer to or from a subsidiary), so long as such
optionee continues to be an employee of the Company or one of its subsidiaries.
If an optionee shall cease to be an employee for any reason other than death,
the options held by such optionee shall thereafter be exercisable only to the
extent of the purchase rights, if any, which had accrued as of the date of such
cessation, provided that (i) the Committee may provide in the instrument
evidencing any option that the Committee may in its absolute discretion, upon
any such cessation of employment, determine (but shall be under no obligation to
determine) that such accrued purchase rights shall be deemed to include
additional Shares covered by such option and (ii) upon any such cessation of
employment, such accrued rights to purchase shall in any event terminate upon
the earlier of (A) the expiration of the full term of the option or (B) the
expiration of thirty (30) days from the date of such cessation of employment.
The instruments evidencing options granted under the Plan may contain such
provisions as the Committee shall approve with reference to the effect of
approved leaves of absence. Nothing in the Plan or in
A-3
<PAGE> 4
any option granted hereunder shall confer upon any optionee any right to
continue in the employ of the Company or any of its subsidiaries, or to limit or
interfere in any way with the right of the Company or its subsidiaries to
terminate such optionee's employment at any time, with or without cause.
(d) Should an optionee die while in the employ of the Company or
one of its subsidiaries, or within thirty (30) days after cessation of such
employment, such person as shall have acquired, by will or by the laws of
descent and distribution (the "personal representative"), the right to exercise
any option theretofore granted such optionee may, in either case, exercise such
option at any time prior to expiration of its full term or one year from the
date of death of the optionee, whichever is earlier, provided that any such
exercise shall be limited to the purchase rights which had accrued as of the
date when the optionee ceased to be an employee, whether by death or otherwise,
and provided further, however, that the Committee may provide in the instrument
evidencing any option that all Shares covered by such option shall become
subject to purchase immediately upon the death of the optionee.
9. SURRENDER OF OPTIONS
The Committee may, under such terms and conditions as it deems
appropriate, accept the surrender by an optionee, or the personal representative
of an optionee, of an option, or any portion thereof, to purchase Shares granted
under the Plan and authorize the payment in consideration for such surrender of
an amount equal to the excess of the fair market value at the date of surrender
of the Shares covered by the option, or portion thereof, surrendered over the
aggregate option price of such Shares, such payment to be in Shares (valued at
fair market value on the date of such surrender) or in cash, or partly in Shares
and partly in cash, provided that the Committee determines that such settlement
is consistent with the purpose set forth in Section 1 hereof.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event of any change in the number of outstanding Shares
through the declaration of share dividends, share splits, or consolidations,
through recapitalizations, or by reason of any other increase or decrease in the
number of outstanding Shares effected without receipt of consideration by the
Company, the number of Shares available and reserved for options which may
thereafter be granted, the number of Shares reserved for and subject to any
options outstanding but unexercised, and the price per share payable on the
exercise of any options outstanding but unexercised, shall be adjusted as the
Committee considers appropriate, and all such adjustments by the Committee shall
be conclusive and binding upon all optionees under the Plan and upon any person
claiming under or through such an optionee.
11. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN
The Board of Directors may at any time terminate or from time to
time amend or suspend the Plan; provided, however, that no such amendment shall,
without approval of the shareholders of the Company, except as provided in
Section 10 hereof, (a) increase the aggregate number of Shares as to which
options may be granted under the Plan; (b) change the minimum option exercise
price; (c) increase the maxinium period during which options
A-4
<PAGE> 5
may be exercised; (d) extend the effective period of this Plan; or (e) permit
the granting of options to members of the Committee. No option may be granted
during any suspension of the Plan or after the Plan has been terminated and no
amendment, suspension, or termination shall, without the optionee's consent,
alter or impair any of the rights or obligations under any option theretofore
granted to such person under the Plan.
12. EFFECTIVE DATE AND DURATION OF PLAN
This Plan shall become effective upon its approval by the
affirmative vote of the holders of a majority of the outstanding Shares present
in person or by proxy and entitled to vote on this Plan at the Annual Meeting of
the Shareholders of the Company on September 28, 1979, or any adjournment
thereof. No options may be granted under this Plan subsequent to September 27,
1989.
A-5
<PAGE> 6
AMENDMENT NO. 1
TO
RPM, INC.
1979 NON-QUALIFIED STOCK OPTION PLAN
This Amendment No. 1 is made this 21st day of July, 1982 by
the Board of Directors of RPM, Inc. (hereinafter referred to as the
"Company");
WITNESSETH:
-----------
WHEREAS, the RPM, Inc. 1979 Non-Qualified Stock Option Plan
(hereinafter referred to as the "Plan") was established on September 28,
1979; and
WHEREAS, the Board of Directors is empowered under Section 11
of the Plan to amend and modify the Plan; and
WHEREAS, it is the desire of the Board of Directors of the Company to
amend certain provisions of the Plan in conformity with the Economic Recovery
Tax Act of 1981 to provide for the creation under the Plan of "incentive stock
options" as defined in Section 422A of the Internal Revenue Code of 1954, as
amended;
NOW, THEREFORE, pursuant to Section 11 of the Plan, the Board of
Directors of the Company, hereby amends the Plan effective July 21, 1982 as
follows:
(1) Section 3 of the Plan is hereby amended by the addition thereto of a
new final paragraph to read as follows:
"Options granted under the Plan on or after July 21, 1982
shall constitute either incentive stock options, as defined in Section
422A of Internal Revenue Code of 1954, as amended (the "Code"),
hereinafter referred to as "incentive stock options", or non-qualified
stock options as the Committee shall determine
<PAGE> 7
with respect to each option granted on or after such date. In the case
of an option which is an incentive stock option, such option shall not
be exercisable by the optionee while any incentive stock option which
was granted before the granting of such option has not been exercised
in full or has not expired by reason of lapse of time."
(2) Section 5 of the Plan is hereby amended by the deletion of
said Section and the substitution in lieu thereof of a new Section 5 to read as
follows:
"5. Term of Options
---------------
The full term of each option granted under the Plan shall be
such period as the Committee shall determine, but shall not be more
than ten years from the date of granting thereof; provided, however,
that if an employee to whom an incentive stock option is granted is at
the time of grant of the incentive stock option an owner as defined in
Section 425(d) of the Code of more than 10 percent of the total
combined voting power of all classes of stock of the Company or any
subsidiary corporation, hereinafter referred to as a "Substantial
Shareholder," no incentive stock option granted to such an employee
shall be exercisable after the expiration of five years from the date
of grant of such option.
Each option shall be subject to earlier termination as
provided in Paragraphs (c) and (d) of Section 8 and in Section 9 of the
Plan.
The Committee may, with the concurrence of the affected
optionee, cancel any option granted under the Plan and authorize the
grant of a new option or options to buy Shares in such number and at
such price as the Committee shall determine, subject to the provisions
of the Plan."
(3) Section 6 of the Plan is hereby amended by the deletion of
said Section and the substitution in lieu thereof of a new Section 6 to read as
follows:
"6. Option Price
------------
The option price shall be determined by the Committee at the
time any option is granted but shall not be less than 100 per cent of
the fair market value of the Shares covered thereby at the time the
option is granted, such fair market value to be determined in
accordance with procedures to be established by the Committee;
provided, however, that if an em-
-2-
<PAGE> 8
ployee to whom an incentive stock option is granted is at the time of
the grant of the incentive stock option a Substantial Shareholder, the
option price shall be determined by the Committee from time to time but
shall never be less than 110 percent of the fair market value of the
Company's Shares on the date such option is granted."
(4) Section 8 of the Plan is hereby amended by the addition thereto of a
new Paragraph (e) to read as follows:
"(e) In the case of incentive stock options granted after
December 31, 1980, the aggregate fair market value (determined as of
the date the option is granted) of the Shares for which any key
management employee may be granted incentive stock options in any
calendar year shall not exceed $100,000 plus any unused limit carryover
to such year as determined under Section 422A(c)(4) of the Internal
Revenue Code of 1954, as amended."
RPM, INC.
BOARD OF DIRECTORS
By /s/ Thomas C. Sullivan
---------------------------------
Thomas C. Sullivan
Chairman of the Board
-3-
<PAGE> 9
AMENDMENT NO. 2
to
RPM, INC.
1979 NON-QUALIFIED STOCK OPTION PLAN
This Amendment No. 2 is made this 3rd day of May, 1984,
by the Board of Directors of RPM, Inc. (hereinafter referred to as
the "Company");
WITNESSETH:
-----------
WHEREAS, the RPM, Inc. 1979 Non-Qualified Stock Option Plan (hereinafter
referred to as the "Plan") was established on September 28, 1979 to provide key
employees of the Company and its subsidiaries with greater incentive to serve
and promote the interests of the Company and its shareholders; and
WHEREAS, the Board of Directors is empowered under Section
11 of the Plan to amend and modify the Plan; and
WHEREAS, it is the desire of the Board of Directors of the Company to
amend certain provisions of the Plan to enable participants to exercise stock
options granted under the Plan by delivering already-owned Common Shares of the
Company in payment therefor;
NOW, THEREFORE, pursuant to Section 11 of the Plan, the Board of
Directors of the Company hereby amends the Plan, effective May 3, 1984, as
follows:
Section 8 of the Plan is hereby amended by the deletion of paragraph (b)
of said Section and the substitution in lieu thereof of a new paragraph (b) to
read as follows:
<PAGE> 10
"(b) A person electing to exercise an option shall give written notice to the
Company of such election and the number of Shares such person has elected to
purchase and shall, at the time of exercise, tender the full purchase price of
the Shares such person has elected to purchase. With respect to incentive stock
options granted prior to May 3, 1984,the purchase price shall be paid in cash,
and with respect to incentive stock options granted thereafter and with respect
to any non-qualified stock options regardless of date of grant, the purchase
price may be paid either in cash or in the Company's Shares (excluding
fractional shares), or a combination thereof; provided, however, that the
practice known as "Pyramiding", which involves successive option exercises using
Shares received from a preceeding exercise to immediately exercise another
option and so on, shall not be permitted. Shares delivered in payment of the
purchase price shall be valued at the fair market value of such Shares on the
date of exercise of the option. Until such person has been issued a certificate
or certificates for the Shares so purchased, such person shall possess no rights
of record holder with respect to such Shares."
/s/ Thomas C. Sullivan
Effective: ----------------------------------
May 3, 1984 Thomas C. Sullivan,
Chairman
<PAGE> 11
AMENDMENT NO. 3
TO
RPM, INC.
1979 NON-QUALIFIED STOCK OPTION PLAN
This Amendment No. 3 is made this 21st day of July, 1987 by the
Board of Directors of RPM, Inc. (hereinafter referred to as the "Company"):
WITNESSETH:
-----------
WHEREAS, the RPM, Inc. 1979 Non-Qualified Stock Option Plan (hereinafter
referred to as the "Plan") was established on September 28, 1979 to provide key
employees of the Company and its subsidiaries with greater incentive to serve
and promote the interests of the Company and its shareholders; and
WHEREAS, the Board of Directors is empowered under Section 11 of
the Plan to amend and modify the Plan; and
WHEREAS, it is the desire of the Board of Directors of the Company to
amend certain provisions of the Plan to reflect certain changes in the federal
tax laws resulting from the Tax Reform Act of 1986 by (i) deleting the provision
requiring the sequential exercise of options granted under the Plan, and (ii)
deleting the $100,000 limit on the aggregate fair market value for options
granted during a calendar year to any employee;
NOW, THEREFORE, pursuant to Section 11 of the Plan, the Board of
Directors of the Company hereby amends the Plan, effective July 21, 1987, as
follows:
<PAGE> 12
(1) Section 3 of the Plan is hereby amended by the deletion of the last
paragraph of said Section in its entirety and the substitution in lieu thereof a
new final paragraph to read as follows:
"Options granted under the Plan on or after July 21, 1982 shall
constitute either incentive stock options, as defined in Section 422A
of Internal Revenue Code of 1954, as amended (the "Code"), hereinafter
referred to as "incentive stock options", or non-qualified stock
options as the Committee shall determine with respect to each option
granted on or after such date."
(2) Section 8 of the Plan hereby is amended by the deletion of paragraph
(e) of said Section in its entirety and the substitution in lieu thereof a new
paragraph (e) to read as follows:
"(e) In the case of incentive stock options granted on or after July
21, 1987, the aggregate fair market value (determined as of the date
the option is granted) of the shares with respect to which options are
exercisable for the first time by any individual during any calendar
year (under this Plan and all such plans of the Company and any parent
or subsidiary corporation) shall not exceed $100,000."
RPM, INC.
BOARD OF DIRECTORS
By /s/ Thomas C. Sullivan
-----------------------
Thomas C. Sullivan
Chairman of the Board
<PAGE> 13
TERMS AND CONDITIONS FOR THE ACCEPTANCE OF THE
SURRENDER OF OPTIONS UNDER THE
RPM, INC. 1979 NON-QUALIFIED STOCK OPTION PLAN
----------------------------------------------
ADOPTED: JANUARY 30, 1980
-------------------------
1. DEFINITIONS. As used herein, the following terms shall
be defined as follows:
"Requesting Optionee": the holder of an option granted under the 1979
Plan (including any person or persons as shall have acquired, by will or by the
laws of descent and distribution, the right to exercise such option) who
desires to surrender his right to exercise such option with respect to Common
Shares as to which such option is then exercisable and to receive payment in
consideration for such surrender.
"Presented Option": the option granted under the 1979 Plan
which is exercisable as to the Surrendered Shares and the Exercised
Shares.
"Covered Shares": all Common Shares as to which the Presented
Option is exercisable.
"Surrendered Shares": Covered Shares as to which the Request-
ing Optionee desires to surrender his right to exercise the Presented
Option and receive payment in consideration for such surrender.
"Exercised Shares": Covered Shares as to which the Requesting
Optionee exercises the Presented Option and pays the per share exer-
cise price.
"Date of Presentation": the date on which the Requesting
Optionee delivers to the Secretary of the Company all the documents
specified in Paragraph 2(b) hereinbelow in full and complete form.
"Fair Market Value": the last sales price for the Common Shares on the
over-the-counter market as reported by NASDAQ for the Date of Presentation or,
in the event there shall be no trading on the over-the-counter market on such
date, for the next day following the Date of Presentation on which trading shall
occur.
"Surrender Benefit": the amount obtained by subtracting the
per share exercise price set forth in the Presented Option from the
per share Fair Market Value.
"Section 16 Reporting Person": an officer or Director of the
Company or beneficial owner of more than ten percent (10%) of the
outstanding Common Shares.
<PAGE> 14
"Section 16 Period": the period beginning on the third (3rd) business
day following the date of the Company's release for publication of quarterly or
annual (as the case may be) sumnmary statements of sales and earnings and ending
on the twelfth (12th) business day following such date.
2. CONDITIONS TO ACCEPTANCE. The Requesting Optionee's
surrender of the Presented Option with respect to the Surrendered
Shares shall be accepted provided that all the following conditions
are met:
(a) The number of Surrendered Shares does not exceed the
number of Exercised Shares; that is, for each of the Covered Shares as
to which the Requesting Optionee desires to obtain the Surrender
Benefit, the Requesting Optionee must exercise the Presented Option
with respect to at least one Covered Share.
(b) The Requesting Optionee delivers to the Secretary of the
Company the following: (i) a completed Notice of Surrender of Option
(obtained from the Secretary) with respect to the Surrendered Shares;
(ii) a completed Notice of Exercise of Option (obtained from the
Secretary) with respect to the Exercised Shares; (iii) a certified or
cashier's check payable to the Company in the amount of the total
purchase price for the Exercised Shares; and (iv) such other
documentation as may be required for the effective exercise of the
Presented Option with respect to the Exercised Shares in accordance
with the instrument pursuant to which the Presented Option was granted.
(c) If the Requesting Optionee is a Section 16 Reporting
Person, the Date of Presentation occurs during a Section 16 Period.
3. FORM OF PAYMENT. The Requesting Optionee shall, upon the acceptance
of the surrender of the Presented Option with respect to the Surrendered Shares
as provided in Paragraph 2 above, be entitled to payment of the Surrender
Benefit with respect to each of the Surrendered Shares, subject to the following
terms and conditions as to the form and manner of such payment:
(a) If the Requesting Optionee is a Section 16 Reporting
Person, then the Surrender Benefit to which the Requesting Optionee is
entitled shall be payable only and entirely in cash.
(b) If the Requesting Optionee is not a Section 16 Reporting
Person, then the Surrender Benefit to which the Requesting Optionee is
entitled shall be payable entirely in cash, entirely in Common Shares,
or partly in cash and partly in Common Shares as the Requesting
Optionee may elect and specify in the Notice of Surrender of Option,
subject to the power and authority invested in and retained by the
Committee to approve or disapprove any such action.
<PAGE> 15
(c) To the extent that any of the Surrender Benefits to which
the Requesting Optionee is entitled shall be payable in Comnon Shares
pursuant to Sub-paragraph (b) above, the amount of the Surrender
Benefit so payable shall be divided by the Fair Market Value, and a
certificate or certificates representing the number of Common Shares
equal to the largest whole number (no fractional shares shall be
issued) contained in the result of such division shall be delivered to
the Requesting Optionee in accordance with Sub-paragraph (d) below. Any
remainder resulting from such division shall be payable to the
Requesting Optionee in cash.
(d) Upon receipt by the Company of all the documents specified
in Paragraph 2(b) above in full and complete form, the Company shall
cause to be mailed or otherwise delivered to the Requesting Optionee,
within thirty (30) days of the Date of Presentation, the following: (i)
a certificate or certificates for the Exercised Shares and for such
Common Shares, if any, which the Requesting Optionee is to receive as
full or part payment for the Surrender Benefit; and (ii) a check
payable to the Requesting Optionee in the amount of the Surrender
Benefit, or part thereof, payable to the Requesting Optionee in cash,
including the remainder, if any, referred to in Sub-paragraph (c)
above. With respect to the certificate or certificates referred to in
the preceding sentence, the Requesting Optionee shall not have any of
the rights of a shareholder with respect to the Common Shares
represented by such certificate or certificates until such certificate
or certificates are issued to the Requesting Optionee.
4. IRREVOCABILITY. The delivery by the Requesting Optionee to the
Secretary of the Company of the documents specified in Paragraph 2(b) above
shall render the exercise and surrender of Covered Shares to be effected by such
delivery irrevocable, except that such exercise and surrender shall be revocable
in the event that the Committee shall disapprove the Requesting Optionee's
election as to the form of payment of the Surrender Benefit pursuant to
Paragraph 3(b) above.
5. AMENDMENT. The Committee reserves the full power and authority
bestowed upon it by the 1979 Non-Qualified Stock Option Plan and, particularly,
by Paragraph 9 thereof, to rescind, amend, or alter, from time to time, these
Terms and Conditions with respect to the acceptance of the surrender of any
option or options granted or to be granted under that Plan and payment in
consideration for such surrender.
<PAGE> 16
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS AGREEMENT, entered into this ____ day of ________, 198__ ,
by and between RPM, Inc., an Ohio corporation (the "Company"), and __________
(the "Optionee).
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company has designated
the Compensation Committee of the Board of Directors (the "Committee") to serve
as the Committee to administer the Company's 1979 Non-Qualified Stock Option
Plan (the "Plan"), and
WHEREAS, the Committee has determined that the Optionee, as an
employee of the Company or of one of its subsidiaries (an "Employee"), should be
granted an incentive stock option under the Plan upon the terms and subject to
the conditions and covering the number of Common Shares, without par value
("Shares"), of the Company, set forth hereinafter:
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
1. Effective as of the date of this Agreement, the Company
grants to the Optionee, upon the terms and subject to the conditions set forth
hereinafter, the right and option to purchase all or any part of an aggregate of
_____ Thousand Shares (_,O0O) shares (such right and option being hereinafter
referred to as the "Option"), at a price of $_____ per share (the "Option
Price").
2. The term of the option shall be for a period of ten (10)
years from the date hereof, and the Option shall expire at the close of regular
business hours at the Company's principal office, Medina, Ohio, on the last day
of the term of the Option, or, if earlier, on the applicable expiration date
provided for in paragraphs 4 and 5 hereof.
3. Except as provided in paragraph 7 hereof, the Option shall
not be exercisable to any extent until one (1) year from the date hereof. The
Optionee shall become entitled to exercise the Option with respect to the number
of shares indicated below as of the date indicated opposite such number below:
Number of Shares Date as of Which
as to Which Option Option May be
May be Exercised Exercised
---------------- ---------
<PAGE> 17
To the extent that the Option has become exercisable with respect to a number of
Shares, as provided above, the Option may thereafter be exercised by the
Optionee either as to all or any part of such Shares at any time or from time to
time prior to expiration of the Option pursuant to paragraph 2 hereof. Except as
provided in paragraphs 4 and 5 hereof, the Option may not be exercised at any
time unless the Optionee shall be an Employee at such time.
4. So long as the Optionee shall continue to be an Employee, the
Option shall not be affected by (a) any temporary leave of absence approved in
writing by the Company or one of its subsidiaries, or (b) any change of duties
or position (including transfer to or from a subsidiary). If the Optionee ceases
to be an Employee for any reason other than death, the Option may be exercised
only to the extent of the purchase rights, if any, which had accrued as of the
date of such cessation pursuant to paragraph 3 hereof and which have not
theretofore been exercised; provided, however, that the Committee may in its
absolute discretion determine (but shall be under no obligation to determine)
that such accrued purchase rights shall be deemed to include additional Shares
covered by the Option. Upon any such cessation of employment, by reason of
discharge, such accrued purchase rights shall in any event terminate upon the
earlier of the date thirty (30) days from the date of such cessation of
employment or the last day of the term of the Option. Upon any such cessation of
employment by reason of a voluntary quit, such accrued purchase rights shall
terminate on the date of such cessation of employment. Nothing contained in this
Agreement shall confer upon the Optionee any right to continue in the employ of
the Company or any of its subsidiaries, or to limit or interfere in any way with
the right of the Company or any such subsidiary to terminate his or her
employment at any time, with or without cause.
5. If the Optionee dies while an Employee or within thirty (30)
days of the Optionee's having ceased to be an Employee for any reason, such
person or persons as shall have acquired, by will or by the laws of descent and
distribution, the right to exercise the Option (the "Personal Representative")
may exercise the Option to the extent of the purchase rights, if any, which had
accrued as of the date of the Optionee's death pursuant to paragraph 3 hereof
and which have not theretofore been exercised; provided, however, that the
Committee may in its absolute discretion determine (but shall be under no
obligation to determine) that such accrued purchase rights shall be deemed to
include additional Shares covered by the Option. Such accrued purchase rights
shall in any event terminate upon the earlier of the date one year from the date
of the Optionee's death or the last day of the term of the Option.
6. Notwithstanding the foregoing, this Option is exercisable
only to the extent that the aggregate fair market value (determined at the time
such Option is granted) of the shares with respect to which such Options first
become exercisable during any calendar year does not exceed $100,000.
7. Upon the commencement of a "tender offer" for RPM, Inc.
Common Shares as provided under Rule 14d-2 of the Securities Exchange Act of
1934, or any subsequent comparable Federal rule or regulation governing
-2-
<PAGE> 18
tender offers in general, or upon the occurrence of a "Control Share
Acquisition" of RPM, Inc. Common Shares as defined under Section 1707.01(z),
Ohio Revised Code, or any subsequent comparable statutes under the laws of the
State of Ohio, whichever first occurs, the Optionee shall have the immediate
right and option (notwithstanding the provisions of paragraph 3 hereof) to
exercise the Option with respect to all Shares covered by the Option, which
exercise, if made, shall be irrevocable.
8. In the event of any change in the number of outstanding
Shares through the declaration of share dividends, share splits, or
consolidations, through recapitalizations, or by reason of any other increase or
decrease in the number of outstanding Shares effected without receipt of
consideration by the Company, the number of Shares then covered by the Option
and the Option Price shall be appropriately adjusted consistent with such
change. The determination of the Committee as to any such adjustment shall be
conclusive and binding upon the Optionee and upon the Personal Representative.
9. The Option may be exercised by delivery to the Secretary of
the Company at its principal office, 2628 Pearl Road, P.O. Box 777, Medina, Ohio
44258, of a completed Notice of Exercise of Option (obtainable from the
Secretary of the Company) setting forth the number of Shares with respect to
which the Option is being exercised, together with a certified or cashier's
check payable to the Company in the amount of the total purchase price of such
Shares.
10. Upon receipt by the Company prior to expiration of the
Option of a duly completed Notice of Exercise of Option accompanied by a
certified or cashier's check , as provided in paragraph 9 hereof, in full
payment for the Shares being purchased pursuant to such Notice (and, with
respect to any Option exercised pursuant to paragraph 5 hereof by the Personal
Representative, accompanied in addition by proof satisfactory to the Committee
of the right of the Personal Representative to exercise the Option), the Company
shall cause to be mailed or otherwise delivered to the Optionee or the Personal
Representative, as the case may be, within thirty (30) days of such receipt, a
certificate or certificates for the number of Shares so purchased. The Optionee
or the Personal Representative shall not have any of the rights of a shareholder
with respect to the Shares covered by the Option unless and until one or more
certificates representing such Shares shall be issued to the Optionee or the
Personal Representative.
11. The Committee may, under such terms and conditions as it
deems appropriate, accept the surrender by the Optionee or by the Personal
Representative of the right to exercise the Option with respect to all or part
of the Shares subject to the Option and authorize a payment in consideration
therefor of an amount equal to the difference obtained by subtracting the Option
Price for such Shares from the fair market value of such Shares (being the last
sales price of the Shares on the date of such surrender as reported on NASDAQ),
such payment to be made in cash, or in Shares valued at fair market value (as
defined above in this paragraph 11) as of the date of such surrender, or partly
in cash and
-3-
<PAGE> 19
partly in Shares, provided that the Committee determines that such settlement is
consistent with the purpose of the Plan. The Option, or part thereof, which is
surrendered pursuant to this paragraph 11 shall terminate as of the date of such
surrender.
12. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and the heirs, estate and personal
representatives of the Optionee. The Option shall not be transferable other than
by will or the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee.
13. This Agreement is subject to all of the terms, conditions, and
provisions of the RPM, Inc. 1979 Non-Qualified Stock Option Plan, as amended
from time to time, and to such rules, regulations, and interpretations of the
Plan as may be adopted by the Committee and in effect from time to time. A copy
of the Plan is attached hereto as Exhibit "A" and is incorporated herein by
reference. In the event and to the extent that this Agreement conflicts or is
inconsistent with the terms, conditions, and provisions of the Plan, the Plan
shall control, and this Agreement shall be deemed to be modified accordingly.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its undersigned officer thereunto duly authorized, and the
Optionee has hereunto set his hand, all as of the day and year first above
written.
RPM, INC.
By_____________________________
Thomas C. Sullivan
("Company")
_____________________________
("Optionee")
-4-
<PAGE> 20
STOCK OPTION AGREEMENT
----------------------
THIS AGREEMENT, entered into this ____ day of __________, 19__,
by and between RPM, Inc., an Ohio corporation (the "Company") , and
__________________ (the "Optionee") ,
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company has designated
the Compensation Committee of the Board of Directors (the "Committee") to
serve as the Committee to administer the Company's 1979 Non-Qualified Stock
Option Plan (the "Plan") , and
WHEREAS, the Committee has determined that the Optionee, as an
employee of the Conpany or of one of its subsidiaries (an "Employee"), should
be granted a stock option under the Plan upon the terms and subject to the
conditions and covering the number of Common Shares, without par value
("Shares"), of the Company, set forth hereinafter:
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
1. Effective as of the date of this Agreenent, the Company
grants to the Optionee, upon the terms and subject to the conditions set forth
hereinafter, the right and option to purchase all or any part of an aggregate
of _____________________ (_) Shares (such right and option being hereinafter
referred to as the "Option"), at a price of $_______ per share (the "Option
Price"), the Option Price being equal to the mean between the closing
over-the-counter bid and asked prices of the Shares on the date hereof as
reported on NASDAQ.
2. The term of the option shall be for a period of __________
(_____) years from the date hereof, and the Option shall expire at the close of
regular business hours at the Company's principal office, Medina, Ohio, on
the last day of the term of the Option, or, if earlier, on the applicable
expiration date provided for in paragraphs 4 and 5 hereof.
3. The Option shall not be exercisable to any extent until
____________ (____) (days/months/years) fran the date hereof. The Optionee shall
become entitled to exercise the Option with respect to the number of Shares
indicated below as of the date indicated opposite such number below:
<PAGE> 21
Number of Shares Date as of Which
as to Which Option Option May be
May be Exercised Exercised
---------------- ---------
________________ _________ __, 19
________________ _________ __, 19
________________ _________ __, 19
________________ _________ __, 19
________________ _________ __, 19
To the extent that the Option has become exercisable with respect to a number
of Shares, as provided above, the Option may thereafter be exercised by the
Optionee either as to all or any part of such Shares at any time or from time to
time prior to expiration of the Option pursuant to paragraph 2 hereof. Except as
provided in paragraphs 4 and 5 hereof, the Option may not be exercised at any
time unless the Optionee shall be an Employee at such time.
4. So long as the Optionee shall continue to be an Employee, the Option
shall not be affected by (a) any temporary leave of absence approved in writing
by the Company or one of its subsidiaries, or (b) any change of duties or
position (including transfer to or from a subsidiary). If the Optionee ceases to
be an Employee for any reason other than death, the Option may be exercised only
to the extent of the purchase rights, if any, which had accrued as of the date
of such cessation, pursuant to paragraph 3 hereof, and which have not
theretofore been exercised; provided, however, that the Committee may in its
absolute discretion determine (but shall be under no obligation to determine)
that such accrued purchase rights shall be deemed to include additional Shares
covered by the Option. Upon any such cessation of employment, such accrued
purchase rights shall in any event terminate upon the earlier of the date thirty
(30) days from the date of such cessation of employment or the last day of the
term of the Option. Nothing contained in this Agreement shall confer upon the
Optionee any right to continue in the employ of the Company or any of its
subsidiaries, or to limit or interfere in any way with the right of the Company
or any such subsidiary to terminate his or her employment at any time, with or
without cause.
5. If the Optionee dies while the Optionee is an Employee or within
thirty (30) days of the Optionee's having ceased to be an Employee for any
reason other than death, such person or persons as shall have acquired, by will
or by the laws of descent and distribution, the right to exercise the Option
(the "Personal Representative") may exercise the Option to the extent of the
purchase rights, if any, which had accrued as of the date of the Optionee's
death, pursuant to paragraph 3 hereof, and which have not theretofore been
exercised; provided, however, that the Committee may in its absolute discretion
determine (but shall be under no obligation to determine) that such accrued
purchase rights shall be deemed to include additional Shares covered by the
Option. Such accrued purchase rights shall in any event terminate upon the
earlier of the date one year from the date of the Optionee's death or the last
day of the term of the Option.
-2-
<PAGE> 22
6. In the event of any change in the number of outstanding Shares
through the declaration of share dividends, share splits, or consolidations,
through recapitalizations, or by reason of any other increase or decrease in
the number of outstanding Shares effected without receipt of consideration by
the Company, the number of Shares then covered by the Option and the Option
Price shall be appropriately adjusted consistent with such change. The
determination of the Committee as to any such adjustment shall be conclusive and
binding upon the Optionee and upon the Personal Representative.
7. The Option may be exercised by delivery to the Secretary of the
Company at its principal office, 2628 Pearl Road, Medina, Ohio, 44256, of a
completed Notice of Exercise of Option (obtainable from the Secretary of the
Company) setting forth the number of Shares with respect to which the Option is
being exercised, together with a certified or cashier's check payable to the
Company in the amount of the total purchase price for such Shares.
8. Upon receipt by the Company prior to expiration of the Option of a
duly completed Notice of Exercise of Option accompanied by a certified or
cashier's check, as provided in paragraph 7 hereof, in full payment for the
Shares being purchased pursuant to such Notice (and, with respect to any Option
exercised pursuant to paragraph 5 hereof by the Personal Representative,
accompanied in addition by proof satisfactory to the Committee of the right of
the Personal Representative to exercise the Option), the Company shall cause to
be mailed or otherwise delivered to the Optionee or the Personal Representative,
as the case may be, within thirty (30) days of such receipt, a certificate or
certificates for the nurrhber of Shares so purchased. The Optionee or the
Personal Representative shall not have any of the rights of a shareholder with
respect to the Shares covered by the Option unless and until one or more
certificates representing such Shares shall be delivered to the Optionee or the
Personal Representative, and then only to the extent covered by such certificate
or certificates.
9. The Committee may, under such term's and conditions as it deems
appropriate, accept the surrender by the Optionee or by the Personal
Representative of the right to exercise the Option with respect to all or part
of the Shares subject to the Option and authorize a payment in consideration
therefor of an amount equal to the difference obtained by subtracting the Option
Price for such Shares from the fair market value of such Shares (being the mean
between the closing over-the-counter bid and asked prices of the Shares on the
date of such surrender as reported on NASDAQ), such payment to be made in cash,
or in Shares valued at fair market value (as defined above in this paragraph 9)
as of the date of such surrender, or partly in cash and partly in Shares,
provided that the Committee determines that such settlement is consistent with
the purpose of the Plan. The Option, or part thereof, which is surrendered
pursuant to this paragraph 9 shall terminate as of the date of such surrender.
10. This Agreement shall be binding upon and inure to the benefit of
any successor or successors of the Company and any successor or successors of
the Optionee
-3-
<PAGE> 23
to the extent provided by paragraph 5 hereof. The Option shall not be
transferable other than by will or the laws of descent and distribution, and
the Option may be exercised during the lifetime of the Optionee only by the
Optionee.
11. This Agreeeent is subject to all of the terms, conditions,
and provisions of the RPM, Inc. 1979 Non-Qualified Stock Option Plan, as
amended, and to such rules, regulations, and interpretations of the Plan as may
be adopted by the Committee and in effect from time to time. A copy of the Plan
is attached hereto as Exhibit "A" and is incorporated herein by reference. In
the event and to the extent that this Agreement conflicts or is inconsistent
with the terms, conditions, and provisions of the Plan, the Plan shall control,
and this Agreement shall be deeeed to be modified accordingly.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its undersigned officer thereunto duly authorized, and
the Optionee has hereunto set his hand, all as of the day and year first above
written.
- ------------------------------- RPM, INC.
By
--------------------------
Thomas C. Sullivan, Chairman
("Optionee") ("Company")
-4-
<PAGE> 1
EXHIBIT 10.6
RPM, INC.
1989 STOCK OPTION PLAN
1. Purpose of the Plan
The Plan is intended to provide a method of providing key employees of
RPM, Inc. (the "Company") and its subsidiaries with greater incentive to serve
and promote the interests of the Company and its shareholders. The premise of
the Plan is that, if such key employees acquire a proprietary interest in the
business of the Company or increase such proprietary interest as they may
already hold, then the incentive of such key employees to work toward the
Company's continued success will be commensurately increased. Accordingly, the
Company will, from time to time during the effective period of the Plan, grant
to such employees as may be selected to participate in the Plan options to
purchase Common Shares, without par value ("Shares"), of the Company on the
terms and subject to the conditions set forth in the Plan.
2. Administration of the Plan
The Plan shall be administered by the Compensation Committee of the
Board of Directors or by such other Committee composed of no fewer than three
(3) disinterested members of the Board of Directors of the Company as may be
designated by the Board of Directors (the "Committee"), provided that the
Committee shall not include any person who has been eligible to receive options
under the Plan or under any other plan of the Company entitling the participants
therein to acquire Shares, options to purchase Shares, or stock appreciation
rights of the Company at any time within the twelve (12) month period
immediately preceding the date on which such person becomes a member of the
Committee. A majority of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all of the members, shall be the acts of
the Committee.
Subject to the provisions of the Plan, the Committee shall have full
and final authority, in its absolute discretion, (a) to determine the employees
to be granted options under the Plan, (b) to determine the number of Shares
subject to each option, (c) to determine the time or times at which options will
be granted, (d) to determine the option price of the Shares subject to each
option, which price shall not be less than the minimum specified in Section 6 of
the Plan, (e) to determine the time or times when each option becomes
exercisable and the duration of the exercise period, (f) to determine the terms
and conditions under which the Committee shall accept the surrender of an option
or any portion thereof pursuant to Section 9 of the Plan and to determine the
form in which payment for such surrendered option or portion thereof shall be
made, (g) to prescribe the form or forms of the agreements evidencing any
options granted under the Plan (which forms shall be consistent with the Plan),
(h) to adopt, amend and rescind such rules and
<PAGE> 2
regulations as, in the Committee's opinion, may be advisable in the
administration of the Plan, and (i) to construe and interpret the Plan, the
rules and regulations and the agreements evidencing options granted under the
Plan and to make all other determinations deemed necessary or advisable for the
administration of the Plan. Any decision made or action taken in good faith by
the Committee in connection with the administration, interpretation, and
implementation of the Plan and of its rules and regulations, shall, to the
extent permitted by law, be conclusive and binding upon all optionees under the
Plan and upon any person claiming under or through such an optionee, and no
member of the Board of Directors shall be liable for any such decision made or
action taken by the Committee.
3. Shares Available for Options
Subject to the provisions of Section 10 of the Plan, the aggregate
number of Shares for which options may be granted under the Plan shall not
exceed one million five hundred thousand (1,500,000).
The Shares to be delivered under exercise of options under the Plan
shall be made available, at the discretion of the Board of Directors, either
from the authorized but unissued Shares of the Company or from Shares held by
the Company as treasury shares, including Shares purchased in the open market.
If an option granted under the Plan shall expire or terminate
unexercised as to any Shares covered thereby, such Shares shall thereafter be
available for the granting of other options under the Plan. If, however, an
option granted under the Plan shall be accepted for surrender pursuant to terms
and conditions determined by the Committee under Section 9, any Shares covered
thereby shall not thereafter be available for the granting of other options
under the Plan.
Options granted under the Plan shall constitute either incentive stock
options, as defined in Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), hereinafter referred to as "incentive stock options", or
non-qualified stock options as the Committee shall determine with respect to
each option granted on or after such date.
4. Eligibility
Option will be granted only to persons who are employees of the Company
or of a subsidiary of the Company. The term "subsidiary" as used herein shall
mean any corporation, a majority of the stock of which having normal voting
rights is owned directly or indirectly by the Company. The term "employees"
shall include officers as well as all other employees of the Company and its
subsidiaries and shall include Directors who are also employees of the Company
or of a subsidiary of the Company. Neither the members
2
<PAGE> 3
of the Committee nor any other member of the Board of Directors who is not an
employee of the Company (or of a subsidiary of the Company) shall be eligible to
receive an option under the Plan. Each grant of an option shall be evidenced by
an agreement executed on behalf of the Company by the Chairman of the Board or
another executive officer and delivered to and accepted by the optionee.
In selecting the persons to whom options shall be granted under the
Plan, as well as in determining the number of Shares subject to and the type and
terms and provisions of each option, the Committee shall weigh such factors as
it shall deem relevant to accomplish the purpose of the Plan, namely, to enhance
the incentive of those key employees of the Company and its subsidiaries who
exert authority over and are responsible for the management and conduct of the
Company's business. A person who has been granted an option under the Plan may
be granted an additional option or options if the Committee shall so determine.
5. Term of Options
The full term of each option granted under the Plan shall be such
period as the Committee shall determine, but shall not be more than ten (10)
years from the date of granting thereof; provided, however, that if an employee
to whom an incentive stock option is granted is at the time of grant of the
incentive stock option an owner as defined in Section 425(d) of the Code of more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any subsidiary corporation, hereinafter referred to as a
"Substantial Shareholder," no incentive stock option granted to such an employee
shall be exercisable after the expiration of five (5) years from the date of
grant of such option.
Each option shall be subject to earlier termination as provided in
Paragraphs (c) and (d) of Section 8 and in Section 9 of the Plan.
The Committee may, with the concurrence of the affected optionee,
cancel any option granted under the Plan and authorize the grant of a new option
or options to buy Shares in such number and at such price as the Committee shall
determine, subject to the provisions of the Plan.
6. Option Price
The option price shall be determined by the Committee at the time any
option is granted but shall not be less than 100 per cent of the fair market
value of the Shares covered thereby at the time the option is granted, such fair
market value to be determined in accordance with procedures to be established by
the Committee; provided, however, that if an employee to whom an incentive stock
option is granted is at the time of the grant of the incentive stock option a
Substantial Shareholder, the option price shall be determined by the Committee
from time to time but shall never be
3
<PAGE> 4
less than 110 percent of the fair market value of the Company's Shares on the
date such option is granted.
7. Non-transferability of Option
No option granted under the Plan shall be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and such option
may be exercised during the optionee's lifetime only by the optionee or by his
guardian or legal representative.
8. Exercise of Options
(a) Each option granted under the Plan shall be exercisable on such
date or dates and during such period and for such number of Shares as shall be
set forth in the agreement evidencing such option.
(b) A person electing to exercise an option shall give written notice
to the Company of such election and the number of Shares such person has elected
to purchase and shall, at the time of exercise, tender the full purchase price
of the Shares such person has elected to purchase. The purchase price may be
paid either in cash or in the Company's Shares (excluding fractional shares), or
a combination thereof; provided, however, that the practice known as
"Pyramiding", which involves successive option exercises using Shares received
from a preceding exercise to immediately exercise another option and so on,
shall not be permitted. Shares delivered in payment of the purchase price shall
be valued at the fair market value of such Shares on the date of exercise of the
option. Until such person has been issued a certificate or certificates for the
Shares so purchased, such person shall possess no rights of a record holder with
respect to any such Shares.
(c) No option shall be affected by any change of duties or position of
the optionee (including transfer to or from a subsidiary), so long as such
optionee continues to be an employee of the Company or one of its subsidiaries.
If an optionee shall cease to be an employee for any reason other than death,
the options held by such optionee shall thereafter be exercisable only to the
extent of the purchase rights, if any, which had accrued as of the date of such
cessation, provided that the Committee may provide in the agreement evidencing
any option that the Committee may in its absolute discretion, upon any such
cessation of employment, determine (but shall be under no obligation to
determine) that such accrued purchase rights shall be deemed to include
additional Shares covered by such option. Upon any such cessation of employment,
such accrued rights to purchase shall in any event terminate upon the earlier of
(A) the expiration of the full term of the option or (B) the expiration of
thirty (30) days from the date of such cessation of employment if by reason of
discharge or immediately if by reason of voluntary quit. The
4
<PAGE> 5
agreements evidencing options granted under the Plan may contain such provisions
as the Committee shall approve with reference to the effect of approved leaves
of absence. Nothing in the Plan or in any option granted hereunder shall confer
upon any optionee any right to continue in the employ of the Company or any of
its subsidiaries, or to limit or interfere in any way with the right of the
Company or its subsidiaries to terminate such optionee's employment at any time,
with or without cause.
(d) Should an optionee die while in the employ of the Company or one of
its subsidiaries or within thirty (30) days after cessation of such employment
by reason of discharge, such person as shall have acquired, by will or by the
laws of descent and distribution (the "personal representative"), the right to
exercise any option theretofore granted such optionee may, in either case,
exercise such option at any time prior to expiration of its full term or one (1)
year from the date of death of the optionee, whichever is earlier, provided that
any such exercise shall be limited to the purchase rights which had accrued as
of the date when the optionee ceased to be an employee, whether by death or
otherwise, and provided further, however, that the Committee may provide in the
agreement evidencing any option that all Shares covered by such option shall
become subject to purchase immediately upon the death of the optionee.
(e) In the case of incentive stock options, the aggregate fair market
value (determined as of the date the option is granted) of the Shares with
respect to which options are exercisable for the first time by any individual
during any calendar year (under this Plan and all such plans of the Company and
any parent or subsidiary corporation) shall not exceed $100,000.
9. Surrender of Options - Stock Appreciation Rights
The Committee may, in its absolute discretion and under such terms and
conditions as it deems appropriate, accept the surrender by an optionee, or the
personal representative of an optionee, of an option, or any portion thereof, to
purchase Shares granted under the Plan and authorize the payment in
consideration for such surrender of an amount equal to the excess of the fair
market value at the date of surrender of the Shares covered by the option, or
portion thereof, surrendered over the aggregate option price of such Shares,
such payment to be in Shares (valued at fair market value on the date of such
surrender) or in cash, or partly in Shares and partly in cash as determined by
the Committee, provided that the Committee determines that such surrender is
consistent with the purpose set forth in Section 1 hereof.
10. Adjustment Upon Changes in Capitalization
In the event of any change in the number of outstanding Shares through
the declaration of share dividends, share splits, or consolidations, through
recapitalizations, or by reason of any
5
<PAGE> 6
other increase or decrease in the number of outstanding Shares effected without
receipt of consideration by the Company, the number of Shares available and
reserved for options which may thereafter be granted, the number of Shares
reserved for and subject to any options outstanding but unexercised, and the
price per share payable on the exercise of any options outstanding but
unexercised, shall be adjusted as the Committee considers appropriate, and all
such adjustments by the Committee shall be conclusive and binding upon all
optionees under the Plan and upon any person claiming under or through such an
optionee.
11. Issuance of Substitute Options
The Committee may also make a determination, subject to approval and
authorization by the Board of Directors, to issue options having terms and
provisions which vary from those specified herein, provided that any options
issued pursuant to this Section are issued in substitution for, or in connection
with the assumption of, existing options issued by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or by
reason of a transaction involving a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation in which the
Company or a subsidiary is a party.
12. Amendment, Suspension or Termination of Plan
The Board of Directors may at any time terminate or from time to time
amend or suspend the Plan; provided, however, that no such amendment shall,
without approval of the shareholders of the Company, except as provided in
Section 10 hereof, (a) increase the aggregate number of Shares as to which
options may be granted under the Plan; (b) change the minimum option exercise
price; (c) increase the maximum period during which options may be exercised;
(d) extend the effective period of this Plan; or (e) permit the granting of
options to members of the Committee. No option may be granted during any
suspension of the Plan or after the Plan has been terminated and no amendment,
suspension or termination shall, without the optionee's consent, alter or impair
any of the rights or obligations under any option theretofore granted to such
person under the Plan.
13. Effective Date and Duration of Plan
This Plan shall become effective upon its approval by the affirmative
vote of the holders of a majority of the outstanding Shares present in person or
by proxy and entitled to vote on this Plan at the Annual Meeting of the
Shareholders of the Company on October 20, 1989, or any adjournment thereof. No
options may be granted under this Plan subsequent to October 19, 1999.
6
<PAGE> 7
AMENDMENT NO. 1
TO
RPM, INC.
1989 STOCK OPTION PLAN
This Amendment No. 1 is made this 19th day of July, 1991
by the Board of Directors of RPM, Inc. (hereinafter referred to as
the "Company");
WITNESSETH:
-----------
WHEREAS, the RPM, Inc. 1989 Stock Option Plan (hereinafter
referred to as the "Plan") was established effective October 20, 1989 to provide
officers and other key employees of the Company with greater incentive to serve
and promote the interests of the Company and its shareholders; and
WHEREAS, the Board of Directors is empowered under
Section 12 of the Plan to amend and modify the Plan; and
WHEREAS, it is the desire of the Board of Directors of the
Company to amend certain provisions of the Plan to conform with the amended
provisions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended, by the Securities and Exchange Commission (the "Commission") and
effective May 1, 1991;
WHEREAS, the Commission has indicated that such conforming
amendments are not required to be submitted to the shareholders of a company for
authorization and approval;
NOW, THEREFORE, pursuant to Section 12 of the Plan, the Board
of Directors of the Company hereby amends the Plan, effective July 19, 1991, as
follows:
<PAGE> 8
(1) Section 2 of the Plan is hereby amended by the deletion of
the first paragraph of said Section and the substitution in lieu thereof of a
new first paragraph to read as follows:
"The Plan shall be administered by the Compensation Committee
of the Board of Directors or by such other Committee composed
of no fewer than two (2) disinterested members of the Board of
Directors of the Company as may be designated by the Board of
Directors (the "Committee"), provided that the Committee shall
not include any person who has been granted or awarded equity
securities under the Plan or under any other plan of the
Company entitling the participants therein to acquire Shares,
options to purchase Shares, or stock appreciation rights of
the Company at any time within the twelve (12) month period
immediately preceding the date on which such person becomes a
member of the Committee. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts
approved in writing by all of the members, shall be the acts
of the Committee."
(2) Section 7 of the Plan is hereby amended by the deletion of
said Section and the substitution in lieu thereof of a new Section to read as
follows:
"No option granted under the Plan shall be transferrable by
the optionee otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations
order as defined by the Code; and such option may be exercised
during the optionee's lifetime only by the optionee or by his
guardian or legal representative."
(3) Section 12 of the Plan is hereby amended by the deletion
of said Section and the substitution in lieu thereof a new Section to read as
follows:
-2-
<PAGE> 9
"The Board of Directors may at any time terminate or from time
to time amend or suspend the Plan; provided, however, that no
such amendment shall, without approval of the shareholders of
the Company, except as provided in Section 10 hereof, (a)
increase the aggregate number of Shares as to which options
may be granted under the Plan; (b) change the minimum option
exercise price; (c) increase the maximum period during which
options may be exercised; (d) extend the effective period of
this Plan; (e) modify the requirements for participation in
the Plan; (f) increase the benefits to participants who are
officers of the Company; or (g) permit the granting of options
to members of the Committee. No option may be granted during
any suspension of the Plan or after the Plan has been
terminated and no amendment, suspension or termination shall,
without the optionee's consent, alter or impair any of the
rights or obligations under any option theretofore granted to
such person under the Plan."
RPM, INC.
BOARD OF DIRECTORS
By /s/ Thomas C. Sullivan
_______________________________
Thomas C. Sullivan
Chairman
-3-
<PAGE> 10
ISO NO.
INCENTIVE STOCK OPTION AGREEMENT
--------------------------------
THIS AGREEMENT, entered into this ______ day of _______, 19__ by
and between RPM, Inc., an Ohio corporation (the "Company"), and ((1)) (the
"Optionee").
W I T N E S S E T H:
--------------------
WHEREAS, the Board bf Directors of the Company has designated
the Compensation Committee of the Board of Directors (the "Committee") to serve
as the Committee to administer the RPM, Inc. 1989 Stock Option Plan (the
"Plan"), and
WHEREAS, the Committee has determined that the Optionee, as an
employee of the Company or of one of its subsidiaries (an "Employee"), should be
granted an incentive stock option under the Plan upon the terms and subject to
the conditions and covering the number of Common Shares, without par value
("Shares"), of the Company, set forth hereinafter:
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
1. Effective as of the date of this Agreement, the Company grants to
the Optionee, upon the terms and subject to the conditions set forth
hereinafter, the right and option to purchase all or any part of an aggregate of
((2)) __________ (__) Shares (such right and option being hereinafter referred
to as the "Option"), at a price of $____ per share (the "Option Price").
2. The term of the option shall be for a period of ten (10) years from
the date hereof, and the Option shall expire at the close of regular business
hours at the Company's principal office, Medina, Ohio, on the last day of the
term of the Option, or, if earlier, on the applicable expiration date provided
for in paragraphs 4 and 5 hereof.
3. Except as provided in paragraph 7 hereof, the Option shall not be
exercisable to any extent until one (1) year from the date hereof. The Optionee
shall become entitled to exercise the Option with respect to the number of
Shares indicated below as of the date indicated opposite such number below:
Number of Shares Date as of Which
as to Which Option Option May be
May be Exercised Exercised
---------------- ---------
<PAGE> 11
To the extent that the Option has become exercisable with respect to a number of
Shares, as provided above, the Option may thereafter be exercised by the
Optionee either as to all or any part of such Shares at any time or from time to
time prior to expiration of the Option pursuant to paragraph 2 hereof. Except as
provided in paragraphs 4 and 5 hereof, the Option may not be exercised at any
time unless the Optionee shall be an Employee at such time.
4. So long as the Optionee shall continue to be an Employee, the Option
shall not be affected by (a) any temporary leave of absence approved in writing
by the Company or one of its subsidiaries, or (b) any change of duties or
position (including transfer to or from a subsidiary). If the Optionee ceases to
be an Employee for any reason other than death, the Option may be exercised only
to the extent of the purchase rights, if any, which had accrued as of the date
of such cessation pursuant to paragraph 3 hereof and which have not theretofore
been exercised; provided, however, that upon written request to the Committee it
may in its absolute discretion determine (but shall be under no obligation to
determine) that such accrued purchase rights shall be deemed to include
additional Shares covered by the Option. Upon any such cessation of employment
by reason of discharge, such accrued purchase rights shall in any event
terminate upon the earlier of the date thirty (30) days from the date of such
cessation of employment or the last day of the term of the Option. Upon any such
cessation of employment by reason of a voluntary quit, such accrued purchase
rights shall terminate on the date of such cessation of employment. Nothing
contained in this Agreement shall confer upon the Optionee any right to continue
in the employ of the Company or any of its subsidiaries, or to limit or
interfere in any way with the right of the Company or any such subsidiary to
terminate his or her employment at any time, with or without cause.
5. If the Optionee dies while an Employee or within thirty (30) days of
the Optionee's having ceased to be an Employee by reason of discharge, such
person or persons as shall have acquired, by will or by the laws of descent and
distribution, the right to exercise the Option (the "Personal Representative")
may exercise the Option to the extent of the purchase rights, if any, which had
accrued as of the date of the Optionee's death pursuant to paragraph 3 hereof
and which have not theretofore been exercised; provided, however, that upon
written request to the Committee it may in its absolute discretion determine
(but shall be under no obligation to determine) that such accrued purchase
rights shall be deemed to include additional Shares covered by the Option. Such
accrued purchase rights shall in any event terminate upon the earlier of the
date one (1) year from the date of the Optionee's death or the last day of the
term of the Option.
6. Notwithstanding the foregoing, this Option is exercisable only to the
extent that the aggregate fair market value (determined at the time such Option
is granted) of the shares with respect to which such Options first become
exercisable during any calendar year does not exceed $100,000.
