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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CBI INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
CBI INDUSTRIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $2.50 PER SHARE
(AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
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124800 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
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CHARLES O. ZIEMER, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
CBI INDUSTRIES, INC.
800 JORIE BOULEVARD
OAK BROOK, ILLINOIS 60521-2268
(708) 572-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
RICHARD D. KATCHER, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019-6150
(212) 403-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is CBI Industries, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268. The title of
the class of equity securities to which this Statement relates is the Company's
Common Stock, par value $2.50 per share (the "Common Stock"), and the associated
Preferred Stock Purchase Rights (the "Rights" and, together with such shares of
Common Stock, except where the context otherwise requires, the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer made by PX Acquisition Corp. ("P
Sub"), a Delaware corporation and a wholly owned subsidiary of Praxair, Inc., a
Delaware corporation ("Praxair"), to purchase all outstanding shares of Common
Stock, including the associated Rights issued pursuant to the Amendment and
Restatement dated August 8, 1989 of a Rights Agreement dated as of March 4,
1986, between the Company and First Chicago Trust Company of New York, as Rights
Agent (as amended to date, the "Rights Agreement"), at a price of $32.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated November 3, 1995 (the "Praxair Offer to
Purchase") and the related Letter of Transmittal (which together constitute the
"Praxair Offer"), as disclosed in a Tender Offer Statement on Schedule 14D-1
filed by P Sub and Praxair with the Securities and Exchange Commission (the
"Commission") on November 3, 1995, as amended by Amendment No. 1, dated November
7, 1995 and Amendment No. 2, dated November 8, 1995 (as so amended, the "Praxair
Schedule 14D-1"). The address of the principal executive offices of P Sub and
Praxair, according to the Praxair Schedule 14D-1, is 39 Old Ridgebury Road,
Danbury, Connecticut 06810-5113.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Except as described herein or in Annex A hereto, to the knowledge of
the Company, as of the date hereof there are no material contracts, agreements,
arrangements or understandings (other than in the ordinary course of business),
or any actual or potential conflicts of interest between the Company or its
affiliates and (i) the Company, its executive officers, directors, or
affiliates, or (ii) Praxair, P Sub or their executive officers, directors or
affiliates.
Certain contracts, agreements, arrangements and understandings between the
Company or its affiliates and certain of its executive officers, directors and
affiliates and between the Company and Praxair are described in Annex A hereto,
which description is incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. The Company's Board of Directors (the "Board") met on
November 6, November 8 and November 14, 1995 to consider the Praxair Offer and
related matters. During those meetings, the Board considered the Company's
business, financial condition, current business strategy and future prospects,
recent and historical market prices for the Common Stock, the terms and
conditions of, and potential alternatives to, the Praxair Offer and other
matters, including presentations by management and by the Company's financial
and legal advisors. After taking into account these matters, the Board
determined by unanimous vote that the Praxair Offer is inadequate and not in the
best interests of the Company's stockholders, and that such interests would be
best served if the Company were to actively explore alternatives to maximize
stockholder value. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS REJECT THE PRAXAIR OFFER AND NOT TENDER ANY OF THEIR SHARES
PURSUANT THERETO. The Board has directed management and the Company's advisors
to explore strategic alternatives and to report back to the Board promptly with
respect thereto.
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At the November 14, 1995 meeting, the Board declined the requests of
Praxair with respect to the Rights and unanimously determined not to redeem the
Rights or amend the Rights Agreement to make the Rights inapplicable to the
Praxair Offer and the merger (the "Second Step Cash Merger") proposed by Praxair
to be consummated after the consummation of the Praxair Offer pursuant to which
all Shares not tendered and purchased pursuant to the Praxair Offer or otherwise
(other than Shares owned by P Sub or Praxair or any of their subsidiaries,
Shares held in the treasury of the Company and Shares owned by stockholders who
perfect dissenters' rights under the Delaware General Corporation Law (the
"DGCL")) would be converted into the right to receive an amount in cash equal to
the price per Share paid pursuant to the Praxair Offer. The Board also
unanimously declined a request by P Sub and Praxair that the Board adopt a
resolution approving and recommending the Praxair Offer and the Second Step Cash
Merger for purposes of Section 203 of the DGCL. The Board also unanimously
declined a request by P Sub and Praxair that the Board adopt a resolution
approving and recommending the Second Step Cash Merger pursuant to the Article
Tenth and Article Fifteenth of the Company's Restated Certificate of
Incorporation (the "Certificate"). Pursuant to such Articles, supermajority
votes would be required to approve the Second Step Cash Merger, in the case of
Article Tenth, unless the Board has recommended the transaction, and, in the
case of Article Fifteenth, unless the transaction is either approved by a
majority of the Continuing Directors (as defined therein) or certain price and
procedural requirements are met.
A copy of the letter to the Company's stockholders communicating the
Board's recommendation and the press release relating thereto are filed as
Exhibits 21 and 22, respectively, to this Schedule 14D-9 and are incorporated
herein by reference.
(b) Reasons for the Recommendation. In addition to the factors set forth
above and considered by the Board in reaching its conclusions with respect to
the Praxair Offer described in Item 4(a) above, the Board considered a number of
factors, including, but not limited to, the following:
(i) the Company's business, financial condition, results of
operations, current business strategy and future prospects, including the
nature of the markets in which the Company operates, the Company's position
in such markets and the historical and current market prices for the Common
Stock;
(ii) presentations by the Company's management relating to the
Company's financial performance and future prospects and the opinion of the
Company's management that the proposed consideration in the Praxair Offer
is inadequate;
(iii) the fact that the Company has had preliminary discussions with
other parties who have indicated their potential interest in an
extraordinary transaction with the Company;
(iv) presentations by Lehman Brothers Inc. ("Lehman Brothers") and
Merrill Lynch & Co. ("Merrill Lynch"), financial advisors to the Company
(the "Financial Advisors"), concerning the financial aspects of the Praxair
Offer;
(v) the written opinions of Lehman Brothers and Merrill Lynch that, as
of the date of such opinions, the consideration of $32.00 per Share offered
to the stockholders of the Company (other than Praxair) pursuant to the
Praxair Offer is inadequate from a financial point of view; the full texts
of such opinions, dated November 14, 1995, which set forth the assumptions
made and matters considered and limitations set forth by Lehman Brothers
and Merrill Lynch, are included as Annexes B-1 and B-2 hereto and should be
read in their entirety;
(vi) the Board's perception that Praxair is primarily interested in
the Company's gas business and may be significantly undervaluing the
Company's non-gas businesses;
(vii) the Board's belief, based in part on the factors referred to
above, that the $32.00 per Share price pursuant to the Praxair Offer does
not reflect the current value inherent in the Company and that the
stockholders' interests would be best served if the Company were to
actively explore alternatives to maximize stockholder value;
(viii) the conditional nature of the Praxair Offer; the Praxair Offer
is conditioned upon, among other things, the matters referred to in
paragraph (ix) and upon there not being any threat of a change in
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the results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of P Sub, may be materially adverse
to the Company or any of its subsidiaries, or P Sub having become aware of
any fact that, in the sole judgment of P Sub, has or may have material
adverse significance with respect to the value of the Shares to P Sub; and
(ix) the Board's belief, based on advice received from outside
counsel, that there are antitrust issues relating to a combination of the
Company and Praxair, both domestically and internationally, which issues
create significant uncertainty as to whether the conditions of the Praxair
Offer will be met; in that regard, the Board noted that the Praxair Offer
is conditioned on there not being threatened or instituted any action by
any domestic or foreign governmental entity or by any other person seeking
to impose any limitations upon the ownership or operation by Praxair of any
portion of the business or assets of the Company.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Praxair
Offer, the Board did not find it practicable to and did not quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determinations and recommendation. In addition, individual members of the
Board may have given different weight to different factors.
Background. During the course of 1994, a series of conversations were held
between officers of the Company and officers of Praxair regarding a possible
joint venture involving the combination of certain hydrogen and carbon monoxide
assets in a particular geographic location. On December 10, 1994, Mr. John E.
Jones, the Chairman, President and Chief Executive Officer of the Company,
contacted Mr. H. William Lichtenberger, the Chairman and Chief Executive Officer
of Praxair, to advise him that the Company was not interested in pursuing
discussions about the project at that time. Later in December, the Company
disclosed that it had received an unsolicited proposal from a third party
interested in acquiring the Company's industrial gas business. Thereafter, Mr.
Jones was contacted by Mr. Lichtenberger, among others, asking whether the
Company was interested in pursuing a transaction involving the Company's
industrial gas business. Mr. Jones said he would let Mr. Lichtenberger know if
the Company developed an interest.
Several months later Mr. Lichtenberger contacted Mr. Jones to arrange a
meeting. On May 19, 1995, Mr. Jones and Mr. Lichtenberger met in Chicago. At
that meeting, Mr. Lichtenberger said he wanted to explore whether the Company
had any interest in pursuing any of several possible business transactions,
including the previously discussed joint venture project involving certain
hydrogen and carbon monoxide assets and also including a combination of the two
companies. Mr. Jones said that, notwithstanding that it was the Company's desire
to pursue its business plan as an independent company, the Board would of course
consider any proposal that was made to it in light of the best interests of the
Company's stockholders. Mr. Jones said that he would be back in touch with Mr.
Lichtenberger regarding the joint venture project after the Company had a chance
to study it further.
Mr. Lichtenberger called Mr. Jones on August 28, 1995. During that
conversation, Mr. Jones informed Mr. Lichtenberger that he was not interested in
pursuing the joint venture project or any of the other transactions Mr.
Lichtenberger had raised at the May meeting. Mr. Lichtenberger requested a
meeting and Mr. Jones agreed.
On August 31, 1995, Mr. Lichtenberger and Mr. John A. Clerico, Vice
President and Chief Financial Officer of Praxair, met with Mr. Jones and Mr.
A.J. Schneider, Chief Financial Officer of the Company. Mr. Lichtenberger and
Mr. Clerico presented certain financial data and background data, discussed the
general business strategies of Praxair and presented their conception of the
bases upon which a business combination of the Company and Praxair might
proceed.
At the end of September 1995, Mr. Lichtenberger called Mr. Jones and told
him that the Praxair Board of Directors had authorized him to enter into
discussions with the Company regarding a possible business combination involving
an exchange of shares on a pooling basis. Mr. Jones said he would discuss the
matter with the Board.
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At a meeting of the Board on October 11, the Board considered Mr.
Lichtenberger's invitation to enter into negotiations and directed Mr. Jones to
tell Mr. Lichtenberger that the Company was not for sale and was not interested
in negotiating with Praxair. Mr. Jones so advised Mr. Lichtenberger on October
20, 1995.
On October 27, 1995, Mr. Lichtenberger submitted to Mr. Jones an
unsolicited written proposal for the acquisition of the Company by Praxair (the
"Praxair Proposal"). Mr. Lichtenberger's letter read in full as follows:
October 27, 1995
Mr. John E. Jones
Chairman, President and Chief
Executive Officer
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60522-7001
Dear John:
As you know, over the past six months you and I have had several
discussions regarding a possible transaction to effect a merger of our
respective companies. Based on our conversations, I think we both realize that
significant benefits could be realized by both our companies from such a
transaction. Therefore, I was greatly disappointed when you told me on October
20 that you had decided not to continue our discussions.
As I told you during that telephone conversation, in recent weeks we at
Praxair have continued to carefully study the dynamics and potential advantages
of a business combination of Praxair and CBI. As a result, we now feel even more
strongly that such a business combination would result in significant strategic
benefits for both our companies and our respective shareholders. In light of
your current position which you communicated to me on October 20, and given what
we continue to view as the compelling rationale for a business combination, we
have decided that the best way to proceed is for Praxair to submit a specific
proposal to your Board of Directors for its formal consideration.
Accordingly, on behalf of the Board of Directors of Praxair, I am pleased
to propose herewith the merger of Praxair and CBI pursuant to which your
shareholders would receive $32.00 for each share of CBI common stock, which we
would propose to pay in either cash or Praxair common stock. Our proposal to
effect a merger of Praxair and CBI is subject to the negotiation of a mutually
satisfactory definitive merger agreement containing customary terms and closing
conditions.
I hope that you will recognize the powerful business logic behind our
proposal and that you will promptly submit it to your Board of Directors for its
consideration with a favorable recommendation from you. It is our hope that,
after appropriate consideration by your Board of Directors, your Board will
authorize proceeding with the negotiation of the definitive merger agreement on
the terms we have proposed.
The price per share in our merger proposal is based on our present
knowledge of CBI, which is limited to public information. It is our view that
the price we are proposing would be both fair and highly attractive to your
shareholders. Our proposal offers your shareholders a significant premium over
the current market value of CBI.
The transaction we propose represents a clearly attractive opportunity for
Praxair to combine the leading industrial gases supplier in North and South
America and the premier world supplier of carbon dioxide. The combined
enterprise will be strongly positioned to maximize our marketing, engineering
and technological skills as it expands its operations further into major global
markets. It will also be able to develop significant new applications for a wide
range of products and advanced technologies to enable our customers to improve
their productivity, product quality and environmental performance. Together,
Praxair's and CBI's business portfolios and synergies will provide the
enterprise with considerable opportunities to support strong future sales and
earnings growth.
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We are prepared to move promptly in connection with our proposal. We would
be happy to meet with you and other members of your Board of Directors and
senior management as soon as practicable to discuss our proposal in detail and
to answer any questions you or they may have. We realize that your Board of
Directors will want to carefully consider our proposal, but we do ask that the
Board respond to us as soon as possible, and in any event by noon, on November
1, 1995.
While we would very much prefer that a business combination of our
companies be effected pursuant to the negotiation of a merger on the terms we
have proposed, you and your Board should appreciate that if your Board rejects
our proposal to negotiate a merger, we reserve the right to propose directly to
the shareholders of CBI a cash offer for CBI by Praxair.
We look forward to hearing the response of your Board of Directors after it
has reviewed our merger proposal.
Sincerely,
/s/ H.W. LICHTENBERGER
On October 29, 1995, Praxair publicly announced that it had delivered the
above letter to the Company, and the Company announced that the Board would
consider the Praxair Proposal in due course.
On October 30, 1995, Praxair filed the lawsuit described below under Item
8.
On October 31, 1995, Mr. Jones telephoned Mr. Lichtenberger to inform him
that while the Company would give consideration to Praxair's acquisition
proposal, the Company would not respond by Praxair's deadline of November 1,
1995 and would respond in due course.
On November 1, 1995, Praxair announced that it intended to commence the
Praxair Offer on Friday, November 3, 1995 and on November 3 Praxair commenced
the Praxair Offer.
On November 6, 8 and 14, the Board met with its legal and financial
advisors to review the Praxair Offer, resulting in the recommendation set forth
above.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Lehman Brothers and Merrill Lynch as its financial
advisors with respect to the Praxair Offer and other matters arising in
connection therewith, including assisting the Company in exploring alternatives
in light of the Praxair Offer. Pursuant to the letter agreement between Lehman
Brothers, Merrill Lynch and the Company dated November 14, 1995 (the
"Lehman/Merrill Engagement Letter") the Company has agreed to pay each of Lehman
Brothers and Merrill Lynch as follows: (i) a retainer fee of $250,000, payable
to each of Lehman Brothers and Merrill Lynch on January 15, 1996 (such retainer
fee will be credited to other fees, if any, payable under the Lehman/Merrill
Engagement Letter); (ii) if during the term of the Financial Advisors'
engagement under the Lehman/Merrill Engagement Letter, or until the later of (x)
18 months after the date of the Lehman/Merrill Engagement Letter or (y) 12
months after the termination of the Financial Advisors' engagement thereunder,
an Acquisition (as defined below) involving all or substantially all of the
Common Stock or the Company's assets occurs, then the Company shall pay to each
of Lehman Brothers and Merrill Lynch a fee of $5,000,000 plus $500,000 (or
proportion thereof) for each $1.00 per Share (or proportion thereof) above
$32.00 per Share that the Company's stockholders receive, in cash or securities,
in connection with or as a result of such Acquisition; (iii) if during the term
of the Financial Advisors' engagement under the Lehman/Merrill Engagement
Letter, or until the later of (x) 18 months after the date of the Lehman/Merrill
Engagement Letter or (y) 12 months after the termination of the Financial
Advisors' engagement thereunder, an Acquisition or a Restructuring (each as
defined below) occurs other than that described in (ii) above, then the Company
shall pay to each of Lehman Brothers and Merrill Lynch fees to be mutually
agreed upon based on the consideration involved in such Acquisition or
Restructuring and the Financial Advisors' reasonable and customary fees for the
services rendered related to such Acquisition or Restructuring. An "Acquisition"
is defined as any transaction or series
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or combination of transactions, other than in the ordinary course of business,
whereby, directly or indirectly, control of or a material interest in the
Company or any of its businesses, or a material amount of any of their
respective assets, is transferred for consideration, including, without
limitation, by means of a sale or exchange of capital stock or assets, a merger
or consolidation, a tender or exchange offer, a leveraged buyout, a minority
investment, the formation of a joint venture or partnership, or any similar
transaction. A "Restructuring" is defined as any transaction or series or
combination of transactions, other than in the ordinary course of business,
whereby any payment or distribution of cash, securities or other property is
made by the Company to the holders of capital stock of the Company, including,
without limitation, any dividend or other distribution (other than normal
dividends) on, or any repurchase or redemption of, or any exchange of other
securities of the Company or any of its affiliates for, any shares of capital
stock of the Company, or any other similar transaction involving a change in the
capital structure of the Company.
The Company has also agreed to reimburse the Financial Advisors for their
reasonable expenses (including, without limitation, professional and legal fees
and disbursements) incurred in connection with their engagement with respect to
the services to be rendered by them, and to indemnify the Financial Advisors and
certain related persons against certain liabilities in connection with their
engagement, including certain liabilities under the federal securities laws.
The Company has retained MacKenzie Partners, Inc. to distribute information
(including this Statement on Schedule 14D-9) on behalf of the Company in
connection with the Praxair Offer and related matters. The Company has also
retained Abernathy MacGregor Scanlon as public relations advisor in connection
with the Praxair Offer and related matters. Such firms will receive customary
compensation for services rendered and also will be reimbursed for their
out-of-pocket expenses.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to stockholders with respect to the Praxair Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, except as set forth on Schedule
I hereto, no transactions in the Shares have been effected within the past 60
days by the Company or by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates or subsidiaries currently do not intend to tender any
Shares which are held of record or beneficially owned by such persons pursuant
to the Praxair Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
At the meetings of the Board held on November 6, November 8 and November
14, 1995, the Board considered and reviewed the feasibility and desirability of
exploring possible alternative transactions to the Praxair Offer. As stated in
Item 4 above, the Board believes that the interests of the Company's
stockholders would be best served if the Company were to actively explore
alternatives to maximize stockholder value. These alternatives could lead to and
involve negotiations which may result in (i) an extraordinary transaction, such
as a merger or reorganization involving the Company or any of its subsidiaries,
(ii) a purchase, sale or transfer of a material amount of the assets of the
Company or any of its subsidiaries, (iii) a tender offer for or other
acquisition of securities by or of the Company or (iv) a material change in the
present capitalization or dividend policy of the Company. In this connection,
the Company is in the preliminary stages of discussion or negotiation concerning
a possible transaction involving the Company of the type described above, having
entered into confidentiality and standstill agreements concerning the furnishing
of confidential information to parties indicating an interest in such a
transaction and having responded to due diligence inquiries. In addition, the
Company has had preliminary discussions with other parties regarding their
potential interest in such a transaction.
In the opinion of the Board, disclosure at this time of the possible terms
of any transaction of the type described above or the parties thereto might
jeopardize the initiation or continuation of such discussions or
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negotiations. Accordingly, the Board, on November 14, 1995, adopted a resolution
instructing management not to disclose the possible terms of any such
transactions, or the parties thereto, unless and until an agreement in principle
relating thereto has been reached.
There can be no assurance that any of the foregoing will result in any
transaction, or that a transaction other than one of the types described herein
will not be authorized or consummated. The initiation or continuation of any of
the foregoing may also be dependent upon the future actions of Praxair with
respect to the Praxair Offer. The proposal, authorization, announcement or
consummation of any transaction of the type referred to in this Item 7 could
adversely affect or result in withdrawal of the Praxair Offer.
Except as described above and under Item 4 above, the Company is not
engaged in any negotiation in response to the Praxair Offer which relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization involving the Company or any of its subsidiaries, (ii) a
purchase, sale or transfer of a material amount of the assets of the Company or
any of its subsidiaries, (iii) a tender offer for or other acquisition of
securities by or of the Company or (iv) a material change in the present
capitalization or dividend policy of the Company.
Except as described above and under Item 4 above, there are no
transactions, Board resolutions, agreements in principle or signed contracts in
response to the Praxair Offer which relate to or would result in one or more of
the matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Litigation. On October 30, 1995, Praxair commenced litigation in the
Court of Chancery of the State of Delaware (the "Chancery Court") against the
Company and the Board, alleging that the Board has violated its fiduciary duties
to the Company's stockholders by failing to pursue a possible transaction with
Praxair and employing the Rights Agreement to prevent Praxair from acquiring the
Company. Praxair's complaint seeks (a) injunctive relief requiring the Board to
redeem the Rights or to amend the Rights Agreement so as to make the Rights
inapplicable to any acquisition proposal which equals or exceeds the Praxair
Proposal, (b) injunctive relief enjoining the Company and the Board from taking
any action to interfere with the Praxair Proposal or any other such proposal,
and (c) a declaratory judgment that the Board has breached its fiduciary duties
to the Company's stockholders by continuing to deploy the Rights. The time of
the Company and the Board to respond to Praxair's complaint has not expired.
On October 30, 1995, four purported stockholders of the Company commenced
litigation in the Chancery Court against the Company and the Board, asserting
claims that are similar to the claims asserted by Praxair. Also, on October 30,
one of the four purported stockholders moved to amend a complaint he had filed
against the Company and the Board in December 1994 in order to assert claims
identical to the ones asserted in his newly-filed action; however, counsel for
this stockholder has since advised counsel for the Company and the Board that
the action filed in December 1994 will not be actively prosecuted. Two
additional stockholder complaints were filed October 31 and November 1. Each of
these complaints seeks relief on behalf of a purported class consisting of all
holders of the Common Stock. In addition to injunctive and declaratory relief,
the stockholder plaintiffs seek to recover damages on behalf of the alleged
class and an award of attorneys' fees. The time to respond to these complaints
has not yet expired. It is contemplated that all of the purported stockholder
actions will be consolidated for all purposes. Attached hereto as Exhibits 24
through 30 are copies of each of the aforementioned complaints and the above
descriptions are qualified in their entirety by reference to such exhibits.
(b) Rights Agreement. Currently, two-thirds of a Right is associated with
each share of Common Stock. Each full Right entitles the registered holder to
purchase from the Company a unit consisting of one one-hundredth of a share (a
"Unit") of Series A Junior Participating Preferred Stock, $1.00 par value per
share (the "Preferred Stock"), at a price of $75.00 per Unit, subject to
adjustment (the "Purchase Price").
Under the Rights Agreement, until the close of business on the
"Distribution Date," which occurs on the earlier of (i) the tenth day following
a public announcement that a person or group of affiliated or associated persons
("Acquiring Persons") has acquired, or obtained the right to acquire, beneficial
ownership of 10% or
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more of the outstanding shares of Common Stock (the "Stock Acquisition Date"),
or (ii) the tenth business day (or such later date as may be determined by
action of the Board prior to such time as any person becomes an Acquiring
Person) after the date of commencement of, or first public announcement of the
intent to commence, a tender or exchange offer if, upon consummation thereof,
such person could be the beneficial owner of 10% or more of the outstanding
shares of Common Stock, the Rights are represented by and may be transferred
only with the shares of Common Stock. Until the Distribution Date, a share
certificate issued upon the transfer or new issuance of shares of Common Stock
will contain a notation incorporating the Rights Agreement by reference, and the
surrender for transfer of any of such shares of Common Stock also constitutes
the transfer of the Rights associated with the shares of Common Stock
represented by such certificate.
Praxair's public announcement on November 1, 1995 of its intention to
commence the Praxair Offer on November 3, 1995 commenced the running of the
ten-business day period described in clause (ii) of the first sentence of the
immediately preceding paragraph. At a meeting held on November 8, 1995, the
Board resolved that the Distribution Date shall not occur until the earlier of
(x) the date on which an Acquiring Person becomes such and (y) such date as may
be determined by action of the Board prior to the time any person or group
becomes an Acquiring Person.
As soon as practicable following the Distribution Date, if any, Rights
certificates will be mailed to holders of record of the shares of Common Stock
as of the close of business on the Distribution Date, and such separate Rights
certificates alone will evidence the Rights.
At the close of business on the Distribution Date, the Rights will become
exercisable and separate Rights certificates will thereafter be distributed. At
the time Rights certificates are distributed, the Company will make the
necessary and appropriate rounding adjustments so that Rights certificates are
distributed representing only whole numbers of Rights and cash is paid in lieu
of fractional Rights.
Unless the Rights are redeemed earlier, if following a Stock Acquisition
Date the Company consummates a merger or other business combination (in which
the Company does not survive or the shares of Common Stock are changed into or
exchanged for other securities or assets) or more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) are sold or
transferred in one or a series of related transactions, then proper provision
must be made so that each holder of a Right will thereafter have the right to
receive, upon exercise and payment of the Purchase Price, that number of shares
of common stock of the acquiring company which at the time of such transaction
has a market value equal to twice the Purchase Price.
In the event that any person or group becomes an Acquiring Person, other
than pursuant to a tender or exchange offer for all outstanding shares of Common
Stock that the Board, taking into account the long-term value of the Company and
all other factors that the Board considers relevant, determines to be at a price
and on terms that are fair to holders of shares of Common Stock, each Right,
other than Rights that are or were beneficially owned by an Acquiring Person,
will thereafter have the right to receive, upon exercise and payment of the
Purchase Price, in lieu of Preferred Stock, that number of shares of Common
Stock which at the time of such transaction would have a market value equal to
twice the Purchase Price.
At any time after the occurrence of an event triggering the Rights
specified in the preceding paragraphs and prior to the acquisition by an
Acquiring Person of beneficial ownership of 50% or more of the Common Stock, the
Board may exchange the Rights, in whole or in part, at an exchange ratio of one
share of Common Stock per Right.
At any time until 20 days following the Stock Acquisition Date, the Board
may redeem the Rights in whole, but not in part, at a price of $.05 per Right
(the "Redemption Price"). Immediately upon the action of the Board ordering the
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Rights will expire on March 18, 1996, unless (i) extended or (ii) earlier
redeemed by the Company.
Until a Right is exercised, the holder thereof, as such, has no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.
8
<PAGE> 10
According to the Praxair Offer to Purchase, it is a condition of the
Praxair Offer that the Board redeem the Rights or that P Sub is otherwise
satisfied in its sole discretion that the Rights have been invalidated or are
otherwise inapplicable to the Praxair Offer and the Second Step Cash Merger.
(c) Section 203 of the Delaware General Corporation Law. In general,
Section 203 of the DGCL ("Section 203") provides that a Delaware corporation,
such as the Company, may not engage in any Business Combination (defined to
include a variety of transactions, including a merger) with any Interested
Stockholder (defined generally as a person that, directly or indirectly, owns
15% or more of the corporation's outstanding voting stock), or any affiliate of
an Interested Stockholder, for three years after the date on which the
Interested Stockholder becomes an Interested Stockholder. Section 203 provides
that an "owner" of voting stock includes any person who, individually or
together with any of its affiliates or associates, beneficially owns such stock
directly or indirectly, or has (i) the right to acquire voting stock (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise, (ii) the
right to vote such stock pursuant to any agreement, arrangement or
understanding, or (iii) any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of such stock with any other
person that beneficially owns, directly or indirectly, such stock. The
three-year prohibition on Business Combinations with Interested Stockholders
(the "Business Combination Prohibition") does not apply if certain conditions,
described below, are satisfied.
The Business Combination Prohibition does not apply to a particular
Business Combination between a corporation and a particular Interested
Stockholder if (i) prior to the date such Interested Stockholder became an
Interested Stockholder, the board of directors of such corporation approved
either the Business Combination or the transaction which resulted in the
stockholder becoming an Interested Stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding
for purposes of determining the number of shares outstanding those shares held
by (x) persons who are directors and also officers of the corporation and (y)
employee stock plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or (iii) on or subsequent to the date
the stockholder becomes an Interested Stockholder, the Business Combination is
(a) approved by the board of directors of the corporation and (b) authorized at
an annual or special meeting of stockholders by the affirmative vote of at least
66 2/3% of the outstanding voting stock of the corporation which is not owned by
the Interested Stockholder.
Section 203(b)(6) of the Delaware General Corporation Law provides that the
restrictions contained in Section 203 do not apply to a Business Combination
that is proposed prior to the consummation or abandonment of and following the
announcement or notification of one of certain extraordinary transactions
(including a merger) involving the corporation which transaction (i) is with or
by a person who either was not an Interested Stockholder during the previous
three years or who became an Interested Stockholder with the approval of the
corporation's board of directors and (ii) has been approved or has not been
opposed by a majority of the members of the board of directors then in office
who were directors prior to any person becoming an Interested Stockholder during
the previous three years or were recommended for election or elected to succeed
such directors by a majority of such directors.
(d) Restated Certificate of Incorporation. The Certificate requires a
supermajority vote for certain transactions. Article Tenth of the Certificate
requires the affirmative vote of holders of not less than two-thirds ( 2/3) of
the outstanding Shares entitled to vote and the affirmative vote of not less
than two-thirds ( 2/3) of each series of shares of preferred stock of the
Company entitled to vote as a class on such issue or, where the Board has
recommended such action, the affirmative vote of holders of a majority of the
outstanding Shares entitled to vote and the affirmative vote of a majority of
each series of the outstanding shares of preferred stock of the Company entitled
to vote as a class on such issue to effect, among other things, a merger or
consolidation.
9
<PAGE> 11
Currently, the Company does not have any series of shares of preferred
stock entitled by its terms to vote as a class on any matter.
Article Fifteenth of the Certificate requires the affirmative vote by the
holders of at least 80% of the then outstanding Shares entitled to vote and the
affirmative vote of at least 80% of each series of the outstanding shares of
preferred stock of the Company entitled to vote as a class on such issue to
approve Business Combinations involving an Interested Stockholder, unless (i)
the Business Combination is either approved by a majority of the Continuing
Directors or (ii) all of the price and procedural requirements set forth therein
are met.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
**Exhibit 1 -- Pages 5 through 23 of Proxy Statement dated March 24, 1995 relating to the
Company's 1995 Annual Meeting of Shareholders.
Exhibit 2 -- CBI Industries, Inc. Employment Agreement and addenda for J.E. Jones.
Exhibit 3 -- CBI Industries, Inc. Employment Agreement and addenda for A.J. Schneider.
Exhibit 4 -- CBI Industries, Inc. Employment Agreement and addenda for C.O. Ziemer.
Exhibit 5 -- CBI Industries, Inc. Employment Agreement and addenda for L.E. Akin.
Exhibit 6 -- CBI Industries, Inc. Employment Agreement and addenda for C.E. Willoughby.
Exhibit 7 -- Form of Liquid Carbonic Industries Corporation Employment Agreement and
Form of Addenda.
Exhibit 8 -- Letter Agreement between John E. Jones and the Company dated January 4,
1982, and addenda thereto.
Exhibit 9 -- CBI Industries, Inc. Stock Option Plan.
Exhibit 10 -- CBI Industries, Inc. 1995 Stock Option Plan.
Exhibit 11 -- CBI Restricted Stock Award Plan (1978).
Exhibit 12 -- CBI 1983 Restricted Stock Award Plan.
Exhibit 13 -- CBI 1989 Restricted Stock Award Plan.
Exhibit 14 -- CBI 1994 Restricted Stock Award Plan.
Exhibit 15 -- CBI Salaried Employee Stock Ownership Plan (1987).
*Exhibit 16 -- CBI Employee Stock Purchase and Savings Plan (1987).
Exhibit 17 -- CBI Executive Life Insurance Plan.
Exhibit 18 -- CBI Benefit Restoration Plan.
Exhibit 19 -- CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit
Restoration Trust.
Exhibit 20 -- Letter to John E. Jones, the Company's Chairman, President and Chief
Executive Officer, from H. William Lichtenberger, the Chairman and Chief
Executive Officer of Praxair, dated October 27, 1995.
**Exhibit 21 -- Letter to stockholders of the Company dated November 16, 1995.
Exhibit 22 -- Press Release issued by the Company on November 16, 1995.
Exhibit 23 -- Letter to holders of Shares issued pursuant to the Company's Restricted
Stock Plans with respect to tendering Shares of restricted stock dated
November 16, 1995.
Exhibit 24 -- Motion to amend Complaint in Steiner v. CBI Industries, Inc. (Delaware
Chancery Court).
Exhibit 25 -- Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 26 -- Complaint in Kreisberg v. Jones (Delaware Chancery Court).
Exhibit 27 -- Complaint in Lasker v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 28 -- Complaint in Polikoff v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 29 -- Complaint in Rosenberg v. Clark (Delaware Chancery Court).
Exhibit 30 -- Complaint in Lewis v. Jones (Delaware Chancery Court).
</TABLE>
- ---------------
* Incorporated by reference to Exhibit A to the Company's 1992 proxy statement
for annual meeting of stockholders.
** Included with the Schedule 14D-9 mailed to stockholders.
10
<PAGE> 12
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
CBI INDUSTRIES, INC.
By: /s/ JOHN E. JONES
---------------------------------
John E. Jones
(CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER)
Dated: November 16, 1995
11
<PAGE> 13
ANNEX A
Certain contracts, agreements, arrangements and understandings between the
Company or its affiliates and certain of its executive officers, directors, and
affiliates are described under the sections entitled "Executive Compensation,"
"Compensation Committee Report on Executive Compensation" and "CBI Industries,
Inc. - 1995 Stock Option Plan" at pages 5 through 23 of the Company's Proxy
Statement dated March 24, 1995 relating to its 1995 Annual Meeting of
Shareholders (the "1995 Proxy Statement"), which pages are attached as Exhibit 1
hereto and are incorporated by reference. The Company's 1995 Stock Option Plan,
described at pages 20 through 23 of the 1995 Proxy Statement, was approved by
the Company's stockholders at the 1995 Annual Meeting of Shareholders.
The CBI Industries, Inc. Stock Option Plan, as approved by the Company's
shareholders in 1987, and amended through August 1993 (the "1987 Stock Option
Plan") provides for the granting of non-qualified options or options qualifying
as incentive stock options under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") either alone or with a stock appreciation right
("SAR"). It is administered by the compensation committee of the Board (the
"Compensation Committee"). The maximum number of Shares issuable pursuant to the
grant of options or exercise of rights is 1,200,000 Shares. No more options may
be granted under the 1987 Stock Option Plan. The number of options which were
granted in 1995 to the following named executive officers, all executive
officers as a group, and all employees as a group are: J.E. Jones, 45,000; L.E.
Akin, 18,000; C.E. Willoughby, 12,000; A.J. Schneider, 6,000; C.O. Ziemer,
9,000; all executive officers as a group, 96,000; all employees as a group,
292,400.* All options granted in 1995 were granted on January 11, 1995 and the
exercise price of all options granted on such date is $24.375. For the period
January 1, 1995 through the date of this Schedule 14D-9, no options have been
exercised by the executive officers or the active employees as a group. The
outstanding grants also have "Limited Rights" to receive cash (equal to the
market value of the Common Stock subject to the related option less the exercise
price) upon expiration at the end of the 30 day period following a Change in
Control (as defined in the option grant) in respect of options which have not
been exercised.
Agreements between the Company and each of the executive officers of the
Company named in the following paragraph provide for each executive's continued
employment for a three year period (or to age 65, if earlier) following a Change
in Control of the Company ("Change in Control Agreements"). "Change in Control"
is defined as the occurrence at any time of any of the following events: an
Acquiring Person (as defined below) has become such; or (b) Continuing Directors
(as defined below) cease to comprise a majority of the Board of Directors of the
Company. The term "Acquiring Person" means any Person (as defined) who or which,
together with all Affiliates (as defined) and Associates (as defined) of such
Person, shall be the Beneficial Owner (as defined) of 10% or more of the Shares
then outstanding (subject to certain exceptions), but shall not include an
Exempt Person (as defined). The term "Continuing Director" means any member of
the Board, while such person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and was a member
of the Board prior to March 4, 1986 and means any person who subsequently
becomes a member of the Board, while such person is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, if (a) such person's nomination for election or election to the Board
is recommended or approved by resolution of a majority of the Continuing
Directors or (b) such person is included as a nominee in a proxy statement of
the Company distributed when a majority of the Board consists of Continuing
Directors.
Compensation and benefits for the three-year period are based generally on
the executive's compensation and benefits before the Change in Control, subject
to stipulated increases, and are payable in a lump sum on a discounted present
value basis upon either (i) termination by the Company of the executive's
employment for any reason other than death, disability or wilful and material
breach of the agreement during such period, or (ii) resignation of the executive
following any of (a) a significant change in the executive's authorities or
duties, (b) a reduction in the executive's total compensation and (c) other
breach of the executive's Change in Control Agreement. Such benefits payable
upon a termination of employment following a Change in
- ---------------
* Information with respect to two of the officers named in the compensation
table in the 1995 proxy statement is not provided herein, because those two
officers are no longer with the Company.
A-1
<PAGE> 14
Control also include a cash payment equal to (a) the fair market value of any
restricted stock awards which are forfeited as a result of such termination, and
(b) with respect to any stock option that ceases to be exercisable or which
terminates, a payment equal to the excess of the fair market value of the stock
subject to such option over the option exercise price. The Change in Control
Agreement also contains "gross-up" provisions pursuant to which the executive
will be paid additional amounts to reimburse such executive for all excise taxes
payable pursuant to Code Section 4999 with respect to so-called golden
parachutes, which additional payments will also include those amounts necessary
to permit the executive to pay all income and excise taxes payable with respect
to all such additional payments. The benefits payable to the following executive
officers as of November 14, 1995, if a Change in Control had occurred as of such
date and a termination causing payment of the benefits had occurred (not
including payments with respect to shares of restricted stock awarded to the
executive officers under any of the Company's Restricted Stock Plans (as defined
and as described below)) are as follows: J.E. Jones, $9,600,000; L.E. Akin,
$4,300,000; C.E. Willoughby, $3,400,000; A.J. Schneider, $1,700,000; and C.O.
Ziemer, $2,600,000. One other executive officer at the Company has a Change in
Control Agreement of the same type as the named executives.
Pursuant to addenda to their respective Change in Control Agreements with
the Company, L.E. Akin and C.E. Willoughby also entered into Change in Control
Agreements with their current employers, Chicago Bridge & Iron Company ("CBIC")
and Liquid Carbonic Industries Corporation ("LCI"), respectively, wholly owned
subsidiaries of the Company. Messrs. Akin's and Willoughby's Change of Control
Agreements become effective upon either a Change in Control of the Company or a
Change in Ownership of CBIC or LCI, as the case may be. A "Change in Ownership"
of CBIC or LCI means an occurrence of an event pursuant to which the ultimate
right to elect the directors of CBIC or LCI, as the case may be, is not
exercisable by the Company or another entity which directly or indirectly
acquires stock of CBIC or LCI, as the case may be, in a leveraged buyout in
which the senior management of the Company participates. Upon the earlier of a
Change in Control in the Company, or a Change in Ownership of CBIC or LCI, as
the case may be, the executive officer must, within 30 days of such change,
notify both its immediate employer and the Company as to which employment
arrangement the executive wishes to apply to his employment. Eight other
executives have similar arrangements with the wholly owned subsidiary of the
Company by which they are employed.
LCI has entered into employment agreements with six executive officers of
LCI (the "LCI Change in Control Agreements"). The LCI Change in Control
Agreements provide that in the event of a Change in Ownership of LCI, the
executive is entitled to receive a lump sum payout equaling the aggregate salary
(including salary increases and bonuses) which would have been paid to such
executive during the remainder of the employment period, which varies from one
to two years depending upon the executive, and cash equal to the fair market
value of any previously granted restricted stock that is forfeited. "Change in
Ownership" is defined in the LCI Change in Control Agreements to mean: the
occurrence of an event pursuant to which (a) the ultimate right to elect
directors of LCI is not exercisable by the Company or another entity which
directly or indirectly acquires stock of LCI in a leveraged buyout in which the
senior management of the Company participates, or (b) Continuing Directors, as
defined in the Rights Agreement, cease to comprise a majority of the board of
directors of the Company at a time when LCI, directly or indirectly, is a
subsidiary of the Company.
The Company maintains the CBI Employee Stock Purchase and Savings Plan
(1987) (the "1987 Stock Purchase and Savings Plan") in which substantially all
employees of the Company and certain subsidiaries are eligible to participate.
The number of Shares purchased in 1995 under the 1987 Stock Purchase and Savings
Plan and the net value of Shares (market value less 85% of market value on the
date of purchase) for the following named executive officers, all executive
officers as a group, and all employees as a group are, respectively: J.E. Jones,
985 and $3,969.55; L.E. Akin, 1,328 and $5,152.90; C.E. Willoughby, 969 and
$3,682.35; A.J. Schneider, 0; C.O. Ziemer, 0; all executive officers as a group,
3,984 and $15,478.42; all employees as a group, 122,358 and $455,933.44. The
average price per share with respect to all such Shares was $21.117.
A-2
<PAGE> 15
The Company restricted stock award plans (the "Restricted Stock Plans")
have been adopted by shareholder votes in 1978, 1983, 1989 and 1994 and such
plans are intended to encourage long-term employment and provide incentive
compensation to participants over an extended period by using specific
longer-term financial goals and/or stock vesting restrictions. The 1994
Restricted Stock Plan provides for awarding a target number of restricted Shares
to an individual recipient, or a percentage thereof, only after the Company
achieves specified performance goals set by the Compensation Committee. Pursuant
to the 1978, 1983 and 1989 Restricted Stock Plans the Compensation Committee
made awards on a discretionary basis to participants. Restricted Stock Plan
participants generally have all the rights of stockholders, with respect to
awarded shares, including the right to vote such Shares; however, Shares awarded
may not be sold, exchanged, pledged or otherwise disposed of until the
restrictions thereon have lapsed. Thus, Shares subject to restrictions tendered
into the Praxair Offer would be forfeited. However, the conversion of Shares in
a merger is deemed not to be a transaction subject to such forfeiture
provisions. Generally, restrictions on 50% of the Shares awarded pursuant to the
1978, 1983 and 1989 Restricted Stock Plans lapse after five years and
restrictions lapse on all other Shares awarded pursuant to such plans upon the
occurrence of death, retirement or termination of employment for reason of
disability. Restrictions on all Shares awarded under the 1994 Restricted Stock
Plans lapse at the beginning of the fifth year following the year for which
performance is measured. Restrictions on Shares awarded under all of the
Restricted Stock Plans lapse during the three year period after a Change in
Control upon the termination of employment (in the case of the 1978 and 1983
plans, by the Company) for any reason (other than wilful and material actions
causing direct and substantial damage to the Company or its Subsidiaries or
affiliates), or (with respect to the 1978 and 1983 Restricted Stock Plans) any
termination of such Restricted Stock Plans. Under the 1989 Restricted Stock
Plan, the Compensation Committee, and under the 1983 Restricted Stock Plan, the
Board, may cause the restrictions to lapse for any participant.
The number of outstanding restricted Shares awarded under all plans as of
November 14, 1995 to the following named executive officers, all executive
officers as a group, and all employees as a group which are still subject to
restrictions are: J.E. Jones, 66,350; L.E. Akin, 22,235; C.E. Willoughby,
10,165; A.J. Schneider, 4,304; C.O. Ziemer, 13,740; all executive officers as a
group, 120,298; all employees as a group, 920,779.
Pursuant to the Executive Life Insurance Plan adopted by the Company in
1992, 23 currently employed executives of the Company are insured under life
insurance contracts established under "split-dollar" arrangements intended to
allow the Company to ultimately recover the insurance premiums it pays with
respect to each insured executive. Under the plan, the executive's
pre-retirement death entitles his beneficiaries to between four and six times
his annual salary at the date of death. If death occurs after retirement, the
executive's beneficiaries are entitled to between two and four times his annual
salary as of the date of the executive's retirement. To the extent that the
insurance in force at the executive's death is not sufficient to pay his
beneficiaries the anticipated death benefit, any shortfall will be paid by the
CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit
Restoration Trust (the "Rabbi Trust"). Such shortfall would include all amounts
necessary to pay any income taxes that are due with respect to any life
insurance make-up payments that are made from the Rabbi Trust.
The Rabbi Trust is a non-qualified, taxable grantor trust established by
the Company to hold certain assets as the source of the life insurance premiums
and any shortfall in life insurance death benefits as described above, and as
the source of certain make-up payments pursuant to the CBI Benefit Restoration
Plan. Under this plan, any employee of the Company affected by the limits
described below is entitled to retirement benefits ("Excess Benefits") from the
Rabbi Trust equal to the additional retirement benefits they would have received
under the Company's qualified retirement plans if in computing the benefits
thereunder there were no legal limitations on either (a) the amount of salary
that could be considered in determining a participant's benefit or (b) the
amount of benefits payable from any of such qualified retirement plans.
Furthermore, pursuant to an agreement dated January 4, 1982 and amended December
19, 1986 and July 16, 1987 between the Company and Mr. Jones, Mr. Jones's Excess
Benefits amount is determined by including in his years of service for pension
plan benefit calculation purposes service with a prior unrelated employer.
A-3
<PAGE> 16
In October 1987, the Board approved and the Company established the CBI
Salaried Employee Stock Ownership Plan (1987) and such plan was amended and
restated as of June 1, 1994 (the "ESOP"). Salaried employees with at least two
years of service with the Company and designated subsidiaries are eligible to
participate. Initial funding of the ESOP came from proceeds of surplus assets in
the terminated CBI Pension Plan (Salaried) and by borrowings on behalf of the
ESOP. Such funds were used to acquire Shares and preferred stock convertible
into Shares at the rate of 1.5 Shares per share of preferred stock which are
held in a trust for annual allocation to eligible employees. Allocations are
based upon a participant's compensation and are fully and immediately vested.
Ongoing funding is provided by Company contributions and by dividends received
on shares held in the trust. The number of shares allocated in 1995 in the ESOP
to the following executive officers, all executive officers as a group, and all
employees as a group and the total number of shares held by the ESOP including
unallocated shares are:
<TABLE>
<CAPTION>
COMMON PREFERRED
------------- -------------
<S> <C> <C>
J.E. Jones............................................. 292.536 787.411
L.E. Akin.............................................. 273.234 752.661
C.E. Willoughby........................................ 257.944 643.406
A.J. Schneider......................................... 213.019 500.519
C.O. Ziemer............................................ 267.943 699.869
All executives......................................... 1,504.819 3,784.062
All employees.......................................... 160,105.642 380,405.079
Held by Trustee -- entire plan......................... 1,680,893.000 3,472,189.000
</TABLE>
Each participant is entitled to direct the trustee as to how the Company
stock allocated to his or her stock account is to be voted, which includes the
power to direct the trustee to abstain from voting on any issue. In addition,
each participant has the right to instruct the trustee as to the manner in which
the trustee is to respond to a tender offer for any or all of the Company stock
allocated to such participant's stock account. Pursuant to the terms of the
ESOP, the trustee is to tender that portion of unallocated shares which
corresponds pro-rata to the portion of allocated shares for which the trustee
has received instructions to tender. With respect to the remaining unallocated
shares, the trustee may determine based on its determination as to the best
interests of the participants whether or not to tender such shares.
LCI and Praxair are currently in negotiations concerning a proposed joint
venture arrangement, the purpose of which will be to operate a certain hydrogen
pipeline which is owned by Southpaw Leasing Master Trust II and leased to LCI.
It is contemplated that such pipeline will connect a hydrogen plant operated by
LCI in Louisiana with a pipeline system operated by Praxair in Texas. As part of
any such joint venture arrangement it is contemplated that LCI and Praxair will
enter into a hydrogen exchange agreement pursuant to which, among other things,
Praxair, on an ongoing basis, will agree to purchase a minimum volume of
hydrogen (having a current market value of approximately $4,000,000 per year)
under a take or pay provision and could purchase hydrogen in quantities having a
current market value of up to approximately $8,000,000 per year.
A-4
<PAGE> 17
SCHEDULE I
RECENT TRANSACTIONS IN SHARES
I. DIRECTORS' DEFERRED FEE PLAN.
The following table sets forth the number of Shares that directors' fees
were converted into based on the selling price of the Common Stock on the date
such director's fees were earned (including dividends on such shares which were
converted into additional Shares):
<TABLE>
<CAPTION>
DIRECTOR DATE EARNED NUMBER OF SHARES PRICE
- ------------------------------------------------- ----------- ---------------- -------
<S> <C> <C> <C>
Gary E. MacDougal................................ 9/15/95 10.0286 $24.500
John F. Riordan.................................. 10/01/95 252.6316 $23.750
10/11/95 43.9560 $22.750
10/11/95 43.9560 $22.750
10/12/95 43.9560 $22.750
Robert G. Wallace................................ 10/11/95 43.9560 $22.750
10/11/95 43.9560 $22.750
10/12/95 43.9560 $22.750
10/25/95 210.5263 $23.750
</TABLE>
II. ESOP DIVIDENDS.
The following table sets forth the number of Shares credited since
September 15 to the accounts of the following officers in connection with
dividends paid:
<TABLE>
<CAPTION>
OFFICER POSITION NUMBER OF SHARES PRICE
- ------------------------------- --------------------------------- ---------------- ------
<S> <C> <C> <C>
John E. Jones.................. Chairman, President and 21.301 $24.50
Chief Executive Officer
Lewis E. Akin.................. Executive Vice President 14.980 $24.50
Calvin E. Willoughby........... Executive Vice President 9.972 $24.50
Charles O. Ziemer.............. Senior Vice President and 13.247 $24.50
General Counsel
Alan J. Schneider.............. Vice President and Chief 4.547 $24.50
Financial Officer
Stephen M. Duffy............... Vice President -- Human Resources .976 $24.50
John R. Meier.................. Controller 5.533 $24.50
</TABLE>
III. DIVIDEND REINVESTMENT PLAN.
The following table sets forth the number of Shares purchased for the
accounts of the following directors and officers pursuant to the Dividend
Reinvestment Plan upon distribution of a common stock dividend on September 15,
1995. All Shares were treasury shares.
<TABLE>
<CAPTION>
OFFICER/DIRECTOR POSITION NUMBER OF SHARES
- ----------------------------------------- --------------------------------- ----------------
<S> <C> <C>
Stephen M. Duffy......................... Vice President -- Human Resources 4.7710
John T. Horton........................... Director 8.8380
Alan J. Schneider........................ Vice President and Chief 2.0420
Financial Officer
</TABLE>
<PAGE> 18
IV. OTHER TRANSACTIONS.
Mr. MacDougal sold 1,850 Shares on October 25, 1995 at a price of $19.625
per Share in the open market in a transaction unrelated to the Directors'
Deferred Fee Plan, the ESOP or the Dividend Reinvestment Plan.
Over the course of the past 60 days the Company has in the ordinary course
(i) sold Shares to former executives (or their estates) upon exercise of options
and to employees in connection with the Company's Dividend Reinvestment Plan;
(ii) exchanged Shares for Series C Preferred Stock in connection with ESOP
terminations; and (iii) purchased odd-lot holdings from stockholders, fractional
Shares related to ESOP terminations and restricted Shares in payment of taxes
incurred in connection with the lapse of restrictions.
2
<PAGE> 19
ANNEX B-1
LEHMAN BROTHERS
November 14, 1995
Board of Directors
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521
Dear Members of the Board:
We understand that PX Acquisition Corp., a wholly owned subsidiary of
Praxair, Inc. (together, the "Bidder"), has made a tender offer to the
shareholders of CBI Industries, Inc. (the "Company") to purchase all outstanding
shares of the common stock, par value $2.50 per share, together with certain
associated rights of the Company for consideration of $32.00 net per share in
cash (the "Praxair Offer"). The terms and conditions of the Praxair Offer are
set forth in more detail in the Offer to Purchase dated November 3, 1995 (the
"Offer to Purchase").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the adequacy, from a financial point of view, to the
Company's shareholders of the consideration offered in the Praxair Offer.
In arriving at our opinion, we reviewed and analyzed: (1) the Offer to
Purchase and the specific terms of the Praxair Offer, (2) such publicly
available information concerning the Company and the Bidder which we believe to
be relevant to our inquiry, (3) financial and operating information with respect
to the business, operations and prospects of the Company furnished to us by the
Company including, without limitation, certain projections prepared by the
Company, (4) a trading history of the Company's common stock and a comparison of
that trading history with those of other companies that we deemed relevant, (5)
a comparison of the historical financial results and present financial condition
of the Company with those of other companies that we deemed relevant, and (6) a
comparison of the financial terms of the Praxair Offer with the financial terms
of certain other transactions that we deemed relevant. In addition, we have
considered various discussions with third parties with respect to such third
parties' potential interest in an acquisition of all or part of the Company or
other strategic transactions involving the Company. We also have had discussions
with the management of the Company concerning its business, operations, assets,
financial condition and prospects and undertook such other studies, analyses and
investigations as we deemed appropriate.
LEHMAN BROTHERS INC.
190 S. LASALLE STREET CHICAGO, IL 60603 TELEPHONE 312/609 7200 FACSIMILE 312/609
8562
B-1-1
<PAGE> 20
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial forecasts and projections of the
Company, upon advice of the Company we have assumed that such forecasts and
projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company as
to the future financial performance of the Company. In arriving at our opinion,
we have not conducted a physical inspection of the properties and facilities of
the Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of the Company. Our opinion is necessarily based upon
market, economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration offered to
the shareholders of the Company in the Praxair Offer is inadequate to such
shareholders.
We have, in the past, provided financial advisory and financing services to
the Company and are acting as financial advisor to the Company in connection
with the Praxair Offer. In addition, the Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion. In the
ordinary course of our business, we actively trade in the securities of the
Company and the Bidder for our own account and for the accounts of our customers
and, accordingly, may at any time hold a long or short position in such
securities.
This opinion is for the use and benefit of the Board of Directions of the
Company. This opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to whether to accept the
consideration offered to such shareholder in the Praxair Offer.
Very truly yours,
LEHMAN BROTHERS
B-1-2
<PAGE> 21
ANNEX B-2
Investment Banking Group
5500 Sears Tower
Chicago, Illinois 60606
312 906 6200
FAX 312 906 6262
(LOGO) Merrill Lynch
November 14, 1995
Board of Directors
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521
Dear Members of the Board:
We understand that PX Acquisition Corp., a wholly owned subsidiary of
Praxair, Inc. (together, the "Bidder"), has made a tender offer to the
shareholders of CBI Industries, Inc. (the "Company") to purchase all outstanding
shares of the common stock, par value $2.50 per share, together with certain
associated rights of the Company for consideration of $32.00 net per share in
cash (the "Praxair Offer"). The terms and conditions of the Praxair Offer are
set forth in more detail in the Offer to Purchase dated November 3, 1995 (the
"Offer to Purchase").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the adequacy, from a financial point of view, to the
Company's shareholders of the consideration offered in the Praxair Offer.
In arriving at our opinion, we reviewed and analyzed: (1) the Offer to
Purchase and the specific terms of the Praxair Offer, (2) such publicly
available information concerning the Company and the Bidder which we believe to
be relevant to our inquiry, (3) financial and operating information with respect
to the business, operations and prospects of the Company furnished to us by the
Company including, without limitation, certain projections prepared by the
Company, (4) a trading history of the Company's common stock and a comparison of
that trading history with those of other companies that we deemed relevant, (5)
a comparison of the historical financial results and present financial condition
with those of other companies that we deemed relevant, and (6) a comparison of
the financial terms of the Praxair Offer with the financial terms of certain
other transactions that we deemed relevant. In addition, we have considered
various discussions with third parties with respect to such third parties'
potential interest in an acquisition of all or part of the Company or other
strategic transactions involving the Company. We have also had discussions with
the management of the Company concerning its business, operations, assets,
financial condition and prospects and undertook such other studies, analyses and
investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial forecasts and projections of the
Company, upon advice of the Company we have assumed that such
B-2-1
<PAGE> 22
forecasts and projections have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company. In arriving at
our opinion, we have not conducted a physical inspection of the properties and
facilities of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company. Our opinion is
necessarily based upon market, economic and other conditions as they exist on,
and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration offered to
the shareholders of the Company in the Praxair Offer is inadequate to such
shareholders.
We have, in the past, provided financial advisory and financing services to
the Company and are acting as financial advisor to the Company in connection
with the Praxair Offer. In addition, the Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion. In the
ordinary course of our business, we actively trade in the securities of the
Company and the Bidder for our own account and for the accounts of our customers
and, accordingly, may at any time hold a long or short position in such
securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. This opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to whether to accept the
consideration offered to such shareholder in the Praxair Offer.
Very truly yours,
MERRILL LYNCH
B-2-2
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Exhibit 1 -- Pages 5 through 23 of Proxy Statement dated March 24, 1995 relating to the
Company's 1995 Annual Meeting of Shareholders.
Exhibit 2 -- CBI Industries, Inc. Employment Agreement and addenda for J.E. Jones.
Exhibit 3 -- CBI Industries, Inc. Employment Agreement and addenda for A.J. Schneider.
Exhibit 4 -- CBI Industries, Inc. Employment Agreement and addenda for C.O. Ziemer.
Exhibit 5 -- CBI Industries, Inc. Employment Agreement and addenda for L.E. Akin.
Exhibit 6 -- CBI Industries, Inc. Employment Agreement and addenda for C.E. Willoughby.
Exhibit 7 -- Form of Liquid Carbonic Industries Corporation Employment Agreement and Form
of Addenda.
Exhibit 8 -- Letter Agreement between John E. Jones and the Company dated January 4,
1982, amendment thereto dated December 19, 1986, and amendment thereto dated
July 16, 1987.
Exhibit 9 -- CBI Industries, Inc. Stock Option Plan.
Exhibit 10 -- CBI Industries, Inc. 1995 Stock Option Plan.
Exhibit 11 -- CBI Restricted Stock Award Plan (1978).
Exhibit 12 -- CBI 1983 Restricted Stock Award Plan.
Exhibit 13 -- CBI 1989 Restricted Stock Award Plan.
Exhibit 14 -- CBI 1994 Restricted Stock Award Plan.
Exhibit 15 -- CBI Salaried Employee Stock Ownership Plan (1987).
Exhibit 16 -- CBI Employee Stock Purchase and Savings Plan (1987) (incorporated by
reference).
Exhibit 17 -- CBI Executive Life Insurance Plan.
Exhibit 18 -- CBI Benefit Restoration Plan.
Exhibit 19 -- CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit
Restoration Trust.
Exhibit 20 -- Letter to John E. Jones, the Company's Chairman, President and Chief
Executive Officer, from H. William Lichtenberger, the Chairman and Chief
Executive Officer of Praxair, dated October 27, 1995.
Exhibit 21 -- Letter to Stockholders of the Company dated November 16, 1995.
Exhibit 22 -- Press Release issued by the Company on November 16, 1995.
Exhibit 23 -- Letter to holders of Shares issued pursuant to the Company's Restricted
Stock Plans with respect to tendering Shares of restricted stock dated
November 16, 1995.
Exhibit 24 -- Motion to amend Complaint in Steiner v. CBI Industries, Inc. (Delaware
Chancery Court).
Exhibit 25 -- Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 26 -- Complaint in Kreisberg v. Jones (Delaware Chancery Court).
Exhibit 27 -- Complaint in Lasker v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 28 -- Complaint in Polikoff v. CBI Industries, Inc. (Delaware Chancery Court).
Exhibit 29 -- Complaint in Rosenberg v. Clark (Delaware Chancery Court).
Exhibit 30 -- Complaint in Lewis v. Jones (Delaware Chancery Court).
</TABLE>
<PAGE> 1
EXHIBIT 1
ing compensation for certain other officers; administers the Company's stock
option plans and restricted stock award plans; and makes determinations as to
which key officers of the Company or its subsidiaries should be offered
employment and/or termination agreements.
The Nominating Committee, which held two meetings in 1994, establishes
criteria regarding the size and composition of the Board and its Committees,
recommends criteria relating to tenure and eligibility, identifies, reviews and
recommends prospective Board members, recommends candidates for the position of
Chief Executive Officer and Chief Financial Officer, and approves the nominees
for new positions on the Board and vacancies on the Board. It will consider
nominees for the Board recommended by shareholders. Pursuant to the Company's
by-laws, recommendations must be submitted in writing and addressed to the
Chairman of the Nominating Committee, c/o Secretary of the Company, Charlotte C.
Toerber, CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, IL 60521-2268 not
less than sixty days prior to the first anniversary of the date of the last
meeting of shareholders called for the election of directors and set forth the
name, age, business and residential address, principal occupation, number of
shares of Common Stock owned and such other information concerning the nominee
as may be required by the Federal securities laws with respect to an individual
nominated as a director for whom proxies are solicited.
The Environmental and Safety Committee, which was established, but did not
meet, in 1994, reviews and makes recommendations concerning the environmental
and safety philosophies and standards of the Company and its operating
subsidiaries, reviews existing compliance programs and monitors environmental
and safety compliance of the Company and its subsidiaries.
COMMON STOCK OWNERSHIP BY
CERTAIN PERSONS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person known to the Company to be the beneficial owner of more than 5% of any
class of the Company's outstanding stock.
<TABLE>
<CAPTION>
TITLE NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock LaSalle National Trust, N.A. 7,063,258(1) 16.30%
135 South LaSalle Street
Chicago, IL 60603
Common Stock The Capital Group Companies, Inc. 3,642,710(2) 9.57%
333 South Hope Street
Los Angeles, CA 90071
Common Stock Putnam Investments, Inc. 2,088,700(3) 5.5%
One Post Office Square
Boston, MA 02109
</TABLE>
5
<PAGE> 2
(1) According to an amended Schedule 13G dated February 13, 1995, these shares
are held by LaSalle National Trust, N.A. in its capacity as Trustee of the
CBI Salaried Employee Stock Ownership Plan (1987) (the "ESOP"). It has
shared power to vote the shares and sole power to dispose of the shares.
Includes 859,082.464 shares of Common Stock and 2,115,318.001 shares of
Series C Preferred Stock (which are convertible into 3,172,977.002 shares of
Common Stock) which are not allocated to accounts of ESOP participants, and
868,798.536 shares of Common Stock and 1,441,599.999 shares of Series C
Preferred Stock (which are convertible into 2,162,399.999 shares of Common
Stock) which are allocated to accounts of ESOP participants.
(2) According to an amended Schedule 13G dated February 6, 1995 filed by The
Capital Group Companies, Inc. and its subsidiaries, Capital Guardian Trust
Company and Capital Research and Management Company, it had sole power to
vote 2,572,610 shares and sole power to dispose of 3,642,710 shares.
(3) According to an amended Schedule 13G dated January 23, 1995 filed by Putnam
Investments, Inc. and its subsidiaries, Putnam Investment Management, Inc.
and The Putnam Advisory Company, Inc., it had shared power to dispose of
2,088,700 shares.
SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned on February 15, 1995, by each director and
nominee, each named executive officer and by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF
NAME OF BENEFICIALLY OWNED OUTSTANDING
BENEFICIAL OWNER AS OF FEBRUARY 15, 1995(1) COMMON STOCK
- ---------------- --------------------------- ------------
<S> <C> <C>
John E. Jones 71,776(2) *
Lewis E. Akin 28,957(2) *
Wiley N. Caldwell 1,500 *
E. Hubert Clark, Jr. 1,350 *
Robert J. Daniels 23,327(2) *
Robert J. Day 1,650 *
John T. Horton 1,536,439(3) 4.2%
Gary E. MacDougal 4,650 *
Stephanie Pace Marshall 200 *
Edward J. Mooney 1,950 *
John F. Riordan 1,100 *
George L. Schueppert 40,682(2) *
Robert T. Stewart 1,100 *
Robert G. Wallace 1,650 *
Charles O. Ziemer 26,600(2) *
All directors and
executive officers as a group
(18 in number) 1,766,053(2) 4.6%
</TABLE>
6
<PAGE> 3
*Beneficially owns less than one percent of the Company's outstanding shares
of Common Stock.
(1) Share amounts for individual directors and officers and all directors and
officers as a group include shares awarded pursuant to the CBI restricted
stock award plans for which restrictions have not lapsed, shares of Common
Stock held pursuant to the CBI Salaried Employee Stock Ownership Plan (1987)
and shares owned by spouses and certain other immediate family members.
(2) Excludes shares which are subject to presently exercisable stock options as
follows: John E. Jones, 165,500 shares; Lewis E. Akin, 52,800 shares; Robert
J. Daniels, 75,500 shares; George L. Schueppert, 78,450 shares; Charles O.
Ziemer 40,200 shares; and directors and executive officers as a group,
436,250 shares, and excludes shares of Series C Preferred Stock held
pursuant to the CBI Salaried Employee Stock Ownership Plan (1987) as
follows: John E. Jones, 5,317 shares; Lewis E. Akin, 4,750 shares; Robert J.
Daniels, 4,896 shares; George L. Schueppert, 4,946 shares; Charles O.
Ziemer, 3,887 shares; and directors and executive officers as a group,
28,461 shares.
(3) Includes 1,534,140 shares owned by Mr. Horton as co-trustee of twenty-one
trusts of which he has a one-sixth beneficial interest.
SECTION 16(A) REPORTING DELINQUENCIES
Under rules adopted by the Securities and Exchange Commission effective
May 1, 1991, the Company is required to report certain information about any
director, officer, beneficial owner of more than ten percent of its Common Stock
or its Preferred Stock, or any other person subject to Section 16 of the
Securities Exchange Act of 1934 that failed to file on a timely basis the
reports required by Section 16(a) of the Exchange Act (the "Reports") during the
last fiscal year. Based upon information furnished to the Company, including the
Reports in question, as contemplated by the rules, it appears that Mr. MacDougal
filed one Form 4 late with regard to one sale transaction and that two officers,
Mr. Duffy, Vice President-Human Resources, and Mr. Schneider, Vice President and
Controller, each filed one Form 5 late with regard to reporting transactions
under the Company's Dividend Reinvestment Plan.
7
<PAGE> 4
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- -------------------------------------------
(a) (b) (c) (d) (f) (g) (i)
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
STOCK OPTIONS/ COMPEN-
BONUS AWARDS SARS SATIONS
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2)(3) (#SHARES)(4) ($)(5)
- --------------------------- ---- --------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
John E. Jones
Chairman of the Board, 1994 530,000 552,497 137,000 31,000 115,042
President, Chief Executive 1993 530,000 77,000 515,250 28,000 133,222
Officer and Director 1992 495,000 456,667 0 28,000 78,395
Lewis E. Akin,
Executive Vice President 1994 290,000 210,189 48,020 14,000 96,045
and Director, President of 1993 290,000 35,000 200,375 12,000 76,575
Chicago Bridge & Iron
Company 1992 275,000 201,822 0 13,500 42,428
Robert J. Daniels
Executive Vice President 1994 265,000 193,507 48,020 14,000 89,021
and Director, President
of Liquid Carbonic 1993 265,000 43,515 171,750 11,000 67,456
Industries Corporation 1992 252,000 148,057 0 12,000 40,191
George L. Schueppert
Executive Vice President, 1994 305,000 261,591 48,020 14,000 105,848
Chief Financial Officer 1993 305,000 35,000 200,375 12,000 87,047
and Director 1992 290,000 218,895 0 13,500 46,156
Charles O. Ziemer 1994 195,000 101,056 20,580 7,000 63,725
Senior Vice President 1993 192,000 25,000 85,875 6,500 48,064
and General Counsel 1992 185,000 86,589 0 7,000 30,634
</TABLE>
8
<PAGE> 5
(1) The amounts were earned in the stated year and paid in the following year
pursuant to annual incentive bonus opportunities described under the caption
"Compensation Committee Report on Compensation Awards."
(2) Amounts earned in 1994 (but awarded in 1995) were pursuant to the CBI 1994
Restricted Stock Award Plan (see description under the caption "Long Term
Incentive Plans" and "Compensation Committee Report on Compensation Awards")
and reflects restricted stock earned pursuant to 50% of the target awards
granted in 1994 for which performance is measured at the end of 1994.
Restrictions on these shares expire January 1, 1999. Amounts awarded in 1993
were pursuant to the CBI 1989 Restricted Stock Award Plan.
(3) Restricted Stock Awards are valued at the closing price on the date of
grant. Participants receive dividends on the Restricted Stock reported in
this column. The number and value of the aggregate restricted stock holdings
at the end of the last completed fiscal year, based on the NYSE composite
closing price of $25.625 per share on 12/31/94, for each named executive
officer are: John E. Jones 60,750, $1,556,719; Lewis E. Akin 20,275,
$519,547; Robert J. Daniels 16,125, $413,203; George L. Schueppert 24,250,
$621,406; and Charles O. Ziemer 12,900, $330,562.
(4) It is the present policy of the Compensation Committee not to award SARs
either at the time of grant or during the term of the option.
(5) The compensation reported represents (a) contributions pursuant to the CBI
Salaried Employee Stock Ownership Plan (1987)(the "ESOP") for shares
allocated to the executive officer's account, (b) the cost of stock
allocated in the form of units to each executive officer's account in an
irrevocable trust under the CBI Benefit Restoration Plan (described under
the caption "Pension and other retirement benefits") for allocations
pursuant to the ESOP which otherwise exceed the maximum limit imposed upon
such plan by the Internal Revenue Code (the "Code"), and (c) the dollar
value of split-dollar life insurance benefits. Those three amounts,
expressed in the same order identified above, for each named executive
officer are as follows: John E. Jones, $57,048, $19,375, $38,619; Lewis E.
Akin $54,866, $17,500, $23,679; Robert J. Daniels $55,635, $14,375, $19,011;
George L. Schueppert $55,586, $19,375, $30,887; Charles O. Ziemer $45,064,
$5,625, $13,036.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants and exercises during the fiscal
year 1994 to and by the executive officers named in the Summary Compensation
Table above, and the value of the options held by such persons at the end of
fiscal 1994. No SARs were granted or exercised during fiscal 1994.
9
<PAGE> 6
OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
- ----------------------------------------------------------------------------- -----------
(A) (B) (C) (D) (E) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE GRANT DATE
GRANTED EMPLOYEES PRICE EXPIRATION PRESENT
NAME (# SHARES)(2) IN FISCAL YEAR ($/SHARE) DATE VALUE($)(3)
- ---- ------------- -------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
John E. Jones 31,000 13.5% 30.125 5/02/04 364,560
Lewis E. Akin 14,000 6.1% 30.125 5/02/04 164,640
Robert J. Daniels 14,000 6.1% 30.125 5/02/04 164,640
George L. Schueppert 14,000 6.1% 30.125 5/02/04 164,640
Charles O. Ziemer 7,000 3.0% 30.125 5/02/04 82,320
</TABLE>
(1) It is the present policy of the Compensation Committee not to award SARs
either at the time of grant or during the term of the option.
(2) All options were granted at market value and are subject to a one-year
holding period. Each option will terminate and cease to be exercisable if
the Participant's employment with the Company terminates for any reason
other than death, retirement for disability or retirement under a retirement
plan of the Company.
(3) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black Scholes model in estimating the value
of the options reflected in the above table include the following: (a) an
exercise price of the option of $30.125 equal to the fair market value of
the underlying stock on the date of grant; (b) an interest rate 6.48% that
represents the interest rate on a U.S. treasury security with a maturity
date corresponding to that of the option term; (c) volatility of 33.249%
calculated using daily stock prices for the one-year period prior to the
grant date; (d) dividends at the rate of $0.48 per share, representing the
annualized dividends paid with respect to a share of Common Stock at the
date of grant; (e) an approximately 4.0% reduction to reflect the
probability of forfeiture due to termination prior to vesting and
approximately 12.33% reduction to reflect the probability of a shortened
option term due to termination of employment prior to the option expiration
date; and (f) an option term of ten years. The ultimate values of options
will depend on the future market price of Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the excess of the
market value of the Common Stock over the exercise price on the date the
option is exercised.
10
<PAGE> 7
AGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER VALUE OF
OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-
UNEXERCISED MONEY
OPTION/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(2)
- ---- --------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
John E. Jones 0 NA 165,500/31,000 464,710/0
Lewis E. Akin 0 NA 52,800/14,000 0/0
Robert J. Daniels 0 NA 75,500/14,000 231,798/0
George L. Schueppert 0 NA 78,450/14,000 218,158/0
Charles O. Ziemer 0 NA 40,200/ 7,000 107,385/0
</TABLE>
(1) It is the present policy of the Compensation Committee not to award SARs
either at the time of grant or during the term of the option.
(2) Value is based on the NYSE composite closing price of $25.625/share on
12/31/94.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Under the Company's 1994 Restricted Stock Award Plan, at the beginning of
each year, the performance goals and target awards are set. Target awards are
allocated 50% to the current year for which the target award was made ("50%
award"), 25% to the first year following ("first year award") and 25% to the
second year following ("second year award"). Target awards are subject to
adjustment based upon measurement of pre-tax operating income as a return on net
assets over a three year period ending with the year in which the measurement of
performance is made. The 50% award is adjusted at the end of the year in which
the target award is made. The first year award is adjusted at the end of the
year in which the target award is made and at the end of the subsequent year.
The second year award is adjusted at the end of the year in which the target
award is made and again at the end of the second year following the year the
target award is made. The target award, as it may be adjusted, will be earned if
100% of the performance goal is achieved. The threshold number of shares will be
earned at the achievement of 75% of the performance goal, and the maximum number
of shares will be earned at the achievement of 125% of the performance goal. No
dividends will be paid during the performance period.
11
<PAGE> 8
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD UNTIL ---------------------------------
SHARES, UNITS, MATURATION THRESHOLD TARGET MAXIMUM
NAME OR OTHER RIGHTS(#) OR PAYOUT (#) (#) (#)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John E. Jones 2,500 1992-4, 1993-5 1400 2,800 5,600
2,500 1992-4, 1994-6 1400 2,800 5,600
Lewis E. Akin 875 1992-4, 1993-5 490 980 1,960
875 1992-4, 1994-6 490 980 1,960
Robert J. Daniels 875 1992-4, 1993-5 490 980 1,960
875 1992-4, 1994-6 490 980 1,960
George L. Schueppert 875 1992-4, 1993-5 490 980 1,960
875 1992-4, 1994-6 490 980 1,960
Charles O. Ziemer 375 1992-4, 1993-5 94 420 840
375 1992-4, 1994-6 94 420 840
</TABLE>
Actual performance against the performance goal for the three year period
ended December 31, 1994 has been certified by the Compensation Committee and the
restricted stock earned pursuant to the 50% award for 1994 has been allocated.
(See Summary Compensation Table - Restricted Stock). The amounts listed in the
table above under "Number of Shares, Units, or other Rights" indicate the first
year award and second year award that are part of a target award made in 1994.
Amounts listed under "Estimated Future Payouts Under Non-Stock Price Based
Plans" have been adjusted as aforesaid to take into account actual performance
against the performance goal for the three year period ended December 31, 1994.
PENSION AND OTHER RETIREMENT BENEFITS
The CBI Pension Plan (the "Pension Plan") is non-contributory and covers
substantially all salaried employees and certain hourly employees of the Company
and its participating subsidiaries. The following table shows approximate annual
pensions payable to salaried employees, including executive officers, assuming
normal retirement at age 65 and that the current social security tax base
remains unchanged:
12
<PAGE> 9
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL YEARS OF SERVICE AT RETIREMENT
EARNINGS 15 20 25 30 35 40
-------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $21,540 $ 28,720 $ 35,900 $ 43,080 $ 50,260 $ 57,440
200,000 42,540 56,720 70,900 85,080 99,260 113,440
300,000 63,540 84,720 105,900 127,080 148,260 169,440
400,000 84,540 112,720 140,900 169,080 197,260 225,440
500,000 105,540 140,720 175,900 211,080 246,260 281,440
600,000 126,540 168,720 210,900 253,080 295,260 337,440
700,000 147,540 196,720 245,900 295,080 344,260 393,440
800,000 168,540 224,720 280,900 337,080 393,260 449,440
900,000 189,540 252,720 315,900 379,080 442,260 505,440
1,000,000 210,540 280,720 350,900 421,080 491,260 561,440
1,100,000 231,540 308,720 385,900 463,080 540,260 617,440
1,200,000 252,540 336,720 420,900 505,080 589,260 673,440
</TABLE>
Pensions for salaried employees, including Executive Officers, are based on
years of service and the greater of the average of their last thirty-six
consecutive months or any three consecutive full calendar years of salary and
bonuses (excluding profit-sharing, overseas living adjustments, remuneration
related to Company securities, and compensation otherwise constituting qualified
earnings in excess of an annually adjusted limitation imposed by the Internal
Revenue Code.)
Pension benefits are computed on the basis of a single life annuity with a
surviving spouse benefit. Pension Plan benefits shown above are offset by a
portion of primary Social Security benefits. In the case of all the named
executive officers, such reduction would not substantially affect their
benefits. Benefits are also offset by an amount equal to the amount of a monthly
annuity that could have been purchased from an insurance company at the time a
participant retires with one-half the cash value of the participant's ESOP
account up to a maximum of one-half the pension accrued by the participant after
1987.
The Internal Revenue Code limited the annual benefits which may be paid to
any person under the Pension Plan to $120,000 per year in 1994. In addition,
compensation to be used in the determination of benefits was limited by the
Internal Revenue Code to $150,000 for 1994. The Company has adopted the CBI
Benefit Restoration Plan through which it pays retirement benefits otherwise
determined under the Pension Plan formulas but in excess of the maximum limit
imposed upon qualified pension plans by the Internal Revenue Code. Certain
assets have been placed in trust with an independent trustee to support the CBI
Benefit Restoration Plan. The Company may not unilaterally amend such trust
after a defined change in control of the Company and may not revoke the trust in
any event.
The number of years of credited service, as of December 31, 1994, for the
named executive officers are: John E. Jones, 37.7 years; George L. Schueppert,
29.4 years; Lewis E. Akin, 34.3 years; Robert J. Daniels, 28.9 years; and
Charles O. Ziemer, 32.3 years. Pursuant to an agreement between Mr. Jones and
the Company, the years credited to him include years of service with his former
employer, but any pension payable by the Company
13
68427
<PAGE> 10
to him will be offset by any pension he receives from his former employer.
Pursuant to an agreement between Mr. Schueppert and the Company the years
credited to him include years of service with a former employer, but any pension
payable by the Company to him will be offset by the amount of accrued and vested
pension to which he was entitled at the former employer.
COMPENSATION OF DIRECTORS
Directors who were not officers of the Company received in 1994 an annual
retainer of $20,000, paid in quarterly installments, plus an amount equal to the
value of 300 shares of Common Stock, valued on the first business day of July,
which each eligible director in 1994 elected to take in the form of shares of
Common Stock, and $1,000 for attendance at each Board meeting. Directors who
were chairpersons of committees received in 1994 an additional retainer of
$4,000. Those who serve on Board Committees receive $1,000 for each Committee
meeting attended. Directors who are not employees of the Company may elect on an
annual basis to defer their fees. Such electing director is credited with
investment units equivalent to the number of shares of Common Stock that could
have been purchased on the open market with the amounts to which the director
was entitled under the standard compensation arrangements, plus credit for
dividends that would have been paid on such shares.
TERMINATION AGREEMENTS
Agreements between the Company and each of the named Executive Officers of
the Company provide for each executive's continued employment for a three year
period (or to age 65, if earlier) following a defined change in control of the
Company. Compensation and benefits for such period are based generally on the
executive's compensation and benefits before such defined change in control,
subject to stipulated increases, and are payable notwithstanding termination
(other than by death, disability or wilful and material breach of the agreement)
of the executive's employment during such period.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside directors and is responsible for reviewing and
approving compensation practices and benefits, in particular those affecting the
executive and management group of employees of the Company and its subsidiaries,
and including recommendations proposed by management. The Committee determines
compensation and awards and grants under corporate plans for officers of the
Company (subject to review by the Board of Directors), reviews management
recommendations concerning compensation for certain other executives, and
administers the Company's stock option plans, the CBI Officers' Bonus Plan and
the CBI 1994 Restricted Stock Award Plan.
The Committee uses the services of Hewitt Associates LLC, a
nationally-recognized, independent compensation consultant which provides
relevant competitive compensation data, to assist the Committee in making its
decisions. The consultant conducts an annual review of the Company's executive
compensation program and reports its findings to the Committee. This review is
based on a study of the current comparative compensation practices of an
appropriate sample of other large public corporations comparable in size to the
Company. Throughout this report, reference to "competitive data," "market
levels," "market data," etc., is
14
<PAGE> 11
reference to the information and values provided by this study. The Company
relies on this array of companies for analysis of executive compensation rather
than the Peer Group chosen for comparing stockholder return in the Performance
Graph because the Committee believes the Company's competition for executive
talent, based on both the Company's geographic location and the industries in
which the Company operates, is better reflected by this array of companies.
OVERALL COMPENSATION PHILOSOPHY
The Company's executive compensation program is designed to support the
achievement of corporate performance goals, to attract, retain and motivate
talented people, and to link executive and shareholder interests through
equity-based plans with a long-term perspective. The program consists of short
and long-term incentive plans which emphasize pay for both individual and
corporate performance and stock based incentives. Because the Committee believes
that it is in the best interest of shareholders to operate the business with a
long term perspective and reward those who do so, the program is intended to
more greatly emphasize its longer-term components. Cash compensation, which
includes base salary and bonus, is designed to be at or near competitive market
levels with base salaries approaching market levels and annual target
performance bonus opportunities at market levels. Long-term incentives, which
are a) stock option grants and b) restricted stock awards based on longer-term
corporate performance, are designed to provide opportunity for resulting
compensation from such incentives at or above the median values indicated by the
competitive data and to provide an incentive to an executive which is aligned
with shareholder interests.
The following is a detailed description of the current compensation program.
BASE SALARY
The Committee annually reviews the salaries of the executive officers of the
Company. In determining appropriate salary levels, the Committee primarily
considered (weighing all the factors on a generally equivalent basis) level of
responsibility, experience, individual performance, and competitive pay levels
as reflected in the compensation consultant's study.
ANNUAL INCENTIVES
Through the CBI Officers' Bonus Plan, annual incentive bonus opportunities
are made available to executive officers, including the CEO, to recognize and
reward corporate, business unit, and individual performance. The plan provides
incentives to executive officers of the Company by making cash payments to those
who achieve their business unit and/or Company annual goals and a discretionary
payment for individual performance as described below.
The performance portion of the plan uses income and return on invested
capital performance goals for the Company. Threshold, target and maximum goals
for Company and business unit performances are established at the beginning of
each year. An executive's target bonus depends upon his position,
responsibility, and ability to impact the achievement of the Company's
performance goals. The competitive market data is reviewed annually in
considering appropriate levels of incentive bonus opportunities for individual
employees. The
15
<PAGE> 12
Committee annually reviews and approves the plan's target opportunities and
performance goals.
Annual incentive bonus opportunities are made available pursuant to the
discretionary portion of the CBI Officers' Bonus Plan by permitting cash
payments to executive officers for the effort and skill exhibited in supervising
their respective areas of responsibility and the personnel who report to them.
Individual target and maximum amounts payable under this portion of the Plan are
established and approved by the Committee.
In 1994, the Company and its business units' performance goals were
exceeded, and the amounts paid consisted of both a performance portion and a
discretionary portion under the Plan.
STOCK OPTION PLAN AND RESTRICTED STOCK AWARD PLAN
The overall compensation philosophy is to stress long-term stock based
incentives related to shareholder value. Opportunities for such incentives are
provided in the form of stock options and restricted stock at a level targeted
slightly above competitive market levels.
