<PAGE> 1
As filed with the Securities and Exchange Commission on March 13, 1997
Registration Statement No. 333-22597
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
EATON CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-0196300
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Eaton Center, Cleveland, Ohio 44114
(Address of principal executive offices)
Eaton Incentive Compensation Deferral Plan
(Full title of the plan)
------------------------
E. R. Franklin, Secretary
Eaton Corporation
Eaton Center, Cleveland, Ohio 44114
(216) 523-4103
(Name, address, and telephone number, including area code, of agent for service)
-----------------------
Amending the Prospectus
1
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the 1933 Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio,
on the 13th day of March, 1997.
EATON CORPORATION
By /s/ G. L. Gherlein
----------------------------
G. L. Gherlein, Executive Vice
President and General Counsel
Pursuant to the requirements of the 1933 Act, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Name Title
---- -----
* Chairman and Chief Executive Officer;
- ----------------------- Principal Executive Officer; Director
Stephen R. Hardis
* President and Chief Operating Officer;
- ----------------------- Director
Alexander M. Cutler
* Vice President and Chief Financial and
- ----------------------- Planning Officer; Principal Financial Officer
Adrian T. Dillon
* Vice President - Accounting; Principal
- ----------------------- Accounting Officer
Ronald L. Leach
* Director
- -----------------------
Phyllis B. Davis
* Director
- -----------------------
Ernie Green
* Director
- -----------------------
Charles E. Hugel
* Director
- -----------------------
John R. Miller
* Director
- -----------------------
Victor A. Pelson
* Director
- -----------------------
A. William Reynolds
* Director
- -----------------------
Gary L. Tooker
*By /s/ David M. O'Loughlin March 13, 1997
----------------------------------------
David M. O'Loughlin, Attorney-in-Fact
for the Officers and Directors
Signing in the capacities indicated
2
<PAGE> 3
Explanatory Note
----------------
The reoffer prospectus which is filed as a part of this
Registration Statement has been prepared in accordance with the requirements of
Form S-3, and pursuant to General Instruction C of Form S-8 may be used for
reoffers or resales of the Shares that have been acquired by the Selling
Shareholders identified herein.
<PAGE> 4
REOFFER PROSPECTUS
EATON CORPORATION
COMMON SHARES, PAR VALUE $.50 PER SHARE
32,836 COMMON SHARES UNDER THE EATON CORPORATION
INCENTIVE COMPENSATION DEFERRAL PLAN
This Prospectus is being used in connection with the offering
from time to time by certain executives (the "Selling Shareholders") of Eaton
Corporation, an Ohio corporation (the "Company") of up to 32,836 common shares,
$.50 par value per share, of the Company (the "Eaton Common Shares"), which have
been or will be acquired by such persons pursuant to the Eaton Corporation
Incentive Compensation Deferral Plan (the "Plan"). The shares that have been so
acquired by such persons pursuant to the Plan are herein referred to as
"Restricted Shares."
The Restricted Shares may be offered hereby from time to time
by any and all of the Selling Shareholders for their own benefit. The Company
will not be entitled to any of the proceeds from such sales.
The Restricted Shares may be sold from time to time to
purchasers directly by any of the Selling Shareholders. Alternatively, the
Selling Shareholders may sell the Shares in one or more transactions (which may
include block transactions) on the open market in ordinary brokerage
transactions on the New York Stock Exchange, the Chicago Stock Exchange, the
Pacific Stock Exchange, or the London Stock Exchange (on each of which the
Common Shares of the Company are listed), in privately negotiated transactions,
or in a combination of such methods of sale; each sale may be made either at
market prices prevailing at the time of such sale or at negotiated prices; some
or all of the Shares may be sold through brokers acting on behalf of the Selling
Shareholders or to dealers for resale by such dealers; and in connection with
such sales, such brokers or dealers may receive compensation in the form of
discounts, fees or commissions from the Selling Shareholders and/or the
purchasers of such shares for whom they may act as broker or agent (which
discounts, fees or commissions are not anticipated to exceed those customary in
the types of transactions involved). However, any Restricted Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"), may be sold under Rule 144
rather than pursuant to this Prospectus. All expenses of registration incurred
in connection with this offering are being borne by the Company, but all
brokerage commissions and other expenses incurred by individual Selling
Shareholders will be borne by each such Selling Shareholder.