7. Upon the commencement of a "tender offer" for the Company's Common
Shares as provided under Rule 14d-2 promulgated under the Federal Securities
Exchange
2
<PAGE> 12
Act of 1934, as amended, or any subsequent comparable Federal rule or
regulation governing tender offers, or upon the occurrence of a "Control Share
Acquisition" of the Company's Common Shares as defined under Section 1701.01(Z),
Ohio Revised Code, or any subsequent comparable statutes under the laws of the
State of Ohio, whichever first occurs, or within the thirty (30) day period
ending on the date designated by the Board for dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not to be the
surviving corporation, the Optionee shall have the immediate right and option
(notwithstanding the provisions of Section 3 hereof) to exercise the Option with
respect to all Shares covered by the Option, and any such exercise shall be
irrevocable. The Optionee shall be entitled to exercise the Option as provided
in the immediately preceding sentence regardless of whether the "tender offer"
or "control share acquisition" is successful and regardless of whether the other
corporation which is the surviving corporation in a merger or consolidation
shall adopt and maintain the RPM, Inc. 1989 Stock Option Plan.
8. The Option may be exercised by delivery to the Secretary of
the Company at its principal office, 2628 Pearl Road, P.O. Box 777, Medina, Ohio
44258, of a completed Notice of Exercise of Option (obtainable from the
Secretary of the Company) setting forth the number of Shares with respect to
which the Option is being exercised, together with either a certified or
cashier's check payable to the Company or certificates for RPM, Inc. Common
Shares, properly endorsed for transfer, or a combination thereof, in the amount
of the total purchase price of such Shares.
9. Upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by a certified or
cashier's check, or properly endorsed certificates for RPM Common Shares, as
provided in paragraph 8 hereof, in full payment for the Shares being purchased
pursuant to such Notice (and, with respect to any Option exercised pursuant to
paragraph 5 hereof by the Personal Representative, accompanied in addition by
proof satisfactory to the Committee of the right of the Personal Representative
to exercise the Option), the Company shall cause to be mailed or otherwise
delivered to the Optionee or the Personal Representative, as the case may be,
within thirty (30) days of such receipt, a certificate or certificates for the
number of Shares so purchased. The Optionee or the Personal Representative shall
not have any of the rights of a shareholder with respect to the Shares covered
by the Option unless and until one or more certificates representing such Shares
shall be issued to the Optionee or the Personal Representative.
10. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and the heirs, estate and
personal representatives of the Optionee. The Option shall not be transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code, and the Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his
guardian or legal representative.
11. This Agreement is subject to all of the terms, conditions,
and provisions of the RPM, Inc. 1989 Stock Option Plan, as amended from time to
time, and to such rules,
3
<PAGE> 13
regulations, and interpretations of the Plan as may be adopted by the Committee
and in effect from time to time. A copy of the Plan is attached hereto as
Exhibit "A" and is incorporated herein by reference. In the event and to the
extent that this Agreement conflicts or is inconsistent with the terms,
conditions, and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly.
4
<PAGE> 14
WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behlaf by its undersigned executive officer thereunto duly
authorized, and the Optionee has hereunto set his hand, ass as of the day and
year first above written.
RPM, INC
By_______________________________
Thomas C. Sullivan, Chairman
("Company")
_______________________________
5
<PAGE> 15
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
THIS AGREEMENT, entered into this ___ day of __________, 19 , by
and between RPM, Inc., an Ohio corporation (the "Company"), and
___________________________________ (the "Optionee").
W I T N E S S E T H:
--------------------
WHEREAS, the Board of Directors of the Company has designated
the Compensation Committee of the Board of Directors (the "Committee") to serve
as the Committee to administer the RPM, Inc. 1989 Stock Option Plan (the
"Plan"), and
WHEREAS, the Committee has determined that the Optionee, as an
employee of the Company or of one of its subsidiaries (an "Employee"), should be
granted a non-qualified stock option under the Plan upon the terms and subject
to the conditions and covering the number of Common Shares, without par value
("Shares"), of the Company, set forth hereinafter:
NOW, THEREFORE, the Company and the Optionee hereby agree as
follows:
1. Effective as of the date of this Agreement, the Company
grants to the Optionee, upon the terms and subject to the conditions set forth
hereinafter, the right and option to purchase all or any part of an aggregate of
_________________________ ( ) Shares (such right and option being hereinafter
referred to as the "Option"), at a price of $___________ per share (the "Option
Price").
2. The term of the option shall be for a period of ten (10)
years from the date hereof, and the Option shall expire at the close of regular
business hours at the Company's principal office, Medina, Ohio, on the last day
of the term of the Option, or, if earlier, on the applicable expiration date
provided for in paragraphs 4 and 5 hereof.
3. Except as provided in paragraph 6 hereof, the Option shall
not be exercisable to any extent until one (1) year from the date hereof. The
Optionee shall become entitled to exercise the Option with respect to the number
of Shares indicated below as of the date indicated opposite such number below:
Number of Shares Date as of Which
as to Which Option Option May be
May be Exercised Exercised
---------------- ---------
<PAGE> 16
To the extent that the Option has become exercisable with respect to a number of
Shares, as provided above, the Option may thereafter be exercised by the
Optionee either as to all or any part of such Shares at any time or from time to
time prior to expiration of the Option pursuant to paragraph 2 hereof. Except as
provided in paragraphs 4 and 5 hereof, the Option may not be exercised at any
time unless the Optionee shall be an Employee at such time.
4. So long as the Optionee shall continue to be an Employee, the
Option shall not be affected by (a) any temporary leave of absence approved in
writing by the Company or one of its subsidiaries, or (b) any change of duties
or position (including transfer to or from a subsidiary). If the Optionee ceases
to be an Employee for any reason other than death, the Option may be exercised
only to the extent of the purchase rights, if any, which had accrued as of the
date of such cessation pursuant to paragraph 3 hereof and which have not
theretofore been exercised; provided, however, that upon written request to the
Committee it may in its absolute discretion determine (but shall be under no
obligation to determine) that such accrued purchase rights shall be deemed to
include additional Shares covered by the Option. Upon any such cessation of
employment by reason of discharge, such accrued purchase rights shall in any
event terminate upon the earlier of the date thirty (30) days from the date of
such cessation of employment or the last day of the term of the Option. Upon any
such cessation of employment by reason of a voluntary quit, such accrued
purchase rights shall terminate on the date of such cessation of employment.
Nothing contained in this Agreement shall confer upon the Optionee any right to
continue in the employ of the Company or any of its subsidiaries, or to limit or
interfere in any way with the right of the Company or any such subsidiary to
terminate his or her employment at any time, with or without cause.
5. If the Optionee dies while an Employee or within thirty (30)
days of the Optionee's having ceased to be an Employee by reason of discharge,
such person or persons as shall have acquired, by will or by the laws of descent
and distribution, the right to exercise the Option (the "Personal
Representative") may exercise the Option to the extent of the purchase rights,
if any, which had accrued as of the date of the Optionee's death pursuant to
paragraph 3 hereof and which have not theretofore been exercised; provided,
however, that upon written request to the Committee it may in its absolute
discretion determine (but shall be under no obligation to determine) that such
accrued purchase rights shall be deemed to include additional Shares covered by
the Option. Such accrued purchase rights shall in any event terminate upon the
earlier of the date one (1) year from the date of the Optionee's death or the
last day of the term of the Option.
6. Upon the commencement of a "tender offer" for the Company's
Common Shares as provided under Rule 14d-2 promulgated under the Federal
Securities Exchange Act of 1934, as amended, or any subsequent comparable
Federal rule or regulation governing tender offers, or upon the occurrence of a
"Control Share Acquisition" of the Company's Common Shares as defined under
Section 7101.01(Z), Ohio Revised Code, or any subsequent comparable statutes
under the
2
<PAGE> 17
laws of the State of Ohio, whichever first occurs, or within the thirty (30) day
period ending on the date designated by the Board for dissolution or liquidation
of the Company or a merger or consolidation in which the Company is not to be
the
3
<PAGE> 18
surviving corporation, the Optionee shall have the immediate right and option
(notwithstanding the provisions of Section 3 hereof) to exercise the Option with
respect to all Shares covered by the Option, and any such exercise shall be
irrevocable. The Optionee shall be entitled to exercise the Option as provided
in the immediately preceding sentence regardless of whether the "tender offer"
or "control share acquisition" is successful and regardless of whether the other
corporation which is the surviving corporation in a merger or consolidation
shall adopt and maintain the RPM, Inc. 1989 Stock Option Plan.
7. The Option may be exercised by delivery to the Secretary of
the Company at its principal office, 2628 Pearl Road, P.O. Box 777, Medina, Ohio
44258, of a completed Notice of Exercise of Option (obtainable from the
Secretary of the Company) setting forth the number of Shares with respect to
which the Option is being exercised, together with either a certified or
cashier's check payable to the Company or certificates for RPM, Inc. Common
Shares, properly endorsed for transfer, or a combination thereof, in the amount
of the total purchase price of such Shares.
8. Upon receipt by the Company prior to expiration of the Option
of a duly completed Notice of Exercise of Option accompanied by a certified or
cashier's check or properly endorsed certificates for RPM Common Shares, as
provided in paragraph 7 hereof, in full payment for the Shares being purchased
pursuant to such Notice (and, with respect to any Option exercised pursuant to
paragraph 5 hereof by the Personal Representative, accompanied in addition by
proof satisfactory to the Committee of the right of the Personal Representative
to exercise the Option), the Company shall cause to be mailed or otherwise
delivered to the Optionee or the Personal Representative, as the case may be,
within thirty (30) days of such receipt, a certificate or certificates for the
number of Shares so purchased. The Optionee or the Personal Representative shall
not have any of the rights of a shareholder with respect to the Shares covered
by the Option unless and until one or more certificates representing such Shares
shall be issued to the Optionee or the Personal Representative.
9. This Agreement shall be binding upon and inure to the benefit
of any successor or successors of the Company and the heirs, estate and personal
representatives of the Optionee. The Option shall not be transferable other than
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, and the Option may be exercised
during the lifetime of the Optionee only by the Optionee or by his guardian or
legal representative.
4
<PAGE> 19
10. This Agreement is subject to all of the terms, conditions,
and provisions of the RPM, Inc. 1989 Stock Option Plan, as amended from time to
time, and to such rules, regulations, and interpretations of the Plan as may be
adopted by the Committee and in effect from time to time. A copy of the Plan is
attached hereto as Exhibit "A" and is incorporated herein by reference. In the
event and to the extent that this Agreement conflicts or is inconsistent with
the terms, conditions, and provisions of the Plan, the Plan shall control, and
this Agreement shall be deemed to be modified accordingly.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its undersigned officer thereunto duly authorized, and
the Optionee has hereunto set his hand, all as of the day and year first above
written.
RPM, INC.
By ____________________________
Thomas C. Sullivan, Chairman
("Company")
____________________________
("Optionee")
5
<PAGE> 1
Exhibit 10.7
NOTICE/CONFIDENTIAL - COPYRIGHTED MATERIAL
------------------------------------------
This document is protected under the copyright laws of the
United States and international copyright treaties, and contains proprietary,
confidential information of Calfee, Halter & Griswold. Any use, duplication,
publication, display, modification, adaptation or dissemination of this document
or its contents requires the express written permission of Calfee, Halter &
Griswold.
Copyright, 1991, Calfee, Halter & Griswold
All Rights Reserved.
RPM, INC.
RETIREMENT SAVINGS TRUST AND PLAN
ADOPTION AGREEMENT
------------------
(Profit Sharing #001)
For
A REGIONAL PROTOTYPE PLAN
SPONSORED BY
CALFEE, HALTER & GRISWOLD
1800 Society Building
Cleveland, Ohio 44114
(216) 622-8200
(1) ESTABLISHMENT OF PLAN. RPM, Inc. (the "Company")
hereby adopts the RPM, Inc. Retirement Savings Trust and Plan (the "Trust
and Plan") this 1st day of June, 1992 ("Adoption Date"), by completing this
Adoption Agreement, establishing the retirement savings plan and trust
agreement in the form of the attached prototype plan.*
- --------
*This Adoption Agreement shall be of no force and effect and Calfee, Halter
& Griswold shall have none of the responsibilities imposed upon a Regional
Prototype Plan Sponsor with respect to the Company, a Participating Company or
any Trust and Plan participants unless and until such time as Calfee, Halter &
Griswold acknowledges receipt of and accepts this Adoption Agreement, in
writing, as set forth on page 28 hereof.
<PAGE> 2
(2) PLAN INFORMATION.
----------------
[x] New Plan
[ ] Amendment and Restatement of:
[ ] Same Plan
[ ] Prototype Plan
[ ] Master Plan
[ ] Other (merger, consolidation, etc.)
If Restatement or Merger, enter names
of predecessor plans:
----------------------------------------
----------------------------------------
----------------------------------------
(3) Plan No. 011
(4) COMPANY INFORMATION. Company name, address,
telephone number and employer identification number:
RPM, Inc.
P.O. Box 777
Medina, OH 44258
(216) 225-3192
E.I.N. 34-6550857
(5) CONTROLLED GROUP. Corporations or other business
organizations related to the Company under Sections 414(b), (c),
(m) and (o) of the Internal Revenue Code (the "Code") are:
See Attachment A
--------------------------------
--------------------------------
--------------------------------
(6) PARTICIPATING COMPANIES. Participating Companies
under the Trust and Plan are:
2
<PAGE> 3
[ ] All of the members of the Controlled Group
under Section (5) above
[x] Other (specify):
<TABLE>
<CAPTION>
Adoption Cessation
Name Date Date
---- -------- ---------
<S> <C> <C>
See Attachment B _________ _________
______________________ _________ _________
______________________ _________ _________
</TABLE>
Each Participating Company must agree to be bound by the terms of the Trust and
Plan.
(7) EFFECTIVE DATE. The effective date of the Trust and
Plan is June 1, 1992.
(8) RESTATEMENT DATE. The restatement date of this
Trust and Plan, if applicable, is N/A.
(9) TAXABLE YEAR. The Company's taxable year is the 12
consecutive month period ending on May 31.
(10) PLAN YEAR. The plan year is:
[ ] the Company's taxable year
[ ] the 12 consecutive calendar month period
ending on May 31.
(11) LIMITATION YEAR. The limitation year is:
[ ] the plan year
[ ] the 12 consecutive calendar month period
ending on May 31.
(12) COVERED EMPLOYEES. Covered Employees under the
Trust and Plan are all employees of Participating Companies,
excluding the following:
[x] aliens whose expected employment within the
United States will be less than 2 years.
3
<PAGE> 4
[x] employees covered by a collective bargaining
agreement to which a Participating Company is a
party, unless such collective bargaining
agreement provides for participation in the Trust
and Plan
[ ] salaried employees
[ ] hourly-paid employees
[x] leased employees
[ ] commissioned salesmen
[ ] ______________________ job categories at the
______________________ location
[x] other (specify): hourly-paid employees at
certain Participating Companies except those
listed on Attachment C.
[ ] none
The foregoing exclusions may only be elected to the extent that any such
election will not cause the Trust and Plan to fail to satisfy the requirements
set forth in Sections 401(a)(26) and 410(b) of the Code.
(13) SERVICE. An employee's service, as defined in
Article III of the Trust and Plan, will be determined as follows:
(a) ELIGIBILITY. An employee's eligibility to par-
ticipate in the Trust and Plan is calculated pursu-
ant to the following method:
[ ] elapsed time method
[x] hours method
N/A (b) VESTING. An employee's vesting service under the
Trust and Plan is calculated pursuant to the
following method:
4
<PAGE> 5
Years Ending Before ____________ (Adoption Date or
other date)
[ ] elapsed time method
[ ] hours method
Years Ending After ______________ (Adoption Date or
other date)
[ ] elapsed time method
[ ] hours method
N/A (c) CREDITING OF SERVICE BASED ON HOURS WORKED. The
following equivalency will be used to determine
service to be credited to participants based on
working time method:
[ ] 1 hour for each hour of service as described
in Section 3.2(a) of the Trust and Plan
[ ] 1.15 hours for each hour of service as defined
in Section 3.2(a) of the Trust and Plan
actually worked by employee
[ ] 1.33 hours for each hour of service as
defined in Section 3.2(a) of the Trust and
Plan which was a regular time hour actually
worked by the employee
[ ] 10 hours for each day employee has at least
1 hour of service as defined in Section 3.2(a)
of the Trust and Plan
[ ] 45 hours for each week employee has at least
1 hour of service as defined in Section 3.2(a)
of the Trust and Plan
[ ] 95 hours for each semi-monthly payroll
period during which employee has at least 1
hour of service as defined in Section 3.2(a)
of the Trust and Plan
[ ] 190 hours for each month employee has at least
1 hour of service as defined in Section 3.2(a)
of the Trust and Plan
5
<PAGE> 6
(14) PARTICIPATION REQUIREMENTS. To become a partici-
pant, a Covered Employee must satisfy the following requirements:
N/A (a) SERVICE REQUIREMENT. To become eligible to partic-
ipate in the Trust and Plan, a Covered Employee:
[ ] need not complete any waiting period
[ ] must complete _______ years(s) of service (may
not exceed 2*)
[ ] must complete _______ consecutive month(s)
of service without regard to the number of
hours of service completed (may not exceed
24*)
(b) SPECIAL 401(k) SERVICE REQUIREMENT. To become
eligible to make 401(k) contributions under the
Trust and Plan, a Covered Employee:
[ ] need not complete any waiting period
[x] must complete 1 year of service
[ ] must complete _______ consecutive month(s) of
service (without regard to the number of hours
of service completed)
(c) AGE REQUIREMENT. To become eligible to participate
in the Trust and Plan a Covered Employee:
[ ] need not attain any minimum age
[x] must be at least 21 years of age (not more
than 21)
(15) ENTRY DATE. An eligible Covered Employee commences
participation in the Trust and Plan on:
[ ] 1st day of the month
[ ] 1st day of the plan year
- --------
*A 2-year or 24-month service requirement may be elected only in the event that
the Trust and Plan provides for full and immediate vesting.
6
<PAGE> 7
[x] earlier of the June 1 or December 1
(first day of the first month or first day of
the seventh month)
[ ] 1st day of each calendar quarter
coinciding with or next following the date such Covered Employee meets the
eligibility requirements.
(16) COMPENSATION.
(a) BASIC DEFINITION. A participant's compensation
shall be determined on the basis of the following:
[ ] Section 415 compensation as described in
Section 2.11(a)(i) of the Trust and Plan
[ ] Modified Section 415 compensation as described
in Section 2.11(a)(ii) of the Trust and Plan
[ ] Modified Section 3121 compensation as de-
scribed in Section 2.11(a)(iii) of the Trust
and Plan
[ ] Modified Section 3401 compensation as de-
scribed in Section 2.11(a)(iv) of the Trust
and Plan
[x] W-2 earnings as described in Section
2.11(a)(v) of the Trust and Plan for all plan
years
[ ] W-2 earnings as described in Section
2.11(a)(v) of the Trust and Plan for plan
years commencing prior to May 10, 1990 and
the definition selected above for all
subsequent plan years
(b) Safe Harbor Adjustments To Compensation
[x] Compensation shall be increased for salary
reduction amounts under 401(k), 125, 403(b)
and similar plans as described in Section
2.11(b)(i) of the Trust and Plan
7
<PAGE> 8
[ ] Compensation shall be reduced by any extra
benefits as described in Section 2.11(b)(ii)
of the Trust and Plan
(c) Other Exclusions From Compensation*
[ ] pre-entry date compensation
[ ] commissions
[ ] bonuses (whether discretionary or
non-discretionary)
[ ] commissions, overtime and bonuses (whether
discretionary or non-discretionary)
[x] other AUTO ALLOWANCES AND GENERAL BUSINESS
EXPENSE ALLOWANCES AND TAXABLE LIFE INSURANCE
AMOUNTS.
[ ] none of the above
(17) CONTRIBUTIONS.
(a) PARTICIPATING COMPANY CONTRIBUTIONS. For each plan
year, the Participating Companies may make any or all of the
following contributions to the Trust and Plan, as they so elect:
N/A [ ] (i) PROFIT SHARING CONTRIBUTIONS. A profit sharing
contribution in an amount equal to:
[ ] _______% of each eligible participant's
compensation**
[ ] ______% of each eligible participant's
compensation under the integration level
specified in Section (18) of this Adoption
Agreement plus ______% of such participant's
- --------
*No exclusions from compensation (other than pre-entry date compensation)
may be elected if Participating Company contributions are allocated in
accordance with the integration method described in Section (18)(a).
**May not exceed 15%.
8
<PAGE> 9
compensation over the integration level
specified in Section (18) of this Adoption
Agreement*
[ ] an amount determined by the Company for the
year
[ ] an amount determined by each Participating
Company for the year
N/A [ ] (ii) MATCHING CONTRIBUTIONS. A matching contribution in
an amount equal to:
[ ] _______% of each eligible participant's
pre-tax contributions up to a maximum
matching contribution of _________
(percentage of participant's compensation or
dollar amount)
[ ] a percentage of each eligible participant's
pre-tax contributions as determined by the
Participating Company for a match period up
to a maximum matching contribution of
_________ (percentage of participant's
compensation or dollar amount)
The match period for which matching contributions are
made is:
[ ] week
[ ] calendar month
[ ] calendar quarter
[ ] semi-annual
[ ] plan year
[ ] Company's pay period
- --------
*The lower limit must be greater than zero (0), and the upper limit may not
exceed the lower limit by more than the lesser of the lower limit, or the
greater of 5.7% or the rate of tax under Code Section 3111(a) which is
attributable to old-age insurance, as adjusted pursuant to Section 6.2(b).
9
<PAGE> 10
[ ] each Participating Company's pay period
N/A [ ] (iii) A special ADP contribution in an amount as
shall be determined by the Company from time to time.
(b) PRE-TAX CONTRIBUTIONS. For each plan year,
participants:
[x] may make pre-tax contributions as follows:
[ ] whole percentage of compensation not less
than 1% nor more than 15%
[ ] any amount up to _______% of compensation
[ ] any amount not less than $_______ nor
more than $_______
[ ] may not make pre-tax contributions pursuant to
Section 5.1 of the Trust and Plan.
(c) AFTER TAX CONTRIBUTIONS.* For each plan year,
participants:
[ ] may make after tax contributions of between
____% and ____% compensation
[ ] any amount up to _______% of compensation
[ ] any amount not less than $_______ nor more
than $_______
[x] may not make after tax contributions
- --------
*After tax contributions can be made to the Trust and Plan only if the
Company has elected to allow pre-tax contributions thereunder.
10
<PAGE> 11
(18) ALLOCATION OF PROFIT SHARING CONTRIBUTIONS.
N/A (a) Profit sharing contributions will be
allocated in accordance with one of the following methods as described in
Section 6.2 of the Trust and Plan:
[ ] relative compensation
[ ] integration method with an integration level
of:
[ ] _____% of the Social Security taxable
wage base
[ ] $____
[ ] per capita among eligible participants
N/A (b) Contributions made by each Participating Company
shall be allocated among:
[ ] all eligible participants
[ ] eligible participants employed by such
Participating Company
N/A (19) EXCLUSIONS FROM ELIGIBILITY FOR PROFIT SHARING
ALLOCATIONS AND REALLOCATION OF FORFEITURES. The following participants shall be
excluded from receiving an allocation of profit sharing contributions pursuant
to Section 6.2 of the Trust and Plan and a reallocation of forfeitures, if
applicable, pursuant to Section 15.4 of the Trust and Plan:
[ ] participants who complete fewer than ______
hours of service (not more than 1,000)
during the plan year
[ ] participants whose employment terminates prior
to the last day of the plan year
11
<PAGE> 12
[ ] participants whose employment terminates
prior to the last day of the plan year for
reasons other than:
[ ] retirement
[ ] disability
[ ] death
(20) VESTING OF PARTICIPATING COMPANY CONTRIBUTIONS.
N/A (a) VESTING OF PROFIT SHARING CONTRIBUTIONS. Profit
sharing contributions made by a Participating Company pursuant to Section
17(a)(i) of this Adoption Agreement will become vested pursuant to the
following schedule:
[ ] Vested Percentage is 100% at all times
[ ] Vested Percentage is 100% upon completion of
___ years of vesting service (may not exceed
5)
[ ] graded vesting, as follows:
<TABLE>
<CAPTION>
Years of Vested
Vesting Service Percentage
--------------- ----------
<S> <C>
Less than 1 ___%
1 but less than 2 ___%
2 but less than 3 ___%
3 but less than 4 ___% (must be at least 20%)
4 but less than 5 ___% (must be at least 40%)
5 but less than 6 ___% (must be at least 60%)
6 but less than 7 ___% (must be at least 80%)
7 or more 100%
</TABLE>
N/A (b) VESTING OF MATCHING CONTRIBUTIONS. Matching
contributions made by a Participating Company pursuant to Section 17(a)(ii) of
this Adoption Agreement become vested as follows:
[ ] Vested Percentage is 100% at all times
12
<PAGE> 13
[ ] Vested Percentage is determined in accordance
with the vesting schedule in Section (20)(a)
above
N/A (21) VESTING IN TOP-HEAVY YEARS. The Vested Percentage
of a participant who is credited with a year of vesting service during a plan
year in which the Trust and Plan is top-heavy, will be determined as follows:
[ ] Vested Percentage is determined in accordance
with the vesting schedule in Section (20)
above
[ ] Vested Percentage is 100% at all times
[ ] Vested Percentage is 100% upon completion of
__ years of vesting service (may not exceed
3)
[ ] graded vesting, as follows:
<TABLE>
<CAPTION>
Years of Vested
Vesting Service Percentage
--------------- ----------
<S> <C>
Less than 1 0%
1 but less than 2 ___%
2 but less than 3 ___% (must be at least 20%)
3 but less than 4 ___% (must be at least 40%)
4 but less than 5 ___% (must be at least 60%)
5 but less than 6 ___% (must be at least 80%)
6 or more 100%
</TABLE>
N/A (22) VESTING SERVICE EXCLUSIONS. Vesting service
excludes any years of service or periods of service which occurred:
[ ] prior to __________ (cannot be later than the
effective date of the Trust and Plan)
[ ] prior to the time the participant attained ___
years of age (not more than 18)
[ ] prior to the effective date of the Trust and
Plan
13
<PAGE> 14
[ ] prior to the acquisition by the Controlled
Group of a predecessor employer (cannot be
excluded if predecessor maintained a qualified
plan)
[ ] for employees of __________ (division,
department or location), prior to _________
(cannot be later than the date employer
became a Participating Company)
N/A (23) USE OF FORFEITURES. Amounts forfeited under the
Trust and Plan will be:
[ ] reallocated among the accounts of eligible
participants
[ ] used to reduce future Participating Company
contributions
N/A (24) RECREDITING OF ACCOUNTS ON REHIRE. Amounts forfeited
following a termination of employment by a participant who is rehired by a
Participating Company prior to his incurring five (5) consecutive One Year
Breaks In Service will be:
[ ] recredited to his employer contribution
and/or match account as of his date of rehire
[ ] recredited to his employer contribution
and/or match account upon repayment to the
Trust and Plan of any amounts which were
previously distributed to such participant
from the Trust and Plan following his
previous termination of employment
(25) NORMAL RETIREMENT DATE. A participant's normal
retirement date is the day on which he meets each of the following
requirements:
[x] attains age 65 (not less than 55 nor more
than 65)
[x] completes 5 years of participation (not to
exceed 5 years)
14
<PAGE> 15
N/A (26) EARLY RETIREMENT DATE. A participant's early
retirement date is the day on which he retires from the employ of the
Controlled Group subsequent to the date he meets all of the following
requirements:
[ ] attains age ______
[ ] completes ______ years of participation
N/A (27) PERMANENT AND TOTAL DISABILITY. Permanent and total
disability will be determined on the basis of:
[ ] Social Security definition contained in
Section 2.30(a) of the Trust and Plan
[ ] alternative definition contained in Section
2.30(b) of the Trust and Plan
(28) FORMS OF BENEFIT. Distributions upon termination of
employment, retirement, disability and death will be made in accordance with:
[x] Article XVIII of the Trust and Plan
(Non-Annuity Forms)
[ ] Article XVIII-A of the Trust and Plan (Normal
Form - Annuity)
[ ] Article XVIII-A of the Trust and Plan (Normal
Form - Lump Sum unless Annuity Form elected)
(a) NON-ANNUITY FORMS OF BENEFIT. Distributions made in
accordance with Article XVIII or XVIII-A of the Trust and Plan in
a non-annuity form will be permitted in the following form(s):
[x] lump sum form
[ ] installment payments over a period of years
(not to exceed _____ years)
15
<PAGE> 16
[ ] installment payments over the maximum
permissible years under Section 401(a)(9) of
the Code
N/A (b) ANNUITY FORMS OF BENEFIT. Distributions made in
accordance with Article XVIII-A of the Trust and Plan in an annuity form will
be permitted in the following form(s):
[ ] life annuity form
[ ] spouse's annuity form
[ ] joint and survivor form
[ ] life-period certain form over ___ year period
[ ] full cash refund life annuity form
[ ] lump sum form
[ ] installment payments over a period of years
(not to exceed ____ years)
N/A (c) TIMING OF INSTALLMENT PAYMENTS. Installment
payments, if permitted pursuant to (a) or (b) above, will be made on the
following basis:
[ ] monthly
[ ] quarterly
[ ] semi-annually
[ ] annually
(29) BENEFIT COMMENCEMENT DATE. In the event of the
termination of employment of a participant for any reason other than his
death, disability or retirement, distribution shall be
16
<PAGE> 17
made or shall commence to be made pursuant to Section 15.2 of the Trust and Plan
as of the date specified below:
(a) if the value of his vested interest is $3,500 or
less (not more than $3500):
[x] as soon as reasonably possible following his
termination of employment
[ ] as soon as reasonably possible following the
close of the plan year in which occurs his
termination of employment
[ ] as soon as reasonably possible following the
close of the calendar quarter in which occurs
his termination of employment
[ ] as soon as reasonably possible following the
close of the half-year in which occurs his
termination of employment
[ ] as soon as reasonably possible following the
valuation date which next follows the date
on which occurs his termination of
employment
[ ] at the same time as indicated in (b) below if
his vested interest were a larger amount
(b) if the value of his vested interest is in excess of
$3,500 (not more than $3500):
[x] as soon as reasonably possible following the
close of the plan year in which his normal
retirement date occurs, or as of such earlier
date as the participant shall select provided
such earlier date is not earlier than an
administratively reasonable period beyond the
date of his termination of employment
[ ] as soon as reasonably possible following the
close of the plan year in which his normal
retirement date occurs, or as of such
earlier date as the participant shall select
provided such earlier date is not earlier
than
_______________________________________________
_______________________________________________
17
<PAGE> 18
/ / as of the date specified below determined on
the basis of the amount of his vested
interest:
(i) if the value of his vested interest is
greater than $_________ (not more than
$3,500), but not in excess of
$_____________________, the distribution
shall be made or shall commence as soon
as reasonably possible following the
close of the plan year in which his
normal retirement date occurs, or as of
such earlier date as the participant
shall select provided such earlier date
is not earlier than an administratively
reasonable period beyond the date of his
termination of employment; or
(ii) if the value of his vested interest is in
excess of $______________________, the
distribution shall be made or shall
commence as soon as reasonably possible
following the close of the plan year in
which his normal retirement date occurs,
or as of such earlier date as the
participant shall select provided such
earlier date is not earlier than an
administratively reasonable period beyond
_________________________________________
_________________________________________
Except as otherwise permitted by the Adoption Agreement pursuant to Section 18.1
or 18.1A of the Trust and Plan, and pursuant to the election of the participant,
distributions must be made or commence to be made not later than sixty (60) days
after the close of the plan year in which the participant's normal retirement
date occurs.
(30) DELAYED DISTRIBUTION. Following termination of
employment, distributions:
/x/ will commence as of the dates specified in
Articles XV, XVI and XVII of the Trust and
Plan
18
<PAGE> 19
/ / may be deferred by election of the participant
or his beneficiary subject to Sections 18.5
and 18.9A of the Trust and Plan
/ / may be deferred by election of the participant
or his beneficiary subject to Sections 18.5
and 18.9A of the Trust and Plan and the
following additional restrictions: __________
_____________________________________________
_____________________________________________
(31) INSURANCE. The purchase of insurance at the
direction of the participant:
/ / is permitted
/x/ is not permitted
If the purchase of insurance is permitted above, it will be purchased as
follows:
/ / at the direction of the participant
/ / on behalf of all participants meeting the
following requirements (specify): __________
____________________________________________
____________________________________________
(32) LOANS. Loans:
/x/ are permitted in any circumstances upon
approval of loan application
/ / are permitted only in the following limited
circumstance(s) and upon approval of the
loan application
/ / in the event the participant would
otherwise qualify for a hardship
distribution, but for the
availability of a plan loan or
other assets
/ / Other (specify): ___________________
____________________________________
19
<PAGE> 20
/ / are not permitted
If permitted, loans may be made from the following accounts:
/x/ all accounts
/ / pre-tax account
/ / match account
/ / employer contribution account
/ / special ADP account
/ / personal account
(33) MINIMUM AMOUNT OF LOANS. If loans are permitted
under Section (32) above, the minimum amount of any loan is:
/x/ $ 1,000.00
/ / no minimum
(34) WITHDRAWALS AND HARDSHIP.
(a) WITHDRAWALS FROM PRE-TAX ACCOUNT. Withdrawals from
pre-tax accounts:
/ / are permitted after age 59-1/2 (must be at
least age 59-1/2)
/ / are not permitted
/ / not applicable
N/A (b) WITHDRAWALS OF QUALIFIED NONELECTIVE CONTRIBUTIONS.
Withdrawals from accounts that contain qualified nonelective contributions:
/ / are permitted after age ____________ (must
be at least age 59-1/2)
20
<PAGE> 21
/ / are not permitted
/ / not applicable
N/A (c) WITHDRAWALS FROM EMPLOYER CONTRIBUTION ACCOUNT.
Withdrawals from employer contribution accounts:
/ / are permitted after:
CHOOSE ONE:
/ / the amounts have been credited to such
account for at least 2 years
/ / the participant has completed a minimum
of 5 years of service
/ / are permitted after age __________
/ / are not permitted
N/A (d) WITHDRAWALS FROM MATCH ACCOUNTS. Withdrawals from
match accounts:
/ / are permitted after:
Choose one:
/ / the amounts have been credited to such
account for at least 2 years
/ / the participant has completed a minimum
of 5 years of service
/ / are permitted after age __________
/ / are not permitted
/ / not applicable
21
<PAGE> 22
(e) WITHDRAWALS FROM ROLLOVER ACCOUNTS. Withdrawals
from rollover accounts:
/x/ are permitted
/ / are not permitted
N/A (f) WITHDRAWALS FROM AFTER TAX ACCOUNTS. Withdrawals
from after tax accounts:
/ / are permitted
/ / are not permitted
N/A (g) WITHDRAWALS FROM PRE-87 IRA ACCOUNTS. Withdrawals
from Pre-87 IRA accounts:
/ / are permitted
/ / are permitted after age ______
/ / are permitted for hardship
/ / are not permitted
(h) HARDSHIP DISTRIBUTIONS. Hardship distributions:
/x/ are permitted
/ / are not permitted
(35) MINIMUM AMOUNT OF WITHDRAWALS. If withdrawals are
permitted under Section (34) above, the minimum amount of any withdrawal shall
be:
22
<PAGE> 23
/ / the lesser of $________ or the total vested
amount credited to the participants accounts
from which a withdrawal may be made
/x/ no minimum
(36) ROLLOVER CONTRIBUTIONS. Rollover contributions from
another qualified retirement plan:
/x/ are permitted
/ / are not permitted
(37) APPOINTMENT OF TRUSTEE. The Company hereby
designates the following institution or person(s) as Trustee(s) under the
Trust and Plan:
Ameritrust Company N.A.
_______________________________
_______________________________
_______________________________
(38) APPOINTMENT OF ADMINISTRATOR. The Company hereby
designates RPM, Inc. as the Administrator of the Trust and Plan.
(39) 411(d)(6) Protection. Benefits protected under
Section 411(d)(6) of the Code, if any, are:
None
______________________________
______________________________
______________________________
23
<PAGE> 24
These benefits are protected with respect to:
/ / pre-Adoption Date account only
/ / total account
(40) TOP HEAVY PROVISIONS.
(a) TOP-HEAVY MINIMUM BENEFIT. If this Trust and Plan is
top-heavy for a plan year and if a participant who is a non-key employee is also
a participant in any defined benefit or defined contribution plan maintained by
a Participating Company, the top-heavy minimum benefit shall be provided as
follows:
/x/ the minimum benefit required under Code Section 416(c)(l) or
Code Section 416(h)(2)(A)(ii) shall be provided under one of
the defined benefit plans in a manner such that the benefit
provided under such defined benefit plan shall be offset by
the actuarial equivalent of the amounts, if any, credited to
the participant's accounts under this Trust and Plan and any
other defined contribution plan maintained by a
Participating Company for such top-heavy year or years
/ / the minimum benefit required under Code Section 416(c)(l) or
Code Section 416(h)(2)(A)(ii) shall be provided under one of
the defined benefit plans maintained by the Participating
Company
/ / the minimum contribution required under Regulation Section
1.416-1(m)(12) or Regulation Section 1.416-1(m)(14) shall be
provided under one of the defined contribution plans
maintained by the Participating Company
(b) PRESENT VALUE. For purposes of establishing present
value to compute the top-heavy ratio, any benefit shall be discounted only for
mortality and interest based on the following:
24
<PAGE> 25
INTEREST RATE: 8% FOR ALL FORMS OF BENEFIT EXCEPT LUMP
SUM AND, WITH RESPECT TO LUMP SUM DISTRIBUTIONS, A RATE
EQUAL TO THE K-1 INTEREST RATE IN EFFECT 3 MONTHS PRIOR
TO THE LUMP SUM DISTRIBUTION ESTABLISHED BY THE PENSION
BENEFIT GUARANTY CORPORATION FOR DEFERRED ANNUITIES UNDER
REG. SEC. 2619.45 BUT IN NO EVENT GREATER THAN A RATE OF
10%
MORTALITY TABLE: UNISEX PENSION 1984 MORTALITY TABLE
RATES WITH AN AGE SET BACK OF 1 YEAR FOR EMPLOYEES AND 2
YEARS FOR BENEFICIARIES
(c) VALUATION DATE. For purposes of computing the
top-heavy ratio, the valuation date shall be:
/X/ the last day of the plan year
/ / other (specify): ___________________
_____________________________________
(41) EXCESS ANNUAL ADDITIONS. If a Participating Company
maintains more than one qualified plan and the limitations set forth in Sections
24.1 and 24.2 of the Trust and Plan are exceeded, the benefits of a participant
who participates in more than one such plan will be reduced in the following
order:
(a) FIRST, ALLOCATIONS MADE UNDER THIS TRUST AND
PLAN SHALL BE REDUCED;
(b) SECOND, PROJECTED BENEFITS UNDER THE RPM, INC.
RETIREMENT PLAN SHALL BE REDUCED; AND
(c) ACCRUED BENEFITS UNDER THE RPM, INC.
RETIREMENT PLAN SHALL BE REDUCED.
25
<PAGE> 26
(42) RELIANCE. The Company may not rely on a notification
letter issued by the National or District Office of the Internal Revenue Service
as evidence that the Trust and Plan is qualified under Section 401 of the Code.
In order to obtain reliance with respect to plan qualification, the Company must
apply to the appropriate key district office for a determination letter.
(43) SPONSOR INFORMATION. The name, address and
telephone number of the Sponsor of this regional prototype plan are:
Calfee, Halter & Griswold
1800 Society Building
Cleveland, Ohio 44114
(216) 622-8200
Inquiries regarding adoption of the Trust and Plan, the meaning of any
provisions of the Trust and Plan, or the effect of the notification letter
should be directed to the sponsor at the address set forth above.
(44) AMENDMENT OR DISCONTINUANCE OF PLAN. The Sponsor of this
regional prototype plan will inform the Company of any amendments made to the
plan or the discontinuance thereof.
(45) IMPROPER COMPLETION OF ADOPTION AGREEMENT. Failure
to properly complete this Adoption Agreement may result in disqualification of
the Trust and Plan.
(46) BASIC PLAN DOCUMENT. This Adoption Agreement may be
used only in conjunction with basic plan document 01.
26
<PAGE> 27
IN WITNESS WHEREOF, the Company and the Participating
Companies, by their duly authorized officers, have caused this Adoption
Agreement to be executed this 20th day of August, 1992.
RPM, INC.
_____________________________ ______________________________
("Company") ("Participating Companies")
By /s/ Thomas C. Sullivan
___________________________
And /s/ Paul A. Granzier
__________________________
AGR Company
Alox Corporation
American Emulsions Co., Inc.
Bondex International, Inc.
Bradshaw - Praeger & Co., Inc.
Briner Paint Mfg. Co., Inc.
Carboline Company
Chemical Specialties Manufacturing
Corporation
Chemical Coatings, Inc.
Consolidated Coatings Corporation
Craft House Corporation
Day-Glo Color Corp.
Design/Craft Fabric Corporation
Floquil-Polly S Color Corp.
Haartz-Mason, Inc.
Kop-Coat, Inc.
Mameco International Inc.
Mohawk Finishing Products, Inc.
Paramount Technical Products, Inc.
PCI Industries, Inc.
Republic Powdered Metals, Inc.
Richard S. Thibaut, Inc.
RPM World Travel, Inc.
Talsol Corporation
The Testor Corporation
Westfield Coatings Corporation
Wm. Zinnser & Co., Inc.
Wisconsin Protective Coatings Corp.
Society National Bank as Successor By
Merger to Ameritrust Company National
Association
<PAGE> 28
The undersigned Trustee hereby executes and agrees to act as
Trustee under the Trust and Plan.
SOCIETY NATIONAL BANK AS
SUCCESSOR BY MERGER TO
AMERITRUST COMPANY NATIONAL
ASSOCIATION
By____________________________
And___________________________
Calfee, Halter & Griswold, by its duly authorized
representative, hereby acknowledges receipt of and accepts the foregoing
Adoption Agreement this 11th day of June, 1993.
CALFEE, HALTER & GRISWOLD
("Regional Prototype Sponsor")
By: ________________________
28
<PAGE> 29
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT A TO ADOPTION AGREEMENT
----------------------------------
CONTROLLED GROUP
----------------
AGR Company
Alox Corporation
Alox International Sales Corporation
American Emulsions Co., Inc.
Beta Chem, Inc.
Bondex International, Inc.
Bondex International (Canada) Ltee. Ltd.
Bradshaw-Praeger & Co., Inc.
Briner Paint Mfg. Co.
BSP Systems, Inc.
Cal-O-Cam, Inc.
Carboline Company
Carboline Dubai Corporation
Carboline International Corporation
Carboline World Wide Corporation
Carboline/Ferro Powder Coatings Company
Chemical Specialties Manufacturing Corporation
Chemical Coatings, Inc.
Consolidated Coatings Corporation
Craft House Corporation
Day-Glo Color Corp.
Design/Craft Fabric Corporation
Euchem
Euchem, Inc.
29
<PAGE> 30
First Colonial Insurance Company, Inc.
Floquil-Polly S Color Corp.
Fopeco, Inc.
H. Behlen & Bro., Inc.
Haartz-Mason, Inc.
Kop-Coat, Inc.
L.D. Wracm, Inc.
Label Systems Corporation
Lubraspin Corporation
Mameco International, Inc.
Map II, Inc.
Martin Mathys N.V.
Mohawk Finishing Products, Inc.
Paramount Technical Products, Inc.
PCI Industries, Inc.
Radiant Color N.V.
Redwood Transport, Inc.
Republic D & B, Inc.
Republic Powdered Metals, Inc.
Richard E. Thibaut, Inc.
RPM/Belgium N.V.
RPM/Europe B. V.
RPM/France S.A.
RPM, Inc.
RPM/Luxembourg S.A.
RPM/Netherlands B.V.
RPM of Mass., Inc.
30
<PAGE> 31
RPM of North Carolina, Inc.
RPM World Trade
RPM World Travel, Inc.
RPOW (France) S.A.
Select Dye & Chemical, Inc.
Talsol Corporation
The Euclid Chemical Corporation
(General Partnership)
The Euclid Chemical International Sales Corp.
The Testor Corporation
U.S. Polymerics, Inc.
Westfield Coating Corporation
Westgate Advertising, Inc.
William Zinnser & Co., Inc.
Wisconsin Protective Coatings Corp.
31
<PAGE> 32
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT B TO ADOPTION AGREEMENT
----------------------------------
PARTICIPATING COMPANIES
-----------------------
Adoption Cessation
Name Date Date
- ---- ---- ----
AGR Company June 1, 1992
Alox Corporation June 1, 1992
American Emulsions Co., Inc. June 1, 1992
Bondex International, Inc. June 1, 1992
Bradshaw-Praeger & Co., Inc. June 1, 1992
Briner Paint Mfg. Co., Inc. June 1, 1992
Carboline Company June 1, 1992
Chemical Specialties Manufacturing
Corporation June 1, 1992
Chemical Coatings, Inc. June 1, 1992
Consolidated Coatings Corporation June 1, 1992
Craft House Corporation June 1, 1992
Day-Glo Color Corp. June 1, 1992
Design/Craft Fabric Corporation June 1, 1992
Floquil-Polly S Color Corp. June 1, 1992
Haartz-Mason, Inc. June 1, 1992
Kop-Coat, Inc. Dec. 1, 1992
Mameco International, Inc. June 1, 1992
Mohawk Finishing Products, Inc. June 1, 1992
Paramount Technical Products, Inc. June 1, 1992
PCI Industries, Inc. June 1, 1992
Republic Powdered Metals, Inc. June 1, 1992
Richard E. Thibaut, Inc. June 1, 1992
32
<PAGE> 33
Adoption Cessation
Name Date Date
- ---- ---- ----
RPM, Inc. June 1, 1992
RPM World Travel, Inc. June 1, 1992
Talsol Corporation June 1, 1992
The Testor Corporation June 1, 1992
Westfield Coatings Corporation June 1, 1992
William Zinnser & Co., Inc. June 1, 1992
Wisconsin Protective Coatings Corp. June 1, 1992
33
<PAGE> 34
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT C TO ADOPTION AGREEMENT
----------------------------------
PARTICIPATING COMPANIES COVERING HOURLY EMPLOYEES
-------------------------------------------------
AGR Company
Carboline Company
Consolidated Coatings Corporation
Craft House Corporation
Day-Glo Color Corp.
Floquil-Polly S Color Corp.
Kop-Coat, Inc.
Mohawk Finishing Products, Inc.
Paramount Technical Products, Inc.
Republic Powdered Metals, Inc.
The Testor Corporation
Wisconsin Protective Coatings Corp.
34
<PAGE> 35
RETIREMENT SAVINGS TRUST AND PLAN
---------------------------------
A REGIONAL PROTOTYPE PLAN
SPONSORED BY
CALFEE, HALTER & GRISWOLD
800 Superior Avenue
Suite 1800
Cleveland, Ohio 44114
(216) 622-8200
NOTICE/CONFIDENTIAL - COPYRIGHTED MATERIAL
------------------------------------------
This document is protected under the copyright laws of the
United States and international copyright treaties, and contains proprietary,
confidential information of Calfee, Halter & Griswold. Any use, duplication,
publication, display, modification, adaptation or dissemination of this document
or its contents requires the express written permission of Calfee, Halter &
Griswold.
Copyright, 1991, Calfee, Halter & Griswold
All Rights Reserved.
<PAGE> 36
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
INTRODUCTION I
Purpose 1.1
Qualification 1.2
DEFINITIONS II
Accounts 2.1
Active Participant 2.2
Administrator 2.3
Allocation Date 2.4
Annuity Starting Date 2.5
Beneficiary 2.6
Board 2.7
Code 2.8
Committee 2.9
Company 2.10
Compensation 2.11
Controlled Group 2.12
Covered Employee 2.13
Date of Hire 2.14
Distribution Account 2.15
Earned Income 2.16
Effective Date 2.17
Employee 2.18
ERISA 2.19
Excess Compensation 2.20
Highly Compensated Employee 2.21
Integration Level 2.22
Leased Employee 2.23
Military Service 2.24
Net Profits 2.25
Normal Retirement Date 2.26
Owner-Employee 2.27
Participant 2.28
Partner-Employee 2.29
Permanent and Total Disability 2.30
Personal Accounts 2.31
Plan Year 2.32
Qualified Nonelective Contribution 2.33
Related Employer 2.34
Restatement Date 2.35
Self-Employed Individual 2.36
Taxable Wage Base 2.37
Taxable Year 2.38
Total Remuneration 2.39
Trust and Plan 2.40
</TABLE>
(ii)
<PAGE> 37
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
Trustee 2.41
Vested Interest 2.42
Vested Percentage 2.43
Other Terms Defined 2.44
SERVICE III
Service Based on the Elapsed Time Method 3.1
Service Based on the Hours Method 3.2
Service With Predecessor Employer 3.3
ELIGIBILITY AND PARTICIPATION IV
Eligibility Requirements 4.1
Entry Date 4.2
Reemployment 4.3
Active and Inactive Participants 4.4
PRE-TAX CONTRIBUTIONS V
Election of Pre-Tax Contributions 5.1
Limitations on Pre-Tax Contributions 5.2
Changes in Elections 5.3
Payment to Trustee 5.4
Pre-Tax Accounts 5.5
Suspension of Pre-Tax Contributions 5.6
PARTICIPATING COMPANY CONTRIBUTIONS VI
Types of Contributions 6.1
Employer Contributions 6.2
Matching Contributions 6.3
Special ADP Contribution 6.4
Payment to Trustee 6.5
Accounts 6.6
AFTER TAX CONTRIBUTIONS VII
Amount of After Tax Contributions 7.1
Changes in Payroll Deductions 7.2
Payment to Trustee 7.3
After Tax Accounts 7.4
Deductible Voluntary Contributions 7.5
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS VIII
Contributions are Subject to Limitations 8.1
The Dollar Limit 8.2
Deferral Percentage Limit 8.3
</TABLE>
(iii)
<PAGE> 38
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
Contribution Percentage Limit 8.4
Multiple Use 8.5
Deductibility Limit 8.6
Correcting Excess Contributions 8.7
INVESTMENT FUNDS AND DIRECTION OF INVESTMENT IX
Participant Direction of Investments 9.1
Investment Funds 9.2
Procedures for Direction of Investment 9.3
Change of Direction of Investment 9.4
Valuation of Investment Funds 9.5
Direction of Investments Not Permitted 9.6
INSURANCE CONTRACTS X
Purchase of Insurance Contracts 10.1
Premium Payments 10.2
Accumulation of Dividends, Etc. 10.3
Insufficient Funds for Paying Premiums 10.4
Contract Provisions 10.5
No Insurance Beyond Retirement 10.6
Cash Surrender Values 10.7
Purchase of Contract on Cessation of
Active Participation 10.8
ACCOUNTS XI
Establishment of Accounts 11.1
Crediting of Accounts 11.2
Valuation of Assets 11.3
Valuation of Investment Funds 11.4
Interim Valuation of Assets 11.5
LOANS XII
Loan Administration and Applications 12.1
Terms and Conditions of Loans 12.2
Payment of Prior Loans 12.3
Shareholder-Employee Defined 12.4
WITHDRAWALS FROM ACCOUNTS XIII
Restrictions on Withdrawals 13.1
Withdrawals from Accounts 13.2
</TABLE>
(iv)
<PAGE> 39
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
Termination of Withdrawal Rights 13.3
Spouse's Consent 13.4
HARDSHIP DISTRIBUTIONS XIV
Hardship Distributions 14.1
Immediate and Heavy Financial Need 14.2
Determination of Amount Necessary to
Satisfy an Immediate and Heavy
Financial Need 14.3
Permitted Distributions 14.4
Method of Distribution 14.5
Administration of Hardship Provisions 14.6
Spouse's Consent 14.7
TERMINATION OF EMPLOYMENT XV
Eligibility for Distribution 15.1
Commencement of Distributions 15.2
Vesting and Forfeitures 15.3
Reallocation of Forfeitures 15.4
Forfeitures Used to Reduce Contributions 15.5
Rehired Participants 15.6
RETIREMENT BENEFITS XVI
Normal Retirement 16.1
Early Retirement 16.2
Late Retirement 16.3
Disability Retirement 16.4
Application for Benefits 16.5
DEATH XVII
Death of a Participant 17.1
Death of a Retired or Terminated
Participant Prior to Commencement
of Benefits 17.2
Death of a Retired or Terminated
Participant after Commencement
of Benefits 17.3
Beneficiary of a Participant 17.4
Designation of Alternate Beneficiary 17.5
Qualified Preretirement Survivor Annuity 17.6
Administrator to Notify Trustee 17.7
</TABLE>
(v)
<PAGE> 40
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
Incomplete Disposition 17.8
Ambiguity of Beneficiary Designation 17.9
DISTRIBUTIONS XVIII
Date of Distributions 18.1
Method of Distribution 18.2
Administering Distribution of Accounts 18.3
Lump Sum Payment of Small Amounts 18.4
Restrictions 18.5
Lump Sum Value of Installment Method
of Distributions 18.6
Revaluation of Undistributed Amounts 18.7
Responsibility of Trustee Regarding
Distributions 18.8
DISTRIBUTIONS - ANNUITY OPTION XVIII-A
Date of Distribution 18.1A
Normal Method 18.2A
Annuity Methods of Distribution 18.3A
Optional Methods of Distribution 18.4A
Notice of Methods of Distribution 18.5A
Election of Annuity Contract or
Optional Method of Payment 18.6A
Lump Sum Payment of Small Amounts 18.7A
Lump sum Value of Optional Methods
of Distribution 18.8A
Revaluation of Undistributed Amounts 18.9A
Restrictions on Distributions 18.10A
Responsibility of Trustee Regarding
Distributions 18.11A
THE TRUSTEE, ITS POWERS AND DUTIES XIX
Obligations and Duties 19.1
Resignation by Trustee 19.2
Administration Expenses 19.3
Ownership of Insurance Contracts 19.4
Receipts and Releases 19.5
Segregation of Assets 19.6
Co-Trustees 19.7
Liability of Trustee 19.8
</TABLE>
(vi)
<PAGE> 41
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
INVESTMENTS XX
Investment Powers and Duties of Trustee 20.1
Investment Manager 20.2
Income from Investments 20.3
Prohibited Transactions 20.4
ADMINISTRATION XXI
The Administrator 21.1
Denial of Application for Benefits 21.2
Retirement Savings Committee 21.3
Committee Procedures 21.4
Operation of Committee 21.5
Appeal Process 21.6
Liability of Committee Members 21.7
PROHIBITION AGAINST ALIENATION XXII
Definitions 22.1
General Prohibition on Alienation 22.2
Distribution of Assets on Death 22.3
No Right to Benefits by Alternate Payee 22.4
Notification of Parties and Determination
Whether Qualified 22.5
Interim Procedures 22.6
Investment of Separate Account 22.7
Review Procedures 22.8
Status of Alternate Payee 22.9
TOP-HEAVY PROVISIONS XXIII
Restrictions 23.1
Determination of Top-Heavy Status 23.2
Top-Heavy Minimum Contributions 23.3
Top-Heavy Vesting 23.4
Vesting upon Cessation of Top-Heavy Status 23.5
Determination of Super Top-Heavy Plan 23.6
Limitations on Annual Additions Under
Top-Heavy Plan 23.7
LIMITATIONS ON ANNUAL ADDITIONS XXIV
Definitions 24.1
Limitation on Benefits 24.2
</TABLE>
(vii)
<PAGE> 42
<TABLE>
<CAPTION>
ARTICLE NO.