STOCK OPTION PLAN
Stock options are granted under the CBI Stock Option Plan to encourage and
reward long-term corporate financial success, as measured by stock price
appreciation. Under the plan, the Committee annually considers grants to
executives of options to purchase shares of Company stock at the closing market
price on the day of the grant. These grants may be exercised after one year and
up to a maximum of ten years from date of grant. The number of shares granted to
an individual employee is based on, in general order of importance, the
employee's potential impact on the Company's performance based upon the
employee's position and level of responsibility, a qualitative evaluation of the
employee's past performance, a review of the competitive compensation data and
the number of options granted in previous years.
RESTRICTED STOCK AWARD PLAN
The Restricted Stock Award Plan is intended to encourage long-term
employment and provide incentive compensation to Participants over an extended
period by using a combination of specific longer-term financial goals and stock
vesting restrictions. The Plan provides for awarding a target number of
restricted shares to an individual recipient, or a percentage thereof, only
after the Company achieves the performance goals set by the Committee.
Restrictions on shares awarded lapse at the beginning of the fifth year
following the year for which performance is measured. Assignment of a target
award of restricted stock to an individual employee is based on, in general
order of importance, the employee's potential impact on the Company's
performance based upon the employee's position and level of responsibility, a
qualitative evaluation of the employee's past performance, a review of the
competitive compensation data and the number of restricted shares awarded in
previous years. The performance goal is based on pre-tax operating income, as a
return on net assets. The Committee each year also approves the levels of the
target awards. In 1994, the Company exceeded its performance goals under the
Plan.
16
<PAGE> 13
CEO COMPENSATION
Mr. John Jones has been Chairman, CEO and President of CBI Industries since
1989. Mr. Jones' 1994 base salary was $530,000, the same as in 1993. In light of
the financial results for 1993, Mr. Jones recommended to the Committee no
adjustment to his salary for 1994, and upon consideration the Committee
accordingly granted no salary increase to him. The amount of Mr. Jones' 1994
base salary remained slightly below the median value as reflected in the
competitive data of the compensation study.
Based on 1994 financial results, Mr. Jones earned an incentive bonus of
$552,497. This amount was up from the $77,000 paid for 1993, which consisted
solely of a bonus paid under the discretionary portion of the Plan. As the
corporate performance goals under the CBI Officers' Bonus Plan were exceeded in
1994, this amount consisted of both a performance-based portion and a
discretionary portion under the Plan. Mr. Jones' bonus target was set as a
percentage of his base salary, taking into consideration the competitive data
for such targets, with most of the amount paid based upon net income and return
on invested capital performance goals for the Company, and a discretionary
portion. The discretionary portion of Mr. Jones' bonus was based on the
Committee's consideration of Mr. Jones' leadership in long-term strategic
planning, his focus on the increasing global market Opportunities for the
Company, and his management ability as the Company undergoes change to adapt to
these conditions. The total amount paid to Mr. Jones could have ranged from a
minimum of 0% to a maximum of 114% of his base pay, depending on the degree of
achievement of net income and return on invested capital performance goals, and
the amount of the discretionary portion under the Plan.
The 1994 stock option grant of 31,000 shares to Mr. Jones was based on his
potential impact on the Company's performance based upon his position and level
of responsibility within the Company, and its consideration of the factors
described above relating to the discretionary bonus. The Committee also
considered the number of options granted in previous years. The potential value
represented by this grant was close to the median value of similar stock option
grants as reflected in the competitive data.
In 1994, the Committee established a target of 10,000 shares for Mr. Jones
under the 1994 CBI Restricted Stock Award Plan. The amount of the target award
was determined separately from the amount of the stock option grant. The
Committee also considered the number of restricted shares awarded under previous
plans in previous years in setting Mr. Jones' 1994 target award under the Plan.
The amount of the target award was slightly above the median value as reflected
in the competitive data of the compensation study. Taken together, the value of
the options granted and the restricted stock target award was slightly above the
median value of total long term incentive compensation as reflected in the
compensation study. Based upon 1994 financial results, Mr. Jones earned a
restricted stock award of 11,200 shares, of which 5,600 shares were awarded
subject to restrictions and 5,600 shares are subject to adjustment based upon
attainment of the performance goals for 1995 and 1996.
17
<PAGE> 14
INTERNAL REVENUE CODE LIMITATION ON DEDUCTIBILITY OF COMPENSATION
The Committee has discussed and considered certain provisions of Section
162(m) of the Internal Revenue Code of 1986, as amended, relating to the
deduction of compensation-related expenses in excess of $1,000,000. The
Committee has determined not to take further action at this time with regard to
the Company's executive compensation programs. It will continue to consider
these Code provisions with regard to such programs and any changes to them;
however, the Committee believes the Company's interests are best served by
retaining a flexible approach and that there may be circumstances in which it is
appropriate to pay certain amounts or forms of compensation that will not be
fully deductible under these Code provisions.
The Compensation Committee Report below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
COMPENSATION COMMITTEE
Edward J. Mooney (Chairman)
Robert J. Day
John T. Horton
Gary E. MacDougal
Robert T. Stewart
18
<PAGE> 15
STOCK PERFORMANCE CHART
The Stock Performance Chart below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The chart below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the S&P 500 Index and the Dow Jones Diversified Industrial Index
for the same period. The comparison assumes $100 was invested in the Company's
Common Stock, the S&P 500 Index and the Dow Jones Diversified Industrial Index
on December 31, 1989, and reinvestment of all dividends.
COMPARISON OF TOTAL RETURNS
VALUE FOR EACH ONE HUNDRED DOLLARS INVESTED ON 12/31/89
(GAINS IN STOCK PRICE, DIVIDENDS AND REINVESTED DIVIDENDS)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) CBI S&P 500 PEER Group*
- --------------------- ---- ------- -----------
<S> <C> <C> <C>
Measurement Pt. -- 12/31/89 $100 $100 $100
Fiscal Year Ended 12/31/90 127 97 93
Fiscal Year Ended 12/31/91 155 127 115
Fiscal Year Ended 12/31/92 144 136 134
Fiscal Year Ended 12/31/93 150 150 164
Fiscal Year Ended 12/31/94 129 152 150
</TABLE>
[FN]
* Dow Jones Diversified Industrial Index
19
<PAGE> 16
PROPOSAL 1
CBI INDUSTRIES, INC. 1995 STOCK OPTION PLAN
The Board of Directors recommends that the shareholders approve the CBI
Industries, Inc. 1995 Stock Option Plan (referred to in the following discussion
of Proposal 1 as the "Plan"), which has been approved by the Board. The
description of the Plan set forth below is qualified in its entirety by
reference to the complete text of the Plan as set forth in Exhibit A.
PURPOSE OF THE PLAN
The purpose of the Plan is to aid the Company and its subsidiaries in
securing and retaining key employees of outstanding ability by making it
possible to offer them an increased incentive in the form of a proprietary
interest in the Company, to join or continue in the service of the Company and
to increase their efforts for its welfare.
CREATION OF THE PLAN
The Board of Directors adopted the Plan on January 11, 1995, to be effective
as of January 1, 1995, subject to approval by the shareholders of the Company at
the Annual Meeting on May 11, 1995.
The Plan replaces the CBI Industries, Inc. Stock Option Plan which expires
on May 10, 1995. As of March 1, 1995, 1,000 shares remained reserved under that
plan.
DESCRIPTION OF THE PLAN
The Plan authorizes the granting of incentive stock options qualified under
Section 422A under the Code and non-qualified stock options ("Non-Qualified
Stock Options") to purchase, or stock appreciation rights to receive, a maximum
of 1,700,000 shares of Common Stock. This number is subject to adjustment by the
Committee (described below) to reflect stock dividends, split-ups and other
changes in the capitalization of the Company. The fair market value (as of the
date an option is granted) of the shares for which a participant may exercise
Incentive Stock Options in any calendar year (regardless of the total value of
such options granted) cannot exceed $100,000. This Code limitation may be
amended by the Board of Directors if the Code is amended. Shares subject to
options that expire without exercise will be available again for option under
the Plan. However, the shares subject to Non-Qualified Stock Options that are
cancelled upon exercise of an associated stock appreciation right (as described
below) shall no longer be available for grant.
The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), no member of which shall be
eligible to participate in the Plan or any other stock option plan maintained by
the Company during Committee membership or within one year prior thereto. The
Committee shall administer and interpret the Plan. The designation of the key
employees (defined in the Plan to be any full time employee of the Company,
including officers, who in the opinion of the Committee are or are expected to
20
<PAGE> 17
be primarily responsible for the management, growth or protection of some part
or all of the business of the Company), the number of shares that may be
optioned to any such employee and, subject to the limitations of the Plan, the
terms and conditions upon which such options are granted, are entirely within
the discretion of the Committee.
Under the Plan: (a) the option price of all options shall not be less than
fair market value of the Common Stock at the time of grant; (b) an option may be
exercised for ten years after the date of grant unless an earlier expiration
date is provided in the option; (c) payment of the option price shall be made in
full and, in the discretion of the Committee, made either in cash, shares of
Common Stock or by a combination of cash and such shares; (d) no option or stock
appreciation rights shall be granted after the tenth anniversary of shareholder
approval, but options and stock appreciation rights already granted may be
extended beyond that date; (e) during the lifetime of a Participant, an option
or stock appreciation right may only be exercised by the optionee, and, unless
otherwise designated by the Committee, may not be transferred other than by
will, the laws of descent and distribution, or by the provision for the
designation of a beneficiary in accordance with the Plan; and (f) a stock
appreciation right may not be transferred on death except to the transferee of
the related option.
An unexercised option will expire upon termination of employment for other
than death, retirement for disability or retirement under a retirement plan of
the Company. If an optionee dies while employed or retires due to disability, an
Incentive Stock Option will expire at the earlier of ten years from the date of
grant or one year from the date of death or such retirement; if an optionee
retires under a Company plan, other than for disability, then an Incentive Stock
Option will expire at the earlier of ten years from the date of grant or three
months after retirement. A Non-Qualified Stock Option will expire at the
expiration date set forth in the option, if employment terminates due to any
retirement; if employment terminates due to death, then a Non-Qualified Stock
Option will expire at the earlier of ten years from the date of grant or one
year after death. The Plan permits the Committee to extend the expiration date
of an option initially granted for less than ten years, but not beyond ten
years.
The Plan permits the grant of stock appreciation rights in conjunction with
options in the form of "Rights", either at the time of the option grant or
during the option's term. Stock appreciation rights permit an optionee to
receive (a) shares of Common Stock, (b) cash or (c) a combination of such shares
and cash in value equal to the amount by which the fair market value of all
shares subject to the related option exceeds the exercise price of such option.
The determination of whether stock appreciation rights will be settled in stock,
cash or a combination will be made by the Committee. To the extent an option is
exercised, in whole or in part, any related stock appreciation right shall
terminate. Likewise, to the extent a stock appreciation right is exercised, the
related option shall terminate. To the extent any stock appreciation right is
not exercised or cancelled, it shall be deemed exercised automatically on the
last day on which its related option may be exercised. It is the present policy
of the Committee not to award Rights either at the time of grant or during the
term of the option.
The Plan also permits the grant of "Limited Rights" in conjunction with the
grant of options, whereby the Committee may specify, as to individual options,
other conditions or circumstances under which options may be terminated by
payment of cash in lieu of the exercise of the related option. Such
circumstances may include automatic termination following a substantial change
in the ownership, control or management of the Company. The exercise of either
the Limited Right or the related option shall pro rata cancel the other.
21
<PAGE> 18
The Board of Directors may amend the Plan at any time, but may not change
the Plan without shareholder approval to (a) increase the maximum number of
shares authorized, (b) reduce the minimum option price, (c) extend the period
within which options or stock appreciation rights may be granted, (d) change the
basis upon which shares or cash may be distributed upon exercise of a stock
appreciation right or (e) provide for an option or stock appreciation right
exercisable more than ten years from the date of grant. The terms of any
previously granted option may not be changed to adversely affect the rights of
the holder without the holder's consent.
The Board of Directors may suspend or terminate the Plan at any time, but
any such action shall not affect options or stock appreciation rights then in
effect.
FEDERAL INCOME TAX CONSEQUENCES
Under present laws and regulations, the Federal income tax consequences of
receiving options and purchasing shares under the Plan, and ultimately disposing
of such shares, are as follows:
The grant of an option under the Plan will not, by itself, result in the
recognition of taxable income to the optionee or entitle the Company or any of
its subsidiaries to a deduction at the time of such grant.
The exercise of an Incentive Stock Option within the meaning of Section 422A
of the Code will not, by itself, result in the recognition of taxable income to
the optionee or entitle the Company or any of its subsidiaries to a deduction at
the time of such exercise. The excess of the market value of the shares over the
option price at the time of exercise will be a tax preference item for purposes
of the alternative minimum tax determination of the optionee. The exercise of a
Non-Qualified Stock Option will result in the recognition of ordinary income by
the optionee, and entitle the optionee's employer to a deduction in an amount
equal to the difference between the exercise price and the fair market value of
the shares acquired pursuant to the option. The exercise of a stock appreciation
right (whether a Right or a Limited Right) will result in the recognition of
ordinary income by the optionee in an amount equal to the amount of cash
received and/or the fair market value of the shares acquired pursuant to the
exercise, and entitle the optionee's employer to a deduction equal to the amount
of ordinary income recognized by the optionee at the time the optionee
recognizes it. For these purposes, the tax is imposed and the fair market value
of the shares is determined as of the date of exercise unless the shares are not
then freely transferable due to insider trading restrictions under the
securities laws, in which case the applicable date is six months after the date
of exercise unless the optionee elects to be taxed and have the fair market
value of the shares determined as of the date of exercise.
The optionee will recognize capital gain or loss upon resale of the shares
received upon the exercise of an Incentive Stock Option, provided that the
optionee held such shares for at least one year after transfer of the shares to
the optionee or two years after the grant of the option, whichever is later. The
amount of gain or loss will be the difference between the amount realized by the
seller and the seller's tax basis for the stock (the price paid for the stock if
the option price is paid in cash, the basis in the stock exchanged to the extent
an equal number of shares are received if the option price is paid in shares of
Common Stock, and zero for those shares received in excess of the number of
shares exchanged if the option price is paid in shares of Common Stock).
Generally, if the shares are not held for the requisite period, the optionee
will recognize ordinary income upon disposition in an amount equal to the lesser
of (a) the difference between the exercise price and the fair market
22
<PAGE> 19
value on the date of exercise of the shares acquired pursuant to the option or
(b) the excess of the fair market value on the date of disposition over the
exercise price; and the optionee's employer will be allowed a deduction equal to
the amount of ordinary income, if any, recognized by the optionee at such time
as the optionee recognizes it.
NEW PLAN BENEFITS
This plan is substantially the same as the CBI Industries, Inc. Stock Option
Plan which expires May 10, 1995. The following sets forth the number of stock
options granted under the expiring plan in January, 1995, which is the same
number of options each person would have received under the proposed Plan if
options had been granted under the proposed Plan in 1995.
<TABLE>
<CAPTION>
NAMED OFFICERS NUMBER OF STOCK OPTIONS
-------------- -----------------------
<S> <C>
John E. Jones 45,000
Lewis E. Akin 18,000
Robert J. Daniels 9,000
George L. Schueppert 18,000
Charles O. Ziemer 9,000
All Current Executive Officers 116,000
Non-Executive Directors or Nominees -0-
Non-Executive Officers -0-
All Employees (excluding Current Executive Officers) 176,400
</TABLE>
VOTE REQUIRED
This proposal requires the affirmative vote of the holders of a majority of
the outstanding shares of the Common Stock and the Series C Preferred Stock
voting as a class and represented at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 1.
23
<PAGE> 1
Exhibit 2
AGREEMENT
THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation
("CBI"), and John E. Jones ("Executive"), dated this 12th day of September,
1986.
WITNESSETH THAT
WHEREAS, CBI wishes to attract and retain well-qualified executives
and both CBI and the Executive desire continuity of management in the event of
any Change in Control of CBI;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Effective Date. The "Effective Date" of this Agreement shall be the
date on which a Change in Control of CBI (as defined in Section 2) occurs.
2. Change in Control. The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below), has become such; or
(b) Continuing Directors (as defined below) cease to comprise a
majority of the board of directors of CBI.
<PAGE> 2
For purposes of this Agreement, the terms "Acquiring Person" and
"Continuing Directors" shall have the respective meanings
ascribed to such terms in that certain Rights Agreement dated
March 4, 1986, between CBI and Morgan Guaranty Trust Company of
New York as rights agent, the relevant portions of which for
convenience of reference are reproduced as Exhibit I to this
Agreement.
3. Employment. CBI hereby agrees that if the
Executive continues as an employee of CBI from the date of
execution hereof until the Effective Date, CBI shall continue
the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the third
anniversary of such date or the 65th birthday of the Executive
(the "Employment Period"), to exercise such authority and
perform such executive duties as are requested of him by CBI,
which authority and duties shall be commensurate with the
authority being exercised and duties being performed by the
Executive immediately prior to the Effective Date. The
Executive shall perform such requested services at the location
where the Executive was employed immediately prior to the
Effective Date, except for required travel on CBI's business to
an extent substantially consistent with the Executive's
business travel obligations prior to the Effective Date. The
Executive agrees that while an employee during the Employment
Period he shall, to the extent required, devote substantially
- 2 -
<PAGE> 3
all of his business time to his executive duties as described
herein and perform such duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in equal biweekly
installments) which is not less than his rate of annual salary in effect
immediately prior to the Effective Date, increased on each January 1 within
the remainder of the Employment Period by at least the greater of (i) the
average annual percentage salary increase for the Executive during the
period of three full calendar years immediately preceding the Effective
Date, or (ii) the percentage increase in the Implicit Price Deflator for
Gross National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in its
Survey of Current Business in December of each year, over such Implicit
Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus, restricted stock award,
stock option, and other incentive compensation for each calendar year (or
other applicable bonus or incentive compensation
- 3 -
<PAGE> 4
period) any part of which is included in the Employment Period, which in
the aggregate shall not in value be a lesser percentage of his annual
salary, as determined in subsection (a) above, for such calendar year (or
period), than the aggregate bonus, restricted stock award, stock option,
and other incentive compensation during the period of three full calendar
years immediately preceding the Effective Date was of the Executive's
aggregate base salary for such three year period.
(c) He shall be entitled to receive all employee benefits to the extent
of the greater of the employee benefits provided by CBI to executives with
comparable duties or the employee benefits to which he was entitled
immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the services
for CBI specified in Section 3, whether as a result of total disability or
as a result of a physical or mental disability that is not total or is not
permanent and therefore is not a total disability, Executive shall continue
to receive base salary at the rate in effect at the commencement of any
such period, together with all other compensation and benefits that are
payable under this Agreement.
- 4 -
<PAGE> 5
(e) He shall be furnished at CBI's expense with an automobile, office,
reasonable secretarial help, club memberships, reimbursement for reasonable
entertainment expenses, and such other supplies, equipment, facilities,
services and emoluments appertinent to his position to the extent of the
greater of such emoluments provided by CBI to executives with comparable
duties or the emoluments to which he was entitled immediately prior to the
Effective Date.
(f) He shall be covered by directors and officers liability and
indemnity insurance or equivalent protection arranged and funded by CBI,
and by corporate indemnity protection, to the extent of the greatest level
of protection afforded to such Executive under any and all policies of
directors and officers liability and indemnity insurance, by-law provisions
or any other arrangements or agreements, at any time within the period of
three full calendar years immediately preceding the Effective Date.
5. Termination. The term "Termination" shall mean the occurrence during
the Employment Period of:
(a) termination by CBI of the employment of the Executive for any
reason other than (i) death, (ii)
- 5 -
<PAGE> 6
physical or mental incapacity which would entitle Executive to permanent
disability benefits under CBI's appropriate plans, or (iii) a willful and
material breach of this Agreement by the Executive which causes a direct
and substantial injury to CBI or to its business, which is not cured by
Executive within 30 days after receiving written notice of such breach and
reasonable directions for cure from CBI; or
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following (i) a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that
provided in Section 4, or the breach by CBI of any other provision of this
Agreement, which change, reduction or breach is not restored or cured by
CBI within 30 days after receiving written notice of such change, reduction
or breach and reasonable directions for restoration or cure from the
Executive; or (ii) a reasonable determination by the Executive that, as a
result of the Change in Control and a change in circumstances thereafter
significantly affecting his position, he is unable to exercise the
authorities, powers, functions or duties attached to his position as
contemplated by Section 3.
- 6 -
<PAGE> 7
A Termination as contemplated by this Section 5, whether or not a breach of
this Agreement by CBI, shall entitle the Executive to Termination benefits as
provided by this Agreement. Nothing in this Agreement shall prevent the
Executive from voluntarily resigning from his Employment upon 90 days written
notice to CBI under circumstances which do not constitute Termination as defined
in this Section 5, and no such resignation shall be deemed a breach of this
Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive during
the Period of Employment, CBI shall pay to the Executive a lump sum amount equal
(without discount to present value) to the sum of the amounts determined in
accordance with subsections (a), (b), (c) and (d) below, and provide the
additional benefits described in subsections (w), (x), (y) and (z) below:
(a) An amount equal to the aggregate salary which would have been paid
to the Executive during the remainder of the Employment Period if he had
received the base salary specified by Section 4(a) above, increased by
assuming the salary increase on each January 1 during the remainder of the
Employment Period to be the greatest of the average annual percentage
salary increase or the percentage increase in the Implicit Price Deflator,
whichever is
- 7 -
<PAGE> 8
applicable, as of any January 1 within the three calendar years including
or preceding the Termination date.
(b) Bonus and incentive compensation for any calendar year (or other
applicable bonus or incentive compensation period) ending prior to the
Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive compensation
which would have been paid to the Executive during each calendar year (or
other applicable bonus or incentive compensation period) any part of which
is included in the remainder of the Employment Period if he had received
bonus and incentive compensation for any such year (or period) in the
minimum amount specified by Section 4(b) based on his increased salary
determined under subsection (a) above; provided, however, that in the event
any bonus year (or period) extends beyond the end of the Employment Period,
bonus or other incentive compensation for such year (or period) shall be
pro-rated in proportion to the number of days within and without the
Employment Period.
(d) In the event any shares of CBI common stock (or other securities
into which such shares may have
- 8 -
<PAGE> 9
been converted) previously awarded to Executive under any restricted stock
award plans of CBI or separate agreements between Executive and CBI are
forfeited by reason of such Termination, an amount in cash equal to the
fair market value of such forfeited common stock (or other securities) as
of the date of Termination. The rights afforded to Executive under this
subsection (d) are without prejudice to any other rights Executive has to
shares of CBI common stock (or other securities) under such plans or
agreements or by reason of the action of the CBI Board of Directors
heretofore taken in causing restrictions on such shares to be removed under
certain circumstances including Termination of the Executive.
CBI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension benefit
plan, benefit restoration plan, profit sharing plan, or employee stock
ownership plan (whether or not funded or qualified under the Internal
Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the
"Benefit Enhancement") between such benefits and the benefits (the
"Enhanced Benefits") that would have been provided under such Retirement
Plans if Executive had remained in the employ of CBI throughout the
Employment Period at the
- 9 -
<PAGE> 10
salary determined under subsection (a) above accruing additional age and
service credits under such Retirement Plans accordingly. If after giving
effect to such additional age and service credit Executive shall not have
the necessary age or credited service at the end of the Employment Period
to qualify under the CBI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w) shall
nevertheless include an early retirement pension under the Pension Plan
beginning upon Executive attaining age 55 or upon the date Executive would
have attained 30 years of credited service had Executive remained
continuously employed by CBI but for Termination (whichever occurs first)
(the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement
Pension shall be payable to the Executive or to the spouse of the Executive
(if applicable) commencing at the time Executive attains (or would have
attained) age 55 or would have otherwise attained 30 years of credited
service as provided aforesaid (whichever occurs first). The Enhanced Early
Retirement Pension shall only be subject to reduction at the rate of four
(4) percentum for each year by which the Executive's age is less than age
65 or the Executive's credited service is less than 40 years, whichever
produces the lesser
- 10 -
<PAGE> 11
reduction, pursuant to the first sentence of Section 5.2.3 of the Pension
Plan (as in effect on the date hereof). If Executive shall die after the
end of the Employment Period but before the date the Enhanced Early
Retirement Pension is payable, the spouse of Executive shall be entitled to
an enhanced survivor's pension under the Pension Plan as if Executive had
died as an employee of CBI, giving effect to service through the date of
Executive's death and Executive's earnings through the end of the
Employment Period. Such Benefit Enhancement will be paid beginning on the
date the Enhanced Benefits would have commenced and thereafter concurrently
with the benefits actually provided under such Retirement Plans; except
that if the Executive receives a distribution from any profit sharing or
employee stock ownership plan before the Benefit Enhancement required by
this subsection in respect of such Retirement Plan become determinable, the
Benefit Enhancement in respect of such plan shall be paid as soon
thereafter as such benefits become determinable. Nothing in this subsection
(w) shall prevent the actual commencement of benefits under any Retirement
Plan, and the Benefit Enhancements required by this subsection (w), before
the end of the Employment Period to the extent required or permitted under
the terms of the applicable Retirement Plan,
- 11 -
<PAGE> 12
giving effect to the additional age and service credit required by this
subsection (w).
(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or medical benefit
insurance, plans, or arrangements, supplemental survivors' benefit plans,
or life insurance arrangements or programs, to the same extent to which he
would have been entitled under all employee benefit plans, programs,
arrangements or practices maintained by CBI if he had remained in the
employ of CBI through the Employment Period at the salary determined under
subsection (a) above.
(y) Continuation of disability income benefits pursuant to Section 4(d)
for so long as any disability may continue and continuation of directors
and officers liability and indemnity insurance and corporate indemnity
protection pursuant to Section 4(f) for so long as any liability may arise;
in either case without regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses actually
incurred or reasonably expected to be incurred by the Executive in seeking
other
- 12 -
<PAGE> 13
employment, including without limitation all travel and relocation expenses
and all fees charged by any executive recruitment firm or firms or
employment consulting or counseling firm or firms selected by the Executive
in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of CBI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the correctness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in excess
of the prime rate as publicly announced by the First National Bank of Chicago or
its successor from time to time as in effect on the first day of each such
month.
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
- 13 -
<PAGE> 14
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute excess parachute
payments" within the meaning the Code. Any payments in excess of the limitation
of this Section 7 or otherwise determined to be "excess parachute payments" made
to Executive hereunder are deemed to be overpayments which shall constitute an
amount owing from the Executive receiving them to CBI with interest from the
date of receipt by the Executive to the date of repayment (or offset) at the
applicable federal rate under Section 1274(d) of the Code, compounded
semi-annually, which shall be payable to CBI upon demand; provided, however,
that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the
Executive and CBI such repayment does not allow such overpayment to be excluded
for federal income and excise tax purposes from the Executive's income for the
year of receipt or afford the
- 14 -
<PAGE> 15
Executive a compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the Executive
agrees to continue all non-competition and confidentiality provisions, as
specified in any other agreement in effect on the Effective Date between the
Executive and CBI relating to confidential information, during (and to the
extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment Period
Executive accepts other employment in a position substantially equivalent to or
better than the position held by him with CBI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses:
(a) It is the intent of CBI that no Executive be required to incur the
expenses associated with the enforcement of his rights under this Agreement
by
- 15 -
<PAGE> 16
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive that
CBI has failed to comply with any of its obligations under this Agreement,
or in the event that CBI or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, CBI irrevocably authorizes Executive from
time to time to retain counsel of his choice, at the expense of CBI as
hereafter provided, to represent Executive in connection with the
initiation or defense of any litigation, arbitration or other legal action,
whether by or against CBI or any director, officer, stockholder or other
person affiliated with CBI, in any jurisdiction. CBI shall advance to the
Executive within 30 days after each written request therefor any and all
attorneys' and related fees and expenses actually incurred or reasonably
expected to be incurred by the Executive in any such proceeding or
otherwise as a result of CBI's failure to perform this Agreement or any
provision hereof or as a result of CBI or any person contesting the
validity or
- 16 -
<PAGE> 17
enforceability of this Agreement or any provision hereof; provided,
however, that to the extent the Executive does not prevail in any such
litigation, arbitration, or other legal action, the Executive shall repay
to CBI the amount (without interest) of such attorney's fees and related
fees and expenses previously advanced.
(b) CBI shall at its sole cost and expense obtain a committment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States
or any State (the "Bank"), to secure for the benefit of Executive the total
value of performance of CBI's obligations under this Agreement by providing
that the total amount of all payments due to be paid by CBI to Executive
under this Agreement shall be paid on a regular, periodic basis upon
presentation by Executive to the Bank of a statement or statements prepared
by Executive's counsel that such payments are due and owing, and that CBI
has not performed its obligation to make such payments. CBI
- 17 -
<PAGE> 18
shall at its sole cost and expense obtain the issuance of the Letter of
Credit pursuant to such committment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain such Letter
of Credit during the Employment Period and for two years thereafter and if,
notwithstanding CBI's complete discharge of such obligations, such Letter
of Credit shall be terminated or not renewed, CBI shall obtain a
replacement irrevocable clean letter of credit on substantially the same
terms and conditions as contained in the Letter of Credit drawn upon a
commercial bank having total assets equivalent to at least $6 billion and
either incorporated under the laws of, or having an office in, the United
States or any State, which assures the Executive the benefits of this
Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with CBI or, in the case of CBI, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a
- 18 -
<PAGE> 19
lien upon any amounts provided under this Agreement; and no benefits payable
hereunder shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law.
13. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancel led by mutual
agreement of the parties in writing without the consent of any other person and,
so long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of CBI and any
successor of CBI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this
- 19 -
<PAGE> 20
Agreement shall be unaffected thereby and shall remain in full force and effect.
/s/ John E. Jones
------------------------------
CBI INDUSTRIES, INC. Executive
By: /s/ W. A. Pogue Title: Vice Chairman
--------------------------- ------------------------
Title: Chairman of the Board
-----------------------
ATTEST:
/s/ Donald H. Craigmile
- -----------------------------
Secretary
(SEAL)
- 20 -
<PAGE> 21
EXHIBIT I
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock, then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act
<PAGE> 22
of 1934, as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the
<PAGE> 23
"Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (ii) the right to vote
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this clause (ii) if the agreement, arrangement or understanding to vote
such security: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with
<PAGE> 24
which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (ii) of paragraph
(b) of this subsection 1.4) or disposing of any voting securities of
the Company.
1.7 "Common Stock" shall mean the common stock, $2.50 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
<PAGE> 25
1.8 "Continuing Director" shall mean any member of the Board, while
such person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of the
Board prior to the date of this Agreement. A "Continuing Director" shall also
mean any person who subsequently becomes a member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if (a) such person's nomination for
election or election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a nominee
in a proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors.
1.9 "Person" shall mean any individual, firm, corporation, partnership
or other entity.
<PAGE> 26
Exhibit II
From:
------------------------
Date:
------------------------
To:
--------------------------
By order of:
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521
We hereby issue our irrevocable Letter of Credit #__________ effective
__________________, 1986 for a principal amount of U.S. $____________ only,
expiring __________________, 1987, in Chicago, Illinois representing support for
an "Agreement" dated ______________ between CBI Industries, Inc. and the
beneficiary of this Letter of Credit.
Whole or partial drawings of the above Letter of Credit are available against
presentation of your draft(s) drawn at sight on us mentioning thereon our Letter
of Credit number and accompanied by (1) beneficiary's signed and dated statement
designating his counsel and (2) a signed and dated statement prepared by his
counsel reading to the effect that payments are due and owing under the
"Agreement" referred to above and that CBI Industries, Inc. has not performed
its obligation to make such payments.
We hereby engage that drafts drawn under and in complicance with the terms and
conditions of this Letter of Credit will be duly honored upon presentation if
presented to us on or before __________________.
This credit is subject to the "Uniform Customs and Practices for Documentary
Credits" (1983 revision), International Chamber of Commerce publication 400.
SIGNATURE
<PAGE> 27
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 14 day of May, 1987, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and John E.
Jones ("Executive") of September 12, 1986 (the "Agreement"):
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to amend and modify the
Agreement to verify and confirm that it is the intent of CBI and the
Executive that the benefits to be provided to Executive under that certain
letter agreement dated January 4, 1982, as amended, shall be and are
intended to be included in the benefits to be provided to Executive by CBI
under the Agreement;
NOW, THEREFORE, in consideration of the premises hereof, it is AGREED
by and between CBI and the Executive as follows:
1. Section 6(w) of the Agreement is amended by inserting the
following language between the phrases "pension benefit plan" and
"benefit restoration plan" in the second line of Section 6(w):
"supplemental pension arrangement (includ-
ing letter to Executive dated January 4,
1982, as amended)"
2. Except as specifically modified herein, all terms and conditions of
the Agreement remain unchanged.
CBI INDUSTRIES, INC. /s/ John E. Jones
------------------------------
Executive
By: /s/ W. A. Pogue
------------------------- Title: Vice Chairman
-----------------------
Title: Chairman of the Board
----------------------
ATTEST:
/s/ Donald H. Craigmile
----------------------------
Secretary
[Seal]
<PAGE> 28
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT between
CBI Industries, Inc., a Delaware Corporation ("CBI") and John E. Jones
("Executive") dated the 12th day of September, 1986 (the "Agreement"):
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement in
light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by
and between CBI and the Executive that the Agreement shall be modified as
follows:
1. Section 3 of the Agreement is amended by adding the following sentence
immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is able to
exercise the authorities, powers, functions and duties attached thereto as
contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation
Page 1
<PAGE> 29
from that provided in Section 4, or the breach by CBI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by CBI within 30 days after receiving written notice of
such change, reduction or breach, reasonable directions for restoration or
cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ", whether
or not a breach of this Agreement by CBI," from the sentence following
subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without penalty at least as rapidly as compensation under
Section 4 would have been payable) of"; (ii) deleting from subsections (a) and
(c) the words "An amount equal to the aggregate" and substituting in lieu
thereof the word "The"; and (iii) deleting from the sentence following
subsection (z) the word "reduction" and substituting in lieu thereof the word
"enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to read as
follows:
In the event any shares of CBI common stock (or other securities into which
such shares may have been converted) previously awarded to Executive under
any restricted stock award plans of CBI or separate agreements between
Executive and CBI are forfeited by reason of such Termination, or in the
event any stock option previously granted to Executive under any stock
option plan of CBI terminates or ceases to be exercisable by
Page 2
<PAGE> 30
reason of such Termination, an amount in cash equal to the fair market value of
such forfeited common stock (or other securities) as of the date of Termination
plus the excess of the fair market value as of the date of Termination of stock
subject to any such terminated option over the exercise price of such terminated
option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the nature of
compensation to be made by CBI to Executive under this. Agreement shall be
reasonable compensation for personal services to be rendered on or after the
date of the Change in Control, including payments to an individual as damages
for breach of contract, within the meaning of Section 280G(b)(4)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"). In the event that
notwithstanding the previous sentence any excise tax under Section 4999 of the
Code is imposed on Executive as a direct or indirect result of payments made by
CBI or its affiliates, whether or not such payments are made pursuant to this
Agreement, CBI shall pay Executive an amount or, from time to time, amounts,
equal to (i) the sum of all excise taxes imposed on Executive in respect of such
payments, plus (ii) the aggregate amount of any interest, penalties, fines or
additions to any tax which are imposed in connection with the imposition of such
excise tax, plus (iii) all income and excise taxes imposed on Executive under
the laws of any United States Federal, state or local government or taxing
authority by reason of the payments required under clause (i) and clause (ii)
and this clause (iii). CBI's obligation to pay such amounts to Executive
pursuant to this Section 7 shall continue for the period specified in Section
6501 of the Code during
Page 3
<PAGE> 31
which a tax may be assessed under Section 4999 of the Code (including any
extensions of such period provided under Section 6503(a)(i) of the Code or
requested by the Internal Revenue Service in connection with an audit of one or
more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive which, if
successful, would require CBI to make a payment under this Section 7, Executive
agrees to contest the claim on request of CBI subject to the following
conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be contested, it
shall promptly (but in no event more than 30 days after the notice from
Executive or such shorter time as the Internal Revenue Service may specify for
responding to such claim) request Executive to contest the claim. Executive
shall not make any payment of any tax which is the subject of the claim before
Executive has given the notice or during the 30-day period thereafter unless
Executive receives written instructions from CBI to make such payment together
with an advance of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if such
advance were an amount described in clause (i) above, in which case Executive
will act promptly in accordance with such instructions.
(b) If CBI so requests, Executive will contest the claim by, at the
direction of CBI, either paying the tax claimed and suing for a refund in the
appropriate court or contesting the claim in the United States Tax Court;
provided, however, that any request by CBI for
Page 4
<PAGE> 32
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any amounts
determined pursuant to clause (ii) and clause (iii) above as if such advance
were an amount described in clause (i) above. If directed by CBI in writing
Executive will take all action necessary to compromise or settle the claim, but
in no event will Executive compromise or settle the claim or cease to contest
the claim without the written consent of CBI; provided, however, that Executive
may take any such action if Executive waives in writing his right to a payment
under this Section 7 for any amounts payable in connection with such claim.
Executive agrees to cooperate in good faith with CBI in contesting the claim and
to comply with any reasonable request from CBI concerning the contest of the
claim, including the pursuit of administrative remedies, the appropriate forum
for any judicial proceeding, and the legal basis for contesting the claim. Upon
request of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7. Provided
that Executive is in compliance with the provisions of this section, CBI shall
be liable for and indemnify Executive against any loss in connection with all
costs and expenses, including attorneys' fees, which may be incurred as a result
of contesting the claim, and shall provide to Executive within 30 days after
each written request therefor by the Executive cash advances or reimbursement
for all such costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise complies
with its obligations under
Page 5
<PAGE> 33
this Section 7, it shall, except as otherwise stipulated in this Section 7,
have no obligation to pay any amounts under Section 7 in respect of the
claim until final determination occurs regarding Executive's liability
under the claim. CBI's obligation to pay amounts under this Section 7 will
be reduced by any refund obtained by Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment in
a position substantially equivalent to or better than the position held by
him with CBI, compensation actually received by the Executive during the
Employment Period from such other employment shall be applied to reduce
Termination payments otherwise due under subsections (a) and (c) of Section
6 of this Agreement; and coverage of the Executive under employee benefit
plans described in subsection (x) of Section 6 of this Agreement shall be
reduced or eliminated to the extent Executive is covered under similar
plans incident to such other employment. In the event of any reduction
under this Section 9 of Termination payments already paid by CBI to
Executive, Executive shall upon 30 days written request from CBI repay to
CBI the amount by which such Termination payment is reduced, without
interest, and further reduced by any taxes attributable to such Termination
payments to the extent Executive cannot recover such taxes through
deductions of equivalent or greater value. Nothing in this Section 9 shall
be construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than reasonable
daily commuting
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<PAGE> 34
distance from the principal residence of the Executive as
of the date of Termination.
CBI INDUSTRIES, INC. /s/ John E. Jones
------------------------------
Executive
By: /s/ W.A. Pogue Title: Vice Chairman
-------------------------- ------------------------
Title: Chairman of the Board
-----------------------
ATTEST:
/s/ Donald H. Craigmile
- -----------------------------
Secretary
[SEAL]
Page 7
<PAGE> 35
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement change
in the CBI Pension Plan effective September 8, 1987, and CBI desires to make
such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement commencing
in the sixth line from the bottom of page 10 and ending in the third line
of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be subject
to reduction at the rate of four (4) percentum for each year
by which the Executive's age is less than age 65 or the
Executive's credited service is less than 40 years, whichever
produces the lesser reduction, pursuant to the first sentence
of Section 5.2.3 of the Pension Plan (as in effect on the
date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be
subject to reduction at the rate of four (4) percentum
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<PAGE> 36
for each year by which the Executive's age is less than
age 62 or the Executive's credited service is less than 35
years, whichever produces the lesser reduction, pursuant
to the first sentence of Section 5.2.3 of the Pension Plan
(as in effect on the date hereof)."
CBI INDUSTRIES, INC.
By: /s/ William A. Pogue /s/ John E. Jones
-------------------------- ------------------------------
Title: Chairman of the Board Executive
-----------------------
ATTEST:
/s/ Donald H. Craigmile
- -----------------------------
Secretary
Page 2
<PAGE> 37
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement
change in the CBI Pension Plan effective September 8, 1987, and CBI desires to
make such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement
commencing in the sixth line from the bottom of page 10 and ending in
the third line of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be
subject to reduction at the rate of four (4) percentum for
each year by which the Executive's age is less than age 65
or the Executive's credited service is less than 40 years,
whichever produces the lesser reduction, pursuant to the
first sentence of Section 5.2.3 of the Pension Plan (as in
effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be
subject to reduction at the rate of four (4) percentum
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<PAGE> 38
for each year by which the Executive's age is less than age 62 or
the Executive's credited service is less than 35 years whichever
produces the lesser reduction, pursuant to the first sentence of
Section 5.2.3 of the Pension Plan (as in effect on the date
hereof)."
CBI INDUSTRIES, INC.
By: /s/ W. A. Payne /s/ John E. Jones
-------------------------- ------------------------------
Title: Chairman of the Board Executive
-----------------------
ATTEST:
/s/ Donald H. Craigmile
- -----------------------------
Secretary
Page 2
<PAGE> 39
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between
CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones
("Executive") dated the 12th day of September, 1986, as previously amended (the
"Agreement").
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement to
eliminate the requirement for CBI to provide an irrevocable clean letter of
credit to secure for the benefit of the Executive the total value of performance
of CBI's obligations under the Agreement;
NOW, THEREFORE, in consideration of $10 and the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby AGREED by and between CBI and the Executive
that the Agreement shall be modified as follows:
1. Subsection 10(b) is deleted.
2. Exhibit II is deleted.
CBI INDUSTRIES, INC.
By: /s/ George L. Schueppert Executive: /s/ John E. Jones
---------------------------- -------------------
Title: Executive Vice President
Title: Chairman
-----------------------
ATTEST:
/s/ Charlotte C. Toerber
- -------------------------------
Secretary
[SEAL]
<PAGE> 40
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 27th day of August, 1993
to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI")
and J.E. Jones ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement to
include a requirement that CBI provide an irrevocable clean letter of credit to
secure for the benefit of the Executive the payment of up to $100,000 for
attorneys fees incurred in enforcing the Agreement following a Change of
Control;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum that the Agreement shall be modified as follows:
1. Section 10 of the Agreement is amended by adding a new subsection
(b) to read as follows:
(b) CBI shall at its sole cost and expense obtain a commitment for
an irrevocable clean letter of credit, substantially in the form of
that attached hereto as Exhibit II and incorporated herein by reference
(the "Letter of Credit"), to be issued by a commercial bank selected by
CBI having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United
States or any State (the "Bank"), to secure for the benefit of
Executive the payment of up to $100,000 for attorneys fees incurred in
enforcing the Agreement pursuant to Section 10(a) upon presentation by
Executive to the Bank of a statement or statements prepared by
Executive's counsel that such payments are due and owing and that CBI
has not performed its obligations to make such payments. CBI shall at
its sole cost and expense obtain the issuance of the Letter of Credit
pursuant to such commitment not later than the Effective Date and shall
pay all amounts and take all action necessary to maintain such Letter
of Credit during the Employment Period and for two years thereafter and
if, notwithstanding CBI's complete discharge of such obligations, such
Letter of Credit shall be terminated or not renewed, CBI shall obtain a
replacement irrevocable clean letter of credit on substantially the
same terms and conditions as contained in the Letter of Credit drawn
upon a commercial bank having total assets equivalent to at least $6
billion and either incorporated under the laws of, or having an office
in, the United States of any State, which
<PAGE> 41
assures the Executive the benefits of this Agreement. Nothing in this
subsection (b) shall limit in any way CBI's obligations under
subsection 10(a).
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ George L. Schueppert By: /s/ John E. Jones
--------------------------- ---------------------------
Title: Executive Vice President - Title:
Finance ------------------------
-----------------------
<PAGE> 42
EXHIBIT II
ROYAL BANK OF CANADA, NEW YORK BRANCH
IRREVOCABLE STANDBY LETTER OF CREDIT
_______________________, 19
Letter of Credit No. ______________
(Beneficiary's Name and Address)
Dear ____________________:
At the request and for the account of CBI Industries, Inc., 800 Jorie
Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby
Letter of Credit No. _______________ (this "Letter of Credit") in your favor in
an aggregate amount of One Hundred Thousand Dollars ($100,000), representing
support of the "Agreement") dated ________________, by and between yourself and
CBI Industries, Inc., as it may be amended from time to time, available by your
draft drawn at sight, presented to this Bank, bearing this Letter of Credit
Number and accompanied by this Letter of Credit and both:
1. Your signed certificate dated the date of such draft indicating the
name, address and signature of your designated counsel, with both your
signature and your designated counsel's signature notarized; and
2. Your designated counsel's signed and notarized statement dated the
date of such draft stating: "Payments are due and payable to (Beneficiary)
under the Agreement dated _______________ between (Beneficiary) and CBI
Industries, Inc., as such Agreement may have been amended from time to
time, and CBI Industries, Inc. has not performed its obligation to make
such payments. (Beneficiary) through the undersigned counsel is enforcing
his/her rights under such Agreement."
Only one draft, in the amount of $100,000 may be presented under this
Letter of Credit.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be honored upon presentation at Royal Bank
of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300
Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration
Manager, facsimile number (___) ___-___. Presentation is to be
<PAGE> 43
made by facsimile transmission of all required documents to this Bank, followed
by overnight courier delivery of all originals as provided in this paragraph.
Any Draft hereunder must be presented on or before _________________.
This Letter of Credit shall automatically expire and be null and void at the
close of business on _________________ or, in the event the expiry date hereof
is extended by us in writing, at the close of business upon such extended
expiry date.
This Letter of Credit sets forth in full the terms of our undertaking,
and this undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
or in which this Letter of Credit is referred to or to which this Letter of
Credit relates, except for the certificates, statements and the sight drafts
referred to therein. This Letter of Credit is not transferrable.
This irrevocable Letter of Credit is subject to The Uniform Customs and
Practices for Documentary Credits (1983 Revision), ICC Publication 400.
ROYAL BANK OF CANADA,
NEW YORK BRANCH
By
-----------------------------
Its
-------------------------
By
-----------------------------
Its
-------------------------
<PAGE> 44
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and John E.
Jones ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a
resolution amending Section 2 of the Agreement, and CBI and the Executive
mutually desire to modify the Agreement by incorporating said amendment
into the Agreement.
NOW THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. Section 2 of the Agreement is hereby amended to read as follows:
Change in Control. The Term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become
such; or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person" and
"Continuing Directors" shall have the same meaning as ascribed to
such terms in that certain Amendment and Restatement dated as of
August 8, 1989, of Rights Agreement dated as of March 4, 1986,
<PAGE> 45
between CBI and First Chicago Trust Company of New York, as Rights
Agent, as has been or may be amended from time to time.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ George L. Schueppert By: /s/ John E. Jones
----------------------------------- -----------------------------
Title: Executive Vice President - Finance
-----------------------------------
ATTEST:
/s/ Charlotte C. Toerber
- -----------------------------
Secretary
[Seal]
<PAGE> 1
Exhibit 3
AGREEMENT
THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI")
and Alan J. Schneider ("Executive"), dated this 3rd day of January, 1995.
WITNESSETH THAT
WHEREAS, CBI wishes to attract and retain well-qualified executives for
itself and for its wholly-owned subsidiaries and both CBI and the Executive
desire continuity of management in the event of any Change in Control of CBI;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Effective Date. The "Effective Date" of this Agreement shall be the
date on which a Change in Control of CBI (as defined in Section 2) occurs.
2. Change in Control. The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below), has become such; or
(b) Continuing Directors (as defined below) cease to comprise a
majority of the board of directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person" and "Continuing
Directors" shall have the respective meanings ascribed to such terms in that
certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent, the relevant portions of which for
convenience of reference are reproduced as Exhibit I to this Agreement.
3. Employment. CBI hereby agrees that if the Executive continues as an
employee of CBI or any wholly-owned subsidiary from the date of execution hereof
until the Effective Date, CBI shall continue the Executive in its employ for the
period commencing on the Effective Date and ending on the earlier to occur of
the third anniversary of such date or the 65th birthday of the Executive (the
"Employment Period"), to exercise such authority and perform such executive
duties as are requested of him by CBI, which authority and duties shall be
commensurate with the authority being exercised and duties being performed by
the Executive immediately prior to the Effective Date. The Executive shall
perform such requested services at the location where the Executive was employed
immediately prior to the Effective Date, except for required travel on CBI's
business to an extent substantially consistent with the Executive's business
travel obligations prior to the Effective Date. The Executive agrees that while
an employee during the Employment Period he
-1-
<PAGE> 2
shall, to the extent required, devote substantially all of his business time to
his executive duties as described herein and perform such duties faithfully and
efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in equal biweekly
installments) which is not less than his rate of annual salary in effect
immediately prior to the Effective Date, increased on each January 1 within
the remainder of the Employment Period by at least the greater of (i) the
average annual percentage salary increase for the Executive during the
period of three full calendar years immediately preceding the Effective
Date, or (ii) the percentage increase in the Implicit Price Deflator for
Gross National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in its
Survey of Current Business in December of each year, over such Implicit
Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus, restricted stock award,
stock option, and other incentive compensation for each calendar year (or
other applicable bonus or incentive compensation period) any part of which
is included in the Employment Period, which in the aggregate shall not in
value be a lesser percentage of his annual salary, as determined in
subsection (a) above, for such calendar year (or period), than the aggregate
bonus, restricted stock award, stock option, and other incentive
compensation during the period of three full calendar years immediately
preceding the Effective Date was of the Executive's aggregate base salary
for such three year period.
(c) He shall be entitled to receive all employee benefits to the extent
of the greater of the employee benefits provided by CBI to executives with
comparable duties or the employee benefits to which he was entitled
immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the services
for CBI specified in Section 3, whether as a result of total disability or
as a result of a physical or mental disability that is not total or is not
permanent and therefore is not a total disability, Executive shall continue
to receive base salary at the rate in effect at the commencement of any such
period, together with all other compensation and benefits that are payable
under this Agreement.
-2-
<PAGE> 3
(e) He shall be furnished at CBI's expense with an automobile, office,
reasonable secretarial help, club memberships, reimbursement for reasonable
entertainment expenses, and such other supplies, equipment, facilities,
services and emoluments appertaining to his position to the extent of the
greater of such emoluments provided by CBI to executives with comparable
duties or the emoluments to which he was entitled immediately prior to the
Effective Date.
(f) He shall be covered by directors and officers liability and
indemnity insurance or equivalent protection to the extent of the greatest
level of protection arranged and funded by CBI, and by corporate indemnity
protection afforded to such Executive under any and all policies of
directors and officers liability and indemnity insurance, by-law provisions
or any other arrangements or agreements, at any time within the period of
three full calendar years immediately preceding the Effective Date.
5. Termination. The term "Termination" shall mean the occurrence
during the Employment Period of:
(a) termination by CBI of the employment of the Executive for any
reason other than (i) death, (ii) physical or mental incapacity which would
entitle Executive to permanent disability benefits under CBI's appropriate
plans, or (iii) a willful and material breach of this Agreement by the
Executive which causes a direct and substantial injury to CBI or to its
business, which is not cured by Executive within 30 days after receiving
written notice of such breach and reasonable directions for cure from CBI;
or
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following (i) a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that provided
in Section 4, or the breach by CBI of any other provision of this Agreement,
which change, reduction or breach is not restored or cured by CBI within 30
days after receiving written notice of such change, reduction or breach and
reasonable directions for restoration or cure from the Executive; or (ii) a
reasonable determination by the Executive that, as a result of the Change in
Control and a change in circumstances thereafter significantly affecting his
position, he is unable to exercise the authorities, powers, functions or
duties attached to his position as contemplated by Section 3.
-3-
<PAGE> 4
A Termination as contemplated by this Section 5, whether or not a breach of
this Agreement by CBI, shall entitle the Executive to Termination benefits as
provided by this Agreement. Nothing in this Agreement shall prevent the
Executive from voluntarily resigning from his Employment upon 90 days written
notice to CBI under circumstances which do not constitute Termination as defined
in this Section 5, and no such resignation shall be deemed a breach of this
Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive
during the Period of Employment, CBI shall pay to the Executive a lump sum
amount equal (without discount to present value) to the sum of the amounts
determined in accordance with subsections (a), (b), (c) and (d) below, and
provide the additional benefits described in subsections (w), (x), (y) and (z)
below:
(a) An amount equal to the aggregate salary which would have been paid
to the Executive during the remainder of the Employment Period if he had
received the base salary specified in Section 4(a) above, increased by
assuming the salary increase on each January 1 during the remainder of the
Employment Period to be the greatest of the average annual percentage salary
increase or the percentage increase in the Implicit Price Deflator,
whichever is applicable, as of any January 1 within the three calendar years
including or preceding the Termination date.
(b) Bonus and incentive compensation for any calendar year (or other
applicable bonus or incentive compensation period) ending prior to the
Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive compensation
which would have been paid to the Executive during each calendar year (or
other applicable bonus or incentive compensation period) any part of which
is included in the remainder of the Employment Period if he had received
bonus and incentive compensation for any such year (or period) in the
minimum amount specified by Section 4(b) based on his increased salary
determined under subsection (a) above; provided, however, that in the event
any bonus year (or period) extends beyond the end of the Employment Period,
bonus or other incentive compensation for such year (or period) shall be
pro-rated in proportion to the number of days within and without the
Employment Period.
(d) In the event any shares of CBI common stock (or other securities
into which such shares may have been converted) previously awarded to
Executive under any restricted
-4-
<PAGE> 5
stock award plans of CBI or separate agreements between Executive and CBI
are forfeited by reason of such Termination, an amount in cash equal to the
fair market value of such forfeited common stock (or other securities) as of
the date of Termination. The rights afforded to Executive under this
subsection (d) are without prejudice to any other rights Executive has to
shares of CBI common stock (or other securities) under such plans or
agreements or by reason of the action of the CBI Board of Directors
heretofore taken in causing restrictions on such shares to be removed under
certain circumstances including Termination of the Executive.
CBI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension benefit
plan, benefit restoration plan, profit sharing plan, or employee stock
ownership plan (whether or not funded or qualified under the Internal
Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the
"Benefit Enhancement") between such benefits and the benefits (the "Enhanced
Benefits") that would have been provided under such Retirement Plans if
Executive had remained in the employ of CBI throughout the Employment Period
at the salary determined under subsection (a) above accruing additional age
and service credits under such Retirement Plans accordingly. If after giving
effect to such additional age and service credit Executive shall not have
the necessary age or credited service at the end of the Employment Period to
qualify under the CBI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w) shall
nevertheless include an early retirement pension under the Pension Plan
beginning upon Executive attaining age 55 or upon the date Executive would
have attained 30 years of credited service had Executive remained
continuously employed by CBI but for Termination (whichever occurs first)
(the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement
Pension shall be payable to the Executive or to the spouse of the Executive
(if applicable) commencing at the time Executive attains (or would have
attained) age 55 or would have otherwise attained 30 years of credited
service as provided aforesaid (whichever occurs first). The Enhanced Early
Retirement Pension shall only be subject to reduction at the rate of four
(4) percentum for each year by which the Executive's age is less than age 65
or the Executive's credited service is less than 40 years, whichever
produces the lesser reduction, pursuant to the first sentence of Section
5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive
shall die
-5-
<PAGE> 6
after the end of the Employment Period but before the date the Enhanced
Early Retirement Pension is payable, the spouse of Executive shall be
entitled to an enhanced survivor's pension under the Pension Plan as if
Executive had died as an employee of CBI, giving effect to service through
the date of Executive's death and Executive's earnings through the end of
the Employment Period. Such Benefit Enhancement will be paid beginning on
the date the Enhanced Benefits would have commenced and thereafter
concurrently with the benefits actually provided under such Retirement
Plans; except that if the Executive receives a distribution from any profit
sharing or employee stock ownership plan before the Benefit Enhancement
required by this subsection in respect of such Retirement Plan become
determinable, the Benefit Enhancement in respect of such plan shall be paid
as soon thereafter as such benefits become determinable. Nothing in this
subsection (w) shall prevent the actual commencement of benefits under any
Retirement Plan, and the Benefit Enhancements required by this subsection
(w), before the end of the Employment Period to the extent required or
permitted under the terms of the applicable Retirement Plan, giving effect
to the additional age and service credit required by this subsection (w).
(x) Participating in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or medical benefit
insurance, plans, or arrangements, supplemental survivors' benefit plans, or
life insurance arrangements or programs, to the same extent to which he
would have been entitled under all employee benefit plans, programs,
arrangements or practices maintained by CBI if he had remained in the employ
of CBI through the Employment Period at the salary determined under
subsection (a) above.
(y) Continuation of disability income benefits pursuant to Section 4(d)
for so long as any disability may continue and continuation of directors and
officers liability and indemnity insurance and corporate indemnity
protection pursuant to Section 4(f) for so long as any liability may arise;
in either case without regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses actually
incurred or reasonably expected to be incurred by the Executive in seeking
other employment, including without limitation all travel and relocation
expenses and all fees charged by any executive recruitment firm or firms or
employment consulting or counseling firm or firms selected by the Executive
in his sole discretion.
-6-
<PAGE> 7
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of CBI or any of
its affiliated corporations delivered to the Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the correctness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in excess
of the prime rate as publicly announced by the First National Bank of Chicago or
its successor from time to time as in effect on the first day of each such
month.
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof no reduction in payments
under the limitation contained in the immediately preceding sentence shall be
applied to payments hereunder which do not constitute "excess parachute
payments" within the meaning of the Code. Any payments in excess of the
limitation of this Section 7 or otherwise determined to be "excess parachute
payments" made to Executive hereunder are deemed to be overpayments which shall
constitute an amount owing from the Executive receiving them to CBI with
interest from the date of receipt by the Executive to the date of repayment (or
offset) at the applicable federal rate under Section 1274(d) of the Code,
compounded semi-annually, which shall be payable to CBI upon demand; provided,
however, that no repayment shall be required under this sentence if in the
written opinion of tax counsel satisfactory to the Executive and delivered to
the Executive and CBI such repayment does not allow such overpayment to be
excluded for federal income and excise tax purposes from the Executive's income
for the year of receipt or afford the Executive a compensating federal income
tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the Executive
agrees to continue all non-competition and confidentiality provisions, as
specified in any other agreement
-7-
<PAGE> 8
in effect on the Effective Date between the Executive and CBI relating to
confidential information, during (and to the extent specified in such agreement,
after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment Period
Executive accepts other employment in a position substantially equivalent to or
better than the position held by him with CBI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses.
(a) It is the intent of CBI that no Executive 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 the
Executive hereunder. Accordingly, if it should appear to the Executive that
CBI has failed to comply with any of its obligations under this Agreement,
or in the event that CBI or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, CBI irrevocably authorizes Executive from
time to time to retain counsel of his choice, at the expense of CBI as
hereafter provided, to represent Executive in connection with the initiation
or defense of any litigation, arbitration or other legal action, whether by
or against CBI or any director, officer, stockholder or other person
affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive
within 30 days after each written request therefor any and all attorneys'
and related fees and expenses actually incurred or reasonably expected to be
incurred by the Executive in any such proceeding or otherwise as a result of
CBI's failure to perform this Agreement or any provision hereof or as a
result of CBI or any person contesting the validity or enforceability of
this Agreement or any provision hereof; provided, however, that to the
extent the Executive does not prevail in any such litigation, arbitration,
or other legal action, the Executive shall repay to CBI the amount (without
interest) of such attorney's fees and related fees and expenses previously
advanced.
-8-
<PAGE> 9
(b) CBI shall at its sole cost and expense obtain a commitment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State (the "Bank"), to secure for the benefit of Executive the total
value of performance of CBI's obligations under this Agreement by providing
that the total amount of all payments due to be paid by CBI to Executive
under this Agreement shall be paid on a regular, periodic basis upon
presentation by Executive to the Bank of a statement or statements prepared
by Executive's counsel that such payments are due and owing, and that CBI
has not performed its obligations to make such payments. CBI shall at its
sole cost and expense obtain the issuance of the Letter of Credit pursuant
to such commitment not later than the Effective Date and shall pay all
amounts and take all action necessary to maintain such Letter of Credit
during the Employment Period and for two years thereafter and if,
notwithstanding CBI's complete discharge of such obligations, such Letter of
Credit shall be terminated or not renewed, CBI shall obtain a replacement
irrevocable clean letter of credit on substantially the same terms and
conditions as contained in the Letter of Credit drawn upon a commercial bank
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State, which assures the Executive the benefits of this Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with CBI or, in the case of CBI, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by operation
of law.
13. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
-9-
<PAGE> 10
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person and,
so long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of CBI and any
successor of CBI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------- -----------------------
Title: Pres, CEO, & Chairman Title: VP and Controller
--------------------- --------------------
ATTEST:
/s/ CCT
- ----------------------------
Secretary
(SEAL)
-10-
<PAGE> 11
EXHIBIT I
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act
<PAGE> 12
of 1934, as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the
<PAGE> 13
"Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (ii) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this clause (ii) if the
agreement, arrangement or understanding to vote such security: (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with
<PAGE> 14
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (ii) of paragraph (b) of this subsection 1.4) or,
disposing of any voting securities of the Company.
1.7 "Common Stock" shall mean the common stock, $2.50 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
<PAGE> 15
1.8 "Continuing Director" shall mean any member of the Board, while
such person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of the
Board prior to the date of this Agreement. A "Continuing Director" shall also
mean any person who subsequently becomes a member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative of an Acquiring person
or of any such Affiliate or Associate, if (a) such person's nomination for
election or election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a nominee
in a proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors.
1.9 "Person" shall mean any individual, firm, corporation, partnership
or other entity.
<PAGE> 16
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 3rd day of January, 1995 to the Agreement between
CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider
("Executive") of January 3, 1995 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement change
in the CBI Pension Plan effective September 8, 1987, and CBI desires to make
such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement commencing in
the seventeenth line of page 5 presently reading:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which
the Executive's age is less than age 65 or the Executive's credited
service is less than 40 years, whichever produces the lesser
reduction, pursuant to the first sentence of Section 5.2.3 of the
Pension Plan (as in effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which
the Executive's age is less than age 62 or the Executive's credited
service is less than 35 years, whichever produces the lesser
reduction, pursuant to the first sentence of Section 5.2.3 of the
Pension Plan (as in effect on the date hereof)."
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------ ------------------------
Title: Pres, CEO & Chairman
---------------------
-1-
<PAGE> 17
ATTEST:
/s/ CCT
- ---------------------
Secretary
[Seal]
-2-
<PAGE> 18
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 3rd day of January, 1995 to the Agreement between
CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider
("Executive") dated the 3rd day of January, 1995 (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement in
light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby agreed by and
between CBI and the Executive that the Agreement shall be modified as follows:
1. Section 3 of the Agreement is amended by adding the following new
sentence immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is able
to exercise the authorities, powers, functions and duties attached
thereto as contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30
days written notice to CBI at any time following a significant change in
the nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that
provided in Section 4, or the breach by CBI of any other provision of
this Agreement, which change, reduction or breach is not restored or
cured by CBI within 30 days after receiving written notice of such
change, reduction or breach, reasonable directions for restoration or
cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ", whether
or not a breach of this Agreement by CBI," from the sentence following
subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without
-1-
<PAGE> 19
penalty at least as rapidly as compensation under Section 4 would have been
payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount
equal to the aggregate" and substituting in lieu thereof the word "The"; and
(iii) deleting from the sentence following subsection (z) the word "reduction"
and substituting in lieu thereof the word "enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to read as
follows:
In the event any shares of CBI common stock (or other securities into
which such shares may have been converted) previously awarded to
Executive under any restricted stock award plans of CBI or separate
agreements between Executive and CBI are forfeited by reason of such
Termination, or in the event any stock option previously granted to
Executive under any stock option plan of CBI terminates or ceases to be
exercisable by reason of such Termination, an amount in cash equal to
the fair market value of such forfeited common stock (or other
securities) as of the date of Termination plus the excess of the fair
market value as of the date of Termination of stock subject to any such
terminated option over the exercise price of such terminated option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the
nature of compensation to be made by CBI to Executive under this
Agreement shall be reasonable compensation for personal services to be
rendered on or after the date of the Change in Control, including
payments to an individual as damages for breach of contract, within the
meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"). In the event that notwithstanding the previous
sentence any excise tax under Section 4999 of the Code is imposed on
Executive as a direct or indirect result of payments made by CBI or its
affiliates, whether or not such payments are made pursuant to this
Agreement, CBI shall pay Executive an amount or, from time to time,
amounts, equal to (i) the sum of all excise taxes imposed on Executive
in respect of such payments, plus (ii) the aggregate amount of any
interest, penalties, fines or additions to any tax which are imposed in
connection with the imposition of such excise tax, plus (iii) all
income and excise taxes
-2-
<PAGE> 20
imposed on Executive under the laws of any United States Federal, state
or local government or taxing authority by reason of the payments
required under clause (i) and (ii) and this clause (iii). CBI's
obligation to pay such amounts to Executive pursuant to this Section 7
shall continue for the period specified in Section 6501 of the Code
during which a tax may be assessed under Section 4999 of the Code
(including any extensions of such period provided under Section
6503(a)(1) of the Code or requested by the Internal Revenue Service in
connection with an audit of one or more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive
which, if successful, would require CBI to make a payment under this
Section 7, Executive agrees to contest the claim on request of CBI
subject to the following conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be
contested, it shall promptly (but in no event more than 30 days after
the notice from Executive or such shorter time as the Internal Revenue
Service may specify for responding to such claim) request Executive to
contest the claim. Executive shall not make any payment of any tax
which is the subject of the claim before Executive has given the notice
or during the 30-day period thereafter unless Executive receives
written instructions from CBI to make such payment together with an
advance of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above, in which
case Executive will act promptly in accordance with such instructions.
(b) If CBI so requests, Executive will contest the claim by, at the
direction of CBI, either paying the tax claimed and suing for a refund
in the appropriate court or contesting the claim in the United States
Tax Court; provided, however, that any request by CBI for
-3-
<PAGE> 21
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above. If directed
by CBI in writing Executive will take all action necessary to
compromise or settle the claim, but in no event will Executive
compromise or settle the claim or cease to contest the claim without
the written consent of CBI; provided, however, that Executive may take
any such action if Executive waives in writing his right to a payment
under this Section 7 for any amounts payable in connection with such
claim. Executive agrees to cooperate in good faith with CBI in
contesting the claim and to comply with any reasonable request from CBI
concerning the contest of the claim, including the pursuit of
administrative remedies, the appropriate forum for any judicial
proceeding, and the legal basis for contesting the claim. Upon request
of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7.
Provided that Executive is in compliance with the provisions of this
section, CBI shall be liable for and indemnify Executive against any
loss in connection with all costs and expenses, including attorneys'
fees, which may be incurred as a result of contesting the claim, and
shall provide to Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such
costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise
complies with its obligations under this Section 7, it shall, except as
otherwise stipulated in this Section 7, have no obligation to pay any
amounts under Section 7 in respect of the claim until final
determination occurs regarding Executive's liability under the claim.
-4-
<PAGE> 22
CBI's obligation to pay amounts under this Section 7 will be reduced by
any refund obtained by Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment
in a position substantially equivalent to or better than the position
held by him with CBI, compensation actually received by the Executive
during the Employment Period from such other employment shall be
applied to reduce Termination payments otherwise due under subsections
(a) and (c) of Section 6 of this Agreement; and coverage of the
Executive under employee benefit plans described in subsection (x) of
Section 6 of this Agreement shall be reduced or eliminated to the
extent Executive is covered under similar plans incident to such other
employment. In the event of any reduction under this Section 9 of
Termination payments already paid by CBI to Executive, Executive shall
upon 30 days written request from CBI repay to CBI the amount by which
such Termination payment is reduced, without interest, and further
reduced by any taxes attributable to such Termination payments to the
extent Executive cannot recover such taxes through deductions of
equivalent or greater value. Nothing in this Section 9 shall be
construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than
reasonable daily commuting distance from the principal residence of the
Executive as of the date of Termination.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------ -----------------------
Title: Pres., CEO & Chairman
---------------------
ATTEST:
/s/ CCT
- ----------------------------
Secretary
[SEAL]
-5-
<PAGE> 23
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 3rd day of January, 1995 to the Agreement
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Alan J.
Schneider ("Executive") dated the 3rd day of January, 1995, as previously
amended (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to eliminate the requirement for CBI to provide an irrevocable clean letter of
credit to secure for the benefit of the Executive the total value of performance
of CBI's obligations under the Agreement;
NOW, THEREFORE, in consideration of $10 and the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby AGREED by and between CBI and the Executive
that the Agreement shall be modified as follows:
1. Subsection 10(b) is deleted.
2. Exhibit II is deleted.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------ ----------------------
Title: Pres., CEO & Chairman
---------------------
ATTEST:
/s/ CCT
- ----------------------------
Secretary
[SEAL]
-1-
<PAGE> 24
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 4th day of January, 1995 to the Agreement
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Alan J.
Schneider ("Executive") dated the 3rd day of January, 1995, as previously
amended (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to include a requirement that CBI provide an irrevocable clean letter of credit
to secure for the benefit of the Executive the payment of up to $100,000 for
attorneys fees incurred in enforcing the Agreement following a Change in
Control;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum that the Agreement shall be modified as follows:
1. Section 10 of the Agreement is amended by adding a new subsection (b)
to read as follows:
(b) CBI shall at its sole cost and expense obtain a commitment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State (the "Bank"), to secure for the benefit of Executive the payment
of up to $100,000 for attorneys fees incurred in enforcing the Agreement
pursuant to Section 10(a) upon presentation by Executive to the Bank of a
statement or statements prepared by Executive's counsel that such payments
are due and owing and that CBI has not performed its obligations to make
such payments. CBI shall at its sole cost and expense obtain the issuance of
the Letter of Credit pursuant to such commitment not later than the
Effective Date and shall pay all amounts and take all action necessary to
maintain such Letter of Credit during the Employment Period and for two
years thereafter and if, notwithstanding CBI's complete discharge of such
obligations, such Letter of Credit shall be terminated or not renewed, CBI
shall obtain a replacement irrevocable clean letter of credit on
substantially the same terms and conditions as contained in the Letter of
Credit drawn upon a commercial bank having
-1-
<PAGE> 25
total assets equivalent to at least $6 billion and either incorporated
under the laws of, or having an office in, the United States or any State,
which assures the Executive the benefits of this Agreement. Nothing in this
subsection (b) shall limit in any way CBI's obligations under subsection
10(a).
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------ -----------------
Title: Pres, CEO & Chairman
ATTEST:
/s/ CCT
- ----------------------------
Secretary
-2-
<PAGE> 26
EXHIBIT II
ROYAL BANK OF CANADA, NEW YORK BRANCH
IRREVOCABLE STANDBY LETTER OF CREDIT
_______________________ , 19__
Letter of Credit No. ______________
(Beneficiary's Name and Address)
Dear ___________________:
At the request and for the account of CBI Industries, Inc., 800 Jorie
Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby
Letter of Credit No. _______________ (this "Letter of Credit") in your favor in
an aggregate amount of One Hundred Thousand Dollars ($100,000), representing
support of the "Agreement") dated ________________, by and between yourself and
CBI Industries, Inc., as it may be amended from time to time, available by your
draft drawn at sight, presented to this Bank, bearing this Letter of Credit
Number and accompanied by this Letter of Credit and both:
1. Your signed certificate dated the date of such draft indicating the
name, address and signature of your designated counsel, with both your
signature and your designated counsel's signature notarized; and
2. Your designated counsel's signed and notarized statement dated the
date of such draft stating: "Payments are due and payable to (Beneficiary)
under the Agreement dated ______________ between (Beneficiary) and CBI
Industries, Inc., as such Agreement may have been amended from time to time,
and CBI Industries, Inc. has not performed its obligation to make such
payments. (Beneficiary) through the undersigned counsel is enforcing his/her
rights under such Agreement."
Only one draft, in the amount of $100,000 may be presented under this Letter of
Credit.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be honored upon presentation at Royal Bank
of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300
Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan
Administration Manager, facsimile number (___)___-_______, Presentation is to be
<PAGE> 27
made by facsimile transmission of all required documents to this Bank, followed
by overnight courier delivery of all originals as provided in this paragraph:
Any Draft hereunder must be presented on or before _________________.
This Letter of Credit shall automatically expire and be null and void at the
close of business on _________________ or, in the event the expiry date hereof
is extended by us in writing, at the close of business upon such extended expiry
date.
This Letter of Credit sets forth in full the terms of our undertaking,
and this undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
or in which this Letter of Credit is referred to or to which this Letter of
Credit relates, except for the certificates, statements and the sight drafts
referred to therein. This Letter of Credit is not transferrable.
This irrevocable Letter of Credit is subject to The Uniform Customs and
Practices for Documentary Credits (1983 Revision), ICC Publication 400:
ROYAL BANK OF CANADA,
NEW YORK BRANCH
By
------------------------------
Its
-----------------------------
By
------------------------------
Its
-----------------------------
<PAGE> 28
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between
CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider
("Executive") of January 3, 1995 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a
resolution amending Section 2 of the Agreement, and CBI and the Executive
mutually desire to modify the Agreement by incorporating said amendment into the
Agreement.
NOW THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. Section 2 of the Agreement is hereby amended to read as follows:
Change in Control. The Term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become such; or
(b) "Continuing Directors" (as defined below) cease to comprise a
majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person" and
"Continuing Directors" shall have the same meaning as ascribed to such
terms in that certain Amendment and Restatement dated as of August 8,
1989, of Rights Agreement dated as of March 4, 1986,
<PAGE> 29
between CBI and First Chicago Trust Company of New York, as Rights
Agent, as has been or may be amended from time to time.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Alan J. Schneider
------------------------ -------------------------
Title:
---------------------
ATTEST
/s/ CCT
- ---------------------------
Secretary
[Seal]
<PAGE> 1
EXHIBIT 4
AGREEMENT
THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation
("CBI"), and Charles O. Ziemer ("Executive"), dated this 12th day of September ,
1986.
WITNESSETH THAT
WHEREAS, CBI wishes to attract and retain well-qualified executives
and both CBI and the Executive desire continuity of management in the event of
any Change in Control of CBI;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Effective Date. The "Effective Date" of this Agreement shall be the
date on which a Change in Control of CBI (as defined in Section 2) occurs.
2. Change in Control. The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below), has become such; or
(b) Continuing Directors (as defined below) cease to comprise a
majority of the board of directors of CBI.
<PAGE> 2
For purposes of this Agreement, the terms "Acquiring Person" and "Continuing
Directors" shall have the respective meanings ascribed to such terms in that
certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent, the relevant portions of which for
convenience of reference are reproduced as Exhibit I to this Agreement.
3. Employment. CBI hereby agrees that if the Executive continues as an
employee of CBI from the date of execution hereof until the Effective Date, CBI
shall continue the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the third anniversary of
such date or the 65th birthday of the Executive (the "Employment Period"), to
exercise such authority and perform such executive duties as are requested of
him by CBI, which authority and duties shall be commensurate with the authority
being exercised and duties being performed by the Executive immediately prior to
the Effective Date. The Executive shall perform such requested services at the
location where the Executive was employed immediately prior to the Effective
Date, except for required travel on CBI's business to an extent substantially
consistent with the Executive's business travel obligations prior to the
Effective Date. The Executive agrees that while an employee during the
Employment Period he shall, to the extent required, devote substantially
- 2 -
<PAGE> 3
all of his business time to his executive duties as described herein and perform
such duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in equal biweekly
installments) which is not less than his rate of annual salary in effect
immediately prior to the Effective Date, increased on each January 1 within
the remainder of the Employment Period by at least the greater of (i) the
average annual percentage salary increase for the Executive during the
period of three full calendar years immediately preceding the Effective
Date, or (ii) the percentage increase in the Implicit Price Deflator for
Gross National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in its
Survey of Current Business in December of each year, over such Implicit
Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus, restricted stock award,
stock option, and other incentive compensation for each calendar year (or
other applicable bonus or incentive compensation
- 3 -
<PAGE> 4
period) any part of which is included in the Employment Period, which in the
aggregate shall not in value be a lesser percentage of his annual salary, as
determined in subsection (a) above, for such calendar year (or period), than
the aggregate bonus, restricted stock award, stock option, and other
incentive compensation during the period of three full calendar years
immediately preceding the Effective Date was of the Executive's aggregate
base salary for such three year period.
(c) He shall be entitled to receive all employee benefits to the extent
of the greater of the employee benefits provided by CBI to executives with
comparable duties or the employee benefits to which he was entitled
immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the services
for CBI specified in Section 3, whether as a result of total disability or
as a result of a physical or mental disability that is not total or is not
permanent and therefore is not a total disability, Executive shall continue
to receive base salary at the rate in effect at the commencement of any such
period, together with all other compensation and benefits that are payable
under this Agreement.
- 4 -
<PAGE> 5
(e) He shall be furnished at CBI's expense with an automobile, office,
reasonable secretarial help, club memberships, reimbursement for reasonable
entertainment expenses, and such other supplies, equipment, facilities,
services and emoluments appurtenant to his position to the extent of the
greater of such emoluments provided by CBI to executives with comparable
duties or the emoluments to which he was entitled immediately prior to the
Effective Date.
(f) He shall be covered by directors and officers liability and
indemnity insurance or equivalent protection arranged and funded by CBI, and
by corporate indemnity protection, to the extent of the greatest level of
protection afforded to such Executive under any and all policies of
directors and officers liability and indemnity insurance, by-law provisions
or any other arrangements or agreements, at any time within the period of
three full calendar years immediately preceding the Effective Date.
5. Termination. The term "Termination" shall mean the occurrence during
the Employment Period of:
(a) termination by CBI of the employment of the Executive for any
reason other than (i) death, (ii)
- 5 -
<PAGE> 6
physical or mental incapacity which would entitle Executive to permanent
disability benefits under CBI's appropriate plans, or (iii) a willful and
material breach of this Agreement by the Executive which causes a direct and
substantial injury to CBI or to its business, which is not cured by
Executive within 30 days after receiving written notice of such breach and
reasonable directions for cure from CBI; or
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following (i) a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that provided
in Section 4, or the breach by CBI of any other provision of this Agreement,
which change, reduction or breach is not restored or cured by CBI within 30
days after receiving written notice of such change, reduction or breach and
reasonable directions for restoration or cure from the Executive; or (ii) a
reasonable determination by the Executive that, as a result of the Change in
Control and a change in circumstances thereafter significantly affecting his
position, he is unable to exercise the authorities, powers, functions or
duties attached to his position as contemplated by Section 3.
- 6 -
<PAGE> 7
A Termination as contemplated by this Section 5, whether or not a breach of
this Agreement by CBI, shall entitle the Executive to Termination benefits as
provided by this Agreement. Nothing in this Agreement shall prevent the
Executive from voluntarily resigning from his Employment upon 90 days written
notice to CBI under circumstances which do not constitute Termination as defined
in this Section 5, and no such resignation shall be deemed a breach of this
Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive during
the Period of Employment, CBI shall pay to the Executive a lump sum amount equal
(without discount to present value) to the sum of the amounts determined in
accordance with subsections (a), (b), (c) and (d) below, and provide the
additional benefits described in subsections (w), (x), (y) and (z) below:
(a) An amount equal to the aggregate salary which would have been paid
to the Executive during the remainder of the Employment Period if he had
received the base salary specified by Section 4(a) above, increased by
assuming the salary increase on each January 1 during the remainder of the
Employment Period to be the greatest of the average annual percentage salary
increase or the percentage increase in the implicit Price Deflator,
whichever is
- 7 -
<PAGE> 8
applicable, as of any January 1 within the three calendar years including or
preceding the Termination date.
(b) Bonus and incentive compensation for any calendar year (or other
applicable bonus or incentive compensation period) ending prior to the
Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive compensation
which would have been paid to the Executive during each calendar year (or
other applicable bonus or incentive compensation period) any part of which
is included in the remainder of the Employment Period if he had received
bonus and incentive compensation for any such year (or period) in the
minimum amount specified by Section 4(b) based on his increased salary
determined under subsection (a) above; provided, however, that in the event
any bonus year (or period) extends beyond the end of the Employment Period,
bonus or other incentive compensation for such year (or period) shall be
pro-rated in proportion to the number of days within and without the
Employment Period.
(d) In the event any shares of CBI common stock (or other securities
into which such shares may have
- 8 -
<PAGE> 9
been converted) previously awarded to Executive under any restricted stock
award plans of CBI or separate agreements between Executive and CBI are
forfeited by reason of such Termination, an amount in cash equal to the fair
market value of such forfeited common stock (or other securities) as of the
date of Termination. The rights afforded to Executive under this subsection
(d) are without prejudice to any other rights Executive has to shares of CBI
common stock (or other securities) under such plans or agreements or by
reason of the action of the CBI Board of Directors heretofore taken in
causing restrictions on such shares to be removed under certain
circumstances including Termination of the Executive.
CBI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension benefit
plan, benefit restoration plan, profit sharing plan, or employee stock
ownership plan (whether or not funded or qualified under the Internal
Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the
"Benefit Enhancement") between such benefits and the benefits (the "Enhanced
Benefits") that would have been provided under such Retirement Plans if
Executive had remained in the employ of CBI throughout the Employment Period
at the
- 9 -
<PAGE> 10
salary determined under subsection (a) above accruing additional age and
service credits under such Retirement Plans accordingly. If after giving
effect to such additional age and service credit Executive shall not have
the necessary age or credited service at the end of the Employment Period to
qualify under the CBI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w) shall
nevertheless include an early retirement pension under the Pension Plan
beginning upon Executive attaining age 55 or upon the date Executive would
have attained 30 years of credited service had Executive remained
continuously employed by CBI but for Termination (whichever occurs first)
(the Enhanced Early Retirement Pension"). The Enhanced Early Retirement
Pension shall be payable to the Executive or to the spouse of the Executive
(if applicable) commencing at the time Executive attains (or would have
attained) age 55 or would have otherwise attained 30 years of credited
service as provided aforesaid (whichever occurs first). The Enhanced Early
Retirement Pension shall only be subject to reduction at the rate of four
(4) percentum for each year by which the Executive's age is less than age 65
or the Executive's credited service is less than 40 years, whichever
produces the lesser
- 10 -
<PAGE> 11
reduction, pursuant to the first sentence of Section 5.2.3 of the Pension
Plan (as in effect on the date hereof). If Executive shall die after the end
of the Employment Period but before the date the Enhanced Early Retirement
Pension is payable, the spouse of Executive shall be entitled to an enhanced
survivor's pension under the Pension Plan as if Executive had died as an
employee of CBI, giving effect to service through the date of Executive's
death and Executive's earnings through the end of the Employment Period.
Such Benefit Enhancement will be paid beginning on the date the Enhanced
Benefits would have commenced and thereafter concurrently with the benefits
actually provided under such Retirement Plans; except that if the Executive
receives a distribution from any profit sharing or employee stock ownership
plan before the Benefit Enhancement required by this subsection in respect
of such Retirement Plan become determinable, the Benefit Enhancement in
respect of such plan shall be paid as soon thereafter as such benefits
become determinable. Nothing in this subsection (w) shall prevent the actual
commencement of benefits under any Retirement Plan, and the Benefit
Enhancements required by this subsection (w), before the end of the
Employment Period to the extent required or permitted under the terms of the
applicable Retirement Plan,
- 11 -
<PAGE> 12
giving effect to the additional age and service credit required by this
subsection (w).
