FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended April 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-8277
ACME ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 16-0324980
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
400 Quaker Road, East Aurora, New York 14052
(Address of principal executive offices)
716/655-3800
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
(1) YES x NO ____
(2) YES x NO ____
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 1, 2000
Common Stock, Par Value $1.00 Per Share 5,076,535
ACME ELECTRIC CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
Unaudited Audited
April 1, 2000 June 30, 1999
(000s) (000s)
------------- -------------
ASSETS
- ------
Current Assets:
Cash $ 448 $ 203
Accounts receivable, net 11,644 11,304
Inventories, net 11,582 9,270
Other current assets 1,981 1,963
------ ------
Total current assets 25,655 22,740
------ ------
Property, plant and equipment, at cost 40,936 39,028
Less accumulated depreciation (26,268) (24,776)
------ ------
Total property, plant
& equipment, net 14,668 14,252
------ ------
Other Assets 4,937 4,396
------- -------
Total Assets $45,260 $41,388
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 5,037 $ 3,766
Accrued compensation and other 3,709 4,528
Current portion of long-term debt 255 2,258
------ ------
Total current liabilities 9,001 10,552
------ ------
Long-term debt 9,172 5,987
Other long-term liabilities 3,158 2,973
------ ------
Total Liabilities $21,331 $19,512
------ ------
Shareholders' Equity:
Common stock, Par Value $1.00
Authorized 8,000,000 shares
Issued 5,076,535 and 5,071,658
shares 5,077 5,072
Capital in excess of par value 19,151 19,134
Accumulated deficit (291) (2,322)
Less: Treasury stock at cost
(699 Shares) (8) (8)
------ ------
Total Shareholders' Equity 23,929 21,876
------ ------
Total Liabilities and
Shareholders' Equity $45,260 $41,388
====== ======
See accompanying Notes to Financial Statements.
ACME ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
04/01/00 04/03/99 04/01/00 04/03/99
(000s) (000s) (000s) (000s)
------ ------ ------ ------
Net Sales $20,989 $19,100 $59,507 $60,281
------ ------ ------ ------
Costs And Expenses:
Cost of Sales 14,752 13,241 41,764 43,671
Research and Engineering
Expenses 924 891 2,658 2,753
Selling and Administrative
Expenses 3,999 3,534 11,118 10,449
Interest Expense 149 185 417 645
------ ------ ------ ------
Total Costs And Expenses 19,824 17,851 55,957 57,518
------ ------ ------ ------
Income Before Taxes 1,165 1,249 3,550 2,763
Income Tax Expense 493 487 1,519 1,077
------ ------ ------ ------
Net Income $ 672 $ 762 $ 2,031 $ 1,686
======= ======= ======= ======
Weighted Average Number of
Shares Outstanding Used
to Compute Net Income per
Common Share:
Basic 5,076 5,061 5,074 5,057
Incremental Shares from
assumed conversion of
stock options 65 36 63 27
------ ------ ------ ------
Diluted 5,141 5,097 5,137 5,084
====== ===== ====== =====
Net Income Per Common Share
Basic $.13 $.15 $.40 $.33
=== === === ===
Diluted $.13 $.15 $.40 $.33
=== === === ===
See accompanying Notes to Financial Statements
ACME ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
39 Weeks Ended 39 Weeks Ended
April 1, 2000 April 3, 1999
(000's) (000's)
------- -------
Cash Flows From Operating Activities:
Net Income $ 2,031 $ 1,686
Adjustments to reconcile net income to net
cash flows from operating activities:
Loss on sale of fixed assets -- 35
Depreciation and amortization 1,635 1,651
Change in assets and liabilities:
Accounts receivable, net (340) 1,030
Inventories, net (2,312) 2,146
Other assets (559) (656)
Accounts payable 1,271 (1,032)
Accrued compensation and other (634) 92
------ ------
Net cash provided from operating
activities 1,092 4,952
------ ------
Cash Flows From Investing Activities:
Proceeds from disposition -- 4
Additions to property,
plant and equipment (2,051) (1,051)
------ -------
Net cash used in investing activities (2,051) (1,047)
------ -------
Cash Flows From Financing Activities:
Increase (decrease) of
borrowings, net 1,182 (4,426)
Proceeds from employee stock purchase
and stock options plans 22 52
------ ------
Net cash provided by (used in)
financing activities 1,204 (4,374)
------ -------
Net increase (decrease) in cash 245 (469)
Cash at beginning of period 203 629
------- ------
Cash at end of period $ 448 $ 160
======= ======
See accompanying Notes to Financial Statements.
ACME ELECTRIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The Balance Sheet of Acme Electric Corporation ("Registrant") at April
1, 2000, the Statement of Operations for the thirteen- and thirty-nine-
week periods ended April 1, 2000, and April 3, 1999, and the Statement
of Cash Flows for the thirty-nine-week periods ended April 1, 2000,
and April 3, 1999, include all adjustments necessary for a fair
representation of the results for such periods.
The unaudited financial data included herein was compiled in
accordance with the "Summary of Significant Accounting Principles and
Practices" (Note 1 of Notes to Financial Statements) contained in the
Registrant's 1999 Annual Report filed on Form 10-K.
The Company had no components of comprehensive income other than net
income for all periods presented.
RECENTLY ISSUED ACCOUNTING STANDARDS.
All start-up costs associated with the Company's Mexican initiative
have been expensed as incurred, in accordance with the American
Institute of Certified Public Accountants' (AICPA) Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-up Activities.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Account Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards for derivative
instruments. The FASB has delayed the required adoption date for
implementation of this Statement until the fiscal year beginning July
1, 2000. The financial statement impact from the adoption of SFAS No.
133 is not expected to be material.
2. Accounts receivables included in the Consolidated Balance Sheet are
net of allowances for doubtful accounts of $294,000 and $171,000 at
April 1, 2000, and June 30, 1999, respectively.
3. Inventories included in the Consolidated Balance Sheet are as follows:
April 1, 2000 June 30, 1999
($000's) ($000's)
-------- ---------
Raw Material $6,465 $5,029
Work-In-Process 1,789 1,759
Finished Goods 3,328 2,482
------ -------
$11,582 $ 9,270
====== =======
Inventories are reported net of reserves for obsolescence of $504,000
and $1,217,000 at April 1 and June 30, respectively.
4. Debt
The Company's new credit facility with its primary lender provides for
unsecured borrowings and letters of credit up to a maximum of
$15,000,000. The agreement provides for an interest rate equal to the
lower of prime or the London Interbank Eurodollar rate plus .60% to
1.40% range, determined quarterly based on a debt-to-earnings ratio
threshold, with a maturity date of December 31, 2002.
The Company pays a maximum annual commitment fee on the unused portion
of the credit facility, ranging from .25% to .375%, determined by a
rolling four-quarter debt-to-earnings ratio calculation. Under the
terms of the credit agreement, the Company is required to meet certain
restrictive covenants with respect to debt-to-earnings, interest
coverage, minimum net worth, and fixed charge coverage ratios. The
covenants further limit the Company's annual capital expenditures to
$5,000,000, and annual operating and capital lease commitments to
$500,000 and $750,000, respectively.
5. Segment Reporting Disclosures
The Company operates in three business segments: Aerospace,
Electronics, and Power Distribution Products. Each business segment
has separate manufacturing facilities. The Company's reportable
segments are strategic business units that offer different products
and services to different markets. The segments are managed
separately, based on the fundamental differences of their operations.
Information by industry segment is as follows (dollars in thousands):
13 Weeks 13 Weeks 39 Weeks 39 Weeks
Ended Ended Ended Ended
04/01/00 04/03/99 04/01/00 04/03/99
(000s) (000s) (000s) (000s)
------ ------ ------ ------
Net Sales
Aerospace $2,597 $2,800 $ 7,462 $ 8,401
Electronics 4,479 4,185 12,030 15,336
Power Distribution
Products 13,913 12,115 40,015 36,544
------ ------ ------ ------
Combined 20,989 19,100 59,507 60,281
====== ====== ====== ======
Operating Income (Loss)
Aerospace 424 268 614 595
Electronics (52) (170) (582) (506)
Power Distribution
Products 2,002 2,347 6,704 6,393
------ ------ ------ -----
Combined 2,374 2,445 6,736 6,482
General Corporate Expense (1,060) (1,011) (2,769) (3,074)
Interest Expense (149) (185) (417) (645)
------ ------ ------ -----
Earnings Before Income Taxes 1,165 1,249 3,550 2,763
====== ====== ====== ======
Identifiable Assets
Aerospace 4,805 4,875 4,805 4,875
Electronics 14,998 15,223 14,998 15,223
Power Distribution
Products 19,680 15,969 19,680 15,969
General Corporate 5,777 5,800 5,777 5,800
------ ------ ------ ------
Combined 45,260 41,867 45,260 41,867
====== ====== ====== ======
Depreciation and Amortization
Aerospace 85 99 280 285
Electronics 185 209 537 629
Power Distribution Products 142 114 378 343
General Corporate 155 126 440 394
------- ------ ------- ------
Combined 567 548 1,635 1,651
======= ====== ====== ======
Capital Expenditures
Aerospace 45 107 203 191
Electronics 76 39 222 339
Power Distribution Products 355 181 1,367 460
General Corporate 66 2 260 61
------ ------ ------ ------
Combined $ 542 $ 329 $ 2,051 $ 1,051
====== ===== ======= ======
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is Management's discussion and analysis of certain
significant factors which have affected the Registrant's financial
condition and results of operations during the periods included in the
accompanying financial statements.