-----------
<S> <C>
Reduction of Excess Benefits 24.3
Suspense Account 24.4
ROLLOVERS AND TRANSFERS INVOLVING OTHER
QUALIFIED RETIREMENT PLANS XXV
Rollovers and Transfers from Other Tax
Qualified Plans 25.1
Transfer to Another Qualified Retirement
Plan 25.2
PARTICIPATING COMPANIES XXVI
Identity of Participating Companies 26.1
Authority of Company 26.2
AMENDMENT AND TERMINATION XXVII
Power to Amend and Terminate Plan 27.1
Changes in Vesting Provisions 27.2
Termination of Plan 27.3
Partial Termination of Plan or Complete
Discontinuance of Contributions 27.4
MISCELLANEOUS XXVIII
Special Rule Relating to Owner-Employees 28.1
Insurance Company Not a Party 28.2
Bankruptcy or Insolvency 28.3
Mergers, Consolidations and Transfers
of Assets 28.4
No Employment, Legal or Equitable
Right Created 28.5
Prohibition on Reversions 28.6
Spousal Consent 28.7
Procedures for Spousal Consent 28.8
Gender 28.9
Headings 28.10
Indemnification 28.11
Applicable Law 28.12
Compliance with Internal Revenue Code 28.13
</TABLE>
(viii)
<PAGE> 43
ARTICLE I
---------
INTRODUCTION
------------
1.1 PURPOSE. This Trust and Plan is created for the purpose of
providing benefits to the participants in this Trust and Plan upon their
retirement and for the purpose of providing such other benefits to such
participants and their beneficiaries as are hereinafter described.
1.2 QUALIFICATION. The Trust and Plan is intended to
qualify under Sections 401(a), 401(k) and 501(a) of the Code.
INTRODUCTION
1-1
<PAGE> 44
ARTICLE II
----------
DEFINITIONS
-----------
Unless the context otherwise indicates, the following terms used herein
shall have the following meanings whenever used in this instrument, regardless
of capitalization:
2.1 ACCOUNTS. The word "accounts" shall mean "pre-tax
accounts" established pursuant to Article V hereof, "employer contribution
accounts," "special ADP accounts" and "match accounts" established pursuant to
Article VI hereof, "after tax accounts" established pursuant to Article VII
hereof which shall be further denominated as either "pre-87 after tax accounts"
or "post-86 after tax accounts", "pre-87 IRA accounts" established pursuant to
Section 7.5 hereof, "distribution accounts" established pursuant to Article XV
hereof and "rollover accounts" established pursuant to Article XXV hereof.
2.2 ACTIVE PARTICIPANT. The words "active participant"
shall mean a participant during any period he is a Covered Employee
at a Participating Company.
2.3 ADMINISTRATOR. The word "Administrator" shall mean the
person or persons, corporation or partnership designated as Administrator under
Section (38) of the Adoption Agreement and Article XXI hereof.
2.4 ALLOCATION DATE. The words "allocation date" shall
mean the last day of each plan year.
DEFINITIONS
2-1
<PAGE> 45
2.5 ANNUITY STARTING DATE. The words "annuity starting date"
shall mean for any participant the first day of the first period for which he
receives an amount paid as an annuity or in any other form by reason of his
termination of employment, retirement or disability under the terms of this
Trust and Plan.
2.6 BENEFICIARY. The word "beneficiary" shall mean any person,
other than an alternate payee as defined in Section 22.1, who receives or is
designated to receive payment of any benefit under the terms of this Trust and
Plan because of the death of a participant.
2.7 BOARD. The word "Board" shall mean the Board of a
corporation or the corresponding Board or Committee of a partnership or other
entity or the proprietor in the case of a proprietorship or the Board of
Trustees in the case of a non-profit corporation.
2.8 CODE. The word "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time.
2.9 COMMITTEE. The word "Committee" shall mean the
Retirement Savings Committee constituted under the provisions of
Article XXI of this Trust and Plan.
2.10 COMPANY. The word "Company" shall mean the entity
designated in Section (1) of the Adoption Agreement or any other business
organization which shall assume the obligations of such entity under this Trust
and Plan.
2.11 COMPENSATION. The word "compensation" shall mean
certain remuneration paid to an employee by a Participating Company
DEFINITIONS
2-2
<PAGE> 46
determined in accordance with one of the definitions contained in subsection (a)
hereof as selected in Section (16)(a) of the Adoption Agreement. Compensation,
as so defined, will then be adjusted as described in subsection (b) hereof to
the extent specified in Section (16)(b) of the Adoption Agreement and will
exclude any amounts designated by the Company in Section (16)(c) of the Adoption
Agreement.
(a) BASIC DEFINITION. The basic definition of "compensation"
used under the Trust and Plan shall be one of the following:
(i) SECTION 415 COMPENSATION. Compensation as
defined in Treasury Regulation Section 1.415-2(d)(1) and (2) which generally
includes all taxable remuneration paid to the employee in cash or in kind for
the performance of services as a Covered Employee for a Participating Company
including taxable expense reimbursements, fringe benefits, and welfare benefits
and generally excludes all nontaxable fringe benefits, welfare benefits and
employee benefits, except that the following amounts which are otherwise taxable
are excluded:
(A) Distributions from a funded deferred
compensation plan, whether or not
qualified;
(B) Restricted property, unless an election
is made under Code Section 83(b);
(C) Amounts treated as taxable upon the
exercise of a nonqualified stock option;
(D) Amounts realized upon the sale, exchange
or other disposition of stock acquired
under a qualified stock option; and
DEFINITIONS
2-3
<PAGE> 47
(E) Amounts contributed by the Participating
Company to a simplified employee pension
plan.
(ii) MODIFIED SECTION 415 COMPENSATION. Compen-
sation as defined in Treasury Regulation Section 1.415-2(d)(10) which is the
same as set forth in subsection (i) above except that the following otherwise
taxable amounts will also be excluded:
(A) Amounts paid to the employee as accident
or sickness benefits or medical
reimbursements;
(B) Moving expenses; and
(C) All amounts related to restricted
property or nonqualified options.
(iii) MODIFIED SECTION 3121 COMPENSATION. "Wages"
as defined in Code Section 3121 for Federal Insurance Contributions Act
purposes, without regard to the limit set forth in Code Section 3121(a)(1) and
without regard to any rules that relate to the nature or location of the
employment or the services performed, which generally is all taxable
remuneration paid to the employee in cash or in kind for the performance of
services as a Covered Employee for a Participating Company including taxable
expense reimbursements, moving expenses, fringe benefits, and welfare benefits
and generally excludes all nontaxable fringe benefits, welfare benefits and
employee benefits, except that:
(A) Amounts contributed under a salary
reduction agreement to a 401(k)
arrangement, to a 403(b) annuity or a
simplified employee pension plan are
excluded from "compensation" even though
included in wages under Code Section
3121(v);
DEFINITIONS
2-4
<PAGE> 48
(B) Amounts attributable to nonqualified
deferred compensation are excluded from
"compensation" even though included in
wages under Code Section 3121(v);
(C) Amounts paid to an employee for medical
or hospital expenses in connection with
sickness or accident disability are
excluded from "compensation" even though
taxable;
(D) Amounts paid to, or on behalf of, an
employee on account of sickness or
accident disability more than six months
after the calendar month when the
employee last worked for a member of the
Controlled Group are excluded from
"compensation" even though taxable; and
(E) Tips paid in any medium other than cash
are excluded from "compensation" even
though taxable.
(iv) MODIFIED SECTION 3401 COMPENSATION. "Wages"
as defined in Code Section 3401(a) for income tax withholding purposes, without
regard to any rules that relate to the nature or location of the employment or
the services performed, which generally is all taxable remuneration paid to the
employee in cash or in kind for the performance of services as a Covered
Employee for a Participating Company including taxable expense reimbursements,
moving expenses, fringe benefits, and welfare benefits and generally excludes
all nontaxable fringe benefits, welfare benefits and employee benefits, except
that:
(A) Amounts paid for group term life
insurance are excluded from
"compensation" even though taxable; and
(B) Tips paid in any medium other than cash
are excluded from "compensation" even
though taxable.
DEFINITIONS
2-5
<PAGE> 49
(v) W-2 EARNINGS. Remuneration which is received
by an employee in cash or in kind for the performance of services as a Covered
Employee for a Participating Company and which must be reported as wages on the
employee's Form W-2 for income tax purposes.
(b) SAFE HARBOR ADJUSTMENTS TO COMPENSATION. To the
extent elected in Section (16) of the Adoption Agreement, the following
adjustments will be made to the "compensation" of an employee:
(i) Compensation shall be increased for salary
reduction amounts which are excluded from the taxable income of the employee
under Code Sections 125, 402(a)(8) and 402(h).
(ii) Compensation shall be reduced by all of the
following amounts even if they are taxable to the employee:
(A) expense reimbursements, expense
allowances or moving expenses;
(B) cash and noncash fringe benefits and
welfare benefits; and
(C) deferred compensation.
(c) COMPENSATION LIMIT. In addition to other applicable
limitations set forth in the Trust and Plan, and notwithstanding any other
provision of the Trust and Plan to the contrary, for plan years beginning on
or after January 1, 1994, the annual compensation of each employee taken into
account under the Trust and Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
DEFINITIONS
2-6
<PAGE> 50
with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding twelve (12) months,
over which compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than twelve (12)
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is twelve (12).
For plan years beginning on or after January 1, 1994, any
reference in this Trust and Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan year,
the compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
Notwithstanding the foregoing, the maximum compensation of any
highly compensated employee that can be considered for any purpose under this
Trust and Plan for any plan year commencing prior to January 1, 1994 shall be
Two Hundred Thousand Dollars ($200,000.00) plus such adjustments for increases
in the cost of
DEFINITIONS
2-7
<PAGE> 51
living as shall be prescribed by the Secretary of the Treasury pursuant to
Section 401(a)(17) of the Code.
In determining the limit on compensation set forth in this
paragraph (c), the family aggregation rules contained in Section 414(q)(6) of
the Code and any lawful regulations thereunder shall apply, except that in
applying such rules, the term "family" shall include only the spouse of the
employee and any lineal descendants of the employee who have not attained age
nineteen (19) before the close of the plan year. If, as a result of the
application of such family aggregation rules, the limit on compensation set
forth above is exceeded, the limit shall apply to the affected family members'
compensation as follows:
(i) If this Trust and Plan is not integrated pursuant to
Sections (17)(a) and (18)(a) of the Adoption Agreement, the amount of each
family member's compensation which shall count toward the limit shall equal that
portion of the limit which bears the same relationship to the limit as such
family member's compensation, determined under this Section 2.11 prior to the
application of such compensation limit ("unlimited compensation"), bears to the
total unlimited compensation of all the family members.
(ii) If this Trust and Plan is integrated pursuant to Sections
(17)(a) and (18)(a) of the Adoption Agreement:
(A) the entire amount of each family member's
compensation up to the taxable wage base shall
count toward the limit; and
(B) the amount of each family member's compensation in
excess of the taxable
DEFINITIONS
2-8
<PAGE> 52
wage base which shall count toward the limit shall
equal that portion of the limit remaining, after
taking into account the compensation in (A) above,
which bears the same relationship to the limit
remaining as such family member's compensation, as
determined under this Section 2.11 prior to the
application of such compensation limit ("unlimited
compensation"), bears to the total unlimited
compensation of all the family members.
The amount of compensation for any plan year shall be determined as of the last
day of such year.
(d) COMPENSATION WITH RESPECT TO SELF-EMPLOYED INDIVIDUALS. For
any self-employed individual covered under the Trust and Plan, compensation
means earned income.
2.12 CONTROLLED GROUP. The words "Controlled Group" shall mean
the Company and all corporations or business organizations which are members of
a controlled group of corporations, as defined in Section 414(b) of the Code, a
controlled group of trades or businesses, as defined in Section 414(c) of the
Code, an affiliated service group, as defined in Section 414(m) of the Code, or
any other arrangements as defined in regulations under Section 414(o) of the
Code of which the Company is a part but, in each case, only during the periods
any such corporation or business organization is so defined.
2.13 COVERED EMPLOYEE. The words "Covered Employee" shall mean
any employee of a Participating Company designated as a Covered Employee
pursuant to Section (12) of the Adoption Agreement.
DEFINITIONS
2-9
<PAGE> 53
2.14 DATE OF HIRE. The words "date of hire" shall mean the date
on which an employee commences employment and works at least one (1) hour of
service for a member of the Controlled Group and shall mean, in the case of a
rehired employee, the first date following his previous termination of
employment on which he works at least one (1) of service hour for a member of
the Controlled Group.
2.15 DISTRIBUTION ACCOUNT. The words "distribution account"
shall mean, with respect to a participant whose employment has terminated for a
reason other than his death, disability or retirement, an account which had been
an employer contribution or match account during his previous period of
participation, after said accounts shall have been debited by the amounts, if
any, forfeited pursuant to Section 15.3 hereof, and which, pursuant to Article
XV hereof, shall have been converted into a "distribution account."
2.16 EARNED INCOME. The words "earned income" shall mean net
earnings from self-employment in the trade or business with respect to which the
Trust and Plan is established, provided the personal services of the individual
are a material income producing factor. Net earnings will be determined without
regard to items not included in gross income and the deductions allocable to
such items. Net earnings are reduced by contributions made by a member of the
Controlled Group to a qualified plan to the extent deductible under Section 404
of the Code. Net earnings are also determined taking into account the deduction
allowed to a member of
DEFINITIONS
2-10
<PAGE> 54
the Controlled Group by Section 164(f) of the Code for taxable years beginning
after December 31, 1989.
2.17 EFFECTIVE DATE. The words "effective date" of this Trust
and Plan shall mean the date specified in Section (7) of the Adoption Agreement.
2.18 EMPLOYEE. The word "employee" shall mean any person
employed in the trade, business or profession of a member of the Controlled
Group, including any common-law employee, owner-employee or partner-employee.
The word "employee" shall not include any person who renders service to a member
of the Controlled Group solely as a director or independent contractor. The word
"employee" shall also include any Leased Employee deemed to be an employee of
the Controlled Group as provided in Section 414(n) or (o) of the Code.
2.19 ERISA. The acronym "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
2.20 EXCESS COMPENSATION. The words "excess compensation"
shall mean for any participant compensation in excess of the integration level
specified in Section (18)(a) of the Adoption Agreement.
2.21 HIGHLY COMPENSATED EMPLOYEE. The words "highly compensated
employee" shall mean an employee or a former employee who is highly compensated
for a plan year as described in Section 414(q) of the Code, which is hereby
incorporated by reference. A highly compensated employee is described for
informational purposes herein as an employee during a plan year if either:
DEFINITIONS
2-11
<PAGE> 55
(a) during the preceding plan year, he:
(i) was at any time a five percent (5%) or more actual
or constructive owner of a member of the
Controlled Group;
(ii) received Total Remuneration from the Controlled
Group greater than Seventy-Five Thousand Dollars
($75,000.00) (plus any increase for cost of living
after 1987 as determined by the Secretary of the
Treasury or his delegate);
(iii) received Total Remuneration from the Controlled
Group greater than Fifty Thousand Dollars
($50,000.00) (plus any increase for cost of living
after 1987 as determined by the Secretary of the
Treasury or his delegate) and was in the "top paid
group" of employees of the Controlled Group for
such plan year; or
(iv) was at any time an officer of a member of the
Controlled Group and received Total Remuneration
greater than Forty-Five Thousand Dollars
($45,000.00) or, if greater, fifty percent (50%)
of the amount specified in Section 415(b)(1)(A) of
the Code for such plan year (plus any increase for
cost of living after 1987 as determined by the
Secretary of the Treasury or his delegate); or
(b) during the current plan year, he either:
(i) was at any time a five percent (5%) or more actual
or constructive owner of a member of the
Controlled Group; or
(ii) was one of the one hundred (100) highest paid
employees of the Controlled Group for the current
plan year and meets the requirements of (a)(ii),
(a)(iii) or (a)(iv) above for the current plan
year.
For purposes of determining the members of the "top paid group"
under subsection (a)(iii) above, an employee is a member of the top paid group
for any plan year if for such plan year the employee is a member of a group
consisting of the top paid twenty percent (20%) of employees of the Controlled
Group ranked on the
DEFINITIONS
2-12
<PAGE> 56
basis of Total Remuneration from the Controlled Group paid during the plan year.
In determining the members of the top paid group, the following employees shall
be excluded:
(A) employees who have not completed six (6) months of
service;
(B) employees who normally work less than seventeen and
one-half (17-1/2) hours per week;
(C) employees who normally work during not more than
six (6) months during any year;
(D) employees who have not attained age twenty-one
(21);
(E) except to the extent provided in regulations,
employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between
employee representatives and a member of the
Controlled Group; and
(F) employees who are nonresident aliens and who receive
no earned income (within the meaning of Section
911(d)(2) of the Code) from the Controlled Group
which constitutes income from sources within the
United States (within the meaning of Section
861(a)(3) of the Code).
The Company may elect (in such manner as may be provided by the Secretary of the
Treasury or his delegate) to apply subsections (A), (B), (C), or (D) above by
substituting a shorter period of service, smaller number of hours or months, or
lower age for the period of service, number of hours or months, or age (as the
case may be) than that specified in such subsection.
For purposes of determining the number and identity of
"officers" in subsection (a)(iv) above:
(1) The total number of employees treated as officers
shall be limited to the lesser of:
(I) fifty (50); or
DEFINITIONS
2-13
<PAGE> 57
(II) the greater of three (3) employees or ten percent
(10%) of all employees of the Controlled Group;
but
(2) If no employee would be described as an officer pursuant to
subsection (a)(iv), the highest paid officer shall be
treated as described in such subsection.
A highly compensated former employee is described for informational
purposes herein as a former employee if either:
(a) such former employee was a highly compensated employee when
such former employee terminated his employment; or
(b) such former employee was a highly compensated employee at
any time after attaining age fifty-five (55).
If any individual is a member of the family of a five percent (5%)
owner or of a highly compensated employee in the group consisting of the ten
(10) highly compensated employees paid the greatest Total Remuneration by the
Controlled Group during the plan year, then for purposes of any Section of this
Trust and Plan which uses the term highly compensated employee, (A) such
individual shall not be considered a separate employee, and (B) any such Total
Remuneration paid to such individual by the Controlled Group (and any applicable
contribution or benefit on behalf of such individual) shall be treated as if it
were paid to (or on behalf of) the highly compensated employee. For purposes of
the foregoing, the word "family" shall mean, with respect to any employee, such
employee's spouse and lineal ascendants or descendants and the spouses of such
lineal ascendants or descendants. Notwithstanding the foregoing, for purposes of
Section 2.11(c) of this Trust and Plan, the word "family" shall
DEFINITIONS
2-14
<PAGE> 58
only include the employee's spouse and lineal descendants under age
nineteen (19).
2.22 INTEGRATION LEVEL. The words "integration level" shall mean a
percentage of the taxable wage base or other dollar amount, specified in Section
(18)(a) of the Adoption Agreement.
2.23 LEASED EMPLOYEE. The words "Leased Employee" shall mean any
individual (other than an employee of a Participating Company) who, pursuant to
an agreement between the Participating Company and any leasing organization, has
performed services for the Company or for the Participating Company and related
persons, as determined in accordance with Section 414(n)(6) of the Code, on a
substantially full-time basis for a period of at least one (1) year; provided,
however, that such services are of a type historically performed by employees in
the business field of the Participating Company. Contributions or benefits
provided on behalf of a Leased Employee by the leasing organization which are
attributable to services performed for the Participating Company shall be
treated as provided by the Participating Company.
A Leased employee shall not be considered an employee of a
Participating Company if:
(a) such employee is covered by a money purchase pension plan
which provides the following:
(i) a nonintegrated employer contribution formula of
at least ten percent (10%) of a participant's
Total Remuneration, as defined in Section 2.39
hereof, together with amounts contributed on his
behalf pursuant to a salary reduction agreement
which are excludable from the employee's gross
income pursuant to Sections 125, 402(a)(8), 402(h)
or 403(b) of the Code;
DEFINITIONS
2-15
<PAGE> 59
(ii) immediate participation in said money purchase
pension plan; and
(iii) full and immediate vesting under said money
purchase pension plan; and
(b) Leased Employees do not constitute more than twenty percent
(20%) of the Participating Company's nonhighly compensated
employees.
2.24 MILITARY SERVICE. The words "military service" shall mean duty in
the Armed Forces of the United States, whether voluntary or involuntary,
provided that the employee serves not more than one voluntary enlistment or tour
of duty, and further provided that such voluntary enlistment or tour of duty
does not follow involuntary duty.
2.25 NET PROFITS. The words "net profits" shall mean the amount of net
profit earned by a Participating Company during a particular taxable year or
years of such Participating Company, as shown on the financial statements of
such Participating Company and as calculated in accordance with generally
accepted accounting principles, before provision for contributions hereunder for
the current taxable year and before provision for any taxes based upon income.
2.26 NORMAL RETIREMENT DATE. The words "normal retirement date"
shall mean the date specified in Section (25) of the Adoption Agreement.
2.27 OWNER-EMPLOYEE. The word "owner-employee" shall mean a sole
proprietor or a partner who owns more than ten percent (10%) of either the
capital or profits interest of a partnership.
DEFINITIONS
2-16
<PAGE> 60
2.28 PARTICIPANT. The word "participant" shall mean any person who
becomes a participant in this Trust and Plan in accordance with Article IV
hereof. A person shall cease to be a participant upon his termination of
employment.
2.29 PARTNER-EMPLOYEE. The word "partner-employee" shall mean a
partner who owns ten percent (10%) or less of either the capital or profits
interest of a partnership.
2.30 PERMANENT AND TOTAL DISABILITY. The words "permanent and total
disability" and "disability" shall have the meaning set forth in the definition
below which has been specified in Section (27) of the Adoption Agreement.
(a) SOCIAL SECURITY DEFINITION. Under this definition, "permanent and
total disability" and "disability" shall mean any disability which entitles the
participant to disability retirement benefits under the United States Social
Security Act.
(b) ALTERNATIVE DEFINITION. Under this definition, "permanent and
total disability" and "disability" shall mean any disability which continuously
disables and wholly prevents a participant from performing the duties of his
occupation and which is expected to be of permanent duration, except that no
participant shall be deemed to be permanently and totally disabled if such
disability was (i) contracted, suffered or incurred while the participant was
engaged in, or resulted from his having engaged in, a criminal act or enterprise
or (ii) resulted from his habitual drunkenness or addiction to narcotics or
(iii) resulted from any intentionally self-inflicted injury.
DEFINITIONS
2-17
<PAGE> 61
2.31 PERSONAL ACCOUNTS. The words "personal accounts" shall mean
pre-87 after tax accounts, post-86 after tax accounts, pre-87 IRA accounts and
rollover accounts.
2.32 PLAN YEAR. The words "plan year" shall mean the twelve (12)
consecutive month period specified in Section (10) of the Adoption Agreement.
Where the context so requires, "plan year" shall also mean the twelve (12) month
period specified in Section (10) of the Adoption Agreement relating to a prior
period or periods.
2.33 QUALIFIED NONELECTIVE CONTRIBUTION. The words "qualified
nonelective contribution" shall mean any special ADP contribution, together with
any employer contribution and matching contribution which satisfies the
requirements of Section 401(m)(4)(C) of the Code and regulations issued
thereunder.
2.34 RELATED EMPLOYER. The words "Related Employer" shall mean a
corporation or other business organization which, when aggregated with any
Participating Company, would be a single employer within the meaning of Sections
414(b), (c), (m) and (o) of the Code, if the phrase "more than fifty percent
(50%)" is substituted for the phrase "at least eighty percent (80%)" where the
latter phrase is applicable under such Sections, but in each case, only during
the periods any such corporation or business organization would be so defined.
2.35 RESTATEMENT DATE. The words "restatement date" shall mean the
date, if any, specified in Section (8) of the Adoption Agreement.
DEFINITIONS
2-18
<PAGE> 62
2.36 SELF-EMPLOYED INDIVIDUAL. The words "self-employed individual"
shall mean an individual who has earned income for the taxable year with respect
to which the Trust and Plan is established, as well as an individual who would
have had earned income but for the fact that the trade or business had no net
profits for the taxable year.
2.37 TAXABLE WAGE BASE. The words "taxable wage base" shall mean, with
respect to any plan year, the maximum amount of compensation which may be
considered wages for said plan year under Section 3121(a) of the Code in effect
as of the beginning of the plan year.
2.38 TAXABLE YEAR. The words "taxable year" shall mean the annual
accounting period of the Company, as specified in Section (9) of the Adoption
Agreement.
2.39 TOTAL REMUNERATION. The words "Total Remuneration" shall mean,
for any participant, his Section 415 Compensation as defined in Section
2.11(a)(1) of this Trust and Plan which is paid to him by a Participating
Company or any Related Employer.
2.40 TRUST AND PLAN. The words "Trust and Plan" shall mean for each
Participating Company this instrument, together with the Adoption Agreement, as
originally executed, and as it or they may be amended from time to time.
2.41 TRUSTEE. The word "Trustee" shall mean the Trustee designated
pursuant to Section (37) of the Adoption Agreement and any successor Trustee or
Trustees.
DEFINITIONS
2-19
<PAGE> 63
2.42 VESTED INTEREST. The words "vested interest" shall mean, with
respect to any participant, (a) plus (b) minus (c) where:
(a) equals the amount, if any, then credited to all pre-tax,
special ADP, and distribution accounts maintained on his
behalf;
(b) equals the sum of:
(i) the amount credited to his employer contribution
and match accounts multiplied by his applicable
Vested Percentage; plus
(ii) any distributions to the participant or
withdrawals by the participant made from his
employer contribution and match accounts since his
earliest date of hire which has not been followed
by five (5) consecutive One Year Breaks In
Service, multiplied by his applicable Vested
Percentage; and
(c) equals the amount of any distributions to the participant or
withdrawals by the participant made from his employer
contribution and match accounts since his earliest date of
hire which has not been followed by five (5) consecutive One
Year Breaks In Service.
2.43 VESTED PERCENTAGE. The words "Vested Percentage" shall mean for
any participant the percentage determined on the basis of his number of years of
vesting service in accordance with the vesting alternative specified in Sections
(20) and (21) of the Adoption Agreement. Notwithstanding any other provision of
this Trust and Plan to the contrary, upon attainment of his normal retirement
date and during all periods thereafter, a participant shall have a Vested
Percentage of one hundred percent (100%).
2.44 OTHER TERMS DEFINED. Other terms are defined elsewhere in this
Trust and Plan and in the Adoption Agreement
DEFINITIONS
2-20
<PAGE> 64
hereto. Such terms and the locations of their definitions are:
<TABLE>
<CAPTION>
<S> <C>
(a) active participant sec. 4.4, Plan
(b) Administrator sec. 38, Ad.Ag.
(c) Adoption Date sec. 1, Ad.Ag.
(d) aggregate limit sec. 8.5, Plan
(e) alternate payee sec. 22.1, Plan
(f) annual additions sec. 24.1, Plan
(g) compensation sec. 16, Ad.Ag.
(h) contribution percentage sec. 8.4, Plan
(i) Covered Employee sec. 12, Ad.Ag.
(j) death beneficiary sec. 17.4, Plan
(k) deferral percentage sec. 8.3, Plan
(l) defined benefit plan fraction sec. 24.1, Plan
(m) defined contribution
plan fraction sec. 24.1, Plan
(n) determination date sec. 23.2, Plan
(o) domestic relations order sec. 22.1 Plan
(p) early retirement date sec. 26, Ad.Ag.
(q) effective date sec. 7, Ad.Ag.
(r) entry date sec. 15, Ad.Ag.
(s) family member sec. 2.21, Plan
(t) hour(s) of service secs. 3.1, 3.2, Plan
(u) inactive participant sec. 4.4, Plan
(v) key employee sec. 23.2, Plan
(w) limitation year sec. 11, Ad.Ag.
(x) match period sec. 17(a)(ii), Ad.Ag.
(y) Maximum Permitted Disparity sec. 6.2(c), Plan
(z) non-key employee sec. 23.2, Plan
(aa) normal retirement date sec. 25, Ad.Ag.
(bb) One Year Break In Service secs. 3.1, 3.2, Plan
(cc) Participating Company sec. 6, Ad.Ag.
(dd) period of service sec. 3.1, Plan
(ee) period of severance sec. 3.1, Plan
(ff) permanent and total disability sec. 27, Ad.Ag.
(gg) permissive aggregation group sec. 23.2, Plan
(hh) Plan No. sec. 3, Ad.Ag.
(ii) plan year sec. 10, Ad.Ag.
(jj) Predecessor Plan sec. 2, Ad.Ag.
(kk) present value sec. 23.2, Plan;
sec. 40(b), Ad.Ag.
(ll) Projected Annual Benefit sec. 24.1, Plan
(mm) qualified domestic relations
order sec. 22.1, Plan
(nn) required aggregation group sec. 23.2, Plan
(oo) Related Companies sec. 5, Ad.Ag.
(pp) restatement date sec. 8, Ad.Ag.
(qq) Service sec. 13, Ad.Ag.
(rr) Shareholder-Employee sec. 12.4, Plan
(ss) Sponsor sec. 43, Ad.Ag.
(tt) taxable year sec. 9, Ad.Ag.
(uu) termination of employment secs. 3.1, 3.2, Plan
</TABLE>
DEFINITIONS
2-21
<PAGE> 65
<TABLE>
<CAPTION>
<S> <C>
(vv) top-heavy group sec. 23.2, Plan
(ww) Trustee sec. 37, Ad.Ag.
(xx) valuation date sec. 23.2, Plan;
sec. 40(c), Ad.Ag.
(yy) Vested Percentage secs. 20, 21, Ad.Ag.
(zz) vesting service secs. 3.1, sec. 3.2, Plan,
sec. 13(b), (22),
Ad.Ag.
(aaa) year of service secs. 3.1, 3.2, Plan
</TABLE>
DEFINITIONS
2-22
<PAGE> 66
ARTICLE III
-----------
SERVICE
-------
3.1 SERVICE BASED ON THE ELAPSED TIME METHOD. If the Company shall
elect, pursuant to Section (13) of the Adoption Agreement, to calculate service
for purposes of this Trust and Plan based on the elapsed time method, the
following definitions shall apply:
(a) HOUR OF SERVICE. The words "hour of service" or "hour" shall mean
for any employee an hour for which he is directly or indirectly paid or entitled
to payment by a member of the Controlled Group for the performance of duties
either as regular wages, salary or commissions or pursuant to an award or
agreement requiring a member of the Controlled Group to pay back wages,
irrespective of mitigation of damages.
(b) ONE YEAR BREAK IN SERVICE. The words "One Year Break In Service"
shall mean for any employee or former employee a twelve (12) month period of
severance commencing on his termination of employment or any anniversary
thereof.
(c) PERIOD OF SERVICE. The words "period of service" shall mean for
any employee any period during which he is or was employed by a member of the
Controlled Group. Each such period shall be measured from his date of hire to
the date of termination of employment which follows such date of hire.
In addition, if any employee is rehired within twelve (12) months of:
ELAPSED TIME METHOD
3-1
<PAGE> 67
(A) the date of his termination of employment; or
(B) if earlier, the first day of any period of leave of absence,
layoff, or military service after the end of which the
employee did not return to work for a member of the
Controlled Group prior to his termination of employment,
such employee's "period of service" shall include the period of severance
measured from his date of termination of employment until his subsequent date of
rehire.
Two or more periods of service or periods of severance that are
included in an employee's service and that contain fractions of a year (computed
in months and days) shall be aggregated on the basis of twelve (12) months
constituting a year and thirty (30) days constituting a month.
(d) PERIOD OF SEVERANCE. The words "period of severance" shall
mean, with respect to an employee or former employee, a period commencing on his
termination of employment and ending on the date such employee is rehired by a
member of the Controlled Group. In the event of the termination of employment of
an employee, on or after the first day of the plan year which commenced or would
have commenced during 1985, by reason of either:
(i) the pregnancy of such employee; or
(ii) the birth of a child of such employee; or
(iii) the placement of a child with such employee in connection
with the adoption of such child by such employee; or
(iv) caring for such child for a period beginning immediately
following such birth or placement;
ELAPSED TIME METHOD
3-2
<PAGE> 68
such employee's period of severance shall be deemed to have commenced on the
first anniversary of the last day he actually performed services for a member of
the Controlled Group. The Administrator may require any employee who is absent
from work by reason of any such pregnancy, birth or placement to furnish to the
Administrator such timely information as the Administrator may reasonably
require to establish that the employee's absence from work was by reason of such
pregnancy, birth or placement.
(e) TERMINATION OF EMPLOYMENT. The words "termination of employment"
shall mean for any employee the occurrence of any one of the following events:
(i) he is discharged by a member of the Controlled Group unless
he is subsequently reemployed and given pay back to his date
of discharge;
(ii) he voluntarily terminates employment with a member of the
Controlled Group;
(iii) he retires from employment with a member of the Controlled
Group;
(iv) he fails to return to work at the end of any leave of
absence authorized by a member of the Controlled Group, or
within ninety (90) days following such employee's release
from military service or within any other period following
military service in which his right to reemployment with a
member of the Controlled Group is guaranteed by law, or
within three (3) days after he has been recalled to work
following a period of layoff;
(v) he has been continuously laid-off for six (6) months; or
(vi) he fails to return to work after the cessation of disability
income payments under any sick leave, short term disability
program or long term disability program of a member of the
Controlled Group.
ELAPSED TIME METHOD
3-3
<PAGE> 69
In the case of the occurrence of any event described in (iv) or (v) of this
Section 3.1(e), the date of such employee's termination of employment shall be
deemed to be the earlier of (A) the first anniversary of the first day of any
such period of leave of absence, layoff, or military service, or (B) the last
day of any such period of leave of absence, layoff or military service.
(f) VESTING SERVICE. The words "vesting service" shall mean, for any
employee, the aggregate of all his periods of service, excluding any periods of
service as the Company shall designate pursuant to Section (22) of the Adoption
Agreement and excluding any period of service that a rehired employee had prior
to his most recent termination of employment, determined as of such date of
termination of employment pursuant to this Section 3.1(f), provided that:
(i) such rehired employee did not have a vested interest under
this Trust and Plan on such date of termination of
employment;
(ii) such rehired employee has had a period of severance which
equals or exceeds five (5) years; and
(iii) the period of such rehired employee's vesting service is
less than or equal to his period of severance.
(g) YEAR OF SERVICE. The words "year of service" shall mean for any
employee a twelve (12) month period of service.
3.2 SERVICE BASED ON THE HOURS METHOD. If the Company shall elect,
pursuant to Section (13) of the Adoption Agreement,
HOURS METHOD
3-4
<PAGE> 70
to calculate service for purposes of this Trust and Plan based on the hours
method, the following definitions shall apply:
(a) HOURS OF SERVICE. The words "hours of service" or "hours" shall
mean for any employee the actual number of hours for which he is directly or
indirectly paid or entitled to payment by a member of the Controlled Group for
the performance of duties either as regular wages, salary or commissions, or for
reasons other than the performance of duties such as vacation or holiday pay,
and in either case, including payments pursuant to an award or agreement
requiring a member of the Controlled Group to pay back wages, irrespective of
mitigation of damages. Hours of service under this paragraph shall be calculated
and credited pursuant to Section 2530.200b-2(b) and (c) of the Department of
Labor Regulations which are incorporated herein by reference. Notwithstanding
the foregoing,
(i) no employee shall be credited with more than 501 hours of
service with respect to payments he receives or is entitled
to receive during any single continuous period during which
he performs no services for a member of the Controlled Group
(irrespective of whether he has terminated employment) due
to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of
absence;
(ii) no employee shall be credited with hours of service with
respect to payments he receives or is entitled to receive
during a period when he performs no services for a member of
the Controlled Group under a plan maintained solely for the
purpose of complying with applicable workers' compensation,
unemployment compensation, disability insurance or Federal
Social Security laws; and
(iii) no employee or former employee shall be credited with hours
of service with respect to payments he
HOURS METHOD
3-5
<PAGE> 71
receives or is entitled to receive under a pension benefit
plan to which a member of the Controlled Group has
contributed during a period when he performs no services for
a member of the Controlled Group.
(b) ONE YEAR BREAK IN SERVICE. The words "One Year Break In
Service" shall mean for any employee or former employee a plan year, ending
after his termination of employment, during which the employee or former
employee did not complete more than five hundred (500) hours of service for a
member of the Controlled Group. Notwithstanding the foregoing provisions of this
Section 3.2(b), in the event any employee is absent from work, on or after the
first day of the plan year which commenced in 1985, by reason of either:
(i) the pregnancy of such employee; or
(ii) the birth of a child of such employee; or
(iii) the placement of a child with such employee in
connection with the adoption of such child by such
employee; or
(iv) caring for such child for a period beginning
immediately following such birth or placement;
such employee shall, solely for the purposes of determining whether such
employee has incurred a One Year Break In Service pursuant to this Section
3.2(b), be credited either with the hours of service which otherwise would
normally have been credited to such employee but for such absence or, in any
case in which the Administrator is unable to determine the hours described in
the preceding clause, eight (8) hours per day of such absence; provided,
however, that the total number of hours of service which an employee may be
credited with by reason of
HOURS METHOD
3-6
<PAGE> 72
any such pregnancy, birth or placement shall not exceed five hundred one (501)
hours. An employee shall be credited with the hours of service described in the
preceding sentence only in the plan year in which the absence from work begins
if the employee would be prevented from incurring a One Year Break In Service in
such plan year solely because the employee is credited with hours of service
pursuant to the preceding sentence or, in any other case, in the immediately
following plan year. The Administrator may require any employee who is absent
from work because of any such pregnancy, birth or placement to furnish to the
Administrator such timely information as the Administrator may reasonably
require to establish both that the employee's absence from work is because of
such pregnancy, birth or placement and the number of days during which the
employee was absent because of such pregnancy, birth or placement.
(c) TERMINATION OF EMPLOYMENT. The words "termination of employment"
shall mean for any employee the occurrence of any one of the following events:
(i) he is discharged by a member of the Controlled Group unless
he is subsequently reemployed and given pay back to his date
of discharge;
(ii) he voluntarily terminates employment with a member of the
Controlled Group;
(iii) he retires from employment with a member of the Controlled
Group;
(iv) he fails to return to work at the end of any leave of
absence authorized by a member of the Controlled Group, or
within ninety (90) days following such employee's release
from military service or within any other period following
military service in which his right to
HOURS METHOD
3-7
<PAGE> 73
reemployment with a member of the Controlled Group is
guaranteed by law, or within three (3) days after he has
been recalled to work following a period of layoff;
(v) he has been continuously laid-off for six (6) months; or
(vi) he fails to return to work after the cessation of disability
income payments under any sick leave, short term disability
program or long term disability program of a member of the
Controlled Group.
In the case of the occurrence of any event described in (iv) or (v) of this
Section 3.2(c), the date of such employee's termination of employment shall be
deemed to be the first day of any such period of leave of absence, layoff, or
military service.
(d) VESTING SERVICE. The words "vesting service" shall mean for any
employee the number of plan years during which the employee has been or was
previously employed by a member of the Controlled Group, excluding any plan
years during which the employee does not complete at least one thousand (1,000)
hours of service for a member of the Controlled Group, excluding such plan years
are specified in Section (22) of the Adoption Agreement and excluding any years
of vesting service which a rehired employee had prior to the date of his most
recent termination of employment, determined as of such date of termination of
employment pursuant to this Section 3.2(d), provided that:
(i) such rehired employee did not have a vested interest under
this Trust and Plan on such date of termination of
employment;
(ii) such rehired employee has had at least five (5) consecutive
One Year Breaks In Service since the last day of such
vesting service; and
HOURS METHOD
3-8
<PAGE> 74
(iii) the number of years of such rehired employee's vesting
service is less than or equal to the number of consecutive
One Year Breaks In Service which he had after the last day
of such vesting service.
(e) YEAR OF SERVICE. The words "year of service" shall mean for
any employee a twelve (12) month period commencing on such employee's date of
hire or on the first day of any plan year commencing thereafter during which the
employee has been or was previously employed by a member of the Controlled
Group, excluding any such years of service during which the employee completed
less than one thousand (1,000) hours of service for a member of the Controlled
Group.
For purposes of determining a "year of service," pursuant to
this Section 3.2(e), the initial twelve (12) month period measured from an
employee's date of hire shall overlap the first plan year following his date of
hire. Thus, if an employee completes at least one thousand (1,000) hours of
service during both the initial twelve (12) month period and the overlapping
plan year, he shall be deemed to have two (2) years of service as of the last
day of such plan year.
3.3 SERVICE WITH PREDECESSOR EMPLOYER. Unless otherwise excluded
pursuant to the Company's election in Section (22) of the Adoption Agreement,
service with a predecessor employer prior to the acquisition by the Controlled
Group of such predecessor employer shall be treated as service for the
Controlled Group. Notwithstanding a contrary election in Section (22) of the
Adoption Agreement, however, if the pre-
HOURS METHOD
3-9
<PAGE> 75
decessor employer maintained a qualified plan at any time within five (5) years
prior to the adoption of this Trust and Plan, service with a predecessor
employer must be treated as service for the Controlled Group.
HOURS METHOD
3-10
<PAGE> 76
ARTICLE IV
----------
ELIGIBILITY AND PARTICIPATION
-----------------------------
4.1 ELIGIBILITY REQUIREMENTS. Each Covered Employee shall be
eligible to become a participant under this Trust and Plan when he has met the
eligibility requirements set forth in Section (14) of the Adoption Agreement.
4.2 ENTRY DATE. Every Covered Employee who may become eligible
to participate in this Trust and Plan shall automatically become a participant
as of the entry date, as set forth in Section (15) of the Adoption Agreement,
coinciding with or next following his eligibility, provided he remains a Covered
Employee on such entry date.
4.3 REEMPLOYMENT. In the event that a member of the Controlled
Group shall reemploy a former participant, such former participant shall
automatically become a participant in this Trust and Plan on his date of rehire.
In the event that a member of the Controlled Group shall reemploy a former
employee who was not a participant during his previous period of employment,
such employee must satisfy the requirements set forth in Section 4.1 hereof and
Section (14) of the Adoption Agreement before he shall become eligible to
participate in this Trust and Plan.
4.4 ACTIVE AND INACTIVE PARTICIPANTS. A participant will be
considered to be an active participant during any period he is a Covered
Employee. If a participant ceases to be a Covered Employee but continues to be
an employee of a member of
ELIGIBILITY
4-1
<PAGE> 77
the Controlled Group, he will be an inactive participant during such period of
employment. An inactive participant who again becomes a Covered Employee shall
participate in the Trust and Plan immediately upon this change in status.
ELIGIBILITY
4-2
<PAGE> 78
ARTICLE V
---------
PRE-TAX CONTRIBUTIONS
---------------------
5.1 ELECTION OF PRE-TAX CONTRIBUTIONS. If Section (17)(b) of the
Adoption Agreement permits pre-tax contributions, then, pursuant to a salary
reduction agreement, an active participant may elect that a stated portion of
his unpaid compensation for a plan year be paid by a Participating Company to
the Trustee hereunder and be treated as a contribution by the Participating
Company. A participant's election hereunder shall be in writing and shall be
conditioned upon:
(a) his right to defer the imposition of federal income tax on
such deferred compensation until a subsequent distribution
of such amount under this Trust and Plan; and
(b) the Participating Company's right to deduct such amount for
federal income tax purposes before taking into account any
contributions made by the Participating Company under
Article VI hereof and after taking into account any
contributions made by the Participating Company under any
other pension, profit sharing or stock bonus plans
maintained by the Participating Company which meet the
requirements of Section 401(a) of the Code.
5.2 LIMITATIONS ON PRE-TAX CONTRIBUTIONS. The Administrator may,
from time to time, establish minimum and maximum limits for the amount of
pre-tax contributions that participants can make under this Trust and Plan. The
Administrator may establish maximum limitations which apply solely to highly
compensated employees. Any limitation, whether a maximum or a minimum, can be
either a stated dollar amount or a stated percentage of compensation.
PRE-TAX CONTRIBUTIONS
5-1
<PAGE> 79
5.3 CHANGES IN ELECTIONS. An election made by a participant
pursuant to Section 5.1 hereof shall continue in effect until changed or
revoked, notwithstanding any changes in the amount of such participant's
compensation. A participant may change the portion of his compensation to be
contributed to this Trust and Plan or suspend his contributions to this Trust
and Plan pursuant to Section 5.1 hereof at least one (1) time in each plan year,
at such times as the Company shall permit. A participant shall change or suspend
his election by providing such notice to the Administrator as the Administrator,
in its sole discretion, shall require.
5.4 PAYMENT TO TRUSTEE. All pre-tax contributions made by a
participant pursuant to Section 5.1 above shall be paid to the Trustee in cash
as soon as reasonably possible after the reduction in the compensation of the
participant. In any event, such amounts shall be paid to the Trustee not later
than ninety (90) days after such compensation reductions are made.
5.5 PRE-TAX ACCOUNTS. Any amounts contributed by a Participating
Company pursuant to a participant's election under Section 5.1 above shall be
held by the Trustee as a part of the Trust Fund created under this Trust and
Plan, shall be specifically allocated to a pre-tax account for the benefit of
such participant and shall be invested and reinvested, valued and administered
in accordance with the terms of this Trust and Plan. Any amounts credited to a
participant's pre-tax account shall be fully vested and nonforfeitable at all
times.
PRE-TAX CONTRIBUTIONS
5-2
<PAGE> 80
5.6 SUSPENSION OF PRE-TAX CONTRIBUTIONS. In the event a
participant receives a distribution from his pre-tax account as a result of
hardship as described in Article XIV, such participant's pre-tax contributions
under Section 5.1 above shall be suspended for a twelve (12) month period after
his receipt of such hardship distribution. In addition, for the taxable year of
the participant immediately following the participant's taxable year during
which said hardship distribution occurs, such participant shall be barred from
making pre-tax contributions in excess of (a) minus (b) below, where:
(a) equals Seven Thousand Dollars ($7,000.00) (plus any cost of
living increase after 1987 allowable under Section 402(g) of
the Code for such immediately following taxable year of the
participant); and
(b) equals the amount of such participant's pre-tax
contributions for the participant's taxable year during
which said hardship distribution is made.
PRE-TAX CONTRIBUTIONS
5-3
<PAGE> 81
ARTICLE VI
----------
PARTICIPATING COMPANY CONTRIBUTIONS
-----------------------------------
6.1 TYPES OF CONTRIBUTIONS. For each plan year ending after the
effective date, a Participating Company shall make a contribution in cash or
other property, in addition to the pre-tax contributions described in Article V
hereof, to the extent required or permitted by Section (17) of the Adoption
Agreement. Discretionary Contributions shall be made from current net profits;
provided, however, that, effective for any plan year commencing on or after
January 1, 1986, if the Participating Company has no net profits for the taxable
year which includes the last day of the plan year for which such contribution is
to be made, it may nonetheless make a discretionary contribution if it is
specifically approved by its Board. At the time the Participating Company pays
the contribution to the Trustee, it shall notify the Trustee of the type of the
contribution, or portions thereof, from among the following listed categories:
(a) a profit sharing contribution or money purchase contribution
to be allocated among the employer contribution accounts of
eligible participants in accordance with Section 6.2 hereof;
(b) a matching contribution to be allocated among the match
accounts of eligible contributing participants in accordance
with Section 6.3 hereof; and
(c) a special ADP contribution to be allocated among the special
ADP accounts of eligible non-highly compensated participants
in accordance with Section 6.4 hereof.
COMPANY CONTRIBUTIONS
6-1
<PAGE> 82
6.2 EMPLOYER CONTRIBUTIONS. If Section (17)(a) of the Adoption
Agreement provides for profit sharing or money purchase contributions, any such
contributions by the Participating Companies shall be allocated among the
employer contribution accounts of all participants who were active participants
during the plan year, excluding any participants described in Section (19) of
the Adoption Agreement. Such contributions shall be allocated in the manner
specified in Section (18) of the Adoption Agreement as follows:
(a) RELATIVE COMPENSATION. Under the relative compensation
method, such contributions shall be allocated to the employer contribution
account of each participant eligible to receive an allocation pursuant to this
Section 6.2 in an amount equal to that portion of the contribution which bears
the same relationship to such contribution as such participant's compensation
during the plan year bears to the total compensation of all such participants
during such plan year.
(b) INTEGRATION METHOD. Under the integration method, such
contribution shall be allocated to the employer contribution accounts of each
participant eligible to receive an allocation pursuant to this Section 6.2 as
follows:
(i) contributions shall be allocated among participants in the
ratio that the sum of each participant's compensation and
compensation in excess of the Integration Level selected in
Section (18) of the Adoption Agreement bears to the sum of
all participants' compensation and compensation in excess of
the Integration Level, but not in excess of the Maximum
Permitted Disparity Rate determined as follows:
COMPANY CONTRIBUTIONS
6-2
<PAGE> 83
<TABLE>
<CAPTION>
Integration Level
Specified in Section (18)
Of The Adoption Agreement Maximum
As A Percentage of The Permitted
Taxable Wage Base Disparity
------------------------- ---------
<S> <C>
0% To 20% 5.7%
20.1% To 80% 4.3%
80.1% To 99.9% 5.4%
100% 5.7%
</TABLE>
(ii) the balance of the employer contribution of the Participating
Companies shall be allocated among such participants in the ratio
of their respective compensation.
(c) PER CAPITA METHOD. Under the per capita method, such
contributions shall be allocated in equal amounts to the employer contribution
account of each participant eligible to receive an allocation pursuant to this
Section 6.2.
(d) HOURS WORKED METHOD. Under the hours worked method, such
contributions shall be allocated to the employer contribution accounts of
participants eligible to receive an allocation pursuant to this Section 6.2 in
proportion to the hours of service, as defined in Section 3.1(a) of this Trust
and Plan, actually worked by each such eligible participant.
6.3 MATCHING CONTRIBUTIONS. If Section (17)(a) of the Adoption
Agreement so provides, each Participating Company may make a matching
contribution to this Trust and Plan for each period specified in Section (17)(a)
of the Adoption Agreement. Such matching contribution, if any, shall be
allocated to the match account of each participant on whose behalf it is made.
6.4 SPECIAL ADP CONTRIBUTION. If Section (17)(a) of the Adoption
Agreement so provides, a Participating Company may make a
COMPANY CONTRIBUTIONS
6-3
<PAGE> 84
special ADP contribution to this Trust and Plan for any plan year. The amount of
such special contribution shall be determined by the Company from time to time.
Such amount, if any, shall be allocated to the special ADP accounts of some or
all of the participants who are not highly compensated employees in such manner
as the Company shall designate at the time any such special ADP contribution is
made to this Trust and Plan.
6.5 PAYMENT TO TRUSTEE. The Participating Companies shall make the
contributions specified in Section 6.1 hereof, in cash or other property, to the
Trustee not later than the last day upon which they may make contributions under
this Trust and Plan and secure under the Code deductions of such contributions
in the computation of their federal income taxes for the taxable years which
include the last day of the plan year for which such contributions are made.
6.6 ACCOUNTS. Any amounts contributed by the Participating Companies
pursuant to this Article VI shall be held by the Trustee as a part of the Trust
Fund created under this Trust and Plan, shall be specifically allocated to the
eligible participants' employer contribution accounts, match accounts or special
ADP accounts, as hereinbefore provided, for the benefit of such participants and
shall be invested and reinvested, valued and administered in accordance with the
terms of this Trust and Plan. Any amounts credited to a participant's employer
contribution and match accounts shall be subject to the vesting schedules
described in Sections (20) or (21) of the Adoption Agreement as appropriate.
COMPANY CONTRIBUTIONS
6-4
<PAGE> 85
Any amounts credited to a participant's special ADP account shall be fully
vested and nonforfeitable at all times.
COMPANY CONTRIBUTIONS
6-5
<PAGE> 86
ARTICLE VII
-----------
AFTER TAX CONTRIBUTIONS
-----------------------
7.1 AMOUNT OF AFTER TAX CONTRIBUTIONS. If permitted by Section
(17)(c) of the Adoption Agreement, then pursuant to uniform rules and procedures
promulgated by the Administrator, an active participant may voluntarily make
after tax contributions to the Trust Fund created under this Trust and Plan.