The Selling Shareholders and any dealer acting in connection
with the offering of any of the Shares or any broker executing selling orders on
behalf of the Selling
-2-
<PAGE> 5
Shareholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or concessions received by any such brokers or
dealers may be deemed to be underwriting discounts and commissions under the
Securities Act.
-3-
<PAGE> 6
REOFFER PROSPECTUS
The Eaton Common Shares are traded on the New York Stock
Exchange and on certain other Exchanges. On March 13, 1997, the closing price of
the Eaton Common Shares as reported on the New York Stock Exchange was $73.125
per share.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------
MARCH 13, 1997
-4-
<PAGE> 7
-----------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
PAGE
----
Available Information................................................ 6
Incorporation of Certain Documents by Reference...................... 6
The Company.......................................................... 8
Selling Shareholders................................................. 8
Plan of Distribution.................................................10
Experts..............................................................11
-5-
<PAGE> 8
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 or at its Regional Offices
located at the Northwestern Atrium Center, 500 West Madison, Chicago, Illinois
60661 and 7 World Trade Center, 13th Floor, New York, New York 10048, and copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
This Prospectus constitutes a part of a Registration Statement
filed by the Company with the Commission under the Securities Act. This
Prospectus omits certain of the information contained in the Registration
Statement in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits for
further information with respect to the Company and the Eaton Common Shares.
Statements contained herein concerning the provisions of any documents are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission
are incorporated herein by reference and made a part hereof: (i) the Company's
Annual Report on Form 10-K filed with the Commission pursuant to Section 13(a)
of the Exchange Act for the Company's fiscal year ended December 31, 1995, (ii)
all reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since
the end of the fiscal year covered by the Annual Report on Form 10-K referred to
in subsection (i) above, and (iii) a description of the Eaton Common Shares,
with a par value of $.50 per share, set forth in the registrant's Registration
Statement under the 1934 Act, as amended to date, filed with the Commission
pursuant to Section 12 of the 1934 Act.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the filing of a post-effective amendment indicating that all
securities offered hereby have been sold or deregistering all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such reports and
documents.
Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes
-6-
<PAGE> 9
of this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. All information appearing in this
Prospectus is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated
herein by reference, except to the extent set forth in the immediately preceding
statement.
The Company will provide without charge to each person to whom
a copy of this Prospectus is delivered, on the written or oral request of such
person, a copy of any or all documents incorporated by reference into this
Prospectus except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Eaton Corporation, Office of the Secretary, Eaton
Center, 1111 Superior Avenue, Cleveland, Ohio 44114-2584; telephone number (216)
523-5000.
--------------------------------------
-7-
<PAGE> 10
THE COMPANY
The Company is a global manufacturer of highly engineered
products which serve industrial, vehicle, construction, commercial and aerospace
markets. Principal products include electrical power distribution and control
equipment, truck transmissions and axles, engine components, hydraulic products,
ion implanters and a wide variety of controls. Headquartered in Cleveland, the
Company has approximately 54,000 employees and 155 manufacturing sites in 26
countries.
The Company is incorporated in Ohio. The principal executive
office of the Company is located at Eaton Center, 1111 Superior Avenue,
Cleveland, Ohio 44114-2584; its telephone number is (216) 523-5000.
SELLING SHAREHOLDERS
This Prospectus relates to Eaton Common Shares that have been
or may be acquired under the Plan by the Selling Shareholders. The address of
each Selling Shareholder is c/o Eaton Corporation, Eaton Center, 1111 Superior
Avenue, Cleveland, Ohio 44114-2584.
The Selling Shareholders are certain executives or former
executives of the Company. The following table sets forth the name and principal
position or positions over the past three years with the Company of each Selling
Shareholder and (a) the number of shares of Common Stock each Selling
Shareholder beneficially owned prior to this offering; (b) the number of shares
of Common Stock acquired by each Selling Shareholder pursuant to the Plan and
being registered hereby, some or all of which shares may be sold pursuant to
this Prospectus; and (c) the number of shares of Common Stock and the
percentage, if 1% or more, of the total class of Common Stock outstanding to be
beneficially owned by each Selling Shareholder following this offering, assuming
the sale pursuant to this offering of all shares acquired by such Selling
Shareholders pursuant to the Plan and registered hereby.