(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or medical benefit
insurance, plans, or arrangements, supplemental survivors' benefit plans, or
life insurance arrangements or programs, to the same extent to which he
would have been entitled under all employee benefit plans, programs,
arrangements or practices maintained by CBI if he had remained in the employ
of CBI through the Employment Period at the salary determined under
subsection (a) above.
(y) Continuation of disability income benefits pursuant to Section 4(d)
for so long as any disability may continue and continuation of directors and
officers liability and indemnity insurance and corporate indemnity
protection pursuant to Section 4(f) for so long as any liability may arise;
in either case without regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses actually
incurred or reasonably expected to be incurred by the Executive in seeking
other
- 12 -
<PAGE> 13
employment, including without limitation all travel and relocation expenses
and all fees charged by any executive recruitment firm or firms or
employment consulting or counseling firm or firms selected by the Executive
in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of CBI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the correctness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in excess
of the prime rate as publicly announced by the First National Bank of Chicago or
its successor from time to time as in effect on the first day of each such
month.
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
- 13 -
<PAGE> 14
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute "excess parachute
payments" within the meaning the Code. Any payments in excess of the limitation
of this Section 7 or otherwise determined to be "excess parachute payments" made
to Executive hereunder are deemed to be overpayments which shall constitute an
amount owing from the Executive receiving them to CBI with interest from the
date of receipt by the Executive to the date of repayment (or offset) at the
applicable federal rate under Section 1274(d) of the Code, compounded
semi-annually, which shall be payable to CBI upon demand; provided, however,
that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the
Executive and CBI such repayment does not allow such overpayment to be excluded
for federal income and excise tax purposes from the Executive's income for the
year of receipt or afford the
- 14 -
<PAGE> 15
Executive a compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the Executive
agrees to continue all non-competition and confidentiality provisions, as
specified in any other agreement in effect on the Effective Date between the
Executive and CBI relating to confidential information, during (and to the
extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment Period
Executive accepts other employment in a position substantially equivalent to or
better than the position held by him with CBI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses:
(a) It is the intent of CBI that no Executive be required to incur the
expenses associated with the enforcement of his rights under this Agreement
by
- 15 -
<PAGE> 16
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive that
CBI has failed to comply with any of its obligations under this Agreement,
or in the event that CBI or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, CBI irrevocably authorizes Executive from
time to time to retain counsel of his choice, at the expense of CBI as
hereafter provided, to represent Executive in connection with the initiation
or defense of any litigation, arbitration or other legal action, whether by
or against CBI or any director, officer, stockholder or other person
affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive
within 30 days after each written request therefor any and all attorneys'
and related fees and expenses actually incurred or reasonably expected to be
incurred by the Executive in any such proceeding or otherwise as a result of
CBI's failure to perform this Agreement or any provision hereof or as a
result of CBI or any person contesting the validity or
- 16 -
<PAGE> 17
enforceability of this Agreement or any provision hereof; provided, however,
that to the extent the Executive does not prevail in any such litigation,
arbitration, or other legal action, the Executive shall repay to CBI the
amount (without interest) of such attorney's fees and related fees and
expenses previously advanced.
(b) CBI shall at its sole cost and expense obtain a commitment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State (the "Bank"), to secure for the benefit of Executive the total
value of performance of CBI's obligations under this Agreement by providing
that the total amount of all payments due to be paid by CBI to Executive
under this Agreement shall be paid on a regular, periodic basis upon
presentation by Executive to the Bank of a statement or statements prepared
by Executive's counsel that such payments are due and owing, and that CBI
has not performed its obligation to make such payments. CBI
- 17 -
<PAGE> 18
shall at its sole cost and expense obtain the issuance of the Letter of
Credit pursuant to such commitment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain such Letter
of Credit during the Employment Period and for two years thereafter and if,
notwithstanding CBI's complete discharge of such obligations, such Letter of
Credit shall be terminated or not renewed, CBI shall obtain a replacement
irrevocable clean letter of credit on substantially the same terms and
conditions as contained in the Letter of Credit drawn upon a commercial bank
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State, which assures the Executive the benefits of this Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with CBI or, in the case of CBI, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a
- 18 -
<PAGE> 19
lien upon any amounts provided under this Agreement; and no benefits payable
hereunder shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law.
13. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person and,
so long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of CBI and any
successor of CBI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this
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<PAGE> 20
Agreement shall be unaffected thereby and shall remain in full force and effect.
CBI INDUSTRIES, NC.
/s/ CHARLES O. ZIEMER
------------------------------
Executive
Title: S. VP & General Counsel
-----------------------
By: /s/ W.A. Pogue
------------------------
Title: Chairman of the Board
---------------------
ATTEST:
/s/ Donald H. Craigmile
- ----------------------------
Secretary
(SEAL)
- 20 -
<PAGE> 21
EXHIBIT 1
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act
<PAGE> 22
of 1934, as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the
<PAGE> 23
"Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (ii) the right to vote
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this clause (ii) if the agreement, arrangement or understanding to vote
such security: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(c) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with
<PAGE> 24
which such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in clause (ii) of paragraph
(b) of this subsection 1.4) or disposing of any voting securities of
the Company.
1.7 "Common Stock" shall mean the common stock, $2.50 par value
per share, of the Company, except that "Common Stock" when used with reference
to any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
<PAGE> 25
1.8 "Continuing Director" shall mean any member of the Board,
while such person is a member of the Board, who is not an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of the
Board prior to the date of this Agreement. A "Continuing Director" shall also
mean any person who subsequently becomes a member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if (a) such person's nomination for
election or election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a nominee
in a proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors.
1.9 "Person" shall mean any individual, firm, corporation,
partnership or other entity.
<PAGE> 26
Exhibit II
From:_____________________________
Date:____________________________
To:___________________________
By order of:
CBI Industries. Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521
We hereby issue our irrevocable Letter of Credit #__________ effective
___________________, 1986 for a principal amount of U.S. $____________ only,
expiring __________________, 1987, in Chicago, Illinois representing support for
an "Agreement" dated ______________ between CBI Industries, Inc. and the
beneficiary of this Letter of Credit.
Whole or partial drawings of the above Letter of Credit are available against
presentation of your draft(s) drawn at sight on us mentioning thereon our Letter
of Credit number and accompanied by (1) beneficiary's signed and dated statement
designating his counsel and (2) a signed and dated statement prepared by his
counsel reading to the effect that payments are due and owing under the
"Agreement" referred to above and that CBI Industries, Inc. has not performed
its obligation to make such payments.
We hereby engage that drafts drawn under and in compliance with the terms and
conditions of this Letter of Credit will be duly honored upon presentation if
presented to us on or before _________________.
This credit is subject to the "Uniform Customs and Practices for Documentary
Credits" (1983 revision), International Chamber of Commerce publication 400.
SIGNATURE
<PAGE> 27
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of September, 1986, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O.
Ziemer ("Executive") of even date herewith (the "Agreement"):
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify in light of
the Agreement that certain Supplemental Survivor's Benefit Agreement (the
"Survivor's Agreement") dated May 20, 1980 by and between CBI and the
Executive;
NOW, THEREFORE, in consideration of the mutual execution of the
Agreement and the premises thereof, it is further AGREED by and between CBI and
the Executive as follows:
1. A Termination of the Executive during the Employment Period shall be
deemed a "retirement" under the Survivor's Agreement entitling Executive in the
event of his death thereafter to the "post-retirement benefit" thereunder,
notwithstanding that Executive may no longer be employed by CBI nor except as
may otherwise be provided by the Agreement be retired for purposes of the
Pension Plan.
<PAGE> 28
CBI INDUSTRIES, INC. /s/ Charles O. Ziemer
------------------------
Executive
By: /s/ W.A. Pogue Title: S. VP & General Counsel
------------------------- ------------------------
Title: Chairman of the Board
---------------------
ATTEST:
/s/ Donald H. Craigmile
- ---------------------------------
Secretary
(SEAL)
<PAGE> 29
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O.
Ziemer ("Executive") dated the 12th day of September, 1986 (the "Agreement"):
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
in light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby AGREED
by and between CBI and the Executive that the Agreement shall be modified as
follows:
1. Section 3 of the Agreement is amended by adding the following new
sentence immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is
able to exercise the authorities, powers, functions and duties attached
thereto as contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30
days written notice to CBI at any time following a significant change
in the nature or scope of the Executive's authorities or duties from
those described in Section 3, a reduction in total compensation
Page 1
<PAGE> 30
from that provided in Section 4, or the breach by CBI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by CBI within 30 days after receiving written notice
of such change, reduction or breach, reasonable directions for
restoration or cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ",
whether or not a breach of this Agreement by CBI," from the sentence following
subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without penalty at least as rapidly as compensation under
Section 4 would have been payable) of"; (ii) deleting from subsections (a) and
(c) the words "An amount equal to the aggregate" and substituting in lieu
thereof the word "The"; and (iii) deleting from the sentence following
subsection (z) the word "reduction" and substituting in lieu thereof the word
"enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to
read as follows:
In the event any shares of CBI common stock (or other securities into
which such shares may have been converted) previously awarded to
Executive under any restricted stock award plans of CBI or separate
agreements between Executive and CBI are forfeited by reason of such
Termination, or in the event any stock option previously granted to
Executive under any stock option plan of CBI terminates or ceases to be
exercisable by
Page 2
<PAGE> 31
reason of such Termination, an amount in cash equal to the fair market
value of such forfeited common stock (or other securities) as of the
date of Termination plus the excess of the fair market value as of the
date of Termination of stock subject to any such terminated option over
the exercise price of such terminated option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the
nature of compensation to be made by CBI to Executive under this
Agreement shall be reasonable compensation for personal services to be
rendered on or after the date of the Change in Control, including
payments to an individual as damages for breach of contract, within the
meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"). In the event that notwithstanding the previous
sentence any excise tax under Section 4999 of the Code is imposed on
Executive as a direct or indirect result of payments made by CBI or its
affiliates, whether or not such payments are made pursuant to this
Agreement, CBI shall pay Executive an amount or, from time to time,
amounts, equal to (i) the sum of all excise taxes imposed on Executive
in respect of such payments, plus (ii) the aggregate amount of any
interest, penalties, fines or additions to any tax which are imposed in
connection with the imposition of such excise tax, plus (iii) all
income and excise taxes imposed on Executive under the laws of any
United States Federal, state or local government or taxing authority by
reason of the payments required under clause (i) and clause (ii) and
this clause (iii). CBI's obligation to pay such amounts to Executive
pursuant to this Section 7 shall continue for the period specified in
Section 6501 of the Code during
Page 3
<PAGE> 32
which a tax may be assessed under Section 4999 of the Code (including
any extensions of such period provided under Section 6503(a)(1) of the
Code or requested by the Internal Revenue Service in connection with an
audit of one or more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive
which, if successful, would require CBI to make a payment under this
Section 7, Executive agrees to contest the claim on request of CBI
subject to the following conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be
contested, it shall promptly (but in no event more than 30 days after
the notice from Executive or such shorter time as the Internal Revenue
Service may specify for responding to such claim) request Executive to
contest the claim. Executive shall not make any payment of any tax
which is the subject of the claim before Executive has given the notice
or during the 30-day period thereafter unless Executive receives
written instructions from CBI to make such payment together with an
advance of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above, in which
case Executive will act promptly in accordance with such instructions.
(b) If CBI so requests, Executive will contest the claim by, at
the direction of CBI, either paying the tax claimed and suing for a
refund in the appropriate court or contesting the claim in the United
States Tax Court; provided, however, that any request by CBI for
Page 4
<PAGE> 33
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above. If directed
by CBI in writing Executive will take all action necessary to
compromise or settle the claim, but in no event will Executive
compromise or settle the claim or cease to contest the claim without
the written consent of CBI; provided, however, that Executive may take
any such action if Executive waives in writing his right to a payment
under this Section 7 for any amounts payable in connection with such
claim. Executive agrees to cooperate in good faith with CBI in
contesting the claim and to comply with any reasonable request from CBI
concerning the contest of the claim, including the pursuit of
administrative remedies, the appropriate forum for any judicial
proceeding, and the legal basis for contesting the claim. Upon request
of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7.
Provided that Executive is in compliance with the provisions of this
section, CBI shall be liable for and indemnify Executive against any
loss in connection with all costs and expenses, including attorneys'
fees, which may be incurred as a result of contesting the claim, and
shall provide to Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such
costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise
complies with its obligations under
Page 5
<PAGE> 34
this Section 7, it shall, except as otherwise stipulated in this
Section 7, have no obligation to pay any amounts under Section 7 in
respect of the claim until final determination occurs regarding
Executive's liability under the claim. CBI's obligation to pay amounts
under this Section 7 will be reduced by any refund obtained by
Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment
in a position substantially equivalent to or better than the position
held by him with CBI, compensation actually received by the Executive
during the Employment Period from such other employment shall be
applied to reduce Termination payments otherwise due under subsections
(a) and (c) of Section 6 of this Agreement; and coverage of the
Executive under employee benefit plans described in subsection (x) of
Section 6 of this Agreement shall be reduced or eliminated to the
extent Executive is covered under similar plans incident to such other
employment. In the event of any reduction under this Section 9 of
Termination payments already paid by CBI to Executive, Executive shall
upon 30 days written request from CBI repay to CBI the amount by which
such Termination payment is reduced, without interest, and further
reduced by any taxes attributable to such Termination payments to the
extent Executive cannot recover such taxes through deductions of
equivalent or greater value. Nothing in this Section 9 shall be
construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than
reasonable daily commuting
Page 6
<PAGE> 35
distance from the principal residence of the Executive as of the date
of Termination.
CBI INDUSTRIES, INC.
/s/ Charles O. Ziemer
------------------------------
Executive
By:/s/ William A. Pogue Title: S. VP & General Counsel
------------------------- ------------------------
Title: Chairman of the Board
----------------------
ATTEST:
/s/ David H. Craigmile
- ----------------------------
Secretary
[SEAL]
Page 7
<PAGE> 36
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O.
Ziemer ("Executive") dated the 12th day of September, 1986 (the "Agreement"):
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
in light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby AGREED
by and between CBI and the Executive that the Agreement shall be modified as
follows:
1. Section 3 of the Agreement is amended by adding the following new
sentence immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is
able to exercise the authorities, powers, functions and duties attached
thereto as contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30
days written notice to CBI at any time following a significant change
in the nature or scope of the Executive's authorities or duties from
those described in Section 3, a reduction in total compensation
Page 1
<PAGE> 37
from that provided in Section 4, or the breach by CBI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by CBI within 30 days after receiving written notice
of such change, reduction or breach, reasonable directions for
restoration or cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ",
whether or not a breach of this Agreement by CBI," from the sentence following
subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without penalty at least as rapidly as compensation under
Section 4 would have been payable) of"; (ii) deleting from subsections (a) and
(c) the words "An amount equal to the aggregate" and substituting in lieu
thereof the word "The"; and (iii) deleting from the sentence following
subsection (z) the word "reduction" and substituting in lieu thereof the word
"enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to
read as follows:
In the event any shares of CBI common stock (or other securities into
which such shares may have been converted) previously awarded to
Executive under any restricted stock award plans of CBI or separate
agreements between Executive and CBI are forfeited by reason of such
Termination, or in the event any stock option previously granted to
Executive under any stock option plan of CBI terminates or ceases to be
exercisable by
Page 2
<PAGE> 38
reason of such Termination, an amount in cash equal to the fair market
value of such forfeited common stock (or other securities) as of the
date of Termination plus the excess of the fair market value as of the
date of Termination of stock subject to any such terminated option over
the exercise price of such terminated option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the
nature of compensation to be made by CBI to Executive under this
Agreement shall be reasonable compensation for personal services to be
rendered on or after the date of the Change in Control, including
payments to an individual as damages for breach of contract, within the
meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"). In the event that notwithstanding the
previous sentence any excise tax under Section 4999 of the Code is
imposed on Executive as a direct or indirect result of payments made by
CBI or its affiliates, whether or not such payments are made pursuant
to this Agreement, CBI shall pay Executive an amount or, from time to
time, amounts, equal to (i) the sum of all excise taxes imposed on
Executive in respect of such payments, plus (ii) the aggregate amount
of any interest, penalties, fines or additions to any tax which are
imposed in connection with the imposition of such excise tax, plus
(iii) all income and excise taxes imposed on Executive under the laws
of any United States Federal, state or local government or taxing
authority by reason of the payments required under clause (i) and
clause (ii) and this clause (iii). CBI's obligation to pay such amounts
to Executive pursuant to this Section 7 shall continue for the period
specified in Section 6501 of the Code during
Page 3
<PAGE> 39
which a tax may be assessed under Section 4999 of the Code (including
any extensions of such period provided under Section 6503(a)(1) of the
Code or requested by the Internal Revenue Service in connection with an
audit of one or more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive
which, if successful, would require CBI to make a payment under this
Section 7, Executive agrees to contest the claim on request of CBI
subject to the following conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be
contested, it shall promptly (but in no event more than 30 days after
the notice from Executive or such shorter time as the Internal Revenue
Service may specify for responding to such claim) request Executive to
contest the claim. Executive shall not make any payment of any tax
which is the subject of the claim before Executive has given the notice
or during the 30-day period thereafter unless Executive receives
written instructions from CBI to make such payment together with an
advance of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above, in which
case Executive will act promptly in accordance with such instructions.
(b) If CBI so requests, Executive will contest the claim by, at
the direction of CBI, either paying the tax claimed and suing for a
refund in the appropriate court or contesting the claim in the United
States Tax Court; provided, however, that any request by CBI for
Page 4
<PAGE> 40
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above. If directed
by CBI in writing Executive will take all action necessary to
compromise or settle the claim, but in no event will Executive
compromise or settle the claim or cease to contest the claim without
the written consent of CBI; provided, however, that Executive may take
any such action if Executive waives in writing his right to a payment
under this Section 7 for any amounts payable in connection with such
claim. Executive agrees to cooperate in good faith with CBI in
contesting the claim and to comply with any reasonable request from CBI
concerning the contest of the claim, including the pursuit of
administrative remedies, the appropriate forum for any judicial
proceeding, and the legal basis for contesting the claim. Upon request
of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7.
Provided that Executive is in compliance with the provisions of this
section, CBI shall be liable for and indemnify Executive against any
loss in connection with all costs and expenses, including attorneys'
fees, which may be incurred as a result of contesting the claim, and
shall provide to Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such
costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise
complies with its obligations under
Page 5
<PAGE> 41
this Section 7, it shall, except as otherwise stipulated in this
Section 7, have no obligation to pay any amounts under Section 7 in
respect of the claim until final determination occurs regarding
Executive's liability under the claim. CBI's obligation to pay amounts
under this Section 7 will be reduced by any refund obtained by
Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment
in a position substantially equivalent to or better than the position
held by him with CBI, compensation actually received by the Executive
during the Employment Period from such other employment shall be
applied to reduce Termination payments otherwise due under subsections
(a) and (c) of Section 6 of this Agreement; and coverage of the
Executive under employee benefit plans described in subsection (x) of
Section 6 of this Agreement shall be reduced or eliminated to the
extent Executive is covered under similar plans incident to such other
employment. In the event of any reduction under this Section 9 of
Termination payments already paid by CBI to Executive, Executive shall
upon 30 days written request from CBI repay to CBI the amount by which
such Termination payment is reduced, without interest, and further
reduced by any taxes attributable to such Termination payments to the
extent Executive cannot recover such taxes through deductions of
equivalent or greater value. Nothing in this Section 9 shall be
construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than
reasonable daily commuting
Page 6
<PAGE> 42
distance from the principal residence of the Executive as of the date
of Termination.
CBI INDUSTRIES, INC. /s/ Charles O. Ziemer
------------------------------
Executive
By: /s/ William A. Pogue Title: S. VP & General Counsel
-------------------------- ------------------------
Title: Chairman of the Board
-----------------------
ATTEST:
/s/ Donald H. Craigmile
- ----------------------------
Secretary
[SEAL]
<PAGE> 43
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement
change in the CBI Pension Plan effective September 8, 1987, and CBI desires to
make such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement
commencing in the sixth line from the bottom of page 10 and ending in
the third line of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which
the Executive's age is less than age 65 or the Executive's
credited service is less than 40 years, whichever produces the
lesser reduction, pursuant to the first sentence of Section 5.2.3
of the Pension Plan (as in effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum
Page 1
<PAGE> 44
for each year by which the Executive's age is less than age 62 or
the Executive's credited service is less than 35 years, whichever
produces the lesser reduction, pursuant to the first sentence of
Section 5.2.3 of the Pension Plan (as in effect on the date
hereof)."
CBI INDUSTRIES, INC.
By:/s/ W.A. Pogue /s/ Charles O. Ziemer
--------------------------- ---------------------------
Title: Chairman of the Board Executive
------------------------
ATTEST:
/s/ Donald H. Craigmile
- ------------------------------
Secretary
Page 2
<PAGE> 45
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement
change in the CBI Pension Plan effective September 8, 1987, and CBI desires to
make such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement
commencing in the sixth line from the bottom of page 10 and ending in
the third line of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which
the Executive's age is less than age 65 or the Executive's
credited service is less than 40 years, whichever produces the
lesser reduction, pursuant to the first sentence of Section 5.2.3
of the Pension Plan (as in effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum
Page 1
<PAGE> 46
for each year by which the Executive's age is less than age 62 or
the Executive's credited service is less than 35 years, whichever
produces the lesser reduction, pursuant to the first sentence of
Section 5.2.3 of the Pension Plan (as in effect on the date
hereof)."
CBI INDUSTRIES, INC.
By: /s/ W.A. Pogue /s/ Charles O. Ziemer
-------------------------- ------------------------
Title: Chairman of the Board Executive
-----------------------
ATTEST:
/s/ Donald Craigmile
- ------------------------------
Secretary
Page 2
<PAGE> 47
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT
between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer
("Executive") dated the 12th day of September, 1986, as previously amended (the
"Agreement").
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to eliminate the requirement for CBI to provide an irrevocable clean letter of
credit to secure for the benefit of the Executive the total value of performance
of CBI's obligations under the Agreement;
NOW, THEREFORE, in consideration of $10 and the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby AGREED by and between CBI and the Executive
that the Agreement shall be modified as follows:
1. Subsection 10(b) is deleted.
2. Exhibit II is deleted.
CBI INDUSTRIES, INC.
By: /s/ John E. Jones Executive: /s/ Charles O. Ziemer
-------------------------- ----------------------
Title: Chairman of the Board
Title: S. VP & General Counsel
--------------------------
ATTEST:
/s/ CCT
- ----------------------------
Secretary
[SEAL]
<PAGE> 48
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 27th day of August,
1993 to the Agreement between CBI Industries, Inc., a Delaware corporation
("CBI") and C.O. Ziemer ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to include a requirement that CBI provide an irrevocable clean letter of credit
to secure for the benefit of the Executive the payment of up to $100,000 for
attorneys fees incurred in enforcing the Agreement following a Change of
Control;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum that the Agreement shall be modified as follows:
1. Section 10 of the Agreement is amended by adding a new
subsection (b) to read as follows:
(b) CBI shall at its sole cost and expense obtain a commitment
for an irrevocable clean letter of credit, substantially in the
form of that attached hereto as Exhibit II and incorporated herein
by reference (the "Letter of Credit"), to be issued by a
commercial bank selected by CBI having total assets equivalent to
at least $6 billion and either incorporated under the laws of, or
having an office in, the United States or any State (the "Bank"),
to secure for the benefit of Executive the payment of up to
$100,000 for attorneys fees incurred in enforcing the Agreement
pursuant to Section 10(a) upon presentation by Executive to the
Bank of a statement or statements prepared by Executive's counsel
that such payments are due and owing and that CBI has not
performed its obligations to make such payments. CBI shall at its
sole cost and expense obtain the issuance of the Letter of Credit
pursuant to such commitment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain
such Letter of Credit during the Employment Period and for two
years thereafter and if, notwithstanding CBI's complete discharge
of such obligations, such Letter of Credit shall be terminated or
not renewed, CBI shall obtain a replacement irrevocable clean
letter of credit on substantially the same terms and conditions as
contained in the Letter of Credit drawn upon a commercial bank
having total assets equivalent to at least $6 billion and either
incorporated under the laws o, or having an office in, the United
States of any State, which
<PAGE> 49
assures the Executive the benefits of this Agreement. Nothing
in this subsection (b) shall limit in any way CBI's obligations
under subsection 10 (a).
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Charles O. Ziemer
-------------------------- ---------------------------------
Title: Title: S. VP & General Counsel
----------------------- ------------------------------
<PAGE> 50
EXHIBIT II
ROYAL BANK OF CANADA, NEW YORK BRANCH
IRREVOCABLE STANDBY LETTER OF CREDIT
_______________________, 19____
Letter of Credit No. ______________
(Beneficiary's Name and Address)
Dear ___________________:
At the request and for the account of CBI Industries, Inc., 800 Jorie
Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby
Letter of Credit No. _______________ (this "Letter of Credit") in your favor in
an aggregate amount of One Hundred Thousand Dollars ($100,000), representing
support of the "Agreement") dated ________________, by and between yourself and
CBI Industries, Inc., as it may be amended from time to time, available by your
draft drawn at sight, presented to this Bank, bearing this Letter of Credit
Number and accompanied by this Letter of Credit and both:
1. Your signed certificate dated the date of such draft indicating the
name, address and signature of your designated counsel, with both your
signature and your designated counsel's signature notarized; and
2. Your designated counsel's signed and notarized statement dated the
date of such draft stating: "Payments are due and payable to (Beneficiary)
under the Agreement dated _____________ between (Beneficiary) and CBI
Industries, Inc., as such Agreement may have been amended from time to time,
and CBI Industries, Inc. has not performed its obligation to make such
payments. (Beneficiary) through the undersigned counsel is enforcing his/her
rights under such Agreement."
Only one draft, in the amount of $100,000 may be presented under this Letter of
Credit.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be honored upon presentation at Royal Bank
of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300
Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration
Manager, facsimile number (___) ___-____. Presentation is to be
<PAGE> 51
made by facsimile transmission of all required documents to this Bank, followed
by overnight courier delivery of all originals as provided in this paragraph.
Any Draft hereunder must be presented on or before _________________.
This Letter of Credit shall automatically expire and be null and void at the
close of business on ________________ or, in the event the expiry date hereof is
extended by us in writing, at the close of business upon such extended expiry
date.
This Letter of Credit sets forth in full the terms of our undertaking,
and this undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
or in which this Letter of Credit is referred to or to which this Letter of
Credit relates, except for the certificates, statements and the sight drafts
referred to therein. This Letter of Credit is not transferrable.
This irrevocable Letter of Credit is subject to The Uniform Customs and
Practices for Documentary Credits (1983 Revision), ICC Publication 400.
ROYAL BANK OF CANADA,
NEW YORK BRANCH
By_______________________________
Its____________________________
By_______________________________
Its____________________________
<PAGE> 52
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and Charles O.
Ziemer ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a
resolution amending Section 2 of the Agreement, and CBI and the Executive
mutually desire to modify the Agreement by incorporating said amendment into the
Agreement.
NOW THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. Section 2 of the Agreement is hereby amended to read as follows:
Change in Control. The Term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become such;
or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person"
and "Continuing Directors" shall have the same meaning as
ascribed to such terms in that certain Amendment and
Restatement dated as of August 8, 1989, of Rights Agreement
dated as of March 4, 1986,
<PAGE> 53
between CBI and First Chicago Trust Company of New York, as
Rights Agent, as has been or may be amended from time to time.
CBI INDUSTRIES, INC. EXECUTIVE
By:/s/ John E. Jones By:/s/ Charles O. Ziemer
--------------------------- ---------------------------------
Title:
------------------------
ATTEST:
/s/ CCT
- ------------------------------
Secretary
[Seal]
<PAGE> 1
EXHIBIT 5
AGREEMENT
THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation
("CBI"), and Lewis E. Akin ("Executive"), dated this 12th day of September,
1986.
WITNESSETH THAT
WHEREAS, CBI wishes to attract and retain well-qualified executives
and both CBI and the Executive desire continuity of management in the event of
any Change in Control of CBI;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Effective Date. The "Effective Date of this Agreement shall be the
date on which a Change in Control of CBI (as defined in Section 2) occurs.
2. Change in Control. The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below), has become such; or
(b) Continuing Directors (as defined below) cease to comprise a
majority of the board of directors of CBI.
<PAGE> 2
For purposes of this Agreement, the terms "Acquiring Person" and "Continuing
Directors" shall have the respective meanings ascribed to such terms in that
certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent. the relevant portions of which for
convenience of reference are reproduced as Exhibit I to this Agreement.
3. Employment. CBI hereby agrees that if the Executive continues as an
employee of CBI from the date of execution hereof until the Effective Date, CBI
shall continue the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the third anniversary of
such date or the 65th birthday of the Executive (the "Employment Period"), to
exercise such authority and perform such executive duties as are requested of
him by CBI, which authority and duties shall be commensurate with the authority
being exercised and duties being performed by the Executive immediately prior to
the Effective Date. The Executive shall perform such requested services at the
location where the Executive was employed immediately prior to the Effective
Date, except for required travel on CBI's business to an extent substantially
consistent with the Executive's business travel obligations prior to the
Effective Date. The Executive agrees that while an employee during the
Employment Period he shall, to the extent required, devote substantially
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<PAGE> 3
all of his business time to his executive duties as described herein and perform
such duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in equal biweekly
installments) which is not less than his rate of annual salary in effect
immediately prior to the Effective Date, increased on each January 1 within
the remainder of the Employment Period by at least the greater of (i) the
average annual percentage salary increase for the Executive during the
period of three full calendar years immediately preceding the Effective
Date, or (ii) the percentage increase in the Implicit Price Deflator for
Gross National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in its
Survey of Current Business in December of each year, over such Implicit
Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus, restricted stock award,
stock option, and other incentive compensation for each calendar year (or
other applicable bonus or incentive compensation
-3-
<PAGE> 4
period) any part of which is included in the Employment Period, which in the
aggregate shall not in value be a lesser percentage of his annual salary, as
determined in subsection (a) above, for such calendar year (or period), than
the aggregate bonus, restricted stock award, stock option, and other
incentive compensation during the period of three full calendar years
immediately preceding the Effective Date was of the Executive's aggregate
base salary for such three year period.
(c) He shall be entitled to receive all employee benefits to the extent
of the greater of the employee benefits provided by CBI to executives with
comparable duties or the employee benefits to which he was entitled
immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the services
for CBI specified in Section 3, whether as a result of total disability or
as a result of a physical or mental disability that is not total or is not
permanent and therefore is not a total disability, Executive shall continue
to receive base salary at the rate in effect at the commencement of any such
period, together with all other compensation and benefits that are payable
under this Agreement.
-4-
<PAGE> 5
(e) He shall be furnished at CBI's expense with an automobile, office,
reasonable secretarial help, club memberships, reimbursement for reasonable
entertainment expenses, and such other supplies, equipment, facilities,
services and emoluments appurtenant to his position to the extent of the
greater of such emoluments provided by CBI to executives with comparable
duties or the emoluments to which he was entitled immediately prior to the
Effective Date.
(f) He shall be covered by directors and officers liability and
indemnity insurance or equivalent protection arranged and funded by CBI, and
by corporate indemnity protection, to the extent of the greatest level of
protection afforded to such Executive under any and all policies of
directors and officers liability and indemnity insurance, by-law provisions
or any other arrangements or agreements, at any time within the period of
three full calendar years immediately preceding the Effective Date.
5. Termination. The term "Termination" shall mean the occurrence during
the Employment Period of:
(a) termination by CBI of the employment of the Executive for any
reason other than (i) death, (ii)
-5-
<PAGE> 6
physical or mental incapacity which would entitle Executive to permanent
disability benefits under CBI's appropriate plans, or (iii) a willful and
material breach of this Agreement by the Executive which causes a direct and
substantial injury to CBI or to its business, which is not cured by
Executive within 30 days after receiving written notice of such breach and
reasonable directions for cure from CBI; or
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following (i) a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from that provided
in Section 4, or the breach by CBI of any other provision of this Agreement,
which change, reduction or breach is not restored or cured by CBI within 30
days after receiving written notice of such change, reduction or breach and
reasonable directions for restoration or cure from the Executive; or (ii) a
reasonable determination by the Executive that, as a result of the Change in
Control and a change in circumstances thereafter significantly affecting his
position, he is unable to exercise the authorities, powers, functions or
duties attached to his position as contemplated by Section 3.
-6-
<PAGE> 7
A Termination as contemplated by this Section 5, whether or not a
breach of this Agreement by CBI, shall entitle the Executive to Termination
benefits as provided by this Agreement. Nothing in this Agreement shall prevent
the Executive from voluntarily resigning from his Employment upon 90 days
written notice to CBI under circumstances which do not constitute Termination as
defined in this Section 5, and no such resignation shall be deemed a breach of
this Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive during
the Period of Employment, CBI shall pay to the Executive a lump sum amount equal
(without discount to present value) to the sum of the amounts determined in
accordance with subsections (a), (b), (c) and (d) below, and provide the
additional benefits described in subsections (w), (x), (y) and (z) below:
(a) An amount equal to the aggregate salary which would have been paid
to the Executive during the remainder of the Employment Period if he had
received the base salary specified by Section 4(a) above, increased by
assuming the salary increase on each January 1 during the remainder of the
Employment Period to be the greatest of the average annual percentage salary
increase or the percentage increase in the Implicit Price Deflator,
whichever is
-7-
<PAGE> 8
applicable, as of any January 1 within the three calendar years including or
preceding the Termination date.
(b) Bonus and incentive compensation for any calendar year (or other
applicable bonus or incentive compensation period) ending prior to the
Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive compensation
which would have been paid to the Executive during each calendar year (or
other applicable bonus or incentive compensation period) any part of which
is included in the remainder of the Employment Period if he had received
bonus and incentive compensation for any such year (or period) in the
minimum amount specified by Section 4(b) based on his increased salary
determined under subsection (a) above; provided, however, that in the event
any bonus year (or period) extends beyond the end of the Employment Period,
bonus or other incentive compensation for such year (or period) shall be
pro-rated in proportion to the number of days within and without the
Employment Period.
(d) In the event any shares of CBI common stock (or other securities
into which such shares may have
-8-
<PAGE> 9
been converted) previously awarded to Executive under any restricted stock
award plans of CBI or separate agreements between Executive and CBI are
forfeited by reason of such Termination, an amount in cash equal to the fair
market value of such forfeited common stock (or other securities) as of the
date of Termination. The rights afforded to Executive under this subsection
(d) are without prejudice to any other rights Executive has to shares of CBI
common stock (or other securities) under such plans or agreements or by
reason of the action of the CBI Board of Directors heretofore taken in
causing restrictions on such shares to be removed under certain
circumstances including Termination of the Executive.
CBI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension benefit
plan, benefit restoration plan, profit sharing plan, or employee stock
ownership plan (whether or not funded or qualified under the Internal
Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the
"Benefit Enhancement") between such benefits and the benefits (the "Enhanced
Benefits") that would have been provided under such Retirement Plans if
Executive had remained in the employ of CBI throughout the Employment Period
at the
- 9 -
<PAGE> 10
salary determined under subsection (a) above accruing additional age and
service credits under such Retirement Plans accordingly. If after giving
effect to such additional age and service credit Executive shall not have
the necessary age or credited service at the end of the Employment Period to
qualify under the CBI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w) shall
nevertheless include an early retirement pension under the Pension Plan
beginning upon Executive attaining age 55 or upon the date Executive would
have attained 30 years of credited service had Executive remained
continuously employed by CBI but for Termination (whichever occurs first)
(the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement
Pension shall be payable to the Executive or to the spouse of the Executive
(if applicable) commencing at the time Executive attains (or would have
attained) age 55 or would have otherwise attained 30 years of credited
service as provided aforesaid (whichever occurs first). The Enhanced Early
Retirement Pension shall only be subject to reduction at the rate of four
(4) percentum for each year by which the Executive's age is less than age 65
or the Executive's credited service is less than 40 years, whichever
produces the lesser
- 10 -
<PAGE> 11
reduction, pursuant to the first sentence of Section 5.2.3 of the Pension
Plan (as in effect on the date hereof). If Executive shall die after the end
of the Employment Period but before the date the Enhanced Early Retirement
Pension is payable, the spouse of Executive shall be entitled to an enhanced
survivor's pension under the Pension Plan as if Executive had died as an
employee of CBI, giving effect to service through the date of Executive's
death and Executive's earnings through the end of the Employment Period.
Such Benefit Enhancement will be paid beginning on the date the Enhanced
Benefits would have commenced and thereafter concurrently with the benefits
actually provided under such Retirement Plans; except that if the Executive
receives a distribution from any profit sharing or employee stock ownership
plan before the Benefit Enhancement required by this subsection in respect
of such Retirement Plan become determinable, the Benefit Enhancement in
respect of such plan shall be paid as soon thereafter as such benefits
become determinable. Nothing in this subsection (w) shall prevent the actual
commencement of benefits under any Retirement Plan, and the Benefit
Enhancements required by this subsection (w), before the end of the
Employment Period to the extent required or permitted under the terms of the
applicable Retirement Plan,
- 11 -
<PAGE> 12
giving effect to the additional age and service credit required by this
subsection (w).
(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or medical benefit
insurance, plans, or arrangements, supplemental survivors' benefit plans, or
life insurance arrangements or programs, to the same extent to which he
would have been entitled under all employee benefit plans, programs,
arrangements or practices maintained by CBI if he had remained in the employ
of CBI through the Employment Period at the salary determined under
subsection (a) above.
(y) Continuation of disability income benefits pursuant to Section 4(d)
for so long as any disability may continue and continuation of directors and
officers liability and indemnity insurance and corporate indemnity
protection pursuant to Section 4(f) for so long as any liability may arise;
in either case without regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses actually
incurred or reasonably expected to be incurred by the Executive in seeking
other
- 12 -
<PAGE> 13
employment, including without limitation all travel and relocation expenses
and all fees charged by any executive recruitment firm or firms or
employment consulting or counseling firm or firms selected by the Executive
in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of CBI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the correctness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in excess
of the prime rate as publicly announced by the First National Bank of Chicago or
its successor from time to time as in effect on the first day of each such
month.
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
- 13 -
<PAGE> 14
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute "excess parachute
payments" within the meaning the Code. Any payments in excess of the limitation
of this Section 7 or otherwise determined to be "excess parachute payments" made
to Executive hereunder are deemed to be overpayments which shall constitute an
amount owing from the Executive receiving them to CBI with interest from the
date of receipt by the Executive to the date of repayment (or offset) at the
applicable federal rate under Section 1274(d) of the Code, compounded
semi-annually, which shall be payable to CBI upon demand; provided, however,
that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the
Executive and CBI such repayment does not allow such overpayment to be excluded
for federal income and excise tax purposes from the Executive's income for the
year of receipt or afford the
- 14 -
<PAGE> 15
Executive a compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the Executive
agrees to continue all non-competition and confidentiality provisions, as
specified in any other agreement in effect on the Effective Date between the
Executive and CBI relating to confidential information, during (and to the
extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment Period
Executive accepts other employment in a position Substantially equivalent to or
better than the position held by him with CBI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses:
(a) it is the intent of CBI that no Executive be required to incur the
expenses associated with the enforcement of his rights under this Agreement
by
- 15 -
<PAGE> 16
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive that
CBI has failed to comply with any of its obligations under this Agreement,
or in the event that CBI or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, CBI irrevocably authorizes Executive from
time to time to retain counsel of his choice, at the expense of CBI as
hereafter provided, to represent Executive in connection with the initiation
or defense of any litigation, arbitration or other legal action, whether by
or against CBI or any director, officer, stockholder or other person
affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive
within 30 days after each written request therefor any and all attorneys'
and related fees and expenses actually incurred or reasonably expected to be
incurred by the Executive in any such proceeding or otherwise as a result of
CBI's failure to perform this Agreement or any provision hereof or as a
result of CBI or any person contesting the validity or
- 16 -
<PAGE> 17
enforceability of this Agreement or any provision hereof; provided, however,
that to the extent the Executive does not prevail in any such litigation,
arbitration, or other legal action, the Executive shall repay to CBI the
amount (without interest) of such attorney's fees and related fees and
expenses previously advanced.
(b) CBI shall at its sole cost and expense obtain a commitment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State (the "Bank"), to secure for the benefit of Executive the total
value of performance of CBI's obligations under this Agreement by providing
that the total amount of all payments due to be paid by CBI to Executive
under this Agreement shall be paid on a regular, periodic basis upon
presentation by Executive to the Bank of a statement or statements prepared
by Executive's counsel that such payments are due and owing, and that CBI
has not performed its obligation to make such payments. CBI
- 17 -
<PAGE> 18
shall at its sole cost and expense obtain the issuance of the Letter of
Credit pursuant to such commitment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain such Letter
of Credit during the Employment Period and for two years thereafter and if,
notwithstanding CBI's complete discharge of such obligations, such Letter of
Credit shall be terminated or not renewed, CBI shall obtain a replacement
irrevocable clean letter of credit on substantially the same terms and
conditions as contained in the Letter of Credit drawn upon a commercial bank
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State, which assures the Executive the benefits of this Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent
by registered or certified mail to the Executive at the last address he has
filed in writing with CBI or, in the case of CBI, at its principal executive
offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a
- 18 -
<PAGE> 19
lien upon any amounts provided under this Agreement; and no benefits payable
hereunder shall be assignable in anticipation of payment either by voluntary
or involuntary acts, or by operation of law.
13. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person
and, so long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of CBI and any
successor of CBI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this
- 19 -
<PAGE> 20
Agreement shall be unaffected thereby and shall remain in full force and effect.
CBI INDUSTRIES, INC. /s/ Lewis E. Akin
-------------------------------
Executive
By: /s/ W. A. Pogue Title: Vice President
---------------------------- -------------------------
Title: Chairman of the Board
------------------------
ATTEST:
/s/ Donald H. Craigmile
- -------------------------------
Secretary
(SEAL)
- 20 -
<PAGE> 21
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act
<PAGE> 22
of 1934, as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or Associates
has (i) the right to acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
the
<PAGE> 23
"Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (ii) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own, any security under this clause (ii) if the
agreement, arrangement or understanding to vote such security: (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(c) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with
<PAGE> 24
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (ii) of paragraph (b) of this subsection 1.4) or
disposing of any voting securities of the Company.
1.7 "Common Stock" shall mean the common stock, $2.50 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
<PAGE> 25
1.8 "Continuing Director" shall mean any member of the Board, while
such person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of the
Board prior to the date of this Agreement. A "Continuing Director" shall also
mean any person who subsequently becomes a member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if (a) such person's nomination for
election or election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a nominee
in a proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors.
1.9 "Person" shall mean any individual, firm, corporation, partnership
or other entity.
<PAGE> 26
Exhibit II
From: ____________________________
Date:__________________________
To:________________________
By order of:
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521
We hereby issue our irrevocable Letter of Credit #__________ effective
__________________, 1986 for a principal amount of U.S. $____________ only,
expiring __________________, 1987, in Chicago, Illinois representing support for
an "Agreement" dated ______________ between CBI Industries, Inc. and the
beneficiary of this Letter of Credit.
Whole or partial drawings of the above Letter of Credit are available against
presentation of your draft(s) drawn at sight on us mentioning thereon our Letter
of Credit number and accompanied by (1) beneficiary's signed and dated statement
designating his counsel and (2) a signed and dated statement prepared by his
counsel reading to the effect that payments are due and owing under the
"Agreement" referred to above and that CBI Industries, Inc. has not performed
its obligation to make such payments.
We hereby engage that drafts drawn under and in compliance with the terms and
conditions of this Letter of Credit will be duly honored upon presentation if
presented to us on or before __________________.
This credit is subject to the "Uniform Customs and Practices for Documentary
Credits" (1983 revision), International Chamber of Commerce publication 400.
SIGNATURE
<PAGE> 27
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of September, 1986, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Lewis E. Akin
("Executive") of even date herewith (the "Agreement"):
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify in light of
the Agreement that certain Supplemental Survivor's Benefit Agreement (the
"Survivor's Agreement") dated January 31, 1984 by and between CBI and the
Executive;
NOW, THEREFORE, in consideration of the mutual execution of the
Agreement and the premises thereof, it is further AGREED by and between CBI and
the Executive as follows:
1. A Termination of the Executive during the Employment Period shall be
deemed a "retirement" under the Survivor's Agreement entitling Executive in the
event of his death thereafter to the "post-retirement benefit" thereunder,
notwithstanding that Executive may no longer be employed by CBI nor except as
may otherwise be provided by the Agreement be retired for purposes of the
Pension Plan.
<PAGE> 28
CBI INDUSTRIES, INC. /s/ Lewis E. Akin
---------------------------------
Executive
By: /s/ W.A. Pogue Title: Vice President
-------------------------- --------------------------
Title: Chairman of the Board
----------------------
ATTEST:
/s/ Donald H. Craigmile
- -----------------------------
Secretary
(SEAL)
<PAGE> 29
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 1st day of June, 1995
to the Agreement between CBI industries, Inc., a Delaware Corporation ("CBI")
and Lewis E. Akin ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, Chicago Bridge & Iron Company ("Bridge"), a wholly owned
subsidiary of CBI, wishes to attract and retain well qualified executives and
both Bridge and the Executive desire continuity of management in the event of
any Change in Ownership of Bridge, and, accordingly Bridge is willing to
undertake the obligations hereinafter stated;
WHEREAS, Executive has been offered an executive position in the
employment of Bridge, and in order to induce Executive to accept such position,
CBI has assured Executive that he may at his election retain the benefits of the
Agreement in the event of a change of control of CBI notwithstanding that
Executive may at such time be an employee of Bridge.
WHEREAS, because of the similarity of the obligations undertaken by CBI
under the Agreement and the obligations to be undertaken by Bridge under this
Addendum, and for the general convenience of the parties, CBI and the Executive
mutually agree to permit Bridge, a Delaware corporation, to become a party to
this Addendum and for Bridge to assume the obligations hereinafter undertaken;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. For purposes of this Addendum the term "Change in Ownership" shall
mean the occurrence of an event pursuant to which the ultimate right to elect
directors of Bridge is not exercisable by CBI or another entity which directly
or indirectly acquires stock of Bridge in a leveraged buy-out in which the
senior management of CBI participates.
2. In the event of a Change in Ownership of Bridge, Bridge and
Executive agree to be bound by the terms of the Agreement as if the Agreement
were an agreement between Bridge and Executive, subject to the following
changes:
(a) "CBI Industries, Inc." and "CBI" shall be replaced by "Chicago
Bridge & Iron Company" and "Bridge," respectively, wherever those terms
appear in the Agreement, except in subsection 6(d).
(b) "Change in Control of CBI" and Change in Control" shall be
replaced by "Change in Ownership of Bridge" and "Change in Ownership,"
respectively, wherever those terms appear in the Agreement.
(c) Section 2 of the Agreement is deleted and replaced by a new
Section 2 for purposes of the obligations undertaken hereunder, which
contains the definition of "Change in Ownership" as set forth in
Section 1 of this Addendum.
(d) In Section 3 "date of execution hereof shall mean date of
execution of this Addendum.
(e) In subsection 4(b) the words "restricted stock award, stock
option" are deleted from the second and, ninth and tenth lines,
respectively.
(f) CBI's obligations under this Section 2 of this Addendum shall
be to provide continuing directors and officers liability and indemnity
insurance and corporate indemnity protection under subsections 4(f) and
6(y) covering the time Executive was an officer or director of CBI.
(g) In subsection 6(w):
<PAGE> 30
i. the second and third lines are deleted and replaced with
the following words: "any pension benefit plan or benefit
restoration plan."
ii. the words "; except that if... determinable" are deleted
from the fourteenth through twenty-first lines on page 11
of the Agreement
(h) Subsection 10(b) is deleted.
(i) Exhibits I and II are deleted.
3. It is understood and agreed by all parties to this Addendum that
Executive shall only be entitled to receive the benefits from either the
Agreement (between CBI and Executive only) or the Agreement as modified by this
Addendum (among and between Bridge, CBI and the Executive) and not from both.
Upon the first to occur of either a Change in Control of CBI or a Change in
Ownership of Bridge, Executive shall be required within thirty (30) days to give
to both CBI and Bridge notice in writing as to which contractual arrangement
provided for herein Executive desires to apply to his employment with Bridge,
after which notice the other contractual arrangement shall be null and void. In
the event Executive elects to receive the benefits of the Agreement between CBI
and Executive only without application of Section 2 of this Addendum, Bridge
shall be responsible for continuing Executive's employment and compensation
within the meaning of Sections 3 and 4 of the Agreement commencing on the date
of the event giving rise to Executive's notice hereunder, and CBI shall be
responsible for termination payments under Section 6 of the Agreement in the
event the employment of Executive with Bridge is terminated within the meaning
of Section 5 of the Agreement
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Lewis E. Akin
--------------------------- ------------------------
Title: Chairman
------------------------
CHICAGO BRIDGE & IRON COMPANY
By: /s/ S. A. Kropf
---------------------------
Title: VP & Treasurer
-----------------------
<PAGE> 31
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 5th day of June , 1987, to the AGREEMENT
between CBI Industries, Inc., a Delaware Corporation ("CBI") and Lewis E. Akin
("Executive") dated the 12th day of September 1986 (the "Agreement"):
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
in light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby AGREED
by and between CBI and the Executive that the Agreement shall be modified as
follows:
1. Section 3 of the Agreement is amended by adding the following new
sentence immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is
able to exercise the authorities, powers, functions and duties attached
thereto as contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30
days written notice to CBI at any time following a significant change
in the nature or scope of the Executive's authorities or duties from
those described in Section 3, a reduction in total compensation
Page 1
<PAGE> 32
from that provided in Section 4, or the breach by CBI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by CBI within 30 days after receiving written notice
of such change, reduction or breach, reasonable directions for
restoration or cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ",
whether or not a breach of this Agreement by CBI," from the sentence
following subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without penalty at least as rapidly as compensation under
Section 4 would have been payable) of"; (ii) deleting from subsections (a) and
(c) the words "An amount equal to the aggregate" and substituting in lieu
thereof the word "The"; and (iii) deleting from the sentence following
subsection (z) the word "reduction" and substituting in lieu thereof the word
"enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to read
as follows:
In the event any shares of CBI common stock (or other securities into
which such shares may have been converted) previously awarded to
Executive under any restricted stock award plans of CBI or separate
agreements between Executive and CBI are forfeited by reason of such
Termination, or in the event any stock option previously granted to
Executive under any stock option plan of CBI terminates or ceases to be
exercisable by
Page 2
<PAGE> 33
reason of such Termination, an amount in cash equal to the fair market
value of such forfeited common stock (or other securities) as of the
date of Termination plus the excess of the fair market value as of the
date of Termination of stock subject to any such terminated option over
the exercise price of such terminated option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the
nature of compensation to be made by CBI to Executive under this
Agreement shall be reasonable compensation for personal services to be
rendered on or after the date of the Change in Control, including
payments to an individual as damages for breach of contract, within the
meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"). In the event that notwithstanding the previous
sentence any excise tax under Section 4999 of the Code is imposed on
Executive as a direct or indirect result of payments made by CBI or its
affiliates, whether or not such payments are made pursuant to this
Agreement, CBI shall pay Executive an amount or, from time to time,
amounts, equal to (i) the sum of all excise taxes imposed on Executive
in respect of such payments, plus (ii) the aggregate amount of any
interest, penalties, fines or additions to any tax which are imposed in
connection with the imposition of such excise tax, plus (iii) all
income and excise taxes imposed on Executive under the laws of any
United States Federal, state or local government or taxing authority by
reason of the payments required under clause (i) and clause (ii) and
this clause (iii). CBI's obligation to pay such amounts to Executive
pursuant to this Section 7 shall continue for the period specified in
Section 6501 of the Code during
Page 3
<PAGE> 34
which a tax may be assessed under Section 4999 of the Code (including
any extensions of such period provided under Section 6503(a)(1) of the
Code or requested by the Internal Revenue Service in connection with an
audit of one or more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive
which, if successful, would require CBI to make a payment under this
Section 7, Executive agrees to contest the claim on request of CBI
subject to the following conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be
contested, it shall promptly (but in no event more than 30 days after
the notice from Executive or such shorter time as the Internal Revenue
Service may specify for responding to such claim) request Executive to
contest the claim. Executive shall not make any payment of any tax
which is the subject of the claim before Executive has given the notice
or during the 30-day period thereafter unless Executive receives
written instructions from CBI to make such payment together with an
advance of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (il) and clause (iii) above as if
such advance were an amount described in clause (i) above, in which
case Executive will act promptly in accordance with such instructions.
(b) If CBI so requests, Executive will contest the claim by, at
the direction of CBI, either paying the tax claimed and suing for a
refund in the appropriate court or contesting the claim in the United
States Tax Court; provided, however, that any request by CBI for
Page 4
<PAGE> 35
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above. If directed
by CBI in writing Executive will take all action necessary to
compromise or settle the claim, but in no event will Executive
compromise or settle the claim, or cease to contest the claim without
the written consent of CBI; provided, however, that Executive may take
any such action if Executive waives in writing his right to a payment
under this Section 7 for any amounts payable in connection with such
claim. Executive agrees to cooperate in good faith with CBI in
contesting the claim and to comply with any reasonable request from CBI
concerning the contest of the claim, including the pursuit of
administrative remedies, the appropriate forum for any judicial
proceeding, and the legal basis for contesting the claim. Upon request
of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7.
Provided that Executive is in compliance with the provisions of this
section, CBI shall be liable for and indemnify Executive against any
loss in connection with all costs and expenses, including attorneys'
fees, which may be incurred as a result of contesting the claim, and
shall provide to Executive within 30 days after each written request
therefor by the Executive cash advances or reimbursement for all such
costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise
complies with its obligations under
Page 5
<PAGE> 36
this Section 7, it shall, except as otherwise stipulated in this
Section 7, have no obligation to pay any amounts under Section 7 in
respect of the claim until final determination occurs regarding
Executive's liability under the claim. CBI's obligation to pay amounts
under this Section 7 will be reduced by any refund obtained by
Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment
in a position substantially equivalent to or better than the position
held by him with CBI, compensation actually received by the Executive
during the Employment Period from such other employment shall be
applied to reduce Termination payments otherwise due under subsections
(a) and (c) of Section 6 of this Agreement; and coverage of the
Executive under employee benefit plans described in subsection (x) of
Section 6 of this Agreement shall be reduced or eliminated to the
extent Executive is covered under similar plans incident to such other
employment. In the event of any reduction under this Section 9 of
Termination payments already paid by CBI to Executive, Executive shall
upon 30 days written request from CBI repay to CBI the amount by which
such Termination payment is reduced, without interest, and further
reduced by any taxes attributable to such Termination payments to the
extent Executive cannot recover such taxes through deductions of
equivalent or greater value. Nothing in this Section 9 shall be
construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than
reasonable daily commuting
Page 6
<PAGE> 37
distance from the principal residence of the Executive as of the date
of Termination.
CBI INDUSTRIES, INC. /s/ Lewis E. Akin
------------------------------
Executive
By: /s/ William A. Pogue Title: Pres CBI Services
--------------------------- -----------------------
Title: Chairman of the Board
------------------------
ATTEST:
/s/ D.H. Craigmile
- ------------------------------
Secretary
[SEAL]
Page 7
<PAGE> 38
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and L.E. Akin
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement
change in the CBI Pension Plan effective September 8, 1987, and CBI desires to
make such change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement
commencing in the sixth line from the bottom of page 10 and ending in
the third line of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which
the Executive's age is less than age 65 or the Executive's
credited service is less than 40 years, whichever produces the
lesser reduction, pursuant to the first sentence of Section 5.2.3
of the Pension Plan (as in effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum
Page 1
<PAGE> 39
for each year by which the Executive's age is less than age 62 or
the Executive's credited service is less than 35 years, whichever
produces the lesser reduction, pursuant to the first sentence of
SectIon 5. 2.3 of the Pension Plan (as in effect on the date
hereof)."
CBI INDUSTRIES, INC.
By: /s/ W.A. Pogue /s/ Lewis E. Akin
--------------------------- -------------------------------
Title: Chairman of the Board Executive
-----------------------
ATTEST:
/s/ D.H. Craigmile
- ------------------------------
Secretary
Page 2
<PAGE> 40
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT
between CBI Industries, Inc., a Delaware corporation ("CBI") and L.E. Akin
("Executive") dated the 12th day of September, 1986, as previously amended (the
"Agreement").
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to eliminate the requirement for CBI to provide an irrevocable clean letter of
credit to secure for the benefit of the Executive the total value of performance
of CBI's obligations under the Agreement;
NOW, THEREFORE, in consideration of $10 and the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby AGREED by and between CBI and the Executive
that the Agreement shall be modified as follows:
1. Subsection 10(b) is deleted.
2. Exhibit II is deleted.
CBI INDUSTRIES, INC.
By: /s/ John E. Jones Executive: /s/ Lewis E. Akin
---------------------------- ------------------------
Title: Chairman of the Board
Title: ---------------------------
ATTEST:
/s/ CCT
- -------------------------------
Secretary
[SEAL]
<PAGE> 41
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 27th day of August,
1993 to the Agreement between CBI Industries, Inc., a Delaware corporation
("CBI") and L.E. Akin ("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement
to include a requirement that CBI provide an irrevocable clean letter of credit
to secure for the benefit of the Executive the payment of up to $100,000 for
attorneys fees incurred in enforcing the Agreement following a Change of
Control;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum that the Agreement shall be modified as follows:
1. Section 10 of the Agreement is amended by adding a new subsection
(b) to read as follows:
(b) CBI shall at its sole cost and expense obtain a commitment for
an irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States or
any State (the "Bank"), to secure for the benefit of Executive the payment
of up to $100,000 for attorneys fees incurred in enforcing the Agreement
pursuant to Section 10(a) upon presentation by Executive to the Bank of a
statement or statements prepared by Executive's counsel that such payments
are due and owing and that CBI has not performed its obligations to make
such payments. CBI shall at its sole cost and expense obtain the issuance of
the Letter of Credit pursuant to such commitment not later than the
Effective Date and shall pay all amounts and take all action necessary to
maintain such Letter of Credit during the Employment Period and for two
years thereafter and if, notwithstanding CBI's complete discharge of such
obligations, such Letter of Credit shall be terminated or not renewed, CBI
shall obtain a replacement irrevocable clean letter of credit on
substantially the same terms and conditions as contained in the Letter of
Credit drawn upon a commercial bank having total assets equivalent to at
least $6 billion and either incorporated under the laws of, or having an
office in, the United States of any State, which
<PAGE> 42
assures the Executive the benefits of this Agreement. Nothing in this
subsection (b) shall limit in any way CBI's obligations under subsection 10
(a).
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Lewis E. Akin
--------------------------- -----------------------------
Title: Title:
------------------------ --------------------------
<PAGE> 43
EXHIBIT II
ROYAL BANK OF CANADA, NEW YORK BRANCH
IRREVOCABLE STANDBY LETTER OF CREDIT
______________________ , 19__
Letter of Credit No. ______________
(Beneficiary's Name and Address)
Dear ___________________:
At the request and for the account of CBI Industries, Inc., 800 Jorie
Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby
Letter of Credit No. _______________ (this "Letter of Credit") in your favor in
an aggregate amount of One Hundred Thousand Dollars ($100,000), representing
support of the "Agreement") dated _______________, by and between yourself and
CBI Industries, Inc., as it may be amended from time to time, available by your
draft drawn at sight, presented to this Bank, bearing this Letter of Credit
Number and accompanied by this Letter of Credit and both:
1. Your signed certificate dated the date of such draft indicating the
name, address and signature of your designated counsel, with both your
signature and your designated counsel's signature notarized; and
2. Your designated counsel's signed and notarized statement dated the
date of such draft stating: "Payments are due and payable to (Beneficiary)
under the Agreement dated _______________ between (Beneficiary) and CBI
Industries, Inc., as such Agreement may have been amended from time to time,
and CBI Industries, Inc. has not performed its obligation to make such
payments. (Beneficiary) through the undersigned counsel is enforcing his/her
rights under such Agreement."
Only one draft, in the amount of $100,000 may be presented under this Letter of
Credit.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be honored upon presentation at Royal Bank
of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300
Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration
Manager, facsimile number (___) ___-____ Presentation is to be
<PAGE> 44
made by facsimile transmission of all required documents to this Bank, followed
by overnight courier delivery of all originals as provided in this paragraph.
Any Draft hereunder must be presented on or before _________________.
This Letter of Credit shall automatically expire and be null and void at the
close of business on _________________ or, in the event the expiry date hereof
is extended by us in writing, at the close of business upon such extended expiry
date.
This Letter of Credit sets forth in full the terms of our undertaking,
and this undertaking shall not in any way be modified, amended, amplified or
limited by reference to any document, instrument or agreement referred to herein
or in which this Letter of Credit is referred to or to which this Letter of
Credit relates, except for the certificates, statements and the sight drafts
referred to therein. This Letter of Credit is not transferrable.
This irrevocable Letter of Credit is subject to The
Uniform Customs and Practices for Documentary Credits (1983
Revision), ICC Publication 400.
ROYAL BANK OF CANADA,
NEW YORK BRANCH
By_______________________________
Its____________________________
By______________________________
Its____________________________
<PAGE> 45
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement
between CBI Industries, Inc., a Delaware corporation ("CBI") and Lewis E. Akin
("Executive") of September 12, 1986 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a
resolution amending Section 2 of the Agreement, and CBI and the Executive
mutually desire to modify the Agreement by incorporating said amendment into the
Agreement.
NOW THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. Section 2 of the Agreement is hereby amended to read as follows:
Change in Control. The Term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become such;
or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person" and
"Continuing Directors" shall have the same meaning as ascribed to
such terms in that certain Amendment and Restatement dated as of
August 8, 1989, of Rights Agreement dated as of March 4, 1986,
<PAGE> 46
between CBI and First Chicago Trust Company of New York, as Rights
Agent, as has been or may be amended from time to time.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ Lewis E. Akin
------------------------ --------------------------
Title:
---------------------
ATTEST:
/s/ CCT
- ---------------------------
Secretary
[Seal]
<PAGE> 1
EXHIBIT 6
AGREEMENT
THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation
("CBI"), and Calvin E. Willoughby, Jr. ("Executive"), dated this 3rd day of
October, 1989.
WITNESSETH THAT
WHEREAS, CBI wishes to attract and retain well-qualified executives and
both CBI and the Executive desire continuity of management in the event of any
Change in Control of CBI;
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Effective Date. The "Effective Date" of this Agreement shall be the
date on which a Change in Control of CBI (as defined in Section 2) occurs.
2. Change in Control. The term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below), has become such; or
(b) Continuing Directors (as defined below) cease to comprise a majority
of the board of directors of CBI.
<PAGE> 2
For purposes of this Agreement, the terms "Acquiring Person" and "Continuing
Directors" shall have the respective meanings ascribed to such terms in that
certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent, the relevant portions of which for
convenience of reference are reproduced as Exhibit I to this Agreement.
3. Employment. CBI hereby agrees that if the Executive continues as an
employee of CBI from the date of execution hereof until the Effective Date, CBI
shall continue the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the third anniversary of
such date or the 65th birthday of the Executive (the "Employment Period"), to
exercise such authority and perform such executive duties as are requested of
him by CBI, which authority and duties shall be commensurate with the authority
being exercised and duties being performed by the Executive immediately prior to
the Effective Date. The Executive shall perform such requested services at the
location where the Executive was employed immediately prior to the Effective
Date, except for required travel on CBI's business to an extent substantially
consistent with the Executive's business travel obligations prior to the
Effective Date. The Executive agrees that while an employee during the
Employment Period he shall, to the extent required, devote substantially
-2-
<PAGE> 3
all of his business time to his executive duties as described herein and
perform such duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in equal biweekly
installments) which is not less than his rate of annual salary in effect
immediately prior to the Effective Date, increased on each January 1 within the
remainder of the Employment Period by at least the greater of (i) the average
annual percentage salary increase for the Executive during the period of three
full calendar years immediately preceding the Effective Date, or (ii) the
percentage increase in the Implicit Price Deflator for Gross National Product
for the calendar year immediately preceding such January 1, as published by the
United States Department of Commerce in its Survey of Current Business in
December of each year, over such Implicit Price Deflator for the calendar year
next preceding such year.
(b) He shall be awarded and receive bonus, restricted stock award,
stock option, and other incentive compensation for each calendar year (or other
applicable bonus or incentive compensation
-3-
<PAGE> 4
period) any part of which is included in the Employment Period, which in the
aggregate shall not in value be a lesser percentage of his annual salary, as
determined in subsection (a) above, for such calendar year (or period), than
the aggregate bonus, restricted stock award, stock option, and other incentive
compensation during the period of three full calendar years immediately
preceding the Effective Date was of the Executive's aggregate base salary for
such three year period.
(c) He shall be entitled to receive all employee benefits to the
extent of the greater of the employee benefits provided by CBI to executives
with comparable duties or the employee benefits to which he was entitled
immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the services
for CBI specified in Section 3, whether as a result of total disability or as a
result of a physical or mental disability that is not total or is not permanent
and therefore is not a total disability, Executive shall continue to receive
base salary at the rate in effect at the commencement of any such period,
together with all other compensation and benefits that are payable under
this Agreement.
- 4 -
<PAGE> 5
(e) He shall be furnished at CBI's expense with an automobile, office,
reasonable secretarial help, club memberships, reimbursement for reasonable
entertainment expenses, and such other supplies, equipment, facilities,
services and emoluments appertinent to his position to the extent of the
greater of such emoluments provided by CBI to executives with comparable duties
or the emoluments to which he was entitled immediately prior to the Effective
Date.
(f) He shall be covered by directors and officers liability and
indemnity insurance or equivalent protection arranged and funded by CBI, and by
corporate indemnity protection, to the extent of the greatest level of
protection afforded to such Executive under any and all policies of directors
and officers liability and indemnity insurance, by-law provisions or any other
arrangements or agreements, at any time within the period of three full
calendar years immediately preceding the Effective Date.
5. Termination. The term "Termination" shall mean the occurrence
during the Employment Period of:
(a) termination by CBI of the employment of the Executive for any
reason other than (i) death, (ii)
- 5 -
<PAGE> 6
physical or mental incapacity which would entitle Executive to permanent
disability benefits under CBI's appropriate plans, or (iii) a willful and
material breach of this Agreement by the Executive which causes a direct and
substantial injury to CBI or to its business, which is not cured by Executive
within 30 days after receiving written notice of such breach and reasonable
directions for cure from CBI; or
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following (i) a significant change in the
nature or scope of the Executive's authorities or duties from those described in
Section 3, a reduction in total compensation from that provided in Section 4, or
the breach by CBI of any other provision of this Agreement, which change,
reduction or breach is not restored or cured by CBI within 30 days after
receiving written notice of such change, reduction or breach and reasonable
directions for restoration or cure from the Executive; or (ii) a reasonable
determination by the Executive that, as a result of the Change in Control and a
change in circumstances thereafter significantly affecting his position, he is
unable to exercise the authorities, powers, functions or duties attached to his
position as contemplated by Section 3.
- 6 -
<PAGE> 7
A Termination as contemplated by this Section 5, whether or not a
breach of this Agreement by CBI, shall entitle the Executive to Termination
benefits as provided by this Agreement. Nothing in this Agreement shall prevent
the Executive from voluntarily resigning from his Employment upon 90 days
written notice to CBI under circumstances which do not constitute Termination as
defined in this Section 5, and no such resignation shall be deemed a breach of
this Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive
during the Period of Employment, CBI shall pay to the Executive a lump sum
amount equal (without discount to present value) to the sum of the amounts
determined in accordance with subsections (a), (b), (c) and (d) below, and
provide the additional benefits described in subsections (w), (x), (y) and (z)
below:
(a) An amount equal to the aggregate salary which would have
been paid to the Executive during the remainder of the Employment
Period if he had received the base salary specified by Section 4(a)
above, increased by assuming the salary increase on each January 1
during the remainder of the Employment Period to be the greatest of
the average annual percentage salary increase or the percentage
increase in the Implicit Price Deflator, whichever is
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<PAGE> 8
applicable, as of any January 1 within three calendar years including or
preceding the Termination date.
(b) Bonus and incentive compensation for any calendar year (or other
applicable bonus or incentive compensation period) ending prior to the
Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive compensation
which would have been paid to the Executive during each calendar year (or other
applicable bonus or incentive compensation period) any part of which is
included in the remainder of the Employment Period if he had received bonus and
incentive compensation for any such year (or period) in the minimum amount
specified by Section 4(b) based on his increased salary determined under
subsection (a) above; provided, however, that in the event any bonus year (or
period) extends beyond the end of the Employment Period, bonus or other
incentive compensation for such year (or period) shall be pro-rated in
proportion to the number of days within and without the Employment Period.
(d) In the event any shares of CBI common stock (or other securities
into which such shares may have
- 8 -
<PAGE> 9
been converted) previously awarded to Executive under any restricted stock
award Plans of CBI or separate agreements between Executive and CBI are
forfeited by reason of such Termination, an amount in cash equal to the
fair market value of such forfeited common stock (or other securities) as
of the date of Termination. The rights afforded to Executive under this
subsection (d) are without prejudice to any other rights Executive has to
shares of CBI common stock (or other securities) under such plans or
agreements or by reason of the action of the CBI Board of Directors
heretofore taken in causing restrictions on such shares to be removed under
certain circumstances including Termination of the Executive.
CBI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension benefit
plan, benefit restoration plan, profit sharing plan, or employee stock
ownership plan (whether or not funded or qualified under the Internal
Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the
"Benefit Enhancement") between such benefits and the benefits (the
"Enhanced Benefits") that would have been provided under such Retirement
Plans if Executive had remained in the employ of CBI throughout the
Employment Period at the
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<PAGE> 10
salary determined under subsection (a) above accruing additional age and
service credits under such Retirement Plans accordingly. If after giving
effect to such additional age and service credit Executive shall not have
the necessary age or credited service at the end of the Employment Period
to qualify under the CBI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w) shall
nevertheless include an early retirement pension under the Pension Plan
beginning upon Executive attaining age 55 or upon the date Executive would
have attained 30 years of credited service had Executive remained
continuously employed by CBI but for Termination (whichever occurs first)
(the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement
Pension shall be payable to the Executive or to the spouse of the Executive
(if applicable) commencing at the time Executive attains (or would have
attained) age 55 or would have otherwise attained 30 years of credited
service as provided aforesaid (whichever occurs first). The Enhanced Early
Retirement Pension shall only be subject to reduction at the rate of four
(4) percentum for each year by which the Executive's age is less than age
65 or the Executive's credited service is less than 40 years, whichever
produces the lesser
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<PAGE> 11
reduction, pursuant to the first sentence of Section 5.2.3 of the Pension
Plan (as in effect on the date hereof). If Executive shall die after the
end of the Employment Period but before the date the Enhanced Early
Retirement Pension is payable, the spouse of Executive shall be entitled to
an enhanced survivor's pension under the Pension Plan as if Executive had
died as an employee of CBI, giving effect to service through the date of
Executive's death and Executive's earnings through the end of the
Employment Period. Such Benefit Enhancement will be paid beginning on the
date the Enhanced Benefits would have commenced and thereafter concurrently
with the benefits actually provided under such Retirement Plans; except
that if the Executive receives a distribution from any profit sharing or
employee stock ownership plan before the Benefit Enhancement required by
this subsection in respect of such Retirement Plan become determinable, the
Benefit Enhancement in respect of such plan shall be paid as soon
thereafter as such benefits become determinable. Nothing in this subsection
(w) shall prevent the actual commencement of benefits under any Retirement
Plan, and the Benefit Enhancements required by this subsection (w), before
the end of the Employment Period to the extent required or permitted under
the terms of the applicable Retirement Plan,
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<PAGE> 12
giving effect to the additional age and service credit required by this
subsection (w).
(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or medical benefit
insurance, plans, or arrangements, supplemental survivors' benefit plans,
or life insurance arrangements or programs, to the same extent to which he
would have been entitled under all employee benefit plans, programs,
arrangements or practices maintained by CBI if he had remained in the
employ of CBI through the Employment Period at the salary determined under
subsection (a) above.
(y) Continuation of disability income benefits pursuant to Section
4(d) for so long as any disability may continue and continuation of
directors and officers liability and indemnity insurance and corporate
indemnity protection pursuant to Section 4(f) for so long as any liability
may arise; in either case without regard to the Termination of the
Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses actually
incurred or reasonably expected to be incurred by the Executive in seeking
other
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<PAGE> 13
employment, including without limitation all travel and relocation expenses
and all fees charged by any executive recruitment firm or firms or
employment consulting or counseling firm or firms selected by the Executive
in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of CBI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the correctness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in excess
of the prime rate as publicly announced by the First National Bank of Chicago or
its successor from time to time as in effect on the first day of each such
month.
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
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<PAGE> 14
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute "excess parachute
payments" within the meaning the Code. Any payments in excess of the limitation
of this Section 7 or otherwise determined to be "excess parachute payments" made
to Executive hereunder are deemed to be overpayments which shall constitute an
amount owing from the Executive receiving them to CBI with interest from the
date of receipt by the Executive to the date of repayment (or offset) at the
applicable federal rate under Section 1274(d) of the Code, compounded
semi-annually, which shall be payable to CBI upon demand; provided, however,
that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the
Executive and CBI such repayment does not allow such overpayment to be excluded
for federal income and excise tax purposes from the Executive's income for the
year of receipt or afford the
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<PAGE> 15
Executive a compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the Executive
agrees to continue all non-competition and confidentiality provisions, as
specified in any other agreement in effect on the Effective Date between the
Executive and CBI relating to confidential information, during (and to the
extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise; provided, however, that if during the Employment Period Executive
accepts other employment in a position substantially equivalent to or better
than the position held by him with CBI, current cash compensation actually
received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses:
(a) It is the intent of CBI that no Executive be required to incur the
expenses associated with the enforcement of his rights under this Agreement
by
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<PAGE> 16
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if it should appear to the Executive that
CBI has failed to comply with any of its obligations under this Agreement,
or in the event that CBI or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, CBI irrevocably authorizes Executive from
time to time to retain counsel of his choice, at the expense of CBI as
hereafter provided, to represent Executive in connection with the
initiation or defense of any litigation, arbitration or other legal action,
whether by or against CBI or any director, officer, stockholder or other
person affiliated with CBI, in any jurisdiction. CBI shall advance to the
Executive within 30 days after each written request therefor any and all
attorneys' and related fees and expenses actually incurred or reasonably
expected to be incurred by the Executive in any such proceeding or
otherwise as a result of CBI's failure to perform this Agreement or any
provision hereof or as a result of CBI or any person contesting the
validity or
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<PAGE> 17
enforceability of this Agreement or any provision hereof; provided,
however, that to the extent the Executive does not prevail in any such
litigation, arbitration, or other legal action, the Executive shall repay
to CBI the amount (without interest) of such attorney's fees and related
fees and expenses previously advanced.
(b) CBI shall at its sole cost and expense obtain a commitment for an
irrevocable clean letter of credit, substantially in the form of that
attached hereto as Exhibit II and incorporated herein by reference (the
"Letter of Credit"), to be issued by a commercial bank selected by CBI
having total assets equivalent to at least $6 billion and either
incorporated under the laws of, or having an office in, the United States
or any State (the "Bank"), to secure for the benefit of Executive the total
value of performance of CBI's obligations under this Agreement by providing
that the total amount of all payments due to be paid by CBI to Executive
under this Agreement shall be paid on a regular, periodic basis upon
presentation by Executive to the Bank of a statement or statements prepared
by Executive's counsel that such payments are due and owing, and that CBI
has not performed its obligation to make such payments. CBI
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<PAGE> 18
shall at its sole cost and expense obtain the issuance of the Letter of
Credit pursuant to such committment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain such Letter
of Credit during the Employment Period and for two years thereafter and if,
notwithstanding CBI's complete discharge of such obligations, such Letter
of Credit shall be terminated or not renewed, CBI shall obtain a
replacement irrevocable clean letter of credit on substantially the same
terms and conditions as contained in the Letter of Credit drawn upon a
commercial bank having total assets equivalent to at least $6 billion and
either incorporated under the laws of, or having an office in, the United
States or any State, which assures the Executive the benefits of this
Agreement.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with CBI or, in the case of CBI, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a
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<PAGE> 19
lien upon any amounts provided under this Agreement; and no benefits payable
hereunder shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law.
13. Governing Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person and,
so long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of CBI and any
successor of CBI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this
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<PAGE> 20
Agreement shall be unaffected thereby and shall remain in full force and effect.
CBI INDUSTRIES, INC.
/s/ C.E. Willoughby, Jr.
-------------------------------
Executive
By: /s/ John E. Jones Title: Senior Vice President
---------------------------
Title: Chairman of the Board
ATTEST:
/s/ Donald H. Craigmile
- ------------------------------
Secretary
(SEAL)
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<PAGE> 21
EXHIBIT I
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity organized,
appointed or established by the Company for or Pursuant to the terms of any such
plan.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act
<PAGE> 22
of 1934, as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the
<PAGE> 23
"Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (ii) the right to vote pursuant to
any agreement, arrangement to understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this clause (ii) if the
agreement, arrangement or understanding to vote such security: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with
<PAGE> 24
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in clause (ii) of paragraph (b) of this subsection 1.4)
or disposing of any voting securities of the Company.
1.7 "Common Stock" shall mean the common stock, $2.50 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
<PAGE> 25
1.8 "Continuing Director" shall mean any member of the Board, while
such person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of the
Board prior to the date of this Agreement. A "Continuing Director" shall also
mean any person who subsequently becomes a member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an Affiliate
or Associate of an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if (a) such person's nomination for
election or election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a nominee
in a proxy statement of the Company distributed when a majority of the Board
consists of Continuing Directors.
1.9 "Person" shall mean any individual, firm, corporation,
partnership or other entity.
<PAGE> 26
EXHIBIT II
From: __________________________
Date: __________________________
To: ____________________________
By order of:
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521
We hereby issue our irrevocable Letter of Credit #__________ effective
__________________, for a principal amount of U.S. $____________ only, expiring
__________________, , in Chicago, Illinois representing support for an
"Agreement" dated ______________ between CBI Industries, Inc. and the
beneficiary of this Letter of Credit.
Whole or partial drawings of the above Letter of Credit are available against
presentation of your draft(s) drawn at sight on us mentioning thereon our Letter
of Credit number and accompanied by (1) beneficiary's signed and dated statement
designating his counsel and (2) a signed and dated statement prepared by his
counsel reading to the effect that payments are due and owing under the
"Agreement" referred to above and that CBI Industries, Inc. has not performed
its obligation to make such payments.
We hereby engage that drafts drawn under and in compliance with the terms and
conditions of this Letter of Credit will be duly honored upon presentation if
presented to us on or before _________________.
This credit is subject to the "Uniform Customs and Practices for Documentary
Credits" (1983 revision), International Chamber of Commerce publication 400.
SIGNATURE
<PAGE> 27
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 3rd day of October, 1989, to the AGREEMENT between
CBI Industries, Inc., a Delaware Corporation ("CBI") and Calvin E. Willoughby,
Jr. ("Executive") dated the 3rd day of October, 1989 (the "Agreement"):
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement in
light of the enactment of the Tax Reform Act of 1986;
NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by
and between CBI and the Executive that the Agreement shall be modified as
follows:
1. Section 3 of the Agreement is amended by adding the following new
sentence immediately after the first sentence thereof:
CBI shall maintain the position of Executive such that Executive is able to
exercise the authorities, powers, functions and duties attached thereto as
contemplated by this Section 3.
2. Subsection (b) of Section 5 of the Agreement is amended to read as
follows:
(b) the resignation of the Executive from his employment upon 30 days
written notice to CBI at any time following a significant change in the
nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation
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<PAGE> 28
from that provided in Section 4, or the breach by CBI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by CBI within 30 days after receiving written notice of
such change, reduction or breach, reasonable directions for restoration or
cure, and an offer to work from the Executive.
3. Section 5 of the Agreement is amended by deleting the words ", whether
or not a breach of this Agreement by CBI," from the sentence following
subsection (b).
4. Section 6 of the Agreement is amended (i) by deleting from the
introductory material preceding subsection (a) the words "equal (without
discount to present value) to the sum of" and substituting in lieu thereof the
words "equal to the present value (discounted at the greatest rate of interest
then payable by the First National Bank of Chicago on any federally insured
account into which Executive could deposit such lump sum amount and made
withdrawals therefrom without penalty at least as rapidly as compensation under
Section 4 would have been payable) of"; (ii) deleting from subsections (a) and
(c) the words "An amount equal to the aggregate" and substituting in lieu
thereof the word "The"; and (iii) deleting from the sentence following
subsection (z) the word "reduction" and substituting in lieu thereof the word
"enhancement".
5. The first sentence of subsection (d) of Section 6 is amended to read
as follows:
In the event any shares of CBI common stock (or other securities into which
such shares may have been converted) previously awarded to Executive under
any restricted stock award plans of CBI or separate agreements between
Executive and CBI are forfeited by reason of such Termination, or in the
event any stock option previously granted to Executive under any stock
option plan of CBI terminates or ceases to be exercisable by
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<PAGE> 29
reason of such Termination, an amount in cash equal to the fair market
value of such forfeited common stock (or other securities) as of the date
of Termination plus the excess of the fair market value as of the date of
Termination of stock subject to any such terminated option over the
exercise price of such terminated option.
6. Section 7 of the Agreement is amended to read as follows:
7. Overall Indemnity. The parties intend that the payments in the nature
of compensation to be made by CBI to Executive under this Agreement shall
be reasonable compensation for personal services to be rendered on or after
the date of the Change in Control, including payments to an individual as
damages for breach of contract, within the meaning of Section 280G(b)(4)(A)
of the Internal Revenue Code of 1986, as amended (the "Code"). In the event
that notwithstanding the previous sentence any excise tax under Section
4999 of the Code is imposed on Executive as a direct or indirect result of
payments made by CBI or its affiliates, whether or not such payments are
made pursuant to this Agreement, CBI shall pay Executive an amount or, from
time to time, amounts, equal to (i) the sum of all excise taxes imposed on
Executive in respect of such payments, plus (ii) the aggregate amount of
any interest, penalties, fines or additions to any tax which are imposed in
connection with the imposition of such excise tax, plus (iii) all income
and excise taxes imposed on Executive under the laws of any United States
Federal, state or local government or taxing authority by reason of the
payments required under clause (i) and clause (ii) and this clause (iii).
CBI's obligation to pay such amounts to Executive pursuant to this Section
7 shall continue for the period specified in Section 6501 of the Code
during
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<PAGE> 30
which a tax may be assessed under Section 4999 of the Code (including any
extensions of such period provided under Section 6503(a)(1) of the Code or
requested by the Internal Revenue Service in connection with an audit of
one or more of Executive's tax returns).
If the Internal Revenue Service makes a claim against Executive which,
if successful, would require CBI to make a payment under this Section 7,
Executive agrees to contest the claim on request of CBI subject to the
following conditions:
(a) Executive shall notify CBI of any such claim within 10 days of
becoming aware thereof. In the event CBI desires the claim to be contested,
it shall promptly (but in no event more than 30 days after the notice from
Executive or such shorter time as the Internal Revenue Service may specify
for responding to such claim) request Executive to contest the claim.
Executive shall not make any payment of any tax which is the subject of the
claim before Executive has given the notice or during the 30-day period
thereafter unless Executive receives written instructions from CBI to make
such payment together with an advance of funds sufficient to make the
requested payment plus any amounts determined pursuant to clause (ii) and
clause (iii) above as if such advance were an amount described in clause
(i) above, in which case Executive will act promptly in accordance with
such instructions.