After tax contributions may either be a stated percentage of the participant's
compensation or a stated dollar amount and can be made by either payroll
deduction or a cash payment from the participant to the Trustee. After tax
contributions shall be permitted hereunder only if pre-tax contributions are
permitted pursuant to Section (17)(b) of the Adoption Agreement.
7.2 CHANGES IN PAYROLL DEDUCTIONS. If after tax contributions
are made by payroll deduction, the percentage designated by the participant
shall continue in effect until revoked or changed by such participant
notwithstanding any change in the amount of such participant's compensation. A
participant may change the portion of his compensation to be contributed to this
Trust and Plan or suspend his contributions to this Trust and Plan pursuant to
Section 7.1 hereof at least one (1) time in each plan year, at such times as the
Company shall permit. A participant shall change or suspend his election by
providing such notice to the Administrator as the Administrator, in its sole
discretion, shall require.
AFTER TAX CONTRIBUTIONS
7-1
<PAGE> 87
7.3 PAYMENT TO TRUSTEE. The Participating Companies shall pay
in cash to the Trustee all amounts deducted from the compensation of a
participant as after tax contributions as soon as reasonably possible after such
deductions are made but in no event more than ninety (90) days after the
deductions are made.
7.4 AFTER TAX ACCOUNTS. Any after tax contributions made by a
participant shall be credited to a post-86 after tax account for the benefit of
such participant. After tax contributions made prior to January 1, 1987, if any,
shall be credited to the participant's pre-87 after tax accounts which shall not
be credited with any after tax contributions made subsequent to December 31,
1986. Any amounts credited to a participant's after tax accounts shall be fully
vested and nonforfeitable at all times.
7.5 DEDUCTIBLE VOLUNTARY CONTRIBUTIONS. The Plan Administrator
shall not accept any deductible voluntary contributions hereunder; provided,
however, that any such contributions made to a Predecessor Plan prior to January
1, 1987, shall be maintained in a separate pre-87 IRA account which shall be
fully vested and nonforfeitable at all times. Such account shall share in the
income, gains and losses of the Trust Fund as provided in Article XI hereof. No
part of such account shall be used to purchase life insurance pursuant to
Article X hereof.
AFTER TAX CONTRIBUTIONS
7-2
<PAGE> 88
ARTICLE VIII
------------
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
--------------------------------------------
8.1 CONTRIBUTIONS ARE SUBJECT TO LIMITATIONS. The amount and
allocation of contributions and the allocation of forfeitures under this Trust
and Plan shall be subject to several limitations. Those limitations shall be as
follows:
(a) Pre-tax contributions made to the Trust and Plan pursuant to
a participant's election under Article V of the Trust and
Plan shall be subject to the individual dollar limit
described in Section 8.2 hereof;
(b) Pre-tax contributions made to the Trust and Plan pursuant to
a participant's election under Article V of the Trust and
Plan plus, to the extent elected by the Company, any
qualified nonelective contributions shall be subject to the
deferral percentage limit set forth in Section 8.3 hereof;
(c) Matching contributions, other than qualified nonelective
contributions used in the deferral percentage test set forth
in Section 8.3 hereof, and after tax contributions made to
the Trust and Plan shall be subject to the contribution
percentage limit set forth in Section 8.4 hereof;
(d) The contributions described in paragraphs (b) and (c) above
shall be subject to the limit on "multiple use" set forth in
Section 8.5 hereof;
(e) All contributions made pursuant to Articles V and VI of the
Trust and Plan, in the aggregate, shall be subject to the
deductibility limit set forth in Section 8.6 hereof; and
(f) The allocation of all of the foregoing contributions and the
allocation of all forfeitures, in the aggregate, shall be
subject to the limitation on annual additions set forth in
Article XXIV hereof.
8.2 THE DOLLAR LIMIT. Effective January 1, 1987, pre-tax
contributions under Article V of the Trust and Plan with
LIMITATIONS ON CONTRIBUTIONS
8-1
<PAGE> 89
respect to the taxable year of a participant made pursuant to a participant's
election plus similar amounts contributed on a similar basis by any other
employer (whether or not related to the Participating Companies) required by law
to be aggregated with such contributions under this Trust and Plan shall not
exceed Seven Thousand Dollars ($7,000.00), plus any increase for cost-of-living
after 1987 as determined pursuant to regulations issued by the Secretary of the
Treasury or his delegate pursuant to Section 415(d) of the Code.
In the event that the contributions made pursuant to Section
5.1 of the Trust and Plan for a participant's taxable year exceed such limit, or
in the event that the Administrator shall receive notice from a participant by
the March 1 next following the close of a participant's taxable year that the
contributions on behalf of the participant under Section 5.1 hereof, together
with similar contributions under plans of other employers shall have exceeded
such limit, the Administrator shall cause the amount of excess contributions,
together with any earnings allocable to such excess contributions, to be
refunded to the participant by the following April 15th. The amount of any such
refund shall be debited to the participant's pre-tax account.
8.3 DEFERRAL PERCENTAGE LIMIT. For any plan year commencing on
or after January 1, 1987, the contributions described in Section 8.1(b) above
shall be limited so that the average deferral percentage for the highly
compensated participants shall not exceed an amount determined based upon the
average deferral
LIMITATIONS ON CONTRIBUTIONS
8-2
<PAGE> 90
percentage for the participants who are not highly compensated
participants, as follows:
<TABLE>
<CAPTION>
(A) (B)
<S> <C>
Average Deferral Limit on Average
Percentage for Deferral Percentage
Participants who for Highly Compensated
are not Highly Participants
Compensated ----------------------
----------------
Less than 2% 2 times Column (A)
2% or more but less than 8% Column (A) plus 2%
8% or more 1.25 times Column (A)
</TABLE>
For purposes of the foregoing, the "deferral percentage" for a
participant for any plan year shall equal a fraction:
(a) the numerator of which shall equal the total of (i) plus
(ii), where:
(i) equals the total of the contributions made on his
behalf for such plan year pursuant to Article V hereof;
and
(ii) equals, to the extent elected by the Company, the
qualified nonelective contributions made on his behalf
for such plan year pursuant to Article VI hereof; and
(b) the denominator of which shall equal the sum of (i) plus
(ii) plus (iii), where:
(i) equals his compensation for such plan year as defined
in any manner described in Section 2.11(a) hereof (or
2.11(d) hereof if applicable) applied consistently to
all participants, subject to the limitation set forth
in Section 2.11(c) hereof, but not reduced by any
amount referred to in Section 2.11(b)(ii), regardless
of the Company's election in the Adoption Agreement;
and
(ii) equals the pre-tax contributions made on his behalf
pursuant to Article V for such plan year; and
(iii) equals other amounts excludable from gross income
under Sections 125, 402(a)(8), 402(h) or 403(b) of the
Code.
LIMITATIONS ON CONTRIBUTIONS
8-3
<PAGE> 91
The Company shall maintain adequate records to demonstrate
compliance with the deferral percentage limits described in this Section 8.3,
including the extent to which qualified nonelective contributions are taken into
account.
8.4 CONTRIBUTION PERCENTAGE LIMIT. For any plan year commencing
on or after January 1, 1987, the contributions described in Section 8.1(c) above
shall be limited so that the average contribution percentage for the highly
compensated participants shall not exceed an amount determined based upon the
average contribution percentage for the participants who are not highly
compensated participants in accordance with the table set forth in Section 8.3
hereof. For purposes of the foregoing, the "contribution percentage" for a
participant for any plan year shall equal a fraction:
(a) the numerator of which shall equal the contributions
described in Section 8.1(c) above; and
(b) the denominator of which shall equal the total of (i) plus
(ii) plus (iii), where:
(i) equals his compensation for such plan year as defined
in any manner described in Section 2.11(a) hereof (or
2.11(d) hereof if applicable) applied consistently to
all participants, subject to the limitation set forth
in Section 2.11(c) hereof, but not reduced by any
amount referred to in Section 2.11(b)(ii), regardless
of the Company's election in the Adoption Agreement;
and
(ii) equals the pre-tax contributions made on his behalf
pursuant to Section 5.1 hereof for such plan year; and
(iii) equals other amounts excludable from gross income
under Sections 125, 402(a)(8), 402(h) and 403(b) of the
Code.
LIMITATIONS ON CONTRIBUTIONS
8-4
<PAGE> 92
If, for any plan year, the Trust and Plan satisfies the requirements of Section
8.3 hereof, then the Company may elect, in such manner as the Secretary of the
Treasury or his delegate may provide, to take into account as additional amounts
for purposes of this Section 8.4, amounts contributed to the Trust and Plan
pursuant to a participant's election under Section 5.1 hereof and qualified
nonelective contributions made hereunder.
8.5 MULTIPLE USE. If the sum of the deferral percentage and
the contribution percentage for one or more highly compensated employees exceeds
the aggregate limit, the contribution percentage for such employee or employees
shall be reduced (beginning with such highly compensated employee whose
contribution percentage is highest) so that the aggregate limit is not exceeded.
The amount by which each highly compensated employee's contribution percentage
is reduced shall be treated as an excess contribution. The deferral percentage
and contribution percentage of the highly compensated employees shall be
determined after any corrections are made to meet the deferral percentage and
contribution percentage limits. Multiple use does not occur if neither the
average deferral percentage nor the average contribution percentage of the
highly compensated employees exceeds one and twenty-five hundredths (1.25)
multiplied by the corresponding average deferral percentage or average
contribution percentage of the non-highly compensated employees.
For purposes of this Section 8.5, the words "aggregate limit"
shall mean the greater of (a) or (b), where:
LIMITATIONS ON CONTRIBUTIONS
8-5
<PAGE> 93
(a) equals the sum of:
(i) one and twenty-five hundredths (1.25) times the greater of
the deferral percentage or the contribution percentage for
the non-highly compensated employees; and
(ii) two (2) percentage points plus the lesser of the deferral
percentage or the contribution percentage for the non-highly
compensated employees; and
(b) equals the sum of:
(i) one and twenty-five hundredths (1.25) times the lesser of
the deferral percentage or the contribution percentage for
the non-highly compensated employees; and
(ii) two (2) percentage points plus the greater of the deferral
percentage or the contribution percentage for the non-highly
compensated employees.
In no event, however, shall the amounts set forth in (a)(ii) and (b)(ii) above
exceed twice the greater of the deferral percentage or the contribution
percentage for the non-highly compensated employees.
8.6 DEDUCTIBILITY LIMIT. In no event shall the amount of all
contributions by a Participating Company pursuant to Article VI hereof, together
with all amounts contributed by the Participating Companies to the Trustee
pursuant to participants' elections under Section 5.1 hereof, exceed the maximum
amount allowable as a deduction under Section 404(a)(3) of the Code unless
specifically authorized by the Board of the Participating Company and all such
contributions are hereby expressly conditioned on their deductibility. This
limitation shall not apply to contributions which may be required in order to
provide the minimum
LIMITATIONS ON CONTRIBUTIONS
8-6
<PAGE> 94
contributions described in Article XXIII for any plan year in which this Trust
and Plan is top-heavy. Nor shall this limitation apply to contributions which
may be required in order to recredit the account of any rehired participant
whose account is to be recredited with previously forfeited amounts as described
in Section 15.6 hereof.
8.7 CORRECTING EXCESS CONTRIBUTIONS. In the event that the
limitations set forth in Sections 8.2, 8.3, 8.4 or 8.5 shall be exceeded, the
Administrator shall take action to reduce future contributions made pursuant to
Sections 5.1 and 7.1 and Article VI hereof as appropriate. Such action may
include a reduction in the future rate of deferral pursuant to Section 5.1
hereof or after tax contributions pursuant to Section 7.1 hereof of any highly
compensated participant pursuant to any legally permissible procedure. Effective
for the first plan year commencing on or after January 1, 1987, in the event
that such action shall fail to prevent the excess, prior contributions made
pursuant to Section 5.1 or 7.1 hereof, plus any income and minus any loss
allocable thereto to the date of distribution, shall be distributed to the
affected highly compensated participants no later than two and one-half (2-1/2)
months following the end of the plan year in which such contributions were made.
If such excess amounts are not distributed within said two and one-half (2-1/2)
month period, a ten percent (10%) excise tax on such excess amount shall be
imposed on the Participating Company employing such highly compensated
participants. Distributions of excess contributions shall be made
LIMITATIONS ON CONTRIBUTIONS
8-7
<PAGE> 95
to highly compensated participants on the basis of the respective portions of
such contributions attributable to such participants. Excess contributions shall
be allocated to participants who are subject to the family aggregation rules of
Section 414(q)(6) of the Code in the manner prescribed by Treasury Regulations.
Excess contributions shall be treated as annual additions under Article XXIV of
the Trust and Plan.
For purposes of adjusting excess contributions to take into
account income and losses to the date of distribution, the income or loss shall
be equal to the sum of:
(a) income or loss for the plan year allocable to the account
to which the excess was allocated multiplied by a fraction, the numerator of
which is the excess contributions credited to such account for the plan year and
the denominator is the total account balance without regard to any income or
loss occurring during such plan year; and
(b) ten percent (10%) of the amount determined under (a) above
multiplied by the number of whole calendar months between the end of the plan
year and the date of distribution, counting the month of distribution if
distribution occurs after the fifteenth (15th) of such month.
LIMITATIONS ON CONTRIBUTIONS
8-8
<PAGE> 96
ARTICLE IX
----------
INVESTMENT FUNDS AND DIRECTION OF INVESTMENT
--------------------------------------------
9.1 PARTICIPANT DIRECTION OF INVESTMENTS. The Company may
direct that participants, former participants and beneficiaries be permitted to
direct the investment of all or certain of their accounts under the Trust and
Plan in such media, whether limited or unlimited, as shall be designated by the
Company, from time to time, subject to the limitations hereinafter set forth in
this Article IX. Any direction of the Company pursuant to this Section 9.1,
shall apply to all participants, former participants and beneficiaries in a
uniform and nondiscriminatory manner. In the event the Company directs that
participants be permitted to direct the investment of certain of their accounts,
the Company shall notify the participants, former participants and beneficiaries
of such fact.
9.2 INVESTMENT FUNDS. The investment funds which may be
selected by the Company shall include, but not be limited to, the following:
(a) Money Market Funds;
(b) Mutual Funds;
(c) Equity Funds;
(d) Fixed Income Funds;
(e) Any pooled investment fund established by a bank;
(f) Any insurance company's general account; and
(g) Any special account established and maintained by
any insurance company.
INVESTMENT FUNDS
9-1
<PAGE> 97
The Company shall have the sole discretion to determine the number of investment
funds to be maintained hereunder and the nature of the funds and may change or
eliminate the funds from time to time.
9.3 PROCEDURES FOR DIRECTION OF INVESTMENT. If the Company so
permits under Section 9.1 above, a participant, former participant or
beneficiary, by written direction to the Trustee, shall direct the investment of
amounts contributed on his behalf in the pooled investment funds and/or mutual
funds and/or group annuity contracts described in Section 9.2 and in such other
funds as may be established by the Company hereunder; provided, however, that
any such individual's investment selections shall be made in accordance with
such rules as are established by the Administrator from time to time in its sole
discretion. Any rules established by the Administrator pursuant to this Section
9.3 shall apply to all participants, former participants and beneficiaries in a
uniform and nondiscriminatory manner.
9.4 INITIAL DIRECTION AND CHANGES OF DIRECTION OF INVESTMENT.
All directions as to the investment of his accounts by a participant, former
participant or beneficiary shall be deemed to be continuing directions until
they shall have been changed. To the extent that any participant, former
participant or beneficiary fails to give investment directions to the Trustee,
amounts credited to his accounts shall be invested in accordance with the
Trustee's direction. A participant, former participant or beneficiary may change
his direction of investment at such times and upon such notice as the
Administrator, from time to time, may
INVESTMENT FUNDS
9-2
<PAGE> 98
designate. Each participant, former participant or beneficiary shall indicate
whether any change in investment direction shall apply only to contributions
made to this Trust and Plan on his behalf following such change or whether such
change shall also operate to change the investment of amounts already credited
to his accounts.
9.5 VALUATION OF INVESTMENT FUNDS. Any investment fund
established pursuant to this Article IX shall be valued and adjusted according
to the procedures set forth in Article XI hereof as a separate Trust Fund. It is
intended that this Section 9.5 operate to adjust each investment fund to reflect
all income attributable to each such fund and changes in the value of each such
fund's assets, as the case may be, as of any valuation date.
9.6 DIRECTION OF INVESTMENTS NOT PERMITTED. If the Company
does not permit individual direction of investment pursuant to Section 9.1
hereof, the investment of the accounts of participants, former participants and
beneficiaries shall be determined by the Trustee or an Investment Manager
pursuant to Article XX hereof.
INVESTMENT FUNDS
9-3
<PAGE> 99
ARTICLE X
---------
INSURANCE CONTRACTS
-------------------
10.1 PURCHASE OF INSURANCE CONTRACTS. If permitted under Section
(31) of the Adoption Agreement, then the Administrator shall purchase on behalf
of any active participant who directs either the Trustee to purchase for his
benefit or any participant who is designated by the Company an endowment or life
insurance contract or contracts from such insurance company or companies in such
amounts (subject to the limitations specified in this Article X) and in such
form as such participant or the Company, as the case may be, may determine. The
proceeds upon the maturity, in whole or in part, of any of contract or
contracts, due to the death of a participant, shall be for the benefit of the
beneficiaries of such participant as to whom the maturity occurs, subject to the
other provisions of this Trust and Plan, specifically including the spousal
consent requirements of Article XVII hereof to the extent legally applicable or
as required by the Administrator. The contract or contracts shall be issued in
the name of the Trustee who shall retain, until their maturity by death of a
participant or disposition under the terms of this Trust and Plan, all incidents
of ownership therein. The proceeds of said contract or contracts payable on the
death of a participant shall be paid directly to the death beneficiary
determined under Article XVII hereof and the Administrator shall execute such
forms or designations as shall be required by the insurance company to comply
with this sentence.
INSURANCE
10-1
<PAGE> 100
The premium on any such contract or contracts purchased for a participant's
benefit shall be paid from the amounts credited to such participant's accounts,
other than his pre-87 IRA account, which accounts shall be debited by the amount
of premiums so paid. In no event shall the aggregate of the entire amounts paid
for term life insurance plus fifty percent (50%) of the amounts paid for
ordinary life insurance contracts for any participant be as much as twenty-five
percent (25%) of the aggregate of contributions which have been allocated to his
accounts, other than his pre-87 IRA account, if any, since the date he first
became a participant.
10.2 PREMIUM PAYMENTS. All contracts purchased shall contain
such provisions against alienation and levying thereon as the Administrator may
deem appropriate and shall be procurable. Premium payments for such insurance
shall be on a single premium or level premium basis and premium payments shall
be charged against the participant's accounts, other than his pre-87 IRA
account, if any, as of the date of payment.
10.3 ACCUMULATION OF DIVIDENDS, ETC. During the time any
contract is held under the provisions of the Trust and Plan, any dividends,
endowments or returns of premium payable under such contract shall be
accumulated at interest under such contract or the participant, in his
discretion, may direct the Trustee to instruct the insurance company to apply
any dividends, endowments or returns of premium accumulated under the contract
to the payment of any premium or the purchase of paid-up additions.
INSURANCE
10-2
<PAGE> 101
10.4 INSUFFICIENT FUNDS FOR PAYING PREMIUMS. When, on an
allocation date, the premium or premiums then due on all contracts held by the
Trustee for the benefit of any participant shall exceed the amount in or
creditable to such participant's accounts, other than his pre-87 IRA account, if
any, or the amount which, under the twenty-five (25%) limitation stated in
Section 10.1 hereof, may be used to pay premiums upon life insurance contracts
for a participant, the participant may proceed as follows:
(a) direct the Trustee to instruct the insurance company
to apply any dividends, endowments or returns of
premium accumulated under such contracts for the
payment of premiums to the extent necessary; and
(b) in the event the Trustee applies the dividends,
endowments and returns of premium accumulated as
aforesaid, but said amount is insufficient to meet
premium payments due under such contracts, such
participant may pay any remaining premium or premiums
or a portion thereof then due himself; and
(c) in the event a participant shall decline to make
personal payment of the premium or premiums due on
such contracts, he may direct the Trustee to borrow
either from the insurance company or from such
other institution as the participant may direct
upon the security of the contract or contracts for
the purpose of paying the premium or premiums
thereon; and
(d) in the event payment of the premium or premiums is
not made under subsections (a) and (b) above, and
the participant shall not direct the Trustee to
borrow funds to pay said premium or premiums, the
Trustee shall instruct the insurance company to
have the contract or contracts placed upon a paid-
up basis, to the extent necessary, provided that in
the event the value of the contract or contracts
shall be insufficient to place same upon a paid-up
basis according to the practice of the insurance
company, such contract or contracts shall be
reduced to cash and the amounts received thereby
shall be credited to the participant's accounts,
other than his pre-87 IRA account, if any.
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10.5 CONTRACT PROVISIONS. If available, any contract purchased
by the Trustee shall contain an automatic premium loan provision exercisable by
the Trustee at the direction of the participant in the event of non-payment of
the premium and shall also permit conversion to paid up insurance by the Trustee
at the direction of the participant. Insurance contracts purchased may contain
double indemnity and waiver of premium provisions, insofar as permitted by the
insurance company.
10.6 NO INSURANCE BEYOND RETIREMENT. In no event shall life
insurance be permitted to continue on the life of a participant beyond his
date of actual retirement.
10.7 CASH SURRENDER VALUES. The Administrator shall maintain
records of the accounts from which premiums on insurance contracts have been
paid and shall allocate the cash surrender values of the insurance contracts
among the accounts in an equitable manner. Upon the termination of employment,
retirement or disability of the participant, the allocable share of the cash
surrender value shall be added to the amount credited to each of the
participant's accounts for purposes of determining his vested interest and the
amount distributable to the participant.
10.8 PURCHASE OF CONTRACT ON CESSATION OF ACTIVE PARTICIPATION.
If the Trustee shall hold an insurance contract or contracts on the life of a
terminated participant on the date he ceases to be an active participant, the
terminated participant shall instruct the Trustee regarding disposition of such
contract as follows:
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(a) the participant may purchase any such contract from
the Trust and Plan;
(b) the participant may direct that such contract be
distributed to him from the Trust and Plan in
satisfaction of all or part of his rights, if any,
under Article XV; or
(c) the participant may direct the Trustee to surrender
said contract to the insurance company for cash.
In the event that the terminated participant elects to purchase any such
contract from the Trust and Plan he shall pay to the Trustee an amount equal to
its cash surrender value within thirty (30) days after the date he ceases to be
an active participant. If such amount is so paid, the Trustee shall assign all
its right, title and interest in and to such contract to the participant and
shall credit his accounts with the amount so paid. In the event that the
terminated participant elects to have any such contract distributed to him from
the Trust and Plan, the Trustee shall debit such participant's accounts with the
cash surrender value of said contract. The Trustee shall then assign all its
right, title and interest in and to such contract to the terminated participant.
In the event that the terminated participant elects to surrender
such contract to the insurance company for cash, to the insurance company for
cash and shall credit such participant's employer contribution account with the
cash surrender value of said contract.
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ARTICLE XI
----------
ACCOUNTS
--------
11.1 ESTABLISHMENT OF ACCOUNTS. Upon an employee's becoming a
participant, the Administrator shall notify the Trustee and provide the Trustee
with such information concerning said participant as the Trustee may require.
Upon being notified by the Administrator that an employee has become a
participant, the Trustee shall establish the appropriate accounts in the name of
such participant. If a participant's employment shall terminate for a reason
other than his death, permanent and total disability or retirement, a
distribution account shall be established for him pursuant to Article XV hereof.
11.2 CREDITING OF ACCOUNTS. Accounts shall be credited with
contributions in the amounts specified in Articles V, VI and VII hereof, shall
be credited or debited with the income, gains or losses of the Trust Fund
pursuant to this Article XI, and shall be debited with the amount of any
withdrawals or distributions made therefrom. All such credits and debits to the
accounts of a participant shall be made as of the dates specified in the
appropriate Sections of this Trust and Plan.
11.3 VALUATION OF ASSETS. As soon as practicable following each
allocation date and on such other dates as the Administrator, in its sole
discretion, may designate pursuant to Section 11.5 hereof, the Trustee shall
evaluate all assets of the Trust Fund as of such valuation date. The Trustee
shall use the
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fair market values of securities or other assets in making said determination.
The Trustee shall then subtract from the total value of the assets of said Trust
Fund the total of all accounts as of said valuation date. Each such account
shall be credited with that portion of the excess of the value of the assets
over the total of all such accounts which bears the same relationship to the
total of such excess as (a) bears to (b), where:
(a) equals the amount credited to said account; and
(b) equals the total amounts credited to all accounts.
The amount credited to each account shall be reduced in similar proportion in
the event the total of all accounts as of said date exceeds the total value of
all assets of the Trust Fund as of said valuation date. It is intended that this
paragraph operate to distribute among all such accounts in the Trust, all income
of the Trust Fund and changes in the value of the Trust Fund's assets, as the
case may be. The Administrator and the Trustee may adopt such rules as they deem
appropriate to credit pre-tax contributions after tax contributions and matching
contributions or other contributions which were received periodically through
the valuation period with an appropriate percentage of the income, gains and
losses of the Trust Fund's assets.
Notwithstanding the foregoing provisions of this Section 11.3,
if the assets of the Trust Fund are invested either with an institutional
Trustee or with an Investment Manager or other professional money manager which
maintains a procedure for allocating investment earnings and losses to accounts
utilizing the
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fair market value of assets, the Trustee may direct that such method be used in
lieu of the procedures hereinbefore described.
11.4 VALUATION OF INVESTMENT FUNDS. If separate investment funds
have been established under Article IX hereof, the Trustee shall proceed as
described in Section 11.3 above but on an investment fund by investment fund
basis. It is intended that this Section 11.4 operate to distribute among all
accounts invested in a particular investment fund all income of such fund
allocable to the Trust and changes in the value of the fund's assets, as the
case may be. The adjustments in the amounts credited to such accounts shall be
deemed to have been made as of said valuation date.
11.5 INTERIM VALUATION OF ASSETS. In addition to or in lieu of
the valuation dates set forth in Section 11.3 hereof, the Administrator, in its
sole discretion, may instruct the Trustee to make an interim valuation of assets
of the Trust Fund. In exercising its discretion as to whether to instruct the
Trustee to evaluate the assets of the Trust Fund, the Administrator shall
consider the following factors:
(a) the expense of any such interim valuation;
(b) the length of time involved in making any such
interim valuation and the resulting delay in making
any distributions from the Trust Fund;
(c) the magnitude of the estimated change in the value
of the assets of the Trust Fund; and
(d) the size of any distribution or distributions
involved.
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Upon instruction by the Administrator, the Trustee shall evaluate the assets of
the Trust Fund and adjust all the accounts of the Trust and Plan in accordance
with the methods and procedures contained in Section 11.3 or 11.4 hereof as of
the date specified by the Administrator.
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ARTICLE XII
-----------
LOANS
-----
12.1 LOAN ADMINISTRATION AND APPLICATIONS. If permitted under
Section (32) of the Adoption Agreement, a participant, former participant or
beneficiary of a deceased participant or former participant, other than an
owner-employee or a shareholder-employee as defined in Section 12.4 of the Trust
and Plan, may apply to the Administrator for a loan from the Trust and Plan. Any
such loan shall not be made available to highly compensated employees in an
amount greater than that made available to nonhighly compensated employees. If
the Administrator determines that such borrower (and proposed loan) satisfies
the requirements set forth below for loan approval, the Administrator shall
direct the Trustee to make a loan to such borrower from one or more of his
accounts, other than his pre-87 IRA account. The amount of any such loan shall
be determined by the Administrator; provided, however, that, on or after October
19, 1989, any such loan shall not, when combined with outstanding loans
previously made from this Trust and Plan and loans made under other qualified
retirement plans, if any, maintained by the Controlled Group, cause the
aggregate amount of all such loans to such borrower to exceed the lesser of (a)
or (b) below, where:
(a) equals one-half (1/2) of all vested amounts held for
such borrower under this Trust and Plan (other than
amounts credited to his pre-87 IRA account); and
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(b) equals Fifty Thousand Dollars ($50,000.00) reduced by the
remainder, if any, of:
(i) the highest outstanding balance of loans to such
borrower from this Trust and Plan and all other
qualified retirement plans maintained by the Controlled
Group during the twelve (12) month period preceding the
date on which the loan is to be made; minus
(ii) the outstanding balance of loans to such borrower from
the plans on the day the loan is to be made.
Loans made prior to October 19, 1989 shall not exceed the lesser of (c) or (d)
below, where:
(c) equals the greater of:
(i) Ten Thousand Dollars ($10,000.00); or
(ii) one-half (1/2) of all vested amounts held for such
borrower under this Trust and Plan (other than amounts
credited to his pre-87 IRA account); and
(d) equals Fifty Thousand Dollars ($50,000.00).
The following additional provisions shall be applicable to the
loan program under this Trust and Plan:
(A) LOAN PROGRAM ADMINISTRATION. The loan program under the
Trust and Plan shall be administered by the Administrator.
(B) LOAN APPLICATION PROCEDURE. Each borrower shall apply for a
loan by written application on a form acceptable to the
Administrator.
(C) BASIS FOR APPROVAL OR DENIAL OF LOANS. Loans will be
approved only if:
(1) the circumstances of the loan satisfy the requirements
of Section (32) of the Adoption Agreement;
(2) the Administrator believes the borrower intends to
repay the loan in accordance with its terms; and
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(3) the borrower's spouse, if any, consents to the loan in
accordance with Sections 28.7 and 28.8 hereof within
the ninety (90) day period ending on the date the loan
is made; and
(4) the amount of such loan shall not be in excess of the
vested amount which is credited to the borrower's
accounts, as selected in Section (32) of the Adoption
Agreement, at the time of such loan and shall be made
exclusively from such accounts; and
(5) the amount of such loan shall not be less than the
amount selected in Section (33) of the Adoption
Agreement; and
(6) the borrower designates the accounts and investments
which are to be liquidated to permit making of such a
loan, as requested by the Administrator; and
(7) the loan satisfies the requirements of Section 12.2 of
the Trust and Plan.
12.2 TERMS AND CONDITIONS OF LOANS. Any loan made pursuant to
Section 12.1 shall be considered to be made solely from the account or accounts
of the borrower and shall be subject to the following terms and conditions:
(a) INTEREST. Interest shall be charged at a reasonable rate,
comparable to the rate charged by a commercial lender for a
similar loan.
(b) LOAN TERM AND REPAYMENT SCHEDULE. The term of any loan shall
be arrived at by mutual agreement between the borrower and
the Administrator but shall not exceed five (5) years,
unless, effective for plan years commencing on or after
January 1, 1987, the proceeds of such loan are to be used to
acquire any dwelling unit which within a reasonable time is
to be used as the borrower's principal residence, in which
case, such loan may be for such term as is customary in
similar transactions involving lending institutions.
Effective for plan years commencing on or after January 1,
1987, all loans shall provide for the substantially level
amortization of the loan, with payments not less frequently
than quarterly, over the term of the loan; provided,
however, that the terms of the loan
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may permit a borrower a grace period of up to one (1) year
from such repayments while such borrower is on an unpaid
leave of absence from a Participating Company.
(c) SEGREGATION OF ACCOUNTS. If an individual borrows money from
the Trust and Plan, his accounts, to the extent of such
borrowing, shall be deemed segregated for investment
purposes. The note representing such loan and the borrower's
accounts, to the extent of such borrowing, shall not be
taken into account in the valuation of the Trust and Plan
pursuant to Section 11.3 hereof.
(d) REPAYMENT PROCEDURES. Repayment of any loan made to an
employee shall be by payroll deduction unless another
procedure is agreed to by the Administrator and the
employee. Repayment of any loan made to a borrower who is
not an employee shall be made as mutually agreed by the
Administrator and such borrower.
(e) DOCUMENTATION AND COLLATERAL. Each loan shall be evidenced
by a borrower's note for the amount of the loan and interest
payable to the order of the Trustee and shall be supported
by adequate collateral. Such collateral shall consist of
(i) an amount not to exceed fifty percent (50%) of the
borrower's entire right, title and interest in and to the
Trust Fund, and any earnings attributable to such amount,
and (ii) other property, if necessary, of sufficient value
to adequately secure the repayment of the loan. The
Administrator may require such other and further
documentation as it deems appropriate.
(f) DEFAULT. A borrower shall be in default if he fails to make
any payment of principal or interest when due, if he fails
to make a required payment after a permitted one (1) year
grace period, as provided in subsection (b) above, or if his
collateral becomes inadequate to secure the loan and he does
not provide substitute collateral satisfactory to the
Administrator within ten (10) days after a request therefor
by the Administrator. In the event of default by a borrower,
his loan shall be accelerated, and:
(i) If his collateral security in this Trust and Plan is
adequate to cover all or part of the outstanding
principal and interest, and if distribution of such
amount would not, in the
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opinion of the Administrator, put at risk the tax
qualified status of the Trust and Plan or the pre-tax
contribution portion thereof, the Trustee shall execute
upon such Trust and Plan collateral; and
(ii) If his collateral security in this Trust and Plan is not
adequate to cover all of the outstanding principal and
interest, or if execution upon such collateral would, in
the opinion of the Administrator, put at risk the tax
qualified status of the Trust and Plan or the pre-tax
contribution portion thereof, the Trustee shall commence
appropriate collection actions against the borrower to
recover the amounts owed.
Expenses of collection, including legal fees, if any, of
any loan in default shall be borne by the borrower or
his accounts under this Trust and Plan.
12.3 PAYMENT OF PRIOR LOANS. Notwithstanding the foregoing
provisions of this Article XII, in the event the proceeds of any loan made
hereunder shall be used directly or indirectly to pay off any obligations under
a prior loan made hereunder, the term of the more recent loan shall not extend
beyond the period of repayment under the prior loan. For purposes of this
Section 12.3, the Administrator shall be able to rely on a certification by the
borrower as to the use of the new loan's proceeds.
12.4 SHAREHOLDER-EMPLOYEE DEFINED. The term "Shareholder-
Employee" shall mean, with respect only to those taxable years for which a
member of the Controlled Group is an "electing small business corporation"
pursuant to Subchapter S of the Code, an employee of who owns, or is considered
as owning (within the meaning of Section 318(a)(1) of the Code) on any day
during such a taxable year, more than five (5) percent of the outstanding stock
of such member of the Controlled Group.
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ARTICLE XIII
------------
WITHDRAWALS FROM ACCOUNTS
-------------------------
13.1 RESTRICTIONS ON WITHDRAWALS. The Administrator may, by
uniform rules and regulations, provide that withdrawals made pursuant to this
Article XIII shall be subject to the following restrictions:
(a) a married participant shall obtain his spouse's
consent as set forth in Section 13.3 hereof;
(b) the minimum amount of any such withdrawal shall be
the lesser of the amount specified in Section (35) of
the Adoption Agreement or the remaining balance of
his vested interest or his personal accounts;
(c) the Administrator shall specify the maximum number
of withdrawals a participant may make in a plan
year or other period;
(d) the participant shall make a written application
for any such withdrawal at least fifteen (15) days
before the withdrawal occurs; and
(e) other reasonable and uniform rules and regulations,
consistently applied, as may be established from
time to time by the Administrator.
If separate investment funds have been established pursuant to Article IX
hereof, the withdrawing participant shall designate the investments that are to
be liquidated to permit the making of such withdrawal.
13.2 WITHDRAWALS FROM ACCOUNTS. To the extent permitted by
Section (34) of the Adoption Agreement, a participant shall have the right,
subject to Section 13.1 above, to withdraw amounts credited to his accounts. To
the extent that Section (34)(f) of the Adoption Agreement permits participants
to withdraw amounts
WITHDRAWALS
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credited to their after tax accounts, any withdrawals from such amounts shall be
deemed to be made in the following order:
(a) first, the after tax contributions which were made by
the participant prior to January 1, 1987, if any, and
which are credited to his pre-87 after tax account,
without adjustment for income, gains or losses
thereon;
(b) second, the amounts credited to his post-86 after
tax account; and
(c) third, the balance of the amounts credited to his
pre-87 after tax account.
No amounts credited to a participant's accounts may be withdrawn by the
participant prior to his attainment of age fifty-nine and one-half (59 1/2)
unless he provides the Administrator with a written statement that he is aware
of the potential income tax ramifications of the withdrawal.
13.2 TERMINATION OF WITHDRAWAL RIGHTS. Upon an attempt by a
participant or beneficiary to use his interest in this Trust and Plan as
security for any type of obligation, or to alienate, dispose of or in any manner
encumber, or upon an attempt by any third person to attach, levy upon or in any
manner convert the use or enjoyment of any such interest of a participant, the
right to withdraw any portion thereof pursuant to this Article XIII shall
automatically terminate.
13.3 SPOUSE'S CONSENT. No withdrawal may be made hereunder
unless the withdrawing participant's spouse, if any, consents to the withdrawal
in accordance with Sections 28.7 and 28.8 hereof within the ninety (90) day
period ending on the date the withdrawal commences to be made.
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ARTICLE XIV
-----------
HARDSHIP DISTRIBUTIONS
----------------------
14.1 HARDSHIP DISTRIBUTIONS. If Section (34)(h) of the Adoption
Agreement so provides and subject to such uniform rules and procedures as the
Administrator may prescribe, in case of hardship, a participant may apply to the
Administrator for a hardship distribution. For purposes of this Section 14.1, a
distribution shall be on account of hardship only if the distribution is made on
account of an immediate and heavy financial need of the participant, as
described in Section 14.2 below, and is necessary, as described in Section 14.3
below, to satisfy such need. Such distribution may be made only from amounts
specified in Section 14.4 below and, if the applicant is married, only with his
spouse's consent pursuant to Section 14.7 below.
14.2 IMMEDIATE AND HEAVY FINANCIAL NEED. A distribution will be
made on account of an immediate and heavy financial need of a participant only
if the distribution is on account of:
(a) medical expenses described in Section 213(d) of the
Code incurred by the participant, the participant's
spouse, or any dependents of the participant (as
defined in Section 152 of the Code);
(b) purchase (excluding mortgage payments) of a
principal residence for the participant;
(c) payment of tuition for the next semester or quarter
of post-secondary education for the participant,
his or her spouse, children, or dependents; or
(d) the need to prevent the eviction of the participant
from his principal residence or foreclosure on the
mortgage of the participant's principal residence.
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14.3 DETERMINATION OF AMOUNT NECESSARY TO SATISFY AN IMMEDIATE
AND HEAVY FINANCIAL NEED. A distribution will be deemed to be necessary to
satisfy an immediate and heavy financial need of the participant only if all of
the following requirements are satisfied:
(a) the distribution is not in excess of the amount of
the immediate and heavy financial need of the
participant;
(b) the participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans
currently available under all plans maintained by a
Participating Company;
(c) the Trust and Plan and all other plans maintained by
the Participating Companies provide that the
participant's pre-tax contributions and employee
after tax contributions will be suspended for at
least twelve (12) months after receipt of the
hardship distribution; and
(d) the Trust and Plan and all other plans maintained
by the Participating Companies provide that the
participant may not make pre-tax contributions for
the participant's taxable year immediately
following the taxable year of the participant
during which said hardship distribution occurs in
excess of the applicable limit under Section 402(g)
of the Code for such next taxable year of the
participant less the amount of such participant's
pre-tax contributions for the taxable year of the
participant during which said hardship distribution
occurs.
By virtue of this Section and Section 5.6, the Trust and Plan provides for the
restrictions contained above in subsections (c) and (d).
14.4 PERMITTED DISTRIBUTIONS. Subject to obtaining spousal
consent as provided in Section 14.7 hereof, if the Administrator determines that
the criteria set forth above are
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satisfied with respect to a participant, it may order a distribution of all or
a portion of the sum of:
(a) such participant's employer contribution and match
accounts which are not amounts attributable to
qualified nonelective contributions multiplied,
respectively, by his Vested Percentage in each such
account;
(b) such participant's distribution accounts, if any,
which do not contain amounts attributable to
qualified nonelective contributions;
(c) the lesser of:
(i) his pre-tax account balance; and
(ii) the sum of the aggregate amount of the
contributions made to his pre-tax account,
plus earnings thereon, if any, credited
prior to January 1, 1989; and
(d) the amount then credited to any personal accounts
held for his benefit.
14.5 METHOD OF DISTRIBUTION. If the Administrator orders a
distribution pursuant to this Article XIV, such distribution may be made in a
lump sum or in a designated number of monthly or quarterly installments or
partly in a lump sum and the balance in installments. If the Administrator
directs that such distribution be made, it may thereafter, if it determines that
such hardship no longer exists or upon agreement with the participant, direct
that any amounts of such distribution remaining unpaid not be distributed.
Amounts distributed to a participant under this Article XIV shall be debited to
the appropriate account as they are paid.
14.6 ADMINISTRATION OF HARDSHIP PROVISIONS. Neither the
application for nor payment of any distribution in accordance with
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this Article XIV shall have the effect of terminating a participant's
participation in the Trust and Plan. The Administrator may prescribe the use of
such forms, conduct such investigation, and require the making of such
representations and warranties, as it deems desirable to carry out the purpose
of this Article XIV.
14.7 SPOUSE'S CONSENT. No hardship distribution may be made
hereunder unless the participant's spouse, if any, consents to the hardship
distribution in accordance with Sections 28.7 and 28.8 hereof within the ninety
(90) day period ending on the date the hardship distribution commences to be
made.
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ARTICLE XV
----------
TERMINATION OF EMPLOYMENT
-------------------------
15.1 ELIGIBILITY FOR DISTRIBUTION. In the event of the
termination of employment of a participant for any reason other than his death,
disability, or retirement, he shall be entitled to receive a distribution of his
vested interest and his personal accounts.
15.2 COMMENCEMENT OF DISTRIBUTIONS. The vested interest and
personal accounts of a terminated participant shall be distributed to him in
accordance with the rules and procedures set forth in Article XVIII or XVIII-A
hereof. Except as otherwise provided in Section 18.1 or 18.1A hereof,
distributions shall be made or shall commence to be made as of the date
specified in Section (29) of the Adoption Agreement.
Notwithstanding the foregoing provisions of this Section 15.2,
if the Company has elected an early retirement date pursuant to Section (26) of
the Adoption Agreement, and if a terminated participant, at the time of his
termination of employment, satisfied the service requirement but not the age
requirement, if any, as set forth therein, such terminated participant may elect
to have his vested interest and personal accounts distributed or commence to be
distributed on such date on or after he meets the age requirement for early
retirement and on or before his normal retirement date, as he shall select, in
his own discretion.
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15.3 VESTING AND FORFEITURES. If a terminated participant's
Vested Percentage in his employer contribution account and/or his match account
is one hundred percent (100%), such account shall be deemed to have become a
distribution account on his date of termination of employment and shall
thereafter be held, administered and distributed in accordance with Article
XVIII or XVIII-A hereof. If his Vested Percentage in his employer contribution
account and/or his match account is less than one hundred percent (100%), such
account shall continue to be administered as such in accordance with the
provisions of Article XI hereof until the earliest to occur of any of the
following events:
(a) he receives a distribution of his entire vested
interest and personal accounts;
(b) he has five (5) consecutive One Year Breaks In
Service;
(c) he dies; or
(d) he is rehired by a member of the Controlled Group.
If the earliest to occur of said events is either the date of
complete distribution of his vested interest and personal accounts, his having
had five (5) consecutive One Year Breaks In Service or his death, an amount
equal to the excess of:
(i) the balance in his employer contribution account plus
the amount, if any, then credited to pre-tax, match,
special ADP and distribution accounts held for his
benefit; over
(ii) his vested interest;
shall be forfeited as of such date and shall be debited to his appropriate
accounts. If any amounts remain credited to said accounts after said
forfeiture, such accounts shall thereafter be
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deemed to have become distribution accounts and shall be held, administered and
distributed in accordance with Article XVIII or XVIII-A hereof. In the event
that a terminated participant does not have a vested interest, then his personal
accounts, if any, shall be distributed to him immediately and the amounts
credited to his employer contribution and match accounts shall be forfeited at
the time of such participant's termination of employment. Even if such
participant does not have any personal accounts, he will be deemed to have
received a distribution on his date of termination of employment of zero (0)
dollars.
If the earliest of said events shall be the terminated
participant's rehire by a member of the Controlled Group, he shall immediately
be reinstated as a participant in this Trust and Plan and this Article XV shall
not apply to him until a subsequent termination of employment described in
Section 15.1 hereof.
15.4 REALLOCATION OF FORFEITURES. If Section (23) of the
Adoption Agreement so provides, the amounts forfeited pursuant to Section 15.3
hereof shall be allocated on the allocation date coinciding with or next
following the date of forfeiture among the employer contribution and match
accounts of all participants who were active participants during the plan year,
excluding such participants as are described in Section (19) of the Adoption
Agreement.
Forfeitures shall be allocated in the same manner as employer
contributions are allocated pursuant to Section 6.2 hereof; provided, however
that no forfeitures shall be allocated to
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the accounts of any participant in excess of the limitations on annual additions
set forth in Article XXIV hereof. Allocation of forfeitures shall be made prior
to the revaluation provided for in Article XI hereof.
15.5 FORFEITURES USED TO REDUCE CONTRIBUTIONS. If Section (23)
of the Adoption Agreement so provides, the amounts forfeited pursuant to Section
15.3 hereof shall be used, on the allocation date coinciding with or next
following the date of forfeiture, to reduce Participating Company contributions.
15.6 REHIRED PARTICIPANTS. In the event a terminated participant
is rehired by a member of the Controlled Group prior to incurring five (5)
consecutive One Year Breaks In Service, he shall immediately be reinstated as a
participant in this Trust and Plan and any amounts forfeited pursuant to Section
15.3 hereof shall be recredited to his employer contribution and/or match
account as provided in Section (24) of the Adoption Agreement.
If the Company has elected pursuant to Section (24) of the
Adoption Agreement to require repayment to the Trust and Plan of amounts
previously distributed to the participant prior to recrediting of forfeited
amounts, any amounts previously forfeited pursuant to Section 15.3 hereof shall
be recredited to a participant's employer contribution and/or match account
provided that such participant recontributes to this Trust and Plan on or before
the first to occur of:
(a) the date he incurs five (5) consecutive One Year
Breaks In Service; and
(b) the fifth (5th) anniversary of his date of rehire;
TERMINATION OF EMPLOYMENT
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the full amount distributed to him following his earlier termination of
employment. Such amount shall be recredited to the account from which it
originated.
Notwithstanding any other provision of this Trust and Plan to
the contrary, in order to balance the accounts maintained under this Trust and
Plan after giving effect to the recrediting of previously forfeited amounts to a
rehired participant's employer contribution and match accounts, the Company, at
its option, may direct the Trustee to:
(a) first reduce the value of the forfeitures, if any,
which would otherwise be reallocated as of the
allocation date coinciding with or next following the
date such participant was rehired; and
(b) in the event the accounts maintained under this Trust
and Plan are not balanced after the reduction in
subsection (a) above, reduce the gain, if any, in the
value of the Trust and Plan's assets since the most
recent valuation date as of the valuation date
coinciding with or next following the date such
participant was rehired;
provided that the total of the reductions described in subsections (a) and (b)
above with respect to any plan year shall not exceed the aggregate previously
forfeited amounts which were recredited to the employer contribution and match
accounts of participants who were rehired during such plan year.
To the extent that the sum of the amounts described in
subsections (a) and (b) above for any plan year is less than the aggregate
previously forfeited amounts which were recredited to the employer contribution
and match accounts of participants who were rehired during the plan year, the
Participating Companies which rehired the former participants shall contribute
to this Trust and
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Plan an amount equal to the difference between the aggregate previously
forfeited amounts which were recredited to the employer contribution and match
accounts of participants who were rehired during the plan year by the
Participating Companies and the sum of the amounts described in subsections (a)
and (b) above. The obligation to contribute such amounts shall be allocated
among the Participating Companies by the Company. Such contributions shall be
made by the Participant Companies no later than the due date (including
extensions) of the tax return for the taxable year which includes the last day
of the plan year during which such participants were rehired. In addition, any
portion of such contribution which represents amounts previously contributed by
a Participating Company to this Trust and Plan shall not be deemed to have been
contributed for purposes of Article XXIV hereof at the time it is recontributed,
but shall be deemed to have been contributed at the time of the original
contribution.
TERMINATION OF EMPLOYMENT
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ARTICLE XVI
-----------
RETIREMENT BENEFITS
-------------------
16.1 NORMAL RETIREMENT. The employer contribution account and
match account of a participant who has attained his normal retirement date shall
be fully vested and nonforfeitable. A participant who retires on his normal
retirement date shall be entitled to receive an amount equal to the sum of the
amounts then credited to all accounts held for his benefit. Except as otherwise
provided in Section 18.1 or 18.1A hereof, such amounts shall be distributed or
shall commence to be distributed as soon as reasonably possible after his date
of retirement but not later than sixty (60) days after the close of the plan
year which includes the date of his retirement. Such distribution shall be made
in accordance with the provisions of Article XVIII or XVIII-A hereof.
16.2 EARLY RETIREMENT. If Section (26) of the Adoption Agreement
permits early retirement, a participant may elect to retire on or after his
early retirement date but before reaching his normal retirement date. In the
event of such early retirement, a participant shall be entitled to receive an
amount equal to the sum of the amounts then credited to all his accounts. Except
as otherwise provided in Section 18.1 or 18.1A hereof, such amounts shall be
distributed or shall commence to be distributed on such date on or after his
early retirement date but no later than his normal retirement date as such
retired participant shall select.
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Such distribution shall be made in accordance with the provisions of Article
XVIII or XVIII-A hereof.
16.3 LATE RETIREMENT. In the event a participant works beyond
his normal retirement date, his retirement shall be deemed to have occurred on
the earlier of the date of his termination of employment with a member of the
Controlled Group for any reason other than death or the date distribution must
commence to a participant under Section 18.5 or 18.9A of this Trust and Plan. In
the event of such late retirement, such participant shall be entitled to receive
an amount equal to the sum of the amounts then credited to all the accounts held
for his benefit. Except as otherwise provided in Section 18.1 or 18.1A hereof,
such amounts shall be distributed or shall commence to be distributed as soon as
reasonably possible after his date of retirement but not later than sixty (60)
days after the close of the plan year which includes his date of late
retirement. Such distribution shall be made in accordance with the provisions of
Article XVIII or XVIII-A hereof.
16.4 DISABILITY RETIREMENT. A participant who becomes
permanently and totally disabled pursuant to Section 27 of the Adoption
Agreement may apply to the Administrator for disability retirement benefits. If
the Administrator shall determine that the participant is permanently and
totally disabled, his date of disability retirement shall be deemed to have been
the date on which his application for benefits under this Article XVI was filed
with the Administrator and he will be deemed to have ceased to be a participant
on that date. Such a disabled participant shall be
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entitled to receive a distribution pursuant to Article XVIII or XVIII-A hereof
of an amount equal to the sum of the amounts, if any, then credited to all the
accounts held for his benefit. Except as otherwise provided in Section 18.1 or
18.1A hereof, such amounts shall be distributed or shall commence to be
distributed on such date as shall be selected by the participant, but not later
than sixty (60) days after the close of the plan year which includes his normal
retirement date.
16.5 APPLICATION FOR BENEFITS. Each participant who is eligible
for benefits under this Article XVI shall apply therefor on a form which shall
be given to him for that purpose by the Administrator; provided, however, that
the foregoing requirement shall not apply in any case in which a participant
shall be unable to make such application for physical, mental or any other
reason satisfactory to the Administrator. Upon finding that such participant
satisfies the eligibility requirements for benefits under this Article XVI, the
Administrator shall promptly notify the Trustee of his eligibility and of the
method of distribution selected in accordance with Article XVIII or XVIII-A
hereof.
RETIREMENT BENEFITS
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ARTICLE XVII
------------
DEATH
-----
17.1 DEATH OF A PARTICIPANT. In the event of the termination of
employment of a participant by reason of his death, his death beneficiary shall
be entitled to receive a distribution in an amount equal to the amounts then
credited to all the accounts held for his benefit plus the proceeds of any life
insurance contracts purchased on his life under Article X hereof. Such amount
shall be distributed or shall commence to be distributed as soon as reasonably
possible after the participant's date of death but not later than sixty (60)
days after the close of the plan year which includes the date of the
participant's normal retirement date (or date of death, if later). Such
distribution shall be made in accordance with the provisions of Article XVIII or
XVIII-A hereof.
17.2 DEATH OF A RETIRED OR TERMINATED PARTICIPANT PRIOR TO
COMMENCEMENT OF BENEFITS. In the event of the death of a retired or terminated
participant prior to the date distribution has been made or commenced to be made
to him, his death beneficiary shall be entitled to receive a distribution in an
amount equal to his vested interest and his personal accounts. The Vested
Percentage of a retired or terminated participant shall not increase due to his
death. Such amount shall be distributed or shall commence to be distributed as
soon as reasonably possible after the participant's date of death but not later
than sixty (60) days after the close of the plan year which includes the date of
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the participant's normal retirement date (or date of death, if later). Such
distribution shall be made in accordance with the provisions of Article XVIII or
XVIII-A hereof. The balance, if any, credited to the deceased participant's
employer contribution and match accounts shall be forfeited as of his date of
death pursuant to Section 15.3 hereof.
17.3 DEATH OF A RETIRED OR TERMINATED PARTICIPANT AFTER
COMMENCEMENT OF BENEFITS. In the event of the death of a retired or terminated
participant after the date of distribution or the commencement of distribution
to him, no benefits shall be payable to his death beneficiary except to the
extent provided for by the method under which the retired or terminated
participant was receiving distributions under Article XVIII or XVIII-A hereof.
17.4 BENEFICIARY OF A PARTICIPANT. Unless a participant or
former participant has designated a death beneficiary in accordance with the
provisions of Section 17.5 hereof, his death beneficiary shall be deemed to be
the person or persons in the first of the following classes in which there are
any survivors of such participant:
(a) his spouse at the time of his death;
(b) his issue, per stirpes;
(c) his parents; and
(d) the executor or administrator of his estate.