A summary of the period-to-period change in the principal items
included in the balance sheets and which affect financial condition
follows:
Comparison of Balance Sheets at
April 1, 2000
and
June 30, 1999
Increase (Decrease)
(000's)
Current Assets $ 2,915
Property, Plant & Equipment Net 416
Other Assets 541
------
$ 3,872
=====
Current Liabilities $(1,551)
Long-Term Debt and
Other Liabilities 3,370
Shareholders' Equity 2,053
------
$ 3,872
======
Current assets at April 1, 2000, increased $2,915,000, or 12.8%, from
June 30, 1999, levels due primarily to an increase in inventories.
Inventories were increased as a result of several factors, including
continued start-up activity with the Mexican manufacturing initiative,
support for increased production levels for the Powerware program in the
Company's power distribution products business, and customer-related order
delays associated with the new magnetic resonance imaging device program in
the Company's electronics business.
The net increase in property, plant, and equipment of $416,000, or
2.9%, represents year-to-date expenditures in the amount of $2,051,000,
primarily associated with the Monterrey, Mexico start-up, offset by
depreciation of $1,635,000.
The increase of other assets of $541,000, or 12.3%, reflects an
increase in the pension asset the Company records associated with its
defined benefit pension plans. To date (through April 1, 2000), the
Company has recorded approximately $513,000 of income from these plans,
compared to income of approximately $630,000 for the similar nine-month
period of a year ago.
Current liabilities decreased $1,551,000, or 14.7%, as a result of
performance incentive payouts made against the June 30, 1999 accruals, the
early buyout of the lease obligation associated with the business
information system, and the refinancing of the credit agreement with the
Company's primary lender. In January, the Company signed a new three-year
unsecured credit agreement with favorable interest terms, which provided
for a revolving credit line with a $15,000,000 limit and a maturity date of
December 31, 2002. The Company has combined outstanding borrowings and
letters of credit against this facility of approximately $6,027,000 as of
April 1, 2000. Management believes that this agreement will provide
adequate liquidity for the foreseeable future. These reductions in current
liabilities were partially offset with increased trade payables associated
with higher inventory stock.
Long-term debt and other liabilities increased approximately
$3,370,000, or 37.6%. This increase includes approximately $760,000 of
revolver proceeds used to pay off the business system lease obligation, as
well as a refinancing of the credit arrangement, resulting in a balance
sheet debt reclassification from current to long-term. One of the term
loans outstanding at June 30, 1999, was satisfied in full by using funds
borrowed against the new revolver. The remainder of the increased
borrowings was used for capital expenditures.
The increase in shareholders' equity of $2,053,000 is primarily due to
the profit year-to-date of $2,031,000.
The Company has financed its working capital requirements, and a
portion of the year-to-date capital expenditures, through operations, with
the balance coming from bank borrowings. The Company expects that
operating activities for the remainder of fiscal year 2000 will provide
adequate cash flow to support any working capital requirements, as well as
support, in part, the anticipated additional $600,000 of capital
expenditures.
YEAR 2000
The Company did not experience any significant problems because of
Year 2000 issues.
RESULTS OF OPERATIONS:
Thirteen- and thirty-nine-week periods ended April 1, 2000,
compared with the comparable thirteen- and thirty-nine-week periods
ended April 3, 1999
--------------------
Consolidated sales for the thirteen- and thirty-nine-week periods
ended April 1, 2000, were $20,989,000 and $59,507,000, respectively,
compared with $19,100,000 and $60,281,000 for the comparable periods of a
year earlier. This is a 9.9% increase from the prior year quarter and a
1.3% decrease from the prior year-to-date. Sales for the quarter increased
$1,889,000 over the prior year quarter, as a result of improved sales in
the Company's power distribution products business, due primarily to the
new Powerware program sales of $1.2 million. This sales increase was
partially offset by lower quarterly sales in the Company's electronics
business, due to the loss of the Cisco Systems program in January 1999, and
lower sales in the Company's aerospace business, due primarily to material
shortages experienced in production. Lower year-to-date sales is explained
by the loss of the Cisco Systems program in the Company's electronics
business. The Company continues its efforts to fill this void with new
programs that will serve the fiber-optic cable power market, medical
diagnostic equipment market, and computer storage systems market.
Cost of sales as a percentage of sales for the thirteen- and thirty-
nine-week periods ended April 1, 2000, were 70.3% and 70.2%, respectively,
compared to 69.3% and 72.4% for the comparable periods of the prior year.
The decrease in gross margin in the quarter compared to the prior year
quarter is the result of lower margin percentages achieved in the Company's
power distribution business due to product mix (Powerware program), and the
Mexico start-up inefficiencies. The improvement in the year-to-date gross
margin percentage reflects the effect of having no Cisco business (lower
percentage margin account) and, year-to-date, a more profitable mix of
product sales in the Company's aerospace business, as well as favorable
material pricing obtained at the Company's power distribution business in
the first half of the fiscal year. Included in the current quarter and
year-to-date costs (cost of sales and general administrative costs
combined) is approximately $500,000 and $1,000,000 of expense,
respectively, associated with the start-up phase of the Mexican
manufacturing initiative. It is anticipated that a portion of these costs
will not repeat in future periods.
Research and engineering expenses as a percent of net sales for the
thirteen- and thirty-nine-week periods ended April 1, 2000, were 4.4% and
4.5%, respectively, compared to 4.7% and 4.6%, respectively, for the
comparable periods of the prior year. While cost remains relatively
constant as a percentage of sales in the year-to-year comparison, actual
cost has fallen approximately $95,000. It is anticipated, with the new
program initiatives in both the Company's electronics business and power
distribution products business, some additional engineering resources will
be required in the future.
Selling and administrative costs as a percent of net sales were 19.1%
and 18.7% for the thirteen- and thirty-nine-week periods ended April 1,
2000, compared to 18.5% and 17.3% for the comparable periods of the prior
year. Included, as an offset in the selling and administrative expenses in
the current year, is $350,000 of insurance recovery (income), associated
with the Company's 1997 municipal landfill settlement. Further, recorded
within the selling and administrative costs for the year-to-date current
and prior year is offsetting income of $237,000 and $486,000, respectively,
related to customer performance incentives. Exclusive of the offsetting
income items, selling and administrative expenses have increased
approximately $769,000 year-to-date over the prior year's comparable
period. Most of these additional expenses related to general and
administrative expenses associated with the Mexican start-up operation,
coupled with one-time professional fees associated with the Company's new
NASDAQ listing.
Interest expense as a percentage of sales for the thirteen and thirty-
nine week periods ended April 1, 2000, was .7%, compared to 1% and 1.1%,
respectively, for the comparable periods of the prior year. Interest
expense for the thirteen and thirty-nine week periods compared to the prior
year same periods decreased $36,000 and $228,000, respectively as a result
of lower debt levels and more favorable interest rates obtained as part of
the debt refinancing.
Income taxes as a percent of income before taxes for the thirteen- and
thirty-nine-week periods ended April 1, 2000, were 42% and 43%,
respectively, compared with 39% for the comparable periods of the prior
year. The effective tax rates for the current year are higher than those
of the prior year, primarily due to a lower Mexican effective tax rate
(than domestic) used in tax benefiting Mexico operating losses.
Backlog at April 1, 2000, was $11,272,000, compared with $15,738,000
at the end of the comparable period of the prior year. The lower backlog
at April 1, 2000, primarily reflects a smaller backlog in the Company's
aerospace and electronics businesses. In the aerospace business,
production throughput improvements have enabled the Division to bring
customer programs current, thereby reducing the outstanding backlog, while
the pursuit of new programs continues. The smaller backlog in the
electronics business is primarily the result of a delay in a customer's
program, which is expected to resume orders and shipping schedules in the
near future.
On April 26, 2000, the Company entered into an Agreement and Plan of
Merger ("Agreement") with Miranda Holdings, Inc. and Miranda Acquisition
Corp. (collectively, "Miranda"), aligned with Robert J. McKenna, Acme
Electric Corporation's Chairman and Chief Executive Officer, pursuant to
which the shareholders of the Company would be asked to approve the merger
of the Company into Miranda for a consideration of $7.65 per share. On May
4, 2000, the parties entered into Amendment #1 to the Agreement increasing
the consideration to be received by the shareholders of the Company to
$8.00 per share. Closing the transaction is conditioned upon approval of
Acme's shareholders, the availability of the financing necessary to
consummate the transactions, and other customary conditions. The
transaction is expected to close within the next 60 to 120 days.
Portions of the narrative set forth in this Financial Condition and
Results of Operations, which are not historical in nature, are forward-
looking statements, based upon current expectations, all of which are
subject to risk and uncertainties, and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. One
can identify these forward-looking statements by their use of the words
such as "anticipates," "believes," "intends," "budgeted," and other words
of similar meaning. The Company's actual performance may differ materially
from that contemplated by the forward-looking statements due to a variety
of factors, which include, among other things, inaccurate assumptions, the
condition of the economy, the condition of the markets that the Company
serves, and the success of the Company's strategic plans and contemplated
capital investments. The Company does not assume the obligation to update
any forward-looking statements, whether as a result of new information,
future events, or otherwise.