This table reflects all Selling Shareholders who are eligible
to resell and the number of Shares available to be resold by such Selling
Shareholders. There is no assurance that any of the Selling Shareholders will
sell any or all of the Shares offered by them hereunder.
-8-
<PAGE> 11
<TABLE>
<CAPTION>
Shares Shares
Shares Covered by Beneficially
Selling Shareholders and Principal Beneficially this Owned After this
Positions with the Company Owned Prospectus Offering
- ---------------------------------- ------------ ---------- ----------------
<S> <C> <C> <C>
John M. Carmont, Vice President 34,910 1,204 34,910
and Treasurer (retired)
Alexander M. Cutler, President 183,130 3,425 183,130
and Chief Operating Officer
Adrian T. Dillon, Vice President - 59,612 290 59,612
Chief Financial and Planning
Officer
Patrick X. Donovan, 50,782 394 50,782
Vice President - International
Earl R. Franklin, Secretary and 46,044 379 46,044
Associate General Counsel
Gerald L. Gherlein, Executive Vice 149,063 126 149,063
President and General Counsel
Stephen R. Hardis, Chairman and 236,862 7,009 236,862
Chief Executive Officer
Ronald L. Leach, Vice President - 96,478 1,294 96,478
Accounting
Derek R. Mumford, Vice President - 52,970 1,276 52,970
Information Technologies
Joseph L. Becherer, Senior Vice 36,185 962 36,185
President - Cutler-Hammer
Thomas W. O'Boyle, Senior Vice 60,691 553 60,691
President - Truck Components
Larry M. Oman, Senior Vice 78,950 1,249 78,950
President - Automotive Components
William E. Butler, Chairman and 257,337 10,322 257,337
Chief Executive Officer (Retired)
John S. Rodewig, President 169,947 4,353 169,947
and Chief Operating Officer
(Retired)
James N. Bateman, Employee 506 492 506
(Retired)
Peter F. Krol, Employee 6,050 1,223 6,050
(Retired)
Henry T. Holland, Employee 20,174 87 20,174
(Retired)
</TABLE>
-9-
<PAGE> 12
Note: No One Selling Shareholder Beneficially Owns More than 1% of the
Outstanding Eaton Common Shares. The Shares Covered by this Prospectus
Currently Are in the Form of Contingent Share Units Which Are Not
Considered to Be Shares Beneficially Owned. The Units are Converted to
Common Shares Upon Distribution to the Selling Shareholders.
-10-
<PAGE> 13
PLAN OF DISTRIBUTION
The Eaton Common Shares are being sold by the Selling
Shareholders acting as principals for their own account. The Company will not be
entitled to any proceeds from the sale of any Shares sold by the Selling
Shareholders as part of this offering.
The Eaton Common Shares may be sold from time to time to
purchasers directly by any of the Selling Shareholders. Alternatively, the
Selling Shareholders may sell the Shares in one or more transactions (which may
include block transactions) on the open market in ordinary brokerage
transactions on the New York Stock Exchange, the Chicago Stock Exchange, the
Pacific Stock Exchange, or the London Stock Exchange (on each of which the
Common Shares of the Company are listed), in privately negotiated transactions,
or in a combination of such methods of sale; each sale may be made either at
market prices prevailing at the time of such sale or at negotiated prices; some
or all of the Shares may be sold through brokers acting on behalf of the Selling
Shareholders or to dealers for resale by such dealers; and in connection with
such sales, such brokers or dealers may receive compensation in the form of
discounts, fees or commissions from the Selling Shareholders and/or the
purchasers of such shares for whom they may act as broker or agent (which
discounts, fees or commissions are not anticipated to exceed those customary in
the types of transactions involved). However, any Restricted Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus. All
expenses of registration incurred in connection with this offering are being
borne by the Company, but all brokerage commissions and other expenses incurred
by individual Selling Shareholders will be borne by each such Selling
Shareholder.