17.5 DESIGNATION OF ALTERNATE BENEFICIARY. In lieu of having the
amounts distributable pursuant to this Article XVII distributed to a death
beneficiary determined in accordance with
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the provisions of Section 17.4 hereof, a participant or former participant may
sign a document designating a death beneficiary or death beneficiaries to
receive such amounts. If the participant is married, any such designation shall
be effective only if the spouse of the participant is the sole primary
beneficiary or consents to such designation in accordance with Section 28.8
hereof.
17.6 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.
Notwithstanding the foregoing Sections 17.4 and 17.5, in the event the Company
has elected to make annuity forms of distribution the normal form of
distribution to participants pursuant to Article XVIII-A hereof, the vested
account balance of a married participant who dies prior to his Annuity Starting
Date shall be applied toward the purchase of an annuity for the life of his
surviving spouse, unless such benefit shall be waived by the participant as
provided herein. The surviving spouse may elect to have such annuity distributed
within a reasonable period after the participant's death.
Any waiver election referred to in the preceding paragraph shall
be made within the period which begins on the earlier of (a) the first day of
the plan year in which the participant attains age thirty-five (35), or (b) the
date on which the participant incurs a termination of employment, and ends on
the date of the participant's death. A participant who will not yet attain age
thirty-five (35) as of the end of any current plan year may make a special
qualified election to waive the annuity payable to his spouse upon his death for
the period beginning on the date of such
DEATH
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election and ending on the first day of the plan year in which the participant
will attain age thirty-five (35). Such election shall not be valid unless the
participant receives a written explanation of the survivor annuity which is
comparable to that provided to the Participant pursuant to Section 18.5A hereof.
Qualified preretirement survivor annuity coverage will be automatically
reinstated as of the first day of the plan year in which the participant attains
age thirty-five (35). Any new waiver on or after such date shall be subject to
the full requirements of this Section 17.6.
Any election to waive qualified preretirement survivor annuity
coverage shall be in writing and shall be effective only if the participant's
spouse consents to the election in accordance with Section 28.8 hereof. The
election shall designate a specific non-spouse beneficiary, including any class
of beneficiaries or any contingent beneficiaries, which may not be changed
without the spouse's consent, unless the spouse shall in the original consent
expressly permit further designations by the participant. Any election by a
participant to waive the qualified preretirement survivor annuity described
herein shall be revocable at any time up to the date of the participant's death.
Any such revocation shall be automatically effective without the consent of the
participant's spouse.
The Administrator shall provide each participant, within the
period beginning with the earlier of (i) the first day of the plan year in which
the participant attains age thirty-two (32) or
DEATH
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(ii) a reasonable period following his termination of employment, and ending
with the close of the plan year preceding the plan year in which the participant
attains age thirty-five (35), a written explanation of the surviving spouse's
rights under this Section 17.6. In the case of a participant hired by a
Participating Company after age thirty-five (35), such written explanation shall
be provided within a reasonable period after the individual becomes a
participant in the Trust and Plan.
17.7 ADMINISTRATOR TO NOTIFY TRUSTEE. Upon the death of a
participant or a former participant, the Administrator shall immediately advise
the Trustee of the identity of such partici- pant's death beneficiary or
beneficiaries. The Trustee shall be completely protected in making distributions
to any person or persons in accordance with the instructions it receives from
the Administrator.
17.8 INCOMPLETE DISPOSITION. In the event that a participant or
former participant dies at a time when he has a designation on file with the
Administrator which does not dispose of all of the amounts distributable under
this Trust and Plan upon his death, then the amounts distributable on behalf of
said participant or former participant, the disposition of which was not
determined by the deceased participant's or former participant's designation,
shall be distributed to a death beneficiary determined under the provisions of
Section 17.4 hereof. Any insurance proceeds for which there is no living
beneficiary named shall be distributed in accordance with the terms of the
insurance contract.
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17.9 AMBIGUITY OF BENEFICIARY DESIGNATION. Any ambiguity in a
participant's death beneficiary designation shall be resolved by the
Administrator. Subject to Section 17.5 hereof, the Administrator may direct a
participant to clarify his designation and if necessary execute a new
designation containing such clarification.
DEATH
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<PAGE> 134
ARTICLE XVIII
-------------
DISTRIBUTIONS
-------------
18.1 DATE OF DISTRIBUTIONS. Distributions will normally commence
as of the dates specified in Articles XV, XVI and XVII hereof. However, if
permitted by Section (30) of the Adoption Agreement, a participant or his
beneficiary may elect in writing, subject to Section 18.5 hereof, to defer any
distribution until a date not later than a date indicated in the Adoption
Agreement.
18.2 METHOD OF DISTRIBUTION. Any distribution to be made
pursuant to Article XV, XVI or XVII hereof may be made pursuant to one or a
combination of the methods of distribution permitted under Section (28) of the
Adoption Agreement, as shall be selected by the participant, former participant
or beneficiary of a deceased participant. Generally, such methods of
distribution shall be:
(a) a single lump sum distribution; and
(b) nearly equal monthly, quarterly or annual
installments over a period selected by the
participant, which shall not exceed the maximum
permissible period under Section 401(a)(9) of the
Code.
If no method is selected, distribution shall be made in the lump sum form.
18.3 ADMINISTERING DISTRIBUTION OF ACCOUNTS. Upon direction of
the Administrator, the Trustee shall make payment from the Trust Fund to the
participant or his beneficiary as the case may be. As long as there remain any
amounts credited to an account, the Trustee shall continue to maintain and
administer said
DISTRIBUTIONS
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account in accordance with the terms and provisions of the Trust and Plan.
18.4 LUMP SUM PAYMENT OF SMALL AMOUNTS. Notwithstanding any
contrary provision of this Trust and Plan, in the event that the vested interest
and personal accounts of a retired, terminated or deceased participant have a
value less than or equal to Three Thousand Five Hundred Dollars ($3,500.00), the
Administrator shall direct the Trustee to distribute such vested interest and
personal accounts in a single lump sum payment without the consent of the
participant or his beneficiary.
18.5 RESTRICTIONS. Notwithstanding any other provisions of this
Trust and Plan, distributions hereunder shall be subject to the following
restrictions:
(a) in the case of a living participant or former participant:
(i) distribution must commence on or before:
(A) the April 1 following the end of the calendar year
in which he attains age seventy and one-half
(70-1/2) or retires, whichever is later, if the
participant shall have attained age seventy and
one-half (70-1/2) prior to January 1, 1988 and was
not a five percent (5%) owner at any time after
the beginning of the plan year that ends in the
calendar year during which he attained age sixty-
six and one-half (66-1/2); or
(B) the April 1 following the end of the calendar year
in which he attains age seventy and one-half
(70-1/2) in all other cases; and
(ii) installment distributions shall not be payable over a
period of years in excess of his life expectancy or the
joint life expectancies of himself and his spouse or
beneficiary; and
DISTRIBUTIONS
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<PAGE> 136
(b) in the case of a deceased participant or former participant,
distributions after his death shall be payable either:
(i) within five (5) years of the date of his death; or
(ii) if distribution commences to his beneficiary, either:
(A) within one (1) year of the date of his death or on
a later date permitted under any lawful
regulations by the Secretary of the Treasury; or
(B) if his spouse is his beneficiary, by the date such
participant would have attained age seventy and
one-half (70-1/2);
over a period not extending beyond the life expectancy
of such beneficiary; or
(iii) if the participant's distribution had commenced prior to
his death under a form of payment meeting the
requirements of subsection (a)(ii) above, such
distribution must be completed by the remainder of the
period specified in said subsection (a)(ii); and
(c) in the case of the death of a beneficiary who is the surviving
spouse of a deceased participant, a distribution commencing
after the death of the spouse shall be payable either:
(i) within five (5) years of the date of the spouse's death;
(ii) if distribution commences to the spouse's beneficiary
within one (1) year of the spouse's death or on a later
date permitted under any lawful regulations issued by
the Secretary of the Treasury, over a period not
extending beyond the life expectancy of such
beneficiary; or
(d) in the event payments are made to a participant's child, for
purposes of this Section 18.5, such payments shall be deemed
to be paid to the partici- pant's spouse if such payments will
become payable to such spouse upon such child's reaching
majority or any other event permitted under any lawful
regulations issued by the Secretary of the Treasury.
DISTRIBUTIONS
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<PAGE> 137
A participant, former participant or beneficiary may elect to have his life
expectancy redetermined from time to time but not more frequently than annually.
In the event that a participant, former participant or beneficiary fails to make
such an election, then no redetermination shall be performed.
Notwithstanding anything in this Trust and Plan to the contrary,
if a participant had filed an election with the Administrator prior to January
1, 1984, that his distribution either be under a form or commence after a date
not provided for in this Trust and Plan, as herein adopted, such distribution
shall nevertheless be made in accordance with such election, provided that the
provisions of such election complied with the terms of the Trust and Plan as in
effect on the date such election was filed with the Administrator.
18.6 LUMP SUM VALUE OF INSTALLMENT METHOD OF DISTRIBUTIONS.
Notwithstanding any other provision of this Trust and Plan, the commuted lump
sum value of the amounts payable to a participant or former participant (whose
beneficiary is someone other than his spouse) pursuant to the installment method
of distribution, computed as of the commencement date of distribution, shall not
be less than fifty percent (50%) of the value of the amounts distributable on
his behalf under this Trust and Plan.
18.7 REVALUATION OF UNDISTRIBUTED AMOUNTS. As long as there
remain any amounts credited to a participant's accounts, the Trustee shall
continue to maintain said accounts and said accounts shall be periodically
revalued in accordance with the provisions of
DISTRIBUTIONS
18-4
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Article XI hereof. In the event that a former participant shall have more than
one account, the Trustee, in its sole discretion, may consolidate said accounts
into a single distribution account.
18.8 RESPONSIBILITY OF TRUSTEE REGARDING DISTRIBUTIONS. The
Trustee, upon notification by the Administrator as to the eligibility of and
method of distribution applicable to a participant, former participant or
beneficiary, shall take one or a combination of the following actions to
effectuate the method of distribution to such person:
(a) sell or surrender any contract or contracts of
insurance then held with respect to such person for
the cash surrender value thereof; or
(b) cause such contract or contracts to be converted
pursuant to any of the available lump sum or
installment options under such contract or
contracts; or
(c) make distributions of cash and insurance contracts
directly from the Trust Fund to such person.
Any amounts received by the Trust Fund upon the surrender of any
life insurance contracts shall be credited to such person's distribution
account. Any amounts paid from the Trust Fund to an insurance company or to a
participant, former participant or beneficiary shall be debited to such account.
18.9 DIRECT ROLLOVERS. This Section 18.9 applies to
distributions made on or after January 1, 1993. Notwithstanding any provision of
the Trust and Plan to the contrary that would otherwise limit a distributee's
election under this Section 18.9, a distributee may elect, at the time and in
the manner prescribed by the Administrator, to have any portion of an eligible
rollover
DISTRIBUTIONS
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distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any 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 distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code Section
401(a)(9), and the portion of any distribution that is not includible in gross
income (determined with regard to the exclusion for net unrealized appreciation
with respect to employer securities).
An eligible retirement plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and
DISTRIBUTIONS
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<PAGE> 140
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the spouse or former
spouse.
A direct rollover is a payment by the Trust and Plan to the
eligible retirement plan specified by the distributee.
DISTRIBUTIONS
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<PAGE> 141
ARTICLE XVIII-A
---------------
DISTRIBUTIONS - ANNUITY OPTION
------------------------------
18.1A DATE OF DISTRIBUTION. Distributions will normally commence
as of the dates specified in Articles XV, XVI and XVII hereof, except that a
participant may elect to have a distribution made pursuant to Section 18.2A or
Section 18.3A below commence upon his attainment of the earliest retirement age
under the Trust and Plan. In addition, if permitted by Section (30) of the
Adoption Agreement, a participant or his beneficiary may elect in writing,
subject to Section 18.10A hereof, to defer any distribution until a date not
later than a date indicated in the Adoption Agreement.
18.2A NORMAL METHOD. Unless an annuity method of distribution is
selected under Section 18.3A hereof or the annuity method has been designated
the normal method of distribution in Section (28) of the Adoption Agreement, the
normal method of distribution of amounts distributable to a participant, former
participant or his beneficiary pursuant to Articles XV, XVI or XVII hereof shall
be a single lump sum payment.
18.3A ANNUITY METHODS OF DISTRIBUTION. In lieu of receiving a
single lump sum payment pursuant to Section 18.2A, or if the normal method of
distribution selected in Section (28) of the Adoption Agreement is the Annuity
Method, a participant, former participant or beneficiary of a deceased
participant may elect to receive the amounts distributable to him pursuant to
Articles XV, XVI and XVII in the form of an annuity contract purchased for him
DISTRIBUTIONS
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from an insurance company by the Trustee pursuant to Section 18.11A hereof.
Unless another form of annuity contract is selected under Section 18.4A, any
such annuity contract shall normally provide by its terms for benefits to be
paid:
(a) to a married participant or a married former
participant in the Spouse's Annuity Form described
in Section 18.4A; and
(b) to an unmarried participant, an unmarried former
participant or a beneficiary of a participant in
the Full Cash Refund Life Annuity Form described in
Section 18.4A.
18.4A OPTIONAL METHODS OF DISTRIBUTION. A participant, a former
participant, or a beneficiary of a participant may elect, in lieu of receiving
the amounts distributable to him pursuant to the normal methods of distribution
set forth in Section 18.2A or Section 18.3A, to receive such amounts pursuant to
any one or a combination of the following optional methods of distribution
permitted under Section (28)(b) of the Adoption Agreement:
FORM 1. LIFE ANNUITY FORM. A participant who receives payment of
his retirement benefits under the Life Annuity Form, shall
receive an immediate annuity providing retirement benefit
payments during his life. No benefits shall be payable after the
death of the participant.
FORM 2. SPOUSE'S ANNUITY FORM. A participant who receives payment
of his retirement benefits under the Spouse's Annuity Form, shall
receive an immediate annuity providing retirement benefit
payments during his life with the provision that after his death
50% of his monthly retirement benefit shall continue during the
life of and shall be paid to the person who was his spouse on the
date his benefits commence.
FORM 3. JOINT AND SURVIVOR FORM. A participant who receives
payment of his retirement benefits under the Joint and Survivor
Form shall receive retirement benefit payments during his life,
with the provision that after his death one hundred percent
(100%) or fifty percent (50%), as shall be selected by the
participant ("Selected Percentage"), of
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his monthly retirement benefit shall continue during the life of
and shall be paid to such beneficiary as he shall nominate by
written designation duly filed with the Administrator or its
designated representative.
FORM 4. LIFE-PERIOD CERTAIN FORM. A participant who receives
payment of his retirement benefits under the Life-Period Certain
Form shall receive retirement benefit payments during his life,
with the provision that, in the event the participant shall die
before he shall have received retirement benefit payments for a
period of sixty (60), one hundred twenty (120), or one hundred
eighty (180) months, as selected by the participant ("Selected
Period"), after his death one hundred percent (100%) of his
monthly retirement benefit shall continue for the remainder of
said Selected Period to such beneficiary as he shall have
nominated by written designation duly filed with the
Administrator or its designated representative.
FORM 5. FULL CASH REFUND LIFE ANNUITY FORM. A participant who
receives payment of his retirement benefits under the Full Cash
Refund Life Annuity Form shall receive retirement benefit
payments during his life, with the provision that, in the event
the participant shall die before he shall have received payments
of retirement benefits aggregating the single lump sum amount
used to purchase the annuity contract which is to be used to
provide benefits with respect to such participant, the balance of
such single lump sum amount ("Full Cash Refund") shall be paid in
a single lump sum to such beneficiary as he shall have nominated
by written designation duly filed with the Administrator or its
designated representative.
FORM 6. LUMP SUM FORM. A participant who receives payment of his
retirement benefits under the Lump Sum Form shall receive a
single lump sum payment upon the date his retirement benefits
would otherwise have commenced under the Trust and Plan.
FORM 7. OTHER FORM. A participant who receives payment of
his retirement benefits under an Other Form shall receive
his benefits in a form described in the Adoption Agreement.
18.5A NOTICE OF METHODS OF DISTRIBUTION. If the annuity method
has been designated the normal method of distribution, the Administrator shall,
no less than thirty (30) days and no more than ninety (90) days prior to the
Annuity Starting Date of a
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participant, former participant or beneficiary, provide each such individual a
written explanation of the terms and conditions of the normal methods of
distribution described in Section 18.3A, the individual's right to make and the
effect of an election of an optional form of distribution, the rights of a
participant's or former participant's spouse and the right to revoke and the
effect of revocation of a prior election of an optional method of distribution.
18.6A ELECTION OF ANNUITY CONTRACT OR OPTIONAL METHOD OF PAYMENT.
To elect an annuity contract as set forth in Section 18.3A or one or a
combination of the optional methods of distribution, a participant, former
participant or beneficiary shall notify the Administrator of such election in
writing prior to the date his retirement benefits become distributable pursuant
to Article XV, XVI or XVII hereof. If either the annuity method of distribution
has been designated the normal method of distribution or a married participant
or former participant has elected to receive an annuity contract pursuant to
Section 18.3A above and further has elected to receive his retirement benefits
under a form other than the Spouse's Annuity Form, such election shall not be of
any effect and the participant or former participant shall be treated the same
as though his election had not been made unless the participant's spouse
consents in writing to such election in accordance with Section 28.8 hereof. Any
such election by a married participant shall designate a specific optional
method of distribution which shall not be changed without his spouse's
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consent, unless the spouse's original consent expressly permits further changes
by the participant.
A married participant shall be allowed to make such election no
less than thirty (30) days nor more than ninety (90) days after having received
a written explanation of the joint and survivor annuity benefit pursuant to
Section 18.5A hereof. The date a participant's retirement benefits become
distributable pursuant to Article XV or XVI hereof shall be postponed, if
necessary, to provide such ninety (90) days unless he makes an earlier election.
In addition to the foregoing, a participant may revoke a prior election and
elect another optional method of distribution, if desired, as long as such
ninety (90) day period has not expired. The number of revocations hereunder
shall not be limited.
18.7A LUMP SUM PAYMENT OF SMALL AMOUNTS. Notwithstanding any
contrary provision of this Trust and Plan, in the event that the vested interest
and personal accounts of a retired, terminated or deceased participant have a
value less than or equal to Three Thousand Five Hundred Dollars ($3,500.00), the
Administrator shall direct the Trustee to distribute such vested interest and
personal accounts in a single lump sum payment without the consent of the
participant or beneficiary. Any such lump sum payment shall be in full
settlement of such participant's or beneficiary's rights under this Trust and
Plan.
18.8A LUMP SUM VALUE OF OPTIONAL METHODS OF DISTRIBUTIONS.
Notwithstanding any other provisions of this Trust and Plan, the
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commuted lump sum value of the amounts payable to a participant or former
participant (whose beneficiary is someone other than his spouse) pursuant to any
optional method of distribution, computed as of the commencement date of
distribution, shall not be less than fifty percent (50%) of the value of the
amounts distributable on his behalf under the Trust and Plan.
18.9A REVALUATION OF UNDISTRIBUTED AMOUNTS. As long as there
remain any amounts credited to a participant's accounts, the Trustee shall
continue to maintain said accounts and said accounts shall be periodically
revalued in accordance with the provisions of Article XI hereof. In the event
that a former participant shall have more than one account, the Trustee, in its
sole discretion, may consolidate said accounts into a single distribution
account.
18.10A RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any other
provisions of this Trust and Plan, distributions hereunder shall be subject to
the following restrictions:
(a) in the case of a living participant or former participant:
(i) distribution must commence on or before:
(A) the April 1 following the end of the calendar year
in which he attains age seventy and one-half
(70-1/2) or retires, whichever is later, if the
employee shall have attained age seventy and
one-half (70-1/2) prior to January 1, 1988 and was
not a five percent (5%) owner at any time after
the beginning of the plan year that ends in the
calendar year during which he attained age
sixty-six and one-half (66-1/2); or
(B) the April 1 following the end of the calendar year
in which he attains age
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seventy and one-half (70-1/2) in all other cases; and
(ii) installment distributions shall not be payable over a
period of years in excess of his life expectancy or the
joint life expectancies of himself and his spouse or
beneficiary; and
(iii) annuities cannot be issued exceeding his life expectancy
or the joint life expectancies of himself and his spouse
or beneficiary; and
(b) in the case of a deceased participant or former participant,
distributions after his death shall be payable either:
(i) within five (5) years of the date of his death; or
(ii) if distribution commences to his beneficiary, either:
(A) within one (1) year of the date of his death or on
a later date permitted under any lawful
regulations by the Secretary of the Treasury; or
(B) if his spouse is his beneficiary, by the date such
employee would have attained age seventy and
one-half (70-1/2);
over a period not extending beyond the life expectancy
of such beneficiary; or
(iii) if the participant's distribution had commenced prior to
his death under a form of payment meeting the
requirements of subsection (a)(ii) or (a)(iii) above,
such distribution must be completed by the remainder of
the period specified in said subsection (a)(ii) or
(a)(iii); and
(iv) if the participant's distribution had not commenced
prior to his death under a form of payment meeting the
requirements of subsection (a)(ii) or (a)(iii) above and
the participant's spouse is entitled to a distribution
hereunder but dies prior to the commencement of such
distribution, then the limitations of this subsection
(b) shall be applied as if the spouse were the
participant; and
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(c) in the case of the death of a beneficiary who is the surviving
spouse of a deceased participant, a distribution commencing
after the death of the spouse shall be payable either:
(i) within five (5) years of the date of the spouse's death;
(ii) if distribution commences to the spouse's beneficiary
within one (1) year of the spouse's death or on a later
date permitted under any lawful regulations issued by
the Secretary of the Treasury, over a period not
extending beyond the life expectancy of such
beneficiary; or
(d) in the event payments are made to a participant's child, for
purposes of this Section 18.9A such payments shall be deemed
to be paid to the participant's spouse if such annuity
payments will become payable to such spouse upon such child's
reaching majority or any other event permitted under any
lawful regulations issued by the Secretary of the Treasury.
A participant, former participant or beneficiary may elect to have his life
expectancy redetermined from time to time but not more frequently than annually.
In the event that a participant, former participant or beneficiary fails to make
such an election, then no recalculation shall be performed.
Notwithstanding anything in this Trust and Plan to the contrary, if
a participant had filed an election with the Administrator prior to January 1,
1984, that his distribution either be under a form or commence after a date not
provided for in this Trust and Plan, as herein adopted, such distribution shall
nevertheless be made in accordance with such election, provided that the
provisions of such election complied with the terms of the Trust and Plan as in
effect on the date such election was filed with the Administrator.
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18.11A RESPONSIBILITY OF TRUSTEE REGARDING DISTRIBUTIONS. The
Trustee, upon notification by the Administrator as to the eligibility of and
method of distribution applicable to a participant, former participant or
beneficiary, shall take one or a combination of the following actions to
effectuate the method of distribution to such person:
(a) purchase from an insurance company a fully paid-up,
nontransferable annuity contract or contracts; or
(b) sell or surrender any contract or contracts of
insurance then held with respect to such person for
the cash surrender value thereof; or
(c) cause such contract or contracts to be converted
pursuant to any of the available lump sum or
installment options under such contract or
contracts; or
(d) make distributions of cash and insurance contracts
directly from the Trust Fund to such person.
In the event that the Trustee, pursuant to this Section 18.11A,
obtains an annuity contract for the benefit of a participant, former participant
or a beneficiary, the Trustee shall, after having selected such settlement
options and placed such restrictive endorsements thereon as are directed by the
Administrator, transfer ownership of the contract or contracts to such
participant, former participant or beneficiary and deliver said contract or
contracts to him. The delivery of said contract or contracts shall be in full
settlement of such participant's, former participant's or beneficiary's rights
under this Plan. The Company, other Participating Companies and Affiliates, the
Administrator and the Trustee shall not be responsible for:
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(a) any failure on the part of any insurance company to
make any payments or provide any benefit under any
annuity contract;
(b) for the action or inaction of any person which may
render any annuity contract invalid or
unenforceable; and
(c) any inability to perform or delay in performing any
act occasioned by any provisions of any annuity
contract or restriction imposed by any insurance
company or by any other person.
Any amounts received by the Trust Fund upon the surrender of any
life insurance contracts shall be credited to such person's distribution
account. Any amounts paid from the Trust Fund to an insurance company or to a
participant, former participant or beneficiary shall be debited to such account.
18.12A DIRECT ROLLOVERS. This Section 18.12A applies to
distributions made on or after January 1, 1993. Notwithstanding any provision of
the Trust and Plan to the contrary that would otherwise limit a distributee's
election under this Section 18.12A, a distributee may elect, at the time and in
the manner prescribed by the Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any 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 distributee or the joint lives (or
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joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any distribution to
the extent such distribution is required under Code Section 401(a)(9), and the
portion of any distribution that is not includible in gross income (determined
with regard to the exclusion for net unrealized appreciation with respect to
employer securities).
An eligible retirement plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
A distributee includes an employee or former employee. In addition,
the employee's or former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code Section 414(p), are
distributees with regard to the interest of the spouse or former spouse.
A direct rollover is a payment by the Trust and Plan to the
eligible retirement plan specified by the distributee.
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ARTICLE XIX
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THE TRUSTEE, ITS POWERS AND DUTIES
----------------------------------
19.1 OBLIGATIONS AND DUTIES. The Trustee shall not be obligated
to institute any action or proceeding to compel a Participating Company to make
any contributions to this Trust, nor shall the Trustee be obligated to make any
inquiry as to whether any amount deposited with it is the amount provided to be
deposited under the terms of Articles V, VI or VII. The Trustee shall keep books
of account which shall show all receipts and disbursements and a complete record
of the operation of the Trust, and the Trustee shall at least once a year and at
such other times as the Company or the Administrator shall so request render a
report of the operation of this Trust to the Company and the Administrator. The
Trustee shall file with the Internal Revenue Service such returns and other
information concerning the Trust Fund as may be required of the Trustee by the
Code and any lawful Regulations issued by the Treasury Department thereunder.
The Trustee shall not be obligated to pay any interest on any funds which may
come into its hands. The Trustee is a party to this Trust and Plan solely for
the purposes set forth in this instrument and to perform the acts herein set
forth, and no obligation or duty shall be expected or required of it except as
expressly stated herein or in ERISA and any lawful Regulations issued thereunder
by the Secretary of Labor or the Secretary of the Treasury. The Trustee may
consult with counsel (who may or may not be counsel for the Company or any
TRUSTEE
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other Participating Company) selected by the Trustee concerning any question
which may arise with reference to its powers or duties under this Trust and
Plan, and the opinion of such counsel shall be full and complete authority and
protection in respect of any action taken, suffered or omitted by the Trustee in
good faith and in accordance with such opinion, provided due care is exercised
in the selection of such counsel.
19.2 RESIGNATION BY TRUSTEE. The Trustee may resign from this
Trust by mailing to the Company a written notice of resignation addressed to the
Company at the last address of the Company on file with the Trustee, or by
delivering such written notice to the Company at such address. The Company may
remove the Trustee by written notice of such removal mailed to the Trustee at
the last address of the Trustee on file with the Company, or by delivering such
written notice to the Trustee at such address. Such resignation or removal shall
take effect on the date specified in the notice of resignation or removal, but
not less than thirty (30) days, nor more than sixty (60) days, following the
date of mailing of such notice or delivery of such notice if it be not mailed
unless a shorter period is mutually acceptable. Upon such resignation or
removal, the Trustee shall be entitled to its fees to the effective date of
resignation or removal and any and all costs or expenses paid or incurred by the
Trustee in connection with this Trust and Plan. In no event shall such
resignation or removal terminate this Trust and Plan, but the Company shall
forthwith appoint a successor Trustee to carry out the terms of this Trust
TRUSTEE
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and Plan, which successor Trustee shall be any individual, trust company or bank
selected by the Company. In case of the resignation or removal of the Trustee,
the Trustee shall forthwith turn over to the successor Trustee all assets in its
possession, and copies of such records as may be necessary to permit the
successor Trustee to carry out its duties.
19.3 ADMINISTRATION EXPENSES. The expenses of administration of
the Trust incurred by the Trustee, including counsel fees and including
Trustee's fees as such may from time to time be agreed upon between the Company
and the Trustee, shall be paid in any one of the following manners as determined
by the Company in its sole discretion:
(a) paid out of the annual contributions by the
Participating Companies before allocation of such
contribution is made among the accounts of the
Trust;
(b) paid directly by the Participating Companies to the
Trustee; or
(c) paid out of the Trust Fund.
Notwithstanding the foregoing, in no event will any Trustee who is an employee
of a Participating Company receive compensation from the Trust and Plan, except
for expenses properly and actually incurred. Fees and expenses of the Trustee
which have not been paid will be deemed to be a lien upon the Trust Fund.
19.4 OWNERSHIP OF INSURANCE CONTRACTS. The Trustee shall be the
complete and absolute owner of the insurance contracts held in the Trust and of
each and every incident of ownership thereof, except as otherwise provided
herein, shall be entitled to receive
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all benefits due thereunder, except that any amount which may become due as a
death benefit under any such insurance contract shall be payable directly to the
death beneficiary determined under Article XVII hereof, shall have such powers,
rights, duties, options, or privileges which belong to the absolute owner of
such contracts or which are granted by the terms of any such contracts or by the
terms of this Trust and Plan, and, without intending to limit the generality of
the foregoing, it is hereby provided that the Trustee shall have the right to
borrow money upon the direction of the Administrator for the payment of premiums
on the security of contracts and to pledge the same, provided that nothing
herein contained shall be construed to permit the use of, and it is hereby
expressly made prohibitive of the use of any contract or contracts to the
advantage, benefit, gain or detriment of any other contract or contracts.
19.5 RECEIPTS AND RELEASES. The Trustee is hereby authorized to
execute all necessary receipts and releases to the insurance company or
companies concerned, and shall be under the duty upon being advised by the
Administrator that the proceeds of any such contracts have become payable to
make efforts to collect such sums as may appear to be due; provided, however,
that the Trustee shall not be required to institute suit or maintain litigation
to collect the proceeds of any contract unless it is in possession of funds
sufficient for that purpose or unless it has been indemnified to its
satisfaction for its counsel fees, costs, disbursements and all other expenses
and liabilities to which it
TRUSTEE
19-4
<PAGE> 156
may in its judgment be subjected by such action on its part, provided, further,
that the Trustee may utilize the proceeds of any such contract to meet expenses
incurred in connection with enforcing payment of such contract. Notwithstanding
anything to the contrary herein contained, the Trustee is authorized, with the
written approval of the Administrator, to compromise and adjust claims arising
out of the contracts or any of them upon such terms and conditions as it may
deem just, and the decision of the Trustee shall be binding and conclusive upon
all persons interested in the Trust and Plan.
19.6 SEGREGATION OF ASSETS. Any segregation of assets required
under this Trust may be made in cash or in kind, or partly in cash and partly in
kind, according to the discretion of the Trustee, but any such segregation shall
be made on the basis of the most recent valuation made pursuant to Article XI.
19.7 CO-TRUSTEES. In the event that the Company shall have
appointed more than one individual, trust company or bank to act jointly as
Trustee hereunder, any action which this Trust and Plan authorizes or requires
the Trustee to do shall be done by action of the majority of the then acting
trustees, or, in the case of two such persons acting jointly as Trustee, by
action of both such trustees. Such action may be taken at any meeting of the
trustees then acting or by written authorization and affirmative consent without
a meeting. The trustees, by written agreement among themselves, a copy of which
shall be filed with the Company and the Administrator, may allocate among
themselves any of the
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powers and duties of the Trustee under this Trust and Plan. In such event, the
trustee to whom a power or duty is allocated may take action with respect
thereto without the consent of any other trustee. Any person, firm, partnership
or corporation may rely upon the written signatures of such number of the
trustees as are hereunder empowered to take action as the signature of the
Trustee hereunder. Notwithstanding any other provision of this Trust and Plan to
the contrary, so long as at least one individual, trust company or bank shall
continue to act as Trustee hereunder, the Company shall not be under any duty to
appoint a successor to any trustee who shall resign or be removed.
19.8 LIABILITY OF TRUSTEE. Except as otherwise provided in
ERISA, if the Trustee is one or more individuals who are employees of a member
of the Controlled Group, the Trustee and its members shall incur no personal
liability of any nature whatsoever in connection with any act done or omitted to
be done in carrying out its responsibilities under the terms of this Trust and
Plan or other responsibilities imposed upon such persons by ERISA or regulations
promulgated thereunder.
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ARTICLE XX
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INVESTMENTS
-----------
20.1 INVESTMENT POWERS AND DUTIES OF TRUSTEE. In addition to the
powers and duties conferred and imposed upon the Trustee by the other provisions
of this Trust and Plan, the Trustee shall, subject to the provisions of Articles
IX, X and XII, have the following powers and duties:
(a) To invest and reinvest the principal and income of the Trust
Fund and keep the same invested with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims, without distinction between
principal and income and without regard to any limitations, other than such
prudent man rule, prescribed by law or custom upon the investments of
fiduciaries, in each and every kind of property, whether real, personal or
mixed, tangible or intangible, and wherever situated, including but not limited
to contracts of an insurance company on the life of any participant (including
annuity contracts if distributions are made in the form of a life annuity
pursuant to Section (28)(b) of the Adoption Agreement), shares of any Regulated
Investment Company, units of any common trust fund of any bank or trust company
now in existence or hereafter established, shares of common, preference and
preferred stock, put and call options, rights, options, subscriptions, warrants,
trust receipts, investment trust certificates, mortgages, leases, bonds, notes,
debentures, equipment or collateral trust certificates and other corporate,
individual or government obligations, whether secured or unsecured; to invest
and reinvest in and retain any stocks, bonds or other securities of any
corporate trustee serving hereunder, or any parent or affiliate thereof; to
invest in commodities and commodity contracts; to invest and reinvest in any
time or savings deposits of the Trustee or any parent or affiliate thereof if
such deposits bear a reasonable rate of interest or of any bank, trust company,
or savings and loan institution, which deposits may but need not be guaranteed
by the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation; and in addition to become a general partner or limited
partner in any partnership or limited partnership the purposes of which are to
invest or reinvest the partnership assets in any such properties or deposits;
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(b) To invest a portion or all of the Trust Fund in units of any
common or group trust created solely for the purpose of providing a satisfactory
diversification of investments for participating trusts; provided that such
common or group trust, (i) limits participation thereunder to pension and
employer contribution trusts which qualify under Section 501(a) of the Code, as
amended, (ii) prohibits income and/or principal attributable to a participating
trust from being used for any purpose other than the exclusive benefit of the
employees or their beneficiaries of such participating trust, (iii) prohibits
assignment by a participating trust of any part of such participating trust's
equity or interest in the common or group trust, (iv) is created or organized in
the United States and is maintained at all times as a domestic trust in the
United States; as long as the Trustee holds such units hereunder, the instrument
establishing such common or group trust (including all amendments thereto) shall
be deemed to have been adopted and made a part of this Trust and Plan;
(c) Upon direction by the Company, to invest or reinvest all or
a portion of the Trust Fund in qualifying employer securities and/or qualifying
employer real estate as such terms are defined in Section 4975 of the Code, as
amended, and Section 407(d) of ERISA, which investment may constitute more than
ten percent (10%) of the fair market value of the assets of the Trust Fund, and
to retain, or to sell, exchange or otherwise dispose of any such securities or
real estate held in this Trust Fund. In the event of any such investment, the
Trustee shall file with the appropriate District Director of Internal Revenue
such returns and other information as shall be required from time to time by the
Code, as amended, and valid regulations, rulings and procedures thereunder;
(d) To sell, convert, redeem, exchange, grant options for the
purchase or exchange of, or otherwise dispose of, any real or personal property,
at public or private sale, for cash or upon credit, with or without security,
without obligation on the part of any person dealing with the Trustee to see to
the application of the proceeds of or to inquire into the validity, expediency
or propriety of any such disposal;
(e) To manage, operate, repair, partition and improve and
mortgage or lease (with or without option to purchase) for any length of time
any real property held in the Trust Fund; to renew or extend any mortgage or
lease, upon any terms the Trustee may deem expedient; to agree to reduction of
the rate of interest on any mortgage note; to agree to any modification in the
terms of any lease or mortgage or of any guarantee pertaining to either of them;
to enforce any covenant or condition of any lease or mortgage or of any
guarantee pertaining to either of them or to waive any default in the
performance thereof; to exercise and enforce any right of foreclosure; to bid on
property on foreclosure; to take a deed in lieu of foreclosure with or without
paying consideration therefor and in connection therewith to release the
obligation on the bond
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secured by the mortgage; and to exercise and enforce in any action, suit or
proceeding at law or in equity any rights or remedies in respect of any lease or
mortgage or of any guarantee pertaining to either of them;
(f) To exercise, personally or by general or limited proxy, the
right to vote any shares of stock or other securities held in the Trust Fund; to
delegate discretionary voting power to trustees of a voting trust for any period
of time; and to exercise or sell, personally or by power of attorney, any
conversion or subscription or other rights appurtenant to any securities or
other property held in the Trust Fund;
(g) To join in or oppose any reorganization, recapitalization,
consolidation, merger or liquidation, or any plan therefor, or any lease (with
or without an option to purchase), mortgage or sale of the property of any
organization the securities of which are held in the Trust Fund; to pay from the
Trust Fund any assessments, charges or compensation specified in any plan of
reorganization, recapitalization, consolidation, merger or liquidation, to
deposit any property with any committee or depositary; and to retain any
property allotted to the Trust Fund in any reorganization, recapitalization,
consolidation, merger or liquidation;
(h) To borrow money from any lender (including the Trustee
hereunder, where applicable in its capacity as a banking corporation when
permitted to do so by the applicable laws and regulations then in effect) in any
amount and upon such terms and conditions and for such purposes as the Trustee
shall deem necessary; for any money so borrowed the Trustee may issue its
promissory note as Trustee and to secure the repayment of any such loan, with
interest, may pledge or mortgage all or any part of the Trust Fund, and no
person loaning money to the Trustee shall be obligated to see to the application
of the money loaned or to inquire into the validity, expediency or propriety of
any such borrowing;
(i) To compromise, settle or arbitrate any claim, debt or
obligation of or against the Trust Fund; to enforce or abstain from enforcing
any right, claim, debt or obligation; and to abandon any property determined by
it to be worthless;
(j) To continue to hold any property of the Trust Fund whether
or not productive of income; to reserve from investment and keep unproductive of
income, without liability for interest, such cash as it deems advisable or, in
its discretion, to hold the same, without limitation on duration, on deposit in
the commercial department or in an interest-bearing account in the savings
department of any bank, trust company, or savings and loan institution
(including the Trustee where applicable in its capacity as a banking
corporation) in which deposits are guaranteed by the
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Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation;
(k) To hold property of the Trust Fund in its own name or in the
name of a nominee, without disclosure of this Trust, or in bearer form so that
it will pass by delivery, but no such holding shall relieve the Trustee of its
responsibility for the safe custody and disposition of the Trust Fund in
accordance with the provisions of this Trust and Plan, and the Trustee's records
shall at all times show that such property is part of the Trust Fund;
(l) To make, execute and deliver, as Trustee, any deeds,
conveyances, leases (with or without option to purchase), mortgages, options,
contracts, waiver or other instruments that the Trustee shall deem necessary or
desirable in the exercise of its powers under this Trust;
(m) To employ, at the expense of the Trust Fund, agents who are
not regular employees of the Trustee, and to delegate in writing to them and
authorize them to exercise such powers and perform such duties required of the
Trustee hereunder without limitation as the Trustee may determine in its
uncontrolled discretion; the Trustee shall not be responsible for any loss
occasioned by any such agents selected by it with reasonable care;
(n) To pay out of the Trust Fund all taxes imposed or levied
with respect to the Trust Fund and in its discretion to contest the validity or
amount of any tax, assessment, penalty, claim or demand respecting the Trust
Fund; however, unless the Trustee shall have first been indemnified to its
satisfaction or arrangements satisfactory to it shall have been made for the
payment of all costs and expenses, it shall not be required to contest the
validity of any tax, or to institute, maintain or defend against any other
action or proceeding either at law or in equity;
(o) Except as otherwise provided in this Trust and Plan, to do
all acts, execute all instruments, take all proceedings and exercise all rights
and privileges with relation to any assets constituting a part of the Trust
Fund, which it may deem necessary or advisable to carry out the purposes of this
Trust and Plan;
(p) During the minority or incapacity, in either case as
determined under applicable local law, of any participant, former participant or
beneficiary under this Trust and Plan, to make any payment to which such person
would otherwise be entitled pursuant to this Trust and Plan either to such
person or to the legal guardian of such person, and the receipt of either such
minor or incapacitated person or such legal guardian shall be a full discharge
and acquittance to the Trustee for such payment.
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(q) Upon direction by the Administrator, to purchase contracts
of life insurance on the lives of key persons whose death might affect adversely
the earnings of a Participating Company. Any such contracts shall be owned by
the Trustee and any and all benefits, including any amounts payable upon the
death of the person insured shall be payable to the Trustee and considered as an
investment for the benefit of the Trust as a whole.
20.2 INVESTMENT MANAGER. Notwithstanding any provisions of this
Trust and Plan, the Company hereby retains the right to appoint, from time to
time, one or more:
(a) banks, as defined in the Investment Advisers Act of
1940;
(b) persons registered as investment advisers under
said Act; or
(c) insurance companies qualified to perform investment
advisory services under the laws of more than one
state;
to act as the Investment Manager or Managers of all or such portions of the
Trust Fund as the Company in its sole discretion shall direct. In order to serve
as Investment Manager, any such bank, person or insurance company must state in
writing to the Company and the Trustee that it meets the requirements set forth
in this Section 20.2 to be an Investment Manager and that it acknowledges that
it shall be a fiduciary with respect to this Trust and Plan during all periods
that it shall serve as such. During any period that an Investment Manager has
been appointed with respect to the Trust Fund or a portion thereof, it shall
have all powers normally given to the Trustee under Section 20.1 hereof with
respect to the management, acquisition or disposition of any asset of the Trust
Fund, or such portion thereof and the Trustee shall have no powers, duties or
obligations with respect to the
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investment, management, acquisition or disposition of such assets. The Company
may remove any Investment Manager or change the portion of the Trust Fund at any
time subject to its management by written notice to the Trustee and the
Investment Manager. Any Investment Manager may resign by written notice to the
Company and the Trustee. Unless the Company appoints a successor to an
Investment Manager which has resigned or been removed or which is no longer
managing a portion of the Trust Fund, the powers, duties and obligations of the
Trustee with respect to the portion of the Trust Fund formerly managed by the
Investment Manager shall be automatically restored.
20.3 INCOME FROM INVESTMENTS. All income from investment and
reinvestment made as provided in this Article XX shall be treated as principal,
and investments and reinvestment shall be made without distinction between
income and principal.
20.4 PROHIBITED TRANSACTIONS. In no case shall the Trustee enter
into or engage in any transaction which is defined as a prohibited transaction
by Section 4975 of the Code or by Section 406 of ERISA, except to the extent any
such transaction is permitted under another provision of the Code or under a
valid regulation or exemption promulgated by a responsible agency of the federal
government.
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ARTICLE XXI
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ADMINISTRATION
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21.1 THE ADMINISTRATOR. The Administrator shall be any
person(s), corporation or partnership, (including the Company or a Participating
Company) as shall be designated in Section (38) of the Adoption Agreement. The
Company shall notify the Trustee of the identity of the Administrator and of any
change in the Administrator. Except as expressly set forth herein with respect
to the duties and responsibilities of the Trustee, the Retirement Savings
Committee, the Investment Manager or the Participating Companies, the
Administrator shall administer the Trust and Plan and shall have all powers and
duties granted or imposed on an "administrator" by ERISA. The Administrator
shall determine any and all questions of fact, resolve all questions of
interpretation of this instrument which may arise under any of the provisions of
this Trust and Plan as to which no other provision for determination is made
hereunder, and exercise all other powers and discretion necessary to be
exercised under the terms of this Trust and Plan which it is herein given or for
which no contrary provision is made. Subject to the provisions of Section 21.6,
the Administrator's decision with respect to any matter shall be final and
binding upon the Trustee and all other parties concerned, and neither the
Administrator nor any of its directors, officers or employees, if applicable,
shall be liable in that regard except for gross abuse of the discretion given it
and them under the terms of
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this Trust and Plan. All determinations of the Administrator shall be made in a
uniform, consistent and nondiscriminatory manner with respect to all
participants and beneficiaries in similar circumstances. The Administrator, from
time to time, may designate one or more persons or agents to carry out any or
all of its duties hereunder.
21.2 DENIAL OF APPLICATION FOR BENEFITS. If any participant, any
beneficiary, or the authorized representative of a participant or beneficiary
shall file an application for benefits hereunder and such application is denied,
in whole or in part, he shall be notified in writing of the specific reason or
reasons for such denial unless the granting or denial of the application is in
the sole discretion of the Administrator in which event the notice to the
applicant shall state that the Administrator has denied the application pursuant
to the exercise of its discretionary powers under the Trust and Plan. The notice
shall also set forth the specific plan provisions upon which the denial is
based, an explanation of the provisions of Section 21.6 hereof, and any other
information deemed necessary or advisable by the Administrator.
21.3 RETIREMENT SAVINGS COMMITTEE. The Board of the Company
shall appoint the members of a Retirement Savings Committee which shall consist
of three (3) or more members. Such Committee shall decide appeals of application
denials as provided in Section 21.6 and shall have such other powers and duties
as shall from time to time be assigned to the Committee by the Company. The
members of the Committee shall remain in office at the will of the Board,
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and the Board may remove any of said members, from time to time, with or without
cause. A member of the Committee may resign upon written notice to the remaining
member or members of the Committee and to the Company respectively. The fact
that a person is a participant or a former participant or a prospective
participant shall not disqualify him from acting as a member of the Committee.
In case of the death, resignation or removal of any member of the Committee, the
remaining members shall act until a successor-member shall be appointed by the
Board of the Company. Upon request, the Company shall notify the Trustee and the
Administrator in writing of the names of the original members of the Committee,
of any and all changes in the membership of the Committee, of the member
designated as Chairman and the member designated as Secretary, and of any
changes in either office. Until notified of a change, the Trustee and the
Administrator shall be protected in assuming that there has been no change in
the membership of the Committee or the designation of Chairman or of Secretary
since the last notification was filed with it. The Trustee and the Administrator
shall be under no obligation at any time to inquire into the membership of the
Committee or its officers. All communications to the Committee shall be
addressed to its Secretary at the address of the Company on file with the
Trustee.
21.4 COMMITTEE PROCEDURES. On all matters and questions, the
decision of a majority of the members of the Committee shall govern and control,
but a meeting need not be called or held to make any decision. The Committee
shall appoint one of its members
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to act as its Chairman and another member to act as Secretary. The terms of
office of these members shall be determined by the Committee, and the Secretary
and/or Chairman may be removed by the other members of the Committee for any
reason which such other members may deem just and proper. The Secretary shall do
all things directed by the Committee. Although the Committee shall act by
decision of a majority of its members as above provided, nevertheless in the
absence of written notice to the contrary, every person may deal with the
Secretary and consider his acts as having been authorized by the Committee. Any
notice served or demand made on the Secretary shall be deemed to have been
served or made upon the Committee.
21.5 OPERATION OF COMMITTEE. No member of the Committee shall be
disqualified from acting on any question because of his interest therein. No fee
or compensation shall be paid to any member of the Committee for his services as
such, but the Committee shall be reimbursed for its expenses by the
Participating Companies. The Committee and the Administrator may hire such
attorneys, accountants, actuaries, agents, clerks, and secretaries as it may
deem desirable in the performance of its functions, and the expense associated
with the hiring or retention of any such person or persons shall be paid
directly by the Participating Companies.
21.6 APPEAL PROCESS. Any participant, any beneficiary, or any
authorized representative of a participant or beneficiary whose application for
benefits hereunder has been denied, in whole
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or in part, by the Administrator may upon written notice to the Committee
request a review by the Committee of such denial of his application. Such review
may be made by written briefs submitted by the applicant and the Administrator
or at a hearing, or by both, as shall be deemed necessary by the Committee. Any
such hearing shall be held in the main office of the Company on such date and at
such time as the Committee shall designate upon not less than seven (7) days'
notice to the applicant and the Administrator unless both of them accept shorter
notice. The Committee shall make every effort to schedule the hearing on a day
and at a time which is convenient to both the applicant and the Administrator.
After the review has been completed, the Committee shall render a decision in
writing, a copy of which shall be sent to both the applicant and the
Administrator. In rendering its decision, the Committee shall have full power
and discretion to interpret this Trust and Plan, to resolve ambiguities,
inconsistences and omissions, to determine any question of fact, to determine
the right to benefits of, and the amount of benefits, if any, payable to, the
applicant in accordance with the provisions of this Trust and Plan. Such
decision shall set forth the specific reason or reasons for the decision and the
specific plan provisions upon which the decision is based. Such decision shall
be final and binding on the applicant, the Trustee, and the Administrator.
21.7 LIABILITY OF COMMITTEE MEMBERS. Neither the Committee nor
any of its members shall be liable for any act taken by the Committee pursuant
to any provision of this Trust and Plan
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except for gross abuse of the discretion given it and them hereunder. No member
of the Committee shall be liable for the act of any other member.
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ARTICLE XXII
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PROHIBITION AGAINST ALIENATION
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22.1 DEFINITIONS. Unless the context otherwise indicates, the
following terms used herein shall have the following meanings whenever used in
this Article XXII:
(a) The words "alternate payee" shall mean any spouse,
former spouse, child or other dependent of a
participant who is recognized by a domestic relations
order as having a right to receive all, or a portion
of, the benefits hereunder attributable to such
participant.
(b) The words "domestic relations order" shall mean, with
respect to any participant, any judgment, decree or
order (including approval of a property settlement
agreement) which both:
(i) relates to the provision of child support,
alimony payments or marital property rights
to a spouse, former spouse, child or other
dependent of the participant; and
(ii) is made pursuant to a State domestic
relations law (including a community
property law).
(c) The words "qualified domestic relations order" shall
mean a domestic relations order which satisfies the
requirements of Section 414(p)(1)(A) of the Code.
22.2 GENERAL PROHIBITION ON ALIENATION. Neither any property nor
any interest in any property held for the benefit of any participant, former
participant or beneficiary of a participant shall be transferred, alienated,
disposed of or in any manner encumbered, voluntarily, involuntarily or by
operation of law, nor, to the fullest extent permitted by law, shall it be
subject to attachment, execution, garnishment, sequestration or other legal or
equitable process while in the possession or control of the Trustee
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except by an act of the Trustee or the participant, former participant or
beneficiary specifically authorized hereunder. If by reason of any act of any
participant, former participant or beneficiary, or by operation of law or by the
happening of any event, or for any reason, except by an act of the Trustee or
such person specifically authorized hereunder, such property or any interest
therein would, except for this provision, cease to be enjoyed by such person, or
if by reason of an attempt of such person to alienate, charge or encumber such
property or any interest therein, or by reason of the bankruptcy or insolvency
of such person, or by reason of any attachment, garnishment or other
proceedings, or by reason of any order, finding or judgment of court, either at
law or in equity, such property or any interest therein would, except for this
provision, vest in or be enjoyed by some person, firm or corporation otherwise
than as provided in this Trust and Plan, in any of such events, the trusts
herein expressed concerning all of such property so payable to or held for the
benefit of such person shall cease and terminate as to him. Thereafter during
his life such property, subject to such interests or rights, if any, as any
other person may have in or to such property as provided in this Trust and Plan,
shall be held by the Trustee according to its absolute discretion, but the
Trustee meanwhile may pay to or expend for the support, comfort and maintenance
of such participant, former participant or beneficiary, may pay to or expend for
the support, comfort and maintenance of his spouse and/or may pay to or expend
for the support, comfort and
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maintenance of his child or children, such sums and such sums only, as directed
by the Administrator, in writing, retaining any undistributed part of such
property until such participant's, former participant's or beneficiary's death.
22.3 DISTRIBUTION OF ASSETS ON DEATH. If any person who shall be
subject to the provisions of Section 22.2 hereof shall die before receiving all
of such property which he would have received except for the operation of the
provisions of said Section 22.2, then, upon or after his death, such
undistributed property shall be disposed of as follows:
(a) If such person was a participant, such
undistributed property shall be disposed of as
provided in such participant's designation of
beneficiary on file with the Trustee at the time of
his death, or as provided in Section 17.8 in the
event that such designation shall not provide for
complete distribution of such undistributed
property or no designation of beneficiary shall be
on file with the Trustee; or
(b) If such person shall be a beneficiary of a partici-
pant, such undistributed property shall be dis-
tributed to the person or persons who upon such
beneficiary's death would be entitled to inherit
such undistributed property under the laws of the
state in which the deceased participant was
domiciled, then in force, if such undistributed
property had then belonged to such beneficiary and
he had then died intestate domiciled in such state.
22.4 NO RIGHT TO BENEFITS BY ALTERNATE PAYEE. Sections 22.2 and
22.3 above shall not be deemed to prohibit the creation, assignment or
recognition of a right to any benefit under the Trust and Plan payable in
respect of a participant to an alternate payee pursuant to a qualified domestic
relations order.
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22.5 NOTIFICATION OF PARTIES AND DETERMINATION WHETHER
QUALIFIED. In the event the Trust and Plan is served with a domestic relations
order, the Administrator shall promptly notify the concerned participant and any
concerned alternate payee of the receipt of such domestic relations order and
the Trust and Plan's procedures for determining whether such domestic relations
order is a qualified domestic relations order. Within a reasonable time after
receipt of such domestic relations order, the Administrator shall determine
whether such domestic relations order is a qualified domestic relations order
and shall notify the participant and any concerned alternate payee of its
determination.