PART II
OTHER INFORMATION
Item 5. Other Information
- --------------------------
a. Exhibits
Amended Employment Agreement
effective March 17, 2000, between
Robert J. McKenna and Acme
Electric Corporation. Exhibit 10.1
Acme Electric Supplemental
Retirement Plan Trust dated
March 30, 2000, between Acme
Electric Corporation and John B.
Drenning as Trustee. Exhibit 10.2
Interim Report dated
April 24, 2000, for the
quarter ended April 1,
2000. Exhibit 13
Financial Data Schedule. Exhibit 27
News Release of April 24,
2000, announcing the third
quarter results for fiscal year 2000. Exhibit 99
Item 6. Reports on Form 8-K
- ---------------------------
The following Form 8-K reports were filed during the thirteen-week
period ended April 1, 2000:
Period Covered
(Date of Earliest
Event Reported) Items Reported Date of Report
---------------- -------------- --------------
April 26, 2000 Item 5 - The Company April 27, 2000
announced that it has
accepted a buyout offer.
May 2, 2000 Item 5 - The Company May 2, 2000
entered into an Agreement
and Plan of Merger on
April 26, 2000.
May 4, 2000 Item 5 - The Company May 5, 2000
entered into an amended
Agreement and Plan of
Merger on May 4, 2000.
SIGNATURES
Pursuant to the requirements 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.
ACME ELECTRIC CORPORATION
(Registrant)
Date: May 16, 2000 /s/
Robert J. McKenna
Chairman, President and
Chief Executive Officer
Date: May 16, 2000 /s/
Michael A. Simon
Corporate Controller and
Assistant Secretary
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<PERIOD-END> APR-01-2000
<CASH> 448
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<RECEIVABLES> 11,938
<ALLOWANCES> 294
<INVENTORY> 11,582
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0
0
<COMMON> 24,228
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<TOTAL-REVENUES> 20,989
<CGS> 14,752
<TOTAL-COSTS> 19,675
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EXHIBIT 13 - THIRD QUARTER INTERIM REPORT
To Our Shareholders
Third quarter sales increased 9.9% over the same quarter last year. Net
income decreased from $762,000 to $672,000, largely due to costs associated
with our new Monterrey, Mexico, plant. These costs will decline over the
fourth quarter, as we continue to ramp up production there.
Our Power Distribution Products Division has enhanced its ability to
supply electrical products through an agreement with two significant e-
commerce outlets, supplyFORCE.com and SourceAlliance.com.
supplyFORCE.com is a network of 244 independent distributors within the
Affiliated Distributors Marketing Group. SourceAlliance.com is a
collection of electrical distributors and manufacturers using the Allen-
Bradley distributor base to supply national account contracts, as well as
day-to-day purchases.
Programs with Marconi (formerly Picker Corporation), Tachion, 3PARdata,
and Exadrive continue to progress at our Electronics Division. We expect
the next six months to be quite busy, as designs are finalized and we move
into production.
Our Aerospace Division is expected to secure multi-year contracts on the
Javelin missile and Apache helicopter programs within the next 90 days. We
have been supplying product for both of these programs during the past few
years and hope to receive five-year extensions on each.
Over the next six months, we will be finalizing design and preparing for
production on the Integrated Standby Flight Display battery back-up system
for Boeing's 737 NG program, and expect production to begin in October.
We anticipate a solid fourth quarter and continuing progress into the
next fiscal year.
/s/
Robert J. McKenna
Chairman and CEO
April 24, 2000
___________________________________________________________________________
ACME ELECTRIC CORPORATION
East Aurora, New York
The following tables set forth certain unaudited financial information
for thirty-nine-week periods ended April 1, 2000, and April 3, 1999 (in
thousands, except for per share data):
BALANCE SHEET
04/01/00 04/03/99 06/30/99
-------- -------- --------
Current Assets $25,655 $23,215 $22,740
Fixed Assets and Other - Net 19,605 18,652 18,648
------ ------ ------
Total $45,260 $41,867 $41,388
====== ====== ======
Current Liabilities $ 9,001 $10,745 $10,552
Long-Term Debt and Other 12,330 10,309 8,960
Shareholders' Equity 23,929 20,813 21,876
------ ------ ------
Total $45,260 $41,867 $41,388
====== ====== ======
INCOME STATEMENT
13 Weeks 13 Weeks 39 Weeks 39 Weeks Fiscal Year
Ended Ended Ended Ended Ended
04/01/00 04/03/99 04/01/00 04/03/99 06/30/99
-------- -------- -------- -------- --------
Net Sales $20,989 $19,100 $59,507 $60,281 $79,813
Net Income $672 $762 $2,031 $1,686 $2,707
Net Income Per Common Share
Basic $.13 $.15 $.40 $.33 $.53
Diluted $.13 $.15 $.40 $.33 $.53
Weighted Average Number of Shares
Outstanding Used to Compute
Income Per Common Share:
Basic 5,076 5,061 5,074 5,057 5,060
Diluted 5,141 5,097 5,137 5,084 5,091
EXHIBIT 99 - NEWS RELEASE -THIRD QUARTER RESULTS
CONTACT:
Richard Becht
(716) 655-3800
FOR IMMEDIATE RELEASE
ACME ELECTRIC CORPORATION REPORTS THIRD QUARTER RESULTS
EAST AURORA, N.Y., April 24, 2000 -- Acme Electric Corporation
(Nasdaq: ACEE) announced today that, for the third quarter ended April
1, 2000, net sales were $20,989,000 with net income of $672,000, or
$.13 per share, compared with sales of $19,100,000 and net income of
$762,000, or $.15 per share, for the comparable period last year.
Sales for the thirty-nine-week period ending April 1, 2000, were
$59,507,000, resulting in net income of $2,031,000, or $.40 per share,
compared with sales of $60,281,000 with net income of $1,686,000, or
$.33 per share for the comparable period of the previous year.
Robert J. McKenna, Chairman and CEO, stated that, "Sales
increased 9.9% over the prior year quarter, but earnings declined from
$762,000 to $672,000 due, primarily to costs associated with the start
up of our new Monterrey, Mexico, plant. Several new programs are in
development and will move into production over the next nine months.
We expect a solid fourth quarter and continuing progress through next
year."
Founded in 1917, Acme Electric Corporation is a leader in the
design and manufacture of power conversion equipment for electronic
and electrical systems for industrial, commercial, residential, and
military and aerospace applications. Corporate headquarters are in
East Aurora, N.Y., with operations in Cuba, N.Y., Lumberton, N.C., and
Tempe, Ariz.
# # # #
ACME ELECTRIC CORPORATION
Comparative Analysis
(in thousands, except per share data)
13 Weeks Ended 39 Weeks Ended
04/01/00 04/03/99 04/01/00 04/03/99
-------- -------- -------- --------
Net Sales $20,989 $19,100 $59,507 $60,281
Net Income $672 $762 $2,031 $1,686
Net Income Per Common Share
Basic $.13 $.15 $.40 $.33
Diluted $.13 $.15 $.40 $.33
Weighted Average Number of Shares
Outstanding Used to Compute
Income Per Common Share:
Basic 5,076 5,061 5,074 5,057
Diluted 5,141 5,097 5,137 5,084
Company news is available by FAX: dial 1-800-758-5804, and input
extension 006675; or visit our web site at acmeelec.com
AMENDED EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of February, 1999 and
amended as of the 17th day of March, 2000 by and between Acme
Electric Corporation, a New York corporation having an office at
400 Quaker Road, East Aurora, New York, (the "Company") and Mr.
Robert J. McKenna, residing at 5 Hummingbird Court, Orchard Park,
New York, ("Mr. McKenna").
W I T N E S S E T H:
WHEREAS, Mr. McKenna is Chief Executive Officer ("CEO"),
Chairman and President of the Company; and
WHEREAS, the Company believes that it is in its best
interest to assure the continued service of Mr. McKenna as its
CEO, Chairman and President on the terms and conditions
hereinafter set forth; and
WHEREAS, Mr. McKenna is desirous of receiving assurances
that, should a "change in control" as hereinafter defined take
place at the Company, he will be provided with security as to his
position, compensation and benefits.
NOW, THEREFORE, in consideration of the premises and mutual
agreement hereinafter contained, the parties hereto agree as
follows:
1. The Company hereby employs Mr. McKenna and Mr. McKenna
hereby accepts employment with the Company as its CEO, Chairman
and President upon the terms and conditions herein contained.
2A. The initial Term shall be for a period commencing on
the date hereof and terminating three years from the date of
commencement or three years from its most recent extension date,
whichever is later.
At the end of each month during the Term, the Term
shall be automatically continued and extended for one additional
month, unless on or before fifteen days prior to the end of any
month during the Term, the Company shall give to Mr. McKenna or
Mr. McKenna shall give to the Company a notice not to extend.
Then, in such event, the Term as theretofore automatically
extended shall be deemed further extended for one additional
month, and thereafter there shall be no further automatic
extensions. (As an example, should the Company or Mr. McKenna
give to the other party a written notice not to extend on
November 15, 2000, the Agreement would be deemed extended to, and
would expire on, December 31, 2003.) "Term" as used in this
Agreement shall be deemed to mean the period of employment from
the date hereof through February 1, 2002, or as automatically
extended pursuant to this Paragraph 2A.