(b) If CBI so requests, Executive will contest the claim by, at the
direction of CBI, either paying the tax claimed and suing for a refund in
the appropriate court or contesting the claim in the United States Tax
Court; provided, however, that any request by CBI for
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<PAGE> 31
Executive to pay the tax shall be accompanied by an advance from CBI to
Executive of funds sufficient to make the requested payment plus any
amounts determined pursuant to clause (ii) and clause (iii) above as if
such advance were an amount described in clause (i) above. If directed by
CBI in writing Executive will take all action necessary to compromise or
settle the claim, but in no event will Executive compromise or settle the
claim or cease to contest the claim without the written consent of CBI;
provided, however, that Executive may take any such action if Executive
waives in writing his right to a payment under this Section 7 for any
amounts payable in connection with such claim. Executive agrees to
cooperate in good faith with CBI in contesting the claim and to comply with
any reasonable request from CBI concerning the contest of the claim,
including the pursuit of administrative remedies, the appropriate forum for
any judicial proceeding, and the legal basis for contesting the claim. Upon
request of CBI, Executive shall take appropriate appeals of any judgment or
decision that would require CBI to make a payment under this Section 7.
Provided that Executive is in compliance with the provisions of this
section, CBI shall be liable for and indemnify Executive against any loss
in connection with all costs and expenses, including attorneys' fees, which
may be incurred as a result of contesting the claim, and shall provide to
Executive within 30 days after each written request therefor by the
Executive cash advances or reimbursement for all such costs and expenses
actually incurred or reasonably expected to be incurred by the Executive as
a result of contesting the claim.
(c) If CBI requests that Executive contest a claim and otherwise
complies with its obligations under
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<PAGE> 32
this Section 7, it shall, except as otherwise stipulated in this Section 7,
have no obligation to pay any amounts under Section 7 in respect of the
claim until final determination occurs regarding Executive's liability
under the claim. CBI's obligation to pay amounts under this Section 7 will
be reduced by any refund obtained by Executive and interest paid thereon.
7. Section 9 of the Agreement is amended to read as follows:
If during the Employment Period Executive accepts other employment in
a position substantially equivalent to or better than the position held by
him with CBI, compensation actually received by the Executive during the
Employment Period from such other employment shall be applied to reduce
Termination payments otherwise due under subsections (a) and (c) of Section
6 of this Agreement; and coverage of the Executive under employee benefit
plans described in subsection (x) of Section 6 of this Agreement shall be
reduced or eliminated to the extent Executive is covered under similar
plans incident to such other employment. In the event of any reduction
under this Section 9 of Termination payments already paid by CBI to
Executive, Executive shall upon 30 days written request from CBI repay to
CBI the amount by which such Termination payment is reduced, without
interest, and further reduced by any taxes attributable to such Termination
payments to the extent Executive cannot recover such taxes through
deductions of equivalent or greater value. Nothing in this Section 9 shall
be construed to require Executive in mitigation of damages to accept
employment in a position not substantially equivalent to or better than
position held by him with CBI or to accept employment more than reasonable
daily commuting
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<PAGE> 33
distance from the principal residence of the Executive as of the date of
Termination.
CBI INDUSTRIES, INC. /s/ C.E. Willoughby, Jr.
------------------------------------
Executive
By:/s/ John E. Jones Title: Senior Vice President
-------------------------------
Title: Chairman of the Board
ATTEST:
/s/ Donald H. Craigmile
- ----------------------------------
Secretary
(SEAL)
Page 7
<PAGE> 34
C.O. ZIEMER
14
<PAGE> 35
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 1st day of June, 1995 to
the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and
Calvin E. Willoughby ("Executive") of October 3, 1989 (the "Agreement").
WITNESSETH THAT
WHEREAS, Executive has been offered an executive position in the employment
of Liquid Carbonic Industries Corporation ("LCC"), a wholly owned subsidiary of
CBI, subject to his resignation as an executive of Liquid Carbonic, Inc.
("LCI"), a wholly owned subsidiary of CBI, and in order to induce Executive to
accept such position, CBI has assured Executive that he may at his election
retain the benefits of the Agreement in the event of a change of control of CBI
notwithstanding that Executive may at such time be an employee of LCC;
WHEREAS, because of the similarity of the obligations undertaken by CBI
under the Agreement and the obligations of LCI under an Addendum to the
Agreement dated as of August 18, 1993, and the obligations to be undertaken by
LCC under this Addendum, and for the general convenience of the parties, CBI and
the Executive mutually agree to permit LCC, a Delaware corporation, to become a
party to this Addendum, to relieve LCI of its obligations under the Addendum
dated as of August 18, 1993, and for LCC to assume the obligations hereinafter
undertaken; and
WHEREAS, LCC also wishes to attract and retain well qualified executives
and both LCC and the Executive desire continuity of management in the event of
any Change of Ownership of LCC, and, accordingly LCC is willing to undertake
the obligations hereinafter stated.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. LCI is relieved of all its obligations under the Addendum dated
as of August 18, 1993.
2. For the purposes of this Addendum the term "Change in Ownership"
shall mean the occurrence of an event pursuant to which the ultimate right
to elect directors of LCC is not exercisable by CBI or another entity
which directly or indirectly acquires stock of LCC in a leveraged buy-out
in which the senior management of CBI participates.
3. In the event of a Change in Ownership of LCC, LCC and Executive
agree to be bound by the terms of the Agreement as if the Agreement were
an agreement between LCC and Executive, subject to the following changes:
A. "CBI Industries, Inc." and "CBI" shall be replaced by
Liquid Carbonic Industries Corporation" and "LCC," respectively,
wherever those terms appear in the Agreement, except in subsection
6(d).
B. "Change in Control of CBI" and "Change in Control" shall be
replaced by "Change in Ownership of LCC" and "Change in Ownership,"
respectively, wherever those terms appear in the Agreement.
C. Section 2 of the Agreement is deleted and replaced by a new
Section 2 for purposes of the obligations undertaken hereunder, which
contains the definition of "Change in Ownership" as set forth in
Section 2 of this Addendum.
<PAGE> 36
D. In Section 3 "date of execution hereof" shall mean date of
execution of this Addendum.
E. In subsection 4(b) the words "restricted stock award, stock
option" are deleted from the second and ninth and tenth lines,
respectively.
F. CBI's obligation under this Section 3 of this Addendum shall
be to provide continuing directors and officers liability and
indemnity insurance and corporate indemnity protection under
subsection 4(f) and 6(y) covering the time Executive was an officer
or director of CBI.
G. In subsection 6(w):
(i) the second and third lines are deleted and replaced
with the following words: "any pension benefit plan or
benefit restoration plan."
(ii) the words ";except that if ... determinable" are
deleted from the 14th through 21st lines on page 11
of the Agreement.
H. Subsection 10(b) is deleted.
I. Exhibits I and II are deleted.
4. It is understood and agreed by all parties to this Addendum that
Executive shall only be entitled to receive the benefits from either the
Agreement (between CBI and Executive only) or the Agreement as modified by
this Addendum (among and between LCC, CBI and the Executive) and not from
both. Upon the first to occur of either a Change in Control of CBI or a
Change in Ownership of LCC, Executive shall be required within thirty (30)
days to give to both CBI and LCC notice in writing as to which contractual
arrangement provided for herein Executive desires to apply to his
employment with LCC, after which notice the other contractual arrangement
shall be null and void. In the event Executive elects to receive the
benefits of the Agreement between CBI and Executive only without
application of Section 3 of this Addendum, LCC shall be responsible for
continuing Executive's employment and compensation within the meaning of
Sections 3 and 4 of the Agreement commencing on the date of the event
giving rise to Executive's notice hereunder, and CBI shall be responsible
for termination payments under Section 6 of the Agreement in the event the
employment of Executive with LCC is terminated within the meaning of
Section 5 of the Agreement.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ C.E. Willoughby
-------------------------- --------------------------
Title: Chairman
LIQUID CARBONIC, INC. LIQUID CARBONIC INDUSTRIES CORPORATION
By: /s/ John E. Jones By: /s/ Otavio Cinto
-------------------------- --------------------------
Title: ______________________ Title: Senior Vice President
<PAGE> 37
- -------------------------------------------------------------------------------
May 13, 1993
PERSONAL & CONFIDENTIAL
TO: C.E. WILLOUGHBY
LIQUID CARBONIC - CANADA
Relative to your Executive Termination Agreement, the Board of Directors of CBI
Industries has determined that it is economically not feasible to provide an
irrevocable letter of credit issued by a commercial bank as outlined in
Subsection 10(b) and Exhibit II of the Agreement. Accordingly, we have enclosed
an Addendum to Agreement effective June 1, 1993 deleting Subsection 10(b) and
Exhibit II along with a $10 check in consideration of this modification. (For
your easy reference we have also enclosed copies of your original Agreement with
subsequent addendum.)
Please review this Agreement modification and should you concur with it, sign
the Addendum and return it to me.
Sincerely,
/s/ John E. Jones
John E. Jones
ls
encs.
- -------------------------------------------------------------------------------
INTEROFFICE CORRESPONDENCE
CBI Industries, Inc.
<PAGE> 38
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between
CBI Industries, Inc., a Delaware corporation ("CBI") and Calvin Willoughby, Jr.
("Executive") of October 3, 1989 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a
resolution amending Section 2 of the Agreement, and CBI and the Executive
mutually desire to modify the Agreement by incorporating said amendment into the
Agreement.
NOW THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. Section 2 of the Agreement is hereby amended to read as follows:
Change in Control. The Term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become such; or
(b) "Continuing Directors" (as defined below) cease to comprise
a majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person" and
"Continuing Directors" shall have the same meaning as ascribed to such
terms in that certain Amendment and Restatement dated as of August 8,
1989, of Rights Agreement dated as of March 4, 1986,
<PAGE> 39
between CBI and First Chicago Trust Company of New York, as Rights
Agent, as has been or may be amended from time to time.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ C.E. Willoughby
----------------------------- -------------------------------
Title:__________________________
ATTEST:
/s/ Charlotte C. Toerber
- --------------------------------
Secretary
[Seal]
<PAGE> 40
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 27th day of August, 1993
to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI")
and C.E. Willoughby ("Executive") of October 3, 1989 (the "Agreement").
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify the Agreement to
include a requirement that CBI provide an irrevocable clean letter of credit to
secure for the benefit of the Executive the payment of up to $100,000 for
attorneys fees incurred in enforcing the Agreement following a Change of
Control;
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum that the Agreement shall be modified as follows:
1. Section 10 of the Agreement is amended by adding a new subsection
(b) to read as follows:
(b) CBI shall at its sole cost and expense obtain a commitment
for an irrevocable clean letter of credit, substantially in the form
of that attached hereto as Exhibit II and incorporated herein by
reference (the "Letter of Credit"), to be issued by a commercial bank
selected by CBI having total assets equivalent to at least $6 billion
and either incorporated under the laws of, or having an office in, the
United States or any State (the "Bank"), to secure for the benefit of
Executive the payment of up to $100,000 for attorneys fees incurred in
enforcing the Agreement pursuant to Section 10(a) upon presentation by
Executive to the Bank of a statement or statements prepared by
Executive's counsel that such payments are due and owing and that CBI
has not performed its obligations to make such payments. CBI shall at
its sole cost and expense obtain the issuance of the Letter of Credit
pursuant to such commitment not later than the Effective Date and
shall pay all amounts and take all action necessary to maintain such
Letter of Credit during the Employment Period and for two years
thereafter and if, notwithstanding CBI's complete discharge of such
obligations, such Letter of Credit shall be terminated or not renewed,
CBI shall obtain a replacement irrevocable clean letter of credit on
substantially the same terms and conditions as contained in the Letter
of Credit drawn upon a commercial bank having total assets equivalent
to at least $6 billion and either incorporated under the laws o, or
having an office in, the United States of any State, which
<PAGE> 41
assures the Executive the benefits of this Agreement. Nothing in this
subsection(b) shall limit in any way CBI's obligations under
subsection 10(a).
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ C.E. Willoughby
----------------------------- -------------------------------
Title:__________________________ Title: President,
Liquid Carbonic, Inc.
<PAGE> 42
EXHIBIT II
ROYAL BANK OF CANADA, NEW YORK BRANCH
IRREVOCABLE STANDBY LETTER OF CREDIT
____________________, 19__
Letter of Credit No.______________
(Beneficiary's Name and Address)
Dear_____________________:
At the request and for the account of CBI Industries, Inc., 800 Jorie
Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby
Letter of Credit No. _______________ (this "Letter of Credit") in your favor in
an aggregate amount of One Hundred Thousand Dollars ($100,000), representing
support of the "Agreement") dated _______________, by and between yourself and
CBI Industries, Inc., as it may be amended from time to time, available by your
draft drawn at sight, presented to this Bank, bearing this Letter of Credit
Number and accompanied by this Letter of Credit and both:
1. Your signed certificate dated the date of such draft indicating
the name, address and signature of your designated counsel, with both your
signature and your designated counsel's signature notarized; and
2. Your designated counsel's signed and notarized statement dated
the date of such draft stating: "Payments are due and payable to
(Beneficiary) under the Agreement dated ____________ between (Beneficiary)
and CBI Industries, Inc., as such Agreement may have been amended from time
to time, and CBI Industries, Inc. has not performed its obligation to make
such payments. (Beneficiary) through the undersigned counsel is enforcing
his/her rights under such Agreement."
Only one draft, in the amount of $100,000 may be presented under this Letter of
Credit.
We hereby agree that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be honored upon presentation at Royal Bank
of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300
Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration
Manager, facsimile number (___)___-____. Presentation is to be
<PAGE> 43
made by facsimile transmission of all required documents to this Bank, followed
by overnight courier delivery of all originals as provided in this paragraph.
Any Draft hereunder must be presented on or before _______________. This
Letter of Credit shall automatically expire and be null and void at the close of
business on _______________ or, in the event the expiry date hereof is extended
by us in writing, at the close of business upon such extended expiry date.
This Letter of Credit sets forth in full the terms of our undertaking, and
this undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein or in
which this Letter of Credit is referred to or to which this Letter of Credit
relates, except for the certificates, statements and the sight drafts referred
to therein. This Letter of Credit is not transferrable.
This irrevocable Letter of Credit is subject to The Uniform Customs and
Practices for Documentary Credits (1983 Revision), ICC Publication 400.
ROYAL BANK OF CANADA,
NEW YORK BRANCH
By_________________________________
Its______________________________
By__________________________________
Its_______________________________
<PAGE> 44
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 3rd day of October, 1989 to the Agreement between CBI
Industries, Inc., a Delaware corporation ("CBI") and Calvin E. Willoughby, Jr.
("Executive") of October 3, 1989 (the "Agreement").
WITNESSETH THAT
WHEREAS, the Board of Directors of CBI approved an early retirement change in
the CBI Pension Plan effective October 3, 1989, and CBI desires to make such
change applicable to the Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. The sentence appearing in Subsection 6(w) of the Agreement commencing
in the sixth line from the bottom of page 10 and ending in the third line
of page 11 presently reading:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum for each year by which the
Executive's age is less than age 65 or the Executive's credited
service is less than 40 years, whichever produces the lesser
reduction, pursuant to the first sentence of Section 5.2.3 of the
Pension Plan (as in effect on the date hereof)."
Is hereby amended to read:
"The Enhanced Early Retirement Pension shall only be subject to
reduction at the rate of four (4) percentum
Page 1
<PAGE> 45
for each year by which the Executive's age is less than age 62 or the
Executive's credited service is less than 35 years, whichever produces
the lesser reduction, pursuant to the first sentence of Section 5.2.3
of the Pension Plan (as in effect on the date hereof)."
CBI INDUSTRIES, INC.
By: /s/ John E. Jones C.E. Willoughby, Jr.
----------------------------- -------------------------------------
Title: Chairman of the Board Executive
Senior Vice President
ATTEST:
/s/ Donald H. Craigmile
- --------------------------------
Secretary
Page 2
<PAGE> 46
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated this 3rd day of October, 1989, to the AGREEMENT between
CBI Industries, Inc., a Delaware Corporation ("CBI") and Calvin E. Willoughby,
Jr. ("Executive") of even date herewith (the "Agreement"):
WITNESSETH THAT
WHEREAS, CBI and the Executive mutually desire to modify in light of the
Agreement that certain Supplemental Survivor's Benefit Agreement (the
"Survivor's Agreement") dated October 3, 1989 by and between CBI and the
Executive;
NOW, THEREFORE, in consideration of the mutual execution of the Agreement
and the premises thereof; it is further AGREED by and between CBI and the
Executive as follows:
1. A Termination of the Executive during the Employment Period shall be
deemed a "retirement" under the Survivor's Agreement entitling Executive in the
event of his death thereafter to the "post-retirement benefit" thereunder,
notwithstanding that Executive may no longer be employed by CBI nor except as
may otherwise be provided by the Agreement be retired for purposes of the
Pension Plan.
<PAGE> 47
CBI INDUSTRIES, INC. /s/ C.E. Willoughby, Jr.
-----------------------------------
Executive
By: /s/ John E. Jones Title: Senior Vice President
-----------------------------
Title: Chairman of the Board
ATTEST:
/s/ Donald H. Craigmile
- --------------------------------
Secretary
(SEAL)
<PAGE> 48
ADDENDUM TO AGREEMENT
THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between
CBI Industries, Inc., a Delaware corporation ("CBI") and C.E. Willoughby
("Executive") dated the 3rd day of October, 1989, as previously amended (the
"Agreement").
WITNESSETH THAT:
WHEREAS, CBI and the Executive mutually desire to modify the Agreement to
eliminate the requirement for CBI to provide an irrevocable clean letter of
credit to secure for the benefit of the Executive the total value of performance
of CBI's obligations under the Agreement;
NOW, THEREFORE, in consideration of $10 and the premises herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby AGREED by and between CBI and the Executive
that the Agreement shall be modified as follows:
1. Subsection 10(b) is deleted.
2. Exhibit II is deleted.
CBI INDUSTRIES, INC.
By: /s/ John E. Jones Executive: /s/ C.E. Willoughby
----------------------------- -------------------------
Title: Chairman of the Board
Title: Executive Vice President
Liquid Carbonic, Inc.
ATTEST:
/s/ Charlotte C. Toerber
- --------------------------------
Secretary
[SEAL]
<PAGE> 49
ADDENDUM TO AGREEMENT
THIS ADDENDUM dated as of and made effective the 18th day of August, 1993
to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI")
and Calvin E. Willoughby ("Executive") of October 3, 1989 (the "Agreement").
WITNESSETH THAT
WHEREAS, Executive has been offered an executive position in the employment
of Liquid Carbonic, Inc. ("LCI"), a wholly owned subsidiary of CBI, and in order
to induce Executive to accept such position, CBI has assured Executive that he
may at his election retain the benefits of the Agreement in the event of a
change of control of CBI notwithstanding that Executive may at such time be an
employee of LCI;
WHEREAS, because of the similarity of the obligations undertaken by CBI
under the Agreement and the obligations to be undertaken by LCI under this
Addendum, and for the general convenience of the parties, CBI and the Executive
mutually agree to permit LCI, a Canadian corporation, to become a party to this
Addendum and for LCI to assume the obligations hereinafter undertaken; and
WHEREAS, LCI also wishes to attract and retain well qualified executives
and both LCI and the Executive desire continuity of management in the event of
any Change in Ownership of LCI, and, accordingly LCI is willing to undertake the
obligations hereinafter stated.
NOW, THEREFORE, it is hereby agreed by and between the parties to this
Addendum as follows:
1. For the purposes of this Addendum the term "Change in Ownership"
shall mean the occurrence of an event pursuant to which the ultimate right
to elect directors of LCI is not exercisable by CBI or another entity which
directly or indirectly acquires stock of LCI in a leveraged buy-out in
which the senior management of CBI participates.
2. In the event of a Change in Ownership of LCI, LCI and Executive
agree to be bound by the terms of the Agreement as if the Agreement were an
agreement between LCI and Executive, subject to the following changes:
A. "CBI Industries, Inc." and "CBI" shall be replaced by
"Liquid Carbonic, Inc." and "LCI," respectively, wherever those terms
appear in the Agreement, except in subsection 6(d).
B. "Change in Control of CBI" and "Change in Control" shall be
replaced by "Change in Ownership of LCI" and "Change in Ownership,"
respectively, wherever those terms appear in the Agreement.
-1-
<PAGE> 50
C. Section 2 of the Agreement is deleted and replaced by a new
Section 2 for purposes of the obligations undertaken hereunder, which
contains the definition of "Change in Ownership" as set forth in
Section 1 of this Addendum.
D. In Section 3 "date of execution hereof" shall mean date of
execution of this Addendum.
E. In subsection 4(b) the words "restricted stock award, stock
option" are deleted from the second and ninth and tenth lines,
respectively.
F. CBI's obligation under Section 2 of this Addendum shall be
to (i) provide continuing directors and officers liability and
indemnity insurance and corporate indemnity protection under
subsections 4(f) and 6(y) covering the time Executive was an officer
or director of CBI, and (ii) provide post-retirement benefits under
the Survivor's Agreement as provided in the Addendum to the Agreement
dated September 12, 1986, between CBI and Executive.
G. In subsection 6(w):
(i) the second and third lines are deleted and replaced
with the following words: "any pension benefit plan or
benefit restoration plan."
(ii) the words "; except that if ... determinable" are
deleted from the 14th through 21st lines on page 11
of the Agreement.
H. Subsection 10(b) is deleted.
I. Exhibits I and II are deleted.
3. It is understood and agreed by all parties to this Addendum that
Executive shall only be entitled to receive the benefits from either the
Agreement (between CBI and Executive only) or the Agreement as modified by
this Addendum (among and between LCI, CBI and the Executive) and not from
both. Upon the first to occur of either a Change in Control of CBI or a
Change in Ownership of LCI, Executive shall be required within thirty (30)
days to give to both CBI and LCI notice in writing as to which contractual
arrangement provided for herein Executive desires to apply to his
employment with LCI, after which notice the other contractual arrangement
shall be null and void. In the event Executive elects to receive the
benefits of the Agreement between CBI and Executive only without
application of Section 2 of this Addendum, LCI shall be responsible for
continuing Executive's employment and compensation within the meaning of
Sections 3 and 4 of the Agreement commencing on the date of the event
giving rise to Executive's notice hereunder, and CBI shall be responsible
for termination payments under Section 6 of the Agreement
-2-
<PAGE> 51
in the event the employment of Executive with LCI is terminated within the
meaning of Section 5 of the Agreement.
CBI INDUSTRIES, INC. EXECUTIVE
By: /s/ John E. Jones By: /s/ C.E. Willoughby
----------------------------- --------------------------------
Title: Title: President,
-------------------------- Liquid Carbonic, Inc.
LIQUID CARBONIC, INC.
By: /s/ Robert J. Daniels
-----------------------------
Title:
--------------------------
-3-
<PAGE> 1
EXHIBIT 7
FORM OF
AGREEMENT
THIS AGREEMENT between LIQUID CARBONIC INDUSTRIES CORPORATION and
Subsidiaries, a Delaware corporation ("LCI"), and ___________________
("Executive"), dated this ___ day of ___________, 198_.
WITNESSETH THAT
WHEREAS, LCI wishes to attract and retain well-qualified executives and
both LCI and the Executive desire continuity of management in the event of any
Change in Ownership of LCI;
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Effective Date. The "Effective Date" of this Agreement shall be
the date on which a Change in Ownership of LCI (as defined in Section
2) occurs.
2. Change in Ownership. The term "Change in Ownership" shall
mean the occurrence of an event pursuant to which
(a) the ultimate right to elect directors of LCI is not
exercisable by CBI Industries, Inc. ("CBI") or another entity which
directly or indirectly acquires stock of LCI in a leveraged buy-out
in which the senior management of CBI participates, or
(b) Continuing Directors, as defined in that certain Rights
Agreement dated March 4, 1986, between CBI and Morgan Guaranty
Trust Company of New York as rights agent, cease to comprise a
majority of the board of directors of CBI at a time when LCI,
directly or indirectly, is a subsidiary or CBI.
Page 1
<PAGE> 2
3. Employment. LCI hereby agrees that if the Executive continues as
an employee of LCI from the date of execution hereof until the Effective Date,
LCI shall continue the Executive in its employ for the period commencing on the
Effective Date and ending on the earlier to occur of the second anniversary of
such date or the 65th birthday of the Executive (the "Employment Period"), to
exercise such authority and perform such executive duties as are requested of
him by LCI, which authority and duties shall be commensurate with the authority
being exercised and duties being performed by the Executive immediately prior
to the Effective Date. The Executive shall perform such requested services at
the location where the Executive was employed immediately prior to the
Effective Date, except for required travel on LCI's business to an extent
substantially consistent with the Executive's business travel obligations prior
to the Effective Date. The Executive agrees that while an employee during the
Employment Period he shall, to the extent required, devote substantially all of
his business time to his executive duties as described herein and perform such
duties faithfully and efficiently.
4. Compensation, Compensation Plans, Benefits. During the Employment
Period, the Executive shall be compensated as follows:
(a) He shall receive an annual salary (to be paid in installments
in the manner customary prior to the Effective Date) which is not less
than his rate of annual salary in effect immediately prior to the
Effective Date, increased on each January 1 within the remainder of
the Employment Period by at least the greater of (i) the average annual
percentage salary increase for the Executive during the period of three
full calendar years immediately preceding the Effective Date, or (ii)
the percentage increase in the Implicit Price Deflator for Gross
National Product for the calendar year immediately preceding such
January 1, as published by the United States Department of Commerce in
its Survey of Current Business in December of each year, over such
Implicit Price Deflator for the calendar year next preceding such year.
(b) He shall be awarded and receive bonus and other incentive
compensation for each calendar year (or other applicable bonus or
incentive
Page 2
<PAGE> 3
compensation period) any part of which is included in the Employment
Period, which in the aggregate shall not in value be a lesser
percentage of his annual salary, as determined in subsection (a) above,
for such calendar year (or period), than the aggregate bonus and other
incentive compensation during the period of three full calendar years
immediately preceding the Effective Date was of the Executive's
aggregate base salary for such three year period.
(c) He shall be entitled to receive all employee benefits to the
extent of the greater of the employee benefits provided by LCI
to executives with comparable duties or the employee benefits to which
he was entitled immediately prior to the Effective Date.
(d) During any period that Executive is unable to perform the
services for LCI specified in Section 3, whether as a result
of total disability or as a result of a physical or mental disability
that is not total or is not permanent and therefore is not a total
disability, Executive shall continue to receive base salary at the rate
in effect at the commencement of any such period, together with all
other compensation and benefits that are payable under this Agreement.
5. Termination. The term "Termination" shall mean the occurrence
during the Employment Period of:
(a) termination by LCI of the employment of the Executive for any
reason other than (i) death, (ii) physical or mental incapacity
which would entitle Executive to permanent disability benefits under
LCI's appropriate plans, or (iii) a willful and material breach of this
Agreement by the Executive which causes a direct and substantial injury
to LCI or to its business, which is not cured by Executive within 30
days after receiving written notice of such breach and reasonable
directions for cure from LCI; or
(b) the resignation of the Executive from his employment upon 30
days written notice to LCI at any time following (i) a significant
change in
page 3
<PAGE> 4
the nature or scope of the Executive's authorities or duties from those
described in Section 3, a reduction in total compensation from
that provided in Section 4, or the breach by LCI of any other
provision of this Agreement, which change, reduction or breach is not
restored or cured by LCI within 30 days after receiving written notice
of such change, reduction or breach and reasonable directions for
restoration or cure from the Executive; or (ii) a reasonable
determination by the Executive that, as a result of the Change in
Ownership and a change in circumstances thereafter significantly
affecting his position, he is unable to exercise the authorities,
powers, functions or duties attached to his position as contemplated by
Section 3.
A Termination as contemplated by this Section 5, whether or not a
breach of this Agreement by LCI, shall entitle the Executive to Termination
benefits as provided by this Agreement. Nothing in this Agreement shall
prevent the Executive from voluntarily resigning from his Employment upon 90
days written notice to LCI under circumstances which do not constitute
Termination as defined in this Section 5, and no such resignation shall be
deemed a breach of this Agreement by the Executive.
6. Termination Payment. In the event of Termination of Executive
during the Period of Employment, LCI shall pay to the Executive a lump sum
amount equal (without discount to present value) to the sum of the amounts
determined in accordance with subsections (a), (b), (c) and (d) below, and
provide the additional benefits described in subsections (w), (x), (y) and (z)
below:
(a) An amount equal to the aggregate salary which would have been
paid to the Executive during the remainder of the Employment
Period if he had received the base salary specified by Section 4(a)
above, increased by assuming the salary increase on each January 1
during the remainder of the Employment Period to be the greatest of the
average annual percentage salary increase or the percentage increase in
the Implicit Price Deflator, whichever is applicable, as of any January
1 within the three calendar years including or preceding the
Termination date.
Page 4
<PAGE> 5
(b) Bonus and incentive compensation for any calendar year (or
other applicable bonus or incentive compensation period) ending
prior to the Termination date but not previously paid.
(c) An amount equal to the aggregate bonus and incentive
compensation which would have been paid to the Executive during
each calendar year (or other applicable bonus or incentive compensation
period) any part of which is included in the remainder of the
Employment Period if he had received bonus and incentive compensation
for any such year (or period) in the minimum amount specified by
Section 4(b) based on his increased salary determined under subsection
(a) above; provided, however, that in the event any bonus year (or
period) extends beyond the end of the Employment Period, bonus or other
incentive compensation for such year (or period) shall be pro-rated in
proportion to the number of days within and without the Employment
Period.
(d) In the event any shares of CBI common stock (or other
securities into which such shares may have been converted)
previously awarded to Executive under any restricted stock award plans
of CBI or separate agreements between Executive and CBI are forfeited
by reason of such Termination, an amount in cash equal to the fair
market value of such forfeited common stock (or other securities) as of
the date of Termination. The rights afforded to Executive under this
subsection (d) are without prejudice to any other rights Executive has
to shares of CBI common stock (or other securities) under such plans or
agreements or by reason of the action of the CBI Board of Directors
heretofore taken in causing restrictions on such shares to be removed
under certain circumstances including Termination of the Executive.
LCI shall also provide to the Executive:
(w) In addition to the benefits provided under any pension beneift
plan or benefit restoration plan (whether or not funded or
qualified under the Internal Revenue Code) maintained by LCI
("Retirement Plans"), the difference (the "Benefit Enhancement")
between such benefits and the
Page 5
<PAGE> 6
benefits (the "Enhanced Benefits") that would have been provided under
such Retirement Plans if Executive had remained in the employ of LCI
throughout the Employment Period at the salary determined under
subsection (a) above accruing additional age and service credits
under such Retirement Plans accordingly. If after giving effect to
such additional age and service credit Executive shall not have the
necessary age or credited service at the end of the Employement Period
to qualify under the LCI Pension Plan (the "Pension Plan") for an early
retirement pension, the Enhanced Benefits under this subsection (w)
shall nevertheless include an early retirement pension under the
Pension Plan beginning upon Executive attaining age 55 or upon the date
Executive would have attained 30 years of credited service had
Executive remained continuously employed by LCI but for Termination
(whichever occurs first) (the "Enhanced Early Retirement Pension").
The Enhanced Early Retirement Pension shall be payable to the Executive
or to the spouse of the Executive (if applicable) commencing at the
time Executive attains (or would have attained) age 55 or would have
otherwise attained 30 years of credited service as provided aforesaid
(whichever occurs first). The Enhanced Early Retirement Pension shall
only be subject to reduction at the rate of four (4) percentum for year
year by which the Executive's age is less than age 65 or the
Executive's credited service is less than 40 years, whichever produces
the lesser reduction, pursuant to the first sentence of Section 4.1.3
of the Pension Plan (as in effect on the date hereof). If Executive
shall die after the end of the Employment Period but before the date
the Enhanced Early Retirement Pension is payable, the spouse of
Executive shall be entitled to an enhanced survivor's pension under
the Pension Plan as if Executive had died as an employee of LCI, giving
effect to service through the date of Executive's death and Executive's
earnings through the end of the Employment Period. Such Benefit
Enhancement will be paid beginning on the date the Enhanced Benefits
would have commenced and thereafter concurrently with the benefits
actually provided under such Retirement Plans. Nothing in this
subsection (w) shall prevent the actual commencement of benefits under
any Retirement Plan, and the Benefit Enhancements required by this
subsection (w), before the end of the Employment Period to the extent
required or permitted under the terms of the applicable Retirement
Plan, giving effect to the additional age and service credit required
by this subsection (w).
Page 6
<PAGE> 7
(x) Participation in or coverage by all other employee benefits,
including, but not limited to, coverage under any health or
medical benefit insurance, plans, or arrangements, supplemental
survivors' benefit plans, or life insurance arrangements or programs,
to the same extent to which he would have been entitled under all
employee benefit plans, programs, arrangements or practices maintained
by LCI if he had remained in the employ of LCI through the Employment
Period at the salary determined under subsection (a) above.
(y) Continuation of disability income benefits pursuant to
Section 4(d) for so long as any disability may continue without
regard to the Termination of the Employment Period.
(z) Within 30 days after each written request therefor by the
Executive, cash advances or reimbursement for any fees or expenses
actually incurred or reasonably expected to be incurred by the
Executive in seeking other employment, including without limitation all
travel and relocation expenses and all fees charged by any executive
recruitment firm or firms or employment consulting or counseling firm
or firms selected by the Executive in his sole discretion.
The amount of Termination payments described in subsections (a), (b), (c) and
(d) of this Section 6 shall be determined and paid in a lump sum within 30 days
of the Termination date by cashier's check or certified check of LCI or any of
its affiliated corporations delivered to Executive together with such
calculations, worksheets, or other information as may be necessary or
appropriate to ascertain the currectness of the computation of such amount and,
if applicable, of any reduction pursuant to Section 7. Any Termination payment
(or the value thereof) not paid on or before the date provided therefor by this
Section 6 shall bear interest after such date until paid at a rate per annum
during each month such amount remains unpaid of five percentage points in
excess of the prime rate as publicly announced by the First National Bank of
Chicago or its successor from time to time as in effect on the first day of
each such month.
Page 7
<PAGE> 8
7. Overall Limitations. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof,
payments to any Executive under this Agreement shall be reduced (but not below
zero) so that the present value, as determined in accordance with Section
280G(d)(4) of the Code, of such payments plus any other payments that must be
taken into account for purposes of any computation relating to Executive under
Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99
times Executive's "base amount," as that term is defined in Section 280G(b)(3)
of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence
shall be applied to payments hereunder which do not constitute "excess
parachute payments" within the meaning of the Code. Any payments in excess of
the limitation of this Section 7 or otherwise determined to be "excess
parachute payments" made to Executive hereunder are deemed to be overpayments
which shall constitute an amount owing from the Executive receiving them to LCI
with interest from the date of receipt by the Executive to the date of
repayment (or offset) at the applicable federal rate under Section 1274(d) of
the Code, compounded semi-annually, which shall be payable to LCI upon demand;
provided, however, that no repayment shall be required under this sentence if
in the written opinion of tax counsel satisfactory to the Executive and
delivered to the Executive and LCI such repayment does not allow such
overpayment to be excluded for federal income and excise tax purposes from the
Executive's income for the year of receipt or afford the Executive a
compensating federal income tax deduction for the year of repayment.
8. Non-Competition. Whether or not a Termination occurs, the
Executive agrees to continue all non-competition and confidentiality
provisions, as specified in any other agreement in effect on the Effective Date
between the Executive and LCI relating to confidential information, during (and
to the extent specified in such agreement, after) the Employment Period.
9. Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise; provided, however, that if during the Employment
Period Executive accepts other employment in a position substantially
equivalent to or
Page 8
<PAGE> 9
better than the position held by him with LCI, current cash compensation
actually received by the Executive during the Employment Period from such other
employment shall be applied to reduce Termination payments otherwise due under
subsections (a) and (c) of Section 6 of this Agreement.
10. Legal Fees and Expenses. It is the intent of LCI that no Executive
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 the Executive hereunder. Accordingly, if it should appear to the
Executive that LCI has failed to comply with any of its obligations under this
Agreement, or in the event that LCI or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any litigation
designed to deny, or to recover from, the Executive the benefits intended to be
provided to Executive hereunder, LCI irrevocably authorizes Executive from time
to time to retain counsel of his choice, at the expense of LCI as hereafter
provided, to represent Executive in connection with the initiation or defense
of any litigation, arbitration or other legal action, whether by or against LCI
or any director, officer, stockholder or other person affiliated with LCI, in
any jurisdiction. LCI shall advance to the Executive within 30 days after each
written request therefor any and all attorneys' and related fees and expenses
actually incurred or reasonably expected to be incurred by the Executive in any
such proceeding or otherwise as a result of LCI's failure to perform this
Agreement or any provision hereof or as a result of LCI or any person
contesting the validity or enforceability of this Agreement or any provision
hereof; provided, however, that to the extent the Executive does not prevail in
any such litigation, arbitration, or other legal action, the Executive shall
repay to LCI the amount (without interest) of such attorney's fees and related
fees and expenses previously advanced.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with LCI or, in the case of LCI, at its principal executive offices.
Page 9
<PAGE> 10
12. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by
operation of law.
13. Governing Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
14. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person
and, so long as the Executive lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter
hereof.
15. Successors to the Company. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of LCI and any
successor of LCI.
16. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
LIQUID CARBONIC INDUSTRIES CORPORATION
--------------------------------------
Executive
Title:
--------------------------------
By:
-----------------------------------
Title:
--------------------------------
ATTEST:
-------------------------------
- --------------------------------------
[SEAL]
Page 10
<PAGE> 11
FORM OF
ADDENDUM TO AGREEMENT AND
ASSIGNMENT OF SUPPLEMENTAL SURVIVOR'S BENEFIT AGREEMENT
THIS ADDENDUM dated this __ day of _________, 198_, to the Agreement
between Liquid Carbonic Industries Corporation, a Delaware corporation
("Liquid") and ____________________________ ("Executive") of even date herewith
(the "Agreement"):
WITNESSETH THAT
WHEREAS, the Executive and CBI Industries, Inc., a Delaware corporation
("CBI") previously have executed that certain Supplemental Survivor's Benefit
Agreement (the "Survivor's Agreement") dated _________, 198_; and
WHEREAS, the Executive is willing to consent to an assignment of the
Survivor's Agreement from CBI to Liquid, and, further, the Executive and
Liquid, upon such assignment, mutually desire to modify the Survivor's
Agreement;
NOW THEREFORE, in consideration of the mutual execution of the
Agreement and the premises thereof, it is agreed by and between CBI, Liquid and
the Executive as follows:
1. CBI hereby assigns to Liquid, and Liquid hereby accepts, all of
CBI's rights, duties and obligations under the Survivor's
Agreement, and the Executive hereby consents to such assignment
and releases CBI from any further duties or obligations under
the Survivor's Agreement.
2. As between Liquid and the Executive:
(a) For all purposes of the Survivor's Agreement, "the Company"
shall henceforth be Liquid.
(b) Reference in the Survivor's Agreement to the "CBI Pension
Plan" in the description of "Integrated Benefit" shall
henceforth be a reference to the "Liquid Carbonic Pension
Plan."
(c) For purposes of the Agreement, a Termination of the
Executive during the Employment Period shall be deemed a
"Retirement" under the Survivor's Agreement entitling the
Executive in the event of his death thereafter to the
"Post-Retirement Benefit" thereunder, notwithstanding that
Executive may no longer be employed by Liquid nor except
as may otherwise be provided by the Agreement be retired
for purposes of the Liquid Carbonic Pension Plan.
Page 1
<PAGE> 12
Addendum and Assignment
IN WITNESS WHEREOF, the parties have caused this document to be
executed on the date first above written.
Executive:
------------------------------------
Title:
----------------------------------------
CBI INDUSTRIES, INC.
By:
-------------------------------------------
Title:
----------------------------------------
ATTEST:
- --------------------------
Secretary
LIQUID CARBONIC INDUSTRIES CORPORATION
By:
-------------------------------------------
Title:
----------------------------------------
ATTEST:
- --------------------------
Page 2
<PAGE> 1
EXHIBIT 8
[CBI INDUSTRIES, INC. LETTERHEAD]
July 16, 1987
Mr. John E. Jones
840 N. Washington Street
Hinsdale, Illinois 60521
Dear John:
In order to confirm the meaning and intent of my letter of January 4,
1982, which set forth the agreement between CBI Industries, Inc. ("CBI") and
yourself as to the pension benefits payable to you by either or both of CBI and
the CBI Pension Plan, this letter shall be a further amendment to the letter of
January 4, 1982 and my letter of December 19, 1986.
We agree that on and after May 3, 1987, the date on which the sum of
your actual CBI service and your Continental Service ("total service") equaled
the 30 years of service required under the provisions of the CBI Pension Plan
("the Plan") to qualify you for immediate early retirement, any termination of
your employment from CBI or its affiliates for any reason shall constitute
retirement for purposes of the Plan and for payment of a pension benefit
from CBI based on such total service.
Please indicate your agreement to the above by signing the two copies
of this letter signed by me, and returning one copy to me.
Sincerely,
/s/ W. A. Pogue
W. A. Pogue, Chairman and
Chief Executive Officer
/s/ John E. Jones
- ------------------------------
J. E. Jones
7-28-87
- ------------------------------
Date
<PAGE> 2
[CBI LETTERHEAD]
December 19, 1986
Mr. John E. Jones
840 N. Washington Street
Hinsdale, Illinois 60521
Dear John:
In order to clarify the meaning and intent of my letter of January 4,
1982, which set forth the agreement between CBI Industries, Inc. ("CBI") and
yourself as to the pension benefits payable to you by either or both of CBI and
the CBI Pension Plan, this letter shall be an amendment to the letter of
January 4, 1982.
We agree that:
1. Paragraph 4 of the letter of January 4, 1982 is deleted and
shall be considered as of no effect and never to have been
part of our agreement.
2. The list of pension examples attached to the letter of
January 4, 1982 were then and are now intended and constitute
examples provided for your personal benefit and financial
planning only, and are in no way substantive provisions of,
nor in any way modify, amend or add to, the agreement
expressed in the letter of January 4, 1982.
Please indicate your assent to the above by signing the two copies of
this letter signed by me, and returning one copy to me.
Very truly yours,
/s/ W.A. Pogue
W.A. Pogue, Chairman and
Chief Executive Officer
/s/ John E. Jones
- -------------------------
J.E. Jones
Date: December 23, 1986
-------------------
<PAGE> 3
[CBI INDUSTRIES, INC. LETTERHEAD]
January 4, 1982
Mr. John E. Jones
840 N. Washington
Hinsdale, IL 60521
Dear John:
The purpose of this letter is to memorialize previous discussions that took
place at the time of your employment as a full-time employee of CBI Industries,
Inc., relating to retirement benefits.
Immediately prior to such employment, you were an employee of Continental
Illinois National Bank and Trust Company of Chicago and as such you were a
participant in the Continental Illinois Employees' Pension Plan (hereinafter
called "Continental Plan") and had accumulated under that Plan 22.83 years of
service (hereinafter called "Continental Service"). At the time of terminating
employment with the Continental Bank, you had vested rights in the Continental
Plan which would entitle you to an annual pension in the form of a single life
annuity of $37,844.45 upon your attaining age 65. However, the Continental Plan
makes available certain retirement options, including an actuarially reduced
benefit as early as age 55, and the alternative election of either (i) a joint
and survivor annuity where payments continue until the death of the surviving
spouse (or another approved dependent), or (ii) a ten year certain annuity
where payments would be made for your life but not less than 120 guaranteed
monthly payments to you or your named beneficiary.
At the time of your employment by CBI Industries, Inc., it was our desire that
your pension benefits upon retirement as a CBI employee, after taking into
account benefits that you will receive under the Continental Plan, would not be
less than benefits that you might have enjoyed had you been a CBI employee
during the combined periods of your CBI Service and your Continental Service.
You will recognize, of course, that the CBI Pension Plan does not contain
provisions for recognition of service with unrelated employers, and for that
reason the retirement benefits that you will receive will come from the CBI
Pension Trust to the extent that benefits are payable under the provisions of
the CBI Pension Plan, applicable law and ERISA regulations, and the balance
from the general assets of CBI Industries, Inc.
Accordingly, the following has been agreed:
1. Your participation and accrual of vested benefits under the CBI Pension
Plan will begin on the date of your employment, namely March 3, 1980.
2. Your pension benefits will be calculated as including your Continental
Service for both "Years of Service" and "Credited Service" in the event
of your retirement under the Plan or your death while in service with
CBI.
<PAGE> 4
[CBI Industries, Inc. Letterhead]
J.E. Jones
1/4/82
Page 2
- ----------
3. In calculating your total CBI pension benefits as described above,
there shall be offset the value of your benefits under the Continental
Plan, which value shall be the amount of a monthly single life annuity
payable at the same time as you first begin receiving a pension under this
agreement whether or not you begin receiving that annuity at that time, but
that offset will not be applied with respect to the calculation of the
benefit that will be paid to your eligible surviving spouse in the event of
your death following your retirement. The benefit payable to your surviving
spouse, should you die while still in CBI service, will be offset by the
amount payable to her under the Continental Plan.
4. Your retirement benefits as a CBI employee may be reviewed in the event
that either the Continental Plan or the CBI Pension Plan is terminated
prior to your retirement.
This letter, when accepted by you as evidenced by your signature on the
acceptance copy thereof, will constitute a binding obligation of CBI
Industries, Inc. with respect to your retirement benefits. Nevertheless, this
letter shall not be deemed as a contract of employment or as an obligation of
CBI Industries, Inc. to continue to employ you. Nor shall this letter be deemed
as affecting or affected by other benefits that may be provided by the Company
to its employees, such as but not limited to the CBI Profit Sharing Plan, the
CBI Restricted Stock Award Plan and the CBI Employee Stock Purchase Plan.
In order to provide guidance for the future, we have prepared a sheet of
examples of calculations or results flowing from the agreement contained in
this letter, and a copy of that sheet is attached for your reference.
If this letter properly sets forth the understanding that was reached at the
time of your employment, please so indicate by signing the acceptance
endorsement appearing on both signed copies of this letter, and returning one
fully-executed copy to us for our records.
Sincerely yours,
Chairman & President
/s/ W.A. Pogue
lkr
attachment
ACCEPTED THIS 6 day of January, 1982
/s/ John E. Jones
- --------------------
J.E. Jones
<PAGE> 5
Sheet attached to Letter from CBI Industries, Inc. to J.E. Jones dated January
4, 1982.
1. J. E. Jones has a deferred vested pension under the Continental Plan, based
upon 22.83 years of service, equal to $37,844.45 annually payable at a normal
retirement age of 65.
2. J. E. Jones will have 30 years of Credited Service required to become
eligible for an unreduced Inability pension upon accumulation of 7.17 years
of CBI service.
3. J. E. Jones will have 35 years of Credited Service required to be eligible
for an Early Retirement pension after 12.17 years of CBI service.
4. In the event J. E. Jones dies while employed by CBI, his eligible spouse's
pension will be 50% of the amount of the pension Mr. Jones would have then
been entitled to receive from the CBI Plan, under calculations using Credited
Service equal to the sum of his Continental service and CBI service, offset
by the actual amount paid to his eligible spouse from the Continental Plan.
5. If J. E. Jones dies after he has begun to receive a CBI pension, leaving an
eligible surviving spouse, she will receive 50% of the pension Mr. Jones was
receiving from the CBI Plan plus 50% of the Continental Plan offset being
applied to his pension under this agreement at the time of his death.
6. If J. E. Jones terminates his CBI employment by retirement as provided in the
CBI Pension Plan (because of age, Inability, Disability or qualifying years
of Credited Service), his pension will be calculated using as Credited
Service his CBI service plus his Continental service, but the pension will be
offset by the amount of a single life annuity payable from the Continental
Plan at the time of his retirement, regardless of the date he actually begins
to receive a pension from the Continental Plan.
7. If J. E. Jones terminates his CBI employment otherwise than by death or
retirement, then he will have a nonforfeitable right at age 65 to any pension
he has accrued, based only on his CBI Credited Service, under the CBI Pension
Plan to date of termination of employment, whether or not such accrued
pension is then vested under the provisions of the CBI Pension Plan.
<PAGE> 1
EXHIBIT 9
TABLE OF CONTENTS
CBI INDUSTRIES, INC.
STOCK OPTION PLAN
(As of 8/11/93)
<TABLE>
<S> <C> <C>
1. PURPOSE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. GRANTING OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. TERMS OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. GRANTING OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. EXERCISE OF OPTIONS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. LIMITATIONS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. TRANSFERS AND LEAVES OF ABSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. STOCK ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 2
(AS OF 8/11/93)
CBI INDUSTRIES, INC.
STOCK OPTION PLAN
1. PURPOSE OF PLAN
The purpose of this Stock Option Plan (the "Plan") is to aid CBI
Industries, Inc., and its Subsidiaries (collectively the "Company") in securing
and retaining Key Employees of outstanding ability by making it possible to
offer them an increased incentive, in the form of a proprietary interest in the
Company, to join or continue in the service of the Company and to increase
their efforts for its welfare.
2. DEFINITIONS
As used in this Plan, the following words shall have the following
meanings:
(a) "CBI" means CBI Industries, Inc.;
(b) "Board of Directors" means the Board of Directors of CBI;
(c) "Common Stock" means common stock of CBI;
(d) "Holder" means either a Participant, or a person other than a
Participant to whom an Option or a Right has been transferred
in accordance with Section 8(d) herein;
(e) "Incentive Stock Option" means an option to purchase shares of
Common Stock which is intended to qualify as an "incentive
stock option" as defined in Section 422A of the Internal
Revenue Code;
(f) "Key Employee" means any person, including officers, in the
regular full-time employment of the Company who, in the
opinion of the Committee referred to in Section 3, is or is
expected to be primarily responsible for the management,
growth or protection of some part or all of the business of
the Company;
(g) "Limited Right" means a right to receive cash in lieu of the
exercise of an Option, if granted pursuant to Section 5(e);
(h) "Officers Exercise Period" means any period beginning on the
third business day following the date of public release of a
summary statement of CBI's quarterly or annual sales and
earnings and ending on the twelfth business day following such
date.
1
<PAGE> 3
(i) "Non-Qualified Stock Option" means an option to purchase
shares of Common Stock which is intended not to qualify as an
incentive stock option as defined in Section 422A of the
Internal Revenue Code;
(j) "Option" means an Incentive Stock Option or a Non-Qualified
Stock Option;
(k) "Participant" means a person to whom an Option is granted that
has not terminated and ceased to be exercisable under the
Plan;
(l) "Right" means a stock appreciation right to elect to receive
shares of Common Stock with a fair market value, at the time
of any exercise of such stock appreciation right, equal to the
amount by which the fair market value of all shares subject to
the Option (or part thereof) in respect of which such stock
appreciation right was granted exceeds the exercise price of
said Option (or part thereof), or to receive from CBI, in lieu
of such shares, the fair market value thereof in cash, as
provided in Section 7; and
(m) "Subsidiary" means any corporation other than CBI in an
unbroken chain of corporations beginning with CBI if each of
the corporations other than the last corporation in the
unbroken chain owns 50% or more of the voting stock in one of
the other corporations in such chain.
3. ADMINISTRATION OF PLAN
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Committee"). None of the members of the Committee
shall be eligible to be selected for the grant of an Option, Right, Limited
Right, or any other option, stock appreciation right or shares under the Plan
or any other stock option plan maintained by the Company during such membership
or have been so eligible for selection within one year prior thereto or
thereafter. The Committee may adopt its own rules of procedure, and the action
of a majority of the Committee, taken at a meeting or taken without a meeting
by a writing signed by such majority, shall constitute action by the Committee.
The Committee shall have the power and authority to administer, construe and
interpret the Plan, to make rules for carrying it out and to make changes in
such rules.
4. GRANTING OF OPTIONS
The Committee may from time to time grant Options under the Plan to
such Key Employees and for such numbers of shares as the Committee may
determine. The Committee may grant Options in such amounts and may impose such
conditions on the grant of an Option as it deems advisable.
2
<PAGE> 4
5. TERMS OF OPTIONS
The terms of each Option granted under the Plan shall be as determined
from time to time by the Committee and shall be set forth in an Incentive Stock
Option Agreement or a Non-Qualified Stock Option Agreement, as shall be
appropriate, in a form approved by the Committee, consistent, however, with the
following:
(a) The Option price per share shall not be less than fair market
value at the time the Option is granted.
(b) The Option shall be exercisable in whole or in part from time
to time during the period beginning at the completion of the
required holding period stated in the Option, if any, and
ending at the expiration of ten years from the date of grant
of the Option, unless an earlier expiration date shall be
stated in the Option or the Option shall cease to be
exercisable pursuant to paragraph (d) of this Section 5.
(c) Payment in full of the Option price shall be made upon
exercise of each Option and may be made in cash, by the
delivery of shares of Common Stock with a fair market value
equal to the Option price, or by a combination of cash and
such shares whose fair market value together with such cash
shall equal the Option price.
(d) If a Participant's employment with the Company terminates
other than by reason of the Participant's death, retirement
for disability or retirement under a retirement plan of the
Company, the Participant's Option shall terminate and cease to
be exercisable. If a Participant's employment with the Company
terminates by reason of death or retirement due to disability,
an Incentive Stock Option shall terminate and cease to be
exercisable at the earlier of ten years from the date of grant
or one year from the date of death or such retirement; if by
reason of retirement under a plan, then at the earlier of ten
years from the date of grant or three months from the date of
such retirement. The Committee may, upon written request of a
Holder, convert an Incentive Stock Option into a Non-Qualified
Stock Option, and if such request is granted, the provisions
concerning termination of Non-Qualified Stock Options shall
apply to the Option in question which has been converted. A
Non-Qualified Stock Option shall terminate at the earlier of
ten years from the date of grant or one year from the date of
termination of employment if such termination is due to death.
Following any retirement of a Participant, a Non-Qualified
Stock Option shall terminate on the expiration date of the
Option. If the terms of an Option provide for its expiration
prior to ten years from the date of grant, the Committee may
at any time extend the expiration date of the Option but not
beyond ten years from its date of grant. In the event any date
specified herein falls on a day that is not a business day,
then such date shall be deemed to be the next following
business day.
3
<PAGE> 5
(e) An Option may contain a Limited Right to receive cash in lieu
of shares under conditions to be set forth in the Option, in
the discretion of and as determined by the Committee, in
addition to Rights.
6. GRANTING OF RIGHTS
The Committee, at the time of grant of an Option or at any time prior
to the expiration of the term of an Option may also grant, subject to the terms
and conditions of the Plan, Rights in respect of all or part of such Option to
a Holder, provided that, if granted to a Participant, the Participant at such
time is a Key Employee.
7. EXERCISE OF OPTIONS AND RIGHTS
(a) A Holder who decides to exercise an Option or Right in whole
or in part shall give notice in writing to the Secretary of
CBI of such exercise on a form approved by the Committee. A
notice exercising a Right shall also specify the extent, if
any, to which the Holder elects to receive shares of Common
Stock and the extent, if any, to which the Holder elects to
receive cash, but shall in any event be subject to the
determination by the Committee as provided in paragraph (d) of
this Section 7. Any exercise shall be effective as of the date
specified in the notice of exercise, but not earlier than the
date the notice of exercise is actually received by the
Secretary of CBI, and in the case of exercise of an Option,
when payment in full of the Option price is actually received
by the Secretary of CBI.
(b) To the extent an Option is exercised in whole or in part, any
Right granted in respect of such Option (or part thereof)
shall terminate and cease to be exercisable. To the extent a
Right is exercised in whole or in part, the Option (or part
thereof) in respect of which such Right was granted shall
terminate and cease to be exercisable.
(c) Subject to Section 6, a Right shall be exercisable only during
the period in which the Option (or part thereof) in respect of
which such Right was granted is exercisable and, in addition,
if the Holder of such Right is an officer of CBI and elects to
receive cash for all or part of the payments upon exercise, or
who exercises for such cash, such Holder may so elect or
exercise such Right only during an Officer's Exercise Period.
For this purpose only, the fair market value of shares of CBI
stock shall be deemed to be the average of the closing prices
for public trading on the largest national securities exchange
on which such shares trade for all of the business days within
such Officer's Exercise Period.
(d) The Committee shall have sole discretion to determine the form
in which payment will be made following exercise of a Right.
All or any part of the obligation arising out of an exercise
of a Right may be settled:
4
<PAGE> 6
(i) by payment in shares of Common Stock with a fair
market value equal to the cash that would otherwise
be paid,
(ii) by payment in cash, or
(iii) by payment in a combination of such shares and cash.
(e) To the extent that any Right shall not have been exercised or
cancelled or become non-exercisable, it shall be deemed to
have been exercised automatically, without any notice of
exercise, on the last day on which the Right's related Option
is exercisable, or, in the case of officers of CBI, on the
last day of the Officer's Exercise Period before the last day
on which the Right's related Option is exercisable, provided
that any other conditions or limitations on the Right's
exercise other than notice of exercise are satisfied and the
Right shall then have value. Such exercise shall be deemed to
specify that, subject to determination by the Committee as
provided in paragraph (d) of this Section 7, the Holder elects
to receive cash and that such exercise of a Right shall be
effective as of the time of the exercise.
(f) The aggregate fair market value of the shares for which any
Key Employee may exercise Incentive Stock Options in any
calendar year under all plans of CBI shall not exceed the sum
of $100,000 plus the amount which may be carried forward to
that year. For purposes of the preceding sentence, the
aggregate fair market value shall be determined as of the time
an Incentive Stock Option is granted, and the amount which may
be carried forward from each previous calendar year is
$100,000 minus the amount of Incentive Options first
exercisable and actually exercised in that previous calendar
year. This provision shall be applied by taking options into
account in the order in which they were granted.
(g) To the extent the receipt of shares of Common Stock pursuant
to the exercise of any Option or Right is subject to the
withholding of any income or employment taxes by CBI for which
CBI requires reimbursement from the recipient, the recipient
may elect to reimburse CBI with shares of Common Stock
withheld from the shares to be received, or cash, or a
combination of such shares and cash, of sufficient value to
make such reimbursement. Any such withholding or reimbursement
shall comply with all applicable governing laws and
regulations.
8. LIMITATIONS AND CONDITIONS
(a) The total number of shares of Common Stock that may be
optioned or issued or transferred upon exercise of Rights
under the Plan is 1,200,000 shares. Such total number of
shares may consist, in whole or in part, of unissued shares or
reacquired shares. The foregoing number of shares may be
increased or decreased by the events set forth in of Section
10.
5
<PAGE> 7
(b) Any shares that have been optioned that cease to be subject to
an Option (other than by reason of exercise of the Option)
shall again be available for option and shall not be
considered as having been theretofore optioned. Any shares
subject to an Option (or part thereof) that is cancelled upon
exercise of a Right shall be treated as if the Option itself
were exercised and such shares shall no longer be available
for grant.
(c) No Option or Right shall be granted under the Plan after May
10, 1995, but Options and Rights theretofore granted may
extend beyond that date. At the time an Option or Right is
granted or amended or the terms or conditions of an Option or
Right are changed, the Committee may provide for limitations
or conditions on the exercisability of the Option or Right.
(d) (i) A Non-Qualified Stock Option shall be
non-transferrable unless the Committee designates
otherwise. An Incentive Stock Option or a Right
associated therewith shall not be transferable by the
Participant otherwise than by will or by the laws of
descent and distribution or by the provisions for the
designation of a beneficiary in accordance with (ii)
below. A Right shall never be transferred except to
the transferee of the related Option. During the
lifetime of the Participant, an Incentive Stock
Option or a Right associated therewith shall only be
exercisable by the Participant.
(ii) Upon the death of a Participant, any outstanding and
unexercised Options or Rights held by such
Participant on the date of death shall be transferred
to such beneficiary or beneficiaries as have been
effectively designated by the Participant or, if
none, then to the deceased Participant's surviving
spouse or, if none, then to the Participant's lawful
descendants, per stirpes as defined by common law,
or, if none, then to the deceased Participant's
estate. Any such transfer shall be effective as of
the date of death of the Participant. To be
effective, the designation of such beneficiary must
be filed with the Committee or its designate in such
written form as it requires and may include
secondary, successive or contingent beneficiaries.
Any Participant may change a beneficiary designation
at any time by filing with the Committee a new
beneficiary designation meeting the above
requirements. The determination of the Committee as
to the identity of a beneficiary, or whether a
beneficiary is living or dead, pursuant to any
determinations of rights under this Plan shall be
conclusive and binding on all concerned.
(e) No person shall have any rights of a stockholder (i) as to
shares under option until, after proper exercise of the
Option, such shares shall have been recorded on CBI's official
stockholder records as having been issued or transferred or
(ii) as to shares to be delivered following exercise of a
Right until, after proper exercise of the Right and
determination by the Committee to make payment therefor in
shares, such shares shall have been recorded on CBI's official
stockholder records as having been issued or transferred.
6
<PAGE> 8
(f) CBI shall not be obligated to deliver any shares until they
have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange upon which
outstanding shares of such class at the time are listed nor
until there has been compliance with such laws or regulations
as CBI may deem applicable. CBI shall use its best efforts to
effect such listing and compliance. No fractional shares shall
be delivered.
9. TRANSFERS AND LEAVES OF ABSENCE
For the purposes of the Plan: (a) a transfer of a Participant's
employment without an intervening period from CBI to a Subsidiary or vice
versa, or from one Subsidiary to another, shall not be deemed a termination of
employment, and (b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Company during such leave
of absence.
10. STOCK ADJUSTMENTS
In the event of any merger, consolidation, stock dividend, split-up,
combination or exchange of shares or recapitalization or change in
capitalization, the total number of shares set forth in paragraph (a) of
Section 8 shall be proportionately and appropriately adjusted. In any such
case, (i) the number and kind of shares that are subject to any Option
(including any Option outstanding after termination of employment), the Option
price per share and the number of Rights granted in connection therewith, if
any, shall be proportionately and appropriately adjusted by the Committee
without any change in the aggregate Option price to be paid therefor upon
exercise of the Option.
11. AMENDMENT AND TERMINATION
(a) The Board of Directors shall have the power to amend the Plan,
including the power to change the amount of the aggregate fair
market value of the shares for which any Key Employee may
exercise Incentive Stock Options under Section 4 to the extent
provided in Section 422A, or any successor provision, of the
Internal Revenue Code. It shall not, however, except as
otherwise provided in the Plan, increase the maximum number of
shares authorized for the Plan, nor reduce the basis upon
which the minimum Option price is determined, nor extend the
period within which Options or Rights under the Plan may be
granted, nor change the basis upon which shares or cash may be
distributed upon exercise of a Right, nor provide for an
Option or Right that is exercisable more than ten years from
the date of grant. It shall have no power (without the consent
of the person or persons at the time entitled to exercise the
Option) to change the terms and conditions of any Option in a
manner that would adversely affect the rights of such person
or persons except to the extent, if any, provided in the
Option.
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<PAGE> 9
(b) The Board of Directors may suspend or terminate the Plan at
any time. No such suspension or termination shall affect
Options or Rights then in effect.
12. EFFECTIVE DATE
The Plan shall be effective as of January 1, 1987, subject to its
approval by the stockholders of CBI and subject to any modification that may be
made herein prior to such stockholder approval that may be deemed required or
appropriate by the Board of Directors to meet legal requirements. All Options,
together with related Rights or Limited Rights, if any, which have been or may
be granted under the Plan prior to stockholder approval, shall be conditioned
upon, and may not be exercised until after, such stockholder approval.
8
<PAGE> 1
EXHIBIT 10
CBI INDUSTRIES, INC.
1995 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of the CBI Industries, Inc., 1995 Stock Option Plan (the
"Plan") is to aid CBI Industries, Inc. and its Subsidiaries (collectively the
"Company") in securing and retaining Key Employees of outstanding ability by
making it possible to offer them an increased incentive in the form of a
proprietary interest in the Company, to join or continue in the service of the
Company and to increase their efforts for its welfare.
2. Definitions
As used in this Plan, the following words shall have the following
meanings:
(a) "CBI" means CBI Industries, Inc.;
(b) "Board of Directors" means the Board of Directors of CBI;
(c) "Common Stock" means common stock of CBI;
(d) "Holder" means either a Participant or a person other than a
Participant to whom an Option or a Right has been transferred in
accordance with Section 8(d) herein;
(e) "Incentive Stock Option" means an option to purchase shares of
Common Stock which is intended to qualify as an "incentive stock
option" as defined in Section 422A of the Internal Revenue Code;
(f) "Key Employee" means any person, including officers, in the
regular full-time employment of the Company who, in the opinion
of the Committee referred to in Section 3, is or is expected to
be primarily responsible for the management, growth or
protection of some part or all of the business of the Company;
(g) "Limited Right" means a right to receive cash in lieu of the
exercise of an Option, if granted pursuant to Section 5(e);
(h) "Officers Exercise Period" means any period beginning on the
third business day following the date of public release of a
summary statement of CBI's quarterly or annual sales and
earnings and ending on the twelfth business day following such
date;
(i) "Non-Qualified Stock Option" means an option to purchase shares
of Common Stock which is intended not to qualify as an incentive
stock option as defined in Section 422A of the Internal Revenue
Code;
(j) "Option" means an Incentive Stock Option or a Non-Qualified
Stock Option;
(k) "Participant" means a person to whom an Option is granted that
has not terminated and ceased to be exercisable under the Plan;
<PAGE> 2
(l) "Right" means a stock appreciation right to elect to receive
shares of Common Stock with a fair market value, at the time of
any exercise of such stock appreciation right, equal to the
amount by which the fair market value of all shares subject to
the Option (or part thereof) in respect of which such stock
appreciation right was granted exceeds the exercise price of
said Option (or part thereof), or to receive from CBI, in lieu
of such shares, the fair market value thereof in cash, as
provided in Section 7; and
(m) "Subsidiary" means any corporation other than CBI in an unbroken
chain of corporations beginning with CBI if each of the
corporations other than the last corporation in the unbroken
chain owns 50% or more of the voting stock in one of the other
corporations in such chain.
3. Administration of Plan
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Committee"). None of the members of the Committee shall
be eligible to be selected for the grant of an Option, Right, Limited Right, or
any other option, stock appreciation right or shares under the Plan or the grant
of any stock or option under any other plan maintained by the Company during
such membership or have been so eligible for selection within one year prior
thereto or thereafter. The Committee may adopt its own rules of procedure, and
the action of a majority of the Committee, taken at a meeting or taken without a
meeting by a writing signed by such majority, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan, to make rules for carrying it out and to make
changes in such rules.
4. Granting of Options
The Committee may from time to time grant Options under the Plan to such
Key Employees and for such numbers of shares as the Committee may determine. The
Committee may grant Options in such amounts and may impose such conditions on
the grant of an Option as it deems advisable.
5. Terms of Options
The terms of each Option granted under the Plan shall be as determined
from time to time by the Committee and shall be set forth in an Incentive Stock
Option Agreement or a Non-Qualified Stock Option Agreement, as shall be
appropriate, in a form approved by the Committee, consistent, however, with the
following:
(a) The Option price per share shall not be less than fair market
value at the time the Option is granted.
(b) The Option shall be exercisable in whole or in part from time to
time during the period beginning at the completion of the
required holding period stated in the Option, if any, and ending
at the expiration of ten years from the date of grant of the
Option, unless an earlier expiration date shall be stated in the
Option or the Option shall cease to be exercisable pursuant to
paragraph (d) of this Section 5.
(c) Payment in full of the Option price shall be made upon exercise
of each Option and may be made in cash, by the delivery of
shares of Common Stock with a fair market value equal to the
Option price, or by a combination of cash and such shares whose
fair market value together with such cash shall equal the Option
price.
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<PAGE> 3
(d) If a Participant's employment with the Company terminates other
than by reason of the Participant's death, retirement for
disability or retirement under a retirement plan of the Company,
the Participant's Option shall terminate and cease to be
exercisable. If a Participant's employment with the Company
terminates by reason of death or retirement due to disability,
an Incentive Stock Option shall terminate and cease to be
exercisable at the earlier of ten years from the date of grant
or one year from the date of death or such retirement; if by
reason of retirement under a plan, then at the earlier of ten
years from the date of grant or three months from the date of
such retirement. The Committee may, upon written request of a
Holder, convert an Incentive Stock Option into a Non-Qualified
Stock Option, and if such request is granted, the provisions
concerning termination of Non-Qualified Stock Options shall
apply to the Option in question which has been converted. A
Non-Qualified Stock Option shall terminate at the earlier of ten
years from the date of grant or one year from the date of
termination of employment if such termination is due to death.
Following any retirement of a Participant, a Non-Qualified Stock
Option shall terminate on the expiration date of the Option. If
the terms of an Option provide for its expiration prior to ten
years from the date of grant, the Committee may at any time
extend the expiration date of the Option but not beyond ten
years from its date of grant In the event any date specified
herein falls on a day that is not a business day, then such date
shall be deemed to be the next following business day.
(e) An Option may contain a Limited Right to receive cash in lieu of
shares under conditions to be set forth in the Option, in the
discretion of and as determined by the Committee, in addition to
Rights.
6. Granting of Rights
The Committee, at the time of grant of an Option or at any time prior to
the expiration of the term of an Option may also grant, subject to the terms and
conditions of the Plan, Rights in respect of all or part of such Option to a
Holder, provided that, if granted to a Participant, the Participant at such time
is a Key Employee.
7. Exercise of Options and Rights
(a) A Holder who decides to exercise an Option or Right in whole or
in part shall give notice in writing to the Secretary of CBI of
such exercise on a form approved by the Committee. A notice
exercising a Right shall also specify the extent, if any, to
which the Holder elects to receive shares of Common Stock and
the extent, if any, to which the Holder elects to receive cash,
but shall in any event be subject to the determination by the
Committee as provided in paragraph (d) of this Section 7. Any
exercise shall be effective as of the date specified in the
notice of exercise, but not earlier than the date the notice of
exercise is actually received by the Secretary of CBI, and in
the case of exercise of an Option, when payment in full of the
Option price is actually received by the Secretary of CBI.
(b) To the extent an Option is exercised in whole or in part, any
Right granted in respect of such Option (or part thereof) shall
terminate and cease to be exercisable. To the extent a Right is
exercised in whole or in part, the Option (or part thereof) in
respect of which such Right was granted shall terminate and
cease to be exercisable.
(c) Subject to Section 6, a Right shall be exercisable only during
the period in which the Option (or part thereof) in respect of
which such Right was granted is exercisable and, in addition, if
the Holder of such Right is an officer of CBI and elects to
receive cash for all or part of the payments upon exercise, or
who exercises for such cash, such Holder may so elect or
exercise
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<PAGE> 4
such Right only during an Officer's Exercise Period. For this
purpose only, the fair market value of shares of CBI stock shall
be deemed to be the average of the closing prices for public
trading on the largest national securities exchange on which
such shares trade for all of the business days within such
Officer's Exercise Period.
(d) The Committee shall have sole discretion to determine the form
in which payment will be made following exercise of a Right. All
or any part of the obligation arising out of an exercise of a
Right may be settled:
(i) by payment in shares of Common Stock with a fair market
value equal to the cash that would otherwise be paid,
(ii) by payment in cash, or
(iii) by payment in a combination of such shares and cash.
(e) To the extent that any Right shall not have been exercised or
cancelled or become non-exercisable, it shall be deemed to have
been exercised automatically, without any notice of exercise, on
the last day on which the Right's related Option is exercisable,
or, in the case of officers of CBI, on the last day of the
Officer's Exercise Period before the last day on which the
Right's related Option is exercisable, provided that any other
conditions or limitations on the Right's exercise other than
notice of exercise are satisfied and the Right shall then have
value. Such exercise shall be deemed to specify that, subject to
determination by the Committee as provided in paragraph (d) of
this Section 7, the Holder elects to receive cash and that such
exercise of a Right shall be effective as of the time of the
exercise.
(f) The aggregate fair market value of the shares for which any Key
Employee may exercise Incentive Stock Options in any calendar
year under all plans of CBI shall not exceed the sum of $100,000
plus the amount which may be carried forward to that year. For
purposes of the preceding sentence, the aggregate fair market
value shall be determined as of the time an Incentive Stock
Option is granted, and the amount which may be carried forward
from each previous calendar year is $100,000 minus the amount of
Incentive Options first exercisable and actually exercised in
that previous calendar year. This provision shall be applied by
taking options into account in the order in which they were
granted.
(g) To the extent the receipt of shares of Common Stock pursuant to
the exercise of any Option or Right is subject to the
withholding of any income or employment taxes by CBI for which
CBI requires reimbursement from the recipient, the recipient may
elect to reimburse CBI with shares of Common Stock withheld from
the shares to be received, or cash, or a combination of such
shares and cash, of sufficient value to make such reimbursement.
Any such withholding or reimbursement shall comply with all
applicable governing laws and regulations.
8. Limitations and Conditions
(a) The total number of shares of Common Stock that may be optioned
or issued or transferred upon exercise of Rights under the Plan
is 1,700,000 shares. Such total number of shares may consist, in
whole or in part, of unissued shares or reacquired shares. The
foregoing number of shares may be increased or decreased by the
events set forth in of Section 10.
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<PAGE> 5
(b) Any shares that have been optioned that cease to be subject to
an Option (other than by reason of exercise of the Option) shall
again be available for option and shall not be considered as
having been theretofore optioned. Any shares subject to an
Option (or part thereof) that is cancelled upon exercise of a
Right shall be treated as if the Option itself were exercised
and such shares shall no longer be available for grant.
(c) No Option or Right shall be granted under the Plan after January
1, 2005 but Options and Rights theretofore granted may extend
beyond that date. At the time an Option or Right is granted or
amended or the terms or conditions of an Option or Right are
changed, the Committee may provide for limitations or conditions
on the exercisability of the Option or Right.
(d) (i) A Non-Qualified Stock Option shall be
non-transferrable unless the Committee designates
otherwise. An Incentive Stock Option or a Right
associated therewith shall not be transferable by the
Participant otherwise than by will or by the laws of
descent and distribution or by the provisions for the
designation of a beneficiary in accordance with (ii)
below. A Right shall never be transferred except to the
transferee of the related Option. During the lifetime
of the Participant, an Incentive Stock Option or a
Right associated therewith shall only be exercisable by
the Participant.
(ii) Upon the death of a Participant, any outstanding and
unexercised Options or Rights held by such Participant
on the date of death shall be transferred to such
beneficiary or beneficiaries as have been effectively
designated by the Participant or, if none, then to the
deceased Participant's surviving spouse or, if none,
then to the Participant's lawful descendants, per
stirpes as defined by common law, or, if none, then to
the deceased Participant's estate. Any such transfer
shall be effective as of the date of death of the
Participant. To be effective, the designation of such
beneficiary must be filed with the Committee or its
designate in such written form as it requires and may
include secondary, successive or contingent
beneficiaries. Any Participant may change a beneficiary
designation at any time by filing with the Committee a
new beneficiary designation meeting the above
requirements. The determination of the Committee as to
the identity of a beneficiary, or whether a beneficiary
is living or dead, pursuant to any determinations of
rights under this Plan shall be conclusive and binding
on all concerned.
(e) No person shall have any rights of a stockholder (i) as to
shares under option until, after proper exercise of the Option,
such shares shall have been recorded on CBI's official
stockholder records as having been issued or transferred or (ii)
as to shares to be delivered following exercise of a Right
until, after proper exercise of the Right and determination by
the Committee to make payment therefor in shares, such shares
shall have been recorded on CBI's official stockholder records
as having been issued or transferred.
(f) CBI shall not be obligated to deliver any shares until they have
been listed (or authorized for listing upon official notice of
issuance) upon each stock exchange upon which outstanding shares
of such class at the time are listed nor until there has been
compliance with such laws or regulations as CBI may deem
applicable. CBI shall use its best efforts to effect such
listing and compliance. No fractional shares shall be delivered.
(g) The total number of shares of Common Stock that may be optioned
to a Participant in any year shall not exceed 100,000 shares.
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<PAGE> 6
9. Transfers and Leaves of Absence
For the purposes of the Plan: (a) a transfer of a Participant's
employment without an intervening period from CBI to a Subsidiary or vice versa,
or from one Subsidiary to another, shall not be deemed a termination of
employment, and (b) a Participant who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Company during such leave
of absence.
10. Stock Adjustments
In the event of any merger, consolidation, stock dividend, split-up,
combination or exchange of shares or recapitalization or change in
capitalization, the total number of shares set forth in paragraph (a) of Section
8 shall be proportionately and appropriately adjusted. In any such case, the
number and kind of shares that are subject to any Option (including any Option
outstanding after termination of employment), the Option price per share and the
number of Rights granted in connection therewith, if any, shall be
proportionately and appropriately adjusted by the Committee without any change
in the aggregate Option price to be paid therefor upon exercise of the Option.
11. Amendment and Termination
(a) The Board of Directors shall have the power to amend the Plan,
including the power to change the amount of the aggregate fair
market value of the shares for which any Key Employee may
exercise Incentive Stock Options under Section 4 to the extent
provided in Section 422A, or any successor provision, of the
Internal Revenue Code. It shall not, however, except as
otherwise provided in the Plan, increase the maximum number of
shares authorized for the Plan, nor reduce the basis upon which
the minimum Option price is determined, nor extend the period
within which Options or Rights under the Plan may be granted,
nor change the basis upon which shares or cash may be
distributed upon exercise of a Right, nor provide for an Option
or Right that is exercisable more than ten years from the date
of grant. It shall have no power (without the consent of the
person or persons at the time entitled to exercise the Option)
to change the terms and conditions of any Option in a manner
that would adversely affect the rights of such person or persons
except to the extent, if any, provided in the Option.
(b) The Board of Directors may suspend or terminate the Plan at any
time. No such suspension or termination shall affect Options or
Rights then in effect.
12. Effective Date
The Plan shall be effective as of January 1, 1995, subject to its
approval by the stockholders of CBI and subject to any modification that may be
made herein prior to such stockholder approval that may be deemed required or
appropriate by the Board of Directors to meet legal requirements. All Options,
together with related Rights or Limited Rights, if any, which have been or may
be granted under the Plan prior to stockholder approval, shall be conditioned
upon, and may not be exercised until after, such stockholder approval.
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<PAGE> 1
EXHIBIT 11
CBI
RESTRICTED STOCK AWARD PLAN
(as amended October 6, 1981)
1. Purpose. The purpose of this CBI Restricted Stock Award Plan (the
"Plan") is to provide an incentive for Participants to contribute to the
continued growth and profitability of the Company by encouraging stock
ownership. The Plan is intended to further the interest of the Company by
enabling it to attract and retain the services of highly qualified and motivated
persons to serve the Company and its subsidiaries.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
Award--The grant of Common Stock subject to the restrictions and pursuant
to the terms of the Plan.
Award Date--The date on which an Award is approved by the Board as provided
by paragraph 4.3 below.
Board--The Board of Directors of the Company, as from time to time
constituted.
Committee--The Compensation Committee of the Board, no member of which
shall be eligible to participate in the Plan while serving as such member.
Common Stock--Common shares of the Company, par value $2.50 per share.
Company--CBI Industries, Inc., a Delaware corporation.
Disability--That condition of a Participant, including but not limited to a
physical or mental condition, which makes a Participant unable to perform
the regular duties of his employment, as determined by the Committee,
provided, however, that Disability shall not consist of a condition
resulting from a cause which the Committee, in its rules, has excluded.
Effective Date--April 11, 1978.
Participant--An employee or former employee who has received an Award under
the Plan.
Retirement--The termination of employment of a Participant with the Company
and all subsidiaries on or after attaining age 62, or such earlier
termination with the Company's consent and as may be determined by the
Committee to constitute early retirement, provided, however, that no
termination of such employment by reason of dishonesty, fraud or breach of
trust against the Company or any of its subsidiaries, as determined by the
Committee, shall constitute Retirement.
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<PAGE> 2
Supplemental Award--An Award made pursuant to paragraph 4.4 below and
designated as a "Supplemental Award" by the Committee at the time it is
made.
3. Common Stock Subject to Plan. There will be reserved for issue upon
the granting of Awards during the term of the Plan an aggregate of 500,000
shares of Common Stock, as adjusted by the Committee as required to reflect any
stock dividend, stock split, reclassification or similar change in
capitalization. If any such adjustment shall result in a fractional share such
fraction shall be disregarded. Upon the granting of an Award, the number of
shares reserved for Award shall be reduced by the number of shares so awarded,
and upon the forfeiture to the Company of any shares awarded hereunder the
number of shares reserved for Award shall be increased by such number of shares,
and such forfeited shares may again be the subject of an Award. Awards may be
made from authorized but unissued shares or from treasury shares. All
authorized but unissued shares awarded hereunder shall be fully paid and
nonassessable shares.
4. Eligibility and Awards.
4.1 Eligibility. The Chairman and President of the Company shall not
be eligible to become a Participant. All other management employees
(including officers but not directors unless also employees) of the Company
and of its present and future subsidiaries are eligible to be selected by
the Committee and approved by the Board as Participants.
4.2 Making of Awards. Subject to the express provisions of the Plan,
the Committee shall in its discretion determine the employees to whom, and
the time or times at which, Awards shall be made pursuant to the Plan and
the number of shares to be awarded. In making such determinations, the
Committee shall take into account the recommendations of the Management
Committee of the Company and the nature of the services rendered by the
respective employees, their present and potential contributions to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant. Except as provided in paragraph 4.4 below, Awards to
any employee will not be made more frequently than once in each calendar
year.
4.3 Form of Award. As soon as reasonably practicable after making a
determination as provided in paragraph 4.2 above, the Committee shall
submit such determination to the Board which shall approve or disapprove
the Award. Promptly upon the approval of an Award by the Board, the
Committee shall advise the Participant in writing of the making of such
Award, the number of shares awarded, the restrictions thereon and incidents
of forfeiture thereof, and any other terms and conditions relating thereto.
4.4 Supplemental Awards. During the first year following the
Effective Date of this Plan, a Supplemental Award may be made to any
employee who is otherwise eligible under this Plan and who (i) is the
holder
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<PAGE> 3
of one or more valid outstanding stock options under Chicago Bridge & Iron
Company's 1975 Stock Option Plan for Selected Key Employees as of May 1,
1978, and (ii) has on or before June 1, 1978 surrendered all options. The
number of shares of common Stock awarded as a Supplemental Award to any
Participant shall be twenty percent (20%) of the number of shares subject
to such surrendered options but not less than 100 shares to any employee
surrendering such options. Supplemental Awards shall be made in the same
manner as Awards under paragraphs 4.2 and 4.3 above, except that a
Supplemental Award may be made in the same year as another Award to such
Participant.
5. Restrictions on Awarded Stock.
5.1 Rights of Participants as Shareholders. Shares awarded hereunder
shall forthwith be duly issued or transferred and a certificate or
certificates for such shares shall be issued in the Participant's name. The
Participant shall thereupon be a shareholder with respect to all the shares
represented by such certificate or certificates and shall have all the
rights of a shareholder with respect to all such shares, including the
right to vote such shares and to receive all dividends and other
distributions (subject to the provisions of paragraph 5.2 below) paid with
respect to such shares, provided, however, that such shares shall be
subject to the restrictions hereinafter described, and to such additional
or more severe restrictions (including more severe provisions relating the
the lapsing of restrictions) as may be imposed by the Committee in making
any individual award. In aid of such restrictions, certificates for shares
awarded hereunder, together with suitable executed stock powers signed by
each Participant, shall be held by the Company in its control for the
account of such Participant until such restrictions lapse as provided in
paragraph 5.4 below or such shares are theretofore forfeited to the Company
as provided by paragraph 5.3 below.