22.6 INTERIM PROCEDURES. During any period in which the issue of
whether a domestic relations order is a qualified domestic relations order is
being determined (whether by the Administrator, a court of competent
jurisdiction, or otherwise), the Administrator shall credit to a new separate
account under the Trust and Plan the amounts which would have been payable to an
alternate payee during such period if the order had been, during such period,
determined to be a qualified domestic relations order, and shall debit the
appropriate accounts of the participant with respect to whom the domestic
relations order was issued for such amounts. If, within eighteen (18) months
after the Trust and Plan is served with such domestic relations order, the
domestic relations order (or a modification thereof) is determined to be a
qualified domestic relations order, the Administrator shall hold and dispose of
the amounts credited to the segregated account established with respect
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to such domestic relations order in accordance with the terms of the qualified
domestic relations order. If within eighteen (18) months after the Trust and
Plan is served with such domestic relations order, it is determined that the
domestic relations order is not a qualified domestic relations order or the
issue with respect to whether the domestic relations order is a qualified
domestic relations order is not resolved, the Administrator shall transfer the
amounts credited to the segregated account to the appropriate accounts
maintained for the benefit of the person who would have been entitled to such
amounts as though the Trust and Plan had never been served with such domestic
relations order. Any determination that a domestic relations order is a
qualified domestic relations order which is made after the close of the eighteen
(18) month period after the Trust and Plan was served with such domestic
relations order shall be applied prospectively only.
22.7 INVESTMENT OF SEPARATE ACCOUNT. The amounts credited to any
new separate account which has been created under Section 22.6 above after the
Trust and Plan is served with a domestic relations order shall be invested as
the Administrator shall direct until the Administrator makes a determination
whether such domestic relations order is a qualified domestic relations order.
22.8 REVIEW PROCEDURES. Any participant or alternate payee who
is affected by a domestic relations order served upon the Trust and Plan may
request a review by the Retirement Savings Committee of the Administrator's
determination with respect to the
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qualification or lack of qualification of such domestic relations order upon
written notice to the Committee. Any such review by the Committee shall be
subject to the rules and procedures set forth in Article XXI hereof.
22.9 STATUS OF ALTERNATE PAYEE. Any alternate payee who is
entitled to receive amounts from the Trust and Plan pursuant to a qualified
domestic relations order shall, with respect to the Trust and Plan, to the
extent of the alternate payee's interest in the Trust and Plan, have such rights
as are specified in the qualified domestic relations order.
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ARTICLE XXIII
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TOP-HEAVY PROVISIONS
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23.1 RESTRICTIONS. During any plan year that this Trust and Plan
is top-heavy as determined in accordance with Section 23.2 hereof, the special
restrictions contained in Sections 23.3, 23.4, 23.5, 23.6 and 23.7 hereof shall
apply.
23.2 DETERMINATION OF TOP-HEAVY STATUS. This Trust and Plan
shall be considered to be top-heavy in any plan year if, as of the determination
date for such plan year, all the aggregation groups of which this Trust and Plan
is a member are top-heavy groups. In the event that in any plan year this Trust
and Plan is a member of an aggregation group which is not a top-heavy group,
this Trust and Plan shall not be considered to be top-heavy for such plan year.
Unless the context otherwise indicates, the following terms used
herein shall have the following meanings whenever used in this Article XXIII:
(a) "determination date" shall mean, for the first plan
year, the last day thereof, and thereafter shall
mean, for any other plan year, the last day of the
preceding plan year;
(b) "key employee" shall mean a "key employee" as
described in Section 416(i) of the Code which is
hereby incorporated by reference and which is
described for informational purposes herein as any
employee or former employee of a member of the
Controlled Group who at any time during the plan
year, or the four (4) preceding plan years is:
(i) an officer of a member of the Controlled Group
having Total Remuneration from the Controlled
Group for the plan year of determination
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greater than Forty-Five Thousand Dollars ($45,000.00)
or, if greater, fifty percent (50%) of the amount
specified in Section 415(b)(1)(A) of the Code (plus any
increase for cost-of-living as determined from time to
time pursuant to regulations issued by the Secretary of
the Treasury or his delegate pursuant to Section 415(d)
of the Code);
(ii) a one-half of one percent (.5%) actual or constructive
owner of a member of the Controlled Group who owns one
of the ten (10) largest interests in a member of the
Controlled Group and who is an employee of a member of
the Controlled Group having Total Remuneration from the
Controlled Group for the plan year of determination
greater than Thirty Thousand Dollars ($30,000.00) or, if
greater, the amount specified in Section 415(c)(1)(A) of
the Code (plus any increase for cost-of-living as
determined from time to time pursuant to regulations
issued by the Secretary of the Treasury or his delegate
pursuant to Section 415(d) of the Code);
(iii) a five percent (5%) actual or constructive owner of a
member of the Controlled Group; or
(iv) a one percent (1%) actual or constructive owner of a
member of the Controlled Group having Total Remuneration
from the Controlled Group for the plan year of
determination greater than One Hundred Fifty Thousand
Dollars ($150,000.00);
provided that any such employee also performed service for a
member of the Controlled Group during the five (5) plan year
period ending on the determination date; and provided that an
amount held for the beneficiary of a key employee who is
deceased shall be deemed to be an amount held for a key
employee;
(c) "non-key employee" shall mean any employee of a member of the
Controlled Group who is not a key employee including any
employee who was formerly a key employee;
(d) "permissive aggregation group" shall mean the required
aggregation group plus each pension, profit sharing and stock
bonus plan of a member of the Controlled Group, including each
such plan
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terminated during the five (5) year period ending on the
determination date, which, when considered as a group with the
required aggregation group, would continue to comply with
Sections 401(a)(4) and 410 of the Code;
(e) "present value" shall be based only on the interest and
mortality rates set forth in Section (40)(b) of the Adoption
Agreement;
(f) "required aggregation group" shall mean each pension, profit
sharing and stock bonus plan of a member of the Controlled
Group, including each such plan terminated during the five (5)
year period ending on the determination date, in which a key
employee is a participant and each other pension, profit
sharing and stock bonus plan which enables such plans to meet
the requirements of Section 401(a)(4) or 410 of the Code; and
(g) "top heavy group" shall mean any aggregation group if the sum,
as of the determination date, of:
(i) the present value of the cumulative accrued benefits for
key employees under all defined benefit plans included
in such group; and
(ii) the aggregate of the account balances of key employees
under all defined contribution plans included in such
group;
exceeds sixty percent (60%) of a similar sum determined for
all participants, former participants and beneficiaries
permitted to be taken into account pursuant to Section 416(g)
of the Code, with such values being determined for each plan
as of the most recent valuation date occurring within the
twelve (12) month period ending on the determination date and
subject to appropriate adjustments under said Section 416(g)
and lawful regulations issued thereunder, including the
requirement that benefits and accounts of an employee be
increased by the aggregate distributions with respect to such
employee during the five (5) year period ending on the
determination date;
(h) "valuation date" means the date as of which account balances
or accrued benefits are valued for purposes of calculating the
top-heavy ratio, as selected in Section (40)(c) of the
Adoption Agreement.
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In making any of the aforementioned determinations,
contributions due but unpaid as of the determination date shall be included in
determining the value of account balances, if any. In addition, the present
value of cumulative accrued benefits shall be determined as if they accrued no
more rapidly than the slowest rate of accrual permitted under the fractional
rule of Section 411(b)(1)(C) of the Code utilizing the actuarial factors and
assumptions set forth in Section (40)(b) of the Adoption Agreement. Furthermore,
for purposes of making the aforementioned calculations with respect to defined
benefit plans, proportional subsidies, and benefits not relating to retirement
benefits such as pre-retirement death and disability benefits and post
retirement medical benefits, are to be disregarded but nonproportional subsidies
are to be taken into account.
23.3 TOP-HEAVY MINIMUM CONTRIBUTIONS. During any plan year that
this Trust and Plan is top-heavy, a Participating Company shall make a
contribution on behalf of each non-key employee employed by the Participating
Company who is a participant on the allocation date coinciding with the last day
of such year or was a participant whose employment terminated on or as of said
allocation date which is at least equal to the greater of (a) or (b) below,
where:
(a) equals the lesser of (i) or (ii) below, where:
(i) equals three percent (3%) of the non-key
employee's Total Remuneration from the
Controlled Group during the plan year; and
(ii) equals the largest percentage of Total Re-
muneration from the Controlled Group (dis-
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regarding any such Total Remuneration in
excess of Two Hundred Thousand Dollars
($200,000.00) per plan year per key
employee) provided to any key employee by
the contributions of the Participating
Companies; and
(b) equals such other percent of the non-key employee's
Total Remuneration from the Controlled Group as may
be necessary to satisfy the requirements of Section
401 and 416 of the Code as prescribed by the
Secretary of the Treasury in lawful regulations.
For purposes of determining the percentage set forth in subsection (a)(ii)
above, a Participating Company's contribution made pursuant to Sections 5.1 and
6.3 hereof for a key employee shall be taken into account, but a Participating
Company's contribution made pursuant to Sections 5.1 and 6.3 hereof on behalf of
a non-key employee shall not be taken into account in determining compliance
with this Section 23.3.
If this Trust and Plan is top-heavy for a plan year and if a
participant who is a non-key employee is also a participant in any other defined
contribution plan or any defined benefit plan maintained by a Participating
Company, the top-heavy minimum benefit shall be provided pursuant to Section
(40)(a) of the Adoption Agreement.
23.4 TOP-HEAVY VESTING. The Vested Percentage of a participant
who is employed during a plan year during which the Trust and Plan is top-heavy
shall be determined in accordance with the table specified in Section (21) of
the Adoption Agreement. Notwithstanding anything herein to the contrary, this
provision shall not apply to the account of any participant who does not work
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an hour of service for a member of the Controlled Group after the Trust and Plan
initially becomes top-heavy.
23.5 VESTING UPON CESSATION OF TOP-HEAVY STATUS. Except as
provided in the next sentence, in the event that this Trust and Plan shall have
been top-heavy for one (1) or more plan years and shall thereafter cease to be
top-heavy, the Vested Percentage of each participant shall again be determined
pursuant to Section (20) of the Adoption Agreement; provided, however, that in
no event may a change in the Trust and Plan's top-heavy status cause the Vested
Percentage of any participant to be reduced. In the event that this Trust and
Plan shall have been top-heavy and shall thereafter cease to be top-heavy, each
participant who had completed three (3) or more years of vesting service on the
date this Trust and Plan ceased to be top-heavy shall continue to be covered by
the vesting schedule set forth in Section (21) of the Adoption Agreement.
23.6 DETERMINATION OF SUPER TOP-HEAVY PLAN. This Trust and Plan
shall be considered to be super top-heavy in any plan year if, as of the
determination date for such plan year, all the aggregation groups of which this
Trust and Plan is a member are super top-heavy groups. The foregoing
determination shall be made as provided in Section 23.2 above for the
calculation of top-heavy status, except that for purposes of this Section 23.6,
subparagraph (g) of said Section 23.2 shall be modified by the substitution of
the words "super top-heavy group" for the words "top-heavy group" in said
subparagraph (g) and by the substitution of the percentage
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"ninety percent (90%)" for the percentage "sixty percent (60%)" in said
subparagraph (g).
23.7 LIMITATIONS ON ANNUAL ADDITIONS UNDER TOP-HEAVY PLAN.
During any plan year that this Trust and Plan is top-heavy or super top-heavy,
the limitations on annual additions and annual benefits set forth in Article
XXIV hereof shall be modified by the substitution of the phrase "one hundred
percent (100%)" for the phrase "one hundred twenty-five percent (125%)" wherever
the latter phrase appears in Article XXIV and by the substitution of the amount
"Forty-One Thousand Five Hundred Dollars ($41,500)" for the amount "Fifty-One
Thousand Eight Hundred Seventy-Five Dollars ($51,875)" wherever the latter
amount appears in Article XXIV. Notwithstanding the previous sentence, the
modifications set forth in this Section 23.7 shall not apply for a plan year if
the Trust and Plan is top-heavy but not super top-heavy for such plan year and
if the amount contributed for each participant who is a non-key employee is
computed by substituting the percentage "4%" for "3%" in Section 23.3(a) above.
In the event that the annual additions or annual benefits of a key employee
shall be in excess of the limitations on annual additions or annual benefits as
described in Article XXIV hereof as modified herein, no contributions shall be
allocated to such participant's accounts under this Trust and Plan until he is
brought into compliance or this Trust and Plan ceases to be top-heavy or super
top-heavy, as the case may be.
TOP-HEAVY
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ARTICLE XXIV
------------
LIMITATIONS ON ANNUAL ADDITIONS
-------------------------------
24.1 DEFINITIONS. Unless the context otherwise indicates, the following
terms shall have the following meanings whenever used in this Article XXIV:
(a) The words "annual additions" shall mean with respect to each
participant the sum of the following amounts in any plan year:
(i) the contributions of the Company or a Related Employer
credited to his accounts with respect to such plan year under
all defined contribution plans of the Company or any Related
Employer (whether or not terminated) which plans meet the
requirements of Section 401(a) of the Code, including, but not
limited to, other defined contribution regional prototype
plans;
(ii) forfeitures creditable to his accounts under all such defined
contribution plans of the Company or any Related Employer
(whether or not terminated) with respect to such plan year;
(iii) an amount determined as follows:
(A) for each limitation year beginning prior to January 1,
1976, such amount shall be equal to (1) minus (2),
where:
(1) equals such participant's contributions with
respect to such limitation year to any plan of the
Company or any Related Employer (whether or not
terminated), which plan met the requirements of
Section 401(a) of the Code; and
(2) equals ten percent (10%) of the aggregate of the
participant's Total Remuneration from the Company
and all Related Employers with respect to such
limitation year and all prior limitation years
during which
LIMITATIONS
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he was a participant in any such plan minus the
aggregate contributions made by him in all such prior
limitation years; or
(B) for each limitation year beginning after December 31,
1975 but before December 31, 1986, such amount shall be
equal to the lesser of:
(1) the amount, if any, by which his own contributions
(excluding deductible voluntary contributions and
rollover contributions, if any) with respect to
any such limitation year under all plans of the
Company and any Related Employer (whether or not
terminated), which plans meet the requirements of
Section 401(a) of the Code, shall exceed six
percent (6%) of his Total Remuneration from the
Company and all Related Employers with respect to
such limitation year; or
(2) one-half (1/2) of such participant's contributions
(excluding deductible voluntary contributions and
rollover contributions, if any) with respect to
such limitation year under all plans of the
Company and all Related Employers (whether or not
terminated), which plans meet the requirements of
Section 401(a) of the Code; or
(C) for each limitation year beginning after December 31,
1986, such amount shall be equal to such participant's
contributions (excluding deductible voluntary
contributions and rollover contributions, if any) with
respect to such limitation year under all plans of the
Company and all Related Employers (whether or not
terminated), which plans meet the requirements of
Section 401(a) of the Code; and
(iv) unless the provisions of this Section 24.1(a)(iv) cease to be
required by the Code, amounts allocated, in plan years
beginning after March 31, 1984, to an individual medical
LIMITATIONS
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account, as defined in Section 415(1)(2) of the Code, which is
part of a pension or annuity plan maintained by the Company or
any Related Employer and amounts derived from contributions
paid or accrued after December 31, 1985, in plan years ending
after such date, which are attributable to the separate
account of a key employee, as defined in Section 419A(d)(3) of
the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Company or any Related
Employer.
(b) The words "defined benefit plan fraction" shall mean, for any
participant with respect to any limitation year, a fraction:
(i) the numerator of which is the sum of his Projected Annual
Benefit under all defined benefit pension plans of the Company
and all Related Employers (whether or not terminated), which
plans meet the requirements of Section 401(a) of the Code; and
(ii) the denominator of which shall equal the greater of (A) and
(B) where:
(A) equals (1) multiplied by (2) below, where:
(1) equals the lesser of (I) or (II), where:
(I) equals, except as otherwise provided in
Section 23.7 hereof, one hundred twenty-five
percent (125%) of the quantity Ninety
Thousand Dollars ($90,000) plus any increase
for cost-of-living as determined from time
to time pursuant to regulations issued by
the Secretary of the Treasury or his
delegate pursuant to Sections 415(b) and
415(d) of the Code; and
(II) equals one hundred forty percent (140%) of
one-third (1/3) of the participant's Total
Remuneration from the Company and all
Related
LIMITATIONS
24-3
<PAGE> 186
Employers during the three (3) consecutive
limitation years during which such total is
highest, assuming in the case of a
participant who is an employee of the
Company or a Related Employer that he
continues to earn remuneration until his
normal retirement date in the same amount as
during such limitation year; and
(2) equals a fraction, the numerator of which
shall be the years of vesting service (or
parts thereof) he shall have on his normal
retirement date, up to but not in excess of
ten (10) years, and the denominator of which
shall equal ten (10); and
(B) equals, except as otherwise provided in Section 23.7
hereof, one hundred twenty-five percent (125%) of
the participant's accrued annual benefit under all
defined benefit pension plans of the Company and all
Related Employers which were in existence on May 6,
1986 (whether or not terminated) calculated at the
end of the last limitation year beginning prior to
January 1, 1987 in accordance with the terms and
provisions of such plans as in effect on May 5, 1986.
(c) The words "defined contribution plan fraction" shall mean for
any participant with respect to any limitation year a
fraction:
(i) except as otherwise provided in Section 24.1(c)(iv)
hereof, the numerator of which shall be equal to the
sum of:
(A) the sum of the least of the following
amounts for each limitation year which began
prior to January 1, 1976:
(1) his annual additions for such
limitation year;
(2) twenty-five percent (25%) of his
Total Remuneration from the Company
LIMITATIONS
24-4
<PAGE> 187
and all Related Employers for such
limitation year; or
(3) Twenty-Five Thousand Dollars
($25,000); plus
(B) the sum of its annual additions in each
limitation year beginning after December 31,
1975; and
(ii) except as otherwise provided in Section 24.1(c)(iv)
hereof, the denominator of which shall equal the sum
of the following amounts for each limitation year
that the participant was an employee of the Company
and any Related Employer (regardless of whether a
defined contribution plan was maintained by the
Company and any Related Employer):
(A) for limitation years which began prior to
January 1, 1976, the lesser of:
(1) one hundred twenty-five percent
(125%) of Twenty-Five Thousand
Dollars ($25,000); or
(2) thirty-five percent (35%) of the
participant's Total Remuneration
from the Company and all Related
Employers for such limitation year;
(B) except as otherwise provided in Section 23.7
hereof, for limitation years which began on
or after January 1, 1976 and prior to
January 1, 1983, the lesser of:
(1) one hundred twenty-five percent
(125%) of Twenty-Five Thousand
Dollars ($25,000) plus any increase
for cost-of-living as determined
from time to time pursuant to
regulations issued by the Secretary
of the Treasury or his delegate
pursuant to Section 415(d) of the
Code; or
(2) thirty-five percent (35%) of the
participant's Total Remuneration
from the Company and all Related
Employers for such limitation year;
and
LIMITATIONS
24-5
<PAGE> 188
(C) except as otherwise provided in Section 23.7
hereof, for limitation years which begin on
or after January 1, 1983, the lesser of:
(1) one hundred twenty-five percent
(125%) of Thirty Thousand Dollars
($30,000) plus any increase for
cost-of-living as determined from
time to time pursuant to
regulations issued by the Secretary
of the Treasury or his delegate
pursuant to Section 415(d) of the
Code; or
(2) thirty-five percent (35%) of the
participant's Total Remuneration
from the Company and all Related
Employers for such limitation year;
(iii) if the sum of the defined benefit plan fraction and
the defined contribution plan fraction, computed as
provided herein but as of the last day of the last
limitation year beginning before January 1, 1983,
exceeds one (1.0), then the numerator of the defined
contribution plan fraction shall be reduced, but not
below zero (0), so that such sum does not exceed one
(1.0). A like reduction also will be made as of the
1st day of the last limitation year beginning before
January 1, 1984 if, as of such date, the sum of the
defined benefit fraction and the defined contribution
fraction, computed as provided herein but as of such
day, exceeds one (1.0). Such reductions shall be made
in accordance with lawful regulations prescribed by
the Secretary of the Treasury or his delegate as
mandated by Section 235(g)(3) of the Tax Equity and
Fiscal Responsibility Act of 1982;
(iv) if an employee was a participant in the Trust and
Plan as of the end of the first day of the first
limitation year beginning after December 31, 1986, in
one or more defined contribution plans maintained by
a Participating Company which were in existence on
May 6, 1986, and the sum of the defined benefit plan
fraction and the defined contribution plan fraction,
computed as provided herein but as of the last day of
the last limitation year beginning before January 1,
1987 (and disregarding any changes
LIMITATIONS
24-6
<PAGE> 189
in the terms and conditions of the Trust and Plan
made after May 5, 1986), exceeds one (1.0), then the
numerator of the defined contribution plan fraction
shall be reduced, but not below zero (0), so that
such sum does not exceed one (1.0); and
(v) if the Company so elects, with respect to any
limitation year ending after December 31, 1982, the
denominator of the defined contribution plan fraction
for each participant for all limitation years ending
before January 1, 1983 shall equal the product of (A)
multiplied by (B), where:
(A) equals the sum of the lesser of the
following amounts for each limitation year
that the participant was an employee of the
Company or any Related Employer through the
limitation year ending in 1982:
(1) twenty-five percent (25%) of the
Total Remuneration he received from
the Company and all Related
Employers for such limitation year;
or
(2) Twenty-Five Thousand Dollars
($25,000) plus any increase for
cost-of-living as determined from
time to time pursuant to
regulations issued by the Secretary
of the Treasury or his delegate
pursuant to Section 415(d) of the
Code; and
(B) except as otherwise provided in Section 23.7
hereof, equals a fraction,
(1) the numerator of which is the
lesser of:
(I) Fifty-One Thousand Eight
Hundred Seventy-Five Dollars
($51,875); or
(II) thirty-five percent (35%) of
the Total Remuneration of the
Participant for the limitation
year ended in 1981; and
LIMITATIONS
24-7
<PAGE> 190
(2) the denominator of which is the
lesser of:
(I) Forty-One Thousand Five
Hundred Dollars ($41,500);
or
(II) twenty-five percent (25%)
of the Total Remuneration
of the participant for
such limitation year.
(d) The words "limitation year" shall have the same
meaning as that set forth in Section (11) of the
Adoption Agreement.
(e) The words "Projected Annual Benefit" shall mean,
with respect to each participant or former
participant, the annual amount which would be
payable to him under all defined benefit pension
plans of the Company and all Related Employers
(excluding amounts attributable to deductible
voluntary contributions and rollover contributions,
if any) if he were to continue to be employed until
his normal retirement date in the position, if any,
he held and at the rate of compensation, if any, he
was receiving on the last day of the limitation
year with respect to which such participant's
"Projected Annual Benefit" is being computed and if
he were to receive his pension as follows:
(i) if the participant is not married, on a life
annuity basis; or
(ii) if the participant is married, on a 100%
joint and survivor basis with his spouse.
24.2 LIMITATION ON BENEFITS. In any event, the maximum amount of
Participating Company contributions, pre-tax contributions and after tax
contributions which can be credited annually to the account or accounts of any
participant for any limitation year beginning on or after January 1, 1987 shall
be such amount which limits his annual additions for such year under this Trust
and Plan to an amount which, when combined with his annual additions, if any,
under all other pension, profit sharing and stock bonus plans
LIMITATIONS
24-8
<PAGE> 191
of the Company or any Related Employer which meet the requirements of Section
401(a) of the Internal Revenue Code, shall not exceed the least of the following
amounts:
(a) Twenty-five percent (25%) of the participant's
Total Remuneration from the Company and all Related
Employers during such plan year;
(b) Thirty Thousand Dollars ($30,000) or, if greater,
twenty-five percent (25%) of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code (plus
any increase for cost-of-living as determined from
time to time by the Secretary of Treasury of his
delegate); or
(c) The amount which will cause the sum of the
participant's defined benefit plan fraction and
defined contribution plan fraction to equal one
(1.0).
24.3 REDUCTION OF EXCESS BENEFITS. In the event a participant
who has excess annual additions is also a participant under another qualified
plan sponsored by a member of the Controlled Group, adjustment under Section 415
of the Code shall be made in the order set forth in Section (41) of the Adoption
Agreement.
24.4 SUSPENSE ACCOUNT. In the event that, after the application
of any other provisions of this Trust and Plan, there still remain Participating
Company contributions made pursuant to Articles V and VI hereof which, if
allocated to a participant, would be in excess of the limits on annual additions
set forth in Section 24.2 hereof and which arise as a result of the allocation
of forfeitures, a reasonable error in estimating a participant's compensation or
other limited facts and circumstances which the Commissioner of Internal Revenue
finds justify the availability of
LIMITATIONS
24-9
<PAGE> 192
the rules set forth in this Section 24.4, such excess amounts shall be used in
the next plan year and any succeeding plan years, as necessary, to reduce
Participating Company contributions which would otherwise be made for such
participant in such plan year or years. In the event such a participant
terminates employment at a time when excess amounts still remain on his behalf,
such excess amounts shall be used to reduce the Participating Company
contributions of all participants who are then eligible.
Until any excess amounts described above are used to reduce
Participating Company contributions, they shall be held in a suspense account.
Such suspense account shall not be subject to the periodic valuation procedure
described in Article XI hereof and will in no event be adjusted to take account
of the income and/or gains or losses of the investment funds of the Trust Fund.
Notwithstanding any other provisions of this Trust and Plan to the contrary (and
specifically Section 28.6 hereof), in the event this Trust and Plan is
terminated at a time when there are amounts credited to a suspense account
pursuant to this Section 24.4, such amounts shall be returned to the
contributing Participating Company. In the event that amounts representing
pre-tax contributions are returned to a Participating Company hereunder, the
Participating Company shall make payments to the participants on whose behalf
such contributions were made equal to the total of said refunded amounts.
LIMITATIONS
24-10
<PAGE> 193
ARTICLE XXV
-----------
ROLLOVERS AND TRANSFERS INVOLVING OTHER
---------------------------------------
QUALIFIED RETIREMENT PLANS
--------------------------
25.1 ROLLOVERS AND TRANSFERS FROM OTHER TAX QUALIFIED PLANS. If the
Company so elects, pursuant to Section (36) of the Adoption Agreement, and in
the event that:
(a) any employee of a Participating Company shall have been, prior
to his becoming an employee of a Participating Company, a
participant under another qualified retirement plan which met
the requirements of Section 401(a) of the Code; and
(b) either:
(i) the custodian or trustee of the assets held pursuant
to said plan on behalf of said employee; or
(ii) the custodian or trustee of the assets of an
individual retirement account established pursuant to
Section 408 of the Code to hold the assets
distributed to said employee from said plan; or
(iii) the employee who holds assets distributed to him
during the preceding sixty (60) days from such plan
or from an individual retirement account described in
paragraph (i) above;
shall agree to transfer said assets to the Trustee hereunder;
and
(c) the assets to be so transferred shall not be made available to
said employee in the course of the transfer except to the
extent permitted by paragraph (b)(iii) above; and
(d) the Administrator consents to the transfer; the Trustee
hereunder shall accept such transferred assets and hold and
administer them pursuant to the terms and provisions of this
Trust and Plan and this Article XXV. Upon the receipt of said
ROLLOVERS/TRANSFERS
25-1
<PAGE> 194
assets, the Trustee shall credit such amount to a rollover account established
for the employee on whose behalf the assets were so transferred.
25.2 TRANSFER TO ANOTHER QUALIFIED RETIREMENT PLAN. In the event
that:
(a) any participant hereunder shall terminate his
employment and subsequently become a participant
under the qualified retirement plan of another
employer, which plan satisfies the requirements of
Section 401 of the Code;
(b) said former participant shall have amounts credited
to an account held for him hereunder which have not
been distributed to the former participant and which
are distributable to the former participant;
(c) either:
(i) the custodian or trustee of the assets of
such other plan shall apply to the Trustee
hereunder for transfer to it of assets held
pursuant to this Trust and Plan representing
said former participant's accounts; or
(ii) such other plan shall provide for the
receipt of assets transferred to it from
other qualified retirement plans;
(d) the assets to be transferred shall not be made
available to said participant in the course of the
transfer except to the extent permitted by Section
402(a)(5) of the Code; and
(e) the Administrator shall consent to such transfer;
the Trustee hereunder agrees to transfer to the applying trustee an amount equal
to the participant's vested interest plus the balance in his personal accounts
on the date of transfer. Said transfer shall not be made until the Administrator
is assured to its full satisfaction that the participant's interest to be
transferred shall be fully vested and nonforfeitable under the terms of such
ROLLOVERS/TRANSFERS
25-2
<PAGE> 195
other plan, and that said interest shall neither be alienable, nor otherwise
subject to disposition or encumbrance by the participant.
ROLLOVERS/TRANSFERS
25-3
<PAGE> 196
ARTICLE XXVI
------------
PARTICIPATING COMPANIES
-----------------------
26.1 IDENTITY OF PARTICIPATING COMPANIES. The Company shall
specify the Participating Companies in Section (6) of the Adoption Agreement.
Thereafter, in accordance with Section (6) of the Adoption Agreement, a member
of the Controlled Group shall either automatically or with the approval of the
Board of the Company and the action of the Board of the member of the Controlled
Group (both of which actions may be ratification of prior actions of the Company
and Participating Company) become a Participating Company. Each such
Participating Company shall sign a document agreeing to be bound by the terms
and provisions of this Trust and Plan. In such latter event, such Participating
Company and its Adoption Date shall be added to the Adoption Agreement.
Participating Companies which are specified in Section (6) of the Adoption
Agreement and which cease to be Participating Companies shall also have their
cessation dates set forth.
26.2 AUTHORITY OF COMPANY. The Company is hereby fully empowered
to act on behalf of itself and the other Participating Companies as it may deem
appropriate in maintaining the Trust and Plan. Without limiting the generality
of the foregoing, such actions include obtaining and retaining tax qualified
status for such Trust and Plan and appointing attorneys-in-fact in pursuit
thereof. Furthermore, the adoption by the Company of any amendment to the Trust
and Plan or the termination thereof, will constitute
PARTICIPATING COMPANIES
26-1
<PAGE> 197
and represent, without any further action on the part of any Participating
Company, the approval, adoption, ratification or confirmation by each
Participating Company of any such amendment or termination. In addition, the
appointment of or removal by the Company of any member of the Retirement Savings
Committee, any Administrator, Trustee, Investment Manager or other person under
the Trust and Plan shall constitute and represent, without any further action on
the part of any Participating Company, the appointment or removal by each
Participating Company of such person.
PARTICIPATING COMPANIES
26-2
<PAGE> 198
ARTICLE XXVII
-------------
AMENDMENT AND TERMINATION
-------------------------
27.1 POWER TO AMEND AND TERMINATE PLAN. This Trust and Plan may
be modified, altered, amended or changed by Calfee, Halter & Griswold to conform
the Trust and Plan with changes in the Code, regulations, revenue rulings and
other guidelines published by the Internal Revenue Service, to correct the Trust
and Plan as approved by the Internal Revenue Service or to conform the Trust and
Plan with changes in regulations and other guidelines published by any other
agency of the federal government. Any such amendment shall be made with respect
to all Participating Companies at any time or from time to time without the
consent of any Participating Company. However, no rights of participants, former
participants or beneficiaries receiving benefits under this Trust and Plan and
no other vested rights under this Trust and Plan shall in any way be modified
except that such rights may be modified if such a modification is necessary to
establish or to continue the qualified status of this Trust and Plan under the
terms of Section 401 of the Code or its successor section or sections. This
Trust and Plan may be modified and amended retroactively, if necessary. After an
amendment is adopted, a copy shall be furnished to the Company and the Trustee.
The Company may change the choice of options in the Adoption
Agreement and add overriding language in the Adoption Agreement when such
language is necessary to satisfy Section 415 or
AMENDMENT AND TERMINATION
27-1
<PAGE> 199
Section 416 of the Code because of the required aggregation of multiple plans.
In addition, the Company may add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption will not
cause the Trust and Plan to be treated as individually designed. In the event
that the Company amends the Trust and Plan for any other reason, it will no
longer participate in this regional prototype plan and will be considered to
have an individually designed plan.
The Trust and Plan may not be amended nor may the choice of
options in the Adoption Agreement be changed in a manner which has the effect of
eliminating any optional method of distribution previously made available
pursuant to the terms of Article XVIII or Article XVIII-A, as the case may be,
or pursuant to the choice of options made in Section (28) of the Adoption
Agreement, as the case may be.
27.2 CHANGES IN VESTING PROVISIONS. If the Company changes the
choice of options in Section (20) of the Adoption Agreement relating to the
determination of a participant's Vested Percentage, each participant with at
least three (3) years of service with a member of the Controlled Group,
determined without regard to the provisions of Sections 3.1(f) or 3.2(d) hereof
regarding the exclusion of periods of service or years of vesting service, as
the case may be, may elect to have his Vested Percentage determined without
regard to such change. The period during which a participant may make such an
election shall begin on
AMENDMENT AND TERMINATION
27-2
<PAGE> 200
the date said change is adopted and shall end on the latest of the
following dates:
(a) The date which is sixty (60) days after the day
such change is adopted;
(b) The date which is sixty (60) days after the day
such change becomes effective; or
(c) The date which is sixty (60) days after the day the
Company or the Administrator notifies such
participant in writing of such change.
Notwithstanding any provision in this Trust and Plan to the contrary, a
participant's Vested Percentage immediately after a change in the choice of
options in the Adoption Agreement relating to the determination of a
participant's Vested Percentage shall not be less than such participant's Vested
Percentage immediately prior to such change.
27.3 TERMINATION OF PLAN. Upon termination of this Trust and
Plan with respect to any Participating Company, all assets of the Trust or of
each investment fund, if investment funds have been established pursuant to
Article IX hereof, held on behalf of participants whose accounts are invested in
the Trust or investment fund, after deduction therefrom of such Participating
Company's proportionate share of any accrued expenses and fees of the Trustee
and any expenses and fees relating to such termination incurred or to be
incurred by the Trustee, shall be allocated among the then existing accounts of
participants. Each such account shall be allocated that portion of such assets
of the Trust or of each investment fund, if investment funds have been
established pursuant to Article IX hereof, which bears the same relationship to
the
AMENDMENT AND TERMINATION
27-3
<PAGE> 201
total of the assets of the Trust or investment fund as the amount then standing
credited to such account bears to the total amounts then standing credited to
all accounts of participants whose accounts are invested under the Trust or
investment fund. All such amounts allocated to the accounts of participants
employed by such Participating Company at the time of termination of this Trust
and Plan with respect to such Participating Company shall be fully vested and
nonforfeitable. The amounts thus allocated shall be forthwith distributed to the
participant for whose benefit the accounts were established if he is living on
the date of termination or, if he shall have died before distribution, to his
death beneficiary.
Upon termination of this Trust and Plan with respect to any
Participating Company, all insurance policies shall be delivered, and all rights
therein transferred, to the participants for whose benefit they were purchased.
The Administrator may direct that any spendthrift provisions contained in such
insurance contracts shall be continued in effect or terminated.
27.4 PARTIAL TERMINATION OF PLAN OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS. Upon the partial termination of this Trust and Plan or upon
complete discontinuance of contributions to this Trust and Plan, if the Company
has executed a profit sharing plan Adoption Agreement, by any Participating
Company, all amounts allocated at the time or such partial termination or
complete discontinuance to the accounts of participants affected by such partial
termination or complete discontinuance shall be fully
AMENDMENT AND TERMINATION
27-4
<PAGE> 202
vested and nonforfeitable. However, after any such partial termination or
complete discontinuance of contributions the Trustee shall continue to
administer this Trust and Plan in the manner in which this Trust and Plan was
administered before any such partial termination and a participant shall only be
entitled to receive benefits upon the occurrence of an event which under the
terms of this Trust and Plan would entitle him to receive such benefits. For
purposes of this Section 27.4, no event shall be a "partial termination" unless:
(a) the Company has so designated such event in writing delivered to the
Trustee; or (b) such event has been finally and expressly determined to be a
partial termination within the meaning of Section 411(d) of the Code, as
amended, in an administrative or judicial proceeding to which both the Company
and the Commissioner of Internal Revenue or his delegate were parties.
AMENDMENT AND TERMINATION
27-5
<PAGE> 203
ARTICLE XXVIII
--------------
MISCELLANEOUS
-------------
28.1 SPECIAL RULE RELATING TO OWNER-EMPLOYEES. If this Trust and
Plan provides contributions or benefits for one or more owner-employees who
control both the business for which this Trust and Plan is established and one
or more other trades or businesses, this Trust and Plan and the plan established
for other trades or businesses must, when looked at as a single plan, satisfy
Sections 401(a) and (d) of the Code for the employees of this and all other
trades or businesses.
If this Trust and Plan provides contributions or benefits for
one or more owner-employees who control one or more other trades or businesses,
the employees of the other trades or businesses must be included in a plan which
satisfies Sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for owner-employees under this
Trust and Plan.
If an individual is covered as an owner-employee under the plans
of two or more trades or businesses which are not part of a Controlled Group and
the individual controls a trade or business, then the contributions or benefits
of the employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan of
the trade or business which is not controlled.
MISCELLANEOUS
28-1
<PAGE> 204
For purposes of the preceding paragraphs, an owner-employee, or
two or more owner-employees, will be considered to a control a trade or business
if the owner-employee, or two or more owner-employees together:
(a) own the entire interest in an unincorporated trade
or business; or
(b) in the case of a partnership, own more than 50
percent or either the capital interest or the
profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee, or
two or more owner-employees, shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership which such
owner-employee, or such two or more owner-employees, are considered to control
within the meaning of the preceding sentence.
28.2 INSURANCE COMPANY NOT A PARTY. No insurance company shall
be deemed to be a party to this Trust and Plan for any purpose, nor shall it be
responsible for the validity of this Trust and Plan. No such company shall be
required to look into the terms of this Trust and Plan or question any action of
the Trustee hereunder, nor be responsible to see that any action of the Trustee
is authorized by the terms of this Trust and Plan. Any such insurance company
shall be fully discharged from any and all liability for any amount paid to the
Trustee or paid in accordance with the direction of the Trustee, or for any
change made or action taken by such insurance company upon such direction, and
no insurance company shall be obligated to see the distribution or further
application of any moneys so paid by it. The certificate
MISCELLANEOUS
28-2
<PAGE> 205
of the Trustee may be received by any insurance company as conclusive evidence
of any of the matters mentioned in this Trust and Plan, and each insurance
company shall be fully protected in taking or permitting any action on the faith
thereof and shall incur no liability or responsibility for doing so.
28.3 BANKRUPTCY OR INSOLVENCY. In the event a Participating
Company shall at any time be judicially declared bankrupt or insolvent, or in
the event of its dissolution, merger or consolidation without any provisions
being made for the continuation of this Trust and Plan, the Trust and Plan
created hereunder shall terminate as to participants employed by such
Participating Company and the Trustee shall make distributions as provided in
Section 27.2 hereof.
28.4 MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS. In the
event the Trust and Plan shall merge or consolidate with, or transfer any of its
assets or liabilities to any other plan, each participant shall be entitled to
receive, if the Trust and Plan were terminated immediately thereafter, a benefit
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 Trust
and Plan had then terminated, in accordance with Section 414(1) of the Code and
Section 208 of ERISA and any lawful regulations issued thereunder.
28.5 NO EMPLOYMENT, LEGAL OR EQUITABLE RIGHT CREATED. Neither
anything contained herein, nor any contribution made hereunder, nor any other
acts done in pursuance of this Trust and
MISCELLANEOUS
28-3
<PAGE> 206
Plan, shall be construed as entitling any participant to be continued in the
employ of a member of the Controlled Group for any period of time nor as
obliging a member of the Controlled Group to keep any participant in its employ
for any period of time, nor shall any employee of a member of the Controlled
Group nor anyone else have any rights whatsoever, legal or equitable, against
the Participating Companies or the Trustee as a result of this Trust and Plan
except those expressly granted to him hereunder.
28.6 PROHIBITION ON REVERSIONS. No contribution or payment by a
Participating Company to the Trustee of this Trust and Plan, nor any income of
the Trust Fund, shall in any event revert or be credited to or be used for the
benefit of a Participating Company, and all such contributions, payments and
income shall be used solely and exclusively for the benefit of the participants
and their beneficiaries under this Trust and Plan, except that the Trustee shall
return to a Participating Company upon written request of a Participating
Company:
(a) any contributions made by the Participating Company
by a mistake of fact, provided such contributions are
returned to the Participating Company within one (1)
year after the date such contributions were made;
(b) any contributions made for plan years during which
this Trust and Plan does not initially qualify
under Section 401(a) of the Code, provided such
contributions are returned to the Participating
Company within one (1) year after the date of
denial of qualification but only if the application
for qualification is made by the time prescribed by
law for the filing of the Participating Company's
tax return for the taxable year in which the plan
is adopted or such later date as the Secretary of
the Treasury may prescribe; and
MISCELLANEOUS
28-4
<PAGE> 207
(c) any contributions, to the extent that their deduction
is disallowed under Section 404 of the Code, provided
that such disallowed contributions are returned to
the Participating Company within one (1) year after
the disallowance of the deduction.
Notwithstanding the foregoing, any contributions or part thereof described in
(a), (b) or (c) above that are made to the Trust and Plan by a Participating
Company pursuant to a participant's election under Section 5.1 hereof shall not
be returned to the Participating Company, but shall instead be returned to the
participant at whose election such contributions were made.
28.7 SPOUSAL CONSENT. Notwithstanding any provision of this
Trust and Plan to the contrary, the Administrator, where required by law or
where it deems appropriate, may require spousal consent for actions taken,
elections made, or the exercise of any rights by a married participant under
this Trust and Plan. Any consent by a spouse pursuant to this Section 28.7 shall
be made in accordance with Section 28.8 hereof.
28.8 PROCEDURES FOR SPOUSAL CONSENT. If any provision of this
Trust and Plan shall require the consent of the spouse of a participant, such
consent shall be in writing with the signature of the spouse notarized or
witnessed by the Administrator. Notwithstanding any provision hereof to the
contrary, the consent of the spouse shall not be necessary if it is established
to the satisfaction of the Administrator that the signature of the spouse cannot
be obtained either because the spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury may prescribe by lawful
regulations. Any consent given by
MISCELLANEOUS
28-5
<PAGE> 208
a spouse pursuant to this Section 28.8 shall be effective only with respect to
such spouse and shall not be effective with respect to any other spouse of such
participant.
28.9 GENDER. Whenever any pronoun is used herein, it shall be
construed to include the masculine pronoun, the feminine pronoun or the neuter
pronoun as shall be appropriate.
28.10 HEADINGS. The headings and subheadings used in the Trust
and Plan are for convenience only and shall not be deemed controlling in any
conflict involving interpretation of the Trust and Plan.
28.11 INDEMNIFICATION. The Participating Companies shall jointly
and severally indemnify, defend and hold harmless any officers, employees or
directors or former officers, employees or directors of the Participating
Companies for all acts taken or omitted in carrying out the responsibilities of
the Company, Participating Companies, Administrator, Retirement Savings
Committee or Trustee under the terms of this Trust and Plan or other
responsibilities imposed upon such individuals by ERISA or regulations, rulings
or pronouncements of any nature promulgated thereunder. This indemnification for
all acts or omissions is intentionally broad, but shall not provide
indemnification for embezzlement or diversion of funds for the benefit of any
such individuals, nor shall it provide indemnification for excise taxes imposed
under Section 4975 of the Code. The Participating Companies shall indemnify such
individuals for expenses of defending an action by a participant, beneficiary,
government
MISCELLANEOUS
28-6
<PAGE> 209
entity or other person, including all legal fees and other costs of such
defense. The Participating Companies will also reimburse such an individual for
any monetary recovery in a successful action against any such person in any
federal or state court or arbitration. In addition, if the claim is settled out
of court with the concurrence of the Company, the Participating Companies shall
indemnify such person for any monetary liability under said settlement.
Notwithstanding the foregoing provisions of this Section 28.11, no
indemnification shall be provided with respect to any person who is not an
individual officer, employee or director or former officer, employee or director
of a Participating Company nor with respect to any claim by the Company or a
Participating Company against such individual.
28.12 APPLICABLE LAW. This Trust and Plan shall be construed
under and in accordance with the law and laws of the State of Ohio and of the
United States of America.
28.13 COMPLIANCE WITH INTERNAL REVENUE CODE. If the Internal
Revenue Service determines that this Trust and Plan does not initially qualify
under Section 401(a) of the Code, all initial contributions made by any
Participating Company to this Trust and Plan shall be returned to such
Participating Company by the Trustee. This Trust and Plan may be modified and
amended retroactively, if necessary, to secure exemption under Section 401(a) of
the Code. If this Trust and Plan fails to attain or retain qualification under
Section 401(a) of the Code, it shall no longer
MISCELLANEOUS
28-7
<PAGE> 210
participate in this regional prototype plan and will be considered an
individually designed plan.
MISCELLANEOUS
28-8
<PAGE> 211
AMENDMENT NO. 1
TO
ADOPTION AGREEMENT
FOR
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
This Amendment No. 1 is executed as of the date set forth
below by RPM, Inc., an Ohio corporation (hereinafter called the "Company");
WITNESSETH:
WHEREAS, the Company adopted the RPM, Inc. Retirement Savings
Trust and Plan (hereinafter called the "Trust and Plan"), effective June 1,
1992, by completing and executing an Adoption Agreement ("hereinafter called the
Adoption Agreement") to the Calfee, Halter & Griswold Regional Prototype Plan;
and
WHEREAS, the Company reserved the right to amend the Trust and
Plan and the Adoption Agreement pursuant to Section 27.1 of the Trust and Plan;
and
WHEREAS, the Company desires to amend the Adoption Agreement
in order to provide that participants who, on May 31, 1993, have amounts
transferred to the Trust and Plan from their Transfer Accounts under the RPM,
Inc. Retirement Plan (hereinafter called the "Retirement Plan") shall receive
distribution of the amounts credited to their accounts in accordance with
Section 401(a)(11) of the Code and to adopt certain other special provisions not
available under the Adoption Agreement;
<PAGE> 212
NOW, THEREFORE, pursuant to Section 27.1 of the Plan, the
Company hereby amends the Adoption Agreement, effective May 31, 1993, as
follows:
1. Section (28) of the Adoption Agreement is hereby
amended to read as follows:
(28) FORMS OF BENEFIT. Distributions upon termination of
employment, retirement, disability and death will be made in accordance with:
/X/ Article XVIII of the Trust and Plan
(Non-Annuity Forms) with respect to
participants who did not have Transfer
Accounts under the Retirement Plan
transferred to the Trust and Plan on May 31,
1993
/X/ Article XVIII-A of the Trust and Plan
(Normal Form - Annuity) with respect to
participants who did have Transfer Accounts
under the Retirement Plan transferred to the
Trust and Plan on May 31, 1993
/ / Article XVIII-A of the Trust and Plan
(Normal Form - Lump Sum unless Annuity Form
elected)
(a) NON-ANNUITY FORMS OF BENEFIT. Distributions made
in accordance with Article XVIII or XVIII-A of the Trust and Plan in a
non-annuity form will be permitted in the following form(s):
/X/ lump sum form
/ / installment payments over a period of years
(not to exceed _____ years)
/ / installment payments over the maximum
permissible years under Section 401(a)(9) of
the Code
(b) ANNUITY FORMS OF BENEFIT. Distributions made in
accordance with Article XVIII-A of the Trust and Plan in an annuity form will be
permitted in the following form(s):
-2-
<PAGE> 213
/x/ life annuity form
/x/ spouse's annuity form
/x/ joint and survivor form
/x/ life-period certain form over a 5, 10 OR 15-
year period
/x/ full cash refund life annuity form
/x/ lump sum form
/ / installment payments over a period of years
(not to exceed ____ years)
N/A (c) TIMING OF INSTALLMENT PAYMENTS. Installment
payments, if permitted pursuant to (a) or (b) above, will be made on the
following basis:
/ / monthly
/ / quarterly
/ / semi-annually
/ / annually
2. Notwithstanding anything contained in the Adoption
Agreement or the Trust and Plan to the contrary, the lump sum amounts
transferred to the Trust and Plan from participants' Transfer Accounts under the
Retirement Plan are permitted to be transferred to the Trust and Plan under the
same terms and conditions as permitted under Article XXV of the Trust and Plan.
-3-
<PAGE> 214
IN WITNESS WHEREOF, the Company, by its duly authorized
officers, has caused this Amendment No. 1 to be executed this 25th day of
May, 1993.
RPM, INC.
(the "Company")
By: /s/ Richard E. Klar
_________________________
And: /s/ Paul A. Granzier
_________________________
-4-
<PAGE> 215
AMENDMENT NO. 2
TO
ADOPTION AGREEMENT
FOR
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
This Amendment No. 2 is executed as of the date set forth
below by RPM, Inc., an Ohio corporation (hereinafter called the
"Company");
WITNESSETH:
-----------
WHEREAS, the Company adopted the RPM, Inc. Retirement Savings
Trust and Plan (hereinafter called the "Trust and Plan"), effective June 1,
1992, by completing and executing an Adoption Agreement ("hereinafter called the
Adoption Agreement") to the Calfee, Halter & Griswold Regional Prototype Plan;
and
WHEREAS, the Company reserved the right to amend the Trust and
Plan and the Adoption Agreement pursuant to Section 27.1 of the Trust and Plan;
and
WHEREAS, the Company desires to amend the Adoption Agreement
in order to modify the eligibility requirements contained therein and to conform
the definition of compensation with administrative practice; and
NOW, THEREFORE, pursuant to Section 27.1 of the Plan, the
Company hereby amends the Adoption Agreement, effective as hereinafter provided,
as follows:
1. Effective September 1, 1993, Sections (13), (14) and (15)
of the Adoption Agreement are hereby amended to read as follows:
<PAGE> 216
(13) SERVICE. An employee's service, as defined in Article III
of the Trust and Plan, will be determined as follows:
(a) ELIGIBILITY. An employee's eligibility to par-
ticipate in the Trust and Plan is calculated
pursuant to the following method:
/x/ hours method, with respect to part-time
employees
/x/ elapsed time method, with respect to
full-time employees
N/A (b) VESTING. An employee's vesting service under the
Trust and Plan is calculated pursuant to the
following method:
Years Ending Before ____________ (Adoption Date or
other date)
/ / elapsed time method
/ / hours method
Years Ending After ______________ (Adoption Date or
other date)
/ / elapsed time method
/ / hours method
N/A (c) CREDITING OF SERVICE BASED ON HOURS WORKED. The
following equivalency will be used to determine
service to be credited to participants based on
working time method:
/ / 1 hour for each hour of service as described
in Section 3.2(a) of the Trust and Plan
/ / 1.15 hours for each hour of service as
defined in Section 3.2(a) actually worked by
employee
/ / 1.33 hours for each hour of service as
defined in Section 3.2(a) which was a
regular time hour actually worked by the
employee
/ / 10 hours for each day employee has at least
1 hour of service as defined in Section 3.2
of the Trust and Plan
-2-
<PAGE> 217
/ / 45 hours for each week employee has at least
1 hour of service as defined in Section
3.2(a) of the Trust and Plan
/ / 95 hours for each semi-monthly payroll
period during which employee has at least 1
hour of service as defined in Section 3.2(a)
of the Trust and Plan
/ / 190 hours for each month employee has at
least 1 hour of service as defined in
Section 3.2(a) of the Trust and Plan
(14) PARTICIPATION REQUIREMENTS. To become a
participant, a Covered Employee must satisfy the following requirements:
N/A (a) SERVICE REQUIREMENT. To become eligible to
participate in the Trust and Plan, a Covered
Employee:
/ / need not complete any waiting period
/ / must complete _______ years(s) of service
(may not exceed 2(1))
/ / must complete _______ consecutive month(s)
of service without regard to the number of
hours of service completed (may not exceed
24*)
(b) SPECIAL 401(K) SERVICE REQUIREMENT. To become
eligible to make 401(k) contributions under the
Trust and Plan, a Covered Employee:
/ / need not complete any waiting period
/x/ must complete 1 year of service, if a part-
time employee
/x/ must complete 6 consecutive month(s) of
service (without regard to the number of
hours of service completed), if a full-time
employee
(c) AGE REQUIREMENT. To become eligible to participate
in the Trust and Plan a Covered Employee:
/ / need not attain any minimum age
- --------
(1)A 2-year or 24-month service requirement may be elected
only in the event that the Trust and Plan provides for full and immediate
vesting.
-3-
<PAGE> 218
/x/ must be at least 21 years of age (not more
than 21)
(15) ENTRY DATE. An eligible Covered Employee commences
participation in the Trust and Plan on:
/x/ 1st day of the month payroll period
/ / 1st day of the plan year
/x/ earlier of the JUNE 1 or DECEMBER 1 (first
day of the first month or first day of the
seventh month), if he is a part-time
employee
/ / 1st day of each calendar quarter
coinciding with or next following the date such Covered Employee meets the
eligibility requirements.
2. Effective September 1, 1993, for purposes of Sections (13)
and (14) above, the terms "full-time employee" and "part-time employee" shall
have the following meanings:
(a) The term "full-time employee" shall mean any employee
of a Participating Company or an Affiliate whose
customary employment is at a rate of one thousand
(1,000) or more hours in any plan year.
(b) The term "part-time employee" shall mean any employee
of a Participating Company or an Affiliate whose
customary employment is at a rate of fewer than one
thousand (1,000) hours in any plan year.
3. Effective June 1, 1992, Section (16) of the Adoption
Agreement is hereby amended to read as follows:
(16) COMPENSATION.