2B. Should the Company breach this Agreement pursuant to
the provisions of Paragraphs 8A, 8B, 8C and 9 herein, Mr. McKenna
shall be entitled to the following:
a. Payments in an amount equal to the base salary
payable each year of the then remaining Term of the
Agreement, with such base salary to be in an amount equal to
Mr. McKenna's base salary in effect prior to such breach,
plus bonus each year of the remaining Term of the Agreement.
The bonus amount each year will be equal to the average of
Mr. McKenna's greatest two out of the previous three years'
bonuses, or 50% of base salary, whichever is greater.
b. Company paid full medical, dental and disability
insurance benefits and life insurance benefits comparable to
those enjoyed prior to such breach, which shall extend for
the duration of the lives of Mr. McKenna and his spouse or
until Mr. McKenna accepts other full-time employment which
provides the same or similar benefits and he elects to
accept such other benefits in lieu of the benefits provided
by the Company. In the event that Mr. McKenna elects to
accept such other benefits, he and his spouse preserve the
right to require the Company to reinstate the benefits
enjoyed at the time of the breach for the duration of the
lives of Mr. McKenna and his spouse.
c. The continuation over the then remaining Term of
this Agreement, in such amounts and in a manner consistent
with that provided immediately prior to such breach, of:
contributions in Mr. McKenna's behalf based on his base
salary to the Company's Pension Plan for Salaried Employees
and to the Supplemental Executive Retirement Plan; Mr.
McKenna's Company furnished automobile; and dues and fees
for Mr. McKenna's club memberships.
d. Payments made pursuant to this Paragraph 2B shall
be made monthly from the date the Company breached this
Agreement throughout the then remaining Term of the
Agreement, or at Mr. McKenna's option in a lump sum within
thirty (30) days of notification of such breach. Such lump
sum shall be an amount equal to the discounted present value
of the payments which were to be paid over the Term
specified herein discounted at a rate of 5% per annum.
2C. "Change in Control" as used in this Agreement shall
mean any one of the following:
a. An acquisition of 35% or more of the beneficial
ownership, directly or indirectly, of the Company's then
outstanding stock, or merger or consolidation by or with
another person, entity or group;
b. A tender offer or tender offers for the Company's
stock in which 35% or more of the then outstanding stock of
the Company is tendered or purchased by a person, single
entity or affiliated group;
c. A reclassification of securities or
recapitalization of the Company which, directly or
indirectly, disproportionately increases or decreases the
outstanding shares of any class of equity securities of the
Company by 35% or more;
d. A sale, lease, exchange, mortgage, pledge,
transfer or other disposition of all or substantially all
the assets of the Company approved by the Board of Directors
to which Mr. McKenna dissented;
e. A change in control shall be deemed to have
occurred if at any time less than 51% of the members of the
Board of Directors shall be persons who were either
nominated for election by the Board of Directors or were
elected by the Board of Directors.
3. Except as otherwise herein provided during the Term of
the Agreement, the Company shall employ Mr. McKenna as its CEO,
Chairman and President and he shall serve the Company in such
capacity, performing the normal duties of a CEO, Chairman and
President of a corporation in the Company's business, subject at
all times to the direction and control of the Board of Directors
of the Company, shall devote his time, attention, skill and
energy to the business, welfare and affairs of the Company and
shall use his best efforts to promote the interests of the
Company, it being understood that the conduct of such duties does
not require his attendance at the offices of the Company during
any particular fixed periods. Mr. McKenna hereby consents to
continue to serve as a Director of the Company or any subsidiary
thereof without additional compensation.
4A. The Company shall pay and Mr. McKenna shall accept as
compensation for all services to be rendered hereunder and during
the Term a base salary determined by the Board of Directors of
the Company pursuant to its normal procedure for setting yearly
salaries for officers of the Company ($295,000 per annum as of
March 17, 2000). Such payments hereunder shall be payable in
accordance with the prevailing salary payroll practices of the
Company and subject to such deductions as are agreed to by Mr.
McKenna. Nothing contained in this Agreement shall be deemed to
prevent the Company during the Term hereof from giving bonuses or
other additional consideration to Mr. McKenna from time to time
as determined by the Board of Directors or, except as otherwise
specifically provided herein, prevent Mr. McKenna from receiving
benefits in accordance with any benefit plan or program made
available by the Company to its officers, salaried employees or
directors.
4B. The Company shall reimburse Mr. McKenna for all
expenses reasonably incurred by him in connection with his
performance of services to the Company, including entertainment
and travel. Mr. McKenna shall be entitled to receive or
participate in all other fringe benefits, such as medical and
hospital plans, profit-sharing plans and pension plans, stock
options under the then existing corporate stock option plan, and
use and maintenance of an automobile of a type and in a manner
consistent with the practices prevailing at the time of the
execution of this Agreement.
5A. Mr. McKenna acknowledges that during the course of his
employment hereunder he will acquire, possess and become exposed
to confidential and proprietary information and materials of the
Company. Accordingly, during his employment hereunder and for a
period of eighteen (18) months thereafter, he shall not, for any
reason whatever, except in the regular authorized course of the
Company's business under appropriate secrecy provisions, directly
or indirectly, use or exploit or disclose or divulge to anyone
(who is not authorized to receive the same), without the prior
written permission of the Company, any proprietary information,
including, but not limited to, trade secrets, know-how, data,
materials or other knowledge relating to or pertaining to the
business of the Company, unless the same (i) has been published
and/or has become a part of the public domain other than by acts
of omission by Mr. McKenna; (ii) has been lawfully furnished or
made known to Mr. McKenna by a third party without restriction on
disclosure or use; and (iii) was in Mr. McKenna's possession at
the time he first became associated with the Company and was not
acquired by Mr. McKenna either directly or indirectly from the
Company.
5B. All documents, records, prototypes or other tangible
embodiments or evidence of the discoveries, trade secrets,
information, know-how, data, materials or other knowledge
previously referred to, which may at any time be acquired by or
come into the possession of Mr. McKenna during his employment
hereunder (except materials excluded in Subparagraph A hereof),
are the sole and exclusive property of the Company and must be
surrendered to the Company, without demand therefor, upon
termination of Mr. McKenna's employment hereunder, or upon the
request by the Company at any other time; and, in addition, prior
to such termination of employment or upon the reasonable request
by the Company at any other time, Mr. McKenna will prepare
materials to accurately and adequately describe, set forth or
embody any of the foregoing and deliver the same to the Company
in order to accomplish or complete the transfer of any and all of
the foregoing to the Company and shall be reimbursed by the
Company for all of his reasonable out-of-pocket expenses in
connection therewith.
5C. Mr. McKenna agrees to execute all documents and to
take all such other action as the Company may reasonably require
(being reimbursed for all of his reasonable out-of-pocket
expenses in this connection) in order to assign to the Company
any and all rights to any materials prepared by him during and in
connection with his employment hereunder.
6A. Mr. McKenna agrees that, during his employment
hereunder for a period of eighteen (18) months after termination
of his employment hereunder for whatever reason (except in the
event such termination is caused by (a) a material breach of this
Agreement by the Company, or (b) the Company's bankruptcy (as
defined in Paragraph 14 hereof)), he shall not (without the prior
written consent of the Company) (i) solicit as a client or
customer in competition with the Company any persons or entities
which were, during his employment hereunder, clients or customers
of the Company, (ii) enter into any business arrangements with
any of the foregoing which could be reasonably deemed to be
materially competitive with or materially injurious to any
business in which the Company is engaged at the time of such
termination, or (iii) solicit, or be instrumental in any way in
causing, any other person to leave the employ of the Company.
Mr. McKenna further agrees that he shall not (without the prior
written consent of the Company) for a period of eighteen (18)
months after the termination of his employment hereunder for any
reason (except in the event the termination is caused by a breach
of this Agreement by the Company), directly or indirectly,
individually or as a director, partner, employee, officer or
agent, engage in any employment, performance of services or other
activity on behalf of any company if such employment, performance
of services or other activity can be reasonably deemed to be
materially competitive with or materially injurious to any
business in which the Company is engaged at the time of such
termination.
6B. For purposes only of determining whether services by
Mr. McKenna during the aforesaid eighteen (18) month period after
his termination of employment hereunder shall be "materially
competitive with or materially injurious to the Company" within
the meaning of this paragraph, either party may initiate
arbitration proceedings to make such determination pursuant to
Paragraph 13 hereof.
6C. If Mr. McKenna commits a material breach of any of the
provisions of Paragraph 5A, 5B, 5C or 6A, the Company shall have
the right and remedy to have such provisions specifically
enforced by any court having equity jurisdiction, since any such
breach or threatened breach will cause irreparable injury to the
Company and money damages will not provide an adequate remedy to
the Company. The initiation of, or participation in, any such
proceeding shall not constitute a waiver of the arbitration
provisions of Paragraph 10.