5.2 Changes in Capitalization. In the event that, as the result of a
stock dividend, stock split, reclassification or similar change in
capitalization, the Participant shall, as the owner of shares subject to
restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or
other evidences of, such new or additional or different shares of
securities, shall also be held by the Company in its control for the
account of such Participant as provided in paragraph 5.1 above, and all
provisions of the Plan relating to restrictions and lapse or restrictions
herein set forth shall thereupon be applicable to such new or additional or
different shares or securities to the extent they were distributed;
provided, however, that if the Participant shall receive rights, warrants
or fractional interests in respect of any of such shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Participant free and clear of
the restrictions hereafter set forth.
5.3 Imposition of Restrictions. Each share awarded under the Plan
shall be subject to the following restrictions except to the extent that
such restrictions have lapsed pursuant to paragraph 5.4 below:
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<PAGE> 4
5.3.1 Transfer Restrictions. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed of in
any manner, whether voluntarily or involuntarily.
5.3.2 Forfeitures. All of such shares shall be forfeited to the
Company without notice immediately upon the occurrence of any of the
following events:
a. The termination of the employment of the Participant
with the Company and all subsidiaries for any reason other
than Retirement, Disability, or death, or
b. The performance of services by the Participant, while an
employee of the company or any subsidiary or within two (2)
years following his Retirement, as an employee, consultant or
independent contractor for, or the acquisition of an
ownership interest in excess of five percent (5%) in, any
competitor of the Company or any subsidiary without the
express written consent of the Company, or
c. The failure of the Participant (for any reason other
than Disability or death), within two (2) years following his
Retirement, to render such consulting services, advice, and
counsel to the Company or any subsidiary as the Company may
reasonably request, or
d. An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of
Paragraph 5.3.1 above, or
e. A. violation of such additional or more severe
restrictions imposed by the Committee pursuant to paragraph
5.1.
5.4 Release of Restrictions. The restrictions set forth in paragraph
5.3 above on shares awarded under the Plan, to the extent such shares have not
been forfeited pursuant to paragraph 5.3 above, shall lapse on the first to
happen of (i) the date of the Participant's death, (ii) the termination of the
Participant's employment by reason of his Disability, or (iii) the second
anniversary of his Retirement; and shall lapse prior thereto either pursuant to
such additional or more severe restrictions imposed by the Committee pursuant to
paragraph 5.1 or as follows:
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<PAGE> 5
5.4.1 Awards other than Supplemental Awards. Restrictions on
shares in each Award under the Plan, other than a Supplemental Award, shall
lapse as to fifty percent (50%) of the shares in such Award on the fifth
anniversary of the Award Date.
5.4.2 Supplemental Awards. Restrictions on shares in each
Supplemental Award under the Plan shall lapse:
a. As to forty percent (40%) of the shares in such Award, on the
second anniversary of the Award Date,
b. As to thirty percent (30%) on the shares in such Award, on the
fourth anniversary of the Award Date, and
c. As to the remaining thirty percent (30%) of the shares in such
Award, on the sixth anniversary of the Award Date.
6. Miscellaneous.
6.1 Administration. Subject to the express provisions of the Plan, the
Committee shall have complete authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all
other determinations necessary or advisable for the administration of the Plan.
The Committee's determinations on the matters referred to herein shall be
conclusive.
6.2 Limitations. Nothing in the Plan or in any Award shall confer on any
employee the right to continue in the employ of the Company or any of its
subsidiaries nor interfere in any way with the right of the Company or its
subsidiaries to terminate the employment of that employee at any time.
6.3 Amendment and Termination. The Board may suspend or terminate the
Plan, or amend the Plan in such respect as it shall deem advisable, provided,
however, that such amendment shall not, without the consent of the Participant
to whom any Award shall theretofore have been granted under the Plan, adversely
affect the rights of such Participant under such Award, and further provided
that such amendment shall not change the maximum number of shares available for
awarding to all Participants or which may be awarded to any Participant as a
Supplemental Award.
6.4 Effectiveness of the Plan. The Plan became effective on April 11,
1978. No stock shall be awarded under the Plan after May 31, 1984, or such
earlier date as the Plan may have been terminated pursuant to paragraph 6.3.
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<PAGE> 6
A meeting of the Board of Directors of CBI Industries, Inc. was held at the
office of the Company in Oak Brook, Illinois at 8:45 A.M. on August 6, 1985.
All the directors were present except Mr. C.W. Lake, Jr. Messrs. R.L.
Brunot and B.T. Adams were present for part of the meeting. Mr. Pogue presided
and Mr. Craigmile acted as secretary.
On motion made, seconded and carried, the minutes of the Board meeting held
June 4, 1985 were approved.
Mr. Pogue said that formal action needed to be taken on management's
recommendation that people terminated as a result of the Company's recent force
reduction do not forfeit shares awarded pursuant to the Company's restricted
stock award plan. After discussion, and on motion made, seconded and carried,
the following resolution was adopted:
RESOLVED, that the release of restrictions on stock awarded to a
Participant under the CBI 1983 Restricted Stock Award Plan ("the 1983
Plan") or under the CBI Restricted Stock Award Plan ("the 1978 Plan") who
may be involuntarily terminated pursuant to a program or plan of work force
reduction, as determined by the Salary and Benefits Committee, shall occur
under the terms of the 1983 Plan as though such Participant had Retired;
provided, however, in the event such Participant is reemployed prior to the
second anniversary of the date of such termination by CBI Industries, Inc.,
or any of its subsidiaries, the release of such restrictions shall occur in
accordance with the otherwise applicable provisions of the 1978 Plan or the
1983 Plan, as the case may be, as though such termination had not occurred.
There was a discussion concerning the cost of termination benefits
resulting from the Company's recent force reduction and the fact that funds were
available in the pension trust to cover such costs and, additionally, pay for
retiree medical benefits. After discussion, and on motion made, seconded and
carried, the following resolution was adopted:
RESOLVED, that the officers of the Company, the General Counsel, and
the Manager of Employee Benefits, as Plan Administrator of the CBI Pension
Plan, are jointly authorized to amend the CBI Pension Plan and CBI Pension
Trust, as necessary, effective January 1, 1985, to provide for the
following:
1. Payment of special severance pay benefits from the Trust to Company
or Participating Affiliate employees terminated from employment under
a formal work force reduction program conducted over a specified time
period, as designated by the Board.
2. Payment from the Trust of retired Participants' medical costs under
the Company's health care program for retired employees, net of such
Participants' own contributions to payment of such costs, and securing
such Internal Revenue Service or other governmental approvals, or
filing such notices or other documents, as necessary to implement such
payments.
Mr. Brunot presented management's recommendation with respect to
adjustments to the carrying value of certain assets. There was a review of the
recommended adjustments considering future business prospects in the energy and
energy service markets, the effects of the recently Implemented restructuring
and the redirection of the Company's efforts in the construction services
segment, and the estimated realizable values in the event some of
<PAGE> 7
Board of Directors Meeting
CBI Industries, Inc.
August 6, 1985 - Page 2
the specified assets were ultimately sold, the primary purpose of the
adjustments being to establish appropriate recoverable values considering
expected future operations. On motion made, seconded and carried, the Board
approved adjustments to the carrying value of certain assets of the Company and
its subsidiaries in the total amount of approximately $153,000,000, as set
forth in the summary thereof attached to these minutes and identified by the
Secretary of the Company.
On Motion made, seconded and carried, a quarterly dividend of 35 cents per
share was declared, payable September 13, 1985 to shareholders of record as of
the close of business August 20, 1985.
The remainder of the meeting was devoted to a discussion of the business
of the Company, its subsidiaries and affiliates.
There was no further business to come before the meeting and, accordingly,
on motion made, seconded and carried, the meeting adjourned at 11:25 A.M.
/s/ D.H. Craigmile
----------------------------
Secretary
<PAGE> 8
A meeting of the Board of Directors of CBI Industries, Inc. was held at
the office of the Company in Oak Brook, Illinois at 8:30 A.M. on August 5, 1986.
All the directors were present. Messrs. R. L. Brunot and C. O. Ziemer were
present for part of the meeting. Mr. Pogue presided and Mr. Craigmile acted as
Secretary.
On motion made, seconded and carried, the minutes of the Board meeting held
June 3, 1986 were approved.
Mr. Brunot reviewed the reasons for the Company's decision to change the
present accounting method for oil and gas reserves from the "full cost" method
to the "successful efforts" method, the change to take effect commencing with
the second quarter 1986.
On motion made, seconded and carried, a quarterly dividend of 15 cents per
share was declared, payable September 12, 1986 to shareholders of record as of
the close of business August 19, 1986.
Mr. Pogue recommended the adoption of new employee stock purchase plans
substantially the same as the existing plans which expire in January 1987. After
discussion, and on motion made, seconded and carried, the directors approved the
"CBI Employee Stock Purchase and Savings Plan (1987)" and the "Employee Stock
Purchase Plan for Participating CBI Subsidiaries (1987)", in the form of which
copies identified by the Secretary have been inserted in the minute book
following these minutes, subject to the approval of shareholders and appropriate
governmental agencies.
After discussion, and on motion made, seconded and carried, the following
resolutions were adopted:
RESOLVED, that in accordance with Article 1, Section 1.09 of the CBI
Employee Stock Purchase and Savings Plan (1987), the subsidiaries listed on
the schedule attached to these minutes and identified by the Secretary are
hereby designated "Participating Subsidiaries" under the plan;
RESOLVED FURTHER, that in accordance with Section 1.07 of the CBI
Employee Stock Purchase and Savings Plan (1987), Mr. R. G. Douglass is
designated "Plan Administrator".
It was reported that it was necessary to ratify certain actions and
authorize other actions concerning the trading and escrow accounts with Banque
de Paris et des Pays-Bas (Suisse) S.A., Geneva, in connection with the Statia
terminal. On motion made, seconded and carried, the following resolutions were
adopted:
RESOLVED, that the actions of Mr. Julian Y. Barrolaza in opening on
behalf of CBI Industries, Inc., Account Number 057045K designated "Statia
Trading Account" and Account Number 057101T currently designated "Bridge
Escrow Account" with Banque de Paris et des Pays-Bas (Suisse) S.A., Geneva,
and in executing and delivering on behalf of CBI Industries, Inc. all
applications, assignments, pledges, agreements and other documents relating
to the opening of and the operation of said accounts and any balances
deposited in and transfers to and from said accounts are hereby ratified
and confirmed.
<PAGE> 9
Board of Directors Meeting
CBI Industries, Inc.
August 5, 1986 - Page 2
RESOLVED FURTHER, that all actions of Mr. Julian Y. Barrolaza on
behalf of CBI Industries, Inc., prior to the date of this resolution
relating to the operation of said accounts and the giving of instructions
to said bank with respect to said accounts in accordance with the foregoing
resolution and the matters contemplated therein are hereby ratified and
confirmed.
RESOLVED FURTHER, that Mr. Buel T. Adams and Mr. Julian Y. Barrolaza
be and they are hereby authorized on behalf of CBI Industries, Inc. to give
instructions to said bank with respect to said accounts and to execute on
behalf of CBI Industries, Inc., any and all other documents which may be
required to continue the operation of or close said accounts all in
accordance with the foregoing resolutions and the matters contemplated
therein.
There was a discussion regarding amending the by-laws to eliminate the
present requirement that a directors' meeting be held immediately following the
annual meeting each year. After due notice given in accordance with the
by-laws, and on motion made, seconded and carried, the following resolution was
adopted:
RESOLVED, that the second sentence of Section 3 of Article V of the
by-laws be and is hereby amended to read as follows:
"Regular meetings of the board of directors shall be held at such
times as may be fixed by resolution of the board."
Mr. Clark gave the report of the Compensation and Nominating Committee. The
Committee recommended that the Board take action to provide for the equitable
handling of certain benefits previously earned by employees of the Company in
the event of certain types of termination. After discussion, and on motion
made, seconded and carried the following resolutions were adopted:
WHEREAS, the directors of the Company wish to provide for the fair and
equitable vesting of deferred compensation previously earned by employees
of the Company and its subsidiaries and affiliates in the event of the
termination by the Company of the employment of such employees for reasons
other than death, disability (as defined in the CBI Pension Plan), or
willful and material acts by such an employee causing direct and
substantial injury to CBI or its business, when such employees have
otherwise fulfilled the requirements or complied with the restrictions
placed on the grant or awards of such deferred compensation but for the
said termination; and
WHEREAS, the Company and its subsidiaries and affiliates maintain the
CBI 1983 Restricted Stock Award Plan and the CBI Restricted Stock Award
Plan of 1978 ("the Plans") to provide such deferred compensation to several
hundred management and administrative employees of such companies in the
form of awards of shares of restricted stock in recognition of past
performance and as an incentive for future service; and
WHEREAS, the directors have previously implemented such a policy by
authorizing the accelerated lapse of restrictions on shares awarded under
the Plans for certain terminations of employment of such employees pursuant
to a program of work force reduction by virtue of the resolution of August
6, 1985;
<PAGE> 10
Board of Directors Meeting
CBI Industries, Inc
August 5, 1986 - Page 3
NOW, THEREFORE, the Board adopts the following resolutions:
RESOLVED, that all restrictions shall be released on shares of stock
awarded to a Participant under either or both of the Plans, or on any
shares of stock awarded to an employee as a substitute for, in lieu of, or
carrying restrictions substantially similar to those incident to
participation in the Plans, whose employment may be terminated by the
Company other than for the excepted reasons recited above throughout the
three-year period following any "change in control" of the Company, as
defined in the CBI Pension Plan, as amended March 4, 1986;
RESOLVED FURTHER, that all such restrictions shall be released
immediately as to all participants in either or both of the
respective Plans, as the case may be, should either or both Plans at
any time be terminated following any "change in control" of the
Company, as defined in the CBI Pension Plan, as amended March 4,
1986.
Mr. Clark also mentioned that the Committee concurred with Mr. Pogue's
recommendation that the Chairman and Vice Chairman of the Board be given
authority to commit up to a total of 10,000 shares of common stock of the
Company to individuals in special situations. After discussion, and on motion
made, seconded and carried, the Board gave the Chairman and the Vice Chairman of
the Board the authority in their sole discretion to commit up to a total of
10,000 shares of the Company's common stock to individuals selected by those
officers, such shares to be awarded pursuant to the CBI 1983 Restricted Stock
Award Plan.
The remainder of the meeting was devoted to a discussion of the business of
the Company, its subsidiaries and affiliates.
There was no further business to come before the meeting and, accordingly,
on motion made, seconded and carried, the meeting adjourned at 11:15 A.M.
/s/ D.H. Craigmile
------------------------------
Secretary
<PAGE> 1
EXHIBIT 12
CBI 1983 RESTRICTED STOCK AWARD PLAN
(As Amended December 6, 1983)
1. Purpose. The purpose of this CBI 1983 Restricted Stock Award Plan
(the "Plan") is to provide an incentive for Participants to contribute to the
continued growth and profitability of the Company by encouraging stock
ownership. The Plan is intended to further the interest of the Company by
enabling it to attract and retain the services of highly qualified and motivated
persons to serve the Company and its subsidiaries.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
Award--The grant of Common Stock subject to the restrictions and
pursuant to the terms of the Plan.
Award Date--The date on which an Award is approved by the Board as
provided by paragraph 4.3 below.
Board--The Board of Directors of the Company, as from time to time
constituted.
Committee--The Compensation Committee of the Board, no member of which
shall be eligible to participate in the Plan while serving as such
member.
Common Stock--Common shares of the Company, par value $2.50 per share.
Company--CBI Industries, Inc., a Delaware corporation.
Disability--That condition of a Participant, including but not limited
to a physical or mental condition, which makes a Participant unable to
perform the regular duties of his employment, as determined by the
Committee, provided, however, that Disability shall not consist of a
condition resulting from a cause which the Committee, in its rules, has
excluded.
Effective Date--May 1, 1983.
Participant--An employee or former employee who has received an Award
under the Plan.
Retirement--The termination of employment of a Participant with the
Company and all subsidiaries on or after attaining age 60, or after
qualifying for any retirement as defined under the terms of the CBI
Pension Plan as amended, or such earlier termination with the Company's
consent and as may be determined by the Committee to constitute early
retirement, provided, however, that no termination of such employment by
reason of dishonesty, fraud or breach of trust against the Company or
any of its subsidiaries, as determined by the Committee, shall
constitute Retirement.
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<PAGE> 2
3. Common Stock Subject to Plan. There will be reserved for issue upon
the granting of Awards during the term of the Plan an aggregate of 500,000
shares of Common Stock, as adjusted by the Committee as required to reflect any
stock dividend, stock split, reclassification or similar change in
capitalization. If any such adjustment shall result in a fractional share such
fraction shall be disregarded. Upon the granting of an Award, the number of
shares reserved for Award shall be reduced by the number of shares so awarded,
and upon the forfeiture to the Company of any shares awarded hereunder the
number of shares reserved for Award shall be increased by such number of shares,
and such forfeited shares may again be the subject of an Award. Awards may be
made from authorized but unissued shares or from treasury shares. All
authorized but unissued shares awarded hereunder shall be fully paid and
nonassessable shares.
4. Eligibility and Awards.
4.1 Eligibility. All management employees (including officers but
not directors unless also employees) of the Company and of its present and
future subsidiaries are eligible to be selected by the Committee and
approved by the Board as Participants.
4.2 Making of Awards. Subject to the express provisions of the Plan,
the Committee shall in its discretion determine the employees to whom, and
the time or times at which, Awards shall be made pursuant to the Plan and
the number of shares to be awarded. In making such determinations, the
Committee shall take into account the recommendations of the Management
Committee of the Company and the nature of the services rendered by the
respective employees, their present and potential contributions to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant. Awards to any employee will not be made more
frequently than once in each calender year.
4.3 Form of Award. As soon as reasonably practicable after making a
determination as provided in paragraph 4.2 above, the Committee shall
submit such determination to the Board which shall approve or disapprove
the Award. Promptly upon the approval of an Award by the Board, the
Committee shall advise the Participant in writing of the making of such
Award, the number of shares awarded, the restrictions thereon and incidents
of forfeiture thereof, and any other terms and conditions relating thereto.
5. Restrictions on Awarded Stock.
5.1 Rights of Participants as Shareholders. Shares awarded hereunder
shall forthwith be duly issued and identified on the books of the Company
in the Participant's name. The Participant shall thereupon be a
shareholder with respect to all such shares and shall have all the rights
of a shareholder with respect to all such shares, including the right to
vote such shares and to receive all dividends and other distributions
(subject to the provisions of paragraph 5.2 below) paid with respect to
such shares, provided, however, that such shares shall be subject to the
restrictions hereinafter described, and to such additional or more severe
restrictions (including more severe provisions relating the the lapsing of
restrictions) as may be imposed by the Committee in making any individual
award. In aid of
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<PAGE> 3
such restrictions, such shares shall be held by the Company in its control
for the account of such Participant until such restrictions lapse as
provided in paragraph 5.4 below or such shares are theretofore forfeited to
the Company as provided by paragraph 5.3 below.
5.2 Changes in Capitalization. In the event that, as the result of a
stock dividend, stock split, reclassification or similar change in
capitalization, the Participant shall, as the owner of shares subject to
restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or
other evidences of, such new or additional or different shares or
securities, shall also be held by the Company in its control for the
account of such Participant as provided in paragraph 5.1 above, and all
provisions of the Plan relating to restrictions and lapse or restrictions
herein set forth shall thereupon be applicable to such new or additional or
different shares or securities to the extent they were distributed;
provided, however, that if the Participant shall receive rights, warrants
or fractional interests in respect of any of such shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Participant free and clear of
the restrictions hereafter set forth.
5.3 Imposition of Restrictions. Each share awarded under the Plan
shall be subject to the following restrictions except to the extent that
such restrictions have lapsed pursuant to paragraph 5.4 below:
5.3.1 Transfer Restrictions. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed
of in any manner, whether voluntarily or involuntarily.
5.3.2 Forfeitures. All of such shares shall be forfeited to the
Company without notice immediately upon the occurrence of any of the
following events:
a. The termination of the employment of the Participant with
the Company and all subsidiaries for any reason other than Retirement,
Disability, or death, or
b. The performance of services by the Participant, while an
employee of the Company or any subsidiary or within two (2) years
following his Retirement, as an employee, consultant or independent
contractor for, or the acquisition of an ownership interest in excess
of five percent (5%) in, any competitor of the Company or any
subsidiary without the express written consent of the Company, or
c. The failure of the Participant (for any reason other than
Disability or death), within two (2) years following his Retirement,
to render such consulting services, advice, and counsel to the
Company or any subsidiary as the Company may reasonably request, or
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<PAGE> 4
d. An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of Paragraph 5.3.1
above, or
e. A violation of such additional or more severe restrictions
imposed by the Committee pursuant to paragraph 5.1.
5.4 Release of Restrictions. The restrictions set forth in paragraph
5.3 above on shares awarded under the Plan, to the extent such shares have
not been forfeited pursuant to paragraph 5.3 above, shall lapse on the first
to happen of (i) the date of the participant's death, (ii) the termination
of the Participant's employment by reason of his Disability, (iii) the
second anniversary of his Retirement, or (iv) such earlier date as to any
Participant as the Board may fix by resolution; and shall lapse prior
thereto either (a) as to fifty percent (50%) of the shares in such Award, on
the fifth anniversary of the Award Date, or (b) pursuant to such additional
or more severe restrictions imposed by the Committee pursuant to paragraph
5.1.
6. Miscellaneous.
6.1 Administration. Subject to the express provisions of the Plan,
the Committee shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to
make all other determinations necessary or advisable for the administration
of the Plan. The Committee's determinations on the matters referred to
herein shall be conclusive.
6.2 Limitations. Nothing in the Plan or in any Award shall confer on
any employee the right to continue in the employ of the Company or any of
its subsidiaries nor interfere in any way with the right of the Company or
its subsidiaries to terminate the employment of that employee at any time.
6.3 Amendment and Termination. The Board may suspend or terminate
the Plan, or amend the Plan in such respect as it shall deem advisable,
provided, however, that such amendment shall not, without the consent of the
Participant to whom any Award shall theretofore have been granted under the
Plan, adversely affect the rights of such Participant under such Award, and
further provided that such amendment shall not change the maximum number of
shares available for awarding to all Participants or which may be awarded to
any Participant as a Supplemental Award.
6.4 Effectiveness of the Plan. The Plan shall become effective on May
1, 1983. No stock shall be awarded under the Plan after April 30, 1989, or
such earlier date as the Plan may have been terminated pursuant to paragraph
6.3.
-4-
<PAGE> 5
CBI RESTRICTED STOCK AWARD PLAN
BRIEF DESCRIPTION OF FEDERAL INCOME TAX EFFECTS
The Plan is not qualified under Section 401(a) of the Internal Revenue Code
(hereinafter called "the Code") nor subject to the requirements of the Employee
Retirement Income Security Act of 1974. The Company is advised by counsel that
under the present laws and regulations, the Federal Income tax consequences to
the Company and participants in the Plan will be as follows:
Participants in the Plan will incur no income for Federal income tax purposes at
the time they receive an award of restricted stock unless they affirmatively
elect under Section 83(b) of the Code to incur income then. Otherwise, each
participant will realize taxable income (and the Company will be entitled to a
corresponding deduction) as risk of forfeiture of the awarded stock lapses. The
amount of income will equal the fair market value of the stock at that time.
Thereafter, the participant will realize capital gain or loss upon the sale or
taxable exchange of the stock equal to the difference between the aggregate
income incurred under the foregoing rules and the price received for the shares.
The holding period for determining whether the gain or loss is long or short
term will begin on the date on which the restrictions lapse.
The risk of forfeiture after an individual has attained age 60 or retires, as
defined in the Plan, depends upon certain events, such as, the failure to
provide consulting services or the performance of services to a competitor.
Counsel believes that under Section 83 of the Code, these events will normally
be sufficient to prevent a lapse of restrictions (and concomitant incurring of
income) after an individual has attained age 60 or has retired. However, this
determination will depend on the facts and circumstances as to each individual
participant at that time.
In the event a participant makes the election under Section 83(b) referred to
above (within 30 days of his receipt of the award), the participant will realize
income (and the Company is entitled to a corresponding deduction) at the time of
the award in an amount equal to the fair market value without regard to the
restrictions on the stock at that time. If the participant thereafter forfeits
the stock, no deduction will be allowed. Upon the lapse of restriction, the
participant will not incur income. Thereafter the participant will realize
capital gain or loss upon the sale or other taxable exchange of the stock equal
to the difference between the aggregate income incurred under the foregoing
rules and the price received for the stock. The holding period for determining
whether the gain or loss is long or short term will begin on the date on which
the stock was awarded.
The foregoing tax analysis is intended to assist in the understanding of the
operation and tax consequences of the Plan. The Company assumes no
responsibility with respect to the income taxes of its employees or how such
taxes should be computed, reported or paid. It is also pointed out that tax laws
and regulations are subject to change at any time.
D6/23
<PAGE> 6
SAMPLE LETTER - 83(b) ELECTION
Date
Send to: The Internal Revenue Service Center where you will file your
1985 U.S. Individual Income Tax Return
Attn: Internal Revenue Service Director
RE: Election of Gross Income in year of
Transfer Pursuant to Section 83(b) of
Internal Revenue Code
The undersigned hereby makes an election pursuant to 83(b) of Internal Revenue
Code with respect to the property described below and supplies the following
information in accordance with the regulations thereunder.
(1) Name, address and tax identification number of undersigned are:
Charles B. Iron
2960 South Street
Anytown, Illinois 60613
Social Security # 999-99-9999
(2) Description of the property with respect to which the election is being
made:
One hundred (100) shares of common stock par value $2.50 per share of CBI
Industries, Inc.
(3) Date on which property was transferred is June 1, 1985.
(4) Taxable year to which this election relates is calendar year 1985.
(5) The nature of the restricted award is the following:
AA. Imposition of Restrictions. Each share awarded under the Plan shall
be subject to the following restrictions except to the extent that
such restrictions have lapsed pursuant to paragraph BB below:
A. Transfer Restriction. None of such shares shall be sold,
exchanged, transferred, pledge, hypothecated, or otherwise
disposed of in any manner, whether voluntarily or involuntarily.
B. Forfeitures. All of such shares shall be forfeited to the Company
without notice immediately upon the occurrence of any of the
following events:
B1 The termination of the employment of the Participant with the
Company and all subsidiaries for any reason other than
Retirement, Disability, or death, or
<PAGE> 7
Sample Letter - 83(b) Election
Page 2
B2 The performance of services by the Participant, while an
employee of the Company or any subsidiary or within two (2)
years following his Retirement, as an employee, consultant
or independent contractor for, or the acquisition of an
ownership interest in excess of five percent (5%) in any
competitor of the Company or any subsidiary, without the
express written consent of the Company, or
B3 The failure of the Participant (for any reason other than
Disability or death), within two (2) years following his
Retirement, to render such consulting services, advice, and
counsel to the Company or any subsidiary as the Company may
reasonably request, or
B4 An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of
Paragraph A above, or
B5 A violation of such additional or more severe restrictions
imposed by the Company.
BB. Release of Restrictions. The restrictions set forth in paragraph B
above on the shares awarded under the Plan, to the extent such shares
have not been forfeited pursuant to paragraph AA above shall lapse on
the first to happen of (i) the date of the Participant's death (ii)
the termination of the Participant's employment by reason of his
Disability, (iii) the second anniversary of his Retirement, or (iv)
such earlier date as to any Participant as the Board may fix by
resolution; and shall lapse prior thereto either (a) as to fifty
percent (50%) of the shares in such Award, on the fifth anniversary of
the Award Date, or (b) pursuant to such additional or more severe
restrictions imposed by the Company.
(6) The fair market value at the time of transfer of the property with respect
to which this election is being made is $______ per share. (Insert CBI
stock closing price per share on May 31, 1985).
(7) The amount paid by the taxpayer for said property is $0.00 per share.
(8) A copy of this statement has been furnished to CBI Industries, Inc.
(9) Date_______________ Signature_______________________________________
(10) Copies to: CBI Industries, Inc.
800 Jorie Blvd.
Oak Brook, IL 60521
(i) Attn: Mr. R. G. Douglass
Employee Benefit Plans
(ii) Attn: Mr. G. B. Fenn
Tax Department
D7/46
lv
<PAGE> 8
A meeting of the Board of Directors of CBI Industries, Inc. was held at the
office of the Company in Oak Brook, Illinois at 8:45 A.M. on August 6, 1985.
All the directors were present except for Mr. C. W. Lake, Jr. Messrs.
R. L. Brunot and B. T. Adams were present for part of the meeting. Mr. Pogue
presided and Mr. Craigmile acted as secretary.
On motion made, seconded and carried, the minutes of the Board meeting held
June 4, 1985 were approved.
Mr. Pogue said that formal action needed to be taken on management's
recommendation that people terminated as a result of the Company's recent force
reduction do not forfeit shares awarded pursuant to the Company's restricted
stock award plan. After discussion, and on motion made, seconded and carried,
the following resolution was adopted:
RESOLVED, that the release of restrictions on stock awarded to a
Participant under the CBI 1983 Restricted Stock Award Plan ("the 1983
Plan") or under the CBI Restricted Stock Award Plan ("the 1978 Plan") who
may be involuntarily terminated pursuant to a program or plan of work force
reduction, as determined by the Salary and Benefits Committee, shall occur
under the terms of the 1983 Plan as though such Participant had Retired;
provided, however, in the event such Participant is reemployed prior to the
second anniversary of the date of such termination by CBI Industries, Inc.,
or any of its subsidiaries, the release of such restrictions shall occur in
accordance with the otherwise applicable provisions of the 1978 Plan or the
1983 Plan, as the case may be, as though such termination had not occurred.
There was a discussion concerning the cost of termination benefits
resulting from the Company's recent force reduction and the fact that funds
were available in the pension trust to cover such costs and, additionally, pay
for retiree medical benefits. After discussion, and on motion made, seconded
and carried, the following resolution was adopted:
RESOLVED, that the officers of the Company, the General Counsel, and
the Manager of Employee Benefits, as Plan Administrator of the CBI Pension
Plan, are jointly authorized to amend the CBI Pension Plan and CBI Pension
Trust, as necessary, effective January 1, 1985, to provide for the
following:
1. Payment of special severance pay benefits from the Trust to
Company or Participating Affiliate employees terminated from
employment under a formal work force reduction program conducted over
a specified time period, as designated by the Board.
2. Payment from the Trust of retired Participants' medical costs
under the Company's health care program for retired employees, net of
such Participants' own contributions to payment of such costs, and
securing such Internal Revenue Service or other governmental
approvals, or filing such notices or other documents, as necessary to
implement such payments.
Mr. Brunot presented management's recommendation with respect to
adjustments to the carrying value of certain assets. There was a review of the
recommended adjustments considering future business prospects in the energy and
energy service markets, the effects of the recently implemented restructuring
and the redirection of the Company's efforts in the construction services
segment, and the estimated realizable values in the event some of
<PAGE> 9
Board of Directors Meeting
CBI Industries, Inc.
August 6, 1985 - Page 2
the specified assets were ultimately sold, the primary purpose of the
adjustments being to establish appropriate recoverable values considering
expected future operations. On motion made, seconded and carried, the Board
approved adjustments to the carrying value of certain assets of the Company and
its subsidiaries in the total amount of approximately $153,000,000, as set forth
in the summary thereof attached to these minutes and identified by the Secretary
of the Company.
On motion made, seconded and carried, a quarterly dividend of 35 cents per
share was declared, payable September 13, 1985 to shareholders of record as of
the close of business August 20, 1985.
The remainder of the meeting was devoted to a discussion of the business of
the Company, its subsidiaries and affiliates.
There was no further business to come before the meeting and, accordingly,
on motion made, seconded and carried, the meeting adjourned at 11:25 A.M.
/s/ D.H. Craigmile
------------------------------
Secretary
<PAGE> 1
Exhibit 13
CBI 1989 RESTRICTED STOCK AWARD PLAN
1. Purpose. The purpose of this CBI 1989 Restricted Stock Award Plan (the
"Plan") is to provide an incentive for Participants to contribute to the
continued growth and profitability of the Company by encouraging stock
ownership. The Plan is intended to further the interest of the Company by
enabling it to attract and retain the services of highly qualified and motivated
persons to serve the Company and its Subsidiaries.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
Award - The grant of Common Stock subject to the restrictions and pursuant
to the terms of the Plan.
Award Date - The date on which an Award is made by the Committee as
provided by paragraph 4.2 below.
Board - The Board of Directors of the Company, as from time to time
constituted.
Committee - The Compensation Committee of the Board, no member of which
shall be eligible to participate in the Plan while serving as such member
or in the prior calendar year.
Common Stock - Common shares of the Company.
Company - CBI Industries, Inc., a Delaware corporation.
Disability - That condition of a Participant, including but not limited to
a physical or mental condition, which makes a Participant unable to
perform the regular duties of his employment, as determined by the
Committee, provided, however, that Disability shall not consist of a
condition resulting from a cause which the Committee has excluded.
Effective Date - May 15, 1989.
Participant - An employee or former employee who has received an Award
under the Plan.
Retirement - The termination of employment of a Participant with the
Company and all Subsidiaries after qualifying for any retirement as defined
under the terms of any qualified defined benefit pension plan sponsored by
the Company or any Subsidiary in which such Participant also participates,
or, if not participating in such a plan, then after attaining such age and
service as would qualify for retirement under the terms of the CBI Pension
Plan, as amended, or such earlier termination with the Company's consent
and as may be determined by the Committee to constitute early retirement
provided, however, that no termination of such employment by reason of
dishonesty, fraud or breach of trust against the Company or any of its
Subsidiaries or affiliates, as determined by the Committee, shall
constitute Retirement.
PAGE 1
<PAGE> 2
Subsidiary - Any corporation of which more than 50% (by number of votes) of
the voting stock is owned by the Company and/or one or more corporations
which are themselves Subsidiaries of the Company.
3. Common Stock Subject to Plan. There will be reserved for issue upon
the granting of Awards during the term of the Plan an aggregate of 500,000
shares of Common Stock, as adjusted by the Committee as required to reflect any
stock dividend, stock split, reclassification or similar change in
capitalization. If any such adjustment shall result in a fractional share such
fraction shall be disregarded. Upon the granting of an Award, the number of
shares reserved for Award shall be reduced by the number of shares so awarded,
and upon the forfeiture to the Company of any shares awarded hereunder the
number of shares reserved for Award shall be increased by such number of shares,
and such forfeited shares may again be the subject of an Award. Awards may be
made from authorized but unissued shares or from treasury shares. All authorized
but unissued shares awarded hereunder shall be fully paid and nonassessable
shares.
4. Eligibility and Awards.
4.1 Eligibility. All management employees (including officers but not
directors unless also employees) of the Company and of its present and
future Subsidiaries are eligible to be selected by the Committee as
Participants.
4.2 Making of Awards. Subject to the express provisions of the Plan,
the Committee shall in its sole discretion determine the employees to whom,
and the time or times at which, Awards shall be made pursuant to the Plan
and the number of shares to be awarded. In making such determinations, the
Committee shall take into account the recommendations of the management of
the Company and the nature of the services rendered by the respective
employees, their present and potential contributions to the Company's
success and such other factors as the Committee in its discretion shall deem
relevant. Awards to any employee will not be made more frequently than once
in each calendar year.
4.3 Form of Award. As soon as reasonably practicable after making a
determination as provided in paragraph 4.2 above, the Committee or its
designee shall advise the Participant in writing of the making of such
Award, the number of shares awarded, the restrictions thereon and incidents
of forfeiture thereof, and any other terms and conditions relating thereto;
except, however, that in the case of any Award to the chief executive
officer of the Company, the Committee shall first submit such determination
to the Board, which shall approve or disapprove the Award.
5. Restrictions on Awarded Stock.
5.1 Rights of Participants as Shareholders. Shares awarded hereunder
shall forthwith be duly issued and identified on the books of the Company in
the Participant's name. The Participant shall thereupon be a shareholder
with respect to all such shares and shall have all the rights of a
shareholder with respect to all such shares, including the right to vote
such shares and to receive all dividends and other distributions (subject to
the provisions of paragraph 5.2 below) paid with respect to such shares,
provided, however, that such shares shall be subject to the restrictions
hereinafter described, and to such additional or more severe restrictions
(including more severe provisions relating the lapsing of restrictions) as
may be
Page 2
<PAGE> 3
imposed by the Committee in making any individual award. In aid of such
restrictions, such shares shall be held by the Company in its control for
the account of such Participant until such restrictions lapse as provided in
paragraph 5.4 below or such shares are theretofore forfeited to the Company
as provided by paragraph 5.3 below.
5.2 Changes in Capitalization. In the event that, as the result of a
stock dividend, stock split, reclassification or similar change in
capitalization, the Participant shall, as the owner of shares subject to
restrictions hereunder, be entitled to new or additional or different shares
of stock or securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or securities,
shall also be held by the Company in its control for the account of such
Participant as provided in paragraph 5.1 above, and all provisions of the
Plan relating to restrictions and lapse of restrictions herein set forth
shall thereupon be applicable to such new or additional or different shares
or securities to the extent they were distributed; provided, however, that
if the Participant shall receive rights, warrants or fractional interests in
respect of any such shares, such rights or warrants may be held, exercised,
sold or otherwise disposed of, and such fractional interests may be settled,
by the Participant free and clear of the restrictions hereafter set forth.
5.3 Imposition of Restrictions. Each share awarded under the Plan
shall be subject to the following restrictions except to the extent
that such restrictions have lapsed pursuant to paragraph 5.4 below:
5.3.1 Transfer Restrictions. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed
of in any manner, whether voluntarily or involuntarily.
5.3.2 Forfeitures. All of such shares shall be forfeited to the
Company without notice immediately upon the occurrence of any of the
following events:
a. The termination of the employment of the Participant
with the Company and all Subsidiaries for any reason other than
Retirement, Disability, or death, or
b. The performance of services by the Participant, while
an employee of the Company or any Subsidiary, as an employee,
consultant or independent contractor for, or the acquisition of an
ownership interest in excess of five percent (5%) in, any
competitor of the Company or any Subsidiary without the express
written consent of the Company, or
c. An attempt to transfer or cause to transfer such
shares, whether voluntarily or involuntarily, in violation of
paragraph 5.3.1 above, or
d. A violation of such additional or more severe
restrictions imposed by the Committee pursuant to paragraph 5.1.
Page 3
<PAGE> 4
5.4 Release of Restrictions. The restrictions set forth in paragraph 5.3
above on shares awarded under the Plan, to the extent such shares have not been
forfeited pursuant to paragraph 5.3 above, shall lapse on the first to happen of
(i) the date of the Participant's death, (ii) the termination of the
Participant's employment by reason of his Retirement or Disability, (iii) such
earlier date as to any Participant or group of Participants as the Committee may
fix, (iv) termination of employment for any reason other than wilful and
material actions causing direct and substantial damage to the Company or its
Subsidiaries or affiliates, or any termination of the Plan, throughout the
three-year period following a "change of control", as defined in the CBI Pension
Plan, and (v) involuntary termination of employment pursuant to a program of
workforce reduction, as determined by the authorized officers of the Company;
and shall lapse prior thereto either (a) as to fifty percent (50%) of the shares
in such Award, on the fifth anniversary of the Award Date, or (b) pursuant to
such additional or more severe restrictions imposed by the Committee pursuant to
paragraph 5.1.
6. Miscellaneous.
6.1 Administration. Subject to the express provisions of the Plan, the
Committee shall have complete authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee's determinations on the matters referred to herein shall be
conclusive.
6.2 Limitation. Nothing in the Plan or in any Award shall confer on any
employee the right to continue in the employ of the Company or any of its
Subsidiaries nor interfere in any way with the right of the Company or its
Subsidiaries to terminate the employment of that employee at any time.
6.3 Amendment and Termination. The Board may suspend or terminate the Plan,
or amend the Plan in such respect as it shall deem advisable, provided, however,
that such amendment shall not, without the consent of the Participant to whom
any Award shall theretofore have been granted under the Plan, adversely affect
the rights of such participant under such Award, and further provided that such
amendment shall not change the maximum number of shares available for awarding
to all Participants.
6.4 Effectiveness of the Plan. The Plan shall become effective on May 15,
1989. No stock shall be awarded under the Plan after April 30, 1994, or such
earlier date as the Plan may have been terminated pursuant to paragraph 6.3.
Page 4
<PAGE> 5
CBI RESTRICTED STOCK AWARD PLAN
BRIEF DESCRIPTION OF FEDERAL INCOME TAX EFFECTS
The Plan is not qualified under Section 401(a) of the Internal Revenue Code of
1986 (hereinafter called "the Code") nor subject to the requirements of the
Employee Retirement Income Security Act of 1974. The Company is advised by
counsel that under the present laws and regulations, the Federal income tax
consequences to the Company and participants in the Plan will be as follows:
Participants in the Plan will incur no income for Federal income tax purposes at
the time they receive an award of restricted stock unless they affirmatively
elect under Section 83(b) of the Code to incur income then. Otherwise, each
participant will realize taxable income (and the Company will be entitled to a
corresponding deduction) as risk of forfeiture of the awarded stock lapses. The
amount of income will equal the fair market value of the stock at that time.
Thereafter, the participant will realize gain or loss upon the sale or taxable
exchange of the stock equal to the difference between the aggregate income
incurred under the foregoing rules and the price received for the shares. Under
the Tax Reform Act of 1986, capital gains will be taxed at the same rates as
ordinary income. Capital losses are allowed in full against capital gains plus
$3,000 of other income.
In the event a participant makes the election under Section 83(b) referred to
above (within 30 days of his receipt of the award), the participant will realize
income (and the Company is entitled to a corresponding deduction) at the time of
the award in an amount equal to the fair market value without regard to the
restrictions on the stock at that time. If the participant thereafter forfeits
the stock, no deduction will be allowed. Upon the lapse of restriction, the
participant will not incur income.
Thereafter, the participant will realize capital gain or loss upon the sale or
other taxable exchange of the stock equal to the difference between the
aggregate income incurred under the foregoing rules and the price received for
the stock.
The foregoing tax analysis is intended to assist in the understanding of the
operation and tax consequences of the Plan. The Company assumes no
responsibility with respect to the income taxes of its employees or how such
taxes should be computed, reported or paid. It is also pointed out that tax
laws and regulations are subject to change at any time.
<PAGE> 6
SAMPLE LETTER - 83(b) ELECTION
DATE
Send to: The Internal Revenue Service Center where you will file your 1992
U.S. Individual Income Tax Return
Attn: Internal Revenue Service Director
Re: Election of Gross Income in year of
Transfer Pursuant to Section 83(b)
of Internal Revenue Code of 1986
The undersigned hereby makes an election pursuant to 83(b) of Internal Revenue
Code with respect to the property described below and supplies the following
information in accordance with the regulations thereunder.
(1) Name, address and tax identification number of undersigned are:
Charles B. Iron
2960 South Street
Anytown, Illinois 60613
Social Security #999-99-9999
(2) Description of the property with respect to which the election is being
made:
One hundred (100) shares of common stock par value $2.50 per share of
CBI Industries, Inc.
(3) Date on which property was transferred is January 8, 1992.
(4) Taxable year to which this election relates is calendar year 1992.
(5) The nature of the restricted award is the following:
AA. Imposition of Restrictions. Each share awarded under the Plan shall be
subject to the following restrictions except to the extent that such
restrictions have lapsed pursuant to paragraph BB below:
A. Transfer Restriction. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise
disposed of in any manner, whether voluntarily or involuntarily.
B. Forfeitures. All of such shares shall be forfeited to the Company
without notice immediately upon the occurrence of any of the
following events:
B1 The termination of the employment of the Participant with
the Company and all subsidiaries for any reason other than
Retirement, Disability, or death, or
<PAGE> 7
Sample Letter - 83(b) Election
Page 2
B2 The performance of services by the Participant, while an
employee of the Company or any Subsidiary, as an employee,
consultant or independent contractor for, or the acquisition
of an ownership interest in excess of five percent (5%) in,
any competitor of the Company or any Subsidiary without the
express written consent of the Company, or
B3 An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of
Paragraph A above, or
B4 A violation of such additional or more severe restrictions
imposed by the Company.
BB. Release of Restrictions. The restrictions set forth in paragraph B
above on shares awarded under the Plan, to the extent such shares have
not been forfeited pursuant to paragraph AA above, shall lapse on the
first to happen of (i) the date of the Participant's death, (ii) the
termination of the Participant's employment by reason of his
Retirement or Disability, (iii) such earlier date as to any
Participant or group of Participants as the Board may fix (iv)
termination of employment for any reason other than willful and
material actions causing direct and substantial damage to the Company
or its Subsidiaries or affiliates, or any termination of the Plan,
throughout the three-year period following a "change of control," as
defined in the CBI Pension Plan, and (v) involuntary termination of
employment pursuant to a program of workforce reduction, as determined
by the authorized officers of the Company; and shall lapse prior
thereto either (a) as to fifty percent (50%) of the shares in such
Award, on the fifth anniversary of the Award Date, or (b) pursuant to
such additional or more severe restrictions imposed by the Company.
(6) The fair market value at the time of transfer of the property with respect
to which this election is being made is $_________ per share.
(Insert CBI stock closing price per share on January 8, 1992.)
(7) The amount paid by the taxpayer for said property is $0.00 per share.
(8) A copy of this statement has been furnished to CBI Industries, Inc.
(9) Date Signature
---------------------- --------------------------------
(10) Copies to: CBI Industries, Inc.
800 Jorie Blvd.
Oak Brook, Illinois 60522-7001
(i) Attention: Mr. R. G. Douglass
Employee Benefit Plans
(ii) Attention: Mr. R. G. Owens
Tax Department
<PAGE> 1
EXHIBIT 14
TABLE OF CONTENTS
CBI 1994 RESTRICTED STOCK AWARD PLAN
(Effective March 9, 1994)
<TABLE>
<S> <C>
1. Purpose .................................................................. 1
2. Definitions .............................................................. 1
Award ............................................................... 1
Award Date .......................................................... 1
Board ............................................................... 1
Committee ........................................................... 1
Common Stock ........................................................ 1
Company ............................................................. 1
Disability .......................................................... 1
Effective Date ...................................................... 1
Involuntary Termination ............................................. 1
Participant ......................................................... 1
Retirement .......................................................... 1
Subsidiary .......................................................... 2
3. Common Stock Subject to Plan ............................................. 2
4. Eligibility and Awards ................................................... 2
4.1 Eligibility ................................................. 2
4.2 Making of Awards ............................................ 2
4.3 Form of Award ............................................... 3
5. Restrictions on Awards ................................................... 4
5.1 Rights of Participants as Shareholders ...................... 4
5.2 Changes in Capitalization ................................... 4
5.3 Imposition of Restrictions .................................. 4
5.3.1 Transfer Restrictions ....................................... 4
5.3.2 Forfeitures ................................................. 5
5.4 Release of Restrictions ..................................... 5
5.5 Effect of Death Prior to Release of Restrictions ............ 5
5.6 Withholding of Shares ....................................... 6
6. Miscellaneous ............................................................ 6
6.1 Administration .............................................. 6
6.2 Limitation .................................................. 6
6.3 Amendment and Termination ................................... 6
6.4 Effectiveness of the Plan ................................... 6
</TABLE>
<PAGE> 2
CBI 1994 RESTRICTED STOCK AWARD PLAN
(Effective March 9, 1994)
1. Purpose. The purpose of this CBI 1994 Restricted Stock Award Plan
(the "Plan") is to provide an incentive for Participants to contribute to the
continued growth and profitability of the Company by encouraging stock
ownership. The Plan is intended to further the interest of the Company by
enabling it to attract and retain the services of highly qualified and motivated
persons to serve the Company and its Subsidiaries.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
Award - The grant of Common Stock subject to the restrictions and
pursuant to the terms of the Plan.
Award Date - The date on which an Award is made by the Committee as
provided by paragraph 4.2 below.
Board - The Board of Directors of the Company, as from time to time
constituted.
Committee - The Compensation Committee of the Board, no member of which
shall be eligible to participate in the Plan while serving as such
member or in the prior calendar year.
Common Stock - Common Stock, $2.50 par value per share, of the Company.
Company - CBI Industries, Inc., a Delaware corporation.
Disability - That condition of a Participant, including but not limited
to a physical or mental condition, which makes a Participant unable to
perform the regular duties of that Participant's employment, as
determined by the Committee, provided, however, that Disability shall
not consist of a condition resulting from a cause which the Committee
has excluded.
Effective Date - March 9, 1994, subject to shareholder approval.
Involuntary Termination - Termination of employment as described in
paragraph 5.4(a)(iv) below.
Participant - An employee or former employee who has received an Award
under the Plan.
Retirement - The termination of employment of a Participant with the
Company and all Subsidiaries after qualifying for any retirement as
defined under the terms of any qualified defined benefit pension plan
sponsored by the Company or any Subsidiary in which such Participant
also participates, or, if not participating in such a plan, then after
attaining such age and service as would qualify for retirement under
the terms of the CBI Pension Plan, as amended, or such earlier
termination with the Company's consent and as may be determined by the
Committee to constitute early retirement, provided, however, that no
termination of such employment by reason of dishonesty, fraud or breach
of trust against
1
<PAGE> 3
the Company or any of its Subsidiaries or affiliates, as determined by
the Committee, shall constitute Retirement.
Subsidiary - Any corporation of which more than 50% (by number of
votes) of the voting stock is owned by the Company and/or one or more
corporations which are themselves Subsidiaries of the Company.
3. Common Stock Subject to Plan. There will be reserved for issue
upon the granting of Awards during the term of the Plan an aggregate of
1,250,000 shares of Common Stock, as adjusted by the Committee as required to
reflect any stock dividend, stock split, reclassification or similar change in
capitalization. If any such adjustment shall result in a fractional share such
fraction shall be disregarded. Upon the granting of an Award, the number of
shares reserved for Award shall be reduced by both the number of shares so
awarded and the number of shares forfeited to the Company hereunder. Awards may
be made from authorized but unissued shares or from treasury shares. All
authorized but unissued shares awarded hereunder shall be fully paid and
nonassessable shares.
4. Eligibility and Awards.
4.1 Eligibility. All employees (including officers, but not
directors unless also employees) of the Company and of its present and
future Subsidiaries within such levels of Supervisory or management
responsibility, and such other key salaried employees, as designated or
approved from time to time by the Committee are eligible to be
Participants.
4.2 Making of Awards. Subject to the express provisions of the
Plan, the Committee shall in its sole discretion determine the
employees who may receive Awards pursuant to the Plan. In making such
determinations, the Committee shall take into account the
recommendations of the management of the Company and the nature of the
services rendered by the respective employees, their present and
potential contributions to the Company's success and such other factors
as the Committee in its discretion shall deem relevant. Any employee
may not receive Awards more frequently than once in each calendar year.
(a) The size of a Participant's Award shall be determined in the
following manner:
At the beginning of each fiscal year of the Company, the
Committee shall approve and record specific goals of performance
for the Company and, as appropriate, each of its primary operating
Subsidiaries to be achieved by the end of that current fiscal
year, which goals shall be based on operating income (before
taxes) as a return on net assets for the Company or Subsidiary, or
a combination thereof, as appropriate. After the close of the
fiscal year, the Committee will certify the level of performance
achieved as compared to the goals established at the beginning of
the fiscal year.
At the same time as the performance goals described above are
established, the Committee shall approve specific targets of
numbers of shares of Common Stock ("Target Award"), either by
individual Participant or a class of Participants, which shall
become Awards following the end of such fiscal year only if the
specified performance goals are achieved by the Company. No Award
shall be made until and
2
<PAGE> 4
unless the Committee shall certify that the performance
goals have been achieved for a fiscal year for which Target Awards
have been approved, or the extent to which such goals have been
achieved. The date on which the Committee makes such certification
shall be the Award Date for a fiscal year for those portions of
Awards for which the number of shares of Common Stock is fixed
based on that performance, as described below. At the same time
that the performance goals are established by the Committee, the
Committee may also approve that Awards for the fiscal year under
consideration, if any, shall be made in an amount more or less
than the Target Award, but in no case greater than 200% of the
Target Award, on the basis of a scale approved by the Committee
corresponding to a proportion of the performance goal actually
achieved.
Awards determined for a given fiscal year shall be allocated
(i) 50% to the year for which performance is measured, and this
portion of an Award shall not be subject to increase or decrease,
(ii) 25% to the first fiscal year following ("First Year Awards"),
and (iii) 25% to the second fiscal year following ("Second Year
Awards"). First Year Awards and Second Year Awards shall be
further subject to increase or decrease, each one time only, in
the same manner and on the same scale, if applicable, as the
amount of the Target Award may be increased or decreased for the
fiscal year to which the First Year Awards and Second Year Awards
are allocated.
(b) In the event of Retirement or Involuntary Termination of a
Participant after the first quarter of a fiscal year, or the death or
Disability of a Participant on any date, an Award for such Participant
relating to the fiscal year of the date of such event ("Final Year")
shall be made, determined as follows: The Target Award, if any, for
such Participant for the Final Year shall be pro-rated for that portion
of the Final Year ending on the date of the event, and the achievement
of the performance goal for determining the amount of the Award for the
Final Year, and the adjustment of any First Year Awards and Second Year
Awards allocated to the Final Year, if any, shall be measured, and
certified by the Committee as appropriate, as of the end of the
calendar quarter immediately preceding or coinciding with the date of
the event, using the same number of calendar quarters immediately
preceding the date of the event as corresponds to the period of time
over which the performance goal established by the Committee for the
Final Year is being measured. Any Second Year Awards allocated to a
fiscal year subsequent to the Final Year shall not be subject to
increase or decrease, and shall become part of the Award for the Final
Year. In the event of Retirement or Involuntary Termination of a
Participant during the first quarter of a fiscal year, the Participant
shall not be eligible to receive a Target Award for the Final Year, but
all First Year Awards and Second Year Awards allocated to the Final
Year and any Second Year Awards allocated to a fiscal year subsequent
to the Final Year shall not be subject to increase or decrease and
shall become part of the Award for the Final Year.
(c) No more than 50,000 shares shall be issued to any person in
any fiscal year.
4.3 Form of Award. As soon as reasonably practicable after making
a determination as provided in paragraph 4.2 above, the Committee or
its designee shall advise the Participant in writing of the making of
the Award, the number of shares not subject to increase or decrease,
the amount of First Year Awards and Second Year Awards still subject to
increase or decrease, the restrictions on any shares and incidents of
forfeiture
3
<PAGE> 5
thereof, and any other terms and conditions relating thereto; except,
however, that in the case of any Award to the Chief Executive Officer
of the Company, the Committee shall first submit such Award to the
Board, which in its discretion may disapprove or reduce the Award.
5. Restrictions on Awards.
5.1 Rights of Participants as Shareholders. Shares awarded
hereunder which are not subject to increase or decrease in accordance
with this Plan shall forthwith be duly issued and identified on the
books of the Company in the Participant's name as of an Award Date, as
determined herein. The Participant shall thereupon be a shareholder
with respect to all such shares and shall have all the rights of a
shareholder with respect to all such shares, including the right to
vote such shares and to receive all dividends and other distributions
(subject to the provisions of paragraph 5.2 below) paid with respect to
such shares; provided, however, that such shares shall be subject to
the restrictions hereinafter described, and to such additional or more
severe restrictions (including more severe provisions relating the
lapsing of restrictions) as may be imposed by the Committee in
approving any Target Awards.
In aid of such restrictions, shares issued as of an Award Date
shall be held by the Company in its control for the account of such
Participant until such restrictions lapse as provided in paragraph 5.4
below or such shares are theretofore forfeited to the Company as
provided by paragraph 5.3 below. No Participant shall be considered to
be a shareholder with respect to any part of an Award which is still
subject to increase or decrease in accordance with this Plan.
5.2 Changes in Capitalization. In the event that, as the result
of a stock dividend, stock split, reclassification or similar change in
capitalization, the Participant shall, as the owner of shares subject
to restrictions hereunder, be entitled to new or additional or
different shares of stock or securities, the certificate or
certificates for, or other evidences of, such new or additional or
different shares or securities, shall also be held by the Company in
its control for the account of such Participant as provided in
paragraph 5.1 above. Any allocated portion of an Award subject to
adjustment as described in paragraph 4.2 above shall be increased or
decreased in the same manner as shares already issued to a Participant
subject to restrictions. All provisions of the Plan relating to
restrictions and lapse of restrictions herein set forth shall thereupon
be applicable to such new or additional or different shares or
securities to the extent they were issued to a Participant; provided,
however, that if the Participant shall receive rights, warrants or
fractional interests in respect of any of such shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of, and
such fractional interests may be settled, by the Participant free and
clear of the restrictions hereafter set forth.
5.3 Imposition of Restrictions. Each share issued to a
Participant under the Plan shall be subject to the following
restrictions except to the extent that such restrictions have lapsed
pursuant to paragraph 5.4 below:
5.3.1 Transfer Restrictions. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise
disposed of in any manner, whether voluntarily or involuntarily.
4
<PAGE> 6
5.3.2 Forfeitures. All of such shares issued, and all shares
subject to Awards, shall be forfeited to the Company without
notice immediately upon the occurrence of any of the following
events:
a. The termination of the employment of the Participant
with the Company and all Subsidiaries for any reason other than
Retirement, Disability, Involuntary Termination or death, or
b. The performance of services by the Participant, while
an employee of the Company or any Subsidiary, as an employee,
consultant or independent contractor for, or the acquisition of an
ownership interest in excess of five percent (5%) in, any
competitor of the Company or competitor of any Subsidiary without
the express written consent of the Company, or
c. An attempt to transfer or cause to transfer such
shares, whether voluntarily or involuntarily, in violation of
paragraph 5.3.1 above, or
d. A violation of such additional or more severe
restrictions which may be imposed by the Committee pursuant to
paragraph 5.1.
5.4 Release of Restrictions. Subject to any adjustments
required by paragraph 4.2(b) above, the restrictions set forth in
paragraph 5.3 above on shares issued to Participants under the Plan, to
the extent such shares have not been forfeited pursuant to paragraph
5.3 above, shall lapse:
(a) on the first to happen of (i) the date of the Participant's
death, (ii) the termination of the Participant's employment by reason
of his Retirement or Disability, (iii) termination of employment for
any reason other than wilful and material actions causing direct and
substantial damage to the Company or its Subsidiaries or affiliates,
or any termination of the Plan, throughout the three-year period
following a "change of control", as defined in the CBI Pension Plan,
(iv) involuntary termination of employment pursuant to a program of
workforce reduction, as determined by the authorized officers of the
Company, and (v) the fifth anniversary of the beginning of the fiscal
year for which a Target Award is approved, as to all shares issued
pursuant to such Target Award, as the same may be increased or
decreased in accordance with the Plan; or
(b) pursuant to such additional or more severe restrictions
imposed by the Committee pursuant to paragraph 5.1.
5.5 Effect of Death Prior to Release of Restrictions. Should
a Participant die, all shares to be issued by the Company with respect
to such Participant under this Plan shall be transferred on the books
of the Company and issued to such beneficiary or beneficiaries as have
been effectively designated by the Participant or, if none, then to the
deceased Participant's surviving spouse or, if none, then to the
Participant's lawful descendants, per stirpes as defined by common law,
or, if none, then to the deceased Participant's estate. Any such
transfer shall be made effective as of the date of death of the
Participant. To be effective, the designation of such beneficiary must
be filed with the Committee or its
5
<PAGE> 7
designee in such written form as it requires and may include secondary,
successive or contingent beneficiaries. Any Participant may change a
beneficiary designation at any time by filing with the Committee or its
designee a new beneficiary designation meeting the above requirements.
The determination of the Committee as to the identity of a beneficiary,
or whether a beneficiary is living or dead, pursuant to any
determinations of rights under this Plan shall be conclusive and
binding on all concerned.
5.6 Withholding of Shares. To the extent the receipt of shares
pursuant to a lapse of restrictions is subject to the withholding of
any income or employment taxes by the Company for which the Company
requires reimbursement from the recipient, the recipient may elect to
reimburse the Company with shares withheld from the shares to be
received, or cash, or a combination of such shares and cash, of
sufficient value to make such reimbursement. Any such withholding or
reimbursement shall comply with all applicable governing laws and
regulations.
6. Miscellaneous.
6.1 Administration. Subject to the express provisions of the
Plan, the Committee shall have complete authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating
to it, and to make all other determinations necessary or advisable for
the administration of the Plan. The Committee's determinations on the
matters referred to herein shall be final and conclusive.
6.2 Limitation. Nothing in the Plan or in any Award shall
confer on any employee the right to continue in the employ of the
Company or any of its Subsidiaries nor interfere in any way with the
right of the Company or its Subsidiaries to terminate the employment
of that employee at any time.
6.3 Amendment and Termination. The Board may suspend or
terminate the Plan, or amend the Plan in such respect as it shall deem
advisable, provided, however, that such amendment shall not, without
the consent of the Participant to whom any Award shall theretofore have
been granted under the Plan, adversely affect the rights of such
Participant under such Award, including shares which may still be
subject to increase or decrease as provided under the Plan, and further
provided that such amendment shall not change the maximum number of
shares available under the Plan or available for any one Participant.
6.4 Effectiveness of the Plan. The Plan shall become effective
on March 9, 1994. No Awards shall be made under the Plan after
April 30, 2000, nor shares issued under the Plan after April 30, 2002
when shares covered by First Year Awards and Second Year Awards based
on the last Target Award under the Plan are no longer subject to
increase or decrease, or such earlier date as the Plan may have been
terminated pursuant to paragraph 6.3.
6
<PAGE> 1
EXHIBIT 15
TABLE OF CONTENTS
CBI SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (1987)
(As Amended and Restated as of June 1, 1994)
<TABLE>
<S> <C>
ARTICLE I: PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.01 AFFILIATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.02 ANNUAL ADDITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.03 BENEFICIARY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.04 BREAK IN SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.05 CBI: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.06 CODE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.07 COMMITTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.08 COMPANY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.09 COMPANY CONTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 COMPANY STOCK: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 COMPENSATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 DEFINED BENEFIT PLAN FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13 DEFINED CONTRIBUTION PLAN FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.14 DISABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15 ELIGIBLE EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16 ENTRY DATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.17 ERISA: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.18 EXEMPT LOAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19 EXEMPT LOAN STOCK SUBACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.20 EXEMPT LOAN SUSPENSE ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.21 HOURS OF SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.22 KEY EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.23 NORMAL RETIREMENT AGE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.24 PARTICIPANT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.25 PARTICIPATING AFFILIATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.26 PLAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.27 PLAN ADMINISTRATOR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 PLAN YEAR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28A REDUCTION IN FORCE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 RETIREMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29A RETIRING PARTICIPANT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.30 SALARIED EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.31 STOCK ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.32 SURPLUS STOCK SUBACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.33 SURPLUS SUSPENSE ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.34 TOP HEAVY PLAN YEAR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.35 TRANSITION FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
i
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<TABLE>
<S> <C>
2.36 TRUST: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.37 TRUSTEES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.38 YEAR OF SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III: PARTICIPATION IN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01 PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02 TERMINATION OF PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.03 RESUMPTION OF PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04 BREAKS IN SERVICE FOR ACCRUING YEARS OF SERVICE OR ELIGIBILITY FOR ALLOCATIONS: . . . . . . . . . . 7
3.05 SERVICE AND COMPENSATION PRIOR TO EFFECTIVE DATE OF PLAN: . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV: CONTRIBUTIONS AND OTHER SOURCES OF PLAN ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.01 COMPANY CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.02 TRANSFER FROM TERMINATED PENSION PLAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.03 TRANSFERS AND ROLLOVERS FROM OTHER QUALIFIED PLANS: . . . . . . . . . . . . . . . . . . . . . . . . 8
4.04 NO PARTICIPANT CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V: STOCK ACCOUNTS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.01 STOCK ACCOUNTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.02 ALLOCATION OF COMPANY CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.03 ALLOCATION OF SURPLUS TRANSFER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.04 ALLOCATION OF DIVIDENDS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.05 ALLOCATION OF EXEMPT LOAN SHARES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.06 ALLOCATION OF TRUST EARNINGS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.07 LIMITATION ON ANNUAL ADDITIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.08 COMBINED LIMITATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.09 CONDITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI: VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.01 GENERAL RULE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII: DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.01 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.02 VALUATION OF ACCOUNT FOR DISTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.03 NOTICE OF THIRD-PARTY OFFERS TO PURCHASE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.04 OTHER OPTIONS OR RESTRICTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.05 EFFECT OF DEATH BEFORE DISTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.06 LEGAL DISABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.07 UNCLAIMED PAYMENTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.08 (RESERVED) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.09 DIRECT ROLLOVER OPTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII: ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.01 COMMITTEE AND PLAN ADMINISTRATOR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
8.02 ADMINISTRATIVE POWERS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.03 DOCUMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.04 RETURNS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.05 CLAIMS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.06 TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.07 LIMITATIONS OF COMPANY LIABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.08 DISCRETIONARY AUTHORITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX: INVESTMENT OF TRUST ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.01 AUTHORIZED INVESTMENTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.02 TRUSTEE TO DETERMINE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.03 BORROWING BY TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.04 INVESTMENT DIVERSIFICATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.01 INFORMATION TO BE PROVIDED TO PARTICIPANTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.02 INFORMATION ON PARTICIPANTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.03 REGULARLY KEPT RECORDS ARE BINDING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.04 NO DERIVATIVE RIGHTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.05 NON-ASSIGNABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.06 NO EMPLOYMENT RIGHT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.07 VOTING COMPANY STOCK: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.08 TENDER OFFER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.09 CHANGE IN COMPANY STRUCTURE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.10 SEVERABILITY OF PROVISIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.11 APPLICABLE LAW: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI: CONTINGENT NON-QUALIFIED EXCESS BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XII: REQUIRED TOP HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.01 SPECIAL RULES FOR TOP HEAVY PLAN YEARS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.02 MINIMUM CONTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.03 ADJUSTMENTS TO LIMITATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XIII: AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.01 RIGHT AND LIMITATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.02 PROHIBITION AGAINST COMPANY BENEFIT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XIV: INTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XV: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.01 POWER TO TERMINATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.02 DISTRIBUTION OF ASSETS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.03 DISCHARGE OF TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.04 PARTIAL TERMINATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.05 BENEFIT UPON PLAN MERGER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
iii
<PAGE> 4
CBI SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (1987)
(As Amended and Restated as of June 1, 1994)
ARTICLE I: PURPOSE
Chi Bridge Holdings, Inc., a Delaware company, in order to give its salaried
employees and the salaried employees of Participating Affiliates an opportunity
to participate in the growth of the Company through ownership of its common
stock or the stock of its affiliates, including its publicly held parent and
sole shareholder, CBI Industries, Inc., a Delaware corporation, has established
this CBI Salaried Employee Stock Ownership Plan (1987), adopted and effective
October 20, 1987, and hereby amends and restates this Plan effective June 1,
1994.
ARTICLE II: DEFINITIONS
Unless the context clearly indicates otherwise, the following terms when used
in this Plan shall have the following meanings:
2.01 AFFILIATE: Any corporation, trade or business, which at the relevant
time is a member of either a "controlled group of corporations", within the
meaning of Section 414(b) of the Code, a group of "trades or businesses
(whether or not incorporated) which are under common control" within the
meaning of Section 414(c) of the Code, or an "affiliated service group", within
the meaning of Section 414(m) of the Code, which includes the Company, or which
is required to be aggregated with the Company by regulations under Section
414(o) of the Code.
2.02 ANNUAL ADDITION: With respect to each Participant in this Plan, the
sum, for any Plan Year, of (i) (A) that part of Company Contributions paid in
cash used to repay the principal amount of an Exempt Loan releasing shares of
Company Stock from the Exempt Loan Suspense Account, (B) that part of the
Surplus Suspense Account, and (C) that part of any other employer contributions
whether in cash or Company Stock as valued under Section 5.01, all as allocated
to the Stock Account of a Participant under Article V, (ii) in a Plan Year in
which more than one-third (1/3) of the Company Contributions are allocated to
"highly compensated employees" as defined in Section 414(q) of the Code, that
part of Company Contributions paid in cash used to repay interest on an Exempt
Loan releasing shares of Company Stock from the Exempt Loan Suspense Account,
as allocated to the Stock Account of a Participant under Article V; and (iii)
any other employer contributions, employee contributions and forfeitures
allocated to the account of such Participant under any other defined
contribution plan or simplified employee pension plan of the Company or an
Affiliate; and for purposes of the $30,000 limitation of Section 5.07(a)(i),
any contributions allocated to any individual medical account of a Key Employee
that is part of a pension or annuity plan, and any amount attributable to
post-retirement medical benefits allocated to a Key Employee under a welfare
benefit fund, shall also be considered Annual Additions.
2.03 BENEFICIARY: The person, persons or organizations designated to
receive benefits under this Plan by reason of the death of a Participant.
2.04 BREAK IN SERVICE: A Plan Year, or, for purposes of Section 3.04, the
twelve consecutive month period applied for purposes of Sections 2.13, during
which a Participant or Salaried Employee has not completed more than 500 Hours
of Service.
2.05 CBI: CBI Industries, Inc., a Delaware corporation, the publicly-held
parent corporation of the Company.
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2.06 CODE: The Internal Revenue Code of 1986, as from time to time amended.
2.07 COMMITTEE: The group appointed by the Company to direct the Trustee
and the administration of the Plan pursuant to Section 8.01.
2.08 COMPANY: Chi Bridge Holdings, Inc., a Delaware corporation, or any
successor corporation.
2.09 COMPANY CONTRIBUTION: A contribution to the Plan from the Company or
any Participating Affiliate pursuant to Section 4.01.
2.10 COMPANY STOCK: Either: (a) the common stock of CBI, par value $2.50,
or (b) the convertible voting preferred stock, Series C, of CBI, par value
$1.00 ("Series C Preferred Stock") or (c) any other common stock, or
convertible preferred stock meeting the requirements of Section 409(l) of the
Code and the regulations thereunder, issued by CBI or any other member of a
controlled group of corporations including the Company. If neither of such
classes of stock is then readily tradable on an established securities market,
then Company Stock that is common stock shall be that class of issued and
outstanding stock having a combination of voting and dividend rights equal to
or in excess of those of the respective classes with the greatest voting and
dividend rights, and Company Stock which is preferred stock shall be
convertible at any time into common stock at a reasonable conversion price,
2.11 COMPENSATION: The total of all wages and salaries paid by a
Participating Affiliate to an employee while he or she is a Participant and
attributable to periods of active and actual employment, and expressly
including any elective deferrals or contributions under Code Sections 125 and
401(k), but excluding the following:
(a) All overtime, shift and other premiums, bonuses, and
all other incentive payments;
(b) All severance payments under any severance plan or
program of the Company, CBI or a Participating Affiliate, and all
payments made at the time of a Participant's termination from
employment which represent pay for vacation time earned, but not
taken, as of the date of said termination of employment.
(c) All payments under the CBI 401(k) Pay Deferral Plan,
the CBI Pension Plan and any other deferred compensation plan or
contract, whether a defined benefit or defined contribution pension
plan;
(d) All payments made by a Participating Affiliate for
services performed outside the 50 states of the United States and the
District of Columbia which are of a character not customarily made by
the Participating Affiliate for services performed within those
states;
(e) All payments identified when made as an allowance for
reimbursement of actual or estimated expense incurred or to be
incurred by the recipient of such payment; and
(f) Any remuneration realized from the grant, receipt,
modification, relinquishment, exchange, assignment, transfer, sale or
other disposition of Company Stock or rights or options with respect
thereto, including those from or under this Plan.
(g) Beginning in Plan Year 1994, any Compensation as
otherwise defined herein exceeding $150,000 annually, as such amount
is adjusted for increases in the cost of living in
2
<PAGE> 6
accordance with Section 401(a)(17)(B) of the Code. If Compensation is
being determined for a period, not exceeding 12 months, that is not a
calendar year, the adjusted annual Compensation limit of this
subsection (g) for the calendar year in which that determination
period begins will apply to that determination period. If the
determination period consists of fewer than 12 months, the adjusted
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 12. If an employee's benefit
accruing in any current Plan Year depends on Compensation for an
earlier determination period, the adjusted annual Compensation limit
for that earlier determination period will apply to that Compensation.
For this purpose, the adjusted annual Compensation limit for periods
before 1994 is $150,000.
2.12 DEFINED BENEFIT PLAN FRACTION: A fraction for any Plan Year, the
numerator of which is the sum of the projected annual benefits (as defined in
Section 415(b)(2) of the Code) for a Participant under all defined benefit
plans of the Company or any Affiliate, determined as of the close of such Plan
Year, and the denominator of which is the lesser of (a) the product of 1.25
multiplied by the maximum dollar limitation of Section 415(b)(1)(A) of the Code
for such Plan Year, or (b) the product of 1.4 multiplied by the amount
allowable under Section 415(b)(1)(B) of the Code for such Plan Year.
2.13 DEFINED CONTRIBUTION PLAN FRACTION: A fraction for any Plan Year, the
numerator of which is the sum of the Annual Additions to a Participant's
account under all defined contribution plans of the Company or any Affiliate as
of the close of such Plan Year and the denominator of which is the sum of the
lesser of the following amounts determined for all Plan Years of Service with
the Company or an Affiliate: (a) the product of 1.25 multiplied by the dollar
limitation of Section 415(c)(1)(A) of the Code for such Plan Year, or (b) the
product of 1.4 multiplied by the amount allowable under Section 415(c)(1)(B)
of the Code for such Plan Year.
2.14 DISABILITY: A physical or mental condition of a Participant, which, on
the basis of evidence satisfactory to the Plan Administrator is determined by
the Plan Administrator as totally and presumably permanently preventing that
Participant from (a) engaging in any regular remunerative occupation or
employment for which that Participant is qualified at the time of such
determination, or (b) performing that Participant's regular duties as an
employee of any Affiliate; excluding disability resulting from or arising out
of self-inflicted injury, use of narcotics or the commission of or
participation in a felony of which that Participant shall have been convicted
by a court of competent jurisdiction.
2.15 ELIGIBLE EMPLOYEE: A Salaried Employee of a Participating Affiliate,
including a Salaried Employee not a United States citizen employed by a
Participating Affiliate within the United States who has completed, without a
Break in Service, two periods of 12 consecutive months during each of which the
employee, while employed in any capacity by any Affiliate, has at least 1000
Hours of Service. Where an employee fails to complete 1000 Hours of Service
before such employee's first anniversary date of employment, the 12 consecutive
month periods used thereafter shall be the Plan Year which includes that
anniversary date and subsequent Plan Years. However, the term "Eligible
Employee" shall not include a Salaried Employee who is a non-United States
citizen employed outside of the United States, any "leased employee" within the
meaning of Section 414(n)(2) of the Code, or any person covered by a collective
bargaining agreement which does not by its terms provide for the inclusion of
such person under the Plan. In the event, however, that persons otherwise
eligible to participate in the Plan select a bargaining representative after
the effective date of the Plan, such persons shall maintain their eligibility
to participate pending the completion of negotiations between a Participating
Affiliate and the employees' chosen bargaining representative. If, following
the completion of negotiations, the resulting collective bargaining agreement
does not provide for
3
<PAGE> 7
continued coverage, such persons shall become ineligible to participate further
in the Plan as of the effective date of the collective bargaining agreement.
2.16 ENTRY DATE: January 1 and July 1 of each Plan Year.
2.17 ERISA: The federal Employee Retirement Income Security Act of 1974,
effective September 2, 1974, as from time to time amended.
2.18 EXEMPT LOAN: The non-recourse loan to the Trust from CBI pursuant to
that certain Exempt Loan Agreement by and between the Trustee and CBI, dated
April 18, 1988 ("1988 Exempt Loan"), and any other non-recourse loan to the
Trust from, or guaranteed by, CBI, the Company or a Participating Affiliate
which complies with the requirements of ERISA, the Code and regulations
thereunder, and Section 9.03 of this Plan.
2.19 EXEMPT LOAN STOCK SUBACCOUNT: That corresponding part of a
Participant's Stock Account consisting of those shares of Company Stock
allocated to such Participant's Stock Account upon any payment made under an
Exempt Loan and release from the Exempt Loan Suspense Account for that specific
Exempt Loan.
2.20 EXEMPT LOAN SUSPENSE ACCOUNT: A specific account in the Trust
consisting at any given time of all shares of Company Stock purchased with the
proceeds of, and subject to or deemed to be subject to the terms of encumbrance
of, a specific Exempt Loan, or any cash or other proceeds of such shares held
by the Trust which are subject to such terms of encumbrance, and not yet
released pursuant to Section 5.05 of this Plan. A separate Exempt Loan Suspense
Account shall be established for each Exempt Loan.
2.21 HOURS OF SERVICE: Such hour or hours for which an employee of any
Affiliate receives a wage or salary, directly or indirectly, or is entitled to
such wage or salary, for the performance of duties, the normal hours usually
worked for authorized but unpaid military, sickness or temporary disability
leaves of absence; paid periods of vacation, holiday, illness and temporary
disability; hours for which back-pay has been awarded or agreed to by any
Affiliate; and any other hours required by Department of Labor regulations,
Section 2530.200b-2(b) and (c); provided, however, that an employee shall not
duplicate Hours of Service by reason of a provision of this definition.,
2.22 KEY EMPLOYEE: A Participant who, at any time during a Plan Year or any
of the four preceding Plan Years, is or was: (a) an officer of CBI, the Company
or an Affiliate having annual Compensation of more than $45,000 (or as adjusted
under Section 415(c)(1)(A) of the Code) and limited to the fifty (50) employees
with the greatest Compensation; (b) one of the 10 employees of CBI, the Company
or an Affiliate owning the largest interests in CBI, the Company or such
Affiliate and having annual Compensation of more than $30,000 (or as adjusted
under Section 415(c)(1)(A) of the Code); (c) a five percent (5%) owner of CBI,
the Company or such Affiliate; or (d) a one percent owner (1%) of CBI, the
Company or such Affiliate having annual Compensation of more than $150,000. For
this purpose, Compensation shall include amounts described in Section 2.11(a)
of this Plan, subject to Section 2.11(f).
2.23 NORMAL RETIREMENT AGE: The age of sixty-five (65) years.
2.24 PARTICIPANT: An Eligible Employee or former Eligible Employee for whom
a Stock Account is currently being maintained and who is entitled to receive or
has received benefits under this Plan, or a former Eligible Employee who is
otherwise entitled to participate in an allocation pursuant to Article III.
4
<PAGE> 8
2.25 PARTICIPATING AFFILIATE: The Company, CBI and every Affiliate, which
shall participate in this Plan without the necessity of further corporate
action by any of the Company, CBI or any Affiliate, unless any of the Company,
CBI or such Affiliate affirmatively acts to exclude such Affiliate or a
specific, identifiable group of Salaried Employees of such Affiliate.
2.26 PLAN: The "CBI Salaried Employee Stock Ownership Plan (1987)" as
herein set forth and as from time to time amended.
2.27 PLAN ADMINISTRATOR: The person appointed by the Company and approved
by CBI to administer the Plan, in accord with the powers and duties of the
Committee, pursuant to Section 8.01.
2.28 PLAN YEAR: The fiscal year of the Plan. The Plan Year shall be the
same as the Company's taxable year and, unless and until changed, shall be a 12
consecutive month period commencing on January 1 and ending on December 3 1.
2.28A REDUCTION IN FORCE: An involuntary, permanent termination of the
employment of a Participant from either the Company or a Participating Affiliate
as part of a formal program of workforce reduction by the Company or
Participating Affiliate occurring at or within a designated unit, location,
department or other subdivision thereof, and occasioned by adverse economic or
business conditions; but excluding any termination of employment that is
non-permanent (such as a layoff or leave of absence), any voluntary resignation
or quit, or any termination of employment that the Company or Participating
Affiliate determines to be for cause (which shall include, but not be limited
to, misconduct, insubordination, or unsatisfactory job performance).
2.29 RETIREMENT: Termination of the employment of a Participant (i) by
retirement as allowed under the provisions of (1) the CBI Pension Plan whether
or not a participant in the CBI Pension Plan or (2) any other retirement
pension plan in which the Participant participates by reason of his employment
with an Affiliate, whichever of (1) or (2) may apply, or (ii) at any time and
for any reason after such Participant has attained Normal Retirement Age.
2.29A RETIRING PARTICIPANT: A Participant, in any Plan Year, whose
employment terminates by Disability, Retirement, Reduction in Force, or death
within that Plan Year, or within the first three months of the following Plan
Year but before the allocation of Company Stock pursuant to Section 5.02(c)(ii)
for that preceding Plan Year has actually been determined.
2.30 SALARIED EMPLOYEE: An employee of the Company or a Participating
Affiliate, without regard to whether such employee is eligible to receive
overtime pay under applicable law, whose normal form of compensation is
expressed as a fixed base amount per fixed time period of one week or longer
(as opposed to an hourly wage), who normally is paid such fixed amount or
pro-rata portion thereof for periods not worked due to vacation, prescribed
holidays or on account of illness or accident, and for whom neither
compensation nor employee benefits are subject to the provisions of a
collective bargaining agreement; including, however, an employee who would
otherwise meet this definition but for periods of employment in another payroll
unit for training purposes or for the temporary convenience of the Company or a
Participating Affiliate; and excluding, however, an employee not normally
receiving such form of compensation, but temporarily being paid by a salaried
payroll unit for the temporary convenience of the Company or a Participating
Affiliate under rules to be adopted by the Committee and prescribed to all
Participating Affiliates.
2.31 STOCK ACCOUNT: The record of whole or fractional shares of Company
Stock, whole or fractional interests in other property, if any, and cash, if
any, constituting a Participant's total interest in the Trust, including all
subaccounts, if any, as provided for herein.
5
<PAGE> 9
2.32 SURPLUS STOCK SUBACCOUNT: That part of a Participant's Stock Account
consisting of the sum of all shares of Company Stock allocated to such
Participant's Stock Account from the Surplus Transfer immediately upon transfer
and all shares of Company Stock subsequently allocated to such Stock Account
from the Surplus Suspense Account.
2.33 SURPLUS SUSPENSE ACCOUNT: A specific account in the Trust consisting
at any given time of all shares of Company Stock held by the Trust and not
allocated to Participants' Stock Accounts pursuant to Section 5.03 of this
Plan, which shares of Company Stock are a part of, or have been purchased or
acquired with, a Surplus Transfer.
2.34 TOP HEAVY PLAN YEAR: Any Plan Year for which the present value of
cumulative accrued benefits under this Plan and any "aggregated plan" (defined
below) for Key Employees exceeds 60% of the cumulative accrued benefits under
this Plan and all aggregated plans for all employees. The computation of such
present value shall utilize the uniform accrual method used in all of the
employee pension benefit plans sponsored by the Company and all Affiliates
aggregated for such purpose in accordance with Section 416 of the Code, or, if
such accrual rate is not uniform, then the benefits of Participants in such
plans who are not Key Employees shall be treated as accruing at a rate not
faster than the slowest rate permitted under the fractional accrual rate of
Section 411(b)(1)(C) of the Code. For purposes of this definition, an
"aggregated plan" shall mean any other pension, profit-sharing, thrift or stock
bonus plan maintained by the Company or any Affiliate in which any Key Employee
participates. Such percentage shall, for a given Plan Year, be computed in
accordance with Section 416 of the Code on the last day of the preceding Plan
Year (except in the case of the first Plan Year of the Plan, the last day of
the first Plan Year)(the "determination date"), and shall include the present
value of the cumulative accrued benefits under any aggregated plans determined
as of the same date. The present value of an accrued benefit under this Plan
shall be determined as of the most recent Valuation Date within the past 12
month period.
2.35 TRANSITION FRACTION: A fraction the numerator of which is the lesser
of (a) $51,875 or (b) 1.4 multiplied by 25% of the Participant's Compensation
for Plan Year 1981, and the denominator of which is the lesser of (a) $41,500
or (b) 25% of the Participant's Compensation for Plan Year 1981.
2.36 TRUST: The "CBI Salaried Employee Stock Ownership Trust (1987)," an
Illinois trust, as from time to time amended.