(a) BASIC DEFINITION. A participant's compensation
shall be determined on the basis of the following:
/ / Section 415 compensation as described in
Section 2.11(a)(i) of the Trust and Plan
-4-
<PAGE> 219
/ / Modified Section 415 compensation as
described in Section 2.11(a)(ii) of the
Trust and Plan
/ / Modified Section 3121 compensation as
described in Section 2.11(a)(iii) of the
Trust and Plan
/ / Modified Section 3401 compensation as
described in Section 2.11(a)(iv) of the
Trust and Plan
/x/ W-2 earnings as described in Section
2.11(a)(v) of the Trust and Plan for all
plan years
/ / W-2 earnings as described in Section
2.11(a)(v) of the Trust and Plan for plan
years commencing prior to May 10, 1990 and
the definition selected above for all
subsequent plan years
(b) Safe Harbor Adjustments To Compensation
/x/ Compensation shall be increased for salary
reduction amounts under 401(k), 125, 403(b)
and similar plans as described in Section
2.11(b)(i) of the Trust and Plan
/x/ Compensation shall be reduced by any extra
benefits as described in Section 2.11(b)(ii)
of the Trust and Plan
(c) Other Exclusions From Compensation1
/ / pre-entry date compensation
/ / commissions
/ / bonuses (whether discretionary or
non-discretionary)
/ / commissions, overtime and bonuses (whether
discretionary or non-discretionary)
- --------
(1)No exclusions from compensation (other than pre-entry date
compensation) may be elected if Participating Company contributions are
allocated in accordance with the integration method described in Section
(18)(a).
-5-
<PAGE> 220
/ / other
/x/ none of the above
4. Effective June 1, 1992, Section 27.1 of the Plan document
is hereby amended by the deletion of said Section 27.1 and the substitution in
lieu thereof of a new Section 27.1 to read as follows:
27.1 This Trust and Plan may be modified, altered, amended,
changed or terminated by the Company by action of its Board of
Directors and/or by writing executed by the Company by its proper
officer or officers, but no rights of participants, former participants
or beneficiaries receiving benefits under this Trust and Plan and no
other vested rights under this Trust and Plan shall in any way be
modified except that such rights may be modified if such a modification
is necessary to establish or to continue the qualified status of this
Trust and Plan under the terms of Section 401 of the Code or its
successor section or sections. Any such amendment shall be made with
respect to all Participating Companies at any time or from time to time
without the consent of any Participating Company. This Trust and Plan
may be modified and amended retroactively, if necessary, to secure
exemption effective on June 1, 1992 under Section 401 of the Code. No
amendment shall be binding on the Trustee until the receipt of such
amendment by the Trustee."
5. Effective June 1, 1993, attachments A, B and C to
the Adoption Agreement are hereby amended as attached hereto.
-6-
<PAGE> 221
IN WITNESS WHEREOF, the Company, by its duly authorized
officers, has caused this Amendment No. 2 to be executed this 27th day of
July, 1995.
RPM, INC.
(the "Company")
By: /s/ Thomas C. Sullivan
_________________________
And: /s/ Paul A. Granzier
_________________________
-7-
<PAGE> 222
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT A TO ADOPTION AGREEMENT
----------------------------------
CONTROLLED GROUP
----------------
AGR Company
Alox Corporation
Alox International Sales Corporation
American Emulsions Co., Inc.
American Protective Coatings Corporation
Bondex International, Inc.
Bondo Canada Limited
Bondo International (Canada) Ltd.
Bradshaw Praeger & Co.
Briner Paint Mfg. Co.
BSP Systems, Inc.
Carboline Company
Carboline Dubai Corporation
Carboline International Corporation
Carboline World Wide Corp.
Carboline/Ferro Powder Coatings Company
Carboline Marine, Ltd.
Chemical Specialties Manufacturing Corporation
Chemical Coatings, Inc.
Consolidated Coatings Corporation
Consolidated Intercontinental Corporation
Consolidated Protection Coatings Limited
Craft House Corporation
Day-Glo Color Corp.
-8-
<PAGE> 223
Design/Craft Fabric Corporation
Design/Craft West, Inc.
Dynatron/Bondo Corporation
Euchem, Inc.
First Colonial Insurance Company
Floquil-Polly S Color Corporation
Fopeco, Inc.
H. Behlen & Bro., Inc.
Haartz-Mason, Inc.
Kop-Coat, Inc.
L.D. Wracm, Inc.
Label Systems Corporation
Lubraspin Corporation
Mameco International, Inc.
Mantrose-Haeuser Co., Inc.
Map II, Inc.
Martin Mathys N.V.
Monile France S.A.
Mohawk Finishing Products, Inc.
Paramount Technical Products, Inc.
PCI Industries, Inc.
Radiant Color N.V.
Republic Powdered Metals, Inc.
Richard E. Thibaut, Inc.
RPM/Belgium N.V.
RPM/Europe B.V.
RPM Finance N.V.
-9-
<PAGE> 224
RPM/France S.A.
RPM, Inc.
RPM/Luxembourg S.A.
RPM/Netherlands B.V.
RPM of Illinois, Inc.
RPM of Mass., Inc.
RPM of North Carolina, Inc.
RPM World Trade, Inc.
RPM World Travel, Inc.
RPOW (France) S.A.
Select Dye & Chemical, Inc.
Sentry Polymers, Inc.
Stonhard, Inc.
Stonhard Canada Ltd.
Stonhard Europe
Stonard Latin America
Talsol Corporation
The Testor Corporation
Testor Australia Pty, Ltd.
Westfield Coatings Corporation
Westgate Advertising, Inc.
William Zinnser & Co., Incorporated
Wisconsin Protective Coatings Corp.
-10-
<PAGE> 225
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT B TO ADOPTION AGREEMENT
----------------------------------
PARTICIPATING COMPANIES
-----------------------
<TABLE>
<CAPTION>
Adoption Cessation
Name Date Date
- ---- ---- ----
<S> <C> <C>
AGR Company June 1, 1992
Alox Corporation June 1, 1992
American Emulsions Co., Inc. June 1, 1992
Bondex International, Inc. June 1, 1992
Bradshaw Praeger & Co. June 1, 1992
Briner Paint Mfg. Co., Inc. June 1, 1992
Carboline Company June 1, 1992
Chemical Specialties Manufacturing
Corporation June 1, 1992
Chemical Coatings, Inc. June 1, 1992
Consolidated Coatings Corporation June 1, 1992
Craft House Corporation June 1, 1992
Day-Glo Color Corp. June 1, 1992
Design/Craft Fabric Corporation June 1, 1992
Floquil-Polly S Color Corp. June 1, 1992
Haartz-Mason, Inc. June 1, 1992
Mameco International, Inc. June 1, 1992
Mohawk Finishing Products, Inc. June 1, 1992
Paramount Technical Products, Inc. June 1, 1992
PCI Industries, Inc. June 1, 1992
Republic Powdered Metals, Inc. June 1, 1992
Richard E. Thibaut, Inc. June 1, 1992
RPM, Inc. June 1, 1992
</TABLE>
-11-
<PAGE> 226
<TABLE>
<CAPTION>
Adoption Cessation
Name Date Date
- ---- ---- ----
<S> <C> <C>
RPM World Travel, Inc. June 1, 1992
Talsol Corporation June 1, 1992
The Testor Corporation June 1, 1992
Westfield Coatings Corporation June 1, 1992
William Zinnser & Co., Inc. June 1, 1992
Wisconsin Protective Coatings Corp. June 1, 1992
Sentry Polymers, Inc. September 1, 1992
Kop-Coat, Inc. December 1, 1992
Mantrose-Haeuser Co., Inc. January 1, 1993
Dynatron/Bondo Corporation October 1, 1993
Weyman Fabrics (a division
of Design/Craft Fabric Corporation) December 1, 1993
Empire Fabrics (a division
of Design/Craft Fabric Corporation) December 1, 1993
</TABLE>
-12-
<PAGE> 227
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
ATTACHMENT C TO ADOPTION AGREEMENT
----------------------------------
PARTICIPATING COMPANIES COVERING HOURLY EMPLOYEES
-------------------------------------------------
AGR Company
Bondex International, Inc.
Carboline Company
Consolidated Coatings Corporation
Craft House Corporation
Day-Glo Color Corp.
Floquil-Polly S Color Corp.
Kop-Coat, Inc.
Mohawk Finishing Products, Inc.
Paramount Technical Products, Inc.
Republic Powdered Metals, Inc.
The Testor Corporation
Wisconsin Protective Coatings Corp.
Sentry Polymers, Inc. (9/1/92)
Mantrose-Haeuser Co., Inc. (1/1/93)
Westfield Coatings Corporation (6/1/93)
Dynatron/Bondo Corporation (10/1/93)
-13-
<PAGE> 228
AMENDMENT NO. 3
TO
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
This Amendment No. 3 is executed as of the date set forth
below by RPM, Inc., an Ohio corporation (hereinafter called the "Company");
WITNESSETH:
-----------
WHEREAS, the Company adopted the RPM, Inc. Retirement Savings
Trust and Plan (hereinafter called the "Trust and Plan"), effective June 1,
1992, by completing and executing an Adoption Agreement (hereinafter called the
"Adoption Agreement") to the Calfee, Halter & Griswold Regional Prototype Plan;
and
WHEREAS, the Company reserved the right to amend the Adoption
Agreement pursuant to Section 27.1 of the Trust and Plan; and
WHEREAS, the Company previously amended the Adoption
Agreement, removing it from prototype status; and
WHEREAS, the Company desires to amend the Adoption Agreement
in order to modify the withdrawal provisions contained therein and to amend the
provisions of the Trust and Plan relating to the method of distributions
pursuant to qualified domestic relations orders and the amendment provisions
contained therein;
NOW, THEREFORE, pursuant to Section 27.1 of the Trust and
Plan, the Company hereby amends the Adoption Agreement and the Trust and Plan,
effective as hereinafter provided, as follows:
<PAGE> 229
1. Effective May 31, 1993, Section (34)(e) is hereby amended
by the addition thereto of the following paragraph:
"Notwithstanding the provisions of this Section (34)(e),
amounts transferred to rollover accounts hereunder from
participants' Transfers Accounts in the RPM, Inc. Retirement Plan may
not be withdrawn."
2. Effective April 1, 1995, Article XXII of the Trust and Plan
is hereby amended by the addition thereto of a new Section 22.10 to read as
follows:
"22.10 IMMEDIATE LUMP SUM PAYMENTS PURSUANT TO QUALIFIED
DOMESTIC RELATIONS ORDERS. Notwithstanding anything contained in the
Trust and Plan to the contrary, an immediate lump sum distribution
shall be made to an alternate payee if such distribution is authorized
by a qualified domestic relations order."
3. Effective May 31, 1993, Section 27.1 of the Trust and Plan
is hereby amended by the deletion of said Section 27.1 and the substitution in
lieu thereof of the following:
"In the event the Company chooses to consider this Trust and
Plan as individually designed, the Trust and Plan may be modified,
altered, amended, changed or terminated by the Company by action of its
Board of Directors and/or by a writing executed by the Company by its
proper officer or officers; provided, however:
(a) No amendment shall deprive any participant, retired
participant, former participant or any beneficiary of
any vested rights to which he is entitled under this
Trust and Plan;
2
<PAGE> 230
(b) No amendment shall provide for the use of any assets
held under the Trust and Plan for any purpose other
than for the benefit of the participants and their
beneficiaries to an extent greater than is provided
in Sections 27.3 and 28.6; and
(c) No amendment shall cause any funds contributed to
this Trust and Plan or any assets held under the
Trust and Plan to revert to or be made available to
the Company to an extent greater than is provided in
Sections 27.3 and 28.6."
IN WITNESS WHEREOF, the Company, by its duly authorized
officers, has caused this Amendment No. 3 to be executed this 1st day of
May, 1995.
RPM, INC.
("Company")
By: /s/ Richard E. Klar
_________________________
And: /s/ Paul A. Granzier
_________________________
3
<PAGE> 231
AMENDMENT NO. 4
TO
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
This Amendment No. 4 is executed as of the date set forth
below by RPM, Inc., an Ohio corporation (hereinafter called the "Company");
WITNESSETH:
-----------
WHEREAS, the Company adopted the RPM, Inc. Retirement Savings
Trust and Plan (hereinafter called the "Trust and Plan"), effective June 1,
1992, by completing and executing an Adoption Agreement (hereinafter called the
"Adoption Agreement") to the Calfee, Halter & Griswold Regional Prototype Plan;
and
WHEREAS, the Company reserved the right to amend the
Trust and Plan pursuant to Section 27.1 of thereof; and
WHEREAS, the Company desires to amend the Trust and Plan to
secure a favorable determination letter from the Internal Revenue Service;
NOW, THEREFORE, pursuant to Section 27.1 of the Trust and
Plan, the Company hereby amends Section 18.3A of the Trust and Plan, effective
as of June 1, 1992, as follows:
"18.3A ANNUITY METHODS OF DISTRIBUTION. In lieu of receiving a
single lump sum payment pursuant to Section 18.2A, or if the normal
method of distribution selected in Section (28) of the Adoption
Agreement is the Annuity Method, a participant, former participant or
beneficiary of a deceased participant may elect to receive the amounts
distributable to
<PAGE> 232
him pursuant to Articles XV, XVI and XVII in the form of an annuity
contract, payable immediately, if so elected by the participant,
purchased for him from an insurance company by the Trustee pursuant to
Section 18.11A hereof. Unless another form of annuity contract is
selected under Section 18.4A, any such annuity contract shall normally
provide by its terms for benefits to be paid:
(a) to a married participant or a married former
participant in the Spouse's Annuity Form described
in Section 18.4A; and
(b) to an unmarried participant, an unmarried former
participant or a beneficiary of a participant in
the Full Cash Refund Life Annuity Form described in
Section 18.4A."
IN WITNESS WHEREOF, the Company, by its duly authorized
officers, has caused this Amendment No. 4 to be executed this 27th day of
July, 1995.
RPM, INC.
("Company")
By: /s/ Thomas C. Sullivan
_________________________
And: /s/ Paul A. Granzier
_________________________
2
<PAGE> 233
AMENDMENT NO. 5
TO
RPM, INC. RETIREMENT SAVINGS TRUST AND PLAN
This Amendment No. 5 is executed as of the date set forth
below by RPM, Inc., an Ohio corporation (hereinafter called the "Company");
WITNESSETH:
-----------
WHEREAS, the Company adopted the RPM, Inc. Retirement Savings
Trust and Plan (hereinafter called the "Trust and Plan"), effective June 1,
1992, by completing and executing an Adoption Agreement (hereinafter called the
"Adoption Agreement") to the Calfee, Halter & Griswold Regional Prototype Plan;
and
WHEREAS, the Company previously amended the Adoption
Agreement, removing it from prototype status; and
WHEREAS, the Company reserved the right to amend the
Trust and Plan pursuant to Section 27.1 of thereof;
NOW, THEREFORE, pursuant to Section 27.1 of the Trust and
Plan, the Company hereby amends the Trust and Plan and the Adoption Agreement,
effective as hereinafter provided, as follows:
1. Effective June 1, 1996, Section 12 of the Adoption
Agreement is hereby amended by the deletion of said Section and the substitution
in lieu thereof of the following:
"(12) COVERED EMPLOYEES. Covered Employees under the Trust and
Plan are all employees of Participating Companies, excluding the following:
<PAGE> 234
/X/ aliens whose expected employment within the
United States will be less than 2 YEARS .
/X/ employees covered by a collective bargaining
agreement to which a Participating Company
is a party, unless such collective
bargaining agreement provides for
participation in the Trust and Plan
/ / salaried employees
/ / hourly-paid employees
/X/ leased employees
/ / commissioned salesmen
/ / ______________________ job categories at the
______________________ location
/ / other (specify):
/ / none
The foregoing exclusions may only be elected to the extent that any
such election will not cause the Trust and Plan to fail to satisfy the
requirements set forth in Sections 401(a)(26) and 410(b) of the Code."
2. Effective September 1, 1995, Sections 34 (f) and (g) of the
Adoption Agreement are hereby amended by the deletion of said Sections and the
substitution in lieu thereof of the following:
"(f) WITHDRAWALS FROM AFTER TAX ACCOUNTS. Withdrawals
from after tax accounts:
/X/ are permitted
/ / are not permitted
2
<PAGE> 235
(g) WITHDRAWALS FROM PRE-87 IRA ACCOUNTS. Withdrawals from
Pre-87 IRA accounts:
/X/ are permitted
/ / are permitted after age
/ / are permitted for hardship
/ / are not permitted"
3. Effective January 1, 1996, Attachment A to the Adoption
Agreement is hereby amended by the addition thereto of the following affiliates:
Dryvit Systems, Inc.
Star Finishing Products, Inc.
4. Effective January 1, 1996, Attachment B to the Adoption
Agreement is hereby amended by the addition thereto of the
following affiliates and Adoption Dates:
<TABLE>
<CAPTION>
Adoption
NAME DATE
---- ----
<S> <C>
Dryvit Systems, Inc. January 1, 1996
Star Finishing Products, Inc. January 1, 1996
</TABLE>
5. Effective June 1, 1996, Attachment C to the Adoption
Agreement is hereby deleted.
6. Effective June 1, 1992, Section 12.1 of the Trust and Plan
is hereby amended by the deletion of the first sentence of said Section and the
substitution in lieu thereof of the following:
"If permitted under Section (32) of the Adoption Agreement, a
participant or former participant, if such former participant is a
party in interest, may apply to the Administrator for a loan from the
Trust and Plan."
3
<PAGE> 236
7. Effective June 1, 1992, Section 12.4 of the Trust and Plan
is hereby amended by the deletion of said Section and the substitution in lieu
thereof of the following:
"12.4 PARTY IN INTEREST DEFINED. For purposes of this Article,
the words "party in interest" shall mean any person who is a party in
interest within the meaning of Section 3(14) of ERISA. For purposes of
determining whether a person is a party in interest under the loan
provisions contained in this Article, the words "party in interest"
generally refer to a former employee who is either an officer or
director of the Company or an affiliate."
IN WITNESS WHEREOF, the Company, by its duly authorized
officers, has caused this Amendment No. 5 to be executed this 29th day of
December, 1995.
RPM, INC.
("Company")
By: /s/ Thomas C. Sullivan
_________________________
And: /s/ Paul A. Granzier
_________________________
4
<PAGE> 1
Exhibit 10.8
RPM, INC.
BENEFIT RESTORATION PLAN
------------------------
Effective January 1, 1991
<PAGE> 2
TABLE OF CONTENTS
-----------------
Preamble
Section I Definitions
Section II Supplemental Restoration Benefits
Section III Payment of Benefits
Section IV Miscellaneous
Section V Effective Date
<PAGE> 3
RPM, INC.
BENEFIT RESTORATION PLAN
PREAMBLE
--------
The principal objective of this Benefit Restoration Plan is to
provide benefits to certain employees participating in the Basic Retirement Plan
(as defined in Section I) of the Company, whose benefits from the plan are
limited by the application of Internal Revenue Code Sections 415 and 401(a)(17).
Eligibility for participation in the Plan shall be limited to executives
selected by the Board of Directors. This Plan will be effective January 1, 1991
and will be effective as to each Participant on the date he or she is designated
as such hereunder. The Company intends and desires by the adoption of this
Benefit Restoration Plan to recognize the value to the Company of the past and
present services of such employees and to encourage their continued services to
the Company by making more adequate provisions for their retirement security.
(i)
<PAGE> 4
SECTION 1
---------
DEFINITIONS
-----------
1.1 ADMINISTRATOR means the Company or any person or
entity to which the authority to administer this Plan
and the Basic Retirement Plan has been delegated by
the Company.
1.2 AFFILIATE means any corporation, partnership or other
organization which, during any period of employment
of a Participant, was at least 50% controlled by the
Company or an affiliate of the Company.
1.3 BASIC RETIREMENT PLAN means the RPM, Inc. Retirement
Plan as originally effective on June 1, 1989 and as
such plan may be amended from time to time
thereafter.
1.4 BASIC DEATH BENEFIT means the amount of death benefit
payable from the Basic Retirement Plan to a
Participant's Surviving Spouse or Beneficiary, as
appropriate, determined by taking into account the
limitations contained in the Plan incorporating
Sections 415 and 401(a)(17) of the Code.
1-1
<PAGE> 5
1.5 BASIC RETIREMENT BENEFIT means the amount of
retirement benefit payable from the Basic Retirement
Plan to a Participant determined by taking into
account the limitations contained in the Plan
incorporating Sections 415 and 401(a)(17) of the
Code.
1.6 BENEFICIARY means the beneficiary or beneficiaries
designated by the Participant to receive the Basic
Death Benefit under the Basic Retirement Plan.
1.7 CODE means the Internal Revenue Code of 1986, as
amended.
1.8 COMPANY means RPM, Inc., an Ohio corporation.
1.9 PARTICIPANT means an employee of the Company or an
Affiliate designated as a participant by the Board of
Directors. An employee shall become a Participant in
the Plan as of the date he or she is individually
selected by, and specifically named in the resolution
of the Board of Directors for inclusion in the Plan.
The Board of Directors may terminate the
participation of any Participant at any time. A
Participant shall automatically cease
1-2
<PAGE> 6
to be a Participant on his date of termination of
employment.
1.10 PLAN means this RPM, Inc. Benefit Restoration Plan.
1.11 SUPPLEMENTAL DEATH RESTORATION BENEFIT means a death
benefit payable under this Plan to a Participant's
Surviving Spouse or Beneficiary, as appropriate,
equal to the Basic Death Benefit which would have
been payable to such Surviving Spouse or Beneficiary
under the Basic Retirement Plan without taking into
account the limitations contained in the Plan
incorporating Sections 415 and 401(a)(17) of the
Code, minus the Basic Death Benefit.
1.12 SUPPLEMENTAL RETIREMENT RESTORATION BENEFIT means a
retirement benefit payable under this Plan to a
Participant equal to the Basic Retirement Benefit
which would have been payable to such Participant
under the Basic Retirement Plan without taking into
account the limitations contained in the Plan
incorporating Sections 415 and 401(a)(17) of the
Code, minus the Basic Retirement Benefit.
1.13 SURVIVING SPOUSE means an individual who is a
surviving spouse as described in the Basic
Retirement Plan.
1-3
<PAGE> 7
1.14 The masculine gender, where appearing in the Plan,
will be deemed to include the feminine gender, and
the singular may include the plural, unless the
context clearly indicates the contrary.
1.15 Words and phrases used herein with initial capital
letters or quotation marks which are defined in the
Basic Retirement Plan are used herein as so defined.
1-4
<PAGE> 8
SECTION II
----------
SUPPLEMENTAL RESTORATION BENEFITS
---------------------------------
2.1 Subject to the other terms and conditions of this
Plan, the Company shall pay:
(a) a Supplemental Retirement Restoration
Benefit to each Participant who is eligible
under this Plan; and
(b) a Supplemental Death Restoration Benefit to
the Surviving Spouse or Beneficiary, as
applicable, of such a Participant.
2-1
<PAGE> 9
SECTION III
-----------
PAYMENT OF BENEFITS
-------------------
3.1 UPON RETIREMENT
(a) The Supplemental Retirement Restoration
Benefit shall be payable to a Participant
within a reasonable time after the
Participant's retirement under the Basic
Retirement Plan on or after his completion
of five (5) years of vesting service and his
attainment of age fifty-five (55).
(b) Except as set forth below in Section 3.2, no
benefit shall be payable to a Participant
from this Plan unless a Participant has
completed at least five (5) years of vesting
service and has attained at least age
fifty-five (55). In the event that a
Participant has a termination of employment
before the date on which he has completed
five (5) years of vesting service and has
attained age fifty-five (55), the retirement
benefit payable under this Section 3.1 shall
be forfeited and the Participant shall not
be entitled to receive payment of any
benefit whatsoever under this Plan.
3-1
<PAGE> 10
3.2 UPON DEATH
(a) The Supplemental Death Restoration Benefit
shall be payable to the Participant's
Surviving Spouse within a reasonable time
after the death of a Participant who had not
yet retired under the Basic Retirement Plan,
or who had terminated employment on or after
his completion of five (5) years of vesting
service and his attainment of age fifty-five
(55) and been eligible for a future
retirement benefit under the Basic
Retirement Plan, but died prior to the
payment or commencement of payment thereof.
(b) The Supplemental Death Restoration Benefit
shall be payable to the Participant's
Beneficiary within a reasonable time after
the death of a Participant who had completed
twenty (20) years of vesting service and had
attained age sixty (60) but who had not yet
retired under the Basic Retirement Plan or
who had terminated employment on or after
his completion of twenty (20) years of
vesting service and attainment of age sixty
(60) and been eligible for a future
retirement benefit under the Basic
Retirement Plan, but died
3-2
<PAGE> 11
prior to the payment or commencement of
payment thereof.
(c) Except as provided in paragraph (b) above,
if a Participant has no Surviving Spouse at
the time of his death, no Supplemental Death
Restoration Benefit will be payable on his
behalf.
3.3 LUMP SUM PAYMENT
The Supplemental Retirement Restoration Benefit or
the Supplemental Death Restoration Benefit shall be
payable in the form of a lump sum using the actuarial
assumptions set forth in the Basic Retirement Plan.
3-3
<PAGE> 12
SECTION IV
----------
MISCELLANEOUS
-------------
4.1 ADMINISTRATION. The operation of this Plan, in
respect of the Participants and their Surviving
Spouses and Beneficiaries, shall be administered by
the Administrator. The Administrator shall have the
same type and extent of authority to administer this
Plan and to make, amend and interpret all appropriate
rules and regulations for the administration of this
Plan as said Administrator has in respect of the
Basic Retirement Plan. Any determination of the
Administrator in respect of this Plan shall be final,
conclusive and binding on the Company, any
Participant, and his Surviving Spouse and any
Beneficiaries. Except as set forth herein, benefits
payable under this Plan shall be processed pursuant
to and shall be subject to the rules set forth in the
Basic Retirement Plan with respect to administrative
procedures including but not limited to the
administrative appeal procedures in the event a
benefit is denied hereunder.
4.2 TERMINATION. This Plan may be terminated at any
time by the Board of Directors of the Company, in
which event the rights of Participants to their
4-1
<PAGE> 13
accrued Supplemental Restoration Benefits established
under this Plan shall become nonforfeitable. Unless
the Board of Directors of the Company takes specific
action to continue this Plan, the Plan shall
automatically terminate on the same date that benefit
accruals cease under the Basic Retirement Plan. In
the event of termination of this Plan, the Company
shall remain obligated to pay benefits to those
employees who are Participants on the date of such
termination to the extent and on the same date as
such benefits would otherwise be payable under this
Plan as if it had not been terminated; provided,
however, that solely for the purpose of determining
the amount of the benefit payable to such
Participants upon actual retirement, such
Participants shall be deemed to have retired on the
date of such termination of this Plan.
Notwithstanding the above, the Company, in its sole
discretion, may, in lieu of making a future benefit
payment, make payment to any Participant on any date
before the payment date otherwise provided for under
this Plan.
4.3 NONASSIGNABILITY. The right to receive any benefit
under this Plan may not be anticipated, alienated,
sold, transferred, assigned, pledged, encumbered or
4-2
<PAGE> 14
subjected to any charge or legal process, and if any
attempt is made to do so, or a person eligible for
any benefit hereunder becomes bankrupt, the interest
hereunder of the person affected may be terminated by
the Company, and the Company may cause the same to be
held or applied for the benefit of such person or his
or her dependents in such manner as it deems proper.
4.4 RIGHTS. Nothing in this Plan shall be construed as
giving any employee the right to be retained in the
employ of the Company. The Company expressly reserves
the right to dismiss any employee at any time without
regard to the effect which such dismissal might have
upon him under the Plan. This Plan is not, and is not
to be construed as a contract of employment. Nothing
contained herein shall give or shall be construed to
give any Participant any right to continue in the
employ of the Company or to otherwise enlarge or
affect employment status or rights.
4.5 AMENDMENT. This Plan may be amended at any time by
the Board of Directors of the Company, except that
no such amendment shall deprive any Participant of
4-3
<PAGE> 15
his Supplemental Restoration Benefit accrued at the
time of such amendment.
4.6 FUNDING. Benefits payable under this Plan shall
not be funded and payments shall be made out of the
general funds of the Company.
4.7 ACTUARY. An actuary may be employed to advise the
Company and the Administrator as to the actuarial
matters relating to this Plan.
4.8 NATURE OF THIS PLAN. This Plan is not intended to be
a qualified pension plan or to be a benefit or
welfare plan subject to ERISA. Benefits payable
hereunder shall be a general, unsecured obligation to
be paid by the Company from its own funds, and no
liability for payments hereunder shall be imposed
upon any officer, director, employee or stockholder
of the Company. The adoption of this Plan and the
setting aside of any funds by the Company with which
to discharge its obligations hereunder shall not be
deemed to create a trust. Legal and equitable title
in any funds so set aside shall remain in the
Company, and no recipient of benefits hereunder shall
have any security or other interest in such funds.
Any and all such funds so
4-4
<PAGE> 16
set aside shall remain subject to the claims of the
general creditors of the Company. Nothing herein
shall require the Company to set aside any funds for
purposes of this Plan, but the Company may do so if
it chooses.
4.9 EFFECT ON QUALIFIED PLAN. The adoption,
administration, amendment or termination of the
Plan shall have no effect on the Basic Retirement
Plan.
4.10 BINDING EFFECT. This Plan shall be binding upon
and inure to the benefit of the Company, its
successors and assigns, and the Participants, their
heirs and legal representatives.
4.11 PRIOR PLANS. This Plan shall supersede any and all
other plans or agreements between the Company and
Participants hereunder relating to the provision of
supplemental retirement benefits or deferred
compensation.
4-5
<PAGE> 17
SECTION V
---------
EFFECTIVE DATE
--------------
5.1 This Plan shall be construed, administered and
enforced according to the laws of the State of
Ohio.
5.2 This Plan is effective January 1, 1991.
IN WITNESS WHEREOF, the Company has executed this document
this 1st day of January, 1991.
RPM, INC.
By: /s/ Thomas C. Sullivan
__________________________
Chairman of the Board
And: /s/ Richard E. Klar
_________________________
Vice President, Treasurer
5-1
<PAGE> 1
Exhibit 10.11
RPM, INC. INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE. The purpose of the RPM, Inc. Incentive
Compensation Plan (the "Plan") is to provide incentives for
specified key employees whose performance in fulfilling the
responsibilities of their positions can have a major impact on the
profitability and future growth of RPM, Inc. (the "Company") and
its subsidiaries.
SECTION 2. DEFINITIONS. For the purposes of the Plan, the
following terms shall have the meanings indicated:
(a) "Aggregate Bonus Pool" shall mean with respect to any
Fiscal Year an amount equal to one and three-tenths percent
(1.3%) of the Income Before Income Taxes.
(b) "Applicable Law" shall mean 26 U.S.C. section 162(m)
and regulations and rulings lawfully promulgated thereunder by
an agency of the federal government.
(c) "Base Salary" shall mean for any Covered Employee in
respect of any Fiscal Year the base salary the Covered Employee
receives from the Company for such Fiscal Year.
(d) "Board of Directors" shall mean the Board of
Directors of the Company.
(e) "Bonus Award" shall mean the amount payable to a
Covered Employee under the Plan in respect of any Fiscal Year.
(f) "Committee" shall mean the Compensation Committee of
the Board of Directors, which shall be comprised solely of two
or more Outside Directors.
<PAGE> 2
(g) "Covered Employee" shall mean in respect of any
Fiscal Year one of the five individuals who is a covered
employee under the Applicable Law.
(h) "Fiscal Year" shall mean any fiscal year of the
Company, commencing with the Fiscal Year which began on June 1,
1995.
(i) "Income Before Income Taxes" shall mean, for any Fiscal
Year, income before income taxes as shown on the Company's
financial statement as certified by the Company's independent
certified public accountants.
(j) "Outside Director" shall mean an outside director
under the Applicable Law.
(k) "Plan" shall mean the RPM, Inc. Incentive
Compensation Plan as set forth in this document and as later
amended in accordance with the terms hereof.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall have full authority to interpret the Plan and from time to
time to adopt such rules and regulations for carrying out the Plan as it may
deem best.
(b) COMMITTEE DETERMINATIONS. All determinations by the
Committee shall be made by the affirmative vote of a majority of its members,
but any determination reduced to writing and signed by all of its members shall
be fully as effective as if it had been made by a majority vote at a meeting
duly called and held. All decisions by the Committee pursuant to the provisions
of the Plan and all orders or resolutions of the Committee pursuant thereto
shall be final, conclusive and binding on all persons, including
2
<PAGE> 3
the Covered Employees (and their heirs, personal representatives, successors or
permitted assigns), the Company, its subsidiaries, and its shareholders.
SECTION 4. BONUS AWARDS.
(a) DETERMINATION OF BONUS AWARDS. Subject to the next sentence,
the Bonus Award of any Covered Employee for any Fiscal Year shall be such
percentage share of the Aggregate Bonus Pool as determined by resolution of the
Committee adopted no later than the ninetieth day of such Fiscal Year.
Notwithstanding the preceding sentence:
(i) the sum of the Bonus Awards of all Covered Employees
for any Fiscal Year shall not exceed the Aggregate
Bonus Pool for the Fiscal Year;
(ii) the Bonus Award of any Covered Employee may be less
than the amount otherwise determined pursuant to the
preceding sentence if, at any time prior to informing
the Covered Employee of his Bonus Award, the
Committee in its sole and absolute discretion so
determines; and
(iii) in no event shall a Bonus Award exceed $1,500,000.
(b) ANNOUNCEMENT OF BONUS AWARDS. No later than ninety days
after the close of a Fiscal Year, the Committee shall promptly inform each
Covered Employee of his or her respective Bonus Award for the Fiscal Year.
(c) PAYMENT OF BONUS AWARDS. Bonus Awards shall be paid to
the Covered Employees at such times as are determined by the Committee.
3
<PAGE> 4
(d) CERTIFICATION OF BONUS AWARDS. Prior to paying any Bonus
Award in respect of any Fiscal Year, the Committee shall certify in writing to
the Board of Directors the amount of such Bonus Award and that such Bonus Award
was determined in accordance with the terms of the Plan. For this purpose,
approved minutes of the Committee meeting in which the certification is made
shall be treated as a written certification.
SECTION 5. EFFECTIVE DATE AND SHAREHOLDER APPROVAL. The Plan
shall become effective for the Fiscal Year commencing on June 1, 1995; PROVIDED,
however, that the Plan shall be of no force and effect unless it is approved by
the Company's shareholders as provided in the Applicable Law at the Company's
1995 annual meeting of shareholders.
SECTION 6. GENERAL PROVISIONS.
(a) NO ASSIGNMENT. No portion of any Bonus Award may be
assigned or transferred otherwise than by will or by the laws of
descent and distribution prior to the payment thereof.
(b) TAX REQUIREMENTS. All payments of Bonus Awards shall be
subject to withholding in respect of income and other taxes
required by law to be withheld, in accordance with the Company's
customary procedures.
(c) NO ADDITIONAL RIGHTS. A Covered Employee shall not have any
right to be retained in the employ of the Company or any of its subsidiaries,
and the right of the Company or any such subsidiary to dismiss or discharge any
such Covered Employee or to terminate any arrangement pursuant to which any such
Covered Employee provides services to the Company or a subsidiary is
specifically reserved.
4
<PAGE> 5
(d) LIABILITY. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including the
independent certified public accountants for the Company. No member of the Board
of Directors or of the Committee or any officers of the Company or its
subsidiaries shall be liable for any act or failure to act under the Plan,
except in circumstances involving bad faith on the part of such member or
officer.
(e) OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any subsidiary or affiliate of the Company
from adopting or continuing in effect other compensation arrangements, which
arrangements may be either generally applicable or applicable only to designated
individuals including the Covered Employees.
SECTION 7. AMENDMENT AND TERMINATION OF THE PLAN. The Board
of Directors may at any time terminate, in whole or in part, or
from time to time amend the Plan; PROVIDED, that no such amendment
or termination shall adversely affect the rights of any Covered
Employee with respect to Bonus Awards announced by the Committee.
The Board of Directors may at any time and from time to time
delegate to the Committee any or all of its authority under this
Section 7. Any amendment to the Plan shall be approved by the
Company's shareholders if required under the Applicable Law.
5
<PAGE> 1
Exhibit 10.12
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made to be effective the 9th day of
February, 1995 between RPM, Inc., an Ohio corporation ("Corporation"), and
________________________ ("Director").
WITNESSETH THAT:
WHEREAS, Director is a director of Corporation and in
such capacity is performing a valuable service for Corporation and
its shareholders; and
WHEREAS, the shareholders of Corporation have adopted a Code
of Regulations (the "Regulations") providing for the indemnification of the
officers, directors, agents, trustees and employees of Corporation; and
WHEREAS, Section 1701.13(E) of the Ohio Revised Code (the
"Ohio Statute") also provides for the indemnification of directors, officers,
employees or agents of Corporation; and
WHEREAS, such Regulations (Article VI, Section 6) and the Ohio
Statute (1701.13(E)(6)) specifically provide that they are not exclusive, and
also specifically contemplate that agreements may be entered into between
Corporation and the members of its Board of Directors and officers with respect
to indemnification of such directors and officers; and
WHEREAS, in accordance with the authorization provided by the
Regulations (Article VI, Section 7) and the Ohio Statute (1701.13(E)(7)),
Corporation has purchased and presently maintains an Executive Liability and
Defense Coverage insurance policy ("D&O Insurance"), insuring Corporation and
its directors and officers against certain liabilities which may be incurred by
its directors and officers in the performance of their services for Corporation;
and
WHEREAS, recent developments with respect to the terms,
coverage and availability of director and officer insurance and with respect to
the application, amendment and enforcement of statutory and corporate
indemnification provisions generally have raised questions concerning the
adequacy and reliability of the protection afforded to directors and officers
thereby; and
WHEREAS, in order to resolve such questions and thereby induce
Director to continue to serve as a director of Corporation, Corporation has
determined and agreed to enter into this Agreement with Director;
NOW, THEREFORE, in consideration of Director's continued
service as a director after the date hereof, the mutual covenants herein
contained, and for other good and valuable consideration the receipt and
adequacy of which hereby is mutually acknowledged, the parties hereto agree as
follows:
<PAGE> 2
1. INDEMNITY OF DIRECTOR. Corporation hereby agrees to
indemnify and hold harmless Director from loss or liability, including any and
all fees and expenses (including attorneys' fees), judgments, fines, penalties
and amounts paid in settlement actually and reasonably incurred by Director or
his spouse in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, investigative or
otherwise (including specifically an action by or in the right of Corporation)
to which Director is, was or at any time becomes a party, or is threatened to be
made a party, by reason of the fact that Director is, was or at any time becomes
a director, officer, employee or agent of Corporation, or is or was serving or
at any time serves at the request of Corporation as a director, officer,
employee, trustee, or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the maximum extent now authorized or permitted by
the provisions of the Regulations and Ohio Statute, or by any subsequent
amendment(s) thereto or other Regulations or statutory provisions authorizing or
permitting such indemnification which are adopted after the date hereof by the
shareholders of Corporation or the State of Ohio, respectively. It is the intent
of this Agreement that the Director shall be fully and completely indemnified by
either Corporation or the D&O Insurance (or a combination thereof) to the
absolute maximum permitted by law and except to the extent absolutely prohibited
by law on the grounds of illegality as finally determined by a court of
competent jurisdiction after all presumptions are made in favor of the Director
and from which no appeal is or can be taken by Director.
2. MAINTENANCE OF INSURANCE AND SELF INSURANCE.
(a) Corporation represents that it presently has in force and
effect a policy of D&O Insurance, a copy of which has been delivered to
Director. Subject only to the provisions of Section 2(c) hereof, Corporation
hereby agrees that, so long as Director shall continue to serve as a director of
Corporation (or shall continue at the request of Corporation to serve as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and thereafter so long as
Director shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
by reason of the fact that Director was a director of Corporation (or served in
any of said other capacities), Corporation will purchase and maintain in effect
for the benefit of Director one or more valid, binding and enforceable policy or
policies of director and officer insurance providing, in all respects, coverage
at least comparable to that presently provided pursuant to the D&O Insurance.
(b) The D&O Insurance currently contains deductible amounts
and certain exclusions. Therefore, Corporation shall indemnify and hold harmless
Director with respect to the following:
2
<PAGE> 3
(i) any deductible amount set forth in the D&O
Insurance, or any similar deductible amount in any
replacement director and officer insurance policy; and
(ii) any loss to or liability of Director by reason
of any Exclusions set forth in, or any of the Endorsements to,
the D&O Insurance, except for liabilities arising from
Director's intentional fraud, actual dishonesty, or willful
misconduct as finally determined by a court of competent
jurisdiction, and except for claims under Section 16(b) of the
Securities Exchange Act of 1934 for so-called six (6) months
"short swing profits".
(c) Corporation shall not be required to maintain the D&O
Insurance or other director and officer insurance if said insurance is not
reasonably available or if, in the reasonable business judgment of the then
directors of Corporation, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of coverage or (ii) the coverage
provided by such insurance is so limited by exclusions that there is
insufficient benefit from such insurance.
3. ADDITIONAL INDEMNITY. "Loss to or liability of Director" as
used in this Agreement shall include any and all fees and expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
actually and reasonably incurred by Director or his spouse in connection with
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise (including specifically an
action by or in the right of Corporation) to which Director is, was or at any
time becomes a party, or is threatened to be made a party, by reason of the fact
that Director is, was or at any time becomes a director, officer, employee or
agent of Corporation, or is or was serving or at any time serves at the request
of Corporation as a director, officer, employee, trustee, or agent of another
corporation, partnership, joint venture, trust or other enterprise.
4. LIMITATION ON INDEMNITY.
(a) Notwithstanding anything contained herein to the contrary,
except as is provided in Section 8 hereof, Corporation shall not be required
hereby to indemnify Director with respect to any action, suit, or proceeding
against Corporation that was initiated, directly or indirectly, by Director.
(b) Corporation shall not be liable under this Agreement to
make any payment in connection with any claim made against Director to the
extent Director has actually received payment (under any insurance policy, the
Regulations, the Ohio Statute, or otherwise) of the amounts otherwise payable
hereunder.
5. CONTINUATION OF INDEMNITY. All agreements and obligations
of Corporation contained herein shall continue during
3
<PAGE> 4
the period Director is a director, officer, employee or agent of Corporation (or
is or was serving at the request of Corporation as a director, officer,
employee, trustee, or agent or another corporation, partnership, joint venture,
trust or other enterprise) and shall continue thereafter so long as Director
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether, civil, criminal, investigative or
otherwise, by reason of the fact that Director was a director of Corporation or
serving in any other capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt
by Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against Corporation
under this Agreement, notify Corporation in writing of the commencement thereof;
but the omission so to notify Corporation will not relieve it from any liability
which it may have to Director otherwise than under this Agreement. With respect
to any such action, suit or proceeding as to which Director notifies Corporation
of the commencement thereof:
(a) Corporation will be entitled to participate therein at its
own expense;
(b) Except as otherwise provided below, to the extent that it
may wish, Corporation jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Director. After notice from Corporation to Director of its
election so to assume the defense thereof, Corporation will not be liable to
Director under this Agreement for any legal or other expenses subsequently
incurred by Director in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Director shall
have the right to employ his own counsel in such action, suit or proceeding but
the fees and expenses of such counsel incurred after notice from Corporation of
its assumption of the defense thereof shall be at the expense of Director unless
(i) the employment of counsel by Director has been authorized by Corporation,
(ii) Director shall have reasonably concluded that there may be a conflict of
interest between Corporation and Director in the conduct of such defense of such
action, or (iii) Corporation shall not in fact have employed counsel to assume
the defense of such action, in each of which cases the fees and expenses of
counsel shall be at the expense of Corporation. Corporation shall not be
entitled to assume the defense of any action, suit or proceeding brought by or
on behalf of Corporation or as to which Director shall have made the conclusion
provided for in (ii) above;
(c) Corporation shall not be liable to indemnify Director
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. Corporation shall not settle any action or
claim in any manner which would impose any penalty or limitation on Director
without Director's written consent. Neither Corporation or Director will
unreasonably withhold consent to any proposed settlement; and
4
<PAGE> 5
(d) Director will reasonably cooperate with Corporation with
respect to the defense of any action, suit or proceeding in connection with
which Director is seeking to be indemnified and held harmless by Corporation.
7. PAYMENT AND REPAYMENT OF EXPENSES.
(a) At Director's request, Corporation shall pay all expenses
as and when incurred by Director after receipt of written notice pursuant to
Section 6 hereof. That portion of the expenses which represents attorneys' fees
and other costs incurred in defending any civil or criminal action, suit or
proceeding shall be paid by Corporation to Director, or at his direction
directly to his attorneys, within 30 days of Corporation's receipt of such
request, together with reasonable documentation evidencing the amount and nature
of such expenses.
(b) Director agrees that he will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Director in the event and only to the extent
that it shall be finally determined by a court of competent jurisdiction from
which no appeal is or can be taken by Director that he is not entitled to be
indemnified by Corporation for such expenses under the provisions of the Ohio
Statute, the Regulations, this Agreement or otherwise.
8. ENFORCEMENT.
(a) Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on Corporation
hereby in order to induce Director to continue as a director of Corporation, and
acknowledges that Director is relying upon this Agreement in continuing in such
capacity.
(b) In the event any dispute or controversy shall arise under
this Agreement between Director and Corporation with respect to whether the
Director is entitled to indemnification hereunder, Director may seek to enforce
this Agreement with respect to such dispute or controversy through legal action
or, at Director's sole option and written request, through arbitration. If
arbitration is requested, such dispute or controversy shall be submitted by the
parties to binding arbitration in the City of Cleveland, State of Ohio, before a
single arbitrator agreeable to both parties. If the parties cannot agree on a
designated arbitrator within 15 days after arbitration is requested in writing
by Director, the arbitration shall proceed in the City of Cleveland, State of
Ohio, before an arbitrator appointed by the American Arbitration Association. In
either case, the arbitration proceeding shall commence promptly under the rules
then in effect of that Association and the arbitrator agreed to by the parties
or appointed by that Association shall be an attorney other than an attorney who
has, or is associated with a firm having associated with it an attorney which
has been retained by or performed services for Corporation or Director at any
time during the five years preceding the commencement of the arbitration. The
award
5
<PAGE> 6
shall be rendered in such form that judgment may be entered thereon in any court
having jurisdiction thereof.
(c) In the event Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is successful
in such action, Corporation shall reimburse Director for all of Director's
reasonable fees and expenses (including attorneys' fees) in bringing and
pursuing such action.
(d) Corporation is aware that upon the occurrence of a Change
in Control (as defined in paragraph 8(e) below) the Board of Directors or a
shareholder of Corporation may then cause or attempt to cause Corporation to
refuse to comply with its obligations under this Agreement or may cause or
attempt to cause Corporation to institute, or may institute, litigation seeking
to have this Agreement declared unenforceable, or may take, or attempt to take,
other action to deny Director the benefits intended under this Agreement. In
these circumstances, the purpose of this Agreement could be frustrated. It is
the intent of Corporation that Director not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by litigation
or other legal action because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Director hereunder, nor be
bound to negotiate any settlement of his rights hereunder under threat of
incurring such expenses. Accordingly, if following a Change in Control it should
appear to Director that Corporation has failed to comply with any of its
obligations under this Agreement or in the event that Corporation or any person
takes any action to declare this Agreement void or unenforceable, or institutes
any litigation or other legal action designed to deny, diminish or to recover
from, Director the benefits intended to be provided to Director hereunder, and
that Director has complied with all of his obligations under this Agreement,
Corporation irrevocably authorizes Director from time to time to retain counsel
of his choice at the expense of Corporation as provided in this Section 8(d), to
represent Director in connection with the initiation or defense of any
litigation or other legal action, whether by or against Corporation or any
director, officer, shareholder or other person affiliated with Corporation, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between Corporation and such counsel, and in that connection
Corporation and Director agree that a confidential relationship shall exist
between Director and such counsel. The reasonable fees and expenses of counsel
selected from time to time by Director as hereinabove provided shall be paid or
reimbursed to Director by Corporation on a regular, periodic basis upon
presentation by Director of a statement or statements prepared by such counsel
in accordance with its customary practices, up to a maximum aggregate amount of
$500,000.
(e) For the purpose of this Agreement, the term "Change in
Control" shall mean a change in control of a nature that would be required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated
under the Securities Act of 1934 as
6
<PAGE> 7
in effect on the date of this Agreement; provided that, without limitation, such
a change in control shall be deemed to have occurred if and when (a) any
"person" (as such term is used in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly,
of securities of Corporation representing 20% or more of the combined voting
power of Corporation's then outstanding securities or (b) during any period of
twelve (12) consecutive months, commencing before or after the date of this
Agreement, individuals who, at the beginning of such twelve (12) month period
were directors of Corporation for whom Director, as a shareholder, shall have
voted cease for any reason to constitute at least a majority of the Board of
Directors of Corporation.
9. SEVERABILITY. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid, illegal or unenforceable for any
reasons, such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of the other provisions hereof.
10. EXTRAORDINARY TRANSACTION. Corporation agrees that, in the
event of any merger, consolidation or reorganization in which Corporation is not
the surviving entity, any sale of all or substantially all of the assets of
Corporation or any liquidation of Corporation (each such event is hereinafter
referred to as an "extraordinary transaction"), Corporation shall:
(a) Have the obligations of Corporation under this Agreement
expressly assumed by the survivor, purchaser or successor, as the case may be,
in such extraordinary transaction; or
(b) Provide a trust fund, letter of credit, or otherwise
provide for the satisfaction of Corporation's obligations under this Agreement
in a manner reasonably acceptable to Director.
11. NO PERSONAL LIABILITY. Director agrees that no director,
officer, employee, representative or agent of Corporation shall be personally
liable for the satisfaction of Corporation's obligations under this Agreement,
and Director shall look solely to the assets of Corporation and any director and
officer insurance referred to in Section 2 hereof for satisfaction of any claims
hereunder.
12. ALLOWANCE FOR COMPLIANCE WITH SEC REQUIREMENTS. Director
acknowledges that the Securities and Exchange Commission ("SEC") has expressed
the opinion that indemnification of directors and officers from liabilities
under the Securities Act of 1933 ("Act") is against public policy as expressed
in the Act and, is therefore, unenforceable. Director hereby agrees that it will
not be a breach of this Agreement for Corporation to undertake with the
Commission in connection with the registration for sale of any stock or other
securities of Corporation from time to time that, in the event a claim for
indemnification against such liabilities
7
<PAGE> 8
(other than the payment by Corporation of expenses incurred or paid by a
director or officer of Corporation in the successful defense of any action, suit
or proceeding) is asserted in connection with such stock or other securities
being registered, Corporation will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of competent
jurisdiction on the questions of whether or not such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue. Director further agrees that such submission to a
court of competent jurisdiction shall not be a breach of this Agreement.
13. SUBROGATION. This Agreement is separate and distinct from
the D&O Insurance, and nothing contained herein shall diminish or otherwise
modify Director's separate and distinct rights and obligations thereunder.
However, in the event of any payment under this Agreement, Corporation shall be
subrogated to the extent thereof to all rights to indemnification or
reimbursement against any insurer or other entity or person vested in Director,
who shall execute all instruments and take all other actions as shall be
reasonably necessary for Corporation to enforce such rights.
14. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Ohio.
(b) This Agreement shall be binding upon Director and upon
Corporation, its successors and assigns, and shall inure to the benefit of
Director, his heirs, personal representatives and assigns and to the benefit of
Corporation, its successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto. Any amendment or modification of this Agreement which is approved in
good faith by the Board of Directors of Corporation need not be submitted to the
shareholders for subsequent approval or ratification.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
RPM, INC.
By:
-----------------------------
Thomas C. Sullivan
Chairman of the Board and
Chief Executive Officer
_______________________________
_____________________, Director
9
<PAGE> 1
Exhibit 10.15
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of August 2, 1995 among RPM, INC. (the "Company") and
the LENDERS listed on the signature pages hereof (the "Lenders").
W I T N E S S E T H :
WHEREAS, the Company, the Lenders and The Chase Manhattan Bank (National
Association), as Administrative Agent (the "Administrative Agent") are parties
to a Credit Agreement dated as of June 23, 1994 (as amended from time to time,
the "Credit Agreement");
WHEREAS, the parties hereto desire to amend certain provisions of the
Credit Agreement in accordance with the terms hereof;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement", "the Credit Agreement" and
each other similar reference contained in the Credit Agreement shall from and
after the date hereof refer to the Credit Agreement as amended and modified
hereby.
SECTION 2. AMENDMENT OF SECTION 1.01 OF THE CREDIT AGREEMENT. The
definition of "Revolving Credit Period" in Section 1.01 of the Credit Agreement
is amended and restated to read in its entirety as follows:
"REVOLVING CREDIT PERIOD" shall mean the period from and
including the date hereof to but not including August 2, 2000.
<PAGE> 2
SECTION 3. AMENDMENT OF SECTION 2.01 OF THE CREDIT AGREEMENT. Section
2.01 of the Credit Agreement is amended by deleting "(a)" at the beginning
thereof and by deleting subsection (b) in its entirety.
SECTION 4. AMENDMENT OF SECTION 9.08 OF THE CREDIT AGREEMENT.
Section 9.08 of the Credit Agreement is amended to replace "60%" with "62.5%".
SECTION 5. AMENDMENT OF SECTION 9.13 OF THE CREDIT AGREEMENT. Clause
(iv) of Section 9.13 of the Credit Agreement is amended to insert "(other than
a Subsidiary of the Company)" immediately after "Company" in both places in
such clause in which "Company" appears.
SECTION 6. AMENDMENT OF PRICING SCHEDULE. The Pricing schedule is
amended and restated to read in its entirety as set forth in the attached
Pricing Schedule.
SECTION 7. REDUCTION OF COMMITMENTS. As of the date hereof, the
Commitments shall be reduced by $150,000,000 to $150,000,000.
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 9. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective as of the date hereof when the
Administrative Agent shall have received:
(a) duly executed counterparts hereof signed by the Company
and the Lenders (or, in the case of any party as to which an executed
counterpart shall not have been received, the Administrative Agent
shall have received facsimile, telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by
such party);
(b) an opinion of Calfee, Halter & Griswold, counsel to the
Company, substantially in the form of Exhibit A hereto; and
(c) all documents the Administrative Agent may reasonably
request relating to the existence of the Company, the corporate
authority for and the validity of the Credit Agreement as amended by
this Amendment,
2
<PAGE> 3
and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent.