The Selling Shareholders and any dealer acting in connection
with the offering or any broker executing selling orders on behalf of the
Selling Shareholders may be deemed to be "underwriters" within the meaning of
the Securities Act, in which event any profit on the sale of any or all of the
Shares by them and any discounts or concessions received by any such brokers or
dealers may be deemed to be underwriting discounts and commissions under the
Securities Act.
Any broker or dealer participating in any distribution of
Shares in connection with this offering may be deemed to be an "underwriter"
within the meaning of the Securities Act and may be required to deliver a copy
of this Prospectus, including a Prospectus Supplement, to any person who
purchases any of the Shares from or through such broker or dealer.
LEGAL MATTERS
The legality of the shares offered hereby have been passed
upon for the Company by G. L. Gherlein, Esq., Executive Vice President and
General Counsel of the Company.
-11-
<PAGE> 14
EXPERTS
The consolidated financial statements incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K for its
fiscal year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
-12-
<PAGE> 15
SUPPLEMENTAL INFORMATION REGARDING
THE EATON INCENTIVE COMPENSATION
DEFERRAL PLAN
This Prospectus, which is comprised of a copy of the Eaton
Incentive Compensation Deferral Plan (the "Plan") of Eaton Corporation (the
"Company") and this supplemental information, relates to the registration of
100,000 Eaton Common Shares (the "Eaton Common Shares") and the associated
Rights under the Securities Act of 1933. Unless otherwise defined herein, the
terms used in this document shall have the meanings set forth in the Plan, a
copy of which is attached hereto.
ERISA
The Plan is subject to the provisions of the Employment
Retirement Income Security Act of 1974 ("ERISA") and complies with the
requirements of a "top hat" plan thereunder. Accordingly, the Plan is exempt
from the participation and vesting, funding, and fiduciary responsibility
requirements of ERISA.
ADMINISTRATION
The Plan is administered by the Compensation and Organization
Committee ("Committee") of the Board of Directors of the Company. The Committee
interprets the provisions of the Plan and adopts procedures for the
administration of the Plan which are consistent with the provisions thereof and
any rules adopted by the Committee. Plan Participants may obtain additional
information about the Plan and its administrators by directing inquiries to
Eaton Corporation, Office of the Secretary, Eaton Center, Cleveland, Ohio 44114,
(216) 523-5000.
DESCRIPTION OF SECURITIES
The Eaton Common Shares and the associated Rights are
registered under Section 12 of the 1934 Act and, accordingly, no description is
provided hereunder.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933.
-1-
<PAGE> 16
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files periodic reports, proxy statements, and other
information with the Securities and Exchange Commission (the "Commission"). All
reports, proxy statements, and other information filed by the Company with the
Commission can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, or at the regional offices of
the Commission located at 7 World Trade Center, Thirteenth Floor, New York, New
York 10048, and The Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a public access site on the Internet through the World Wide Web at
which site reports, information statements and other information, including all
electronic filings, may be viewed. The Internet address of such World Wide Web
site is http://www.sec.gov.
The following documents heretofore filed with the Commission
are incorporated herein by reference and made a part hereof: (i) the Company's
Annual Report on Form 10-K filed with the Commission for the Company's fiscal
year ended December 31, 1995, (ii) all other reports filed by the Company
pursuant to Section 13(a) or 15(d) of the 1934 Act since December 31, 1995,
(iii) a description of Eaton Common Shares and the associated Rights set forth
in the Company's Registration Statement filed with the Commission, as amended to
date, pursuant to Section 12 of the 1934 Act. All reports and other documents
subsequently filed by the Company pursuant to Sections 13, 14 and 15(d) of the
1934 Act prior to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
The Company undertakes to provide without charge to each
person to whom a copy of this document has been delivered, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
herein by reference (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to Eaton Corporation, Office of the
Secretary, Eaton Center, Cleveland, Ohio 44114, telephone number (216) 523-5000.
-2-
<PAGE> 17
Each person who receives this document will simultaneously
receive the Company's most recent Annual Report. Additionally, the Company will
send to each Plan participant a copy of every report, proxy statement, and
other communications distributed by the Company to its shareholders no later
than the time such material is sent to shareholders.