2.37 TRUSTEES: The Trustee or Trustees appointed pursuant to Section 8.06.
2.38 YEAR OF SERVICE: A Plan Year in which a Participant completes 1000 or
more Hours of Service.
ARTICLE III: PARTICIPATION IN BENEFITS
3.01 PARTICIPATION: Subject to Section 3.05, each Salaried Employee shall
become a Participant in the Plan on the first Entry Date coincident with or
subsequent to the date on which that Salaried Employee becomes an Eligible
Employee, provided such Eligible Employee is employed by a Participating
Affiliate on such Entry Date. If a Salaried Employee becomes an Eligible
Employee but is not employed by a Participating Affiliate on such Entry Date,
then such Salaried Employee shall become a Participant on the date such
Salaried Employee thereafter becomes employed by a Participating Affiliate.
Subject to all provisions of this Article III, a Participant shall, after that
Participant's Entry Date or date of employment by a Participating Affiliate,
whichever is applicable, be eligible to participate in allocations to Stock
Accounts in accordance with Article V.
6
<PAGE> 10
3.02 TERMINATION OF PARTICIPATION:
(a) A Participant whose employment by any Affiliate is
terminated other than by (i) Disability, (ii) Retirement, (iii)
Reduction in Force, (iv) death, or (v) transfer to an Affiliate which
is not a Participating Affiliate shall not participate in allocations
under the Plan for any Plan Year which includes, or ends after, the
date of such termination of employment, but shall participate in the
allocation for the Plan Year preceding the Plan Year in which the
Participant's employment is terminated, subject to all provisions of
this Article III.
(b) A Participant whose employment by any Affiliate is
terminated because of (i) Disability, (ii) Retirement, (iii) Reduction
in Force, (iv) death, or (v) transfer to an Affiliate which is not a
Participating Affiliate, or who otherwise becomes employed in a class,
group or unit of employees not eligible to participate in this Plan,
shall not participate in allocations under the Plan for any Plan Year
which begins after the date of such termination of employment or
change in employment status, but shall participate in allocations
under the Plan for the Plan Year in which such termination or change
in employment status takes place, subject to all provisions of this
Article III, with respect to that portion of the Plan Year in which
such termination of employment or change in employment status occurred
during which such Participant was an Eligible Employee.
3.03 RESUMPTION OF PARTICIPATION: A Participant who has become ineligible
to participate in allocations pursuant to Sections 3.02 shall again be eligible
to participate in such allocations, subject to all provisions of this Article
III, with respect to that portion of a Plan Year beginning with the date on
which such Participant becomes re-employed as a Salaried Employee of a
Participating Affiliate, and all subsequent Plan Years, subject to Section
3.02.
3.04 BREAKS IN SERVICE FOR ACCRUING YEARS OF SERVICE OR ELIGIBILITY FOR
ALLOCATIONS: An employee's Years of Service for purposes of commencing
participation in this Plan shall be permanently canceled if, prior to becoming
an Eligible Employee, such employee has any Break in Service. Any Participant
who incurs a Break in Service in any Plan Year except for any of the reasons
described in Section 3.02(b) shall not participate in allocations for such Plan
Year. In computing a Break in Service, an employee shall be credited with up to
a maximum of 501 Hours of Service on account of absence from active employment
due to pregnancy, child birth, or post birth or pre-adoption care. If such
absence occurs in more than one Plan Year, such Hours of Service granted on
account of such absence shall be allocated to the Plan Year or Years, or
applicable twelve-month period under Section 2.14, in a manner calculated to
prevent any Break in Service.
3.05 SERVICE AND COMPENSATION PRIOR TO EFFECTIVE DATE OF PLAN: All prior
periods of a Salaried Employee's employment subsequent to December 31, 1981 and
preceding the date of adoption of this Plan which would otherwise constitute
Years of Service if this Plan had then been effective, shall be counted as
Years of Service for such Salaried Employee for purposes of commencing initial
participation in this Plan. Notwithstanding anything in this Article III to the
contrary, however, no Salaried Employee shall have such prior periods of
employment counted as Years of Services, nor be eligible to participate in any
allocation under this Plan for Plan Year 1987, unless such Salaried Employee is
still actively employed by a Participating Affiliate as of the end of Plan Year
1987; and further provided that such Participants eligible as provided herein
for an allocation for Plan Year 1987 shall have considered all 1987
Compensation earned after the date such Participant would have begun
participation in this Plan if the Plan had been in effect for all of Plan Year
1987.
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<PAGE> 11
ARTICLE IV: CONTRIBUTIONS AND OTHER SOURCES OF PLAN ASSETS
4.01 COMPANY CONTRIBUTIONS:
(a) Except as may be otherwise provided herein, each Plan
Year the Company and each Participating Affiliate shall contribute to
the Trust such Company Contribution as may be determined by the
Company's Board of Directors, which may be none in a given Plan Year,
as of the end of such Plan Year. The respective amount of the total
Company Contribution to be made by each Participating Affiliate shall
be the same percentage of the total Company Contribution which the
Compensation of the Participants employed by such Participating
Affiliate bears to the total Compensation of all Participants. The
Company Contribution for each Plan Year in which any Exempt Loan is
outstanding shall at a minimum include cash sufficient, when combined
with other income and assets available for such purpose under ERISA
and the Code, to enable the Trust to make timely payment of all
required payments on all outstanding Exempt Loans. Such Company
Contribution shall be used first for the payment of interest due on
such Exempt Loans, and then to the payment of principal due. But such
minimum cash contributions shall be required only to the extent
dividends paid on Company Stock and received by the Trust, and
available for such purposes under ERISA and the Code, are insufficient
to make such payments. Company Contributions made pursuant to this
Section 4.01 shall be made, for each Plan Year, not later than the due
date (including extensions) for filing the Company's federal income
tax return for such Plan Year.
(b) Company Contributions shall be in cash or Company
Stock. Company Contributions in cash shall be allocated to
Participants' Stock Accounts in accordance with Section 5.02 and shall
then be used by the Trustee either to repay principal and interest on
an Exempt Loan or to purchase whole shares of Company Stock or other
permitted investments for allocation to Participants' Stock Accounts,
subject to the fiduciary duties of the Trustee under the provisions of
ERISA.
4.02 TRANSFER FROM TERMINATED PENSION PLAN: The Trustee shall be authorized
to accept into the Trust a transfer of part or all of the assets which would
otherwise revert to the Company or a Participating Affiliate as a consequence
of the termination of the CBI Pension Plan (Salaried) ("Surplus Transfer"), and
such assets, to the extent not transferred in the form of Company Stock, shall
be used to the greatest extent possible by the Trustee within ninety (90) days
of such transfer (or within such extended period greater than 90 days as
permitted by the Code or regulations thereunder or pursuant to an individual
ruling of the Internal Revenue Service) for the purchase of Company Stock to be
allocated in accordance with Article V. To the extent not so used, such unused
Surplus Transfer shall be treated as reverted to the Company and recontributed
to this Plan to the extent deductible by the Company under the provisions of
the Code.
4.03 TRANSFERS AND ROLLOVERS FROM OTHER QUALIFIED PLANS:
(a) The Trustee shall be authorized, upon the direction of the
Committee, to accept into the Trust on behalf of any Eligible Employee
or group of Eligible Employees either a direct plan-to-plan or
trust-to-trust transfer of assets, or funds constituting a "qualifying
rollover distribution" (as defined in the Code) made to an Eligible
Employee, from another plan or trust ("Transferror Plan") which is
qualified under Section 401 (a) and exempt under Section 501 (a) of
the Code.
(b) A qualifying rollover distribution shall be accepted
only if made no later than the sixtieth (60th) day after such
distribution to the Eligible Employee, and shall be subject
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<PAGE> 12
to the maximum rollover provisions of the Code. Funds so transferred
or rolled over shall be allocated to a Stock Account either newly or
already established for such Eligible Employee, and shall be used
immediately upon transfer to acquire Company Stock for such Stock
Account, which shall be immediately fully vested in such Eligible
Employee. Such Eligible Employee shall thereafter be a Participant to
the extent of his or her interest in the funds so transferred or
rolled over.
(c) A direct plan-to-plan or trust-to-trust transfer of
assets shall be accepted only if (i) it arises from or as a result of
a separate agreement between the Company or a Participating Affiliate
and the sponsor of the Transferror Plan, by which the Company or such
Participating Affiliate has purchased or otherwise acquired, or merged
or consolidated with, such sponsor, or all or a part of such sponsor's
business or assets, and such agreement specifies that such Eligible
Employees shall receive credit in this Plan for past service under the
Transferror Plan, or if the Transferror Plan is a terminated plan
previously sponsored by either the Company or a Participating
Affiliate (ii) the Trustee determines that such funds may be made
subject to the provisions of this Plan under provisions of the Code
and ERISA and is otherwise not detrimental to the Plan or Trust, and
(iii) such Eligible Employee was previously employed by such sponsor
or one of its affiliates or subsidiaries participating in such
Transferror Plan.
4.04 NO PARTICIPANT CONTRIBUTIONS: Participants shall not be required nor
permitted to make contributions to the Trust.
ARTICLE V: STOCK ACCOUNTS AND ALLOCATIONS
5.01 STOCK ACCOUNTS:
(a) The Plan Administrator shall cause a Stock Account
including, as necessary, an Exempt Loan Stock Subaccount and a Surplus
Stock Subaccount to be maintained for each Participant, reflecting the
interest of such Participant in the Trust. Such interest shall be
expressed in shares, and fractional shares as appropriate, of Company
Stock, and an interest in any other assets, including cash, allocated
to Participants' Stock Accounts. The record of such Stock Accounts
shall further show the number of such shares which are common stock,
the number which are Series C Convertible Voting Preferred Stock, and
the number which are other Company Stock, and to which Subaccount any
such shares are allocated. The Plan Administrator shall maintain
adequate records of the aggregate cost basis of Company Stock
allocated to each Participant's Stock Account.
(b) For all purposes of this Plan, Company Stock shall be
valued at the closing price of such Company Stock on the trading day
immediately preceding the Valuation Date (as defined in Section 7.02)
provided such Company Stock is currently trading publicly on a
national or representative regional securities exchange or a national
securities quotation service, pursuant to registration under the
Federal Securities Act of 1934 ("publicly traded"). Company Stock that
is not publicly traded shall be valued at the most recent appraised
fair market value. The appraisal of such fair market value shall be
instituted by the Trustee, and shall be conducted in accordance with
Section 401(a)(28)(c) of the Code no less than once each calendar
quarter by an independent appraiser within the meaning of Section
170(a)(1) of the Code and regulations thereunder, and based on all
relevant factors for determining the fair market value of securities.
Such an appraisal shall be made as of the last day of the calendar
quarter, and the Trustee shall specify the date, with the agreement of
the Plan Administrator, by which such independent appraiser shall
report and publish its appraisal.
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<PAGE> 13
5.02 ALLOCATION OF COMPANY CONTRIBUTIONS:
(a)(i) Company Contributions for each Plan Year shall be
allocated to the Stock Accounts of Participants who are entitled to
participate in an allocation for that Plan Year in accordance with
Article III. Except as otherwise provided in this Section 5.02, such
allocations shall for valuation purposes be deemed made as of the last
day of the Plan Year for which the allocation is being made, but the
actual allocation shall be determined and made as soon as is
practicable (as determined by the Plan Administrator) after the date
of the last Company Contribution for such Plan Year, but in no event
later than May 1 of the calendar year following the close of said Plan
Year; provided, however, that Participant rights with respect to shares
so allocated, including but not limited to, dividend and voting
rights, shall not attach until the allocated is actually determined
and made. Notwithstanding the foregoing general rule, the allocation
for any Retiring Participant shall be made as of the last day of the
month in which his or her employment terminates by Retirement,
Disability, Reduction in Force, or death ("Retirement Date"), to the
Stock Accounts of such Retiring Participant who is entitled to
participate in that allocation in accordance with Article III. Said
allocation to the Stock Account of a Retiring Participant shall be
determined and made on or as soon as practicable (as determined by the
Plan Administrator) after the Retiring Participant's Retirement Date.
(a)(ii) For the Plan Years which end on December 31, 1993, and
December 31, 1994, a Retiring Participant who (A) qualifies as an
Incentive Eligible Participant as defined under the CBI Pension Plan,
and (B) has satisfied all conditions under the CBI Pension Plan to
receive special pension benefits under the Liquid Carbonic Salaried
Employee Voluntary Retirement Incentive Program (an "Incentive
Eligible ESOP Participant"), shall have his or her allocation
determined for each such Plan Year using the formula set forth in
Section 5.02(c)(i) and made as soon as practicable (as determined by
the Plan Administrator) after April 30, 1994. Such Incentive Eligible
ESOP Participant shall not participate in any other allocation for
such Plan Years.
(b) For purposes of the allocation, the Company
Contribution shall be the sum of cash contributed by the Company,
shares contributed by the Company, and any other assets other than
Company Stock contributed by the Company.
(c) The number of shares of each class of such Company
Stock (and the amount of cash or other assets) allocable to the Stock
Account of each such Participant shall be:
(i) in the case of a Retiring Participant, that
number equal to:
(A) (I) the number of shares scheduled
to be released from the Surplus
Suspense Account for the Plan Year
pursuant to Section 5.03, plus (II)
the number of shares scheduled to
be released from any Exempt Loan
Suspense Account based on scheduled
repayments for such Plan Year
pursuant to Section 5.05, minus
(III) the number of shares
respecting dividends estimated to be
allocated for such Plan Year
pursuant to Section 5.05(b), as
determined by the Plan Administrator
on the assumptions that dividends
will be declared in accordance with
the terms of such Company Stock (if
any) and the Company's dividend
practices, multiplied by:
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(B) a fraction, the numerator of which
is the Retiring Participant's
Compensation for such Plan Year, and
the denominator of which is the
total Compensation of all
Participants for the previous Plan
Year (rounded to the nearest $1,000)
increased by the average annual
percentage increase in such total
Compensation of all Participants
over all Plan Years since 1987.
(ii) in the case of any other Participant, that
number equal to:
(A) the total number of each class of
such shares (and the amount of cash
or other assets to be allocated
excluding any shares or amounts to
be allocated for such Plan Year
under clause (i) above), multiplied
by:
(B) a fraction, the numerator of which
is such Participant's Compensation
for such Plan Year, and the
denominator of which is the total
Compensation of all Participants
eligible for such allocation
(excluding Compensation of Retiring
Participants applied in allocations
for the same Plan Year under clause
(i) above).
5.03 ALLOCATION OF SURPLUS TRANSFER: The Surplus Transfer shall be
allocated to Participants' Stock Accounts, to their respective Surplus Stock
Subaccounts, as an allocation for the Plan Year 1987, in which the Surplus
Transfer commenced, in an amount equal to one-eighth (1/8) of the Surplus
Transfer or such larger amount as may be required to meet the requirements of
Section 4980(c)(3)(C) of the Code, and the remainder, if any, shall be held in
the Surplus Suspense Account and allocated at the direction of the Committee no
less rapidly than ratably over no more than the next seven Plan Years, in each
Plan Year, however, subject to the limitation on Annual Additions in Section
5.07. Should any part of the Surplus Transfer remain unallocated by reason of
Section 5.07 after such seven Plan Years, such part shall revert to the Company
and be recontributed to this Plan, to the extent deductible by the Company, in
the Plan Year following such seventh Plan Year. For each such Plan Year, the
allocation of Surplus Transfer shall be determined and made at those times as
set forth in Section 5.02(a), and the number of shares from such Surplus
Transfer to be so allocated to a Participant's Stock Account shall be
determined by the formula set forth in Section 5.02(c).
5.04 ALLOCATION OF DIVIDENDS: All cash dividends on Company Stock held by
the Trust shall to the extent permitted by ERISA and the Code be used first by
the Trustee to pay required payments of interest on an outstanding Exempt Loan
and then to pay required payments of principal on such Exempt Loan. All cash
dividends paid on Company Stock in excess of such dividends used to repay an
Exempt Loan as provided above, and paid on Company Stock held in the Surplus
Suspense Account, shall be paid immediately to Participants in proportion to
their respective Surplus Stock Subaccount balances. All cash dividends paid on
Company Stock in excess of such dividends used to repay an Exempt Loan as
provided above, and paid on Company Stock held in an Exempt Loan Suspense
Account, shall be used to purchase additional shares of Company Stock which
shall be allocated to Participants' Stock Accounts at the same time and on the
same basis as the shares of Company Stock upon which such dividends are paid,
are also allocated. Any other cash dividends paid on Company Stock held in the
Trust which are already allocated to Participants' Stock Accounts, and are not
otherwise required to meet current or reasonably anticipated cash obligations
of the Trust, shall be used to purchase additional shares of Company Stock to
be immediately allocated directly to such Stock Accounts. All dividends paid on
Company Stock previously allocated to the Stock
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<PAGE> 15
Accounts of Participants, if paid in the form of Company Stock, shall be
allocated directly to such Stock Accounts immediately upon receipt thereof by
the Trust.
5.05 ALLOCATION OF EXEMPT LOAN SHARES: The Company Stock purchased with the
proceeds of the 1988 Exempt Loan, or any other Exempt Loan made to the Trust,
shall be allocated to its own Exempt Loan Suspense Account and the number of
shares to be allocated to Participants' Stock Accounts, released from each
respective Exempt Loan Suspense Account, shall be determined by multiplying the
total number of shares in each such Exempt Loan Suspense Account by a fraction,
the numerator of which is the total amount of all payments of principal and
interest made by the Trustee under the provisions of such Exempt Loan for the
Plan Year, and the denominator of which is the sum of all required payments of
principal and interest under such Exempt Loan to be paid for the current and
all future Plan Years, on a loan by loan basis for each such Exempt Loan for
the release of shares from the corresponding Exempt Loan Suspense Account. In
the event an Exempt Loan provides for a variable interest rate, the formula
described above for the allocation of shares shall use the interest rate for
the current Plan Year as though in effect throughout the remainder of the term
of the loan for computing the total payments of principal and interest to be
made under such Exempt Loan.
The allocation of shares of Company Stock released from the Exempt Loan
Suspense Account and to be allocated to individual Participants' Stock Accounts
in any Plan Year shall be determined as follows:
(a) An individual Participant's portion of the total
number of shares to be allocated which have been released from the
Exempt Loan Suspense Account where the source of funds for the loan
payment resulting in such release are either Company Contributions
previously allocated in accordance with Section 5.02 or dividends paid
on shares previously unallocated to Participant's Stock Accounts,
shall be determined by using the formula described in Section 5.02(c).
Such allocation shall be made at those times as set forth in Section
5.02(a).
(b) That portion of the total number of shares to be
allocated which have been released from the Exempt Loan Suspense
Account as a result of payments under the Exempt Loan, where the
source of funds for the loan payment resulting in such release are
dividends paid on shares already allocated to Participants' Stock
Accounts, shall be allocated in an amount equal in value to the amount
of such dividends directly to and proportionally to the Stock Accounts
of the Participants for which such dividends were paid to make the
Exempt Loan payments resulting in the release of such shares, or in a
manner as otherwise required by the applicable provisions of the Code
and Regulations. Such allocations shall be made as soon as practicable
(as determined by the Plan Administrator) after the date on which such
dividends are paid.
5.06 ALLOCATION OF TRUST EARNINGS: All earnings or losses of the Trust,
other than dividends paid on Company Stock, shall be allocated to the Stock
Accounts of Participants as soon as is practicable following the close of each
calendar quarter and the amount of such income or loss allocable to the Stock
Account of each Participant shall be that amount which bears the same
proportion to the amount of all such income or loss allocable to such Stock
Accounts for such calendar quarter as the amount of each such Stock Account as
of the end of such calendar quarter bears to the total of all such Stock
Accounts as of the end of such calendar quarter.
5.07 LIMITATION ON ANNUAL ADDITIONS: Notwithstanding any other provisions
of the Plan, a Participant's Annual Addition shall not exceed the lesser of:
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<PAGE> 16
(a) The sum of
(i) the greater of $30,000 or 25% of the
dollar limitation of Section 415(b)(1)(A) of
the Code (as adjusted by Section 415(d)(1));
and
(ii) the lesser of the amount in paragraph
(i) above, or the sum of the portions of the
Company contributions and Surplus Transfer
which are treated as Annual Additions and
allocated to such Participant's Stock Account;
or
(b) 25% of the Compensation paid to the
Participant by Participating Affiliates in that Plan
Year. For this purpose only, Compensation shall not
include the total of contributions made for such
Participant under a cash or deferred arrangement
pursuant to Section 401(k) of the Code, but shall
include amounts described in Section 2.11(a) of this
Plan, subject to Section 2.11(f).
Paragraph (ii), above, shall apply in a Plan Year only if no more than one-third
(1/3) of the Company Contributions are allocated to "highly compensated
employees", as defined in Section 414(q) of the Code. In the event this
limitation would be exceeded by what would otherwise be such Participant's
properly determined Annual Addition, such excess shall be held in the Trust in
a special "Annual Addition Suspense Account." Beginning in the following Plan
Year and continuing in each of the following Plan Years such an excess
continues to exist, the shares in such Annual Addition Suspense Account shall
be allocated and reallocated to Participants' Stock Accounts in accordance with
the formula described in Section 5.02(c), subject to the limits of Section 415
of the Code. Such allocation shall be done prior to allowing any Company
contributions to the Plan which would constitute Annual Additions in that Plan
Year. In determining a Participant's Annual Addition limitation, any allocation
made to such Participant's Stock Account pursuant to Section 5.03 shall be
counted first, before any other contribution or allocation which would
otherwise be made in the same Plan Year on behalf of such Participant under
this Plan or any other defined contribution plan in which the Participant
participates.
5.08 COMBINED LIMITATION: In the case of an employee who is a Participant
in both this Plan and the CBI Pension Plan, or any other defined benefit plan
sponsored by the Company or an Affiliate (considered as one plan), the sum of
the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction
(computed by taking into account the limitation of Section 5.07(a)) for the
Plan Year shall not exceed 1.0. Where the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction for a Plan Year would
otherwise exceed 1.0, the Participant shall cease to accrue benefits payable
under the CBI Pension Plan or such other defined benefit plan in such a manner
that the sum of the above Fractions shall be maintained equal to 1.0. In the
discretion of the Plan Administrator, for Plan Years 1983 and later, the amount
taken into account for the denominator of the Defined Contribution Plan
Fraction for a Participant for all Plan Years 1982 and prior shall be an amount
equal to the product of (a) the amount of the denominator of such Fraction as
otherwise determined for Plan Years 1981 and prior, multiplied by (b) the
Transition Fraction.
5.09 CONDITION: Notwithstanding any other provisions of this Plan other
than Article XI, all Company contributions are expressly conditioned on
qualification of this Plan and the Trust under Sections 401 and 501, and
meeting the applicable conditions of Sections 409 and 4975, of the Code, and on
the deductibility of such contribution under the provisions of the Code. Any
contribution, to the extent not theretofore distributed, may be returned to the
respective contributing Participating Affiliate within one year after the date
of denial of initial qualification of this Plan or the Trust or deductibility
of such contribution.
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ARTICLE VI: VESTING
6.01 GENERAL RULE: A Participant's Stock Account shall be 100% vested at
all times.
ARTICLE VII: DISTRIBUTIONS
7.01 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT:
(a) Each Participant whose employment is terminated from
all of the group consisting of the Company and all Affiliates (or the
Beneficiary of a Participant whose employment so terminated by death)
shall be entitled to request in writing, in a manner prescribed by the
Plan Administrator, a distribution of such Participant's Stock
Account. A distribution to a Retiring Participant shall be made on his
or her Retirement Date (as defined in Section 5.02(a)) if so elected
by the Retiring Participant in a request received by the Plan
Administrator not later than the 15th day of the month closing with
his or her Retirement Date. All distributions shall be made as soon as
practicable after the Quarterly Valuation Date (as defined in Section
7.02) that coincides with the end of the calendar quarter on which the
first applicable condition for distribution, as described below, is
met if so elected by the Participant (or Beneficiary) in a request
received by the Plan Administrator not later than the 15th day of the
month which follows such Quarterly Valuation Date. If a Participant's
request is received after the 15th day of the month after such
Quarterly Valuation Date, such distribution will be made as soon as
practicable after the earlier of the first Quarterly Valuation Date
following the Plan Administrator's receipt of the request or the end
of the Plan Year during which the Participant's termination of
employment occurred. The date of all distributions (other than
Retirement Date distributions to Retiring Participants) respecting a
given quarterly Valuation Date shall be a single date designated by
the Plan Administrator occurring as soon as practicable following the
date of publication of the appraisal, if any, conducted pursuant to
Section 5.01(b). Such designated distribution date ("Distribution
Date") shall be the date such distribution is mailed or otherwise
delivered from the Trustee for transmittal to the Participant (or
Beneficiary) receiving such distribution.
(i) A distribution of a Participant's Stock
Account may be made pursuant to this Section 7.01
following the earliest to occur of:
(A) the commencement of benefits to such
Participant from either the CBI Pension Plan
or any other pension benefit plan maintained
by the Company or any Affiliate as a result
of Retirement;
(B) the death or Disability of the
Participant;
(C) the latest of the date the
Participant terminates employment, attains
Normal Retirement Age or the tenth
anniversary of the Entry Date on which the
Participant entered the Plan;
(D) the date the Participant attains age
70-1/2;
(E) the date applicable under Section
9.04 of this Plan to the extent of the
distribution provided thereunder; or
(F) the date a Participant separates
from service for any reason other than in (A)
or (B) above.
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<PAGE> 18
If no request for distribution is received by April 1
of the calendar year following the date specified in
(D) above, distribution shall be made on such date,
and annually thereafter to the extent of any
additional benefits accrued in this Plan in each
subsequent Plan Year. Also, no distribution shall be
deferred without the consent of the Participant or
the Beneficiary who is the surviving spouse of a
deceased Participant to a date later than sixty (60)
days after the close of the Plan Year in which the
date specified in (C) occurs or at the end of five
years following the date described in (B), if either
shall be applicable.
(b) All distributions shall be made in whole shares of
common stock of CBI and cash, as computed in Section 7.02; provided,
however, that to the extent a Participant (or other distributee)
elects under Section 7.09 to make a direct rollover from this Plan to
any other eligible retirement plan sponsored by the Company, CBI, or a
Participant Affiliate, of that portion of the Participant's Stock
Account that will be accepted in a direct rollover by such plan, the
portion of the distribution transferred to such plan by direct
rollover shall be in cash. All distributions shall be in a single lump
sum, except as otherwise provided in (a) above or in Section 9.04 or
pursuant to a direct rollover election under Section 7.09.
(c) If a Participant who is otherwise entitled to a
distribution or distributions is re-employed by the Company or by any
Affiliate before such Participant has received all the distributions
to which such Participant is entitled, no distribution shall be made
to such Participant during the period of such employment unless
otherwise required by subsection (a)(i)(D) above.
7.02 VALUATION OF ACCOUNT FOR DISTRIBUTIONS: There shall be at least one
valuation date (an "Annual Valuation Date") on the last day of each Plan Year
for appraising the fair market value of any Company Stock which is not publicly
traded. The Trustee may, and if directed by the Committee shall, cause
additional valuations to occur regularly on the last day of each quarter
("Quarterly Valuation Date") or the last day of each month ("Monthly Valuation
Date"). The amount of a cash distribution to be made to a Participant pursuant
to Section 7.01 on a Distribution Date respecting a given Valuation Date (or on
a Retirement Date for a Retiring Participant) shall be the sum of (i) the
product of (x) the number of shares of Series C Preferred Stock in such
Participant's Stock Account, and (y) the difference in value between Series C
Preferred Stock and CBI common stock, determined pursuant to Section 5.01, (ii)
the value, so determined, of any fractional shares of Company Stock in such
Stock Account, and (iii) any cash or property other than Company Stock being
held in such Stock Account. The Trustee shall have a "put option" to CBI on
Series C Preferred Stock it holds to the extent required, as determined by the
Trustee, to make such distribution; and a "put option" to CBI on CBI common
stock it holds to the extent required, as determined by the Trustee, to make a
transfer to the CBI Pension Plan of that portion of the Participant's Stock
Account that will be accepted in a direct rollover by the CBI Pension Plan
pursuant to the election of a Participant under Section 7.09. Either such put
option shall be implemented as follows:
(a) If permitted under applicable law, rulings and
regulations, and not a prohibited transaction under Section 4975(c) of
the Code or Section 406 and 407 of ERISA (or a prohibited transaction
exemption), the Trustee, in its discretion, shall put Series C
Preferred Stock to CBI, and shall be paid therefor the fair market
value of such Series C Preferred Stock determined pursuant to Section
5.01. The payment for the purchase by CBI under such put option shall
be in the form of the number of shares of common stock of CBI (which
when delivered to the Trustee shall be publicly traded, as defined in
Section 5.01(b)) into which such shares of Series C Preferred Stock so
put are convertible, if such shares of Series C
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<PAGE> 19
Preferred Stock were then converted, at the time such shares are put,
and cash equal to the amount computed in clause (i), above.
(b) The Committee, in its discretion, may direct the
Trustee to cause a special valuation of the Series C Preferred Stock
to be made by an independent appraiser as of the date of the put
option to CBI, and it may cause benefits to be distributed based on
the value of a Participant's Series C Preferred Stock as of the
special valuation date.
(c) To the extent necessary to accomplish a direct
rollover to any other eligible retirement plan sponsored by the
Company, CBI, or a Participating Affiliate, of the portion of a
Participant's Stock Account that will be accepted in direct rollover
by the CBI Pension Plan, and if permitted under applicable law,
rulings and regulations, and not a prohibited transaction under
Section 4975(c) of the Code or Section 406 and 407 of ERISA (or a
prohibited transaction exemption), the payment for the purchase by CBI
of Series C Preferred Stock shall, notwithstanding subsection (a), be
in cash; and the Trustee in its discretion shall put CBI common stock
to CBI, and shall be paid therefor in cash. The cash payment shall be
equal to the fair market value on the date of the direct rollover of
the number of shares of CBI common stock attributable to the Series C
Preferred Stock as determined under subsection (a) and the number of
shares of CBI common stock otherwise put to CBI, plus cash equal to
the amount computed in clause (i) above.
(d) The Trustee may exercise a put option to CBI for the
fair market value of such Series C Preferred Stock to be paid by CBI
pursuant to any other arrangement agreed upon by the Trustee and the
Committee to the extent permitted by applicable law, rulings and
regulations.
A distribution of Company Stock shall be in the form of stock certificates for
the number of whole shares of stock being distributed from the recipient
Participant's Stock Account.
7.03 NOTICE OF THIRD-PARTY OFFERS TO PURCHASE: In the event a prospective
bonafide third party purchaser offers to buy from the Trust any shares of
Company Stock which are then not publicly traded, the Trustee shall promptly
notify the Company and CBI in writing of the terms of such offer prior to the
Trustee's response to such offer.
7.04 OTHER OPTIONS OR RESTRICTIONS: Except as otherwise provided in this
Article VII, a Participant may not be required to sell Company Stock to the
Company, CBI or any other Participating Affiliate, nor may the Trust enter into
an agreement which obligates the Trust to purchase Company Stock upon the death
of a shareholder, nor shall there be any other restrictions on the alienation
of Company Stock for purposes of this Plan.
7.05 EFFECT OF DEATH BEFORE DISTRIBUTION: Should a Participant die before
receiving all distributions due to such Participant, the balance of such
deceased Participant's Stock Account shall be distributed to the Beneficiary or
Beneficiaries effectively designated by the Participant or, if none, then to
the deceased Participant's surviving spouse or, if none, then to the
Participant's lawful descendants, per stirpes as defined by common law, or, if
none, then to the deceased Participant's estate. To be effective, a beneficiary
designation must be filed with the Plan Administrator in such written form as
the Plan Administrator requires and may include secondary, successive or
contingent Beneficiaries; provided, however, that any designation by a
Participant who is married at the time of his death which fails to name his
surviving spouse as the sole primary Beneficiary shall not be effective unless
such surviving spouse has consented to the designation in writing, witnessed by
a Plan representative or notary public, acknowledging the effect of the
designation and the specific non-spouse Beneficiary, including any class of
Beneficiaries or any contingent Beneficiary. Such consent
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shall not be required if, at the time of filing such designation, and also at
the time of death of the Participant if the marital status of the Participant
has changed since the filing of such designation, the Participant or
Beneficiary, as the case may be, establishes to the satisfaction of the Plan
Administrator that the consent of the Participant's spouse could not be
obtained because there was no spouse, such spouse could not be located, or
because of other reasonable circumstances. Any consent by a spouse (or
establishment that the consent of a spouse could not be obtained) shall be
effective only with respect to such spouse, but shall be irrevocable unless and
until the Participant changes his Beneficiary designation, in which case a new
spousal consent shall (unless the spouse is the sole primary Beneficiary) be
obtained for such change. Any Participant may change his Beneficiary
designation at any time by filing with the Plan Administrator a new Beneficiary
designation meeting the above requirements.
7.06 LEGAL DISABILITY: Should any distribution under this Plan be to a
minor or to any other person under legal disability, the Plan Administrator in
his sole discretion may direct that such distribution be made in any one or
more of the following ways:
(a) directly to such minor or other person; or
(b) to the legal guardian or conservator of such minor or
other person; or
(c) to the spouse or to any parent, child, brother,
sister or other relative or dependent of such minor or other person,
or to any person or persons who is or are caring for or supporting
such minor or other person, in each case for the use of such minor or
other person; or
(d) by expenditure of the same for education, health, or
maintenance of such minor or other person.
7.07 UNCLAIMED PAYMENTS: If any check or other instrument in payment of a
benefit hereunder, which was mailed by regular United States mail to the
address of the payee furnished the Plan Administrator by the payee or a
Participating Affiliate, is returned unclaimed, the Plan Administrator shall
direct that further payments to such payee be discontinued until the Plan
Administrator receives further information from such payee or a Participating
Affiliate. Such discontinuance shall not be treated as a forfeiture of any
unclaimed or future payment provided, however, that where the Plan
Administrator is unable to locate a payee, the Plan Administrator may, at any
time after an amount has been distributable and unclaimed for at least three
(3) years following the date distribution is to be made, and in its sole
discretion, direct that the entire amount payable to such payee shall be
reallocated to the Stock Accounts of other Participants as an additional
Company Contribution as set forth in Section 5.02 hereof. Any amounts so
reallocated shall again become payable to such payee upon his filing a written
claim for benefits under the Plan with the Plan Administrator, in accordance
with Section 8.05, containing his complete mailing address and such evidence
that he is entitled to such benefits as the Plan Administrator may require, and
upon allowance of such claim, such amount shall be paid as an administrative
expense of the Plan.
7.08 (Reserved)
7.09 DIRECT ROLLOVER OPTION: Notwithstanding any other provision of this
Plan to the contrary that would otherwise limit a distributee's election under
this Article, a distributee may elect, in writing at the time and in the manner
prescribed by the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan, specified by the
distributee, which will accept such rollover, in a direct rollover (the "Direct
Rollover Option").
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(a) In the event a distributee elects the Direct Rollover
Option, the Trustee may exercise on the Distribution Date the put
option described in Section 7.02 for a number of shares of Series C
Preferred Stock (and, if applicable under Section 7.02(c), CBI common
stock) it holds for the Participant's Stock Account so that,
immediately after such exercise (and without regard to any cash to be
paid under Section 7.02 equal to the amount computed in clause (i) of
Section 7.02), the Stock Account will contain a sufficient number of
shares of CBI common stock such that (i) CBI common stock equal in
value to (or, if applicable under Section 7.02(c), cash in) the amount
to be transferred in the direct rollover can be transferred to the
transferee eligible retirement plan; and (ii) immediately thereafter
the ratios of CBI common stock and Series C Preferred stock to each
other and to all other assets held in the Participant's Stock Account
will be the same as such ratios immediately before such exercise of
the put option and transfer.
(b) For purposes of the Direct Rollover Option:
(i) 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 distributions is
required under section 401(a)(9) of the Code and the
portion of any distribution that is not includible in
gross income (determined without regard to the
exclusion for net unrealized appreciation with
respect to employer securities);
(ii) an "eligible retirement plan" is an
individual retirement account described in Section
408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity
plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the
Code, 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 an individual retirement
annuity;
(iii) a "distributee" includes any Participant; and
a Beneficiary who is the Participant's surviving
spouse, and the Participant's spouse or former spouse
who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the
Code, are distributees with respect to the interest
of the spouse or former spouse; and
(iv) a "direct rollover" is a payment by the Plan
to the eligible retirement plan specified by the
distributee.
ARTICLE VIII: ADMINISTRATION
8.01 COMMITTEE AND PLAN ADMINISTRATOR: The Plan will be administered by a
Committee and a named Plan Administrator, both appointed by the Board of
Directors of the Company and approved by CBI, as provided in this Article VIII.
Unless otherwise designated in writing by the Board of Directors of the
Company, and with proper notice to interested parties, the
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Plan Administrator, as defined by and required by ERISA, shall be the Manager
of Employee Benefits of CBI.
8.02 ADMINISTRATIVE POWERS: The Committee shall have full power and
authority, within the limits provided by the Plan:
(a) to determine all questions arising concerning the
construction and interpretation of the Plan and its administration,
including, but not by way of limitation, the determination of the
rights or eligibility under the Plan of employees and Participants and
their Beneficiaries, the amount of their respective benefits,
procedures and forms for claims therefor, and the existence or
nonexistence and the continuance or termination of a Participant's
Disability;
(b) to adopt such rules and regulations, subject to
review and approval by the Board of Directors, as it may deem
reasonably necessary for the proper and efficient administration of
the Plan and consistent with its purposes;
(c) to enforce the Plan in accordance with its terms,
(d) to prepare and distribute, as required or
appropriate, information explaining the Plan,
(e) to receive from the Company, the Board of Directors,
the Trustee, and from Participants and beneficiaries, such
information, and to maintain records concerning such information, as
shall be necessary for the proper administration of the Plan,
(f) to furnish the Company such annual and other reports
with respect to the administration of the Plan as are reasonable and
appropriate,
(g) to give instructions to the Trustee regarding the
payment of benefits, and distribution of Trust funds, and such other
matters except those specifically reserved to the Trustee in this Plan
and the Trust Agreement,
(h) to receive, review and maintain on file reports of
the financial condition and of the receipts and disbursements of the
Trust Fund from the Trustee,
(i) to delegate any of the above to the Plan
Administrator,
(j) to establish sub-committees, as and when directed by
the Board of Directors of the Company, to exclusively carry out any
specific duties or powers enumerated herein; and
(k) to do all other acts, in its judgment necessary or
desirable, for the proper and advantageous administration of the Plan.
8.03 DOCUMENTATION: The Committee may require Participants and
Beneficiaries to supply it with such evidence of their eligibility to
participate and receive benefits under this Plan and with such mailing
addresses, specimen signatures, and other data as it may reasonably require in
order to determine and pay any benefits which may be due hereunder, and it, the
Plan Administrator and Trustee and their respective agents shall be protected
in relying thereon.
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8.04 RETURNS: The Committee shall cause to be filed such information and
other returns, and retain such records, as may be required from time to time by
governmental authority except returns, if any, required to be filed or kept by
a Participating Affiliate or by the Trustee.
8.05 CLAIMS: Other than the request for distribution prescribed by Section
7.01(a), no formal request for benefits that are due hereunder shall be
required. Any claim for benefits not received shall be made in writing to the
Plan Administrator. The Plan Administrator shall consider such claim and within
90 days of receipt thereof, shall either approve it or deny it, or, if having
first given written notice to the claimant within such 90 days of the need for
addition information or consideration, within 90 days of receipt thereof. Each
denial shall be in writing, setting forth the specific reasons for such denial
and written in a manner calculated to be understood by the claimant and shall
be delivered to the claimant either in person or by mail. The claimant may
appeal such denial in writing, filed within 60 days of the date of denial. The
Committee shall afford a reasonable opportunity to any claimant whose claim is
denied for a full and fair review by the Committee of the appeal of such
denial, and shall respond within 60 days of the filing of the appeal.
8.06 TRUSTEE: The Board of Directors of the Company shall appoint, as
approved by CBI, one or more individuals or corporations eligible under the
provisions of ERISA to act as Trustee or Trustees under the Plan, who shall
execute the Trust Agreement. Except for those independent or discretionary
powers and duties specifically reserved to them in this Plan or in the Trust
Agreement, the Trustee shall only act subject to the direction of the
Committee. The Trustee shall hold and invest the contributions paid to the
Trustee and the earnings thereon in accordance with the terms of the Plan and
the Trust Agreement. The Trustee shall be entitled to receive reasonable
compensation as agreed between the Trustee and the Company in the Trust
Agreement or otherwise. The Company upon CBI's approval may remove any Trustee
at any time by written notice to such Trustee and the remaining Trustees, if
any, or in accordance with the Trust Agreement.
8.07 LIMITATIONS OF COMPANY LIABILITY: In no circumstances shall an
Affiliate be liable for the payment of any benefit either in whole or in part;
nor shall an Affiliate have any financial liability or obligation of any kind
to any employee, Participant or Beneficiary or to anyone else whomsoever or
whatsoever because of or with respect to the Plan or any provision thereof or
anything done or omitted by an Affiliate in connection with the Plan or its
administration, except as may otherwise be provided in ERISA, and except for
the benefit, if any, payable under Article XI. No Affiliate guarantees the Trust
against loss or depreciation and no Affiliate shall have any liability or
obligation whatever for or with respect to the assets of the Trust or any part
thereof or any transaction affecting the same, except as may otherwise be
provided in ERISA. The limitations herein shall be subject to the provisions of
Article IX of the Trust Agreement.
8.08 DISCRETIONARY AUTHORITY: To the extent not expressly delegated or
limited otherwise in this Plan, the Committee and, as to those matters which
have been delegated to him, the Plan Administrator, shall have full and
absolute discretion to determine the eligibility for or amount of benefits due
or payable under the Plan, or to otherwise interpret and apply the terms of the
Plan, and such decisions shall be final and binding on all parties to the
fullest extent permitted by law.
ARTICLE IX: INVESTMENT OF TRUST ASSETS
9.01 AUTHORIZED INVESTMENTS: The purpose of the Plan shall be, and the
primary duty and obligation of the Trustee shall be, to invest primarily in
Company Stock. It is the specific intention of the Company that the Plan
constitute and qualify as an "employee stock ownership plan" or "ESOP", as
defined in Section 4975 of the Code and the regulations thereunder. The Trustee
may invest funds under the Plan, to the extent not used to purchase Company
Stock, in savings accounts, certificates of deposit, United States Treasury
securities, high-grade short-term securities, or other
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investment-grade stocks, bonds, or commercial paper deemed by the Trustee to be
desirable for the Trust, pooled investment funds for the investment of
qualified plan assets including any such pooled fund maintained by the Trustee,
or such funds may be held in cash, all in accordance with the Trust Agreement.
9.02 TRUSTEE TO DETERMINE: Except as otherwise provided herein, all
investments will be made by the Trustee, and all purchases of Company Stock
shall be made at prices which, in the judgment of the Trustee, do not exceed
the fair market value of such shares as of the date of the transaction.
9.03 BORROWING BY TRUSTEE: Subject to any additional provisions of the
Trust Agreement, the Trustee may borrow from time-to-time for the purpose of
maintaining reasonable fund liquidity, for investments in other than Company
Stock which the Trustee deems necessary and prudent for the Trust, and for the
acquisition of Company Stock. However, any borrowing for the purpose of
acquiring Company Stock shall be in the form of an Exempt Loan only, and the
Trustee may not borrow from the Company, CBI or any Participating Affiliate for
any other purpose except for short-term interest free loans to obtain cash for
distributions to Participants under Article VII, as agreed between the Trustee
and the Company, CBI or a Participating Affiliate. The proceeds of an Exempt
Loan may be used only to acquire Company Stock, to repay such Exempt Loan, or
to repay a prior Exempt Loan. Any such Loan must not be prohibited by either
Section 4975 of the Code or by ERISA, or the regulations thereunder, and shall
meet the requirements thereof, shall bear a reasonable rate of interest, and
may be secured by a collateral pledge of the Company Stock so acquired. No
other Trust assets may be pledged as collateral by the Trustee, and no lender
shall have recourse against Trust assets other than any share of Company Stock
remaining subject to pledge, any Company contributions made to meet the
obligations of an Exempt Loan under Section 4.01(a), or any dividends in the
Trust that were paid on shares subject to pledge. Any pledge of Company Stock
must provide for the release of shares so pledged on a pro rata basis in
accordance with the formula stated in Section 5.05. To the extent permitted by
ERISA and the Code, repayments on any Exempt Loan shall be made by the Trustee
first from any dividends paid on Company Stock held by the Trust, applied first
to outstanding interest and then principal due; next from any Company
contributions in the form of cash, applied first to outstanding interest due
and then to principal; and next from the Surplus Transfer or any Exempt Loan to
refinance the outstanding Exempt Loan. Should this Plan cease to be an
"employee stock ownership plan" (as defined in Section 4975 the Code and the
regulations thereunder), Company Stock acquired with the proceeds of an Exempt
Loan will continue after the loan is paid to be subject to the provisions of
Sections 7.03 and 7.04, and of this Section 9.03.
9.04 INVESTMENT DIVERSIFICATION: A Participant who has attained age
fifty-five (55) and who has completed at least ten years of participation under
this Plan shall have the right to elect within 90 days after the close of that
Plan Year and each Plan Year during the "qualified election period" (as defined
below) to direct the Trustee as to the investment of at least 25% of the total
balance of the Participant's Stock Account to the extent such balance exceeds
the amount to which a prior election under this Section has been applied. For
purposes of this Section, the term "qualified election period" shall mean the
five-Plan Year period beginning with the Plan Year after the Plan Year in which
the Participant satisfies the above conditions. In the case of the Plan Year in
which the Participant can make his last election, such percentage shall be 50%
of such balance rather than 25%. The Participant shall make such investment
election by directing that part of his Stock Account balance covered by the
election shall be distributed to him within ninety (90) days after the close of
the election period during which such election is made. Valuation of that part
of such Participant's Stock Account balance so distributed or reinvested shall
be in accordance with Section 7.02.
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ARTICLE X: MISCELLANEOUS
10.01 INFORMATION TO BE PROVIDED TO PARTICIPANTS: At least once in each Plan
Year, the Plan Administrator shall cause to be furnished to each Participant a
statement indicating, on the basis of the latest available information, the
status of the Participant's Stock Account, including the number of shares of
Company Stock allocated thereto.
10.02 INFORMATION ON PARTICIPANTS: Participants shall furnish promptly to
the Plan Administrator such information as the Plan Administrator reasonably
considers necessary or desirable for the purpose of administering the Plan. If
such information is not submitted, or shows that information previously
furnished has been misstated on the records of the Plan, the Plan Administrator
will make such corrections and adjustments in accordance with the available
facts as it considers appropriate.
10.03 REGULARLY KEPT RECORDS ARE BINDING: The regularly kept records of a
Participating Affiliate shall be conclusive and binding upon all persons with
respect to a person's Hours of Service; date, nature and length of employment;
time, type and amount of Compensation paid and the manner of payment thereof-,
type and length of absence from work and other matters contained therein
relating to such person.
10.04 NO DERIVATIVE RIGHTS: No Participant or Beneficiary shall have any
right to, or interest in, any specific assets of the Trust, nor in any part of
the general assets of the Trust except as expressly provided in this Plan. Any
person claiming benefits under this Plan shall look solely to the Trust for
payment. In no event will any Affiliate or any officers, directors, or
employees thereof, or the Plan Administrator, or the Trustee be liable, in
their respective individual capacities, to any person whomsoever to pay
benefits under the provisions of this Plan.
10.05 NON-ASSIGNABILITY:
(a) No part of the assets of the Trust or interest of a
Participant or Beneficiary in the assets of the Trust or any part
thereof shall be assignable in anticipation of payment, either by
voluntary or involuntary act or by operation of law, or be liable in
any way for any debt or other obligation of such Participant or
Beneficiary. Any effort to exercise the powers herein denied, except
as provided in (b) shall be ineffective and need not be recognized by
the Plan Administrator or by the Trustee.
(b) Notwithstanding (a), above, the Plan Administrator
and Trustee shall make payments of benefits in compliance with, but
only with, the provisions of any "qualified domestic relations order",
as that term is defined in the Code and ERISA. Under no circumstances
shall such payment be made to an "alternate payee" (as defined
therein) in the form of a "joint and survivor annuity" (as defined in
the Code). The Plan Administrator shall adopt notice and determination
procedures for reviewing all qualified domestic relations orders
presented to him, the Plan or the Trustee.
10.06 NO EMPLOYMENT RIGHT: Nothing contained in this Plan shall be construed
as a contract of employment between an Affiliate and any person, or a
conferring a right upon any person to be continued in the employment of an
Affiliate, or as a limitation of the right of an Affiliate to discharge any
person at any time with or without cause.
10.07 VOTING COMPANY STOCK: Each Participant is entitled to direct the
Trustee as to how any Company Stock allocated to his Stock Account is to be
voted, which shall specifically
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include the power to direct the Trustee to abstain from voting on any issue.
The Company shall timely distribute or cause to be distributed to the
Participant such information as is distributed to all other shareholders of the
Company in connection with such voting, and shall provide the means by which
the Participant can instruct the Trustee in what manner it should vote (or
abstain from voting) the Company Stock allocated to such Participant's Stock
Account. The Company shall provide the Trustee with a copy of any materials
provided to Participants. A Participant shall elect to exercise such right by a
proxy or such other writing filed with the Trustee or an independent third
party delegated to receive and compile such direction, or in such other form as
applicable law may reasonably require. Such directions shall be held
confidential by the party compiling them. Fractional shares of Company Stock in
a Participant's Stock Account shall be combined with fractional shares in other
Participants' Stock Accounts and voted to reflect, to the extent the Trustee
determine is possible, the directions of the Participants with respect to such
fractional shares. Company Stock held in the Trust in Stock Accounts for which
Participants have not exercised their right to direct the Trustee as to how to
vote such Company Stock shall be voted by the Trustee at it determines is in
the best interests of the Participants affected, provided, however, that prior
thereto the Trustee in its sole discretion shall determine, based on the
information available to it concerning those Participants from whom directions
have not been previously received, the type of information distributed to
Participants, and the directions of Participants actually received, to what
extent, if at all, and in what manner to attempt to secure the directions of
those Participants who theretofore have failed to give the Trustee directions.
Such actions by the Trustee may include, but shall not be limited to, mailing
by certified mail, return receipt requested, a second set of proxy or other
materials containing voting instructions to such Participants. All Company
Stock held in the Trust which is unallocated shall be voted by the Trustee by
taking that portion of unallocated Company Stock corresponding to the
proportion of allocated Company Stock for which the Trustee have received
directions, and voting it in the same proportions as the Company Stock for
which they have received directions is voted, and by voting the remainder of
unallocated Company Stock as the Trustee determine in the best interests of the
Participants. In the case of Company Stock which is convertible preferred
stock, the right and power to determine whether and when to convert such stock
shall not be directed by the Plan's Participants, but shall be exercised
exclusively by the Trustee or converted otherwise only in accordance with
either this Plan or the stock certificate of designation.
10.08 TENDER OFFER: Notwithstanding any other provisions of this Plan,
including Section 10.07 or Section 10.09, the provisions of this Section shall
govern the tendering of Company Stock held in this Plan. For purposes of this
Section, "Company" shall include CBI.
(a) Upon commencement of a tender offer for any
securities of the Trust that are Company Stock, the Company shall
notify each Participant of such tender offer and shall timely
distribute or cause to be distributed to the Participant such
information as is distributed to all other shareholders of the Company
in connection with such tender offer, and shall provide a means by
which the Participant can instruct the Trustee whether or not to
tender the Company Stock allocated to such Participant's Stock
Account. The Company shall provide the Trustee with a copy of any
materials provided to Participants.
(b) Each Participant shall have the right to instruct the
Trustee as to the manner in which the Trustee is to respond to the
tender offer for any or all of the Company Stock allocated to such
Participant's Stock Account. The Trustee shall respond to the tender
offer with respect to the Company Stock as instructed by the
Participant. All such instructions received by the Trustee shall be
held in confidence and shall not be divulged to the Company, any
subsidiary of the Company, to any officer or employee thereof, or to
any other person, except to the extent necessary to the Plan
Administrator, who shall also hold such information confidential. The
Trustee shall exercise its discretion in the best interests of the
Participants affected whether to tender Company Stock allocated to a
Participant's Stock Account for
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which the Trustee has received no instructions from the Participant,
prior thereto, however, using the procedure described in Section
10.07, above, to secure to the extent possible directions from such
Participants who have theretofore failed to give directions to the
Trustee.
(c) The Trustee shall tender that number of unallocated
shares of Company Stock which is determined by multiplying the number
of unallocated shares by a fraction of which the numerator is the
number of shares of Company Stock allocated to Participants' Stock
Accounts which the Trustee tender pursuant to paragraph (b) above, and
the denominator is the total number of shares of Company Stock
allocated to Participants' Stock Accounts. That portion of unallocated
shares which corresponds pro-rata to that portion of allocated shares
for which the Trustee has not received instructions as to tendering
shall be tendered or not by the Trustee as it shall determine in its
discretion to be in the best interests of Plan Participants.
(d) A Participant who has directed the Trustee to tender
shares of Company Stock allocated to such Participant's Stock Account
may, at any time, up to one business day prior to the tender offer
withdrawal date, instruct the Trustee in writing to withdraw, and the
Trustee shall withdraw, such shares of Company Stock from the tender
offer prior to the withdrawal deadline. Prior to such withdrawal
deadline, if unallocated shares of Company Stock have already been
tendered, the Trustee shall re-determine the number of shares of
Company Stock which would be tendered under paragraph (c) above, if
the date of such withdrawal were the date of determination, and
withdraw the number of unallocated shares necessary to reduce the
number of unallocated shares tendered to the amount so re-determined.
A Participant shall not be limited as to the number of instructions to
tender or withdraw which he may give to the Trustee.
(e) The Trustee shall credit the proceeds, whether cash
or securities, received in exchange for allocated Company Stock which
has been tendered to the Stock Account of each Participant who
instructed the Trustee to so tender.
(f) In the event of a self-tender or other purchase or
repurchase offer of Company Stock by the Company or any Affiliate,
prior to responding to any such self-tender or other offer, the
Trustee shall consult with the Company, and the Company shall disclose
to the Trustee such information as is legally permissible regarding
the Company's intentions for continuing, amending or terminating the
Plan, the projected affect of such self-tender or purchase on the
Company's business and finances, and any other relevant information,
as shall enable the Trustee to determine the prudence and desirability
of tendering any Company Stock held by the Trust in response to such
self-tender or offer.
10.09 CHANGE IN COMPANY STRUCTURE: Notwithstanding any other provisions of
this Plan, including Sections 10.07 and 10.08, the provisions of this Section
shall govern events following certain "Business Combinations", as hereinafter
defined.
For purposes of this Section 10.09 and Article XI, the terms "Business
Combination" and "Continuing Directors" shall have the respective meanings
ascribed to such terms in Article Fifteenth of CBI's Certificate of
Incorporation, as amended to March 1, 1988.
Upon the consummation of any Business Combination which has not been approved
by a majority of the Continuing Directors, then this Plan shall immediately and
automatically terminate; Company Stock held in the Exempt Loan Suspense Account
shall be applied, to the extent required, to prepay any outstanding Exempt Loan
balance; and no further Company Contributions will be made.
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In the event of any such termination of the Plan, any unallocated shares of
Company Stock which upon such termination are not then in an Exempt Loan
Suspense Account, or are released from such Exempt Loan Suspense Account by any
repayment of any such Exempt Loan upon, or as a result of, the occurrence of
such Business Combination or termination of this Plan, or other property then
in the Trust shall not revert to the Company, any Participating Affiliate, or
any successor of either under any circumstances, but shall be immediately
allocated, as the final allocation, to the Stock Accounts of those, and only
those, Participants in the Plan who were Participants immediately prior to the
effective date of such Business Combination, pro-rata on the basis of the
balances of such Stock Accounts as of the date of the termination, but only,
however, up to the limitations of Section 415 of the Code for the Plan Year of
such termination. The Trustee shall hold, administer and distribute any
remaining unallocated property in accordance with the provisions of the plan
described in Article XI herein.
10.10 SEVERABILITY OF PROVISIONS: The invalidity of any provision of this
Plan shall not affect the validity of any other provision of this Plan, but the
invalid provision shall be fully severable, and this Plan shall be construed
and enforced as though the invalid provision had never been included herein.
10.11 APPLICABLE LAW: To the extent not otherwise preempted by ERISA, the
Code or any other applicable federal law, the provisions of this Plan and the
interpretation thereof shall be governed by the laws of the State of Illinois.
ARTICLE XI: CONTINGENT NON-QUALIFIED EXCESS BENEFIT PLAN
Any remaining unallocated property held by the Trustee of the CBI Salaried
Employee Stock Ownership Plan (1987) ("the Qualified Plan") following the final
allocation upon that Plan's termination, pursuant to Section 10.09, shall be
held, administered and distributed by such Trustee as the Trustee of the plan
described in this Article XI ("the Excess Plan"), which shall be a nonqualified
excess benefit plan within the meaning of ERISA and the Code, and which shall
not be, or considered or treated as, a part of the Qualified Plan. This Article
XI is included herein only for the reference and information of those
Participants who may become covered by the Excess Plan at any time.
Following the termination of the Qualified Plan, the Trustee, with the
cooperation of the Plan Administrator, shall establish separate accounts under
the Excess Plan for the benefit of those Participants, and only those
Participants, of the Qualified Plan who were such Participants immediately
preceding the effective date of the Business Combination described in Section
10.09 of the Qualified Plan, who shall henceforth be Participants in this
Excess Plan. The Trustee shall allocate to each Participant's account under
this Excess Plan a pro-rata share of all property held under this Excess Plan,
based on the balance of each Participant's Stock Account in the Qualified Plan
as a percentage of the sum of all such balances as of the date of termination
of the Qualified Plan, following the final allocation under the Qualified Plan.
The pro-rata share of all property, other than shares of Company Stock or
other securities, shall be based on the fair market value of such property as
of the date of allocation, determined in the same manner as valuation of Stock
Accounts under Section 7.02 of the Qualified Plan.
As soon as practicable after such allocation, the Trustee shall distribute all
account balances of this Excess Plan to all its Participants. The Trustee
shall, in its discretion, make such distribution in the form of shares, cash or
whatever combination of shares, cash and other securities and property as they
determine shall result in the greatest value to recipients. The form of
distribution shall be consistent as to all Participants. All distributions in
cash shall be in a single lump-sum only. The Trustee shall make any withholding
of federal or state taxes of any type as may be required of them by the Code
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or other applicable law. After all such distributions are made, the Excess Plan
shall terminate and the Trustee shall be discharged hereunder.
ARTICLE XII: REQUIRED TOP HEAVY PROVISIONS
12.01 SPECIAL RULES FOR TOP HEAVY PLAN YEARS: Notwithstanding any other
provisions of this Plan, Sections 12.02 and 12.03 shall apply in any Top Heavy
Plan Year beginning after December 31, 1983, for determining the Company
Contributions with respect to such Top Heavy Plan Year.
12.02 MINIMUM CONTRIBUTION: The Company Contribution for a Top-Heavy Plan
Year for each Participant who is not a Key Employee and who is not entitled to
the applicable minimum benefit under the special provisions of any defined
benefit plan of the Company or any Affiliate for Top Heavy Plan Years of such
plan, shall not be less than 7-1/2% of the Participant's compensation (within
the meaning of Treas. Reg. Section 1.415 - 2(d).
12.03 ADJUSTMENTS TO LIMITATIONS: If a Top-Heavy Plan Year would remain a
Top-Heavy Plan Year if a figure of "90%" were substituted for "60%" in Section
2.29, a figure of "1.0" shall be substituted for "1.25" in Sections 2.12 and
2.13.
ARTICLE XIII: AMENDMENTS
13.01 RIGHT AND LIMITATIONS: The Company reserves the right to amend this
Plan in any manner at any time and from time to time by resolution of its Board
of Directors, but such right of amendment shall not include the right in any
way or to any extent:
(a) to revest or otherwise transfer any interest in or to
the assets of the Trust, or any income therefrom, in or to an
Affiliate, except as provided in Article XV; or
(b) to divest any Participant or Beneficiary of then
vested benefits in such Trust; or
(c) to cause any part of the assets of the Trust,
including income therefrom, to be used for, or diverted to, any
purpose other than the exclusive benefit of Participants or their
Beneficiaries;
but this Plan may nevertheless be amended in any manner whatsoever, with
prospective or retroactive effect, for the purpose of qualifying it under the
appropriate Section or Sections of the Code, as now in effect or as hereafter
amended, or for complying with ERISA, or any similar law hereafter applicable.
A certified copy of each such amendment shall be filed with the Trustee.
13.02 PROHIBITION AGAINST COMPANY BENEFIT: In no event shall any interest in
the assets of the Trust or any part thereof or any income therefrom revest in
an Affiliate or otherwise be transferred to an Affiliate, except to the extent
provided in Article XV, below, or as permitted by ERISA for the return of a
Company Contribution made under a mistake of fact, or for which a deduction
pursuant to the Code is later denied or made impermissible, if such Company
Contribution is returned within one year of being contributed.
ARTICLE XIV: INTENT
The Company intends that this Plan, as amended from time to time, (a) shall
constitute a qualified plan under the provisions of Section 401(a) of the Code,
(b) shall constitute an employee stock
26
<PAGE> 30
ownership plan as defined in Section 4975(e)(7) of the Code and Section
407(d)(6) of ERISA, and (c) shall meet the requirements of Sections 409 and
401(a)(28) of the Code as necessary to comply with (a) and (b), above. The
Company intends that this Plan and Trust shall be in full compliance with the
provisions of ERISA. The Company intends that this Plan shall continue to be
maintained by it for the above purposes indefinitely, subject, however, to the
rights reserved by the Company to amend and terminate the Plan as set forth
herein. Nothing contained in this Plan shall be construed as disqualifying any
person from receiving any benefits under any other plan or program to which
such person would be entitled in the absence of this Plan.
ARTICLE XV: TERMINATION
15.01 POWER TO TERMINATE: Subject only to Section 10.09 and Article XI, the
Company may terminate this Plan in its entirety at any time by a duly adopted
resolution of its Board of Directors. In addition, this Plan may be terminated
as to any Participating Affiliate at any time by a duly adopted resolution of
its respective Board of Directors, and a complete and final discontinuance of
Company contributions hereunder by or for any Participating Affiliate will
constitute a termination of the Plan as to that Participating Affiliate. In the
event of any such termination of the Plan as to any Participating Affiliate,
the assets of the Trust attributable to such Participating Affiliate and its
employees who are Participants shall be held and administered by the Trustee
and the Plan Administrator for the benefit of such Participants in the same
manner and with the same powers, rights, duties and privileges herein
described, until such assets have been fully distributed pursuant to the
provisions of Article VII hereof.
15.02 DISTRIBUTION OF ASSETS: Upon termination as provided in Section 15.01,
the Trustee shall make allocations to all Participant's Stock Accounts for any
contributions, Surplus Transfer, dividends, purchased shares not then in an
Exempt Loan Suspense Account, and trust earnings, pursuant to Article V, not
previously made and properly allocable up to the date of such termination.
After such allocations are made, all Stock Accounts shall be distributed after
the effective termination date in accordance with Article VII. Any remaining
Surplus Transfer, purchased shares or other property not then allocated and not
properly allocable by reason of Section 5.07 or 5.08 shall revert to the
Company or the contributing Affiliate after, and only upon, the final
distribution of all Stock Accounts, anything in this Plan to the contrary
notwithstanding except for the operation of Section 10.09 and Article XI.
15.03 DISCHARGE OF TRUSTEE: When all of the assets of the Trust have been
distributed hereunder, this Plan shall terminate and the Trustee shall be
discharged.
15.04 PARTIAL TERMINATIONS: In the event of a partial termination of the
Plan, or in the event of the extraordinary sale, shut-down, or other
disposition or closure of a division, plant or other facility of a
Participating Affiliate or the extraordinary lay-off or termination of a
significant number of Participants which nevertheless does not affect a
sufficient number of Participants to constitute a partial termination of the
Plan, an appropriate and equitable portion of the assets of the Trust
attributable to the Participants and Beneficiaries subject to such partial
termination or extraordinary event, as determined by the Committee, shall be
separated by the Trustee and such separated portion of the assets of the Trust
shall be allocated among the Participants and the Beneficiaries subject to such
partial termination or extraordinary event.
15.05 BENEFIT UPON PLAN MERGER: No merger or consolidation with, or transfer
of assets or liabilities to or from any other plan shall be effected unless
each Participant in the Plan would, if the Plan then terminated, receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit each Participant would have been entitled to
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<PAGE> 31
receive immediately before the merger, consolidation, or transfer if the
Plan (or transferring plan) had then terminated.
END
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<PAGE> 32
CHI BRIDGE HOLDINGS, INC.
DIRECTORS' CONSENT IN LIEU OF
A BOARD OF DIRECTORS MEETING
The undersigned, being all of the Directors of Chi Bridge Holdings,
Inc., a Delaware Corporation (the "Corporation"), hereby consent to and approve
of the following actions taken by the Board of Directors of the Corporation,
without a meeting, namely, the adoption by the Board of Directors of the
Corporation of the following resolutions and declarations, authorizations,
approvals, and actions of the Board of Directors therein expressed and set
forth:
RESOLVED, that all of those functions, duties, powers and
authority heretofore granted to the Committee under the CBI Salaried
Employee Stock Ownership Plan (1987) (the "Plan") are hereby
transferred effective immediately to the Plan Administrator; provided,
however, that review of claims denials by the Plan Administrator as
provided under Section 8.05 of the Plan shall be made by a Committee
consisting of not less than three (3) persons as may from time to time
be appointed by the Vice President of Human Resources of CBI
Industries, Inc. or in the event of his absence or inability to act,
appointed by the President of CBI Industries, Inc. or such other
officer of CBI Industries, Inc. as the President may designate.
Members of the Committee may be officers, directors, or employees of
the Corporation or of CBI Industries, Inc., or may be any other
persons appointed hereunder, and shall serve without compensation.
FURTHER RESOLVED, that the General Counsel of CBI Industries,
Inc., the Vice President of Human Resources of CBI Industries, Inc.,
and the Plan Administrator are hereby authorized to take such actions
to amend or restate the Plan as they deem necessary and appropriate to
effectuate the purposes and intent of the foregoing resolution.
Dated: March 27, 1995
/s/ J.E. Jones
------------------------------
J.E. Jones
/s/ G.L. Schueppert
------------------------------
G.L. Schueppert
<PAGE> 1
EXHIBIT 17
---------------------------------
CBI EXECUTIVE LIFE INSURANCE
PLAN
--------------------------------
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<PAGE> 2
CBI EXECUTIVE LIFE INSURANCE PLAN
1. Introduction
This document sets forth the terms of the CBI Executive Life
Insurance Plan, a plan sponsored by CBI Industries, Inc. for Selected Key
Executives of the Company, its subsidiaries and affiliates. This document,
along with the Insurance Policy issued to the Executive or his designee under
the Plan, the Assignment Form, the Plan Participation Form and the life
insurance application documents described herein constitute the official Plan
documents.
2. Plan Purpose
The purpose of the Plan is to encourage Selected Key
Executives, who have rendered and will render in the future valuable services
to the Company, its subsidiaries and affiliates, to continue in employment by
providing an insured death benefit with respect to the Executive before and
after retirement.
3. Effective Date
December 1, 1992
4. Definitions
"Annual Premium" means the amount of consideration determined
annually by the Insurance Company for an Insurance Policy issued under the
Plan. For Plan purposes, if necessary, the Annual Premium shall be separated
into two component parts: (i) the "Basic Annual Premium" shall be the part of
the Annual Premium for standard risk life insurance coverage; and (ii) the
"Extra Premium" shall be the part of the Annual Premium, if any, required for a
life insurance risk determined by the Insurance Company to be substandard.
"Assignment" or "Assignment Form" means a written agreement
between the Executive and the Rabbi Trust, whereby the Executive assigns
certain Insurance Policy rights and interests to the Rabbi Trust, in accordance
with the terms of the Plan documents.
"Beneficiary(ies)" means the individual(s) or entity(ies)
designated by the Executive or his designee to be the beneficiary of certain
Death Benefit Proceeds payable under the Insurance Policy subject to the terms
of the Plan documents.
"CBI Group Life Insurance Plan" means that employee benefit
plan sponsored by the Company that provides group life insurance benefits to
certain salaried employees of the Company, its subsidiaries and affiliates, as
it may hereinafter be amended, and including any successor plan(s).
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"CBI Long Term Disability Plan" means that employee benefit
plan sponsored by the Company that provides disability benefits to certain
salaried employees of the Company, its subsidiaries and affiliates, as it may
be hereinafter amended,and including any successor plan(s).
"Change in Control" shall mean the occurrence at any time of
any of the following events: (a) An "Acquiring Person" (as defined below) has
become such; or "Continuing Directors" (as defined below) cease to comprise a
majority of the Board of Directors of the Company. For purposes of this
definition, the terms "Acquiring Person" and "Continuing Directors" shall have
the same meaning as ascribed to such terms in the Amendment and Restatement of
Rights Agreement dated as of March 4, 1986, between the Company and First
Chicago Trust Company of New York, as Rights Agent, without regard to whether
said Amendment and Restatement of Rights Agreement shall continue to remain in
effect. For convenience of reference, the relevant portions of said Amendment
and Restatement of Rights Agreement are reproduced as Exhibit B to this Plan
document.
"Corporate Capital Interest" means, at the earliest of the
following to occur, the cumulative amount of Annual Premiums paid by the Rabbi
Trust for an Insurance Policy, less the cumulative amount of Imputed Income
attributed to the Executive with respect to that Insurance Policy, plus
whichever of the following is applicable: (i) the amount, if any, at the
conclusion of the Normal Premium Period, by which the Insurance Policy's
remaining cash value exceeds the projected amount of cash value for that
Insurance Policy necessary, based on conservative, actuarial funding
assumptions as determined at the time by the Plan Administrator, to provide the
Executive or his designee with an Insurance Policy that will provide the
Scheduled Death Benefit Amount without the necessity of any further payment of
Annual Premiums by the Rabbi Trust, the Executive or his designee; (ii) the
amount, if any, in the event the Executive dies before the Corporate Capital
Interest is otherwise recovered, by which the Death Benefit Proceeds of the
Insurance Policy exceed the Scheduled Death Benefit Amount for the Executive at
the time of death; or (iii) the amount, if any, in the event of the insolvency
of the Company, the termination of the Plan pursuant to Section 12, or the
termination of the Executive's employment for any reason other than death or
Retirement, by which the Insurance Policy's remaining actual cash
value exceeds an estimated cash value determined by the Plan Administrator,
provided that the estimated cash value shall be equal to that amount of cash
value which would have accumulated in the Insurance Policy had Annual Premiums
been paid based upon: (a) the Executive's actual Salary progression rather
than the assumed Salary progression utilized by the Company in determining
funding of the Insurance Policy; and (b) the actual earnings performance of the
Insurance Policy rather than the earnings assumptions attributed to the
Insurance Policy utilized by the Company in determining the funding of the
Insurance Policy. At all times, the amount of the Corporate Capital Interest
shall be determined by the Company, and such determination shall be binding
upon the Insurance Company and any person or entity having an ownership or
beneficial interest in the Insurance Policy. The Corporate Capital Interest
shall be reduced by policy loans, if any (including interest thereon), made by
the Rabbi Trust from the Insurance Policy.
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"Company" means CBI Industries, Inc., a Delaware corporation,
and its successors and assigns.
"Death Benefit" or "Death Benefit Proceeds" means the amount
of proceeds paid, or to be paid, at the death of the Executive by the Insurance
Company under an Insurance Policy.
"Executive" or "Selected Key Executive" (collectively
"Executives" or "Selected Key Executives") means: (i) an actively employed
executive of the Company, or one of its subsidiaries or affiliates, nominated
by an Officer of the Company, and approved by the Chairman of the Board of
Directors of the Company, to be eligible to participate in the Plan; or (ii) a
retired Executive of the Company, or one of its subsidiaries or affiliates, who
was participating in the Plan at the date of Retirement.
"Imputed Income" means that amount of annual income imputed to
the Executive equal to the lower of (i) the one-year term insurance premium
rate prescribed by the Internal Revenue Service or (ii) the Insurance Company's
alternate term insurance premium rate, with either (i) or (ii), as applicable,
multiplied by the Scheduled Death Benefit Amount provided to the Executive
under the Plan at the time such imputed income is determined.
"Insurance Company" means the life insurance company(ies)
selected by the Company to issue Insurance Policies pursuant to the Plan.
"Insurance Policy" means the life insurance policy, together
with additional policy benefits and riders, if any, issued by the Insurance
Company pursuant to the Plan. Unless otherwise required by the Plan, Insurance
Policy terms used herein shall have the same meaning as in the Insurance Policy.
"Normal Premium Period" means that time period during which
the Rabbi Trust will pay Annual Premiums, subject to the limits on the amount
of Annual Premiums to be paid by the Rabbi Trust set forth in Section 15, to
the Insurance Company for an Insurance Policy issued pursuant to the Plan. The
Normal Premium Period will extend from the date the first Annual Premium is
paid until the later to occur of either: (i) the date the Executive reaches age
sixty-five (65); or (ii) the date the cumulative amount of Annual Premiums paid
by the Rabbi Trust and, if applicable, the cumulative amount of Extra Premiums
paid by the Executive or his designee pursuant to Section 15, create sufficient
cash value under the Insurance Policy, after taking into account the recovery
of the Corporate Capital Interest by the Rabbi Trust, so that the Scheduled
Death Benefit Amount can be sustained without further payment of Annual
Premiums by the Rabbi Trust, the Executive or his designee, provided that this
period shall generally not be less than ten (10) years nor more than fifteen
(15) years.
"Plan" means the CBI Executive Life Insurance Plan.
"Plan Participation Form" means a written agreement between
the Executive and the Company, wherein the Executive is designated as being
eligible to participate in the Plan, and whereby the Executive and the Company
agree to be bound by the terms and conditions of the Plan.
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"Rabbi Trust" means the CBI Industries, Inc. Supplemental
Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust, a
trust established by the Company for the purpose of providing funds for certain
employee benefits.
"Retirement" means retirement under the CBI Pension Plan.
"Salary" means: (i) in the case of an Executive paid on the
basis of a weekly base salary, the Executive's base weekly salary expressed in
terms of United States dollars, or the currency in which the Executive is
normally paid, multiplied by fifty-two (52); or (ii) in the case of an
Executive paid on any basis other than a weekly base salary, the aggregate of
the Executive's base salary expressed in terms of United States dollars, or the
currency in which the Executive is normally paid, received each pay period,
multiplied by the number of pay periods normally occurring during a calendar
year.
"Scheduled Death Benefit Amount" means that amount of life
insurance which is set forth in Appendix A and is to be provided to the
Executive pursuant to the Plan.
Definitions of other terms are provided in the Plan.
5. Eligibility
Selected Key Executives nominated by an Officer of the Company
and approved by the Chairman of the Board of Directors of the Company are
eligible to participate in the Plan as indicated herein.
6. Participation
Participation begins on the date an Insurance Policy under the
Plan is issued on the life of the Executive to the Executive or his designee
and all other Plan documents are completed by the Executive to the satisfaction
of the Plan Administrator and the Insurance Company. Participation in the Plan
by an Executive will not cause that Executive's participation in the CBI Group
Life Insurance Plan to terminate.
7. Plan Operation
The Plan is a "split dollar" life insurance program. In
general, the Executive or his designee is the owner of an Insurance Policy on
the Executive's life issued by the Insurance Company, for which the Company,
through the Rabbi Trust, pays the Annual Premiums for the duration of the
Normal Premium Period. The Company, through the Rabbi Trust, retains an
economic interest in both the cash value and Death Benefit Proceeds of the
Insurance Policy documented by the Assignment Form. Except as otherwise
provided in the Plan, the Executive is not responsible for payment of Annual
Premiums, but under United States tax laws in effect on the effective date of
the Plan, the Executive may be responsible for paying income tax on the Imputed
Income attributed to the Executive's participation in the Plan until the Rabbi
Trust recovers the Corporate Capital Interest and cancels the Assignment Form.
Executives who are not covered by
12/1/92
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<PAGE> 6
United States income tax laws may have income
tax or other tax consequence under applicable laws of other countries.
The Scheduled Death Benefit Amount provided to the Executive
will be a multiple of the Executive's Salary. The amount of the Executive's
multiple is set forth in Exhibit A.
If applicable, at the conclusion of the Normal Premium Period,
the Rabbi Trust will cease paying Annual Premiums and, under the Assignment
Form, will recover from the Insurance Policy's cash value the Corporate Capital
Interest. The aggregate amount of Annual Premiums paid by the Rabbi Trust is
intended to produce sufficient cash value so that after the Rabbi Trust recovers
the Corporate Capital Interest and cancels the Assignment Form, the Executive or
his designee will own the Insurance Policy providing the Scheduled Death Benefit
Amount without payment of any further Annual Premiums. The Executive or his
designee may continue the Scheduled Death Benefit Amount from the Insurance
Policy or withdraw all or part of the remaining cash value at any point after
the Rabbi Trust has recovered the Corporate Capital Interest, although
withdrawing cash value will void the guarantee under Section 8. In the event
the Executive dies before the Corporate Capital Interest is recovered, the Rabbi
Trust will recover the Corporate Capital Interest from the Death Benefit
Proceeds attributable to the Executive's Insurance Policy pursuant to the
Assignment Form.
8. Guarantee of Benefits
The funding of the Plan is intended to create sufficient cash
values in the Insurance Policy at the conclusion of the Normal Premium Period
so that the Scheduled Death Benefit Amount will be available under the
Insurance Policy until the Executive's death, based upon conservative,
actuarial assumptions as determined from time to time by the Plan
Administrator.
However, in the event the Death Benefit Proceeds actually paid
to the Beneficiary under the Insurance Policy are not at least equal to the
Scheduled Death Benefit Amount, or, if applicable, the Reduced Death Benefit as
provided in Section 15, an additional payment will be made from the Rabbi Trust
to the Beneficiary. The amount of this additional payment from the Rabbi Trust
will be the difference between the Scheduled Death Benefit Amount, or Reduced
Death Benefit, whichever is applicable, and the Death Benefit Proceeds actually
paid to the Beneficiary under the Insurance Policy, adjusted so that the total
net after tax amount payable to the Beneficiary, both from the Insurance Policy
and the Rabbi Trust, after taking into account the assumed liability of the
Beneficiary to pay income taxes on the additional payment from the Rabbi Trust,
equals the Scheduled Death Benefit Amount, or Reduced Death Benefit, as the
case may be, under the Insurance Policy.
For purposes of determining assumed income taxes under this
Section, the highest marginal personal United States Federal Income Tax rate
for married individuals filing jointly in effect at the date of the Executive's
death will be used.
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It is the intent of the Plan to guarantee the Scheduled Death
Benefit Amount only insofar as such guarantee is described in this Section, and
there is no other guarantee concerning the cash value or any other Death
Benefit Proceeds under the Insurance Policy at any time. Furthermore, the
guarantee under this Section shall be void and of no effect in the event the
Executive or his designee withdraws any part of the cash value or dividends
payable under the Insurance Policy following recovery of the Corporate Capital
Interest and cancellation of the Assignment Form. In the event the Executive
or his designee obtains a loan under the Insurance Policy which has not been
completely repaid at the date of the Executive's death, the guarantee provided
by this Section shall be reduced by the amount of any such loan and any unpaid
interest thereon.
The guarantee under this Section shall not apply in the event
the Insurance Company, during the two year contestability period that begins
with the date of issue of the Insurance Policy, rescinds the Insurance Policy
or denies a claim thereunder on the basis of a misstatement in Insurance
Company applications, or in the event the Insurance Company denies or limits a
claim where the Executive dies by suicide within one year from the date of
issue of the Insurance Policy.
9. Scheduled Death Benefit Amount
The Executive's Scheduled Death Benefit Amount is set forth
in Appendix A.
10. Company Participation in Funding of Plan
Subject to the terms of the Plan, the Company, through the
Rabbi Trust, will pay Annual Premiums for Insurance Policies issued pursuant to
the Plan until the earliest to occur of the following:
- The termination of the Normal Premium Period.
- The Executive's death.
- The Executive's termination from employment
by reason other than death or Retirement,
provided the Executive's termination is not
in connection with a Change in Control.
Upon the earliest to occur of these events, the Rabbi Trust
will withdraw the Corporate Capital Interest and terminate the Assignment
against the Insurance Policy. Prior to such withdrawal, the Rabbi Trust may
borrow against the Insurance Policy to the extent of the Corporate Capital
Interest.
If the Executive is living after the Rabbi Trust withdraws the
Corporate Capital Interest, the Executive or his designee will own the
Insurance Policy free of any interest on the part of the Company or the Rabbi
Trust and may then exercise without restriction all the rights available under
the Insurance Policy, although the exercise of such rights may affect the
guarantee provided under Section 8.
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11. Security
The Company will ensure that the Rabbi Trust, on each date on
which the Rabbi Trust evaluates its obligations, has sufficient assets to
provide funding equal to the net present value (utilizing a discount rate equal
to the Insurance Company's then current dividend rate minus 100 basis points)
of future Annual Premiums for Insurance Policies issued to Executives under the
Plan and against which the Rabbi Trust holds an Assignment Form payable for the
next ten (10) years (hereinafter the "Security Fund"). In the case of a
decision by the Company to terminate or amend the Plan pursuant to Section 12,
or if the Company fails or refuses to ensure that the Rabbi Trust has
sufficient assets available to meet funding obligations pursuant to the Plan,
the Security Fund shall be used by the Rabbi Trust to pay Annual Premiums on
the Insurance Policies to the extent and in the amount available.
In the case of the insolvency of the Company, the Rabbi Trust
would be subject to the claims of the Company's creditors (which would include
participants in the Plan) and funds in the Rabbi Trust (including the Security
Fund) may not be available to pay future Annual Premiums or to meet the
guarantee to participants under Section 8. The amount of the Corporate Capital
Interest in the Insurance Policies would also be subject to the claims of the
Company's creditors. The interests of the Executive under the Insurance Policy
in excess of the Corporate Capital Interest, however, generally should not be
subject to the claims of the Company's creditors.
Accordingly, in the case of the insolvency of the Company (as
that term is defined in the Rabbi Trust) the Rabbi Trust will recover from the
Insurance Policy the Corporate Capital Interest, to the extent allowed by law,
terminate the Assignment of the Insurance Policy and have no further obligations
under this Plan. The Executive or his designee may thereafter elect to maintain
the Insurance Policy by assuming responsibility for paying Annual Premiums. If
the Executive or his designee elects to maintain the Insurance Policy, he will
deal directly with the Insurance Company.
12. Right to Terminate or Amend
The Company reserves the right to terminate the Plan if the
Company, in its sole discretion, determines that changes in the U.S. tax laws
or other laws, or other government action or events beyond the control of the
Executive or the Company adversely and materially affect the Plan. If the Plan
is terminated and the Company has instituted at the time of termination of the
Plan a comparable replacement plan providing benefits, security and a guarantee
to all Executives not less than the benefits, security and guarantee provided
under the Plan, the Rabbi Trust may recover the Corporate Capital Interest from
the Insurance Policies and the guarantee provided under Section 8 of the Plan
shall be void and of no further force and effect.
If the Plan is terminated and a comparable replacement plan
has not been instituted at the time of termination of the Plan, to the extent
outlined in Section 11 payment of future Annual Premiums will be made from the
Rabbi Trust from the Security Fund. The Rabbi Trust will thereafter recover
the Corporate Capital Interest upon the earliest to occur of
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<PAGE> 9
the following: (a) the date on which funds in the Security Fund are exhausted;
or (b) the date on which the Company's obligations to pay Annual Premiums
pursuant to Section 10 ceases.