SECTION 10. EFFECT OF AMENDMENTS. Except as expressly set forth
herein, the amendments contained herein shall not constitute a waiver or
amendment of any term or condition of the Credit Agreement, and all such terms
and conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
RPM, INC.
By: /s/ Frank C. Sullivan
-----------------------------------
Name: Frank C. Sullivan
Title: Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: /s/ Lawrence Shields
-----------------------------------
Name: Lawrence Shields
Title: Managing Director
NATIONAL CITY flANK
By: /s/ Terri L. Cable
-----------------------------------
Name: Terri L. Cable
Title: Vice President
THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Stephanie L. Tucker
-----------------------------------
Name: Stephanie L. Tucker
Title: Vice President
CREDIT LYONNAIS CHICAGO BRANCH
By: /s/ Mary Ann Klemm
-----------------------------------
Name: Mary Ann Klemm
Title: Vice President and
Group Head
4
<PAGE> 5
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/ Mary Ann Klemm
-----------------------------------
Name: Mary Ann Klemm
Title: Authorized Signature
HARRIS TRUST AND SAVINGS BANK
By: /s/ Keith L. Burson
-----------------------------------
Name: Keith L. Burson
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Christonher L. Helmeci
-----------------------------------
Name: Christopher L. Helmeci
Title: Assistant Vice President
SOCIETY NATIONAL RANK
By: /s/ Marianne T. Meil
-----------------------------------
Name' Marianne T. Meil
Title: Assistant vice President
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By: /s/ Jay H. Nilson
-----------------------------------
Name: Jay H. Nilson
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ J. Peter Peyton
-----------------------------------
Name: J. Peter Peyton
Title: Senior Vice president
5
<PAGE> 6
PRICING SCHEDULE
The "Applicable Margin" for each Type of Loan and the commitment
fee rate for any day are the respective percentages set forth below in the
applicable row under the column corresponding to the Status that exists on such
day:
<TABLE>
<CAPTION>
--------------------------------------------------------------
Level Level Level Level Level Level
Status I II III IV V VI
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Euro-Dollar .30% .35% .425% .475% .625% 1.0%
Loans
--------------------------------------------------------------
CD Loans .425% .475% .55% .60% .75% 1.125%
--------------------------------------------------------------
Commitment Fee .10% .115% .14% .1875% .25% .375%
Rate
--------------------------------------------------------------
Base Rate Loans 0% 0% 0% 0% 0% 0%
--------------------------------------------------------------
</TABLE>
For purposes of this Schedule, the following terms have the
following meanings:
"Applicable Indebtedness" means senior unsecured
long-term debt of the Company.
"Implied Rating" means the implied rating issued for the
Company's Applicable Indebtedness on the basis of the rating issued for the
Company's zero coupon redeemable convertible subordinated notes (the "Notes"),
or, if no such implied rating has been issued, a rating one designation higher
than the rating issued for the Notes.
"Level I Status" exists at any date if, at such date, the
Applicable Indebtedness is rated or has received an Implied Rating of A- or
higher by or from S&P and A3 or higher by or from Moody's.
"Level II Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated or has received an Implied Rating of BBB+ or
higher by or from S&P and Baa1 or higher by or from Moody's and (ii) Level I
Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated or has received an Implied Rating of BBB or
higher by or from S&P
<PAGE> 7
and Baa2 or higher by or from Moody's and (ii) neither Level I Status nor Level
II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated or has received an Implied Rating of BBB- or
higher by or from S&P and Baa3 or higher by or from Moody's and (ii) none of
Level I Status, Level II Status or Level III Status exists.
"Level V Status" exists at any date if, at such date, (i) the
Applicable Indebtedness is rated or has received an Implied Rating of BB+ or
higher by or from S&P and Ba1 or higher by or from Moody's and (ii) none of
Level I Status, Level II Status, Level III Status or Level IV Status exists.
"Level VI Status" exists at any date if, at such date, no other
Status exists.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Corporation.
"Status" refers to the determination of which of Level I Status,
Level II Status, Level III Status, Level IV Status, Level V Status or Level VI
Status exists at any date.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to senior unsecured long-term debt securities without third-party
credit enhancement, and except as set forth in the definition of "Implied
Rating" any rating assigned to any other debt security shall be disregarded. The
rating in effect at any date is that in effect at the close of business on such
date. If no Implied Rating is in effect, Status shall be determined as a
function of the leverage ratio described in Section 9.08, with appropriate
levels and related mechanics to be agreed by the Company and each of the
Lenders.
2
<PAGE> 1
Exhibit 11.1
RPM, INC. AND SUBSIDIARIES
--------------------------
CONSOLIDATED STATEMENTS OF COMPUTATIONS OF EARNINGS
---------------------------------------------------
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS EQUIVALENTS Exhibit XI
---------------------------------------------------------------------
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended May 31
------------------------------------------
1996 1995 1994
-------- -------- ------
(Restated) (Restated)
<S> <C> <C> <C>
Net Income
- ----------
Net income applicable to common shares
for primary earnings per share $ 68,929 $ 62,616 $ 53,753
Add back interest net of tax on
convertible securities assumed
to be converted 4,982 4,731 4,850
-------- -------- --------
Net income applicable to common shares
for fully-diluted earnings per share $ 73,911 $ 67,347 $ 58,603
======== ======== ========
Shares Outstanding
- ------------------
For computation of primary earnings per
common share
Weighted average shares 76,166 73,257 72,580
Net issuable common share equivalents 382 403 423
------- ------- -------
Total shares for primary earnings
per share 76,548 73,660 73,003
For computation of fully-diluted earnings
per common share
Additional shares of issuable common
share equivalents assuming conver-
sion of convertible securities 9,767 9,767 10,186
Additional common share equivalents
ending market value higher than
average market value 112 156 12
------- ------- -------
Total shares for fully-diluted
earnings per share 86,427 83,583 83,201
======= ======= =======
Earnings Per Common Share And Common
- ------------------------------------
Share Equivalents $.90 $.85 $.74
----------------- ==== ==== ====
Earnings Per Common Share Assuming Full
- ---------------------------------------
Dilution $.86 $.81 $.70
-------- ==== ==== ====
</TABLE>
<PAGE> 1
Exhibit 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
- ---------------------------------------------------------------------------
CONDITION
---------
RPM, Inc. and Subsidiaries
RESULTS OF OPERATIONS
FISCAL 1996 COMPARED TO FISCAL 1995
The Company acquired TCI, Inc. on January 12, 1996 on a pooling-of-interests
basis. TCI is a leading manufacturer of powdered coatings with annual sales of
approximately $20 million. Powdered coatings are the fastest growing line of the
paint and coatings industry and TCI is evidence of this fact, having achieved a
53% compounded annual growth rate during the past five years. Prior years'
results have been restated to reflect this pooling [Refer to Note A].
Dryvit Systems, Inc. was acquired on September 21, 1995. Dryvit, with annual
sales of approximately $75 million, is the leading North American manufacturer
of exterior insulating and finishing systems [EIFS], used in the construction
and renovation of commercial buildings and increasingly on homes. The
acquisition of Dryvit and several smaller businesses this year, plus that of
Rust-Oleum Corporation on June 28, 1994, accounted for approximately two-thirds
of the 1996 sales increase. The Company's existing operations generated the
balance of sales growth from a combination of pricing adjustments, that averaged
approximately 2% year-to-year, and higher unit volume. Exchange rate differences
and several small product line additions had a slight, yet positive effect on
sales.
The Company's gross profit margin improved to 42.8% from 42.7% a year ago.
Strength in certain industrial lines, most notably floorings, coupled with
leveraged purchasing of significant materials, resulted in improved overall
margins among the industrial businesses. In addition, the recent acquisitions
combined have comparatively higher gross profit margins. These positive effects
on margin were partly offset by certain higher material costs among primarily
the consumer lines. Raw material price increases have somewhat stabilized and
the Company is confident that any further increases will continue to be
effectively managed.
Selling, general and administrative expenses remained at 30% of sales this year.
The Company had initiated an expense reduction campaign during the second
quarter of 1996 in consideration of the slower than planned sales growth.
During this past year, the Company disposed of certain assets and businesses
that no longer conformed to management's long-term objectives. The net gains
that resulted were offset by costs associated with several product line
discontinuations.
Interest expense increased $5.6 million in 1996, reflecting primarily the
indebtedness associated with Rust-Oleum, Dryvit and other acquisitions with the
balance attributable to comparatively higher interest rates and the LYONs
[Refer to Note B] interest accretion. Debt reductions of approximately $30
million during the past year and slightly higher interest income reduced net
interest expense comparatively.
The tax attributes of TCI, prior to acquisition, had historically passed through
to its respective shareholders as a Subchapter S Corporation. Consequently, on a
restatement basis, last year's provision for income taxes appears as a lower
percentage of pre-tax income than this year's from the effects of this pooling.
Upward pressures on the tax rate from revised tax laws, continual upward trends
in state and local taxes, and unfavorable tax treatment of certain acquisition
related expenses were effectively mitigated through generally improved
operations throughout Europe where previous tax disadvantaged losses were
significantly reduced or eliminated [Refer to Note I for geographic breakout of
results of operations].
The Company's environmental obligations continue to be appropriately addressed
and, based upon the latest available information, it is not anticipated that the
outcome of such matters will materially affect the Company's results of
operations or financial position. However, such costs could be material to
results of operations in a future period [Refer to Note H].
The Company's European and other foreign sales and results of operations are
subject to the impact of foreign currency fluctuations. Since most of the
Company's foreign operations are in Belgium, and the Belgian franc has been a
fairly stable currency in relation to the majority of other currencies in which
those operations transact business, this effect has been minimal. In addition,
foreign debt is denominated in the respective foreign currency thereby
eliminating any related translation impact on earnings.
The Company's earnings per share this year were affected by the averaging of
Company shares issued in connection with the Dryvit acquisition [more fully
described in Capital Resources and Liquidity-Financing Activities]. As a result,
a 10% increase in earnings this year equates to a 6% increase in earnings per
share. Previously reported per share data has been restated to reflect the 25%
stock dividend issued December 8, 1995.
Subsequent to year-end, on June 13, 1996, the Company completed its acquisition
of Okura Holdings, Inc., Dallas, Texas. With sales of approximately $35 million,
Okura is a leading global manufacturer of molded and pultruded fiberglass
reinforced plastic grating products, used for pedestrian walkways, platforms,
staircases and similar types of industrial structures. Okura has posted a strong
growth record under the leading brand names Fibergrate and Chemgrate. Okura
offers the Company an attractive opportunity to capitalize on market, product
and customer synergies. This acquisition is not expected to be dilutive in 1997.
FISCAL 1995 COMPARED TO FISCAL 1994
On June 28, 1994, the Company acquired Rust-Oleum Corporation, the leading North
American producer of consumer rust-preventative coatings. Nearly two-thirds of
Rust-Oleum sales are consumer products and the balance industrial, both
complementing the Company's existing product lines. Rust-Oleum accounted for
$139 million, or approximately 70%, of the $205 million sales increase. The
Com-pany's existing operations generated the balance of sales growth mainly from
higher unit volume, approximately two-thirds industrial and the balance
consumer. Pricing adjustments were somewhat more in 1995 than in the recent past
to compensate for nearly universal supplier cost increases, averaging less than
3%. Exchange rate differences and several small product line additions had a
slight, yet positive effect on sales.
The Company's gross profit margin strengthened during 1995 to 42.7% from 41.5%
in 1994. This improvement reflects Rust-Oleum's higher gross profit margin,
positive shifts in product mix, and the benefit of increased sales volume among
the existing businesses. Management was able to effectively control a number of
raw material and packaging cost increases through the leverage of combined
purchasing of significant materials, pricing adjustments where necessary, and
product reformulations.
20
<PAGE> 2
Selling, general and administrative expenses increased to 30.0% of sales from
29.1% the previous year as a result of Rust-Oleum's higher percentage in this
category plus related acquisition expenses. Higher sales volume and increased
joint venture income had slightly offsetting favorable effects.
Interest expense increased $10.8 million from indebtedness associated with the
Rust-Oleum acquisition. Slightly higher interest rates and the LYONs [Refer to
Note B] interest accretion added to interest expense in 1995, while the 1994
Eurobond conversion, debt refinancing in both years and debt reductions totaling
nearly $40 million during 1995 reduced interest expense comparatively.
The tax attributes of TCI, acquired during 1996, and those of Dynatron/Bondo and
Stonhard, acquired during 1994, had historically passed through to the
respective shareholders as Subchapter S Corporations. Consequently, the restated
39.7% provision for income taxes in 1994 [Refer to Note C] was comparably low.
As a result and as expected, the 1995 effective tax rate increased from the
reported 1994 rate, to 42.3%. This higher rate was driven by revised tax laws,
certain foreign tax loss carryforwards, continuing upward trends in state and
local taxes, and unfavorable tax treatment of certain acquisition related
expenses.
As a result of the expenses associated with the acquisition of Rust-Oleum and
the tax rate differences discussed above, the Company's net income margin
declined to 6.1% from 6.5% in 1994. Rust-Oleum contributed approximately a third
of the earnings increase in 1995.
CAPITAL RESOURCES AND LIQUIDITY
CASH PROVIDED FROM OPERATIONS
The Company generated cash from operations of $87 million in 1996, or $18
million more than net income for the year from non-cash expenses less
growth-related increases in working capital. Cash flow from operations continues
to be the primary source of financing the Company's internal growth.
During 1995, the Company had embarked on a campaign to reduce its working
capital requirements, and thereby generate additional cash flow. This program
has produced positive results, evidenced by the decline in the current ratio
from 2.8:1 to 2.5:1 this past year. Dryvit contributed to this improvement,
having a relatively lower investment in working capital. Notably, there had been
a significant one-time reduction of working capital at Rust-Oleum upon its
acquisition in June 1994, without which cash generation from operations this
year would have exceeded that of last year to a much greater extent.
INVESTING ACTIVITIES
The Company annually invests in capital expenditures primarily to improve
production and distribution efficiency and capacity. Such expenditures generally
do not exceed depreciation and amortization in a given year. Capital
expenditures amounted to $33 million in 1996 compared with depreciation and
amortization of $43 million.
The investment of $45.4 million in businesses this year reflects primarily the
cash portion of Dryvit, along with several smaller acquisitions, net of cash
acquired. The Company historically has acquired complementary businesses and
this trend is expected to continue.
The Company's captive insurance company generates trades in marketable
securities in the ordinary course of conducting its operations and this activity
will continue.
The Company divested a small business and certain assets during 1996, as
previously discussed under Results of Operations.
FINANCING ACTIVITIES
On June 15, 1995 the Company issued and sold $150 million [aggregate principal]
of 7% senior unsecured notes due 2005. The total net proceeds of this offering
were used to reduce the $190 million balance of the Company's $300 million
revolving credit agreement to $40 million. The Company thereafter reduced the
limit of its revolving credit facility to $150 million and extended its final
maturity to 2000.
The Company completed the acquisition of Dryvit Systems, Inc. on September 21,
1995 for approximately $32 million in cash, the retirement of approximately
$14.5 million of Dryvit's existing long-term debt, and the issuance of 4 million
[restated for the December 8, 1995 stock split] Company shares. The Company's
revolving credit facility was utilized for the cash and debt retirement portions
of this transaction. This instrument had an outstanding balance of $82 million
at May 31, 1996, having been reduced by nearly $30 million during 1996 through
cash provided from operations, after exchange rate differences and net of the
uses of this facility for acquisitions. Interest accretion on the LYONs issue
added $8.7 million to long-term debt during 1996. LYONs interest to be accreted
in 1997 will be $9.1 million.
As a result of the above transactions, the Company's debt to capital ratio
improved to 50% at May 31, 1996 from 54% a year ago.
The acquisition of Okura, subsequent to year-end, was financed through the
Company's revolving credit agreement. The Company has since renegotiated this
facility to $250 million and extended its final maturity to 2001.
The Company maintains excellent relations with its banks and other financial
institutions to further enable the financing of future growth opportunities.
21
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
- ----------------------------
RPM, Inc. and Subsidiaries
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
MAY 31
------
1996 1995
---- ----
(Restated)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and short-term investments (Note A) $ 19,855 $ 19,834
Marketable securities, at cost (Note A) 14,422 8,132
Trade accounts receivable (less allowances of $9,993 in 1996 and $9,813 in 1995) 231,560 209,886
Inventories (Note A) 178,929 170,920
Prepaid expenses and other current assets 20,360 16,659
----------- --------
TOTAL CURRENT ASSETS 465,126 425,431
----------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST (NOTE A)
Land 20,969 18,886
Buildings and leasehold improvements 143,478 131,734
Machinery and equipment 235,133 212,942
----------- --------
399,580 363,562
Less allowance for depreciation and amortization 174,920 157,259
----------- --------
PROPERTY, PLANT AND EQUIPMENT, NET 224,660 206,303
----------- --------
OTHER ASSETS
Cost of businesses over net assets acquired, net of amortization (Note A) 268,492 211,781
Other intangible assets, net of amortization (Note A) 159,798 85,375
Equity in unconsolidated affiliates 16,623 14,857
Other 20,377 21,776
----------- --------
TOTAL OTHER ASSETS 465,290 333,789
----------- --------
TOTAL ASSETS $ 1,155,076 $965,523
----------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 85,874 $ 71,987
Current portion of long-term debt (Note B) 1,747 1,312
Accrued compensation and benefits 29,678 30,187
Accrued loss reserves (Note H) 33,731 23,897
Other accrued liabilities 26,910 20,325
Income taxes payable (Notes A and C) 11,464 6,088
----------- --------
TOTAL CURRENT LIABILITIES 189,404 153,796
LONG - TERM LIABILITIES
Long-term debt, less current maturities (Note B) 447,654 407,041
Other long-term liabilities 14,375 14,405
Deferred income taxes (Notes A and C) 57,810 39,812
----------- --------
TOTAL LIABILITIES 709,243 615,054
----------- --------
SHAREHOLDERS' EQUITY
Common shares, stated value $.018 per share; authorized 100,000,000 shares,
issued and outstanding 77,449,000; 73,302,000 in 1995 (Note D) 1,410 1,334
Paid-in capital 215,019 149,028
Cumulative translation adjustment (Note A) (2,492) 580
Retained earnings 231,896 199,527
----------- --------
TOTAL SHAREHOLDERS' EQUITY 445,833 350,469
----------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,155,076 $965,523
----------- --------
<FN>
- ------------------------
See Notes to Consolidated Financial Statements.
</TABLE>
22
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------
RPM, Inc. and Subsidiaries
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-----------------
1996 1995 1994
---- ---- ----
(Restated) (Restated)
<S> <C> <C> <C>
NET SALES $1,136,396 $1,030,736 $825,292
Cost of sales 649,819 590,394 482,658
---------- ---------- --------
Gross profit 486,577 440,342 342,634
Selling, general and administrative expenses 340,851 309,069 239,861
Interest expense, net 25,840 22,781 13,566
---------- ---------- --------
Income before income taxes 119,886 108,492 89,207
Provision for income taxes (Note C) 50,957 45,876 35,454
---------- ---------- --------
NET INCOME $ 68,929 $ 62,616 $ 53,753
---------- ---------- --------
Average shares outstanding (Note D) 76,548 73,660 73,003
---------- ---------- --------
Earnings per common share and common share equivalents (Note D) $ .90 $ .85 $ .74
---------- ---------- --------
Earnings per common share assuming full dilution (Note D) $ .86 $ .81 $ .70
---------- ---------- --------
Cash dividends per common share $ .47 $ .44 $ .41
---------- ---------- --------
<FN>
- ------------------------
See Notes to Consolidated Financial Statements.
23
</TABLE>
<PAGE> 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -----------------------------------------------
RPM, Inc. and Subsidiaries
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
COMMON SHARES
-------------
NUMBER CUMULATIVE
OF SHARES STATED PAID-IN TRANSLATION RETAINED
(NOTE D) VALUE CAPITAL ADJUSTMENT EARNINGS TOTAL
-------- ------ ------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT MAY 31, 1993 (RESTATED) 68,356 $ 1,244 $ 97,390 $ (673) $147,173 $245,134
Net income 53,753 53,753
Dividends paid (27,949) (27,949)
Sub S Corp. income 3,290 (3,290)
Sub S Corp. distributions (1,994) (1,994)
Stock option exercises 94 1 566 567
Conversion of debt 4,595 84 48,466 48,550
Translation adjustments (1,617) (1,617)
------ ------- -------- ------- --------- ---------
BALANCE AT MAY 31, 1994 (RESTATED) 73,045 1,329 147,718 (2,290) 169,687 316,444
Net income 62,616 62,616
Dividends paid (31,259) (31,259)
Sub S Corp. income 1,517 (1,517)
Sub S Corp. distributions (607) (607)
Business combinations 135 3 (252) (249)
Stock option exercises 122 2 652 654
Translation adjustments 2,870 2,870
------ ------- -------- ------- --------- ---------
BALANCE AT MAY 31, 1995 (RESTATED) 73,302 1,334 149,028 580 199,527 350,469
Net income 68,929 68,929
Dividends paid (4) (78) (35,598) (35,676)
Sub S Corp. income 962 (962)
Sub S Corp. distributions (1,067) (1,067)
Business combinations 4,000 73 65,127 65,200
Stock option exercises 151 3 1,047 1,050
Translation adjustments (3,072) (3,072)
------ ------- -------- ------- --------- ---------
BALANCE AT MAY 31, 1996 77,449 $ 1,410 $215,019 $ (2,492) $231,896 $445,833
------ ------- -------- ------- --------- ---------
- ------------------------
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
24
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
RPM, Inc. and Subsidiaries
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-----------------
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES: (RESTATED) (RESTATED)
<S> <C> <C> <C>
Net income $ 68,929 $ 62,616 $ 53,753
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 42,562 37,123 26,050
(Decrease) in deferred liabilities (5,696) (578) (916)
(Earnings) of unconsolidated affiliates (2,120) (2,638) (1,732)
Changes in assets and liabilities, net of effect from purchases and sales of
businesses:
Decrease (increase) in marketable securities 212 (9) 623
(Increase) in accounts and notes receivable (17,249) (10,852) (1,749)
(Increase) in inventory (4,441) (20,566) (2,690)
(Increase) in prepaid and other assets (3,319) (627) (7,176)
Increase (decrease) in accounts payable 9,808 11,238 (9,683)
Increase (decrease) in accrued liabilities (728) 8,132 (1,974)
Other (935) (233) (745)
--------- ---------- --------
87,023 83,606 53,761
--------- ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (33,196) (28,796) (26,331)
Acquisition of new businesses, net of cash acquired (45,375) (173,483) (4,094)
Payments for the purchase of marketable securities (17,453) (7,330) (7,813)
Proceeds from maturities or redemptions of marketable securities 10,951 6,235 4,815
Distribution from joint ventures 1,571 1,000 1,220
Investments in joint ventures (1,663) (368) (36)
Proceeds from sale of assets and businesses 11,666
--------- ---------- --------
(73,499) (202,742) (32,239)
--------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt 227,785 251,806 73,324
Reductions of long-term and short-term debt (205,595) (99,615) (70,200)
Cash dividends/distributions paid (36,743) (31,866) (29,943)
Exercise of stock options 1,050 654 567
Other (249)
--------- ---------- --------
(13,503) 120,730 (26,252)
--------- ---------- --------
NET INCREASE (DECREASE) IN CASH 21 1,594 (4,730)
CASH AT BEGINNING OF YEAR 19,834 18,240 22,970
--------- ---------- --------
CASH AT END OF YEAR $ 19,855 $ 19,834 $ 18,240
--------- ---------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 14,369 $ 15,734 $ 7,601
Income taxes 59,277 42,086 37,708
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Conversion from debt to equity 48,550
Interest accreted on LYONs 8,666 8,228 7,812
Common shares issued for acquisition 65,200
--------- ---------- --------
- -----------------------------
<FN>
See Notes to Consolidated Financial Statements.
25
</TABLE>
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - MAY 31, 1996, 1995 AND 1994
- -------------------------------------------------------------------------
RPM, Inc. and Subsidiaries
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of RPM, Inc. and its
majority owned domestic and foreign subsidiaries. The Company accounts for its
investment in less than majority owned joint ventures under the equity method.
Income and distributions recognized from Subchapter S Corporations are solely a
result of the Company's acquisitions of these subsidiaries on a
pooling-of-interests basis. Intercompany accounts, transactions and unrealized
profits and losses are eliminated in consolidation.
Certain reclassifications have been made to prior year amounts to conform with
the current year presentation.
2. BUSINESS COMBINATIONS
During the two year period ended May 31, 1996, the Company completed several
acquisitions.
As reported last year, on June 28, 1994, the Company acquired all the
outstanding shares of Rust-Oleum Corporation. Rust-Oleum manufactures and
markets primarily rust-preventative coatings for the consumer market.
On August 10, 1995, the Company acquired all of the outstanding shares of Star
Finishing Products. Located in Illinois, Star manufactures and sells furniture
finishes.
On September 21, 1995, the Company acquired all of the outstanding shares of
Dryvit Systems, Inc. Dryvit, based in Rhode Island, manufactures and sells
exterior insulation and finishing systems used in the construction and
renovation of both commercial and residential properties.
These acquisitions as well as several small product line acquisitions have been
accounted for by the purchase method of accounting and the difference of
approximately $70,000,000 between the fair value of net assets acquired and the
purchase consideration of $119,500,000 ($52,500,000 in cash, $1,800,000 in notes
and 4,000,000 of the Company's shares) has been allocated to goodwill. The
assets, liabilities and operating results of these companies are reflected in
the Company's financial statements from their respective dates of acquisition
forward.
The following data summarizes, on an unaudited pro-forma basis, the combined
results of operations of the Company and the busi-nesses acquired accounted for
by the purchase method for the two years ended May 31, 1996. The pro-forma
amounts give effect to appropriate adjustments resulting from the combination,
but are not necessarily indicative of future results of operations or of what
results would have been for the combined companies.
<TABLE>
<CAPTION>
YEAR ENDED
MAY 31
1996 1995
---------- ----------
(Unaudited)
(In thousands, except
per share amounts)
<S> <C> <C>
Net sales $1,165,396 $1,126,107
---------- ----------
Net income $ 68,091 $ 60,828
---------- ----------
Earnings per common share and common share equivalent $ .88 $ .78
---------- ----------
Earnings per common share assuming full dilution $ .83 $ .75
---------- ----------
</TABLE>
In addition, on January 12, 1996, the Company acquired all the outstanding
shares of TCI, Inc., a manufacturer of powdered coatings located in Ellaville,
Georgia in exchange for 2,106,000 shares of the Company's common stock. This
acquisition has been accounted for as a pooling-of-interests. Accordingly,
historical financial data presented in this report has been restated to include
the accounts and transactions of TCI, Inc. as though TCI was acquired as of June
1, 1993. The following table reconciles combined net sales and net income of
the separate companies for the two years ended May 31, 1995 and the nine months
ended February 29, 1996:
<TABLE>
<CAPTION>
JUNE 1, 1995 YEAR ENDED
THROUGH MAY 31
FEBRUARY 29,1996 1995 1994
---------------- ----------------
NET SALES (In thousands)
<S> <C> <C> <C>
RPM, Inc. $807,158 $1,016,954 $815,598
TCI, Inc. 12,355 13,782 9,694
-------- ---------- --------
Combined $819,513 $1,030,736 $825,292
-------- ---------- --------
NET INCOME (In thousands)
RPM, Inc. $ 43,040 $ 61,099 $ 52,640
TCI, Inc. 1,258 1,517 1,113
-------- ---------- --------
Combined $ 44,298 $ 62,616 $ 53,753
-------- ---------- --------
</TABLE>
3. FOREIGN CURRENCY
For the periods presented, assets and liabilities have been translated using
exchange rates prevailing at year end. Income and expense for the periods have
been translated using an average exchange rate. The resulting translation
adjustments have been recorded in shareholders' equity and will be included in
net earnings only upon the sale or liquidation of the underlying foreign
investment, which is not contemplated at this time. Transaction gains and losses
have been immaterial during the past three fiscal years.
4. CASH AND SHORT-TERM INVESTMENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents. The Company does not believe it is exposed to any significant
credit risk on cash and short-term investments.
5. MARKETABLE SECURITIES
Marketable securities are included in the accompanying consolidated balance
sheets at cost, which approximates market.
6. INVENTORIES
Inventories are stated at the lower of cost or market, cost being determined
substantially on a first-in, first-out (FIFO) basis and market being determined
on the basis of replacement cost or net realizable value. Inventory costs
include raw material, labor and manufacturing overhead. Inventories were
composed of the following major classes:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995
- ---------------------------------------------------------
<S> <C> <C>
Raw materials and supplies $ 64,995 $ 60,385
Finished goods 113,934 110,535
-------- --------
Total inventory $178,929 $170,920
-------- --------
</TABLE>
26
<PAGE> 8
7. DEPRECIATION
Depreciation is computed over the estimated useful lives of the assets primarily
using the straight-line method. The annual depreciation rates are based on the
following ranges of useful lives:
Land improvements 5 to 25 years
Buildings and improvements 10 to 50 years
Machinery and equipment 3 to 20 years
8. INTANGIBLES
The excess of cost over the underlying value of the net assets of companies
acquired is being amortized on the straight-line basis, primarily over 40 years.
Amortization expense charged to operations for the three years ended May 31,
1996 was $7,562,000, $5,888,000 and $3,688,000, respectively. Cost of businesses
over net assets acquired is shown net of accumulated amortization of $33,079,000
at May 31, 1996 ($26,630,000 at May 31, 1995).
Intangible assets also represent costs allocated to formulae, trademarks,
tradenames and other specifically identifiable assets arising from business
acquisitions. These assets are being amortized using the straight-line method
over periods of 10 to 40 years. The Company assesses the recoverability of the
excess of cost over the assigned value of net assets acquired by determining
whether the amortization of the balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operations.
Amortization expense charged to operations for the three years ended May 31,
1996, was $7,553,000, $4,991,000 and $1,142,000, respectively.
Other intangible assets were composed of the following major classes:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995
- --------------------- ---- ----
<S> <C> <C>
Trademarks $ 65,530 $ 37,436
Formulae 62,995 35,120
Other 51,706 25,759
------- -------
180,231 98,315
Accumulated amortization 20,433 12,940
------- -------
Other intangible assets, net $159,798 $ 85,375
------- -------
</TABLE>
9. RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations when incurred and are
included in operating expenses. The amounts charged for the three years ended
May 31, 1996, were $13,712,000, $12,337,000 and $11,081,000, respectively. The
customer sponsored portion of such expenditures was not significant.
10. INTEREST EXPENSE, NET
Interest expense is shown net of investment income which consists of interest
and dividends. Investment income for the three years ended May 31, 1996 was
$2,005,000, $1,739,000 and $856,000, respectively.
11. INCOME TAXES
The Company and its wholly owned domestic subsidiaries file a consolidated
federal income tax return. The tax effects of transactions are recognized in
the year in which they enter into the determination of net income, regardless of
when they are recognized for tax purposes. As a result, income tax expense
differs from actual taxes payable. The accumulation of these differences at May
31, 1996, is shown as a noncurrent liability of $57,810,000 (net of a noncurrent
asset of $29,366,000). At May 31, 1995, the noncurrent liability was $39,812,000
(net of a noncurrent asset of $11,396,000). The Company does not intend to
distribute the accumulated earnings of consolidated foreign subsidiaries
amounting to $31,826,000 at May 31, 1996, and $26,347,000 at May 31, 1995, and
therefore no provision has been made for the taxes which would result if such
earnings were remitted to the Company.
12. ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE B - BORROWINGS
A description of long-term debt follows:
<TABLE>
<CAPTION>
MAY 31 1996 1995
- ------ ---- ----
(In thousands)
<S> <C> <C>
$400 million face value at maturity Liquid Yield Option Notes (LYONs)
due 2012. The 5.25% LYONs are zero coupon (In thousands) subordinated notes
currently convertible at $17.57 ($16.68 at May 31, 1995) and are redeemable by
the holder for the issuance price plus accrued original issue discount in
September 1997, 2002 and 2007. There are 9,767,000 shares reserved for the
conversion of this debt. $171,589 $162,923
Revolving credit agreement for $150,000,000 ($300,000,000 at May 31, 1995) with
nine banks through August 2, 2000. Interest, which is tied to one of various
rates, was 5.87% at May 31, 1996. The Chairman of the Board and Chief Executive
Officer of the Company is a director of one of the banks providing this
facility. 82,000 190,000
7% unsecured senior notes due June 15, 2005, the proceeds of which were used to
reduce the credit agreement described above. 150,000 --
Multi-currency revolving credit agreement for $45,000,000 with a bank through
December 14, 1998. Interest, which is tied to one of various rates, averaged
3.14% on the $14,667,000 Dutch Guilder component and 3.71% on the $14,500,000
Belgian Franc component at May 31, 1996. 29,167 39,163
6.75% unsecured senior notes due to an insurance company in annual installments
from 1997 through 2003. 12,000 12,000
Other notes and mortgages payable at various rates of interest due in
installments through 2005, substantiallysecured by property. 4,645 4,267
------- -------
449,401 408,353
Less current portion 1,747 1,312
------- -------
Total long-term debt, less current maturities $447,654 $407,041
------- -------
- -----------------------------------
<FN>
Additionally, at May 31, 1996, the Company had an unused short-term line of
credit with a bank for $30,000,000.
The aggregate maturities of long-term debt for the five years subsequent to May
31, 1996, are as follows: 1997 - $1,747,000; 1998 - $2,922,000; 1999 -
$31,974,000; 2000 - $2,087,000; 2001 - $83,889,000.
27
</TABLE>
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - MAY 31, 1996, 1995 AND 1994
- -------------------------------------------------------------------------
RPM, Inc. and Subsidiaries
Note C - Taxes
The provision for taxes on income includes the following:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31 (IN THOUSANDS) 1996 1995 1994
- -------------------------------- ---- ---- ----
<S> <C> <C> <C>
Federal income tax rate of 35% applied to income before income taxes $ 41,960 $ 37,972 $ 31,222
Increase (decrease) in taxes resulting from:
Tax credits (585) (411) (439)
State and local taxes - Net of Federal income tax benefit 5,323 4,870 3,705
Foreign taxes in excess of U.S. Federal tax rate 500 1,440 1,282
Permanent differences between tax and book basis, related to acquisitions 3,411 1,880 1,093
Difference between tax and book income, related to pooled entities (404) (572) (1,526)
All other items, none of which exceed 5% of computed tax 752 697 117
------ ------ ------
Actual tax expense $ 50,957 $ 45,876 $ 35,454
------ ------ ------
Actual tax rate 42.50% 42.29% 39.74%
------ ------ ------
The provision for income taxes consists of the following:
Current
Federal $ 43,992 $ 34,292 $ 24,674
State 8,189 7,492 5,700
Foreign 4,473 4,789 3,717
------ ------ ------
56,654 46,573 34,091
Deferred
Federal (5,814) (809) 2,059
Foreign 117 112 (696)
------ ------ ------
Actual tax expense $ 50,957 $ 45,876 $ 35,454
------ ------ ------
</TABLE>
Deferred income taxes result from timing differences in recognition of revenue
and expense for book and tax purposes, primarily from the tax timing differences
relating to business combinations.
NOTE D - COMMON SHARES
There are 100,000,000 common shares authorized with a stated value of $.018 per
share. At May 31, 1996 and 1995, there were 77,449,000 and 73,302,000 shares
outstanding respectively, each of which is entitled to one vote.
Share data for May 31, 1995 and May 31, 1994, has been re-stated to reflect a
25% stock dividend in December 1995 and the acquisition of TCI, Inc. in which
2,106,000 common shares were exchanged for all of the outstanding shares of TCI
in a transaction accounted for as a pooling of interests. See consolidated
statements of shareholders' equity for more information.
Earnings per share are based on the weighted average number of common shares and
common share equivalents outstanding during each year (76,548,000 in 1996,
73,660,000 in 1995 and 73,003,000 in 1994). In computing such average number of
shares outstanding, the number of common shares was increased by common stock
options with exercisable prices lower than the average market prices of common
shares during each year and reduced by the number of shares assumed to have been
purchased with the proceeds from the exercise of the options.
The Company has options outstanding under two stock option plans: the 1979
Nonqualified Stock Option Plan, which, prior to its expiration in September
1989, provided for the granting of options for up to 2,104,000 shares; and the
1989 Stock Option Plan, which provides for the granting of options for up to
3,516,000 shares at a price equal to the fair market value at the date of grant.
These options are exercisable cumulatively in equal annual installments
commencing one year from the grant date and have expiration dates ranging from
September 1997 to October 2005. At May 31, 1996, 1,177,000 shares (1,791,000 May
31, 1995) were available for future grant. The Company does not expect to adopt
the recognition provisions of the recently issued SFAS No. 123 "Accounting for
Stock-Based Compensation." Disclosures required by the new accounting standard
will be included in future financial statements pursuant to the effective date
criteria.
28
<PAGE> 10
Transactions during the two years are summarized as follows:
<TABLE>
<CAPTION>
SHARES UNDER OPTION (IN THOUSANDS) 1996 1995
- ---------------------------------- ---- ----
<S> <C> <C>
Outstanding, beginning of year 1,828 1,565
Granted during the year 614 452
Expired during the year (33) (29)
Exercised during the year (at prices
ranging from $5.40 to $15.40 per share) (164) (160)
----- -----
Outstanding, end of year (at an average
price of $12.97 ranging from $5.48 to
$15.80 per share) 2,245 1,828
----- -----
Exercisable, end of year (at an average
price of $10.89 ranging from $5.48 to
$15.40 per share) 1,087 935
----- -----
</TABLE>
NOTE E - LEASES
At May 31, 1996, certain property, plant and equipment were leased by the
Company under long-term leases. Certain of these leases provide for increased
rental based upon an increase in the cost-of-living index. Future minimum lease
commitments as of May 31, 1996, for all noncancellable leases are as follows:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS)
- ---------------------
<C> <C>
1997 $3,982
1998 3,045
1999 1,753
2000 785
2001 545
Thereafter 478
------
Total minimum lease commitments $10,588
------
</TABLE>
Rental expenses for all operating leases totalled $6,614,000 in 1996, $6,290,000
in 1995 and $5,185,000 in 1994. Capitalized leases were insignificant for the
three year period ended May 31, 1996.
NOTE F - RETIREMENT PLANS
To provide uniform retirement income for its non-union employees, the
Company has a defined benefit retirement plan in which substantially all
non-union employees participate. The Retirement Plan is a non-contributory plan
fully paid for by the Company, with accrued benefits vesting after five years of
service. This plan provides benefits that are based on years of service and
average compensation. Benefits for union employees are provided by separate
plans and are generally based on years of service. The Company's funding policy
is to contribute annually an amount that can be deducted for federal income tax
purposes using a different actuarial cost method and different assumptions from
those used for financial reporting.
The net periodic pension cost for the three years ended May 31, 1996, included
the following components:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995 1994
- --------------------- ---- ---- ----
<S> <C> <C> <C>
Service cost - Benefits
earned during
the period $ 3,086 $ 3,524 $ 2,750
Interest cost on projected
benefit obligations 4,428 2,533 2,171
Actual return on
plan assets (7,367) 1,753 (1,678)
Net amortization
and deferral 3,946 (3,540) (514)
----- ----- -----
Net pension cost $ 4,093 $ 4,270 $ 2,729
----- ----- -----
</TABLE>
The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligations
were 7.75% (8.5% for May 31, 1995) and 5%, respectively. The expected long-term
rate of return on assets was 8.5%. The plans' assets consist primarily of
stocks, bonds and fixed income securities.
The following table sets forth the funded status of the Company's pension plans
and the amounts reflected in the accompanying balance sheets:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995
- --------------------- ---- ----
<S> <C> <C>
Actuarial present value of projected benefit
obligation:
Vested employees $ 45,706 $ 41,970
Nonvested employees 2,206 1,359
------ ------
Accumulated benefit obligation 47,912 43,329
Additional amount related to projected
salary increases 10,293 7,297
------ ------
Total projected benefit obligation 58,205 50,626
Funded assets at fair value 50,154 41,542
------ ------
Projected benefit obligation in excess of assets (8,051) (9,084)
Unamortized net asset existing at date
of adoption (518) (586)
Unrecognized prior service cost 769 731
Unrecognized net loss 4,603 3,994
------ ------
Accrued pension cost $ (3,197) $ (4,945)
------ ------
</TABLE>
Some subsidiaries contribute to multi-employer defined benefit plans for their
collective bargaining groups. Contributions to these plans were immaterial for
the three year period ended May 31, 1996. In addition, the Company maintains a
non-contributory 401(k) Plan for substantially all non-union employees in the
United States.
29
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - MAY 31, 1996, 1995 AND 1994
- -------------------------------------------------------------------------
RPM, Inc. and Subsidiaries
NOTE G - POSTRETIREMENT HEALTH CARE BENEFITS
In addition to the defined benefit pension plan, the Company also provides
health care benefits to certain of its retired employees through unfunded plans.
Employees become eligible for these benefits if they meet minimum age and
service requirements. The components of this expense for the three years ended
May 31, 1996 were as follows:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995 1994
- --------------------- ---- ---- ----
<S> <C> <C> <C>
Service cost - Benefits
earned during
the period $ 4 $ 47 $--
Interest cost on the
accumulated obligation 673 763 199
Net amortization (113) 20 --
--- --- ---
Net periodic post-retirement
expense $ 564 $830 $199
--- --- ---
</TABLE>
The accumulated post-retirement obligation recognized on the May 31, 1996 and
May 31, 1995 balance sheets are comprised of the following components:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995
- --------------------- ---- ----
<S> <C> <C>
Current retirees $8,231 $ 8,385
Future retirees 798 1,427
Unrecognized net gain (loss) 595 (315)
----- -----
Accumulated post-retirement benefit
obligation $9,624 $ 9,497
----- -----
</TABLE>
A 7.75% (8.5% at May 31, 1995) discount rate was used in determining the
accumulated post-retirement benefit obligation. A 12% increase in the cost of
covered health care benefits was assumed for fiscal 1996, except for one
subsidiary where a 9% rate was assumed. This trend rate in all cases is assumed
to decrease incrementally to 5% after several years and remain at that level
thereafter except for various union plans which will cap at alternate benefit
levels. A 1% increase in the health care costs trend rate would have increased
the accumulated post-retirement benefit obligation as of May 31, 1996 by
$694,000 and the net post-retirement expense by $54,000.
NOTE H - CONTINGENCIES AND LOSS RESERVES
Accrued loss reserves consisted of the following classes:
<TABLE>
<CAPTION>
MAY 31 (IN THOUSANDS) 1996 1995
- --------------------- ---- ----
<S> <C> <C>
Accrued product liability reserves $15,429 $13,485
Accrued environmental reserves 5,546 5,554
Accrued warranty reserves 10,364 2,401
Other 2,392 2,457
------ ------
Accrued loss reserves $33,731 $23,897
------ ------
</TABLE>
The Company, through its wholly-owned insurance subsidiary, provides certain
insurance coverages, primarily product liability, to the Company's other
domestic subsidiaries. Excess coverage is provided by outside carriers. The
Company has provided the reserves reflected above to provide for these losses as
well as other uninsured claims.
In addition, the Company, like others in similar businesses, is involved in
several proceedings relating to environmental matters. It is the Company's
policy to accrue remediation costs when it is probable that such efforts will be
required and the related costs can be reasonably estimated. These liabilities
are undiscounted and do not take into consideration any possible recoveries of
future insurance proceeds or claims against third parties. Because of the
uncertainty inherent in the estimation process, it is at least reasonably
possible that actual costs will differ from estimates, but, based upon
information presently available, such future costs are not expected to have a
material adverse effect on the Company's competitive or financial position or
its ongoing results of operations. However, such costs could be material to
results of operations in a future period.
Provision for estimated warranty costs is recorded at the time of sale and
periodically adjusted to reflect actual experience. Included at May 31, 1996 in
the amount of $7,761,000 is the warranty reserve of a subsidiary which was
acquired during the year.
30
<PAGE> 12
NOTE I - INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company operates principally in one business segment -- the manufacture and
sale of protective coatings. In computing net income for foreign subsidiaries,
no allocations of general corporate expenses have been made.
Information concerning the Company's operations in different geographical areas
of the Company's business at May 31, 1996, 1995 and 1994 and for the years then
ended is summarized as follows:
<TABLE>
<CAPTION>
Other
United European Foreign
(In thousands) States Operations Operations Total
- -------------- ------ ---------- ---------- -----
<S> <C> <C> <C> <C>
Net Sales
May 31, 1996 $1,001,706 $90,880 $ 43,810 $1,136,396
May 31, 1995 913,119 85,537 32,080 1,030,736
May 31, 1994 724,662 71,912 28,718 825,292
------------ ------- ------ ------ -------
Gross Profit
May 31, 1996 431,493 41,366 13,718 486,577
May 31, 1995 392,244 37,913 10,185 440,342
May 31, 1994 304,812 32,373 5,449 342,634
------------ ------- ------ ----- -------
Interest Expense, Net
May 31, 1996 22,785 2,738 317 25,840
May 31, 1995 20,159 2,334 288 22,781
May 31, 1994 10,926 2,571 69 13,566
------------ ------ ----- -- ------
Income Before Tax
May 31, 1996 108,589 8,773 2,524 119,886
May 31, 1995 100,721 6,665 1,106 108,492
May 31, 1994 85,203 4,248 (244) 89,207
------------ ------ ----- ----- ------
Net Income
May 31, 1996 62,080 5,130 1,719 68,929
May 31, 1995 59,336 2,404 876 62,616
May 31, 1994 53,171 502 80 53,753
------------ ------ --- -- ------
Assets Employed
May 31, 1996 1,041,726 86,275 27,075 1,155,076
May 31, 1995 858,257 90,340 16,926 965,523
May 31, 1994 570,672 79,396 15,899 665,967
------------ ------- ------ ------ -------
</TABLE>
The above sales do not include sales of Company products by joint ventures and
licensees of approximately $104,000,000. The Company reflects income from joint
ventures on the equity method and receives royalties from its licensees.
Export sales were less than 10% of total consolidated revenue for each of the
three years.
31
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - MAY 31, 1996, 1995 AND 1994
- -------------------------------------------------------------------------
RPM, Inc. and Subsidiaries
NOTE J - INTERIM FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for
the years ended May 31, 1996 and 1995:
<TABLE>
<CAPTION>
The Three Months Ended (In thousands, except per share amounts)
AUGUST 31 NOVEMBER 30 FEBRUARY 29 MAY 31
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Net sales $282,954 $281,402 $255,157 $316,883
- -----------------------------------------------------------------------------------------------
Gross profit $119,641 $117,452 $104,966 $144,518
- -----------------------------------------------------------------------------------------------
Net income $ 19,993 $ 16,258 $ 8,047 $ 24,631
- -----------------------------------------------------------------------------------------------
Primary earnings per share $ .27 $ .22 $ .11 $ .32
- -----------------------------------------------------------------------------------------------
Fully diluted earnings per share $ .25 $ .21 $ .11 $ .30
===============================================================================================
Three Months Ended (In thousands, except per share amounts)
AUGUST 31 NOVEMBER 30 FEBRUARY 28 MAY 31
- -----------------------------------------------------------------------------------------------
1995
Net sales $256,425 $256,719 $233,384 $284,208
- -----------------------------------------------------------------------------------------------
Gross profit $107,956 $108,284 $ 96,523 $127,579
- -----------------------------------------------------------------------------------------------
Net income $ 18,740 $ 15,686 $ 7,686 $ 20,504
- -----------------------------------------------------------------------------------------------
Primary earnings per share $ .26 $ .21 $ .10 $ .28
- -----------------------------------------------------------------------------------------------
Fully diluted earnings per share $ .24 $ .20 $ .10 $ .26
===============================================================================================
</TABLE>
The computation of fully diluted earnings per share reflects additional shares
issuable assuming conversion of convertible securities.
Quarterly earnings per share do not total to the earnings per share due to the
weighted average number of shares outstanding in each quarter.
NOTE K - SUBSEQUENT EVENTS
On June 12, 1996, the Company acquired all the outstanding shares of Okura
Holdings, Inc. for $73,000,000 in cash. Okura manufactures and markets
fiberglass reinforced plastic grating products. This acquisition will be
accounted for by the purchase method of accounting and the difference of
approximately $29,000,000 between the fair value of net assets acquired and the
purchase consideration will be allocated to goodwill. The Company's financial
statements will reflect the assets, liabilities and operating results of Okura
from the date of acquisition forward.
Pro-forma amounts as if Okura had been acquired on June 1, 1994, are as follows:
<TABLE>
<CAPTION>
Year Ended May 31 1996 1995
- ----------------- ---- ----
(Unaudited)
(In thousands, except per
share amounts)
<S> <C> <C>
Net sales $ 1,172,193 $ 1,061,516
--------- ---------
Net income $ 68,280 $ 63,222
--------- ---------
Earnings per common share and common
share equivalent $ .89 $ .86
--------- ---------
Earnings per common share assuming
full dilution $ .85 $ .81
--------- ---------
</TABLE>
INDEPENDENT AUDITOR'S REPORT
- -----------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS
RPM, INC.
MEDINA, OHIO
We have audited the accompanying consolidated balance sheets of RPM, Inc. and
Subsidiaries as of May 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three year period ended May 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements 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 RPM, Inc. and
Subsidiaries at May 31, 1996 and 1995, and the results of their operations and
their cash flows for each of the years in the three year period ended May 31,
1996, in conformity with generally accepted accounting principles.
/s/ Ciulla, Smith & Dale, LLP
- -----------------------------
Cleveland, Ohio
July 3, 1996
32
<PAGE> 1
EXHIBIT 21.1
------------
RPM, INC.
---------
The following is a list of the direct subsidiaries of RPM, Inc. as of
August 15, 1996:
<TABLE>
<CAPTION>
Percentage of
Jurisdiction of Securities Owned
Name Incorporation By RPM, Inc.
- ---- --------------- ----------------
<S> <C> <C>
Bondex International, Inc. Ohio 100%
Consolidated Coatings Ohio 100%
Corporation
Day-Glo Color Corp. Ohio 100%
Kop-Coat, Inc. Ohio 100%
Mameco International, Inc. Ohio 100%
Republic Powdered Metals, Inc. Ohio 100%
RPM of North Carolina, Inc. Ohio 100%
Talsol Corp. Ohio 100%
Euchem, Inc. Ohio 100%
The Testor Corporation Ohio 100%
Westgate Advertising, Inc. Ohio 100%
Label Systems Corporation Connecticut 100%
Carboline Company Delaware 100%
Narragansett/DSI Acquisition Delaware 100%
Co., Inc.
Okura Holdings, Inc. Delaware 100%
RPM World Trade, Inc. Delaware 100% (1)
Simian Company, Inc. Delaware 100%
Stonhard, Inc. Delaware 100%
Wisconsin Protective Coatings Delaware 100%
Corp.
American Emulsions Co., Inc. Georgia 100%
Dynatron/Bondo Corporation Georgia 100%
TCI, Inc. Georgia 100%
Design/Craft Fabric Corporation Illinois 100%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Percentage of
Jurisdiction of Securities Owned
Name Incorporation By RPM, Inc.
- ---- --------------- ----------------
<S> <C> <C>
Rust-Oleum Corporation Illinois 100%
Star Finishing Products, Inc. Illinois 100%
Chemical Specialties Maryland 100%
Manufacturing Corporation
RPM of Mass., Inc. Massachusetts 100%
Craft House Corporation Michigan 100%
William Zinsser and Co. New Jersey 100%
Incorporated
Floquil-Polly S Color Corp. New York 100%
Fopeco, Inc. New York 100%
Mohawk Finishing Products, New York 100%
Inc.
Chemical Coatings, Inc. North Carolina 100%
Sentry Polymers, Inc. Texas 100%
First Colonial Insurance Vermont 100%
Company
Bondex International Canada 100%
(Canada) Ltd.
RPM/Belgium N.V. Belgium 96% (2)
RPOW/France S.A. France 100%
RPM/Europe B.V. Netherlands 100%
RPM/Luxembourg S.A. Luxembourg 88% (3)
RPM Asia Pte. Ltd. Singapore 100%
<FN>
- ------------------
(1) DISC Corporation
(2) The remaining 4% is owned by an affiliate of RPM, Inc.
(3) The remaining 12% is owned by an affiliate of RPM, Inc.
</TABLE>
-2-
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference of our report dated July 3, 1996 in this Annual Report on Form 10-K
for the year ending May 31, 1996, in RPM, Inc.'s Registration Statements on Form
S-3 (Reg. Nos. 33-50868, Liquid Yield Option Notes, 33-61513, Dryvit Systems,
Inc. acquisition and 333-08209, TCI, Inc. acquisition) and Registration
Statements on Form S-8 (Reg. Nos. 2-65508, 1979 Stock Option Plan and 33-32794,
1989 Stock Option Plan).
/s/ Ciulla, Smith & Dale, LLP
CIULLA, SMITH & DALE, LLP
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 19,855
<SECURITIES> 14,422
<RECEIVABLES> 241,553
<ALLOWANCES> 9,993
<INVENTORY> 178,929
<CURRENT-ASSETS> 465,126
<PP&E> 399,580
<DEPRECIATION> 174,920
<TOTAL-ASSETS> 1,155,076
<CURRENT-LIABILITIES> 189,404
<BONDS> 447,654
<COMMON> 1,410
0
0
<OTHER-SE> 444,423
<TOTAL-LIABILITY-AND-EQUITY> 1,155,076
<SALES> 1,136,396
<TOTAL-REVENUES> 1,136,396
<CGS> 649,819
<TOTAL-COSTS> 990,670
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,840
<INCOME-PRETAX> 119,886
<INCOME-TAX> 50,957
<INCOME-CONTINUING> 68,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,929
<EPS-PRIMARY> 0.90
<EPS-DILUTED> 0.86
</TABLE>