7. During the Term, Mr. McKenna will not directly or
indirectly engage in the business of, or own or control any
interest in (except as a passive investor owning less than ten
percent (10%) of the equity securities of a publicly-owned
company), or act as a director, officer or employee of, or
consultant to, any individual, partnership, joint venture,
corporation or other business entity directly or indirectly
engaged anywhere in the United States in any business competing
with the business carried on by the Company or any of its
subsidiaries.
8A. It is specifically understood and agreed that the
Company may terminate this Agreement and its obligations to Mr.
McKenna hereunder prior to a change in control or upon voluntary
retirement by Mr. McKenna from active employment with the
Company. Notwithstanding the foregoing, at any time during the
Term of this Agreement, after a change of control has taken
place, any termination or notice of termination shall be deemed a
breach of this Agreement and a notice not to extend, and the
provisions of Paragraph 2B above shall apply so as to have the
effect of fixing the Term as provided herein and terminating Mr.
McKenna's employment with the Company.
8B. At any time during the Term of this Agreement, after a
change in control has taken place, should the Company reduce the
compensation or benefits then being paid to Mr. McKenna, it shall
be deemed a breach of this Agreement and a notice not to extend,
and the provisions of Paragraph 2B above shall apply so as to
have the effect of fixing the Term as provided herein and
terminating Mr. McKenna's employment with the Company.
8C. At any time during the Term of this Agreement, after a
change in control has taken place, should the Company change Mr.
McKenna's position or duties without his written consent, it
shall be deemed a breach of this Agreement and a notice not to
extend, and the provisions of Paragraph 2B above shall apply so
as to have the effect of fixing the Term as provided herein and
terminating Mr. McKenna's employment with the Company.
9. In the event that during Mr. McKenna's lifetime and
during the Term of this Agreement, after a change in control has
taken place, the Company defaults as to any payment under this
Agreement or fails to make any payments provided for in this
Agreement and fails to cure such default or make such payment
within ten (10) days after written notice thereof, or written
demand therefor, or in the event that the Company terminates this
Agreement for cause and it is ultimately determined that such
termination was wrongful, Mr. McKenna may elect to treat such
default or wrongful termination as a breach of this Agreement and
shall he entitled to recover all of his expenses, including
reasonable attorneys' fees, in prosecuting or defending any
actions or proceedings arising out of, or in any other way
relating to, the matters referred to in this paragraph, and the
provisions of Paragraph 2B of this Agreement shall apply.
10. Any controversy, claim or dispute arising out of or
relating to this Agreement, including without limitation, any
claim for breach of this Agreement, shall be settled by
arbitration in accordance with the Rules of the American
Arbitration Association (AAA) obtaining at the time of such
proceeding, except that the authority of the arbitrators shall be
limited to the interpretation and enforcement of the terms and
conditions of this Agreement and the arbitrators shall set forth
in writing the reasons for their decisions. Judgment upon any
award rendered by the arbitrators pursuant hereto may be entered
in any court having jurisdiction thereof and thereafter enforced.
Either party shall have the right to initiate arbitration
proceedings. Any arbitration shall take place under the auspices
of the AAA in Buffalo, New York. There shall be three
arbitrators. Each party shall appoint one arbitrator. If either
party fails to appoint an arbitrator within five (5) days from
the date upon which the notice of the initiating party of its
intention to arbitrate is received by the other party to such
proceedings, the AAA shall make the appointment for that party.
The two arbitrators appointed in the manner provided for above
shall appoint a third arbitrator, mutually acceptable to them.
If the two arbitrators first appointed cannot, for any reason,
agree upon a third arbitrator, or an acceptable person is unable
to act, the AAA shall appoint the third arbitrator in accordance
with its rules.
11. Mr. McKenna may terminate this Agreement prior to the
date of expiration of the Term herein above set forth by written
notice to the Company if the Company shall file a petition in
bankruptcy, make a voluntary assignment for the benefit of
creditors, file a petition or an answer seeking an arrangement
with creditors or take advantage of any insolvency law, or if the
Company applies for or consents to the appointment of a receiver
or trustee of all or a substantial part of its assets, or an
order, judgment or decree shall be entered in any court of
competent jurisdiction appointing a receiver of all or a
substantial part of its assets, and such order, judgment or
decree shall continue unstayed and in effect for any consecutive
period of ninety (90) days.
12. This Agreement and all rights hereunder are personal to
Mr. McKenna and shall not be assignable; provided, however, that
all of Mr. McKenna's rights under the Agreement shall inure to
the benefit of his heirs, distributees, personal representatives
or designees or other legal representatives, as the case may be.
Any person, firm or corporation succeeding to the business of the
Company by merger, purchase, consolidation or otherwise, shall
assume by contract or operations of law the obligations of the
Company hereunder; provided, however, that the Company shall,
notwithstanding such assumption or assignment, remain liable and
responsible for fulfilling the obligations of the Company under
this Agreement.
This Agreement supersedes and replaces any and all
present written or oral agreements of employment between the
parties hereto, and all such agreements are hereby deemed
canceled, revoked and of no further force or effect; provided,
however, that in the event that Mr. McKenna's employment is
terminated prior to a change in control or under circumstances
not involving a breach of this Agreement, Mr. McKenna, in
addition to the other benefits provided by this Agreement, shall
be entitled to an amount equal to six (6) months base salary paid
in a lump sum in accordance with the letter of August 12, 1992
from the Company to Mr. McKenna.
13. Without in any way implying that any provisions hereof
is invalid or unenforceable, the validity or unenforceability of
any provision hereof shall in no way affect the validity or
enforceability of any other provision.
14. This Agreement constitutes the whole agreement between
the parties hereto, and there are no terms other than those
stated herein. No variation hereof shall be deemed valid unless
in writing and signed by the parties hereto, and no discharge of
the terms hereof shall be deemed valid unless by full performance
by the parties hereto or by a writing signed by the parties
hereto. No waiver by either party of any provisions or condition
of this Agreement to be performed by them should be deemed a
waiver of any other provisions of this Agreement.
15. Any notice, statement, report, request or demand
required or permitted to be given by this Agreement shall be in
writing, and shall be sufficient if addressed and sent by
certified mail, return receipt requested, to the parties at the
addresses set forth above, or at such other place that either
party may designate by notice to the other and shall be deemed
given when so mailed.
16. This Agreement has been made in, and shall be
interpreted according to the laws of, the State of New York. The
parties hereto submit to the jurisdiction of the courts of the
New York 7upreme Court, County of Erie, for the purpose of any
actions or proceedings which may be required to enforce the
provisions of this Agreement or an award made in any arbitration
proceeding initiated hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their
respective hands and seals causing these presents to be executed
as of the day and year first above written.
Witnessed:
/s/ John J. Zak /s/
Robert J. McKenna
Witnessed: ACME ELECTRIC CORPORATION
/s/ Maryann J. Graf By: /s/
Randall L. Clark
Chairman, Compensation Committee
BFLODOCS:335560_1 (76X401)
ACME ELECTRIC CORPORATION
SUPPLEMENTAL RETIREMENT PLAN TRUST
THIS TRUST AGREEMENT, made and entered into as of the
30 day of March, 2000 by and between Acme Electric Corporation, a
corporation organized under the laws of the State of New York,
hereinafter referred to as the "Company," and John B. Drenning,
an individual with offices at One M&T Plaza, Suite 2000, Buffalo,
New York 14203-2391, hereinafter referred to as the "Trustee".
WITNESSETH THAT:
(1) The Company has entered into Supplemental
Executive Compensation Agreements (the "Agreements") to provide
supplemental retirement income and benefits for certain executive
employees of the Company ("Executives") as identified in Exhibit
A;
(2) The amount and timing of benefit payments (the
"Supplemental Benefits") to which Executive participants and, if
applicable, their surviving spouses (the "Trust Beneficiaries")
are or may become entitled are set forth in the Agreements;
(3) In the event of a Change of Control (as defined in
Section 11.5), the Trust Beneficiaries shall be limited to those
individuals who are Trust Beneficiaries at the time of the Change
of Control;
(4) The Company has established a trust fund to aid it
in accumulating the amounts necessary to satisfy its contractual
liability to pay Supplemental Benefits under the terms of the
Agreements;
(5) The Company is obliged to pay all Supplemental
Benefits from its general assets and the establishment of this
trust shall not reduce or otherwise affect the Company's
continuing liability to pay Supplemental Benefits from such
assets, except that the Company's liability shall be offset by
actual benefit payments made from this trust;
(6) The trust established by this Trust Agreement is
intended to be a "grantor trust" with the result that the corpus
and income of the trust be treated as assets and income of the
Company pursuant to Sections 671 through 679 of the Internal
Revenue Code of 1986, as amended (the "Code"); and
(7) The Company intends that the Trust Fund (as
hereinafter defined) shall at all times be subject to the claims
of its senior creditors and general unsecured creditors as herein
provided and that the Agreements not be deemed funded within the
meaning of the Employee Retirement Income Security Act of 1974,
as amended, solely by virtue of the existence of this Trust;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the Company and the Trustee declare and agree
as follows:
1 SECTION 1. Establishment and Title of the Trust
1.1 The Company hereby establishes with the Trustee a
trust to be known as the Acme Electric Corporation Supplemental
Retirement Plan Trust (the "Trust") consisting of such sums of
money and other property acceptable to the Trustee as from time
to time shall be paid or delivered to the Trustee. All such
money and other property, all investments and reinvestments made
therewith or proceeds thereof and all earnings and profits
thereon, that are not paid to the Company as provided in
Section 4.2 of this Trust Agreement, less all payments and
charges as authorized herein, are hereinafter referred to as the
"Trust Fund." The Trust Fund shall be held by the Trustee IN
TRUST and shall be dealt with in accordance with the provisions
of this Trust Agreement. The Trust Fund shall be held for the
exclusive purpose of reimbursing the Company for payments it
makes pursuant to the Agreements to Trust Beneficiaries or
providing direct payments to Trust Beneficiaries in accordance
with the provisions of this Trust Agreement and defraying
reasonable expenses of administration in accordance with the
provisions of this Trust Agreement until all such payments
required by this Trust Agreement have been made; provided,
however, that the Trust Fund shall at all times be subject to the
claims of the senior creditors and general unsecured creditors of
the Company as set forth in Section 8 of this Trust Agreement.