Subsequent to termination of the Plan, the Company may
institute, at any time, a comparable replacement plan providing benefits,
security and a guarantee to all Executives not less than the benefits, security
and guarantee previously provided by the Plan, in which event the Rabbi Trust
may recover the Corporate Capital Interest upon institution of the replacement
plan, and the guarantee previously provided under Section 8 of the Plan and
surviving the prior termination shall be void and of no further force and
effect.
In the event the Company does not institute a comparable
replacement plan, as previously defined, the guarantee provided in Section 8
shall survive termination of the Plan.
Following termination of the Plan and recovery of the
Corporate Capital Interest, the Executive or his designee will thereafter have
the option of surrendering his share of the Insurance Policy for its remaining
cash value or making Annual Premium payments, if required, directly to the
Insurance Company in order to maintain the Insurance Policy.
The Company may amend the Plan at any time, provided that no
amendment shall reduce or eliminate the obligation of the Rabbi Trust to make
payments of the guarantee of benefits as described in the Plan, and that any
amendment to reduce or eliminate the obligation to provide the Security Fund
shall be prospective in application only. No amendment shall reduce the
benefits in effect for Executives before the amendment without the prior
written consent of the Executives affected by the amendment whose Scheduled
Death Benefit Amounts in the aggregate represent at least 51% of the total
amount of Scheduled Death Benefit Amounts then provided to them. Amendments to
the Plan shall be made by a written instrument signed by the Plan
Administrator. The Plan Administrator will inform Executives affected by the
amendment in writing of the amendment to the Plan.
13. Termination of Employment
If the Executive's employment is terminated for any reason
other than death or Retirement, and the Executive's termination is not in
connection with a Change in Control of the Company, the Rabbi Trust will
withdraw the Corporate Capital Interest and terminate the Assignment. The
Executive or his designee may thereafter maintain the Insurance Policy by
assuming responsibility for paying Annual Premiums. If the Executive or his
designee elects to maintain the Insurance Policy, he will deal directly with
the Insurance Company. Thereafter, neither the Company nor the Rabbi Trust
shall have further responsibility to such Executive for any of the benefits or
the guarantee of benefits provided under the Plan.
If the employment of an Executive is terminated in connection
with a Change in Control of the Company, Annual Premiums will be paid by the
Rabbi Trust to the extent of the Security Fund as provided in Section 11.
12/1/92
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<PAGE> 10
14. Disability
If the Executive becomes disabled and, as a result, becomes
eligible for benefits from the CBI Long-Term Disability Plan, the Executive
will be treated as being actively employed for purposes of this Plan and
subject to the terms of this Plan. If an Executive who is receiving benefits
from the CBI Long Term Disability Plan retires under the CBI Pension Plan, the
Executive will be deemed retired for purposes of this Plan.
15. Underwriting
In order to participate in the Plan and be issued an Insurance
Policy under the Plan, the Executive will be required to provide medical
evidence of insurability satisfactory to the Insurance Company. This medical
evidence will include taking a physical examination.
If the Insurance Company, based upon the medical evidence
obtained, issues an Insurance Policy on the Executive's life that will require
the payment of an Extra Premium, the Rabbi Trust will pay that portion of the
Extra Premium that does not exceed 40% of the Basic Annual Premium. The
Executives affected by the requirement for an Extra Premium will be so
notified.
If the cost of the Extra Premium exceeds 40% of the Basic
Annual Premium, the following three (3) options will be available to the
Executive or his designee:
- Pay that portion of the Extra Premium that
exceeds 40% of the Basic Annual Premium in
order to maintain an Insurance Policy that
will provide the Scheduled Death Benefit
Amount;
- Accept a Death Benefit equal to the amount of
Death Benefit the Basic Annual Premium and
that portion of the Extra Premium that does
not exceed 40% of the Basic Annual Premium
would purchase (herein the "Reduced Death
Benefit"). If the Executive elects to accept
a Reduced Death Benefit, the obligation to
provide the Scheduled Death Benefit Amount
and the guarantee under Section 8 shall be
limited to the amount of the Reduced Death
Benefit; or
- Remain a participant in the CBI Group Life
Insurance Plan, and not participate in the
Plan.
If the Insurance Company determines that the Executive is
uninsurable, the Executive will remain a participant in the CBI Group Life
Insurance Plan, and will not be a participant in this Plan.
Benefit changes brought about by changes in Salary will be
handled as follows:
- Except as provided below, adjustments will be
made to the Scheduled Death Benefit Amount
provided by the Insurance Policy at the same
time
12/1/92
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<PAGE> 11
that the Salary change is effective and,
in general, these adjustments will not require
medical evidence.
- Where any Salary increase in any calendar
year causes an increase in the Scheduled
Death Benefit Amount in excess of 8%, medical
evidence of insurability may be required for
the portion of the Scheduled Death Benefit
Amount increase exceeding 8%. If an
Executive is found uninsurable based on
medical evidence for the portion of the
Scheduled Death Benefit Amount increase
exceeding 8%, the Scheduled Death Benefit
Amount increase for that year will be limited
to that amount not exceeding 8%.
If the Insurance Company determines that an
Extra Premium will be required on the
Scheduled Death Benefit Amount increase, the
Rabbi Trust will pay that portion of the
Extra Premium that does not exceed 40% of the
Basic Annual Premium applicable to the
increase in Scheduled Death Benefit Amount.
If the Extra Premium exceeds 40% of the Basic
Annual Premium required for the Scheduled
Death Benefit Amount increase, the options
set forth previously in this Section will be
available to the Executive.
16. Enrollment Procedures
To participate in the Plan, the Executive must:
- Sign a Plan Participation Form.
- Designate who will apply for and be the owner
of the Insurance Policy to be issued, if
other than the Executive.
- Complete any required Insurance Company
applications and cooperate in providing the
Insurance Company with medical evidence of
insurability.
- Designate a Beneficiary under the Insurance
Policy.
- Sign an Assignment Form.
17. Plan Administration
Unless otherwise designated in writing by the CBI Industries,
Inc. Vice President of Administration, the Plan Administrator ("Plan
Administrator") will be the CBI Industries, Inc. Director of Human Resources,
800 Jorie Boulevard, Oak Brook, IL 60521-2268, (708) 572-7000, who shall have
control over the administration and interpretation of the Plan. To the extent
not limited otherwise in this Plan, the Plan Administrator shall have full and
absolute discretion to construe, interpret and apply the terms of the Plan, and
12/1/92
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<PAGE> 12
decisions of the Plan Administrator shall be final and binding on all parties
to the fullest extent permitted by law. The Plan Administrator will have all
power needed to carry out his duties, and as he deems necessary or advisable,
may adopt rules and regulations relating to the Plan, may delegate
administrative responsibilities to advisors or other persons, and may rely on
information or opinions of legal counsel or experts.
The Insurance Company under the Plan is Northwestern Mutual
Life Insurance Company, 720 E. Wisconsin Avenue, Milwaukee, WI 53202, (414)
299-1444, unless such other Insurance Company is selected by the Company. The
Insurance Company shall be responsible for all matters relating to any
Insurance Policy.
The trustee of the Rabbi Trust is the Gary-Wheaton Bank, 120
East Wesley, Wheaton, IL 60187, (708) 665-2600.
18. Claims Procedure
For all benefits to be paid by the Insurance Policy, the
claims procedure will be the claims procedure established by the Insurance
Company. In any other case, a written claim must be filed with the Plan
Administrator or the Trustee of the Rabbi Trust. The Plan Administrator or the
Trustee of the Rabbi Trust, as applicable, will fully and fairly review all
claims and provide a final written decision within sixty (60) days of the date
the claim is received by the Plan Administrator or the Trustee.
The Plan Administrator is designated as the agent to receive
service of legal process on behalf of the Plan.
19. No Relation Between Plan and Continued
Employment
--------------------------------------
Nothing in this Plan and/or any actions taken under it shall
be construed or interpreted as a contract of employment giving the Executive a
right to be retained as an employee of the Company for any period of time, or
to restrict the right of the Company or the Executive to terminate employment
at any time for any reason, or to give the Executive a right to continued
employment in a capacity eligible to participate in the Plan.
20. Rules of Construction
As used in this Plan and where appropriate, the singular shall
include the plural, and vice versa, and the masculine shall include the
feminine, and vice versa.
21. Statement of ERISA Rights
Executives are entitled to certain rights and protection under
the Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate the Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of Executives
12/1/92
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<PAGE> 13
and their beneficiaries and designees. The Company may not fire or otherwise
discriminate against the Executive in any way to prevent him from obtaining Plan
benefits to which he is entitled or from exercising his rights under ERISA. If
a claim for a benefit is denied in whole or in part, the Executive must receive
a written explanation of the reason for the denial. The Executive has the right
to have the Plan reviewed and his claim reconsidered. Under ERISA, there are
steps to enforce the above rights. For instance, if a claim for benefits is
denied or ignored, in whole or in part, the Executive may file suit in a state
or federal court. If it should happen that Plan fiduciaries misuse the Plan's
money, or if the Executive is discriminated against for asserting his rights, he
may seek assistance from the U.S. Department of Labor, or may file suit in a
federal court. The court will decide who should pay court costs and legal fees,
for example, if it finds that the Executive's claim is frivolous. If there are
any questions about this statement or the Executive's rights under ERISA,
contact the Plan Administrator or the nearest Area Office of the U.S.
Labor-Management Service Administration, Department of Labor.
22. Controlling Law
To the extent not controlled by federal law, the Plan shall be
interpreted according to the laws of the State of Illinois.
12/1/92
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<PAGE> 14
CBI EXECUTIVE LIFE INSURANCE PLAN
APPENDIX A
Your Scheduled Death Benefit Amount under the Plan as of December 1, 1992, is:
<TABLE>
<CAPTION>
Scheduled Death Benefit Amount
------------------------------
<S> <C>
Pre-Retirement 4 x Salary at Date of Death
Post-Retirement 2 x Salary at Date of Retirement
</TABLE>
<PAGE> 15
APPENDIX B
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 20% or more of the shares of Common Stock then
outstanding, but shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the Common Stock of the Company then outstanding; provided, however, that if
a Person (other than an Exempt Person) shall become the Beneficial Owner of 20%
or more of the shares of Common Stock of the Company then outstanding by reason
of share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares of Common Stock
-2-
<PAGE> 16
of the Company, then such Person shall be deemed to be an "Acquiring Person".
1.2 "Acquisition Event" shall mean a Subsection 11.1(b) Event
(as such term is hereinafter defined) or any event described in subsection 13.1
hereof.
1.3 "Adjustment Shares" shall have the meaning set forth in
subsection 11.1(b).
1.4 "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
1.5 A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the
-3-
<PAGE> 17
States of New York or Illinois are authorized or
obligated by law or executive order to close.
1.7 "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
1.8 "Common Stock" when used with reference to the Company
shall mean the common stock, $2.50 par value per share, of the Company.
"Common Stock" when used with reference to any Person other than the Company
which is organized in corporate form shall mean the capital stock or other
equity security with the greatest voting power of such Person. "Common Stock"
when used with reference to any Person which is not organized in corporate form
shall mean units of beneficial interest which represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power per unit of such
Person.
1.9 "Common Stock equivalents" shall have the meaning set
forth in subsection 11.1(c) hereof.
1.10 "Continuing Director" shall mean any member of the
Board, while such person is a member of the Board, who
-6-
<PAGE> 18
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of this Agreement. A
"Continuing Director" shall also mean any person who subsequently becomes a
member of the Board, while such person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, if
(a) such person's nomination for election or election to the Board is
recommended or approved by resolution of a majority of the Continuing Directors
or (b) such person is included as a nominee in a proxy statement of the Company
distributed when a majority of the Board consists of Continuing Directors.
1.11 "Current Market Price" shall have the meaning set forth
in subsection 11.4 hereof.
1.12 "Current Value" shall have the meaning set forth in
subsection 11.1(c) hereof.
1.13 "Distribution Date" shall have the meaning set forth in
subsection 3.1 hereof.
1.14 "equivalent preferred stock" shall have the meaning set
forth in subsection 11.2 hereof.
-7-
<PAGE> 19
BACKGROUND
Amendment of the Company's Shareholders' Rights Plan on
December 20, 1994 has caused there to be certain inconsistencies in the
language of the CBI Executive Life Insurance Plan, CBI Industries, Inc.
Supplemental Survivors' Benefit, Executive Life Insurance and Benefit
Restoration Trust (the Rabbi trust) and certain Executive Termination
Agreements. It is recommended that the Board adopt the following resolutions
in order to amend the documents related to the foregoing in order to correct
such inconsistencies.
--------------
RESOLVED, that the definition of "Change in Control" set forth
in Section 4 of the CBI Executive Life Insurance Plan is hereby amended to read
as follows:
"Change in Control" shall mean the occurrence at any time of
any of the following events:
(a) An "Acquiring Person" (as defined below) has become
such; or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of the
Company.
For purposes of this definition, the terms "Acquiring Person"
and "Continuing Directors" shall have the same meaning as
ascribed to such terms in the Amendment and Restatement dated
as of August 8, 1989, of Rights Agreement dated as of March 4,
1986, between the Company and First Chicago Trust Company
of New York, as Rights Agent, as has been or may be amended
from time to time; and that the Plan Administrator is
authorized to take such actions as necessary to implement said
amendment to the CBI Executive Life Insurance Plan, including
but not limited to informing executives who participate in
said plan in writing of the aforementioned amendment.
FURTHER RESOLVED, that Section 5.3 of the CBI Industries, Inc.
Supplemental Survivors' Benefit, Executive Life Insurance and Benefit
Restoration Trust is hereby amended to read as follows:
5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL.
Notwithstanding Section 5.1, CBI may amend (but not revoke)
this
7-1
<PAGE> 20
Trust Agreement prior to a Change in Control (as defined
below) with respect to Participants, Designees, Beneficiaries
and the Trustee without limitation and in any manner and
effective as of any date, including a retroactive effective
date, by delivery to the Trustee of a written notice executed
by CBI of the substance and effective date of such amendment,
accompanied by the written certification of the Secretary of
CBI that no Change in Control has occurred; provided that no
amendment may have the effect of revoking the Trust by
returning to CBI or diverting to others any of the Trust Fund
before all payment of benefits and premiums have been made to
or for the benefit of Participants and their Designees and
Beneficiaries pursuant to the terms of the Plan(s), except as
provided in Section 1.3; and, provided further, that no
amendment shall enlarge the duties or responsibilities of the
Trustee without its written consent. For purposes of this
Section 5.3, the term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become
such; or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Section 5.3, the terms "Acquiring Person"
and "Continuing Directors" shall have the respective meaning as
ascribed to such terms in that certain Amendment and
Restatement dated as of August 8, 1989, of Rights Agreement
dated as of March 4, 1986, between CBI and First Chicago Trust
Company of New York, as Rights Agent, as has been or may be
amended from time to time. If a Change in Control occurs, CBI
shall within five (5) days notify the Trustee in writing of
that fact and the date thereof, and CBI shall upon the written
request of the Trustee and may at any other time in its
discretion notify the Trustee in writing whether a Change in
Control is expected to occur; provided, however, that
the Trustee shall have sole discretion to determine for
purposes of this Trust Agreement whether a Change in Control
has actually occurred, and such determination shall be
conclusive and binding on all parties hereto.
FURTHER RESOLVED, that Section 2 of each Executive Termination
Agreement entered into between the Corporation and an executive of the
Corporation is hereby amended to read as follows:
2. Change in Control. The term "Change in Control"
shall mean the occurrence at any time of any of the following
events:
7-2
<PAGE> 21
(a) An "Acquiring Person" (as defined below) has become
such; or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Agreement, the terms "Acquiring Person"
and "Continuing Directors" shall have the same meaning as
ascribed to such terms in that certain Amendment and
Restatement dated as of August 8, 1989, of Rights Agreement
dated as of March 4, 1986, between CBI and First Chicago Trust
Company of New York, as Rights Agent, as has been or may be
amended from time to time.
7-3
<PAGE> 1
EXHIBIT 18
CBI BENEFIT RESTORATION PLAN
(as amended through September 9, 1986)
This CBI Benefit Restoration Plan is adopted by CBI
Industries, Inc., for the purpose of restoring to certain Participants
retirement benefits of which they would otherwise be deprived through the
operation of certain laws of the United States.
1. Each person who is a Participant (as that term is
defined in the respective plans) in the CBI Pension Plan or the CBI Profit
Sharing Plan who is deprived of benefits that otherwise would accrue and be
payable to him or his beneficiary but for the limitation provision of the
Employee Retirement Income Security Act of 1974 or the Internal Revenue Code
and limiting provisions of either plan implementing those statutory limitations
shall be entitled to a benefit under this plan in the amount of benefits so
deprived because of such statutory limitations, so that the aggregate benefits
under this plan and those plans shall equal the benefits such person would have
been entitled to receive under those plans if the statutory limitations had not
been in effect.
2. Such benefit shall be paid by the Company in the same
form and at the same time as benefits paid under the respective Plan in respect
to which the excess amount is paid. However, the payment of such excess amount
shall not otherwise be subject to any of the provisions of those plans.
3. Payment of such benefit shall be made only from
either the general assets of the Company, or from assets placed by the Company
in such form of grantor trust (as that term is used in the Internal Revenue
Code, as amended) as shall permit access to such assets only by the Company's
judgment creditors. No person shall have rights in or to any specific assets
of the Company.
4. This plan may be amended by further action of the
board of directors, but no such amendment shall have the effect of terminating
or reducing benefits of any retired person who was a Participant at the time of
retirement or of depriving any person who is a Participant at the time of such
amendment of any future benefit to which that person would have otherwise
become entitled upon retirement pursuant to this plan as it existed immediately
prior to such amendment, or of reducing any such benefit. Notwithstanding the
foregoing, nothing in this plan shall confer upon any Participant any right of
continued employment.
<PAGE> 2
Identified as resolutions duly adopted by the Board of Directors of CBI
Industries, Inc. at its regular meeting of March 1, 1988.
After discussion, and on motion made, seconded and carried,
the following resolutions were unanimously adopted:
RESOLVED, that the CBI Benefit Restoration Plan, as
amended through September 9, 1986, is further amended
effective February 1, 1988 such that Paragraph 3 of the Plan
shall henceforth read as follows:
"Payment of such benefit shall be made only from
either the general assets of the Company, or from
assets placed by the Company in such form of grantor
trust (as that term is used in the Internal Revenue
Code of 1986, as amended) as shall permit access to
such assets only by the Company's general creditors
in bankruptcy or insolvency. No person shall have
rights in or to any specific assets of the Company."
RESOLVED FURTHER, that the Board hereby
ratifies and confirms action taken by the Vice-President -
Human Resources on behalf of the Company in executing the "CBI
Supplemental Survivors' Benefit and Benefit Restoration Trust
Agreement", dated February 8, 1988, by and between the Company
and Gary-Wheaton Bank, an Illinois banking corporation, which
Agreement establishes a Trust which is intended to constitute
a grantor trust as is contemplated by this resolution and
which trust shall merger and consolidate into a single trust
the CBI Supplemental Survivors' Benefit Trust and CBI Benefit
Restoration Trust all as further provided by the terms of the
Agreement.
<PAGE> 3
Identified as a resolution duly adopted by the Board of Directors of CBI
Industries, Inc. at its regular meeting of January 10, 1990.
After discussion, and on motion made, seconded and carried,
the following resolutions were unanimously adopted:
RESOLVED, that the CBI Benefit Restoration Plan, as
amended through February 1, 1988, is further amended effective
January 1, 1990 such that Paragraph 1 of the Plan shall
henceforth read as follows:
"Each person who is a Participant (as that term is
used in the respective plans) in the CBI Pension
Plan, CBI 401(k) Pay Deferral Plan (formerly the CBI
Profit-Sharing Plan), the CBI Salaried Employee Stock
Ownership Plan (1987) or any other tax qualified
pension benefit plan who is deprived of benefits that
otherwise would accrue and be payable to him or his
beneficiary but for the limitation provisions of the
Employee Retirement Income Security Act of 1974, as
amended, or the Internal Revenue Act of 1986, as
amended, and limiting provision of any of such plans
implementing such statutory limitations, shall be
entitled to a benefit under this plan in the amount
of benefits so deprived because of such statutory
limitations, so that the aggregate benefits under
this plan and those plans shall equal the benefits
such person would have been entitled to receive under
those plans if the statutory limitations had not been
in effect. The computation of such "aggregate
benefits" shall take into account 1) any individual
employee agreements with respect to pension benefits,
and 2) non-statutory limitations within the terms of
any of such plans, including, but not limited to,
limitations on or deductions from benefits payable
under the CBI Pension Plan as a result of the
benefits paid under the CBI Salaried Employee Stock
Ownership Plan (1987)."
<PAGE> 1
EXHIBIT 19
CBI INDUSTRIES, INC.
SUPPLEMENTAL SURVIVORS' BENEFIT, EXECUTIVE LIFE INSURANCE
AND BENEFIT RESTORATION TRUST
This amended and restated Trust Agreement (herein "Trust
Agreement") entered into as of this 30th day of November, 1992 at Wheaton,
Illinois between CBI INDUSTRIES, INC., a Delaware corporation (herein "CBI"),
and the GARY-WHEATON BANK, N.A., a national banking association, as trustee
(herein "Trustee") WITNESSETH:
WHEREAS, CBI has adopted the CBI Benefit Restoration Plan
(herein the "Restoration Plan") as an excess benefit plan within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
which is "unfunded" (within the meaning of Section 4(b)(5) of ERISA), to
provide certain employees of CBI and its subsidiaries and affiliates (herein
the "Participants") with the benefits they would otherwise accrue under the CBI
Pension Plan, the CBI 401(k) Pay Deferral Plan, the CBI Salaried Employee Stock
Ownership Plan (1987) or any other tax-qualified employee benefit plan
sponsored by CBI or an affiliate (together referred to herein as the
"Underlying Plans") but for Section 415 of the Internal Revenue Code of 1986
(herein the Code); and
WHEREAS, CBI and its wholly-owned subsidiary, Liquid Carbonic
Industries Corporation, a Delaware corporation (herein "Liquid"), have entered
into certain supplemental survivors' benefit agreements (herein the "Survivors'
Agreements") with certain employees of CBI and its subsidiaries and affiliates
(herein also "Participants") providing certain benefits to the survivors of such
employees as designated in or pursuant to their Survivors' Agreements (herein
their "Beneficiaries"); and
WHEREAS, CBI has adopted the CBI Executive Life Insurance Plan
(herein the "Insurance Plan") effective December 1, 1992, as an employee
welfare benefit plan within the meaning of Section 3(1) of ERISA, pursuant to
which CBI has entered into certain Plan Participation Forms, (herein "Insurance
Agreements") with selected key executives of CBI and its subsidiaries and
affiliates (herein also "Participants") in which CBI has agreed to contribute
to the cost of providing certain life insurance benefits as described in the
Insurance Plan to such Participants, or their designees (herein "Designees")
and beneficiaries (herein "Beneficiaries"), with the payment of
<PAGE> 2
premiums for life insurance policies to be issued pursuant to the Insurance Plan
and the death benefit guarantees set forth in said Plan to be an obligation of
the trust maintained under this Trust Agreement as provided in the Insurance
Plan; and
WHEREAS, Pursuant to the Insurance Plan the Trustee shall hold
certain rights and interests in the insurance policies to be issued to
Participants or their Designees, said interests to be documented in an
assignment form executed between the Trustee and each Participant or Designee
(herein the "Assignment"); and
WHEREAS, the Insurance Agreements entered into between CBI and
the Participants further provide that, except as otherwise provided in the
Insurance Plan, in the event a life insurance policy is issued on the life of a
Participant under the Insurance Plan, the Participant relinquishes any and all
rights that he or she may have pursuant to any prior Survivor's Agreement
between the Participant and CBI; and
WHEREAS, CBI has entered into certain agreements (herein
"Service Agreements") with certain officers of CBI regarding the granting of
past service with another employer for the payment of pension benefits directly
by CBI and not the CBI Pension Plan, which benefits shall also be considered
"excess benefits" for the purposes herein, including agreements with J.E.
Jones, G.L. Schueppert and any other officer whose name may be certified in
writing to the Trustee; and
WHEREAS, Liquid has entered into certain agreements (herein
"Retirement Agreements") with certain of its employees (herein also
"Participants") for the direct payment by Liquid of certain supplements and/or
post-retirement increases to the pension benefits payable to such employees
from the CBI Pension Plan or any other tax-qualified pension plan sponsored by
CBI or Liquid; and
WHEREAS, the Survivors' Agreements, Insurance Agreements,
Service Agreements and Retirement Agreements are hereinafter referred to
collectively as "the Agreements"; and
WHEREAS, CBI and the Trustee previously established on October
3, 1986, the "CBI Industries, Inc. Supplemental Survivors' Benefit Trust"
(herein the "Survivors' Trust") and the "CBI
-2-
<PAGE> 3
Industries, Inc. Benefit Restoration Trust" (herein the "Restoration Trust"),
and entered into a First Amendment to the latter on November 3, 1986; and
WHEREAS, CBI and the Trustee then previously established on
February 8, 1988 the "CBI Industries, Inc. Supplemental Survivors' Benefit and
Benefit Restoration Trust", which continued, merged and consolidated the
Survivors' Trust and the Restoration Trust into one trust for simplicity,
efficiency and cost of administration, as well as the commonality of purpose of
the two trusts, to the benefit of CBI, the Trustees and the trust beneficiaries
herein; and
WHEREAS, CBI desires to amend, restate and continue the trust
established under this Trust Agreement for the purpose of segregating on its
books certain insurance policies, Assignments and other assets that shall be
held therein, subject to the rights and claims of CBI's general creditors in the
event of Insolvency (as defined in Section 2.3, below), until paid as benefits
or insurance premiums to or for the benefit of Participants and their Designees
and Beneficiaries in such manner and at such times as specified under the
Restoration Plan, the Insurance Plan and the Agreements; of appointing the
Trustee to hold custody of such policies, Assignments and other assets; and of
facilitating payment of such benefits and insurance premiums and the exercise of
rights under the Assignments by the Trustee as agent of CBI; and
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the status of the
Restoration Plan, the Insurance Plan and the Agreements as unfunded plans
maintained for the purpose of providing deferred compensation or welfare
benefits for a select group of management or highly compensated employees for
purposes of Title I of the ERISA; and
WHEREAS, CBI desires to rename this Trust the "CBI Industries,
Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit
Restoration Trust";
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained it is hereby agreed as follows:
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ARTICLE 1: TRUST, AGREEMENTS AND TRUST FUND
1.1 TRUST. CBI and the Trustee have established the
Trust evidenced hereby ("Trust") to facilitate the operation of the Restoration
Plan, Insurance Plan, the Survivors' Agreements, Insurance Agreements, Service
Agreements and Retirement Agreements (collectively herein, the "Plans") which
are maintained by CBI or its affiliates primarily for the purpose of providing
benefits to a select group of management or highly compensated employees.
1.2 TRUST FUND. CBI has deposited with the Trustee to
comprise the fund (the "Trust Fund") under this Trust certain life insurance
policies on the lives of Participants, of which CBI or Liquid is the owner and
beneficiary, and certain other assets. CBI has also deposited with the Trustee
for execution and holding by the Trustee as part of the Trust Fund, certain
Assignments setting forth the specific rights and interests of the Trustee in
the insurance policies to be issued to Participants under the Insurance Plan.
CBI shall from time to time deposit with the Trustee such additional life
insurance policies, Assignments or other assets to form part of the Trust Fund
as the Trustee in its sole discretion reasonably exercised determines is
necessary or appropriate to enable the Trustee to carry out all of its present
and future obligations under this Trust Agreement on behalf of CBI with respect
to the Plans, and may from time to time deposit with the Trustee as it desires
such further life insurance policies, Assignments or other assets to form part
of the Trust Fund. The Trustee shall, by itself or in consultation with CBI,
re-evaluate annually the Trust's total obligations under this Trust Agreement
with respect to the Plans for these purposes. In this regard, the obligations
of the Trust shall include the net present value (utilizing a discount rate
equal to the then current dividend rate of the insurance company issuing
policies under the Insurance Plan minus 100 basis points) of future insurance
premiums payable for (but not beyond) the next ten years following the
evaluation date for insurance policies then currently issued under the
Insurance Plan and for which the Trustee is then holding Assignments. The
Trustee, and its successor or successors, shall receive, hold, invest,
administer, distribute, assert, exercise and enforce rights and interests in
the assets of the Trust Fund in accordance with the provisions of this Trust
as a fiduciary for the Participants and their Designees or Beneficiaries under
the Plans. Except as herein otherwise provided, title to the assets of the
Trust Fund shall at all times be vested in the Trustee, subject to the right
of the Trustee to hold title in bearer form or in the name of a nominee, and
the interest of others in the Trust Fund shall be only the right to have the
Trust Fund receive,
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hold, invest, administer, distribute, assert, exercise and enforce rights and
interests in the assets of the Trust Fund in accordance with the provisions of
the Trust.
1.3 TRUSTEE TO INVEST. The Trustee shall invest the Trust
Fund to the extent necessary in life insurance policies on the lives of
Participants for the purpose of paying survivors' benefits under the Survivors'
Agreements, and may fund the premiums for such policies and the payment of
benefits in accordance with any of the Plans by borrowing from life insurance
policies held in the Trust Fund. The Trustee shall invest the Trust Fund as
provided in Section 3.2 to the extent necessary to pay premiums on insurance
policies issued pursuant to the Insurance Plan, and may fund the premiums for
such policies by borrowing from life insurance policies, or pursuant to rights
under Assignments, held in the Trust Fund; provided, however, that any borrowing
against insurance policies in which the Trustee maintains an interest pursuant
to the Insurance Plan and any Assignment shall be limited to the extent of the
Trustee's interest in said policies. All borrowings under this Section shall
conform to such requirements of Section 264(c) or other applicable provision of
the Code as may be necessary to make the interest paid or accrued on any such
borrowing fully deductible by CBI. Subject to the foregoing limitations, the
Trustee shall be granted discretion in and responsibility for investment,
management and control of the assets in the Trust Fund. The Trustee may in its
sole discretion reasonably exercised borrow from any such life insurance policy
to pay premiums under any other life insurance policy or to pay benefits in
accordance with any Plan whether or not the borrowing is applied to the benefit
of the Participant who is the named insured under the life insurance policy from
which the borrowing is made; provided, however, that the Trustee shall not
borrow from any policy in an amount so that the death benefit payable upon the
death of the insured shall be less than the survivors' benefit payable to the
Beneficiaries of the insured under a Survivors' Agreement, if any, between CBI
or Liquid and the insured, or less than the death benefit payable to a
Beneficiary named under a life insurance policy issued pursuant to the Insurance
Plan.
1.4 PLANS AND AGREEMENTS. A true and correct copy of the
Restoration Plan, Insurance Plan, the Agreements, the CBI Pension Plan, the CBI
401(k) Pay Deferral Plan, and the CBI Salaried Employee Stock Ownership Plan
(1987), all as in effect on the date hereof, are attached hereto as,
respectively, Exhibits I, II, III, IV, V and VI. CBI shall file with the
Trustee promptly
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upon its adoption a true and correct copy of each amendment to the Restoration
Plan, Insurance Plan, an Underlying Plan, or an Agreement.
(a) NEW AGREEMENTS. CBI may from time to time
enter into new Agreements on similar or substantially identical terms with
other employees of CBI and its subsidiaries and affiliates. In such event CBI
may, but shall not be required to, deliver copies of such new Agreements to the
Trustee together with such life insurance policies, Assignments or other assets
to the Trust Fund in a value or amount as the Trustee in its sole discretion
reasonably exercised determines is necessary or appropriate to enable the
Trustee to carry out its obligations under the Trust Agreement with respect to
such new Agreements. The Trustee shall then determine, in its sole discretion
reasonably exercised, whether all life insurance policies, Assignments and
other assets contained in the Trust Fund are adequate to make payment to the
Beneficiaries of all Participants or Designees under all the Plans; and if so
the Trustee shall accept the new Agreements by written notice to CBI and any
new Agreement so delivered to and accepted by the Trustee shall be deemed
incorporated in Exhibit II with the same effect as if originally included
therein. Except as provided in Section 2.3, the Trustee shall have no
liability, responsibility, or obligation respecting Agreements not so accepted
by the Trustee.
(b) VOID AGREEMENTS. In the event an Agreement,
other than one entered into pursuant to the Insurance Plan, becomes void prior
to a Change in Control (as defined in Section 5.3 below) by reason of the
Participant having ceased to be an officer or ceased to be an employee of CBI or
one of its subsidiaries or affiliates for any reason other than retirement or
death, CBI shall so notify the Trustee, and the Trustee shall have no liability,
responsibility or obligation under this Trust respecting such void Agreement.
In the event an Agreement becomes void upon or after a Change in Control (as
defined in Section 5.3 below) by reason of the Participant having ceased to be
an officer or ceased to be an employee of CBI or one of its subsidiaries or
affiliates for any reason other than death, or in the event a Participant ceases
to be eligible to participate in the Insurance Plan for any reason, CBI shall so
notify the Participant in writing a copy of which shall be delivered to the
Trustee; and shall upon request of the Trustee substantiate that assertion with
objective evidence directly relevant to the provisions of the Insurance Plan or
Agreement. If within sixty (60) days after the later of the date such notice is
delivered to the Participant or such copy is delivered to the Trustee, or with
respect to the Insurance Plan at any time thereafter, the
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Participant (or his personal representative) objects in writing to the Trustee
to the assertion that such Agreement is void, the Trustee shall promptly make
its best effort to verify the correctness of the assertion by consulting with
CBI, the Participant, or such other persons as it chooses. If the Participant
(or his personal representative) files no objection within the time provided
herein, or if the Trustee finds that the Participant (or his personal
representative) has not substantiated his objection, such Agreement shall become
void for purposes of this Trust and the Trustee shall have no liability,
responsibility or obligation under this Trust respecting such void agreement,
except that in the case of an Insurance Agreement, the Trustee shall be
obligated to make premium payments and pay death benefit guarantee amounts as
provided under the Insurance Plan and Sections 1.2, 2.1 and 2.2.
1.5 GRANTOR TRUST. The Trust shall be deemed to be a
grantor trust under Sections 671 eg seq. of the Code with the Trust Fund being
deemed assets of CBI and subject at all times to the rights of its general
creditors (which may include Participants, Designees and Beneficiaries) in the
event of Insolvency (as defined in Section 2.3, below) but thereafter to the
rights and claims of the Participants, Designees and Beneficiaries and the
fiduciary obligations of the Trustee which are subordinated only to the rights
of general creditors of CBI in the event of Insolvency (as defined in Section
2.3, below).
1.6 PARTICIPANTS' UNSECURED CONTRACTUAL RIGHTS. The
Trust Fund shall be held separate and apart from other funds of CBI and shall be
used exclusively for the uses and purposes of Participants and general creditors
as herein set forth. Participants and their Designees and Beneficiaries shall
have no preferred claim on, or any beneficial ownership interest in, any assets
of the Trust Fund. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Participants and their
Designees and Beneficiaries against CBI. Any assets held by the Trust will be
subject to the claims of CBI's general creditors under federal and state law in
the event of insolvency (as defined in Section 2.3 below). To the extent that
any Participant, Designee or Beneficiary actually receives, or has distributed
on their behalf a distribution from the Trust Fund, such distribution shall to
the extent of the distribution be deemed in full satisfaction of the
Participant's, Designee's or Beneficiary's contractual claim against CBI or
Liquid under the Plan to which such distribution relates. To the extent the
Trustee has made distributions or otherwise acted in accordance with a Plan or
this Trust, the Trustee shall have no
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further obligation with respect to that Participant, Designee or Beneficiary
and except as provided in Section 2.3 shall not be a proper party to any court
or other proceeding brought by or on behalf of a Participant, Designee or
Beneficiary against CBI, Liquid, or any subsidiary or affiliate for enforcement
of any rights under any Plan.
ARTICLE II: DISTRIBUTIONS FROM THE TRUST FUND
2.1 DISTRIBUTIONS TO PARTICIPANTS AND BENEFICIARIES.
Except as provided in Section 2.2, distributions to or for the benefit of
Participants or Beneficiaries in accordance with a Plan shall be initiated
either by (i) written direction to the Trustee from CBI certifying that such
distribution is in accordance with the particular Plan to which such
distribution relates, or (ii) by a written request to the Trustee from the
Participant or Beneficiary or personal representative of either, with a copy to
CBI, certifying to the date on which payments to the Participant (or
Beneficiary) under a Plan or Underlying Plan are scheduled to begin (or be
made), and the form, payee and amount of such benefits, and either (A) the
amount of benefits under an Underlying Plan to which the Participant or
Beneficiary would be entitled but for the provisions of such Underlying Plan, if
applicable, implementing Section 415 of the Code; or (B) such information about
the Participant as the Trustee may reasonably require to determine the amount of
benefits under the Plan or Underlying Plan to which the Participant or
Beneficiary would be entitled. The Trustee shall promptly confirm to CBI the
date of its receipt of such direction or request (herein the "Distribution
Date"). Unless within fifteen days from the Distribution Date (i) the Trustee
notifies CBI in writing that it has reason to believe a distribution directed by
CBI is not in accordance with the applicable Plan or (ii) CBI notifies the
Trustee in writing that the Participant or Beneficiary is not entitled to a
distribution and substantiates that assertion with objective evidence directly
relevant to the provisions of the applicable Plan, the direction and
certification of CBI or the request and certification of the Participant or
Beneficiary or personal representative shall be deemed correct and the Trustee
shall make or commence the requested distribution on behalf of CBI in accordance
with the applicable Plan. If the Trustee or CBI objects to a distribution, the
Trustee shall promptly make its best effort to verify the correctness of the
certifications by consulting with CBI, the Participant, Beneficiary or personal
representative, or such other persons as it chooses. If the Trustee finds that
a distribution directed by CBI is in accordance with the applicable Plan, or
finds that CBI has not substantiated its objections to a distribution requested
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by a Participant, Beneficiary or personal representative, it shall within 30
days after the Distribution Date, make or commence distributions in accordance
with the applicable Plan. If by 30 days after the Distribution Date, the
Trustee still has reason to believe that a distribution directed by CBI is not
in accordance with the applicable Plan, or has been unable to ascertain the
correctness of CBI's objections to a distribution requested by a Participant,
Beneficiary or personal representative, there shall be no distribution, the
Trustee shall so notify the Participant, Beneficiary or personal representative
and CBI, and CBI shall pay benefits, if any, in accordance with the applicable
Plan, to the Participant or Beneficiary entitled thereto. If the Trustee finds
the objections of CBI to be valid and supported by pertinent facts, there shall
be no distribution.
2.2 DISTRIBUTION TO PAY PREMIUMS UNDER THE INSURANCE
PLAN. Distributions to pay premiums on insurance policies issued pursuant to
the Insurance Plan shall be made either (i) by written direction to the Trustee
by CBI certifying that such distribution is in accordance with the Insurance
Plan, or (ii) at the sole discretion of the Trustee, reasonably exercised,
provided such distribution is in accordance with the terms of the Insurance
Plan and this Trust.
2.3 DISTRIBUTIONS TO OR FOR THE BENEFIT OF OTHER CREDITORS.
At all times during the continuance of this Trust, as provided in Section 1.6
hereof, the Trust Fund shall be subject to claims of general creditors of CBI,
but only as set forth in this Section 2.3. The Trustee shall cease payment of
benefits to or in respect of Participants and their Designees and Beneficiaries
if CBI is insolvent. CBI shall be considered "insolvent" for purposes of this
Trust Agreement if (i) CBI is unable to pay its debts as they become due, or
(ii) CBI is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
The Board of Directors and the Chief Executive Officer of CBI
shall have the duty to inform the Trustee in writing of CBI's insolvency. If a
person claiming to be a creditor of CBI alleges in writing to the Trustee that
CBI has become insolvent, the Trustee shall determine whether CBI is insolvent
and, pending such determination, the Trustee shall discontinue payment of
benefits to or on behalf of Participants or their Designees or Beneficiaries.
Unless the Trustee has actual knowledge of CBI's insolvency,
or has received notice from CBI or a person claiming to be a creditor alleging
that CBI is insolvent, the Trustee shall have no
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duty to inquire whether CBI is insolvent. The Trustee may in all events rely on
such evidence concerning CBI's solvency as may be furnished to the Trustee and
that provides the Trustee with a reasonable basis for making a determination
concerning CBI's solvency.
If at any time the Trustee has determined that CBI is insolvent,
the Trustee shall discontinue payments to or for the benefit of Participants or
their Designees or Beneficiaries and shall hold the assets of the Trust for the
benefit of CBI's general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of Participants or their Designees and Beneficiaries
to pursue their rights as general creditors of CBI with respect to benefits due
under the Plan(s) or otherwise.
The Trustee shall resume the payment of benefits to or for the
benefit of Participants and their Designees and Beneficiaries in accordance
with Sections 2.1 and 2.2 of this Trust Agreement only after Trustee has
determined that CBI is not insolvent (or is no longer insolvent).
Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to this Section
2.3 and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to or for
the benefit of Participants and their Designees and Beneficiaries under the
terms of the Plan(s) for the period of such discontinuance, less the aggregate
amount of any payments made to or for the benefit of Participants and their
Designees and Beneficiaries by CBI in lieu of the payments provided for
hereunder during any such period of discontinuance.
2.4 DISTRIBUTIONS IN REVERSION TO CBI. In the event an
Agreement becomes void as provided in Section 1.4(b), or in the event CBI
requests in writing the Trustee to determine and revert to CBI excess assets
from the Trust Fund, the Trustee shall determine in its sole discretion
reasonably exercised whether the life insurance policies, Assignments and other
assets remaining in the Trust Fund, after such reserve for future premium
payments as the Trustee in its sole discretion reasonably exercised shall deem
necessary or appropriate, are more than adequate to insure payment to all
Participants and Beneficiaries as determined under Section 1.2 above and to
satisfy the obligations of the Trust under the Insurance Plan as provided in
Section 1.2; and if so the Trustee (after converting to cash so much of any
insurance policies as the Trustee in its sole discretion reasonably exercised
deems appropriate) shall distribute such excess assets in reversion
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to CBI. In the event assets remain in the Trust Fund after all payments to
Participants and Beneficiaries have been completed in accordance with the
Restoration Plan and all Agreements, and all obligations of the Trust under the
Insurance Plan are satisfied, the Trustee shall distribute such remaining
assets in reversion to CBI.
2.5 DISTRIBUTION TO PAY TAXES. All taxes, including but
not limited to income taxes, upon or in respect of the income or assets of the
Trust Fund, or upon or in respect of distributions from the Trust Fund required
by any federal or state revenue law to be withheld at the source, shall be
reported and paid by CBI from assets other than the Trust Fund. To the extent
not so paid by CBI, or to the extent the Trustee in its sole discretion
reasonably exercised determines that it is necessary to protect the Trustee from
any liability under any federal or state revenue law for failure to report and
withhold taxes at the source, the Trustee may report and pay such taxes from the
Trust Fund, provided, however, that CBI shall indemnify the Trustee and the
Trust Fund and hold them harmless from and against any such taxes.
ARTICLE III: ADMINISTRATION OF AND ACCOUNTING FOR TRUST FUND
3.1 MANAGEMENT AND CONTROL OF TRUST FUND. Subject to the
provisions of this Trust Agreement, the Trustee shall have exclusive authority,
discretion and responsibility to manage, control, assert, exercise and enforce
rights or interests in the assets of the Trust Fund, in accordance with such
instructions and directions consistent with this Trust Agreement as are
communicated to the Trustee by CBI. All rights associated with assets of the
Trust shall, to the extent of the ownership interest of the Trustee, be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with Participants or their Designees and
Beneficiaries; provided, however, that a Participant or his Designee or
Beneficiary may exercise all rights of ownership respecting his or its interest
in an insurance policy under the Insurance Plan, the ownership of which may be
divided between the Trustee and the Participant or their Designee and
Beneficiary during such time as the Trustee holds an Assignment on said
insurance policy.
3.2 INVESTMENT OF FUNDS. During the term of this Trust,
an income received by the Trust, net of expenses and taxes, shall be
accumulated and reinvested. The Trustee may invest any portion of the Trust
Fund not invested in life insurance policies in United States Government
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<PAGE> 13
obligations, corporate or governmental bonds or other debt obligations of
investment quality, annuity contracts, savings accounts, other bank accounts or
deposits (including such an account or deposit in its own banking or trust
department, any common trust fund, group trust, pooled fund or other commingled
investment fund maintained by the Trustee for trust investment purposes or with
a fiduciary or party in interest, other than such a Trust or fund maintained
for tax-qualified plans or trusts) which bear a reasonable rate of interest,
and in cash or accounts or deposits which do not bear interest for only such
limited time as is necessary pending investment, reinvestment or payment of
distributions. In no event may the Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by CBI, other than a de
minimis amount held in common investment vehicles in which the Trustee invests.
3.3 TRUSTEE'S ADMINISTRATIVE POWERS. Except as otherwise
provided in the Trust Agreement, the Trustee shall exercise the following
powers, rights and duties in addition to those provided elsewhere in the Trust
Agreement or by law:
(a) to retain any asset of the Trust Fund,
including any dividends or other property received with respect to insurance
policies or other property held in the Trust;
(b) to borrow from any lender (including, to the
extent permitted under federal or state law, CBI, any shareholder of CBI or the
lending department of the Trustee), to acquire or maintain life insurance
policies on the lives of Participants or to distribute benefits in accordance
with the Plans; provided that the Trustee shall not make any borrowing (other
than under a life insurance policy) from a lender other than CBI, if CBI is
willing to make such loan; and further provided, however, that before a Change
in Control (as defined in Section 5.3), CBI and the Trustee must jointly agree
to the terms and conditions of any borrowing (other than under a life insurance
policy) or any agreement with any lender (other than a life insurance company
making loans pursuant to such life insurance policy).
(c) to employ such accountants, actuaries,
attorneys and agents, whether independent or not, as may be reasonably
necessary in collecting, managing, administering, investing, distributing and
protecting the Trust Fund or the assets thereof or any borrowings of the
Trustee
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made in accordance with paragraph (b) above or computing the obligations herein
or excess assets, if any, of the Trust Fund;
(d) to settle, submit to arbitration, compromise,
contest, prosecute or abandon claims and demands in favor of or against the
Trust Fund;
(e) to vote any securities either in person or by
proxy for any purpose, to consent to, to dissent from and to oppose or take any
action in connection with, and receive and retain any securities resulting from
any reorganization, consolidation, merger, readjustment of the financial
structure, sale, lease or other disposition of the assets of any corporation or
other organization, the securities of which may be an asset of the Trust Fund;
(f) to cause any asset of the Trust Fund to be
issued, held or registered in its individual name or in the name of its
nominee, or in such form that title will pass by delivery, provided that the
records of the Trustee shall indicate the true ownership of such assets;
(g) Pursuant to the Insurance Plan, to execute
and hold the Assignments, and to exercise, assert and enforce the rights and
interests of the Assignee thereunder, and to pay premiums for insurance
policies issued under the Insurance Plan as set forth in the Insurance Plan,
an Agreement or this Trust;
(h) to exercise any of the powers and rights of
an individual owner with respect to any asset of the Trust Fund and to perform
any and all other acts in its judgment necessary or appropriate for the proper
administration of the Trust Fund, even though such powers, rights and acts are
not specifically enumerated in the Trust.
Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or by applicable law, the Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedural
and Administrative Regulations promulgated pursuant to the Code.
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3.4 TRUSTEE'S RELIANCE UPON COUNSEL, ACCOUNTANTS,
INSURANCE CONSULTANTS OR ACTUARIES. The Trustee may consult with counsel,
accountants, insurance consultants or actuaries (who may be counsel,
accountants, insurance consultants or actuaries for CBI) with respect to any of
its duties or obligations hereunder and the opinion of such counsel with
respect to legal matters, of such accountants with respect to accounting
matters, and of such actuaries or insurance consultants with respect to
computing Trust obligations, shall be full and complete authorization with
respect to any action taken by the Trustee in good faith and in accordance
therewith.
3.5 INDEMNIFICATION OF TRUSTEE. (a) CBI agrees, to the
extent permitted by applicable law to indemnify the Trustee and hold the
Trustee harmless from and against any loss or expense incurred (including legal
expenses) or any claim or liability that may be asserted against the Trustee by
reason of its taking or refraining from taking, in either case based upon the
Trustee's reasonable and good faith interpretation of the Trust Agreement, any
action under this Trust Agreement (including, without limiting the generality
of the foregoing, any claim brought against the Trustee by CBI), provided that
in no event shall CBI's obligation to indemnify the Trustee and hold the
Trustee harmless as provided herein apply in the event of the Trustee's
negligence, bad faith or willful misconduct.
(b) The Trustee shall be entitled to rely upon a
certification of an authorized representative of CBI with respect to any
instruction, direction or approval of CBI until a subsequent certification is
filed with the Trustee. Notwithstanding any other provision to the contrary
under this Trust Agreement, CBI agrees to fully indemnify the Trustee and hold
the Trustee harmless from and against any loss or expense incurred (including
legal expenses) or any claim or liability that may be asserted against the
Trustee by reason of the Trustee taking or refraining from taking any action
in compliance with or pursuant to CBI's instruction, direction or approval
under this Trust Agreement.
(c) The Trustee shall be entitled to rely upon any
instrument, certificate or paper which the Trustee reasonably and in good faith
believes to be genuine and to be signed or presented by the proper person or
persons, and the Trustee shall not be under any duty to make any investigation
or inquiry as to any statement contained in any such writing but may accept the
same as conclusive evidence of the accuracy of the statements therein
contained.
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(c) The Trustee shall not be liable for the proper
application of any part of the Trust Fund if distributions are made in
accordance with the terms of this Trust Agreement and information furnished to
the Trustee by CBI.
3.6 RECORDS AND ACCOUNTS OF TRUSTEE. The Trustee shall
maintain accurate and detailed records and accounts of all transactions of the
Trust, which shall be available at all reasonable times for inspection or audit
by any person designated by CBI and which shall be retained as required by
applicable law.
3.7 FISCAL YEAR. The fiscal year of the Trust shall be
the twelve-month period beginning on January 1 and ending on December 31.
3.8 REPORT OF TRUSTEE. The Trustee shall prepare and
present to CBI, a report for the period ending on the last day of each fiscal
year, and for such shorter periods as CBI may request, listing all policies,
securities and other property acquired and disposed of and all receipts,
disbursements, distributions and other transactions effected by it since the
date of its last account, and further listing all cash, securities, and other
property held by it, together with the fair market value thereof, as of the end
of such period. In addition to the foregoing, the report shall contain such
additional information regarding the Trust Fund's assets and transactions as
CBI may request and as may be necessary to enable CBI to comply with the
provisions of any Plan and applicable law. The Trustee shall forward promptly
to CBI copies of premium notices, statements, and other reports received by the
Trustee from any insurance company or agent thereof respecting any life
insurance policies held in the Trust Fund, or under which the Trustee holds an
Assignment.
3.9 FINAL REPORT. In the event of the resignation or
removal of the Trustee hereunder, CBI may request and the Trustee shall then
submit, for the period ending on the effective date of such resignation or
removal, a report similar in form and purpose to that described in Section 3.8
above.
3.10 APPROVAL OR REPORTS. CBI may approve a report
submitted by the Trustee pursuant to Section 3.8 or Section 3.9 by written
notice of approval delivered to the Trustee or by failure to express objection
to such report in writing delivered to the Trustee within six months from the
date
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upon which the report was delivered to CBI. Upon the receipt of a written
approval of a report, or upon the passage of the period of time within which
objection may be filed without written objections having been delivered to the
Trustee, such report shall be deemed to be approved, and the Trustee shall be
released and discharged as to all items, matters and things set forth in such
report, as fully as if such report had been settled and allowed by decree of a
court of competent jurisdiction in an action or proceeding in which the Trustee,
CBI and all persons having or claiming to have any interest in the Trust Fund or
under any Plan or any Agreement were parties. If the Trustee and CBI cannot
agree with respect to any act or transaction contained in any report, the
Trustee shall have the right to have its accounts settled by judicial
proceedings, in which event only the Trustee and CBI shall be necessary parties.
3.11 COMPENSATION AND EXPENSES. The Trustee shall be
entitled to reasonable compensation for its services as may be agreed upon from
time to time by the Trustee and CBI. Unless otherwise paid by CBI, the Trustee
is authorized to reimburse itself from the Trust Fund for its reasonable
compensation, expenses, taxes and charges (including fees and expenses of its
accountants, attorneys, insurance consultants, actuaries and agents) incurred
in connection with the administration, management, investment, protection,
distribution and exercise of rights with respect to assets in the Trust Fund.
In determining whether any excess assets currently exist in the Trust Fund,
under Section 2.4, above, the Trustee may take into account recurring and
reasonably anticipated expenses for such administration.
3.12 COOPERATION IN ADMINISTRATION. CBI shall provide to the
Trustee upon request from the Trustee from time to time such information on a
Participant's date of hire, age, years of service, compensation, death,
elections, Designee, Beneficiary, and the form, payee, amount and commencement
date of benefits under any Plan or Underlying Plan, as the Trustee may
reasonably request to fulfill its obligations under this Trust Agreement.
ARTICLE IV: SUCCESSION OF TRUSTEE
4.1 RESIGNATION OF TRUSTEE. The Trustee or any successor
thereto may resign as Trustee hereunder at any time upon delivering a written
notice of such resignation, to take effect thirty (30) days after the delivery
thereof to CBI (unless CBI shall accept shorter notice).
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4.2 REMOVAL OF TRUSTEE. The Trustee or any successor
thereto may be removed for good and sufficient cause by delivering to the
Trustee so removed an instrument executed in the name of CBI by both (i) the
Chairman of CBI, and (ii) any Executive Vice President or Senior Vice President
of CBI. Such removal shall take effect at the date specified in such
instrument, which shall not be less than thirty (30) days after delivery of the
instrument (unless a successor Trustee shall have been earlier appointed by
CBI).
4.3 APPOINTMENT OF SUCCESSOR TRUSTEE. Whenever the
Trustee or successor Trustee shall resign or be removed or a vacancy in the
position shall otherwise occur, CBI shall appoint a successor Trustee which
shall be a bank or trust company authorized to exercise trust powers in
Illinois and which is unaffiliated with CBI or any successor thereto, which may
qualify by delivering its acceptance in writing to CBI. If no such appointment
has been made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
4.4 SUCCESSION TO TRUST FUND ASSETS. The title to all
property held hereunder shall vest in any successor Trustee acting pursuant to
the provisions hereof without the execution or filing of further instrument,
but a resigning or removed Trustee shall execute all instruments and do all
acts necessary to vest title in the successor Trustee. Each successor Trustee
shall have, exercise and enjoy all of the powers, both discretionary and
ministerial, herein conferred upon its predecessors. A successor Trustee shall
not be obligated to examine or review the accounts, records, and acts of or
property delivered by any previous Trustee and shall not be responsible for any
action or any failure to act on the part of any previous Trustee.
4.5 CONTINUATION OF TRUST. In no event shall the legal
disability, resignation or removal of a Trustee terminate the Trust, but CBI
shall have the duty of forthwith appointing a successor Trustee to carry out
the terms of the Trust.
4.6 CHANGES IN ORGANIZATION OF TRUSTEE. In the event
that any corporate Trustee hereunder shall be converted into, shall merge or
consolidate with, or shall sell or transfer substantially all of its assets and
business to another corporation, the corporation resulting from
-17-
<PAGE> 19
such conversion, merger or consolidation or the corporation to which such sale
or transfer shall be made shall thereupon become and be the Trustee under the
Trust with the same effect as though originally so named.
4.7 CONTINUANCE OF TRUSTEE'S POWERS IN EVENT OF
TERMINATION OF THE TRUST. In the event of the termination of the Trust, as
provided herein, the Trustee shall dispose of the Trust Fund as directed by CBI
in accordance with the provisions hereof and of the Plans. Until the final
distribution of the Trust Fund, the Trustee shall continue to have all powers
provided hereunder as necessary or expedient for the orderly liquidation and
distribution of the Trust Fund. Except as provided in Sections 2.3, 2.4 and
2.5, no part of the Trust Fund shall be used for or diverted to purposes other
than the payment of expenses properly chargeable to the Trust Fund and payments
of benefits or premiums to or on behalf of Participants, Designees and
Beneficiaries.
ARTICLE V: AMENDMENT, TERMINATION AND MISCELLANEOUS
5.1 AMENDMENT OF TRUST. CBI may amend this Trust by
delivery to the Trustee of a written notice executed by CBI of the text and
effective date of such amendment if but only if either (i) such notice is
accompanied by the specific written consent to the proposed amendment by
Participants and Beneficiaries whose actuarial interests under all of the Plans
except the Insurance Plan represent at least 51% of the total of all actuarial
interests under Plans computed as of the effective date of such amendment and,
in the case of the Insurance Plan, specific written consent of the Executives
then participating in the Insurance Plan and against whose insurance policies
the Trustee holds Assignments whose scheduled death benefit amounts (as defined
in the Insurance Plan) in the aggregate represent at least 51% of the total
amount of scheduled death benefit amounts as of the effective date of such
amendment; or (ii) such notice is accompanied by the opinion of counsel
satisfactory to the Trustee that the amendment is necessary for the purpose of
conforming the Trust to any present or future federal or state law (including
revenue laws) relating to trusts of this or similar nature, as such laws may be
amended from time to time, and a copy of such notice and opinion of counsel is
delivered to each Participant or Designee; provided, however, that no amendment
shall enlarge the duties or responsibilities of the Trustee without its written
consent.
-18-
<PAGE> 20
5.2 REVOCATION OF TRUST. Subject to the rights of
creditors of CBI in the event of Insolvency, this Trust shall be irrevocable.
5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL.
Notwithstanding Section 5.1, CBI may amend (but not revoke) this Trust
Agreement prior to a Change in Control (as defined below) with respect to
Participants, Designees, Beneficiaries and the Trustee without limitation and
in any manner and effective as of any date, including a retroactive effective
date, by delivery to the Trustee of a written notice executed by CBI of the
substance and effective date of such amendment, accompanied by the written
certification of the Secretary of CBI that no Change in Control has occurred;
provided that no amendment may have the effect of revoking the Trust by
returning to CBI or diverting to others any of the Trust Fund before all
payment of benefits and premiums have been made to or for the benefit of
Participants and their Designees and Beneficiaries pursuant to the terms of the
Plan(s), except as provided in Section 13; and, provided further, that no
amendment shall enlarge the duties or responsibilities of the Trustee without
its written consent. For purposes of this Section 5.3, the term "Change in
Control" shall mean the occurrence at any time of any of the following events:
(a) An Acquiring Person (as defined below) has become
such; or
(b) Continuing Directors (as defined below) cease to
comprise a majority of the board of directors of CBI.
For purposes of this Section 5.3, the terms "Acquiring Person" and "Continuing
Directors" shall have the respective meanings ascribed to such terms in that
certain Amendment and Restatement of Rights Agreement dated as of March 4,
1986, between CBI and First Chicago Trust Company of New York, as Rights Agent,
the relevant portions of which for convenience of reference are reproduced as
Exhibit VII to this Trust Agreement. If a Change in Control occurs, CBI shall
within five (5) days notify the Trustee in writing of that fact and the date
thereof, and CBI shall upon the written request of the Trustee and may at any
other time in its discretion notify the Trustee in writing whether a Change in
Control is expected to occur; provided, however, that the Trustee shall have
sole discretion to determine for purposes of this Trust Agreement whether a
Change in
-19-
<PAGE> 21
Control has actually occurred, and such determination shall be
conclusive and binding on all parties hereto.
5.4 AMENDMENT BY TRUSTEE IN EVENT CBI CEASES TO EXIST.
In the event CBI shall cease to exist and its obligation to cooperate in the
administration of the Trust is not assumed by any other person or corporation,
the Trustee shall have the power to make by amendment such changes in,
additions to, and substitutions for the provisions of the Trust, to take effect
retroactively or otherwise, as may be necessary or advisable for the purpose of
conforming the Trust to any present or future Federal or State law relating to
trusts of this or similar nature, as amended from time to time.
5.5 TERMINATION OF TRUST. The Trust shall terminate at
such time as all of the assets held for the benefit of Participants, Designees
and their Beneficiaries have been disbursed to Participants or their
Beneficiaries pursuant to Section 2.1, distributed to pay premiums under the
Insurance Plan pursuant to Section 2.2, distributed to or for the payment of
taxes pursuant to Section 2.5 or for the benefit of general creditors of
CBI pursuant to Section 2.3, or distributed in reversion to CBI pursuant to
Section 2.4.
5.6 NONALIENABILITY. No Participant, Designee or
Beneficiary shall have any right to sell, assign, pledge, hypothecate,
anticipate or in any way create a lien on any part of the Trust Fund. To the
maximum extent permitted by law, no interest in the Trust shall be assignable
in or by operation of law, or be liable in any way for the debts for defaults
of a Participant, Designee, Beneficiary, spouse or heirs at law whether to CBI
or to others.
5.7 COLLECTION. In the event CBI fails to pay over to
the Trustee within 10 days of notice and demand from the Trustee any amount
determined by the Trustee under Section 1.2 or Section 1.4(a) (relating to
deposit of additional insurance policies or other assets to the Trust Fund),
Section 2.1 (relating to distributions to Participants and Beneficiaries),
Section 2.2 (relating to premiums under the Insurance Plan), or Section 2.5
(relating to taxes), the Trustee may bring an action against CBI in any court
of competent jurisdiction and shall be entitled to recover from CBI such amount
plus interest at five percentage points in excess of the Trustee's prime
lending rate as publicly announced from time to time plus all costs of
collection including reasonable attorneys fees
-20-
<PAGE> 22
and costs of litigation. During any period in which the Trustee
determines it does not or will not have sufficient assets to carry out its
obligations herein, pending any action against CBI as provided in this Section
5.7, the Trustee shall first pay any survivors' benefits due to Beneficiaries
pursuant to the Survivors' Agreements and to any guarantee of death benefits
under the Insurance Plan, next any other benefits due under the Restoration
Plan or any Agreement on a pro rata basis to Beneficiaries also receiving
benefits under Survivors' Agreements, next any other benefits due under the
Restoration Plan, Service Agreements or Retirement Agreements on a pro rata
basis, and last to pay premiums for insurance policies issued pursuant to the
Insurance Plan. Upon any recovery from CBI pursuant to such action, proceeds
shall first be used by the Trustee to pay previously due and unpaid benefits
and premiums, in the order described above.
5.8 ARBITRATION OF DISPUTES. Except as otherwise
provided in Section 5.7, in the event of any dispute between or among a
Participant, a Designee, a Beneficiary, personal representative, CBI or the
Trustee, such dispute shall be resolved by arbitration in the City of Chicago
in accordance with the rules governing commercial arbitration established by
the American Arbitration Association and a judgment upon the award may be
entered in any court having jurisdiction thereof; provided, however, that a
claim by any Participant, Designee, Beneficiary or personal representative
against CBI shall be subject to arbitration only with the consent of such
Participant, Designee, Beneficiary, or personal representative.
5.9 CONSTRUCTION OF UNDERLYING PLANS. The entitlement of
a Participant or their Designee or Beneficiary to benefits under a Plan (or
Underlying Plan) shall be determined in accordance with such Plan (or
Underlying Plan). Notwithstanding anything in this Trust Agreement to the
contrary, the determination by the plan administrator of a Plan or Underlying
Plan as to the benefits provided by such Plan shall except as otherwise
redetermined pursuant to the claims procedure of such Plan or as otherwise
provided in Section 2.1, be conclusive and binding on the Trustees, CBI,
Participants, Designees and their Beneficiaries and all other persons for all
purposes of this Agreement.
5.10 CERTIFICATION OF PARTICIPANT DATA TO TRUSTEE. CBI
shall, as promptly as practicable after the date hereof, certify to the Trustee
such age, salary and other data concerning each Participant as the Trustee may
reasonably request. The Trustee may rely and act upon such data.
-21-
<PAGE> 23
5.11 CONTROLLING LAW. The laws of the State of Illinois
shall be controlling state laws in all matters relating to the Trust.
5.12 NOTICE. Any notice to the Trustee or to CBI required or
permitted under this Trust shall be duly and properly given and delivered if
sent by certified United States mail, return receipt requested, to the Trustee
at:
Gary-Wheaton Bank, N.A.
120 East Wesley
Wheaton, Illinois 60187
Attention: Janice Lorenz, Trust Department
and to CBI at
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60522-7001
Attention: Vice-President of Administration
or to such other address as the Trustee or CBI may specify by written notice to
the other.
5.13 CORPORATE ACTION. Except as otherwise expressly
provided in this Trust Agreement, any action or direction CBI is required or
permitted to take or give under this Trust Agreement shall be duly and properly
taken or given if done in writing over the signature of any of the following
CBI officers: President and Chairman of the Board, Executive Vice
President-Finance, Senior Vice President and General Counsel or Vice President
and Treasurer (as their incumbency is certified to the Trustee from time to
time by the Secretary of CBI) or such other officer of CBI as may be authorized
by specific resolution of the board of directors of CBI to take actions with
respect to this Trust Agreement. CBI shall be bound thereby and the Trustee
and all other persons shall be protected in relying thereon.
5.14 GRANTORS AND AGENCY. In the event Liquid or other
affiliates of CBI have contributed assets to the Trust Fund relating to Plans
covering Participants employed by them, references in this Agreement to CBI
shall be read as references to Liquid or such other affiliate as appropriate,
but Liquid and each such other affiliate shall be deemed to have appointed CBI
as its agent for purposes of this Trust Agreement to the end that the Trustee
may deal with CBI as if CBI were the only settlor and grantor under the Trust.
The Trustee shall nevertheless maintain accounts showing
-22-
<PAGE> 24
the respective assets attributable to CBI and each affiliate for the purpose of
applying Section 2.3 separately to CBI and each such affiliate and enabling CBI
and each such affiliate to comply with requirements of Section 671 et seq. of
the Code as applicable to it.
5.15 COUNTERPARTS. The Trust may be executed in any number
of counterparts, each of which shall be considered an original.
IN WITNESS WHEREOF, the CBI and the Trustee have caused this
Trust Agreement to be signed and their corporate seal affixed hereto by
authorized officers, all as of the day and year first above written, the
Trustee hereby evidencing its acceptance of the Trust including its agreement
to perform the duties given to or required of it by the Trust.
ATTEST: CBI INDUSTRIES, INC.
/s/ Charlotte C. Toerber By: /s/ G.L. Scheuppert
----------------------------------- ---------------------------
ATTEST: GARY-WHEATON BANK, N.A. as
/s/ Thomas S. Palmer By: /s/ Gary-Wheaton Bank, N.A.
----------------------------------- ---------------------------
-23-
<PAGE> 25
SECRETARY'S CERTIFICATE
I, C.C. Toerber, do hereby certify that I am the Secretary of
CBI Industries, Inc., a Delaware corporation (hereinafter the "Corporation"),
and that as such officer I am duly authorized to make this Certificate on
behalf of the Corporation.
I further certify: (1) that the Board of Corporation
unanimously adopted the following resolutions at their meeting January 11, 1995
(hereinafter "January 11th Consent"), (2) that the January 11th Consent was
adopted in accordance with the By-Laws of the Corporation; and (3) that the
following is a true and complete extract of the January 11th Consent as adopted
by the Board of Directors of the Corporation:
FURTHER RESOLVED, that Section 5.3 of the CBI Industries, Inc.
Supplemental Survivors' Benefit, Executive Life Insurance and Benefit
Restoration Trust is hereby amended to read as follows:
5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL.
Notwithstanding Section 5.1, CBI may amend (but not revoke)
this Trust Agreement prior to a Change in Control (as defined
below) with respect to Participants, Designees, Beneficiaries
and the Trustee without limitation and in any manner and
effective as of any date, including a retroactive effective
date, by delivery to the Trustee of a written notice executed
by CBI of the substance and effective date of such amendment,
accompanied by the written certification of the Secretary of
CBI that no Change in Control has occurred; provided that no
amendment may have the effect of revoking the Trust by
returning to CBI or diverting to others any of the Trust Fund
before all payment of benefits and premiums have been made to
or for the benefit of Participants and their Designees and
Beneficiaries pursuant to the terms of the Plan(s), except as
provided in Section 1.3; and, provided further, that no
amendment shall enlarge the duties or responsibilities of the
Trustee without its written consent. For purposes of this
Section 5.3, the term "Change in Control" shall mean the
occurrence at any time of any of the following events:
(a) An "Acquiring Person" (as defined below) has become
such;
or
(b) "Continuing Directors" (as defined below) cease to
comprise a majority of the Board of Directors of CBI.
For purposes of this Section 5.3, the terms "Acquiring Person"
and "Continuing Directors" shall have the respective meaning
as ascribed to such terms in that certain Amendment and
Restatement dated as of
<PAGE> 26
August 8, 1989, of Rights Agreement dated as of March 4, 1986,
between CBI and First Chicago Trust Company of New York, as
Rights Agent, as has been or may be amended from to time. If a
Change in Control occurs, CBI shall within five (5) days notify
the Trustee in writing of that fact and the date thereof, and
CBI shall upon the written request of the Trustee and may at
any other time in its discretion notify the Trustee in writing
whether a Change in Control is expected to occur; provided,
however, that the Trustee shall have sole discretion to
determine for purposes of this Trust Agreement whether a Change
in Control has actually occurred, and such determination shall
be conclusive and binding on all parties hereto.
I certify that, as of January 11, 1995, no "Change in Control"
of the Corporation has occurred, as that term is defined in Section 5.3 (either
before or after the amendment made by the January 11th Consent) of that certain
Trust Agreement entered into as of the 8th day of February, 1988, by and
between CBI Industries, Inc. and the Gary-Wheaton Bank, an Illinois banking
corporation, known as the "CBI Industries, Inc. Supplemental Survivors' Benefit
and Benefit Restoration Trust".
I further certify that the foregoing resolutions continue to
be in full force and effect and have not been modified or otherwise superseded
by further action of the Board of Directors or the shareholders of the
Corporation.
IN WITNESS WHEREOF, I have set my hand on behalf of
CBI Industries, Inc. this 23rd day of January, 1995.
/s/ CCT
------------------------------------
C.C. Toerber, Secretary
<PAGE> 1
Exhibit 20
H. William Lichtenberger Praxair, Inc.
Chairman and 19 Old Ridgebury Road
Chief Executive Officer Danbury, CT 06810-5113
Tel (203) 837-2554
Fax (203) 837-2518
[PRAXAIR LETTERHEAD]
October 27, 1995
Mr. John E. Jones
Chairman, President and Chief
Executive Officer
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60522-7001
Dear John:
As you know, over the past six months you and I have had several
discussions regarding a possible transaction to effect a merger of our
respective companies. Based on our conversations, I think we both realize that
significant benefits could be realized by both our companies from such a
transaction. Therefore, I was greatly disappointed when you told me on October
20 that you had decided not to continue our discussions.
As I told you during that telephone conversation, in recent weeks we at
Praxair have continued to carefully study the dynamics and potential advantages
of a business combination of Praxair and CBI. As a result, we now feel even
more strongly that such a business combination would result in significant
strategic benefits for both our companies and our respective shareholders. In
light of your current position which you communicated to me on October 20, and
given what we continue to view as the compelling rationale for a business
combination, we have decided that the best way to proceed is for Praxair to
submit a specific proposal to your Board of Directors for its formal
consideration.
Accordingly, on behalf of the Board of Directors of Praxair, I am pleased
to propose herewith the merger of Praxair and CBI pursuant to which your
shareholders would receive $32.00 for each share of CBI common stock, which we
would propose to pay in either cash or Praxair common stock. Our proposal to
effect a merger of Praxair and CBI is subject to the negotiation of a mutually
satisfactory definitive merger agreement containing customary terms and closing
conditions.
I hope that you will recognize the powerful business logic behind our
proposal and that you will promptly submit it to your Board of Directors for its
consideration with a favorable recommendation from you. It is our hope that,
after appropriate consideration by your Board of Directors, your Board will
authorize proceeding with the negotiation of the definitive merger agreement on
the terms we have proposed.
<PAGE> 2
Mr. John E. Jones
CBI Industries, Inc.
Page two
The price per share in our merger proposal is based on our present
knowledge of CBI, which is limited to public information. It is our view that
the price we are proposing would be both fair and highly attractive to your
shareholders. Our proposal offers your shareholders a significant premium over
the current market value of CBI.
The transaction we propose represents a clearly attractive opportunity for
Praxair to combine the leading industrial gases supplier in North and South
America and the premier world supplier of carbon dioxide. The combined
enterprise will be strongly positioned to maximize our marketing, engineering
and technological skills as it expands its operations further into major global
markets. It will also be able to develop significant new applications for a
wide range of products and advanced technologies to enable our customers to
improve their productivity, product quality and environmental performance.
Together, Praxair's and CBI's business portfolios and synergies will provide the
enterprise with considerable opportunities to support strong future sales and
earnings growth.
We are prepared to move promptly in connection with our proposal. We would
be happy to meet with you and other members of your Board of Directors and
senior management as soon as practicable to discuss our proposal in detail and
to answer any questions you or they may have. We realize that your Board of
Directors will want to carefully consider our proposal, but we do ask that the
Board respond to us as soon as possible, and in any event by noon, on November
1, 1995.
While we would very much prefer that a business combination of our
companies be effected pursuant to the negotiation of a merger on the terms we
have proposed, you and your Board should appreciate that if your Board rejects
our proposal to negotiate a merger, we reserve the right to propose directly to
the shareholders of CBI a cash offer for CBI by Praxair.
We look forward to hearing the response of your Board of Directors after it
has reviewed our merger proposal.
Sincerely,
/s/ Bill
H.W. Lichtenberger
HWL/asr
<PAGE> 1
Exhibit 21
[CBI INDUSTRIES, INC. LETTERHEAD]
November 16, 1995
To Our Stockholders:
On November 3, 1995, a subsidiary of Praxair, Inc. began a tender offer
(the "Praxair Offer") for all of the Company's outstanding Common Stock
(together with the associated Preferred Stock Purchase Rights) at a price of $32
per share in cash. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE
PRAXAIR OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE COMPANY OR ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU REJECT THE PRAXAIR OFFER AND NOT TENDER YOUR SHARES TO PRAXAIR.
In reaching the determination that the Praxair Offer is inadequate and
not in the best interests of CBI or its stockholders, your Board gave careful
consideration to CBI's financial performance and future prospects, the opinions
of the Company's financial advisors, Lehman Brothers Inc. and Merrill Lynch &
Co., that as of such date the consideration offered to the Company's
stockholders pursuant to the Praxair Offer is inadequate to such stockholders
from a financial point of view, the significant conditions to consummation of
the Praxair Offer, and the other factors described in the attached Schedule
14D-9. We urge you to read carefully the attached document in its entirety,
including the opinions of Lehman Brothers Inc. and Merrill Lynch & Co. included
as annexes, so that you will be fully informed as to the Board's recommendation.
Your Board of Directors believes that the Praxair offer fails to
recognize the current value of the Company. The Board concluded that the
interests of the stockholders would be best served by the Company exploring
alternatives to maximize stockholder value and the Company is actively engaged
in that effort. In this regard, the Company has entered into confidentiality
agreements with certain parties.
If you have any questions or need any assistance in withdrawing your shares
from the Praxair Offer please contact MacKenzie Partners, Inc. at (800) 322-2885
toll free.
Your Directors thank you for your continued support.
On behalf of the Board of Directors,
/s/ John E. Jones
-----------------------------------
John E. Jones
Chairman, President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 22
[CBI Industries, Inc. Press Release Letterhead]
FOR FURTHER INFORMATION CONTACT: Joele Frank or Ann Hance
Abernathy MacGregor Scanlon
(212) 371-5999
FOR IMMEDIATE RELEASE:
IND-393
CBI REJECTS PRAXAIR OFFER;
AUTHORIZES EXPLORATION OF ALTERNATIVES
OAK BROOK, ILLINOIS, November 16, 1995 -- The Board of Directors of CBI
Industries, Inc. (NYSE: CBI) has unanimously voted to reject the offer of
a subsidiary of Praxair, Inc. (NYSE: PX) to acquire all of the outstanding
shares of Common Stock of the Company at a price of $32 per share. CBI's Board
concluded that the interests of the Company's stockholders would be best served
by the Company exploring alternatives to maximize stockholder value and the
Company is actively engaged in that effort. In this regard, the Company has
entered into confidentiality agreements with certain parties.
After considering a variety of factors, including the opinion of its financial
advisors, Lehman Brothers Inc. and Merrill Lynch & Co., that, from a financial
point of view, the consideration offered to CBI stockholders in the Praxair
offer is inadequate to such stockholders, the Board concluded that the Praxair
offer is inadequate and not in the best interests of CBI or its stockholders.
A letter mailed to stockholders states that "The Directors believe the Praxair
offer fails to recognize the current value of the Company." The CBI Board
recommends that CBI's stockholders not tender their shares to Praxair pursuant
to the tender offer.
The Board has also delayed the separation date of the Company's Preferred Stock
Purchase Rights until such later date as may be determined by the Board.
Accordingly, the Rights will continue to trade with the Company's Common Stock.
CBI Industries has subsidiaries operating throughout the world in producing
and distributing carbon dioxide and industrial gases; in designing,
engineering, fabricating and erecting metal plate structures, and in executing
other contracting services; and in providing oil and refined petroleum product
storage and blending facilities.
###
<PAGE> 1
Exhibit 23
[CBI LOGO] CBI Industries, Inc.
_______________________________________________________________________________
800 Jorie Boulevard
Oak Brook, Illinois 60521-2268
708 572 7000
FAX: 708 572 7405
November 16, 1995
Dear Restricted Stock Plan Participant:
You have been awarded shares in one or more of the CBI Restricted Stock
Award Plans ("Plans") on which the restrictions have not yet lapsed. You have
the rights of a shareholder regarding shares awarded to you, except for the
restrictions stated in the Plans. One restriction stated in the Plans is a
prohibition against the sale or transfer, or attempted sale or transfer, by you
of restricted shares prior to the lapse of restrictions.
As you are undoubtedly aware, there is currently an outstanding tender
offer by a subsidiary of Praxair, Inc. to purchase all outstanding shares of
CBI Industries common stock. You may receive, or may already have received,
materials from Praxair regarding the tender offer. As indicated above,
attempting to tender restricted shares would be a prohibited attempt to
transfer such shares, and could result in forfeiture of the shares.
Accordingly, so that these shares will not be forfeited, the Company will not
tender these shares on your behalf and you should take no action with respect
to your restricted shares as regards the Praxair offer.
Stephen M. Duffy
Vice President of Human Resources
<PAGE> 1
Exhibit 24
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- --------------------------------------------X
WILLIAM STEINER, :
:
Plaintiff, :
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940
H. CLARK, JR., E.J. MOONEY, JR., R.J. :
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
- --------------------------------------------X
NOTICE OF MOTION
----------------
TO: Jesse Finkelstein, Esquire
Richards, Layton & Finger
One Rodney Square
Wilmington, DE 19801
PLEASE TAKE NOTICE that the within Motion will be presented at the
earliest time convenient to the Court and counsel.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
------------------------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
<PAGE> 2
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- --------------------------------------------X
WILLIAM STEINER, :
:
Plaintiff, :
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940
H. CLARK, JR., E.J. MOONEY, JR., R.J. :
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
- --------------------------------------------X
MOTION
------
Plaintiff moves for leave to file an amended complaint in the form
attached hereto as Exhibit A. The grounds for this motion are that the amended
complaint contains allegations concerning events which have taken place since
this action was filed in December 1994.
In compliance with Rule 15(aa), plaintiff avers that the within amended
complaint is in full substitution for the complaint heretofore filed on
December 22, 1994.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
------------------------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
- 2 -
<PAGE> 3
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- --------------------------------------------X
WILLIAM STEINER, on behalf of himself :
and all others similarly situated, :
: Civil Action
Plaintiffs, : No. 13940
:
-against- : AMENDED
: CLASS ACTION
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : COMPLAINT
H. CLARK, JR., E.J. MOONEY, JR., R.J. : ------------
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
- --------------------------------------------X
Plaintiff, by and through his attorneys, alleges as follows:
1. Plaintiff brings this action as a class action on behalf of himself
and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who
are similarly situated, to void and enjoin defendants' efforts to entrench
themselves and solidify their control of CBI and thwart any takeover of the
Company by, among other things, increasing the Company's anti-takeover devices,
such as its poison pill or shareholder rights plan, described below, and/or
refusing to rescind such antitakeover devices despite the existence of a value
maximizing offer.
2. Defendants' actions represent an effort by the individual
defendants to entrench themselves in office so that they may continue to
receive the substantial
<PAGE> 4
salaries, compensation and other benefits and perquisites of their offices.
3. The individual defendants are abusing their fiduciary positions of
control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to
acquire the Company, to prevent CBI's shareholders from receiving and/or acting
upon bona fide offers for the Company, and are seeking to use corporate
resources to entrench themselves in the management of the Company. The actions
of the individual defendants constitute a breach of their fiduciary duties to
maximize shareholder value, to not consider their own interests over that of
the public shareholders, and to respond reasonably to offers for CBI.
PARTIES
-------
4. Plaintiff is the owner of CBI common stock, and has owned such
stock at all times relevant herein.
5. CBI is a holding company which, through numerous operating
subsidiaries, operates in three basic areas: contracting services, industrial
gases and investments. In recent time, the Company's industrial gases area,
organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic")
subsidiary, has contributed nearly 90% of CBI's pre-tax income.
- 2 -
<PAGE> 5
6. The individually named defendants are members of the CBI Board of
Directors. The following defendants are also officers and thus inside
directors of CBI:
(a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board
of Directors, president, and chief executive officer. For the year ended
December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and
restricted stock awards of $515,250.
(b) Defendant L.E. Akin ("Akin") is an executive vice president,
and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main
corporation under which the Company's contracting services area is organized).
For the year ended December 31, 1993, Akin earned a salary of $290,000, a
bonus of $35,000, and restricted stock awards of $200,375.
(c) Defendant R.J. Daniels ("Daniels") is an executive vice
president, and president of Liquid Carbonic. For the year ended December 31,
1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted
stock award of $171,750.
(d) Defendant G.L. Schueppert ("Schueppert") is an executive vice
president, and the Company's chief financial officer. For the year ended
December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000,
and a restricted stock award of $160,875.
- 3 -
<PAGE> 6
The remaining defendants are outside or non-officer directors of the Company.
7. By virtue of the individual defendants' positions as directors
and/or officers of the Company, the defendants were and are in a fiduciary
relationship with plaintiff and the other public stockholders of the Company
and owe to plaintiff and the other members of the Class the highest obligations
of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
------------------------
8. Plaintiff brings this action for injunctive and other relief on his
own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court
of Chancery and on behalf of all common stockholders of CBI (except defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) or their successors in interest, who are
bring deprived of the opportunity to maximize the value of their CBI shares by
the wrongful acts of the individual defendants described herein ("Class").
9. This action is properly maintainable as a class action for the
following reasons:
(a) The Class for whose benefit this action is brought is so
numerous that joinder of all class members is impracticable. There are more
than 37 million common shares of CBI outstanding, owned by thousands of
- 4 -
<PAGE> 7
stockholders of record. Members of the class are disbursed throughout the
United States.
(b) There are questions of law and fact which are common to members
of the Class and which predominate over all questions affecting only individual
members, including whether the defendants have breached the fiduciary duties
owned by them to plaintiff and members of the Class by reason of their efforts
to entrench themselves in office, protect the interests of other firms with
which they are affiliated and prevent CBI public stockholders from maximizing
the value of their holdings.