PURCHASE OF SECURITIES PURSUANT TO THE PLAN
Upon payment of Common Share Retirement Compensation (as
defined under the Plan) in Eaton Common Shares, the share units standing to the
Participant's credit will be converted to the same number of Eaton Common Shares
for distribution to the Participant. Eaton Common Shares may be purchased on the
open market to pay this Common Share Retirement Compensation. Eaton Common
Shares also may be acquired from trusts established by the Company in order to
fund its obligation under the Plan as well as other plans maintained by the
Company.
ADDITIONAL INFORMATION REGARDING INVESTMENTS
As noted in the Plan, a Participant's deferred compensation
allocated to Common Share Retirement Compensation is based on Eaton Common
Shares. A summary of the investment performance for Eaton Common Shares is set
forth below:
EATON CORPORATION COMMON SHARES
HISTORICAL MARKET PRICE DATA
<TABLE>
<CAPTION>
Quarter-End High Low Close
Date ---- --- -----
- -----------
<S> <C> <C> <C>
03/31/94 $62.125 $50.375 $57.875
06/30/94 $58.750 $49.875 $52.000
09/30/94 $54.625 $45.750 $47.500
12/30/94 $54.250 $43.875 $49.500
03/31/95 $55.875 $45.250 $54.250
06/30/95 $61.250 $51.875 $58.125
09/29/95 $62.500 $52.375 $53.000
12/29/95 $56.250 $49.500 $53.625
03/29/96 $61.875 $50.375 $60.250
06/28/96 $62.375 $56.875 $58.625
09/30/96 $61.250 $53.000 $60.375
12/30/96 $70.875 $57.750 $69.750
02/27/97 $72.625 $67.250 $72.625
03/13/97 $73.625 $72.625 $73.125
</TABLE>
-3-
<PAGE> 18
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the federal income tax
treatment which will generally apply with respect to amounts of Incentive
Compensation deferred under the Plan. Because the following is only a brief
summary, Participants should not rely thereon for individual tax advice, as each
taxpayer's situation and the consequences of any particular transaction will
vary depending upon the specific facts and circumstances involved. Each taxpayer
is advised to consult with his or her own tax advisor for particular federal, as
well as state and local, income and any other tax advice.
Under existing federal income tax provisions, a Participant
who elects to defer receipt of an amount of Incentive Compensation will not be
subject to current federal income tax on the amount deferred, and the Company
will not be entitled to a current federal income tax deduction for the deferred
amount. In addition, the Participant will not be subject to current federal
income tax on dividend equivalents credited to his or her Common Share
Retirement Compensation Account, and the Company will not be entitled to a
current federal income tax deduction for such amounts.
A Participant, or his or her beneficiaries, will be subject to
federal income tax on amounts distributed from the Plan at the time the amounts
are actually or constructively received by the recipient, and the Company
generally will be entitled to a federal income tax deduction at the time of the
distribution. The Company's deduction for such amounts, together with all other
compensation, may be limited under Code Section 162(m) to $1 million (per
person) annually. This annual limit generally applies only to non-performance
based compensation paid to the Chief Executive Officer and the other four most
highly compensated officers.
The Plan provides in certain circumstances for accelerated
distributions in the event of a change in ownership or control of the Company.
In that event and depending upon the individual circumstances of the recipient,
certain amounts with respect to such distribution may constitute "excess
parachute payments" under the "golden parachute" provisions of the Code.
Pursuant to these provisions, a recipient will be subject to a 20% excise tax on
any "excess parachute payments," and the Company will be denied any deduction
with respect to such payment. The Company has agreed to "gross-up" the recipient
with respect to any excise tax imposed. Recipients of distributions should
consult their tax advisors as to whether accelerated distribution of amounts
under the Plan in connection with a change of ownership or control of the
Company would give rise to an excess parachute payment.
-4-
<PAGE> 19
ASSIGNMENT OF PARTICIPANT'S INTEREST IN PLAN ASSETS
Generally, a participant's interest in the Plan is
non-assignable and non-transferable. In addition, a participant may not pledge
his or her plan interest and a participant's creditors cannot claim his or her
interests in the Plan to satisfy the participant's debts.
-5-