SECTION 2. Acceptance by the Trustee
2.1 The Trustee accepts the Trust established under
this Trust Agreement on the terms and subject to the provisions
set forth herein, and he agrees to discharge and perform fully
and faithfully all of the duties and obligations imposed upon him
under this Trust Agreement.
SECTION 3. Limitation on Use of Funds
3.1 Unless the Trust is terminated in accordance with
the provisions of Sections 6.5, 13.1, 13.2 or 13.3, no part of
the corpus of the Trust Fund shall be recoverable by the Company
or used for any purpose other than for the exclusive purpose of
providing payments to the Company to reimburse it for providing
payments to Trust Beneficiaries in accordance with the provisions
of Section 6.2 or directly to Trust Beneficiaries in accordance
with the provisions of Section 6.3 and defraying reasonable
expenses of administration in accordance with the provisions of
this Trust Agreement until all such payments required by this
Trust Agreement have been made; provided, however, that
(i) nothing in this Section 3.1 shall be deemed to limit or
otherwise prevent the payment from the Trust Fund of expenses and
other charges as provided in Sections 9.1 and 9.2 and (ii) the
Trust Fund shall at all times be subject to the claims of the
senior creditors and general unsecured creditors of the Company
as set forth in Section 8 of this Trust Agreement.
3.2 Without limiting the foregoing, no part of the
corpus of the Trust Fund may be loaned to the Company.
SECTION 4. Duties and Powers of the Trustee With
Respect to Investments
4.1 The Trustee shall invest and reinvest the
principal and income of the Trust Fund and keep the Trust Fund
invested, without distinction between principal and income, in
such debt or equity securities as are permitted in accordance
with the Investment Guidelines which are, or when adopted shall
be, attached hereto as Exhibit B, as amended from time to time by
the Company. The Trustee may rely on the Investment Guidelines
provided to him until he receives written notice to the contrary
from the Company. Except as otherwise provided by applicable
law, the Trustee shall have no liability or responsibility for
the Investment Guidelines or the appropriateness thereof. If at
any time no Investment Guidelines have been provided to the
Trustee, or if the Investment Guidelines provided to the Trustee
are revoked and new Investment Guidelines are not substituted
therefor, the Trustee shall invest the Trust Fund in such one or
more instruments consisting of U.S. Treasury Bills, Notes or
Bonds, U.S. Government Agency issues, notes and other fixed
income securities issued by State and local governments, time
deposits, certificates of deposit, commercial paper, bankers'
acceptances, repurchase agreements and pooled short-term
investment funds, as the Trustee in his sole discretion shall
determine; provided, however, that the investment of Company
assets in such investments is not prohibited by the terms of any
credit agreement to which the Company is a party.
4.2 Unless directed otherwise by the Company, all net
income of the Trust Fund shall be added to, and used for the same
purposes as, the corpus of the Trust Fund.
SECTION 5. Additional Powers and Duties of the Trustee
5.1 The Trustee shall have the powers conferred by
Section 11-1.1 of the New York Estates, Powers and Trusts Law, as
amended from time to time, and by other provisions of law, in
addition to any powers and authority granted by this Trust
Agreement, with respect to property constituting a part of the
Trust Fund.
5.2 From time to time and subject to the restrictions
on amendments in Section 14.1(iii), the Company may substitute
new or revised Agreements or add additional executives to the
entitlements hereunder by delivering appropriate documents to the
Trustee.
SECTION 6. Payments by the Trustee
6.1 The establishment of the Trust and the payment or
delivery to the Trustee of money or other property acceptable to
the Trustee shall not vest in any Trust Beneficiary any right,
title or interest in and to any assets of the Trust.
6.2 The Trustee shall pay to the Company upon the
written request of the Company the amount of Supplemental
Benefits paid by the Company to Trust Beneficiaries.
6.3 To the extent that the Company has not made a
payment of Supplemental Benefits in accordance with the
Agreements to Trust Beneficiaries, such Beneficiaries may provide
written notice to the Trustee and to the Company. The Trustee
shall thereupon make direct payments of Supplemental Benefits to
the Trust Beneficiaries from the assets of the Trust, if and to
the extent such assets are available for distribution, in
accordance with the Agreements. In the event that the Company
notifies the Trustee in writing that any Trust Beneficiary is not
entitled to receive a direct payment because the Company is
making payments of Supplemental Benefits to the Trust
Beneficiary, the Trustee shall suspend all payments to such Trust
Beneficiary until he receives written notification from the
Company or an order from a court of competent jurisdiction to
make direct payments to such Trust Beneficiary. The Trustee
shall not make a payment to a Trust Beneficiary to the extent
that the amount of the payment required by such Agreement exceeds
the amount then held in the Trust. In the event that a Trust
Beneficiary is deceased and the Agreement provides for a payment
to be made to such Trust Beneficiary on or after such Trust
Beneficiary's death, such payment shall be made to the legal
representative of such Trust Beneficiary's estate.
6.4 If the Trust assets are not sufficient to make one
or more payments of Supplemental Benefits to a Trust Beneficiary
(or his or her estate) in accordance with the Agreement, the
Company shall make the balance of such payment when it falls due.
6.5 Except as provided in Section 8 regarding payments
to Trust Beneficiaries if the Company is insolvent, but
notwithstanding any other provision of this Trust Agreement to
the contrary, if at any time (i) the Trust is finally determined
by the Internal Revenue Service (the "IRS") not to be a "grantor
trust," with the result that the income of the Trust Fund is not
treated as income of the Company pursuant to Sections 671 through
679 of the Code, (ii) a Federal tax is finally determined by the
IRS to be payable by the Trust Beneficiaries with respect to the
entire value of their interest under the Trust Fund prior to the
final distribution of the Trust assets to the Trust
Beneficiaries, or (iii) the Trustee receives an opinion of
counsel satisfactory to it to the effect that it is likely that
the IRS will determine that a tax will be payable by Trust
Beneficiaries as described in (ii) and it is likely that such
determination will be upheld, then the Trust shall immediately
terminate and the assets shall be liquidated and paid in a lump
cash sum as soon as practicable by the Trustee to the Company.
If the IRS determination referred to in (ii) or the opinion
referred to in (iii) applies to less than the entire value of the
Trust Fund for all Trust Beneficiaries, then that part of the
assets to which such determination or opinion relates shall be
liquidated and paid in a lump cash sum as soon as practicable by
the Trustee to the Company and the Trust shall continue in
effect.
6.6 The Company shall remain primarily liable to pay
Supplemental Benefits under the Plan. However, the Company's
liability under the Plan shall be reduced or offset to the extent
Supplemental Benefit payments are made from the Trust Fund.
6.7 The Trustee shall deduct from each payment to a
Trust Beneficiary under this Trust Agreement any Federal, state
or local withholding or other taxes or charges which the Trustee
may be required to deduct under applicable law; provided,
however, that the Trustee shall be fully protected in relying
upon information provided by the Company as to state or local tax
withholding requirements.
SECTION 7. Funding of the Trust
7.1 The Company, at its discretion, may from time to
time make contributions to the Trust Fund.
7.2 Within sixty (60) days following a Change of
Control, the Company shall contribute to the Trust Fund an amount
equal to the amount that, when added to the Trust Fund, would
cause the Trust Fund to have sufficient assets to provide the
aggregate of the benefits described in the Agreements (determined
as of the date of the Change of Control (as defined in Section
11.5) and assuming that the Company terminated the Agreements on
such date. Thereafter, the Company shall make annual
contributions within sixty (60) days following the end of the
calendar year in an amount equal to the above and determined by
substituting the last day of that calendar year for the date of
the Change of Control. The amount to be contributed to the Trust
Fund by the Company following any Change of Control shall be
determined by the Company's actuary ("Actuary"). The Actuary
shall be such actuarial firm as, subject to any conditions on
removal provided in Section 11.6, as shall be designated by the
Company and as consented to by the Trust Beneficiaries.
7.3 The Company shall make additional contributions to
the Trust Fund as and when required by the Trustee to fund the
payment of the expenses of the Trust, including the expenses for
compensation of the Trustee for his services and other expenses
described in Section 9.
7.4 The Company may at any time or from time to time
make additional contributions to the Trust Fund to augment the
principal to be held, administered and disposed of by the Trustee
as provided by this Trust Agreement.