(c) The claims of plaintiff are typical of the claims of the other
members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation in this
nature. Accordingly, plaintiff is an adequate representative of the Class and
will fairly and adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of
the Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish
- 5 -
<PAGE> 8
incompatible standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or other equitable relief with respect to the Class as a whole.
FACTUAL BACKGROUND
------------------
10. CBI is a company with operating subsidiaries in three areas:
contracting services, industrial gases and investments. The Company's
industrial gases segment, which is organized under Liquid Carbonic, is the
world's largest supplier of carbon dioxide, and makes and markets other gases
for industrial, medical and specialty applications. In 1993, it was the
Company's most profitable division of the Company, and currently contributes
approximately 90% of the Company's pre-tax revenue.
11. Liquid Carbonic will likely be the greatest contributor to CBI's
revenues in the future as well. In November 1994, for instance, CBI announced
that its contracting services area's gross profit and income from operation in
the 1994 third quarter were hurt in the United States by narrowing margins,
mainly due to the continuing slow pace of capital spending for new or
replacement vessels for the refining, chemical, and pulp and paper industries.
- 6 -
<PAGE> 9
12. Nonetheless, the individual defendants have done nothing to
maximize shareholder value, and to enable CBI's shareholders to realize the
value of Liquid Carbonics. Instead, they have taken steps to entrench
themselves and to maintain their control over all of the three areas of CBI's
business.
Airgas' 1994 Offer
- ------------------
13. Since as early as November, 1994 the individual defendants knew
that, based on the value of Liquid Carbonics, as well as the other aspects of
CBI's business, the Company presented itself as an outstanding merger target for
potential bidders. It was confirmed that the Company was "in play" when, at or
about that time, Airgas made an offer for the Company.
14. On December 20, 1994, CBI first publicly announced that sometime
in early November, Airgas Inc. ("Airgas"), a fast growing distributor of
industrial, medical and specialty gases, had made an unsolicited offer in which
it proposed the spin-off, in the form of a dividend to CBI shareholders of the
Contracting Segment and Investment Segment of its business, as new companies on
a debt-free basis, and the merger of CBI, which would then just own Liquid
Carbonic, with Airgas. In the merger, CBI shareholders would receive 19
million shares of Airgas,
- 7 -
<PAGE> 10
representing approximately 35% of the Airgas shares to be outstanding after the
merger (the "Airgas Merger Proposal").
15. The Airgas Merger Proposal was projected to enable CBI
shareholders to realize the value inherent in their ownership of Liquid
Carbonic, while still maintaining their shares and thus the ability to obtain
any future accretion in the value of such shares.
16. As an alternative transaction, Airgas offered to purchase Liquid
Carbonics outright for cash of $1.45 billion (which is greater than the total
market capitalization of CBI), part of which would include the assumption of
CBI's over $770 million in debt. This alternative would again enable CBI's
shareholders to realize immediate value from their ownership of Liquid
Carbonic, and would also increase the value of the Contracting and Investment
segments by reducing CBI's debt.
CBI's Rejection Of The Airgas
Proposal and Amendment Of Its
Shareholder Rights Plan
17. Despite the obvious advantages to CBI shareholders of either of
these two proposals, CBI's Board of Directors, allegedly after consideration
and consultation with its financial advisors, Lehman Brothers Inc. and Lynch &
Co., and in a desire to keep CBI independent so that they could entrench
themselves, rejected the offers as inadequate.
- 8 -
<PAGE> 11
18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the
purpose of allowing it to purchase up to 15% of CBI's common stock through open
market or privately negotiated purchases.
19. In response to the obvious takeover attempts by Airgas, and the
realization that CBI was now "in play", CBI's Board of Directors authorized an
amendment to CBI's shareholders rights plan, which significantly lowers the
ownership level required to trigger a distribution of the Rights under the Plan
from 20% to 10%, making a hostile bid for the Company prohibitively expensive.
20. After giving effect to the amendment, the Plan provides that if a
person or group acquires 10% or more of the outstanding CBI common shares, each
Right will entitle its holder, other than the person or group which has
acquired the share, to purchase common shares of CBI having a market value
equal to twice the exercise price of each right.
21. In January, 1995, after its proposal was rejected, Airgas dropped
its merger proposal to CBI.
Praxair's October 29, 1995
Merger Proposal To CBI
22. Praxair is the largest supplier of industrial gases in North and
South America and one of the three largest industrial gas suppliers in the
world. Using air as
- 9 -
<PAGE> 12
its base raw material, Praxair produces oxygen, nitrogen and argon through
several air separation processes.
23. In approximately June, 1995, Praxair approached CBI in connection
with a potential combination of Praxair and CBI whereby the two companies would
be merged together. After approximately six months of negotiations between
Praxair and CBI, CBI, on October 20, 1995, broke off negotiations.
24. As a result of CBI's determination not to seek a combination with
Praxair, on October 29, 1995 Praxair announced that it intended to commence a
cash or stock tender offer for all the outstanding shares of CBI at $32 per
share -- a transaction which has an estimated worth of approximately $2.1
billion.
25. Rather than negotiating in good faith with Praxair, to obatin the
best possible price for CBI's shareholders, the Individual Defendants have
stated that they will "review the Praxair proposal in due course."
26. They have not, however, rescinded the poison pill. CBI's poison
pill has the effect of entrenching the Individual Defendants in control of CBI,
but the Individual Defendants have refused to rescind, waive or otherwise
abolish the terms of the CBI poison pill.
27. Praxair's tender offer will be for 100% of CBI's outstanding stock
which, in turn, will invoke the poison pill. This will make Praxair's tender
offer
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<PAGE> 13
prohibitively expensive and may well discourage Praxair from continuing its
tender offer.
28. Defendants' failure to rescind, waive or otherwise abolish the
terms of the poison pill, the failure to ease CBI's anti-takeover provisions,
or to otherwise negotiate with Praxair in good faith, constitutes a breach of
defendants' fiduciary duties owed to plaintiff and other members of the Class.
It will have the effect of making the Praxair proposal cost-prohibitive, and
therefore may discourage Praxair from going forward with a tender offer -- the
primary alternative which would enable CBI shareholderss to maximize the value
of their equity holdings.
29. At all times herein, defendants were and are obligated to
adequately consider, in a timely fashion and on an informed basis, any
reasonable proposal from any party, not to place their own self-interests and
personal considerations ahead of the interests of the stockholders and to make
corporate decisions in good faith. The actions of the Individual Defendants in
maintaining and refusing to waive or otherwise rescind the poison pill or to
negotiate in good faith were fundamentally motivated to further their own
self-interests and objectives, and correspondingly preserve and protect their
emoluments and positions in the Company, all in violation of their fiduciary
duties and to the detriment of the shareholders of the Company.
-11-
<PAGE> 14
30. The Individual Defendants' entrenchment motives are evidenced by,
inter alia, the following:
(a) Through the maintenance of the poison pill, and defendants'
failure to waive its terms, defendants have erected a virtually insurmountable
barrier to persons who may wish to acquire CBI, obtain control or take steps to
maximize shareholder value, and are thereby attempting to entrench themselves
in their positions of control and improperly advance their own personal agenda
at the expense of CBI's public stockholders;
(b) In reality, the poison pill provisions are designed to
prevent unsolicited takeovers from succeeding. Defendants' inaction concerning
the waiver or rescission of the poison pill is indicative of their true motives
and objectives; and
(c) Defendants' efforts to increase CBI's anti-takeover devices
when confronted with the Airgas Merger Proposal and to continue the
anti-takeover devices knowing that the Company was the target of a potential
offer by Praxair.
31. In increasing CBI's anti-takeover devices, and failing to waive or
rescind the poison pill, the Individual Defendants have acted to manipulate the
corporate machinery of CBI, thereby impairing the corporate democratic process
within the Company at the expense and to the detriment of the Company's common
stockholders. By
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<PAGE> 15
maintaining the poison pill and increasing the Company's anti-takeover devices,
the Individual Defendants have restrained and impaired the ability of CBI's
stockholders to affect corporate policy, and freely structure the directorial
constituency of the Company. The poison pill, inter alia, impedes shareholder
ability to accumulate shares and associate together to replace incumbent
management, oppose any management initiative, or otherwise affect corporate
policy through stockholder resolutions.
32. As a result of the foregoing, the Individual Defendants have
breached and/or aided and abetted breaches and/or aided and abetted breaches
of fiduciary duties owed to CBI and its stockholders.
33. Unless enjoined by this Court, defendants will breach their
fiduciary duties owed to plaintiff and the other members of the Class and may
benefit themselves in their corporate offices, all to the irreparable harm of
the Class, as aforesaid.
34. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
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<PAGE> 16
(i) rescind the "poison pill" and any other takeover devices
which would hinder Praxair's hostile offer;
(ii) negotiate in good faith with Praxair to obtain the
greatest possible value for CBI's shareholders;
(iii) undertake an appropriate evaluation of alternatives
designed to maximize value for CBI's public stockholders;
(iv) adequately ensure that no conflicts of interests exist
between defendants' own interests and their fiduciary obligations to public
stockholders or, if such conflicts exist, ensure that all the conflicts would
be resolved in the best interests of CBI's public stockholders; and
(c) ordering defendants, jointly and severally, to account to
plaintiff and the other members of the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(d) awarding plaintiff the costs and disbursements of the action,
including a reasonable allowance for plaintiff's attorney's fees and experts'
fees; and
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<PAGE> 17
(e) granting such other and further relief as this Court may deem
to be just and proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:
-----------------------------
First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017-5563
(212) 907-0700
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<PAGE> 18
CERTIFICATE OF SERVICE
I, Joseph A. Rosenthal, do hereby certify on this 30th day of October,
1995, that I caused two copies of the foregoing Notice of Motion and Motion to
be served by hand delivery upon:
JESSE FINKELSTEIN, ESQUIRE
RICHARDS, LAYTON & FINGER
ONE RODNEY SQUARE
WILMINGTON, DE 19801
/s/ JOSEPH A. ROSENTHAL
-------------------------------
Joseph A. Rosenthal
- 3 -
<PAGE> 1
EXHIBIT 25
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------------- x
:
WILLIAM STEINER, on behalf of himself :
and all others similarly situated, :
:
: Civil Action
:
Plaintiffs, : No. 14654
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : CLASS ACTION
H. CLARK, JR., E.J. MOONEY, JR., R.J. : COMPLAINT
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
- ---------------------------------------- x
Plaintiff, by and through his attorneys, alleges as follows:
1. Plaintiff brings this action as a class action on behalf of
himself and all other shareholders of CBI Industries, Inc. ("CBI" or the
"Company") who are similarly situated, to void and enjoin defendants' efforts to
entrench themselves and solidify their control of CBI and thwart any takeover of
the Company by, among other things, increasing the Company's anti-takeover
devices, such as its poison pill or shareholder rights plan, described below,
and/or refusing to rescind such antitakeover devices despite the existence of a
value maximizing offer.
2. Defendants' actions represent an effort by the individual
defendants to entrench themselves in office so that they may continue to receive
the substantial
<PAGE> 2
salaries, compensation and other benefits and perquisites of their offices.
3. The individual defendants are abusing their fiduciary positions of
control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to
acquire the Company, to prevent CBI's shareholders from receiving and/or acting
upon bona fide offers for the Company, and are seeking to use corporate
resources to entrench themselves in the management of the Company. The actions
of the individual defendants constitute a breach of their fiduciary duties to
maximize shareholder value, to not consider their own interests over that of the
public shareholders, and to respond reasonably to offers for CBI.
PARTIES
4. Plaintiff is the owner of CBI common stock, and has owned such
stock at all times relevant herein.
5. CBI is a holding company which, through numerous operating
subsidiaries, operates in three basic areas: contracting services, industrial
gases and investments. In recent time, the Company's industrial gases area,
organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic")
subsidiary, has contributed nearly 90% of CBI's pre-tax income.
- 2 -
<PAGE> 3
6. The individually named defendants are members of the CBI Board of
Directors. The following defendants are also officers and thus inside directors
of CBI:
(a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board of
Directors, president, and chief executive officer. For the year ended December
31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and restricted
stock awards of $515,250.
(b) Defendant L.E. Akin ("Akin") is an executive vice president, and
the president of CBI subsidiary, Chicago Bridge & Iron Company (the main
corporation under which the Company's contracting services area is organized).
For the year ended December 31, 1993, Akin earned a salary of $290,000, a bonus
of $35,000, and restricted stock awards of $200,375.
(c) Defendant R.J. Daniels ("Daniels") is an executive vice
president, and president of Liquid Carbonic. For the year ended December 31,
1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted
stock award of $171,750.
(d) Defendant G.L. Schueppert ("Schueppert") is an executive vice
president, and the Company's chief financial officer. For the year ended
December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000,
and a restricted stock award of $160,875.
-3-
<PAGE> 4
The remaining defendants are outside or non-officer directors of the Company.
7. By virtue of the individual defendants' positions as directors
and/or officers of the Company, the defendants were and are in a fiduciary
relationship with plaintiff and the other public stockholders of the Company and
owe to plaintiff and the other members of the Class the highest obligations of
good faith and fair dealing.
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action for injunctive and other relief on
his own behalf and as a class action, pursuant to Rule 23 of the Rules of the
Court of Chancery and on behalf of all common stockholders of CBI (except
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants) or their successors in
interest, who are being deprived of the opportunity to maximize the value of
their CBI shares by the wrongful acts of the individual defendants described
herein ("Class").
9. This action is properly maintainable as a class action for the
following reasons:
(a) The Class for whose benefit this action is brought is so
numerous that joinder of all class members is impracticable. There are more than
37 million common shares of CBI outstanding, owned by thousands of
-4-
<PAGE> 5
stockholders of record. Members of the class are disbursed throughout the
United States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over all questions affecting only
individual members, including whether the defendants have breached the fiduciary
duties owned by them to plaintiff and members of the Class by reason of their
efforts to entrench themselves in office, protect the interests of other firms
with which they are affiliated and prevent CBI public stockholders from
maximizing the value of their holdings.
(c) The claims of plaintiff are typical of the claims of the
other members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation in this
nature. Accordingly, plaintiff is an adequate representative of the Class and
will fairly and adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members
of the Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish
-5-
<PAGE> 6
incompatible standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or other equitable relief with respect to the Class as a whole.
FACTUAL BACKGROUND
10. CBI is a company with operating subsidiaries in three areas:
contracting services, industrial gases and investments. The Company's industrial
gases segment, which is organized under Liquid Carbonic, is the world's largest
supplier of carbon dioxide, and makes and markets other gases for industrial,
medical and specialty applications. In 1993, it was the Company's most
profitable division of the Company, and currently contributes approximately 90%
of the Company's pre-tax revenue.
11. Liquid Carbonic will likely be the greatest contributor to CBI's
revenues in the future as well. In November 1994, for instance, CBI announced
that its contracting services area's gross profit and income from operation in
the 1994 third quarter were hurt in the United States by narrowing margins,
mainly due to the continuing slow pace of capital spending for new or
replacement vessels for the refining, chemical, and pulp and paper industries.
-6-
<PAGE> 7
12. Nonetheless, the individual defendants have done nothing to
maximize shareholder value, and to enable CBI's shareholders to realize the
value of Liquid Carbonics. Instead, they have taken steps to entrench themselves
and to maintain their control over all of the three areas of CBI's business.
Airgas' 1994 Offer
13. Since as early as November, 1994 the individual defendants knew
that, based on the value of Liquid Carbonics, as well as the other aspects of
CBI's business, the Company presented itself as an outstanding merger target for
potential bidders. It was confirmed that the Company was "in play" when, at or
about that time, Airgas made an offer for the Company.
14. On December 20, 1994, CBI first publicly announced that sometime
in early November, Airgas Inc. ("Airgas"), a fast growing distributor of
industrial, medical and specialty gases, had made an unsolicited offer in which
it proposed the spin-off, in the form of a dividend to CBI shareholders of the
Contracting Segment and Investment Segment of its business, as new companies on
a debt-free basis, and the merger of CBI, which would then just own Liquid
Carbonic, with Airgas. In the merger, CBI shareholders would receive 19 million
shares of Airgas,
-7-
<PAGE> 8
representing approximately 35% of the Airgas shares to be outstanding after
the merger (the "Airgas Merger Proposal").
15. The Airgas Merger Proposal was projected to enable CBI
shareholders to realize the value inherent in their ownership of Liquid
Carbonic, while still maintaining their shares and thus the ability to obtain
any future accretion in the value of such shares.
16. As an alternative transaction, Airgas offered to purchase Liquid
Carbonics outright for cash of $1.45 billion (which is greater than the total
market capitalization of CBI), part of which would include the assumption of
CBI's over $770 million in debt. This alternative would again enable CBI's
shareholders to realize immediate value from their ownership of Liquid Carbonic,
and would also increase the value of the Contracting and Investment segments by
reducing CBI's debt.
CBI's Rejection Of The Airgas
Proposal And Amendment Of Its
Shareholder Rights Plan
17. Despite the obvious advantages to CBI shareholders of either of
these two proposals, CBI's Board of Directors, allegedly after consideration and
consultation with its financial advisors, Lehman Brothers Inc. and Lynch & Co.,
and in a desire to keep CBI independent so that they could entrench themselves,
rejected the offers as inadequate.
-8-
<PAGE> 9
18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the
purpose of allowing it to purchase up to 15% of CBI's common stock through open
market or privately negotiated purchases.
19. In response to the obvious takeover attempts by Airgas, and the
realization that CBI was now "in play", CBI's Board of Directors authorized an
amendment to CBI's shareholders rights plan, which significantly lowers the
ownership level required to trigger a distribution of the Rights under the Plan
from 20% to 10%, making a hostile bid for the Company prohibitively expensive.
20. After giving effect to the amendment, the Plan provides that if a
person or group acquires 10% or more of the outstanding CBI common shares, each
Right will entitle its holder, other than the person or group which has acquired
the share, to purchase common shares of CBI having a market value equal to twice
the exercise price of each right.
21. In January, 1995, after its proposal was rejected, Airgas dropped
its merger proposal to CBI.
Praxair's October 29, 1995
Merger Proposal To CBI
22. Praxair is the largest supplier of industrial gases in North and
South America and one of the three largest industrial gas suppliers in the
world. Using air as
-9-
<PAGE> 10
its base raw material, Praxair produces oxygen, nitrogen and argon through
several air separation processes.
23. In approximately June, 1995, Praxair approached CBI in connection
with a potential combination of Praxair and CBI whereby the two companies would
be merged together. After approximately six months of negotiations between
Praxair and CBI, CBI, on October 20, 1995, broke off negotiations.
24. As a result of CBI's determination not to seek a combination with
Praxair, on October 29, 1995 Praxair announced that it intended to commence a
cash or stock tender offer for all the outstanding shares of CBI at $32 per
share -- a transaction which has an estimated worth of approximately $2.1
billion.
25. Rather than negotiating in good faith with Praxair, to obtain the
best possible price for CBI's shareholders, the Individual Defendants have
stated that they will "review the Praxair proposal in due course."
26. They have not, however, rescinded the poison pill. CBI's poison
pill has the effect of entrenching the Individual Defendants in control of CBI,
but the Individual Defendants have refused to rescind, waive or otherwise
abolish the terms of the CBI poison pill.
27. Praxair's tender offer will be for 100% of CBI's outstanding
stock which, in turn, will invoke the poison pill. This will make Praxair's
tender offer
- 10 -
<PAGE> 11
prohibitively expensive and may well discourage Praxair from continuing
its tender offer.
28. Defendants' failure to rescind, waive or otherwise abolish the
terms of the poison pill, the failure to ease CBI's anti-takeover provisions, or
to otherwise negotiate with Praxair in good faith, constitutes a breach of
defendants' fiduciary duties owed to plaintiff and other members of the Class.
It will have the effect of making the Praxair proposal cost-prohibitive, and
therefore may discourage Praxair from going forward with a tender offer -- the
primary alternative which would enable CBI shareholders to maximize the value of
their equity holdings.
29. At all times herein, defendants were and are obligated to
adequately consider, in a timely fashion and on an informed basis, any
reasonable proposal from any party, not to place their own self-interests and
personal considerations ahead of the interests of the stockholders and to make
corporate decisions in good faith. The actions of the Individual Defendants in
maintaining and refusing to waive or otherwise rescind the poison pill or to
negotiate in good faith were fundamentally motivated to further their own
self-interests and objectives, and correspondingly preserve and protect their
emoluments and positions in the Company, all in violation of their fiduciary
duties and to the detriment of the shareholders of the Company.
- 11 -
<PAGE> 12
30. The Individual Defendants' entrenchment motives are evidenced by,
inter alia, the following:
(a) Through the maintenance of the poison pill, and defendants'
failure to waive its terms, defendants have erected a virtually insurmountable
barrier to persons who may wish to acquire CBI, obtain control or take steps to
maximize shareholder value, and are thereby attempting to entrench themselves in
their positions of control and improperly advance their own personal agenda at
the expense of CBI's public stockholders;
(b) In reality, the poison pill provisions are designed to
prevent unsolicited takeovers from succeeding. Defendants' inaction concerning
the waiver or rescission of the poison pill is indicative of their true motives
and objectives; and
(c) Defendants' efforts to increase CBI's anti-takeover devices
when confronted with the Airgas Merger Proposal and to continue the
anti-takeover devices knowing that the Company was the target of a potential
offer by Praxair.
31. In increasing CBI's anti-takeover devices, and failing to waive
or rescind the poison pill, the Individual Defendants have acted to manipulate
the corporate machinery of CBI, thereby impairing the corporate democratic
process within the Company at the expense and to the detriment of the Company's
common stockholders. By
- 12 -
<PAGE> 13
maintaining the poison pill and increasing the Company's anti-takeover devices,
the Individual Defendants have restrained and impaired the ability of CBI's
stockholders to affect corporate policy, and freely structure the directorial
constituency of the Company. The poison pill, inter alia, impedes shareholder
ability to accumulate shares and associate together to replace incumbent
management, oppose any management initiative, or otherwise affect corporate
policy through stockholder resolutions.
32. As a result of the foregoing, the Individual Defendants have
breached and/or aided and abetted breaches of fiduciary duties owed to CBI and
its stockholders.
33. Unless enjoined by this Court, defendants will breach their
fiduciary duties owed to plaintiff and the other members of the Class and may
benefit themselves in their corporate offices, all to the irreparable harm of
the Class, as aforesaid.
34. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
- 13 -
<PAGE> 14
(i) rescind the "poison pill" and any other takeover devices
which would hinder Praxair's hostile offer;
(ii) negotiate in good faith with Praxair to obtain the
greatest possible value for CBI's shareholders;
(iii) undertake an appropriate evaluation of alternatives
designed to maximize value for CBI's public stockholders;
(iv) adequately ensure that no conflicts of interests exist
between defendants' own interests and their fiduciary obligations to public
stockholders or, if such conflicts exist, ensure that all the conflicts would be
resolved in the best interests of CBI's public stockholders; and
(c) ordering defendants, jointly and severally, to account to
plaintiff and the other members of the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(d) awarding plaintiff the costs and disbursements of the action,
including a reasonable allowance for plaintiff's attorney's fees and experts'
fees; and
- 14 -
<PAGE> 15
(f) granting such other and further relief as this Court may deem
to be just and proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
-------------------------------
First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF
& SUCHAROW, LLP
100 Park Avenue
New York, NY 10017-5563
(212) 907-0700
-15-
<PAGE> 1
EXHIBIT 26
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- --------------------------------------------------x
SANDRA KREISBERG, on behalf of herself :
and all others similarly situated, :
:
Plaintiff, :
:
v. :
:
JOHN E. JONES, HUBERT E. CLARK, JR., : C.A. No. 14656
JOHN T. HORTON, STEPHANIE PACE MARSHALL, : --------
GEORGE L. SCHUEPPERT, ROBERT T. STEWART, :
ROBERT J. DANIELS, EDWARD J. MOONEY, JR. :
ROBERT G. WALLACE, LEWIS E. AKIN, :
WILEY N. CALDWELL, ROBERT J. DAY, :
GARY E. MAC DOUGAL, JOHN F. RIORDAN, :
and CBI INDUSTRIES, INC. :
:
Defendants. :
- --------------------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, by her attorneys, alleges upon information and belief, except
as to the allegations of paragraph 2 which are made on personal knowledge, as
follows:
NATURE OF THE ACTION
1. This is a stockholders' class action brought on behalf of the public
stockholders of CBI Industries, Inc. ("CBI Industries" or the "Company") who
have been, and continue to be, deprived of the opportunity to realize fully the
benefits of their investment in the Company. The named defendants have
wrongfully refused to take the steps necessary to maximize stockholder value,
including properly considering a bona fide offer for the Company (the
"Offer") from Praxair Inc. ("Praxair"). By failing and refusing to take such
steps, including adequately considering the Offer, defendants have breached
their fiduciary duties to plaintiff
<PAGE> 2
and the class. The individual defendants are using their fiduciary positions of
control over CBI Industries to thwart others in their legitimate attempts to
acquire CBI Industries, and the individual defendants are trying to entrench
themselves in their positions with the Company.
PARTIES
2. Plaintiff Sandra Kreisberg is and, at all relevant times has been,
the owner of shares of CBI Industries common stock.
3. CBI Industries is a corporation duly organized and existing under the
laws of Delaware. CBI Industries is in the business of producing, processing and
marketing industrial, medical, and specialty gases. It also, inter alia, is
engaged in the business of providing contracting services and providing services
for hydrocarbon products. CBI Industries maintains its principal executive
offices at 800 Jorie Boulevard, Oak Brook, Illinois 60521. CBI Industries has
approximately 38 million shares of common stock outstanding and approximately
8000 stockholders of record. CBI Industries' stock trades on the New York Stock
Exchange.
4. Defendant John E. Jones ("Jones") is Chairman of CBI Industries'
Board of Directors and its President and Chief Executive Officer. In 1994, Jones
received $1,334,537 in compensation from CBI Industries.
5. Defendant Lewis E. Akin ("Akin") is an Executive Vice President of
CBI Industries. In 1994, Akin received $644,254 in compensation from CBI
Industries.
2
<PAGE> 3
6. Defendant George L. Schueppert ("Schueppert") is an Executive Vice
President and the Chief Financial Officer of CBI Industries. In 1994, Schueppert
received $720,459 in compensation from CBI Industries.
7. Defendants Hubert E. Clark, Jr., John T. Horton, Stephanie Pace
Marshall, Robert T. Stewart, Robert J. Daniels, Edward J. Mooney, Jr., Robert G.
Wallace, Wiley N. Caldwell, Robert J. Day, Gary E. MacDougal, and John F.
Riordan are directors of CBI Industries.
8. The defendants named in paragraphs 4, 5, 6 and 7 are hereinafter
referred to as the "Individual Defendants."
9. Because of their positions as officers/directors of the Company, the
Individual Defendants owe fiduciary duties of loyalty and due care to plaintiff
and the other members of the class.
10. Each defendant herein is sued individually as a conspirator and
aider and abettor, as well as in his/her capacity as an officer and/or director
of the Company, and the liability of each arises from the fact that he or she
has engaged in all or part of the unlawful acts, plans, schemes, or transactions
complained of herein.
CLASS ACTION ALLEGATIONS
11. Plaintiff brings this case on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or
3
<PAGE> 4
other entity related to or affiliated with any of the defendants, who will be
threatened with injury arising from defendants' actions as is described more
fully below (the "Class").
12. This action is properly maintainable as a class action.
13. The Class is so numerous that joinder of all members is
impracticable. The Company has thousands of stockholders who are scattered
throughout the United States.
14. There are questions of law and fact common to the Class that
predominate over questions affecting any individual class member. The common
questions include, inter alia, whether:
a. defendants have breached their fiduciary duties owed by them to
plaintiff and other members of the Class by failing and refusing to attempt in
good faith to maximize stockholder value, including, inter alia, by considering
the sale of CBI Industries;
b. defendants have breached or aided and abetted the breach of the
fiduciary duties owed by them to plaintiff and other members of the Class;
c. defendants have engaged in a plan and scheme to thwart and reject
offers and proposals from third parties, including the one made by Praxair; and
d. plaintiff and the other members of the Class are being and will
continue to be injured by the wrongful conduct alleged herein and, if so, what
is the proper remedy and/or measure of damages.
4
<PAGE> 5
15. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.
16. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
17. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole are appropriate.
SUBSTANTIVE ALLEGATIONS
18. By the acts, transactions, and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme and/or aiding
and abetting one another in total disregard of their fiduciary duties, are
attempting to unfairly deprive plaintiff and the Class of their right to
maximize the value of their investment in CBI Industries.
5
<PAGE> 6
19. On October 27, 1995, following six months in which it attempted to
hold discussions with CBI Industries Chairman Jones -- discussions that Jones
terminated on or about October 20 -- Praxair sent a letter to CBI Industries'
Board of Directors making a bid for CBI Industries at a price of $32 a share in
either cash or Praxair common stock, for a total of approximately $1.5 billion
(plus the assumption of about $700 million of liabilities). Praxair gave CBI
Industries until noon on November 1 to respond.
20. This offer was reported in The New York Times and The Wall Street
Journal on October 30, 1995. Both newspapers reported that the offer constituted
a nearly 60% premium over CBI Industries' then current stock price. Both
newspapers also reported that analysts believed that the companies had
synergies, making the combination a good one for both businesses.
21. Praxair is a substantial company with the financial wherewithal to
follow through on its offer. Praxair, based in Danbury, Connecticut, is the
country's leading producer of such industrial gases as oxygen, hydrogen and
helium. Last year Praxair earned $203 million on sales of $2.7 billion.
22. Praxair's offer comes at a particularly opportune time for CBI
Industries shareholders, because it comes amid a slide in CBI Industries stock
this year. CBI Industries' stock is down over 21% according to Baseline, a New
York financial data service. Indeed, The New York Times reported on October 30,
1995 that CBI Industries shares have "recently fallen from a 52 week high of
$27.75 to flirt with a five year low of $19.
6
<PAGE> 7
23. Despite the significant interest of CBI Industries stockholders,
defendants have acted without regard to the fiduciary duties they owe them by,
inter alia, failing to take the steps necessary to maximize stockholder value,
including, but not limited to, hold meetings and negotiations with Praxair
regarding its offer. Defendants have done so without business justification.
24. Defendants' failure to act promptly upon Praxair's offer has no
valid business purpose, and simply evidences their disregard for the premium
being offered to CBI Industries stockholders. By failing to meet promptly and
negotiate, or offer to meet and negotiate, with Praxair regarding its offer,
defendants are depriving plaintiff and the Class of their right to receive the
maximum value for their CBI Industries shares.
25. CBI Industries represents a highly attractive acquisition candidate.
Defendants' conduct is depriving CBI Industries' public stockholders of the
substantial control premium that Praxair is prepared to pay, or of the enhanced
premium that further negotiation or exposure of CBI Industries to the market
could provide.
26. Defendants owe fundamental fiduciary obligations to CBI industries'
stockholders to take all necessary and appropriate steps to maximize the value
of their shares. In addition, the Individual Defendants have the responsibility
to act independently so that the interests of CBI Industries' public
stockholders will be protected, to seriously consider all bona fide offers for
the Company, and to conduct fair and active bidding procedures or other
7
<PAGE> 8
mechanisms for checking the market to assure that the highest possible price is
achieved. Further, the directors of CBI Industries have a duty to adequately
ensure that no conflict of interest exists between the Individual Defendants'
own interests and their fiduciary obligations to maximize stockholder value or,
if such conflicts exist, ensure that all such conflicts will be resolved in the
best interests of the Company's stockholders;
27. Because defendants dominate and control the business and corporate
affairs of CBI Industries and because they are in possession of private
corporate information concerning CBI Industries' assets, businesses and future
prospects, there exists an imbalance and disparity of knowledge between
defendants and the public shareholders of CBI Industries. This discrepancy makes
it grossly and inherently unfair for defendants to refrain from taking those
steps necessary to maximize stockholder value. Defendants have refused to
seriously consider Praxair's offer, and have failed to announce any active
auction or open bidding procedures that would maximize stockholder value by
entertaining offers to purchase the Company.
28. The Individual Defendants are acting to entrench themselves in their
offices and positions and maintain their substantial salaries and perquisites,
all at the expense and to the detriment of the public stockholders of CBI
Industries.
29. As a result of the actions of the Individual Defendants, plaintiff
and the other members of the Class have been and will be damaged in that they
have not and will not receive
8
<PAGE> 9
their fair proportion of the value at CBI Industries' assets and businesses
and/or have been and will be prevented from obtaining a fair and adequate price
for their shares of CBI Industries' common stock.
30. Plaintiff seeks preliminary and permanent injunctive relief
preventing defendants from inequitably and unlawfully depriving plaintiff and
the Class of their rights to realize a full and fair value for their stock at a
premium over the market price, by unlawfully entrenching themselves in their
positions of control, and to compel defendants to carry out their fiduciary
duties to maximize stockholder value.
31. Only through the exercise of this Court's equitable powers can
plaintiff and the Class be fully protected from the immediate and irreparable
injury that defendants' actions threaten to inflict. Defendants are precluding
the enjoyment by CBI Industries' stockholders of the full economic value of
their investment by failing to proceed expeditiously and in good faith to
evaluate and pursue a premium acquisition proposal that would provide
consideration for all shares at a premium price.
32. Unless enjoined by the Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the members of the Class, and/or
aid and abet and participate in such breaches of duty, and will prevent the sale
of CBI Industries at a substantial premium, all to the irreparable harm of
plaintiff and other members of the Class.
33. Plaintiff and the Class have no adequate remedy at
9
<PAGE> 10
law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and certifying
plaintiff as a class representative;
(b) Ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
(i) cooperate fully with any entity or person, including
Praxair, having a bona fide interest in proposing any transaction that would
maximize stockholder value including, but not limited to, a merger or
acquisition of CBI Industries;
(ii) immediately undertake an appropriate evaluation of CBI
Industries' worth as a merger/acquisition candidate;
(iii) take all appropriate steps to enhance CBI Industries'
value and attractiveness as a merger/acquisition candidate;
(iv) take all appropriate steps to effectively expose CBI
Industries to the marketplace in an effort to create an active auction of the
Company;
(v) act independently so that the interests of the Company's
public stockholders will be protected; and
(vi) adequately ensure that no conflicts of interest exist
between the Individual Defendants' own interest and their fiduciary obligation
to maximize stockholder value or, in the event such conflicts exist, ensure that
all conflicts of interest
10
<PAGE> 11
are resolved in the beet interests of the public stockholders of CBI Industries;
(c) Ordering the Individual Defendants, jointly and severally to
account to plaintiff and the Class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;
(d) Awarding plaintiff the costs and disbursements of this
action, including a reasonable allowance for plaintiff's attorneys' and experts'
fees; and
(e) Granting such other and further relief as may be just and
proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
--------------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
11
<PAGE> 1
EXHIBIT 27
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ----------------------------------------x
HOWARD LASKER, on behalf of :
himself and all others similarly :
situated, :
: Civil Action No. 14659
Plaintiff, :
:
: CLASS ACTION COMPLAINT
-against- : ----------------------
:
CBI INDUSTRIES, INC. E. HUBERT :
CLARK. JR., JOHN T. HORTON, :
STEPHANIE PACE MARSHALL, GEORGE L. :
SCHUEPPERT, ROBERT T. STEWART, :
ROBERT J. DANIELS, JOHN E. JONES :
EDWARD J. MOONEY, JR., ROBERT G. :
WALLACE, LEWIS E. AKIN, WILEY N. :
CALDWELL, ROBERT J. DAY, GARY E. :
MACDOUGAL, and JOHN F. RIORDAN, :
:
Defendants :
- ----------------------------------------x
Plaintiff, by his undersigned attorneys, for his complaint against
defendants (the "Complaint"), alleges the following upon information and belief,
except as to Paragraph 2 hereof, which is alleged upon personal knowledge:
1. This is a shareholder's class action lawsuit on behalf of the public
shareholders of defendant CBI Industries, Inc. ("CBI" or the "Company") These
shareholders are currently being deprived of the opportunity to realize the full
benefits of their investment in CBI. Among other things, the director-
defendants have failed and refused and continue to refuse adequately to consider
a premium offer to acquire control of CBI by Praxair Inc. ("Praxair"). The
director-defendants are
<PAGE> 2
utilizing their fiduciary positions of control over CBI to thwart Praxair and
others in their legitimate attempts to acquire CBI, and the director-defendants
are trying to entrench themselves in their positions with the Company.
2. Plaintiff, Howard Lasker, is the owner of CBI common stock and has
owned such stock at all relevant times.
3. Defendant CBI is a Delaware corporation with its principal executive
offices located at 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268. CBI is a
holding company comprised of Liquid Carbonic Industries Corporation, the world's
largest supplier of commercial carbon dioxide and a major producer of other gas
products; CBI's Contracting Services, which includes the Chicago Bridge & Iron
Company, a major construction and engineering firm; and CBI Investments, Inc.,
which is the parent company for an operating business in the shipment, storage
and marketing of hydrocarbon products in the Western Hemisphere.
4. The following individual defendants (the "director-defendants")
constitute the entire board of directors of CBI: E. Hubert Clark, Jr., John T.
Horton, Stephanie Pace Marshall, George L. Schueppert, Robert T. Stewart, Robert
J. Daniels, John E. Jones, Edward J. Mooney, Jr., Robert G. Wallace, Lewis E.
Akin, Wiley N. Caldwell, Robert J. Day, Gary E. Macdougal and John F. Riordan
(the "Board"). Director-defendant Jones also serves as the Company's Chairman of
the Board, President and Chief Executive Officer; defendant Akin also serves as
Executive Vice President; defendant Daniels also serves as Executive Vice
President; and defendant Schueppert also serves as
2
<PAGE> 3
Executive Vice President and Chief Financial Officer. All director-defendants
receive substantial financial compensation as well as enjoying the perquisites
of office.
5. By virtue of their positions as directors and/or officers of CBI and
their exercise of control over the business and corporate affairs of CBI, the
director-defendants have, and at all relevant times had, the power to control
and influence, and did control and influence and cause CBI to engage in the
practices complained of herein. The director-defendants owed and owe CBI and its
stockholders fiduciary obligations and were and are required to: use their
powers to control and manage CBI in a fair, just and equitable manner; act in
furtherance of the best interests of CBI and its stockholders to maximize
stockholder value; govern CBI in such a manner as to heed the expressed views of
its public shareholders; refrain from abusing their positions of control; and
refrain from advancing their own interests at the expense of CBI and its
stockholders.
6. By virtue of the acts and conduct alleged herein, the
director-defendants, who control the actions of CBI, are breaching their
fiduciary duties to the public shareholders of the Company.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action for declaratory, injunctive and other
relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules
of the Court of Chancery and on behalf of all common stockholders of CBI (except
3
<PAGE> 4
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants) and their
successors-in-interest, who are being specially injured and deprived of the
opportunity to maximize the value of their CBI shares by the wrongful acts of
the director-defendants described herein (the "Class").
8. This action is properly maintainable as a class action for the
following reasons:
(a) The class of stockholders for whose benefit this action is
brought is so numerous that joinder of all Class members is impracticable. As of
May 11, 1995, there were in excess of 35 million shares of CBI common stock
outstanding, held by hundreds, or thousands of shareholders scattered throughout
the United States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over any questions affecting only
individual members. The common questions include, inter alia, the following:
i) whether the director-defendants are unlawfully impeding a
potential acquisition of CBI to the detriment of the shareholders of the
Company, and have breached their fiduciary obligations to plaintiff and other
members of the Class by failing and refusing to attempt in good faith to
maximize value for CBI's public shareholders by adopting strategies, policies,
and plans designed to thwart offers for CBI and entrench defendants in their
positions of control and failing to act with complete candor;
4
<PAGE> 5
ii) whether the director-defendants have engaged and are
continuing to engage in an unlawful plan and scheme to perpetuate their control
over and enjoyment of the perquisites of office at the expense of CBI's public
shareholders;
iii) whether the director-defendants have breached the
fiduciary and other common law duties owed by them to plaintiff and the other
members of the Class; and
iv) whether plaintiff and the other members of the Class are
being or will continue to be injured by the wrongful conduct alleged herein and,
if so, what is the proper remedy and/or measure of damages.
(c) The claims of plaintiff are typical of the claims of the
other members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation of this
nature. Plaintiff is an adequate representative of the Class and will fairly and
adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of
the Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for the party opposing the Class.
5
<PAGE> 6
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or corresponding declaratory relief with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
9. The director-defendants, by virtue of the acts and conduct alleged
herein, are carrying out, in gross disregard of their fiduciary duties to
plaintiff and the other members of the Class, a preconceived plan and scheme to
entrench themselves in office to thwart the offer of Praxair to acquire CBI,
regardless of the benefit to the public shareholders of CBI.
10. On or about October 29, 1995, Praxair announced its bid to acquire
CBI. The Praxair offer will pay $32 per share, or about $1.5 billion, a nearly
60% premium over the October 27, 1995 closing price for CBI, demonstrating
Praxair's good faith. Praxair, which is based in Danbury, Connecticut, is the
leading producer of industrial gases such as oxygen, hydrogen and helium and
last year earned $203 million on sales of $2.7 billion. Praxair is, therefore,
fully capable of financing and consummating the acquisition of CBI.
11. Praxair stated it would pay in stock or cash in a friendly deal,
but if the Board rejects the offer it might buy the shares directly in the open
market.
12. Earlier this year Airgas Inc. attempted to buy CBI's crown-jewel
Liquid Carbonics unit through an unsolicited
6
<PAGE> 7
bid for that division. The Board rejected the $680 million bid
and Airgas Inc. withdrew its offer.
13. As reported in The Wall Street Journal on October 30, 1995, Praxair
Chairman H. William Lichtenberger stated in an interview that he attempted
discussions with defendant-director Jones for six months, most recently on
October 20. Lichtenberger said Jones terminated the discussions.
14. As a result, in a letter delivered on Friday, October 27, 1995,
Praxair forwarded to defendant-director Jones a formal written offer stating
that "the best way to proceed is for Praxair to submit a specific proposal to
your Board of Directors for its formal consideration."
15. In response to the announcement of the Praxair offer, the price of
CBI common stock immediately jumped $10.75 per share to $30.875 per share in
intra-day trading.
16. CBI has in place a shareholder rights plan or "poison pill" (the
"Rights Plan"). The Rights Plan is designed to make an unfriendly takeover of
CBI prohibitively expensive and it, therefore, can be used to thwart legitimate
third-party offers for CBI.
17. The director-defendants have taken no action in response to the
Praxair offer and thus far have been content to remain behind the protection of
the preexisting Rights Plan. To act consistent with their fiduciary duties, the
director-defendants should evaluate all available alternatives, including
negotiating with Praxair, which they have failed to do.
7
<PAGE> 8
18. The Company's Rights Plan is designed to inflict a substantial
financial penalty on any person who "swallows the pill" and engages in any
transaction without first receiving the approval of CBI's management and
directors.
19. By adopting the Rights Plan, the Company's directors caused a
fundamental shift of power from its shareholders to themselves. The Rights Plan
permits the director-defendants to act as the prime negotiators of -- and, in
effect, totally to preclude -- any and all acquisition offers through their
power to redeem or to refuse to redeem the rights.
20. This fundamental shift of control of the Company's destiny from the
bands of its shareholders to the hands of the director-defendants results in a
heightened fiduciary duty of the director-defendants to consider, in good faith,
a third-party bid, and further requires the director-defendants to pursue a
third-party's interest in acquiring the Company and to negotiate in good faith
with a bidder on behalf of the Company's shareholders.
21. Rather than moving with dispatch to secure a definitive agreement
with Praxair or to negotiate for a superior price or engage in an auction or
market check designed to secure maximum value for the shareholders, defendants
have instead indefinitely delayed making any response and have failed to state
that they will not seek to frustrate or defeat the outside premium bid and have
failed to declare their willingness to deactivate takeover defenses designed
to and which will frustrate
8
<PAGE> 9
any acquisition proposal that the Board has neither solicited or approved.
22. The preliminary and permanent injunctive relief requested herein
is therefore necessary to prevent the Company's stockholders from suffering
irreparable injury as a result of the director-defendants' intransigence. There
is no adequate remedy at law for the following injuries with which CBI's
shareholders are currently threatened:
(a) CBI's stockholders may be deprived of any opportunity to
receive the benefits of Praxair's premium offer;
(b) CBI's stockholders may be deprived of the opportunity to
choose for themselves whether to receive the benefits of Praxair's offer or to
remain stockholders of an independent CBI; and
(c) CBI's stockholders will be deprived of the opportunity to
receive the maximum value possible for their CBI stock as a result of the
director-defendants' refusal to negotiate with Praxair or seek alternatives in
order to maximize short-term and long-term value.
23. The director-defendants owe fundamental fiduciary obligations to
the Company's shareholders to take all necessary and appropriate steps to
maximize the value of CBI common stock. In addition, the director-defendants are
obligated to act independently so that the interests of CBI public stockholders
will be protected, to consider seriously all bona fide offers for the Company,
and to conduct fair and active bidding procedures or other mechanisms for
checking the market to assure that the
9
<PAGE> 10
highest value available to CBI shareholders is achieved. Further, the directors
of the Company must adequately ensure that no conflict of interest exists
between defendants' own interests and their fiduciary obligations to maximize
stockholder value or, if such conflicts exist, ensure that all such conflicts
are resolved in the best interests of the Company's public stockholders.
24. CBI represents a highly attractive acquisition candidate.
Defendants' conduct has deprived and will continue to deprive the Company's
public shareholders of the very substantial control premium now being offered
and which further exposure of the Company to the market could provide.
25. The director-defendants have refused to take those steps necessary
to ensure that the Company's shareholders will receive maximum value for their
shares of CBI stock. Defendants have refused to consider seriously the Praxair
offer and have failed to announce any active auction or open bidding procedures
best calculated to maximize shareholder value in selling the Company.
26. By virtue of the acts and conduct alleged herein, the
director-defendants, who control the actions of the Company, have carried out a
preconceived plan and scheme to place their own personal interests ahead of the
interests of the shareholders of CBI and thereby entrench themselves in their
offices and positions within the Company. The director-defendants have violated
their fiduciary duties owed to plaintiff and the Class in that they have not and
are not exercising independent business
10
<PAGE> 11
judgment and have acted and are acting to the detriment of the Company's public
shareholders for their own personal benefit.
27. As the directors of a corporation faced with a bona fide offer for
the sale of control of the corporation, the director-defendants have a duty to
act on an informed basis to secure the best value reasonably available to CBI's
public stockholders and their conduct in that regard is subject to enhanced
scrutiny.
28. As a result of the acts and conduct described above, the
director-defendants are not fully informing themselves, are not acting in good
faith and have deliberately and/or recklessly breached their fiduciary and other
common law duties which they owe to plaintiff and the other members of the
Class, have engaged in unfair dealing for their own benefit and to the detriment
of the Class, and have pursued a course of conduct designed to prevent an
acquisition of the Company.
29. To the extent that the conduct of the director-defendants is based
upon what they perceive to be a threat that Praxair or any other third party
will acquire control over CBI, the director-defendants have a heightened
fiduciary duty to act in the best interest of the Company's public stockholders
and to act reasonably with regard to any perceived threat. They have recklessly
and in bad faith violated such duties.
30. By reason of the foregoing, the director-defendants have violated
their fiduciary duties to plaintiff and the Class by failing to ensure that the
defensive tactics they
11
<PAGE> 12
utilize are reasonable under the circumstances and are not contrary to the
interests of the public shareholders.
31. As a result of the actions of the director-defendants, plaintiff
and other members of the Class have been and will be damaged in that they have
not and will not receive their fair proportion of the value of CBI's assets and
businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their shares of CBI common stock. Defendants are unlawfully
manipulating the corporate machinery of CBI for their own benefit.
32. Plaintiff seeks preliminary and permanent injunctive relief and
declaratory relief preventing defendants from inequitably and unlawfully
depriving plaintiff and the Class of their rights to realize a full and fair
value for their stock at a substantial premium over the market price and to
compel defendants to carry out their fiduciary duties to maximize shareholder
value and not adopt or employ draconian anti-takeover measures.
33. Only through the exercise of this Court's equitable powers can
plaintiff and class members be fully protected from the immediate and
irreparable injury which the defendants' actions threaten to inflict.
34. Unless enjoined by the Court, defendants will continue to breach
the fiduciary duties they owe to plaintiff and the members of the Class, and/or
to aid and abet and participate in such breaches of duty, and will continue to
entrench themselves in office, all to the irreparable harm of plaintiff
12
<PAGE> 13
and the other members of the Class, and in defiance of the wishes of CBI
shareholders.
35. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and certifying
plaintiff as the class representative;
(b) Ordering the director-defendants to carry out their fiduciary
duties to plaintiff and the other members of the Class by announcing their
intention to:
i) cooperate fully with any entity or person, including
Praxair, having a bona fide interest in proposing any transaction which would
maximize shareholder value, including but not limited to, a buy-out or takeover
of the Company;
ii) immediately undertake an appropriate evaluation of CBI's
worth as a merger or acquisition candidate;
iii) take all appropriate steps necessary to enhance the
Company's value and attractiveness as a merger/acquisition candidate;
iv) take all appropriate steps necessary to effectively
expose CBI to the marketplace in an effort to create an active auction for
control of the Company;
v) act independently so that the interests of the Company's
public shareholders will be protected; and
vi) adequately ensure that no conflicts of interest exist
between the director-defendants' own interests and
13
<PAGE> 14
their fiduciary obligation to maximize shareholder value or, in the event such
conflicts exist, to ensure that all conflicts of interest are resolved in the
best interests of the public shareholders of CBI;
(c) Declaring that the director-defendants and each of them have
violated their fiduciary duties to the Class;
(d) Enjoining defendants from erecting any unlawful barriers to
the acquisition of the Company by any third party which would make CBI less
attractive as an acquisition candidate;
(e) Enjoining defendants from abusing the corporate machinery of
the Company for the purpose of entrenching themselves in office;
(f) Ordering the director-defendants to take steps to facilitate a
premium acquisition by utilizing the Rights Plan exclusively in a manner
designed to maximize shareholder value;
(g) Ordering the director-defendants, jointly and severally, to
account to plaintiff and the Class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;
(h) Alternatively, awarding plaintiff and the Class compensatory
damages;
(i) Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts' fees;
and
14
<PAGE> 15
(j) Granting such other and further relief as may be just and
proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
------------------------------
Joseph A. Rosenthal
First Federal Plaza
Suite 214
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
David J. Bershad
Steven G. Schulman
Lori G. Feldman
MILBERG WEISS BERSHAD HYNES
& LERACH
One Pennsylvania Plaza
New York, New York 10119
(212) 594-5300
STULL STULL & BRODY
Jules Brody
6 East 45th Street
New York, New York 10017
(212) 687-7230
WEISS & YOURMAN
Joseph Weiss
319 Fifth Avenue
New York, New York 10016
(212) 532-4171
15
<PAGE> 1
EXHIBIT 28
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------------x
:
HARRY POLIKOFF, as Trustee u/w/o :
Marjorie L. Polikoff, on behalf of :
himself and all others similarly :
situated, :
: Civil Action
Plaintiff, : No. 14662
:
-against- :
:
CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : CLASS ACTION
H. CLARK, JR., E.J. MOONEY, JR., R.J. : COMPLAINT
DAY, L.E. AKIN, J.E. JONES, R.J. :
DANIELS, W.N. CALDWELL, J.T. HORTON, :
R.G. WALLACE, STEPHANIE P. MARSHALL, :
G.E. MacDOUGAL, J.F. RIORDAN and :
R.T. STEWART, :
:
Defendants. :
- ---------------------------------------x
Plaintiff, by and through his attorneys, alleges as follows:
1. Plaintiff brings this action as a class action on behalf of himself
and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who
are similarly situated, to void and enjoin defendants' efforts to entrench
themselves and solidify their control of CBI and thwart any takeover of the
Company by, among other things, increasing the Company's anti-takeover devices,
such as its poison pill or shareholder rights plan, described below, and/or
refusing to rescind such antitakeover devices despite the existence of a value
maximizing offer.
2. Defendants' actions represent an effort by the individual
defendants to entrench themselves in office
<PAGE> 2
so that they may continue to receive the substantial salaries, compensation and
other benefits and perquisites of their offices.
3. The individual defendants are abusing their fiduciary positions of
control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to
acquire the Company, to prevent CBI's shareholders from receiving and/or acting
upon bona fide offers for the Company, and are seeking to use corporate
resources to entrench themselves in the management of the Company. The actions
of the individual defendants constitute a breach of their fiduciary duties to
maximize shareholder value, to not consider their own interests over that of the
public shareholders, and to respond reasonably to offers for CBI.
PARTIES
4. Plaintiff is the owner of CBI common stock, and has owned such
stock at all times relevant herein.
5. CBI is a holding company which, through numerous operating
subsidiaries, operates in three basic areas: contracting services, industrial
gases and investments. In recent time, the Company's industrial gases area,
organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic")
subsidiary, has contributed nearly 90% of CBI's pre-tax income.
- 2 -
<PAGE> 3
6. The individually named defendants are members of the CBI Board of
Directors. The following defendants are also officers and thus inside directors
of CBI:
(a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board
of Directors, president, and chief executive officer. For the year ended
December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and
restricted stock awards of $515,250.
(b) Defendant L.E. Akin ("Akin") is an executive vice president,
and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main
corporation under which the Company's contracting services area is organized).
For the year ended December 31, 1993, Akin earned a salary of $290,000, a bonus
of $35,000, and restricted stock awards of $200,375.
(c) Defendant R.J. Daniels ("Daniels") is an executive vice
president, and president of Liquid Carbonic. For the year ended December 31,
1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted
stock award of $171,750.
(d) Defendant G.L. Schueppert ("Schueppert") is an executive vice
president, and the Company's chief financial officer. For the year ended
December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000,
and a restricted stock award of $160,875.
- 3 -
<PAGE> 4
The remaining defendants are outside or non-officer directors of the Company.
7. By virtue of the individual defendants' positions as directors
and/or officers of the Company, the defendants were and are in a fiduciary
relationship with plaintiff and the other public stockholders of the Company and
owe to plaintiff and the other members of the Class the highest obligations of
good faith and fair dealing.
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action for injunctive and other relief on
his own behalf and as a class action, pursuant to Rule 23 of the Rules of the
Court of Chancery and on behalf of all common stockholders of CBI (except
defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants) or their successors in
interest, who are being deprived of the opportunity to maximize the value of
their CBI shares by the wrongful acts of the individual defendants described
herein ("Class").
9. This action is properly maintainable as a class action for the
following reasons:
(a) The Class for whose benefit this action is brought is so
numerous that joinder of all class members is impracticable. There are more than
37 million common shares of CBI outstanding, owned by thousands of
- 4 -
<PAGE> 5
stockholders of record. Members of the class are disbursed throughout the
United States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over all questions affecting only
individual members, including whether the defendants have breached the fiduciary
duties owned by them to plaintiff and members of the Class by reason of their
efforts to entrench themselves in office, protect the interests of other firms
with which they are affiliated and prevent CBI public stockholders from
maximizing the value of their holdings.
(c) The claims of plaintiff are typical of the claims of the
other members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation in this
nature. Accordingly, plaintiff is an adequate representative of the Class and
will fairly and adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of
the Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish
- 5 -
<PAGE> 6
incompatible standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or other equitable relief with respect to the Class as a whole.
FACTUAL BACKGROUND
10. CBI is a company with operating subsidiaries in three areas:
contracting services, industrial gases and investments. The Company's industrial
gases segment, which is organized under Liquid Carbonic, is the world's largest
supplier of carbon dioxide, and makes and markets other gases for industrial,
medical and specialty applications. In 1993, it was the Company's most
profitable division of the Company, and currently contributes approximately 90%
of the Company's pre-tax revenue.
11. Liquid Carbonic will likely be the greatest contributor to CBI's
revenues in the future as well. In November 1994, for instance, CBI announced
that its contracting services area's gross profit and income from operation in
the 1994 third quarter were hurt in the United States by narrowing margins,
mainly due to the continuing slow pace of capital spending for new or
replacement vessels for the refining, chemical, and pulp and paper industries.
- 6 -
<PAGE> 7
12. Nonetheless, the individual defendants have done nothing to
maximize shareholder value, and to enable CBI's shareholders to realize the
value of Liquid Carbonics. Instead, they have taken steps to entrench themselves
and to maintain their control over all of the three areas of CBI's business.
Airgas' 1994 Offer
13. Since as early as November, 1994 the individual defendants knew
that, based on the value of Liquid Carbonics, as well as the other aspects of
CBI's business, the Company presented itself as an outstanding merger target for
potential bidders. It was confirmed that the Company was "in play" when, at or
about that time, Airgas made an offer for the Company.
14. On December 20, 1994, CBI first publicly announced that sometime
in early November, Airgas Inc. ("Airgas"), a fast growing distributor of
industrial, medical and specialty gases, had made an unsolicited offer in which
it proposed the spin-off, in the form of a dividend to CBI shareholders of the
Contracting Segment and Investment Segment of its business, as new companies on
a debt-free basis, and the merger of CBI, which would then just own Liquid
Carbonic, with Airgas. In the merger, CBI shareholders would receive 19 million
shares of Airgas,
- 7 -
<PAGE> 8
representing approximately 35% of the Airgas shares to be outstanding after the
merger (the "Airgas Merger Proposal").
15. The Airgas Merger Proposal was projected to enable CBI
shareholders to realize the value inherent in their ownership of Liquid
Carbonic, while still maintaining their shares and thus the ability to obtain
any future accretion in the value of such shares.
16. As an alternative transaction, Airgas offered to purchase Liquid
Carbonics outright for cash of $1.45 billion (which is greater than the total
market capitalization of CBI), part of which would include the assumption of
CBI's over $770 million in debt. This alternative would again enable CBI's
shareholders to realize immediate value from their ownership of Liquid Carbonic,
and would also increase the value of the Contracting and Investment segments by
reducing CBI's debt.
CBI's Rejection Of The Airgas
Proposal And Amendment Of Its
Shareholder Rights Plan
17. Despite the obvious advantages to CBI shareholders of either of
these two proposals, CBI's Board of Directors, allegedly after consideration and
consultation with its financial advisors, Lehman Brothers Inc. and Lynch & Co.,
and in a desire to keep CBI independent so that they could entrench themselves,
rejected the offers as inadequate.
- 8 -
<PAGE> 9
18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the
Purpose of allowing it to purchase up to 15% of CBI's common stock through open
market or privately negotiated purchases.
19. In response to the obvious takeover attempts by Airgas, and the
realization that CBI was now "in play", CBI's Board of Directors authorized an
amendment to CBI's shareholders rights plan, which significantly lowers the
ownership level required to trigger a distribution of the Rights under the Plan
from 20% to 10%, making a hostile bid for the Company prohibitively expensive.
20. After giving effect to the amendment, the Plan provides that if a
person or group acquires 10% or more of the outstanding CBI common shares, each
Right will entitle its holder, other than the person or group which has acquired
the share, to purchase common shares of CBI having a market value equal to twice
the exercise price of each right.
21. In January, 1995, after its proposal was rejected, Airgas dropped
its merger proposal to CBI.
Praxair's October 29, 1995
Merger Proposal To CBI
22. Praxair is the largest supplier of industrial gases in North and
South America and one of the three largest industrial gas suppliers in the
world. Using air as
- 9 -
<PAGE> 10
its base raw material, Praxair produces oxygen, nitrogen and argon through
several air separation processes.
23. In approximately June, 1995, Praxair approached CBI in connection
with a potential combination of Praxair and CBI whereby the two companies would
be merged together. After approximately six months of negotiations between
Praxair and CBI, CBI, on October 20, 1995, broke off negotiations.
24. As a result of CBI's determination not to seek a combination with
Praxair, on October 29, 1995 Praxair announced that it intended to commence a
cash or stock tender offer for all the outstanding shares of CBI at $32 per
share -- a transaction which has an estimated worth of approximately $2.1
billion.
25. Rather than negotiating in good faith with Praxair, to obtain the
best possible price for CBI's shareholders, the Individual Defendants have
stated that they will "review the Praxair proposal in due course."
26. They have not, however, rescinded the poison pill. CBI's poison
pill has the effect of entrenching the Individual Defendants in control of CBI,
but the Individual Defendants have refused to rescind, waive or otherwise
abolish the terms of the CBI poison pill.
27. Praxair's tender offer will be for 100% of CBI's outstanding stock
which, in turn, will invoke the poison pill. This will make Praxair's tender
offer
- 10 -
<PAGE> 11
prohibitively expensive and may well discourage Praxair from continuing its
tender offer.
28. Defendants' failure to rescind, waive or otherwise abolish the
terms of the poison pill, the failure to ease CBI's anti-takeover provisions, or
to otherwise negotiate with Praxair in good faith, constitutes a breach of
defendants' fiduciary duties owed to plaintiff and other members of the Class.
It will have the effect of making the Praxair proposal cost-prohibitive, and
therefore may discourage Praxair from going forward with a tender offer -- the
primary alternative which would enable CBI shareholders to maximize the value of
their equity holdings.
29. At all times herein, defendants were and are obligated to
adequately consider, in a timely fashion and on an informed basis, any
reasonable proposal from any party, not to place their own self-interests and
personal considerations ahead of the interests of the stockholders and to make
corporate decisions in good faith. The actions of the Individual Defendants in
maintaining and refusing to waive or otherwise rescind the poison pill or to
negotiate in good faith were fundamentally motivated to further their own
self-interests and objectives, and correspondingly preserve and protect their
emoluments and positions in the Company, all in violation of their fiduciary
duties and to the detriment of the shareholders of the Company.
- 11 -
<PAGE> 12
30. The Individual Defendants' entrenchment motives are evidenced by,
inter alia, the following:
(a) Through the maintenance of the poison pill, and defendants'
failure to waive its terms, defendants have erected a virtually insurmountable
barrier to persons who may wish to acquire CBI, obtain control or take steps to
maximize shareholder value, and are thereby attempting to entrench themselves in
their positions of control and improperly advance their own personal agenda at
the expense of CBI's public stockholders;
(b) In reality, the poison pill provisions are designed to
prevent unsolicited takeovers from succeeding. Defendants' inaction concerning
the waiver or rescission of the poison pill is indicative of their true motives
and objectives; and
(c) Defendants' efforts to increase CBI's anti-takeover devices
when confronted with the Airgas Merger Proposal and to continue the
anti-takeover devices knowing that the Company was the target of a potential
offer by Praxair.
31. In increasing CBI's anti-takeover devices, and failing to waive or
rescind the poison pill, the Individual Defendants have acted to manipulate the
corporate machinery of CBI, thereby impairing the corporate democratic process
within the Company at the expense and to the detriment of the Company's common
stockholders. By
- 12 -
<PAGE> 13
maintaining the poison pill and increasing the Company's anti-takeover devices,
the Individual Defendants have restrained and impaired the ability of CBI's
stockholders to affect corporate policy, and freely structure the directorial
constituency of the Company. The poison pill, inter alia, impedes shareholder
ability to accumulate shares and associate together to replace incumbent
management, oppose any management initiative, or otherwise affect corporate
policy through stockholder resolutions.
32. As a result of the foregoing, the Individual Defendants have
breached and/or aided and abetted breaches of fiduciary duties owed to CBI and
its stockholders.
33. Unless enjoined by this Court, defendants will breach their
fiduciary duties owed to plaintiff and the other members of the Class and may
benefit themselves in their corporate offices, all to the irreparable harm of
the Class, as aforesaid.
34. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
- 13 -
<PAGE> 14
(i) rescind the "poison pill" and any other takeover devices
which would hinder Praxair's hostile offer;
(ii) negotiate in good faith with Praxair to obtain the
greatest possible value for CBI's shareholders;
(iii) undertake an appropriate evaluation of alternatives
designed to maximize value for CBI's public stockholders;
(iv) adequately ensure that no conflicts of interests exist
between defendants' own interests and their fiduciary obligations to public
stockholders or, if such conflicts exist, ensure that all the conflicts would be
resolved in the best interests of CBI's public stockholders; and
(c) ordering defendants, jointly and severally, to account to
plaintiff and the other members of the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
(d) awarding plaintiff the costs and disbursements of the action,
including a reasonable allowance for plaintiff's attorney's fees and experts'
fees; and
- 14 -
<PAGE> 15
(e) granting such other and further relief as this Court may deem
to be just and proper.
Dated: October 31, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
-----------------------------------
First Federal Plaza
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
LOWEY DANNENBERG BEMPORAD & SELINGER, P.C.
747 Third Avenue
New York, NY 10017
(212) 759-1504
- 15 -
<PAGE> 1
EXHIBIT 29
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- -----------------------------------------x
David Rosenberg, :
:
Plaintiff, :
:
- against - :
:
E. HUBERT CLARK, JR., JOHN T. HORTON, :
ROBERT T. STEWART, STEPHANIE PACE : C.A. No. 14652
MARSHALL, GEORGE L. SCHUEPPERT, ROBERT :
J. DANIELS, JOHN E. JONES, EDWARD :
J. MOONEY, JR. ,ROBERT G. WALLACE, :
LEWIS E. AKIN, WILEYN. CALDWELL, ROBERT :
J. DAY, GARY E. MACDOUGAL, JOHN F. :
RIORDAN and CBI INDUSTRIES, INC., :
:
Defendants. :
- -----------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, by his attorneys, Rosenthal, Monhait, Gross & Goddess,
P.A., for his complaint against defendants, alleges upon information and belief,
except for paragraph 2 hereof which is alleged upon knowledge, as follows:
1. Plaintiff brings this action on his own behalf and as a class
action on behalf of all persons, other than defendants and those in privity with
them, who own the common stock of CBI Industries, Inc. ("CBI" or the "Company").
2. Plaintiff is and has been the owner of common stock of the Company
since prior to the wrongs herein complained of and continuously to date.
3. Defendant CBI is a corporation duly organized and existing under
the laws of the State of Delaware. The Company is
<PAGE> 2
a holding company with subsidiaries which provide contracting services such as
design, engineering, fabrication and project management. The Company also
produces and markets industrial and specialty gases, such as carbon dioxide,
oxygen, nitrogen and argon. Additionally, the Company assembles and sells
gas-related equipment and invests in a variety of companies related to the oil
industry.
4. The following individual defendants (the "Individual Defendants")
constitute the entire Board of Directors of CBI:
Name Position
- ---- --------
E. Hubert Clark, Jr. Director
John E. Jones Chairman, President and C.E.O.
John T. Horton Director
Stephanie Pace Marshall Director
George L. Schueppert Director, C.F.O.
Robert T. Stewart Director
Robert J. Daniels Director
Edward J. Mooney, Jr. Director
Robert G. Wallace Director
Lewis E. Akin Director
Wiley N. Caldwell Director
Robert J. Day Director
Gary E. MacDougal Director
John F. Riordan Director
5. The Individual Defendants named in paragraph 4 are in a fiduciary
relationship with plaintiff and the other public
2
<PAGE> 3
stockholders of CBI and owe them the highest obligations of loyalty, good
faith, due care, candor and fair dealing.
CLASS ACTION ALLEGATIONS
6. Plaintiff brings this action on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all holders of common stock of the Company (except defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated with
any of the defendants) and their successors in interest, who are or will be
threatened with injury arising from defendants' actions as more fully described
herein.
7. This action is properly maintainable as a class action.
8. The class is so numerous that joinder of all members is
impracticable. There are approximately 32,206,403 shares of CBI common stock
outstanding, owned by over 8,000 record shareholders scattered throughout the
country.
9. There are questions of law and fact which are common to the class
including, inter alia, the following: (a) whether defendants have breached their
fiduciary and other common law duties owed by them to plaintiff and the members
of the class; (b) whether defendants are unlawfully impeding a value maximizing
acquisition of the Company; (c) whether defendants' actions hereinafter
described, constitute a breach of the duty of fair dealing with respect to the
plaintiff and the other members of the
3
<PAGE> 4
class, a failure to maintain a level playing field and a failure to maximize
shareholder value; and (d) whether the class is entitled to injunctive relief as
a result of defendants' wrongful conduct.
10. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of
plaintiff are typical of the claims of other members of the class and plaintiff
has the same interests as the other members of the class. Plaintiff will fairly
and adequately represent the class.
12. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
13. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
14. Praxair, Inc. ("Praxair") has long been interested in acquiring
CBI. For the past six months, H. William Lichtenberg,
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Praxair's chairman and chief executive officer, has engaged in discussions with
defendant John E. Jones regarding a possible merger of the two companies. On
October 20, 1995 CBI terminated discussions concerning a possible merger.
15. On October 29, 1995, Praxair announced that it had made an
unsolicited merger proposal to CBI providing for the acquisition of 100 percent
of the common stock of CBI. Pursuant to the terms of the merger proposal,
Praxair would pay $32.00 in cash or Praxair common stock for every share of CBI
common stock. Praxair would also assume about $700 million of CBI's long term
debt. The total value of the transaction is approximately $2.1 billion.
16. Praxair's offer represents a hefty premium of 59 percent to the
$20.125 closing price of CBI common stock on Friday October 27, 1995. Praxair
also invited the board of directors of CBI to immediately commence negotiations
of a definitive merger agreement.
17. Defendants owe fundamental fiduciary obligations to the CBI
shareholders to take all necessary and appropriate steps to maximize the value
of their shares. In addition, the Individual Defendants have the responsibility
to act independently so that the interests of CBI public stockholders will be
protected, to seriously consider all bona fide offers for the company, and to
conduct fair and active bidding procedures or other mechanisms for checking the
market to assure that the highest possible price is achieved. Further, the
directors of the Company must adequately
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<PAGE> 6
insure that no conflict of interest exists between defendants' own interests and
their fiduciary obligations to maximize stockholder value or, if such conflicts
exist, insure that all such conflicts will be resolved in the best interests of
the company's public stockholders.
18. The individual Defendants have breached their fiduciary and
other common law duties owed to Plaintiff and other members of the Class in that
they have not exercised and are not exercising independent business judgement
and have acted and are acting to the detriment of the Class. The defendants'
rejection of Praxair's offer is an uninformed knee jerk reaction made without
adequate information as to what Praxair would be prepared to offer in a fully
negotiated transaction, so that defendants can maintain their positions in
control of the company.
19. Moreover, Defendants have refused to take those steps
necessary to ensure that the Company's public shareholders will receive maximum
value for their shares of CBI common stock. Defendants' failure to accept
Praxair's offer to enter into a definitive merger agreement is clearly the
result of the desire by the individual Defendants to protect their own
substantial salaries, perquisites and positions with the Company.
20. The Individual Defendants have breached their fiduciary
duties by reason of the acts and transactions complained of herein, including
their failure to negotiate a value maximizing acquisition of CBI.
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21. Unless enjoined by this Court, the Individual Defendants will
continue to breach their fiduciary duties owed to plaintiff and the other
members of the class.
22. Plaintiff and the class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
A. declaring this to be a proper class action;
B. ordering the Individual Defendants to carry out their fiduciary
duties to plaintiff and the other members of the class by announcing their
intention to:
1) cooperate fully with any person or entity having a bona fide
interest in proposing any transaction which would maximize shareholder value,
including, but not limited to, a buyout or takeover of the Company by Praxair;
2) undertake an appropriate evaluation of CBI's worth as a
merger/acquisition candidate;
3) take all appropriate steps to enhance CBI value and
attractiveness as a merger/acquisition candidate;
4) take all appropriate steps to effectively expose CBI to the
marketplace in an effort to create an active auction for CBI;
5) act independently so that the interests of CBI's public
stockholders will be protected; and
6) adequately ensure that no conflicts of interest exist between
the Individual Defendant's interests and their fiduciary obligation to maximize
stockholder value or, if
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such conflicts exist, ensure that all conflicts are resolved in the best
interests of CBI's public stockholders;
C. ordering the Individual Defendants, jointly and severally, to
account to plaintiff and the class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;
D. awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts' fees;
and
E. granting such other and further relief as may be just and proper in
the premises.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
----------------------------------------
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ
274 Madison Avenue
New York, NY 10016
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Exhibit 30
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ----------------------------------------x
HARRY LEWIS, :
Plaintiff, :
:
v. :
:
JOHN E. JONES, HUBERT E. CLARK, JR., : C.A. No. 14664
JOHN T. HORTON, STEPHANIE PACE MARSHALL,: -------
GEORGE L. SCHUEPPERT, ROBERT T. STEWART,:
ROBERT J. DANIELS, EDWARD J. MOONEY, JR.:
ROBERT G. WALLACE, LEWIS E. AKIN, :
WILEY N. CALDWELL, ROBERT J. DAY, :
GARY E. MAC DOUGAL, JOHN F. RIORDAN, :
and CBI INDUSTRIES, INC. :
Defendants. :
- ----------------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, by his attorneys, alleges upon information and belief,
except as to the allegations of paragraph 2 which are made on personal
knowledge, as follows:
NATURE OF THE ACTION
1. This is a stockholders' class action brought on behalf of the
public stockholders of CBI Industries, Inc. ("CBI Industries" or the "Company")
who have been, and continue to be, deprived of the opportunity to realize fully
the benefits of their investment in the Company. The named defendants have
wrongfully refused to take the steps necessary to maximize stockholder value,
including properly considering a bona fide offer for the Company (the "Offer")
from Praxair Inc. ("Praxair"). By failing and refusing to take such steps,
including adequately considering the
<PAGE> 2
Offer, defendants have breached their fiduciary duties to plaintiff and the
class. The individual defendants are using their fiduciary positions of control
over CBI Industries to thwart others in their legitimate attempts to acquire CBI
Industries, and the individual defendants are trying to entrench themselves in
their positions with the Company.
PARTIES
2. Plaintiff is and, at all relevant times has been, the owner of
shares of CBI Industries common stock.
3. CBI Industries is a corporation duly organized and existing under
the laws of Delaware. CBI Industries is in the business of producing, processing
and marketing industrial, medical, and specialty gases. It also, inter alia, is
engaged in the business of providing contracting services and providing services
for hydrocarbon products. CBI Industries maintains its principal executive
offices at 800 Jorie Boulevard, Oak Brook, Illinois 60521. CBI Industries has
approximately 38 million shares of common stock outstanding and approximately
8000 stockholders of record. CBI Industries' stock trades on the New York Stock
Exchange.
4. Defendant John E. Jones ("Jones") is Chairman of CBI Industries'
Board of Directors and its president and Chief Executive Officer. In 1994, Jones
received $1,334,537 in compensation from CBI Industries.
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<PAGE> 3
5. Defendant Lewis E. Akin ("Akin") is an Executive Vice President of
CBI Industries. In 1994, Akin received $644,254 in compensation from CBI
Industries.
6. Defendant George L. Schueppert ("Schueppert") is an Executive Vice
President and the Chief Financial Officer of CBI Industries. In 1994, Schueppert
received $720,459 in compensation from CBI Industries.
7. Defendants Hubert E. Clark, Jr., John T. Horton, Stephanie Pace
Marshall, Robert T. Stewart, Robert J. Daniels, Edward J. Mooney, Jr., Robert G.
Wallace, Wiley N. Caldwell, Robert J. Day, Gary E. MacDougal, and John F.
Riordan are directors of CBI Industries.
8. The defendants named in paragraphs 4, 5, 6 and 7 are
hereinafter referred to as the "Individual Defendants."
9. Because of their positions as officers/directors of the Company, the
Individual Defendants owe fiduciary duties of loyalty and due care to plaintiff
and the other members of the class.
10. Each defendant herein is sued individually as a conspirator and
aider and abettor, as well as in his/her capacity as an officer and/or director
of the Company, and the liability of each arises from the fact that he or she
has engaged in all or part of the unlawful acts, plans, schemes, or transactions
complained of herein.
3
<PAGE> 4
CLASS ACTION ALLEGATIONS
11. Plaintiff brings this case on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants, who will be threatened with injury arising from defendants' actions
as is described more fully below (the "Class").
12. This action is properly maintainable as a class action.
13. The Class is so numerous that joinder of all members is
impracticable. The Company has thousands of stockholders who are scattered
throughout the United States.
14. There are questions of law and fact common to the Class that
predominate over questions affecting any individual class member. The common
questions include, inter alia, whether:
a. defendants have breached their fiduciary duties owed by them to
plaintiff and other members of the Class by failing and refusing to attempt in
good faith to maximize stockholder value, including, inter alia, by considering
the sale of CBI Industries;
b. defendants have breached or aided and abetted the breach of the
fiduciary duties owed by them to plaintiff and other members of the Class;
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<PAGE> 5
c. defendants have engaged in a plan and scheme to thwart and
reject offers and proposals from third parties, including the one made by
Praxair; and
d. plaintiff and the other members of the Class are being and will
continue to be injured by the wrongful conduct alleged herein and, if so, what
is the proper remedy and/or measure of damages.
15. Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.
16. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
17. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole are appropriate.
5
<PAGE> 6
SUBSTANTIVE ALLEGATIONS
18. By the acts, transactions, and courses of conduct alleged herein,
defendants, individually and as part of a common plan and scheme and/or aiding
and abetting one another in total disregard of their fiduciary duties, are
attempting to unfairly deprive plaintiff and the Class of their right to
maximize the value of their investment in CBI Industries.
19. On October 27, 1995, following six months in which it attempted to
hold discussions with CBI Industries Chairman Jones -- discussions that Jones
terminated on or about October 20 -- Praxair sent a letter to CBI Industries'
Board of Directors making a bid for CBI Industries at a price of $32 a share in
either cash or Praxair common stock, for a total of approximately $1.5 billion
(plus the assumption of about $700 million of liabilities). Praxair gave CBI
Industries until noon on November 1 to respond.
20. This offer was reported in The New York Times and The Wall Street
Journal on October 30, 1995. Both newspapers reported that the offer constituted
a nearly 60% premium over CBI Industries' then current stock price. Both
newspapers also reported that analysts believed that the companies had
synergies, making the combination a good one for both businesses.
21. Praxair is a substantial company with the financial wherewithal to
follow through on its offer. Praxair, based in Danbury, Connecticut, is the
country's leading producer of such industrial gases as oxygen, hydrogen and
helium. Last year Praxair earned $203 million on sales of $2.7 billion.
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<PAGE> 7
22. Praxair's offer comes at a particularly opportune time for CBI
Industries shareholders, because it comes amid a slide in CBI Industries stock
this year. CBI Industries' stock is down over 21% according to Baseline, a New
York financial data service. Indeed, The New York Times reported on October 30,
1995 that CBI Industries shares have "recently fallen from a 52 week high of
$27.75 to flirt with a five year low of $19.
23. Despite the significant interest of CBI Industries stockholders,
defendants have acted without regard to the fiduciary duties they owe them by,
inter alia, failing to take the steps necessary to maximize stockholder value,
including, but not limited to, hold meetings and negotiations with Praxair
regarding its offer. Defendants have done so without business justification.
24. Defendants' failure to act promptly upon Praxair's offer has no
valid business purpose, and simply evidences their disregard for the premium
being offered to CBI Industries stockholders. By failing to meet promptly and
negotiate, or offer to meet and negotiate, with Praxair regarding its offer,
defendants are depriving plaintiff and the Class of their right to receive the
maximum value for their CBI Industries shares.
25. CBI Industries represents a highly attractive acquisition
candidate. Defendants' conduct is depriving CBI Industries' public stockholders
of the substantial control premium that Praxair is prepared to pay, or of the
enhanced premium that further negotiation or exposure of CBI Industries to the
market could provide.
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26. Defendants owe fundamental fiduciary obligations to CBI Industries'
stockholders to take all necessary and appropriate steps to maximize the value
of their shares. In addition, the Individual Defendants have the responsibility
to act independently so that the interests of CBI Industries' public
stockholders will be protected, to seriously consider all bona fide offers for
the Company, and to conduct fair and active bidding procedures or other
mechanisms for checking the market to assure that the highest possible price is
achieved. Further, the directors of CBI Industries have a duty to adequately
ensure that no conflict of interest exists between the Individual Defendants'
own interests and their fiduciary obligations to maximize stockholder value or,
if such conflicts exist, ensure that all such conflicts will be resolved in the
best interests of the Company's stockholders.
27. Because defendants dominate and control the business and corporate
affairs of CBI Industries and because they are in possession of private
corporate information concerning CBI Industries' assets, businesses and future
prospects, there exists an imbalance and disparity of knowledge between
defendants and the public shareholders of CBI Industries. This discrepancy makes
it grossly and inherently unfair for defendants to refrain from taking those
steps necessary to maximize stockholder value. Defendants have refused to
seriously consider Praxair's offer, and have failed to announce any active
auction or open bidding procedures that would maximize stockholder value by
entertaining offers to purchase the Company.
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<PAGE> 9
28. The Individual Defendants are acting to entrench themselves in
their offices and positions and maintain their substantial salaries and
perquisites, all at the expense and to the detriment of the public stockholders
of CBI Industries.
29. As a result of the actions of the Individual Defendants, plaintiff
and the other members of the Class have been and will be damaged in that they
have not and will not receive their fair proportion of the value of CBI
Industries' assets and businesses and/or have been and will be prevented from
obtaining a fair and adequate price for their shares of CBI Industries' common
stock.
30. Plaintiff seeks preliminary and permanent injunctive relief
preventing defendants from inequitably and unlawfully depriving plaintiff and
the Class of their rights to realize a full and fair value for their stock at a
premium over the market price, by unlawfully entrenching themselves in their
positions of control, and to compel defendants to carry out their fiduciary
duties to maximize stockholder value.
31. Only through the exercise of this Court's equitable powers can
plaintiff and the Class be fully protected from the immediate and irreparable
injury that defendants' actions threaten to inflict. Defendants are precluding
the enjoyment by CBI Industries' stockholders of the full economic value of
their investment by failing to proceed expeditiously and in good faith to
evaluate and pursue a premium acquisition proposal that would provide
consideration for all shares at a premium price.
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<PAGE> 10
32. Unless enjoined by the Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the members of the Class, and/or
aid and abet and participate in such breaches of duty, and will prevent the sale
of CBI Industries at a substantial premium, all to the irreparable harm of
plaintiff and other members of the Class.
33. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and
certifying plaintiff as a class representative;
(b) Ordering the Individual Defendants to carry out their
fiduciary duties to plaintiff and the other members of the Class by announcing
their intention to:
(i) cooperate fully with any entity or person, including
Praxair, having a bona fide interest in proposing any transaction that would
maximize stockholder value including, but not limited to, a merger or
acquisition of CBI Industries;
(ii) immediately undertake an appropriate evaluation of
CBI Industries' worth as a merger/acquisition candidate;
(iii) take all appropriate steps to enhance CBI
Industries' value and attractiveness as a merger/acquisition candidate;
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(iv) take all appropriate steps to effectively expose
CBI Industries to the marketplace in an effort to create an active auction of
the Company;
(v) act independently so that the interests of the
Company's public stockholders will be protected; and
(vi) adequately ensure that no conflicts of interest
exist between the Individual Defendants' own interest and their fiduciary
obligation to maximize stockholder value or, in the event such conflicts exist,
ensure that all conflicts of interest are resolved in the best interests of the
public stockholders of CBI Industries;
(c) Ordering the Individual Defendants, jointly and
severally to account to plaintiff and the Class for all damages suffered and to
be suffered by them as a result of the acts and transactions alleged herein;
(d) Awarding plaintiff the costs and disbursements of this
action, including a reasonable allowance for plaintiff's attorneys' and experts'
fees; and
(e) Granting such other and further relief as may be just
and proper.
ROSENTHAL, MONHATT, GROSS & GODDESS, P.A.
By: /s/ JOSEPH A. ROSENTHAL
-----------------------------
Joseph A. Rosenthal
First Federal Plaza, Suite 214
P.O. Box 1870
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
GARWIN BRONZAFT GERSTEIN & FISHER LLP
1501 Broadway, Suite 1416
New York, NY 10036-5601
11