SECTION 8.Trustee Responsibility Regarding Payments
to Trust Beneficiaries If Company is Insolvent
8.1(a) The Board of Directors and the chief
executive officer of the Company shall have the duty to inform
the Trustee in writing if the Company becomes Insolvent, as
hereinafter defined. If the Trustee receives any written
certification signed under penalties of perjury by any person
other than the Board of Directors or the chief executive officer
of the Company that the Company has become Insolvent, the Company
shall be deemed to be Insolvent for purposes of this Section 8.
When the Trustee has been so informed by the Board of Directors
or the chief executive officer of the company, or has received
such certification from another person, the Trustee shall
immediately discontinue payments of Supplemental Benefits and
shall hold the assets of the Trust for the benefit of the
Company's senior creditors and general unsecured creditors.
8.1(b) The Company shall be considered "Insolvent" for
purposes of this Trust Agreement in the event of (a) the Company
is unable to pay its debts as they become due; (b) a general
assignment for the benefit of the Company's creditors; (c) the
voluntary commencement by the Company of any proceeding under
Title 11 of the United States Code or any other law of any
jurisdiction for the relief, liquidation or rehabilitation of
debtors (all of which proceedings are hereinafter collectively
referred to as "Insolvency Proceedings"); (d) the making of an
admission by the Company of any of the material allegations of or
consenting to or acquiescing in a petition, application, motion
or complaint commencing an Insolvency Proceeding or the seeking
by the Company of the appointment of, or the taking of possession
by, a receiver, custodian, trustee, liquidator or similar
official of or for a substantial part of its assets; (e) the
involuntary commencement of an Insolvency Proceeding against the
Company which is not fully stayed, timely controverted or
dismissed within one hundred twenty (120) days after the filing
thereof; or (f) the appointment of or taking of possession by a
receiver, custodian, trustee, liquidator or similar official of
or for the Company or of or for a substantial part of its assets.
8.1(c) Notwithstanding the foregoing provisions of
this Section 8.1, the Company shall be deemed to be no longer
Insolvent if the Trustee has received a copy of the Company's
most recent quarterly (unaudited) condensed balance sheet
("Quarterly Report"), or of its most recent annual (audited)
consolidated balance sheet ("Annual Report"), reporting that the
Company's total assets exceed its total liabilities as of the
date of such Quarterly or Annual Report. The Company shall
deliver to the Trustee a copy of each Quarterly Report and Annual
Report within one business day after the date such report is
released to anyone not employed by, or affiliated with, the
Company.
8.1(d) Nothing in this Trust Agreement shall in any
way enlarge or diminish the rights of the Trust Beneficiaries in
the event the Company is Insolvent to pursue their rights as
general unsecured creditors of the Company with respect to their
Supplemental Benefits or otherwise.
8.2 Whenever the Trustee has actual knowledge or has
determined that the Company is Insolvent, the Trustee shall
deliver any undistributed principal and income in the Trust Fund
to satisfy claims of the Company's senior creditors and general
unsecured creditors as directed by a court of competent
jurisdiction.
8.3 If the Trustee discontinues payments as a result
of the Insolvency of the Company, such payments shall be resumed
only after the Trustee has determined that the Company is not
Insolvent (or is no longer Insolvent, assuming the Company had
been deemed to be Insolvent) or upon order of a court of
competent jurisdiction. Upon such resumption, the first payment
of each Trust Beneficiary following such discontinuance shall
include the aggregate amount of all payments which would have
been made to such Trust Beneficiary in accordance with the
Agreements during the period of such discontinuance, less the
aggregate amount of payments of Supplemental Benefits made to
such Trust Beneficiary by the Company during any such period of
discontinuance.
SECTION 9. Taxes, Expenses and Compensation
9.1 The Company shall from time to time pay taxes of
any and all kinds whatsoever which at any time are lawfully
levied or assessed upon or become payable in respect of the Trust
Fund, the income or any property forming a part thereof, or any
security transaction pertaining thereto. To the extent that any
taxes levied or assessed upon the Trust Fund are not paid by the
Company, the Trustee shall pay such taxes out of the Trust Fund.
The Trustee shall if requested by the Company, or may, in his
discretion, contest the imposition of taxes in any manner deemed
appropriate by the Company or its counsel, but at Company
expense, and only if he has received an indemnity bond or other
security satisfactory to him to pay any such expenses.
Notwithstanding the foregoing, the Trustee shall not be obligated
to contest the imposition of tax unless he receives an opinion of
counsel, or of a certified public accounting firm of national
reputation, satisfactory to him to the effect that there is a
reasonable basis in law and fact for such contest. In the
alternative, the Company may itself contest the validity of any
such taxes.
9.2 The Company shall pay the Trustee such
compensation for his services as may be agreed upon in writing
from time to time by the Company and the Trustee. The Company
shall also pay the reasonable expenses incurred by the Trustee in
the performance of his duties under this Trust Agreement,
including but not limited to brokerage commissions and fees of
counsel engaged by the Trustee pursuant to Section 9.1. Such
compensation and expenses shall be charged against and paid from
the Trust Fund to the extent the Company does not pay such
compensation.
SECTION 10. Administration and Records
10.1 The Trustee shall keep or cause to be kept
accurate and detailed accounts of any investments, receipts,
disbursements, and other transactions hereunder, and all such
accounts, books and records shall be open to inspections and
audit at all reasonable times by any person designated by the
Company. All such accounts, books and records shall be preserved
(in original form, or on microfilm, magnetic tape or any other
similar process) for such period as the Trustee may determine,
but the Trustee may only destroy such accounts, books and records
after first notifying the Company in writing of his intention to
do so and transferring to the Company any of such accounts, books
and records requested.
10.2 Within ninety (90) days after the close of each
calendar year, and within ninety (90) days after the removal or
resignation of the Trustee or the termination of the Trust, the
Trustee shall file with the Company a written account setting
forth all investments, receipts, disbursements and other
transactions affected by it during the preceding calendar year,
or during the period from the close of the preceding calendar
year to the date of such removal, resignation or termination,
including a description of all investments and securities
purchased and sold with the cost or net proceeds of such
purchases or sales and showing all cash, securities and other
property held at the end of such calendar year or other period.
Upon the expiration of ninety (90) days from the date of filing
such annual or other account, the Trustee shall to the maximum
extent permitted by applicable law be forever released and
discharged from all liability and accountability with respect to
the propriety of his acts and transactions shown in such account
except with respect to any such acts or transactions as to which
the Company shall within such 90 day period file with the Trustee
written objections.
10.3 The Trustee shall from time to time permit an
independent public accountant selected by the Company (except one
to whom the Trustee has reasonable objection) to have access
during ordinary business hours to such records as may be
necessary to audit the Trustee's accounts.
10.4 As of the last day of each calendar year, the
fair market value of the assets held in the Trust Fund shall be
determined. Within ninety (90) days after the close of each
calendar year, the Trustee shall file with the Company the
written report of the determination of such fair market value of
the assets held in the Trust Fund.
10.5 Nothing contained in this Trust Agreement shall
be construed as depriving the Trustee or the Company of the right
to have a judicial settlement of the Trustee's accounts, and upon
any proceeding for a judicial settlement of the Trustee's
accounts or for instructions the only necessary parties thereto
in addition to the Trustee shall be the Company and the Trust
Beneficiaries.
10.6 In the event of the removal or resignation of the
Trustee, upon the payment of any unpaid fees and expenses and
after adequate provision has been made for liabilities of the
Trust, the Trustee shall deliver to the successor trustee all
records which shall be required by the successor trustee to
enable it to carry out the provisions of this Trust Agreement.
10.7 In addition to any tax returns required of the
Trustee by law, the Trustee shall prepare and file such tax
reports and other returns as the Company and the Trustee may from
time to time agree.
SECTION 11. Removal or Resignation of the Trustee or the
Actuary and Designation of Successor Trustee
or Successor Actuary
11.1 At any time the Company may remove the Trustee
with or without cause, upon at least sixty (60) days' notice in
writing to the Trustee.
11.2 Trustee may resign at any time upon at least sixty
(60) days' notice in writing to the Company.
11.3 In the event of such removal or resignation, the
Trustee shall duly file with the Company a written account as
provided in Section 10.2 for the period since the last previous
annual accounting, listing the investments of the Trust and any
uninvested cash balance thereof, and setting forth all receipts,
disbursements, distributions and other transactions respecting the
Trust not included in any previous account, and if written
objections to such account are not filed as provided in
Section 10.2, the Trustee shall to the maximum extent permitted by
applicable law be forever released and discharged from all
liability and accountability with respect to the propriety of its
acts and transactions shown in such account.
11.4 Within sixty (60) days after any such notice of
removal or resignation of the Trustee, the Company shall
designate a successor trustee qualified to act hereunder;
provided, however, that if the Trustee resigns or is removed
following a Change of Control, the Company must obtain the prior
written consent of all of the Trust Beneficiaries to its
designation of a successor trustee. In the event that the
Company fails to designate a successor trustee or to obtain prior
written consent of all of the Trust Beneficiaries (if the Trustee
was removed or resigned following a Change of Control), within
sixty (60) days after the Trustee's resignation or removal, the
Trustee shall select a successor trustee who, during such period
as it shall act as such, shall have the powers and duties herein
conferred upon the Trustee, and the word "Trustee" wherever used
herein, except where the context otherwise requires, shall be
deemed to include any successor trustee. Upon designation of a
successor trustee and delivery to the resigned or removed Trustee
of written acceptance by the successor trustee of such
designation, such resigned or removed Trustee shall promptly
assign, transfer, deliver and pay over to such successor trustee,
in conformity with the requirements of applicable law, the funds
and properties in its control or possession then constituting the
Trust Fund. In the event the Company selects a successor trustee
which meets the criteria set forth in this Section 11.4, it shall
not be liable for its selection.
11.5 For purposes of this Trust Agreement, the term
"Change of Control" shall mean: (i) an acquisition of 35% or more
of the Company's stock, or merger or consolidation by or with
another entity or affiliated group; (ii) a tender offer or tender
offers for the Company's stock in which 35% or more of the
outstanding stock of the Company is tendered or purchased by a
single entity or affiliated group; (iii) a reclassification of
securities or recapitalization of the Company which directly or
indirectly, disproportionately increase or decreases the
outstanding shares of any class of equity securities of the
Company by 35% or more; (iv) a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of substantially all the
assets of the Company approved by the Board of Directors; or (v)
a change in control shall be deemed to have occurred if at any
time less than 51% of the members of the Board of Director shall
be persons who were either nominated for election by the Board of
Directors or were elected by the Board of Directors.
11.6 The Company may remove the Actuary and designate
a successor Actuary with or without cause at any time; provided,
however, that if the Actuary is removed or resigns following a
Change of Control, the Company must obtain the prior written
consent of at least 75 percent of the Trust Beneficiaries to its
designation of a successor Actuary. If the Company fails to
designate a successor Actuary or to obtain the prior written
consent of at least 75 percent of the Trust Beneficiaries (if the
Actuary is removed or resigns following a Change of Control),
within sixty (60) days after the Actuary's resignation or
removal, the Trustee shall select a successor Actuary pursuant to
this Section 11.6.
SECTION 12. Enforcement of Trust Agreement
and Legal Proceedings
12.1 The Company shall have the right to enforce any
provision of this Trust Agreement, and any Trust Beneficiary
shall have the right as a beneficiary of the Trust, to enforce
any provision of this Trust Agreement that affects the right,
title and interest of such Trust Beneficiary in the Trust. In
any action or proceedings affecting the Trust, the only necessary
parties shall be the Company, the Trustee and the Trust
Beneficiaries and, except as otherwise required by applicable
law, no other person shall be entitled to any notice or service
of process. Any judgment entered in such an action or proceeding
shall to the maximum extent permitted by applicable law be
binding and conclusive on all persons having or claiming to have
any interest in the Trust.
12.2 In the event that any dispute or difference
arising under or in connection with this Trust Agreement results
in arbitration or litigation, Company shall reimburse the Trust
Beneficiary for all reasonable Attorney's Fees and expenses if
the Trust Beneficiary prevails in such proceeding.
SECTION 13. Termination and Suspension
13.1 Except as provided in Section 13.2, the Trust
shall terminate when all payments which have or may become
payable pursuant to the terms of the Trust have been made or the
Trust Fund has been exhausted, and all remaining assets shall
then be paid by Trustee to the Company.
13.2 This Trust shall terminate if the Company and all
of the Trust Beneficiaries give the Trustee written notice of
termination. Upon such termination, all remaining assets shall
then be paid by the Trustee to the Company.
SECTION 14. Amendments
14.1 The Company may from time to time amend or
modify, in whole or in part, any or all of the provisions of this
Trust Agreement with the written consent of the Trustee, but
without the consent of any Trust Beneficiary; provided, that (i)
Sections 1.1, 3.1, 12, 13 and 14 may not be amended; (ii) no such
amendment shall be permitted if, in the opinion of counsel to the
Company, such amendment would cause the Trust to cease to
constitute a grantor trust as described in Section 6.5; (iii) no
amendment may be made to the Agreements if it would reduce or
adversely affect the amount, or time for payment, of the
Supplemental Benefits of any Trust Beneficiary without the
consent of such Trust Beneficiary, unless it is due to an
arithmetic or computational mistake of fact, as determined by the
Company in its sole discretion and certified to the Trustee,
based on the provisions of the Agreements; and (iv) no amendment
may be made to this Trust Agreement following a Change of Control
without the written consent of all of the Trust Beneficiaries.
14.2 The Company and the Trustee shall execute such
supplements to or amendments of, this Trust Agreement as shall be
necessary to give effect to any such amendment or modification.
SECTION 15. Nonalienation
15.1 Except insofar as applicable law may otherwise
require and subject to Sections 1.1, 3.1 and 8, (i) no amount
payable to or in respect of any Trust Beneficiary at any time
under the Trust shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge,
attachment, charge or encumbrance of any kind, and any attempt to
so alienate, sell, transfer, assign, pledge, attach, charge, or
otherwise encumber any such amount, whether presently or
thereafter payable, shall be void; and (ii) the Trust Fund shall
in no manner be liable for or subject to the debts or liabilities
of any Trust Beneficiary.
SECTION 16. Communications
16.1 Communications to the Company shall be addressed
to Acme Electric Corporation, 400 Quaker Road, East Aurora, New
York 14052, Attention: President; provided, however, that upon
the Company's written request, such communications shall be sent
to such other address as the Company may specify.
16.2 Communications to the Trustee shall be addressed
to John B. Drenning, One M&T Plaza, Suite 2000, Buffalo, New York
14203-2391; provided, however, that upon the Trustee's written
request, such communications shall be sent to such other address
as the Trustee may specify.
16.3 No communication shall be binding on the Trustee
until it is received by the Trustee and no communication shall be
binding on the Company until it is received by the Company.
16.4 Any action of the Company pursuant to this Trust
Agreement, including all orders, requests, directions,
instructions, approvals and objections of the Company to the
Trustee, shall be in writing, signed on behalf of the Company by
any duly authorized officer of the Company. Any action by a
Trust Beneficiary shall be in writing. The Trustee may rely on,
and will be fully protected with respect to any such action taken
or omitted in reliance on any information, order, request,
direction, instruction, approval, objection, or list delivered to
the Trustee by the Company or, to the extent applicable under
this Trust Agreement, by a Trust Beneficiary.
SECTION 17. Miscellaneous Provisions
17.1 This Trust Agreement shall be binding upon and
inure to the benefit of the Company and the Trustee and their
respective successors and assigns.
17.2 The Trustee assumes no obligation or
responsibility with respect to any action required by this Trust
Agreement on the part of the Company.
17.3(a) The Company shall pay and shall protect,
indemnify and save harmless the Trustee and his employees and
agents from and against any and all losses, liabilities
(including liabilities for penalties), actions, suits, judgments,
demands, damages, reasonable costs and reasonable expenses
(including, without limitation, attorney's fees and expenses) of
any nature arising from or relating to any action or failure to
act by the Trustee, his employees and agents or the transactions
contemplated by this Trust Agreement, including, but not limited
to, any claim made by a Trust Beneficiary with respect to
payments made or to be made by the Trustee, any claim made by the
Company or its successor, whether pursuant to a sale of assets,
merger, consolidation, liquidation or otherwise, that this Trust
Agreement is invalid or ultra vires, except to the extent that
any such loss, liability, action, suit, judgment, demand, damage,
cost or expense is the result of the negligence or willful
misconduct of the Trustee, his employees or agents.
17.3(b) The Trustee will be under no duties
whatsoever, except such duties as are specifically set forth as
such in this Trust Agreement, and no implied covenant or
obligation will be read into this Trust Agreement against the
Trustee. The Trustee will not be compelled to take any action
toward the execution or enforcement of the Trust or to prosecute
or defend any suit in respect thereof, unless indemnified to his
satisfaction against loss, reasonable cost, liability and
reasonable expense; and the Trustee will be under no liability or
obligation to anyone with respect to any failure on the part of
the Company or the Committee to perform any of their respective
obligations.
17.4 Titles to the Sections of this Trust Agreement
are included for convenience only and shall not control the
meaning or interpretation of any provision of this Trust
Agreement.
17.5 This Trust Agreement and the Trust established
hereunder shall be governed by and construed, enforced, and
administered in accordance with the laws of the State of New York
and the Trustee shall be liable to account only in the courts of
the State of New York.
17.6 This Trust Agreement may be executed in any
number of counterparts, each of which shall be deemed to be the
original although the others are not produced.
IN WITNESS WHEREOF, this amended and restated Trust
Agreement has been duly executed by the parties hereto as of the
day and year first above written.
ACME ELECTRIC CORPORATION
WITNESS:
/s/ Maryann J. Graf By: /s/ Randall L. Clark
WITNESS:
/s/ Sonia M. Dolegala /s/ John B. Drenning
________________, as Trustee
EXHIBIT A
Executives
1. Robert J. McKenna
2. Daniel Corwin
BFLODOCS:363697_1 (7SMP01)
EXHIBIT B
Investment Guidelines
U.S. Treasury Bills, Notes or Bonds, U.S. Government
Agency issues, notes and other fixed income securities issued by
State and local governments, time deposits, certificates of
deposit, commercial paper, bankers' acceptances, repurchase
agreements and pooled short-term investment funds.
_______________________________
1Operator Auto #:
Level 2 = 1.
1.1 and (a) are automatic
