As filed with the Securities and Exchange Commission on June 1, 1998.
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------------
AON CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 36-3051915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
--------------------------------------
AON STOCK AWARD PLAN (as amended and restated through 1997)
AON STOCK OPTION PLAN (as amended and restated through 1997)
AON 1998 EMPLOYEE STOCK PURCHASE PLAN
RATH & STRONG, INC. EMPLOYEES' STOCK BONUS PLAN
(Full title of the plans)
-------------------------------------
Raymond I. Skilling, Esq.
Executive Vice President and
Chief Counsel Copy to:
123 North Wacker Drive Jerome S. Hanner, Senior Counsel
Chicago, Illinois 60606 Aon Corporation
(Name and address of agent 123 North Wacker Drive
for service) Chicago, Illinois 60606
(312) 701-3025
(Telephone Number, including
area code, of agent for service)
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
|Title of |Amount to Be |Proposed Maximum |Proposed Maximum |Amount of |
|Securities to be |Registered(1) |Offering Price Per |Aggregate Offering |Registration Fee(2) |
|Registered | |Share(2) |Price(2) | |
| | | | | |
|------------------------|----------------------|----------------------|----------------------|----------------------|
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
<S> <C> <C> <C> <C>
|Common Stock | 3,575,500 | $64.06 |$229,014,500.00 | $67,560.00 |
|$1.00 par value per |Aon Stock Award Plan | | | |
|share |(as amended and | | | |
| |restated through | | | |
| |1997) | | | |
|------------------------|----------------------|----------------------|----------------------|----------------------|
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
|Common Stock | 4,000,000 | $64.06 |$256,240,000.00 | $75,591.00 |
|$1.00 par value per |Aon Stock Option | | | |
|share |Plan (as amended and | | | |
| |restated through | | | |
| |1997) | | | |
|------------------------|----------------------|----------------------|----------------------|----------------------|
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
|Common Stock | 5,000,000 | $64.06 |$320,300,000.00 | $94,489.00 |
|$1.00 par value per |Aon 1998 Employee | | | |
|share |Stock Purchase Plan | | | |
|------------------------|----------------------|----------------------|----------------------|----------------------|
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
|Common Stock | 57,654 | $64.06 | $3,693,316.00 | $1,090.00 |
|$1.00 par value per |Rath & Strong | | | |
|share |Employees' Stock | | | |
| |Bonus Plan | | | |
|------------------------|----------------------|----------------------|----------------------|----------------------|
|------------------------|----------------------|----------------------|----------------------|----------------------|
| | | | | |
| | | | |Total Fees: |
| | | | | $238,730.00 |
|------------------------|----------------------|----------------------|----------------------|----------------------|
<FN>
(1) Pursuant to Rule 416 under the Securities Act of 1933, includes such
indeterminant number of shares as may be issuable by reason of the
operation of the anti-dilution provisions of the plans listed below.
(2) Estimated solely for the purpose of calculating the registration fee
and, pursuant to Rule 457(h) under the Securities Act of 1933, based
upon the average of the high and low sale prices of the Common Stock of
the Registrant on the New York Stock Exchange on May 27, 1998.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 have been or will be sent or given to employees as specified by Rule
428(b)(1) under the Securities Act of 1933, as amended.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in the
registration statement:
(c) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 filed pursuant to Section 13(a)
of the Securities Exchange Act of 1934.
(d) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934.
(e) All other reports filed by the Registrant pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934 since
December 31, 1997.
(f) The description of Aon Corporation common stock, $1.00 par
value per share (the "Common Stock") contained in the
Registrant's registration statement on Form 8-A filed under
the Securities Exchange Act of 1934 (File No. 1-7933),
including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant pursuant to Section
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all shares offered
have been sold or which deregisters all shares then remaining unsold, shall be
deemed to be incorporated by reference in the registration statement and to be
part hereof from the date of filing of such documents.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL
The validity of the issuance of the Common Stock offered pursuant to
the plans registered hereunder will be passed upon for the Registrant by Jerome
S. Hanner, Senior Counsel of the Registrant. As of May 27, 1998, Mr. Hanner
owned 4,681 shares of Common Stock.
II-1
<PAGE>
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation provides that the
Registrant shall indemnify each director and officer of the Registrant to the
fullest extent permitted by law, subject to the limitations set forth in its
By-Laws. The By-Laws provide that the Registrant shall indemnify to the fullest
extent permitted by law any person made or threatened to be made a party to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Registrant or serves or served at the request of the Registrant
any other enterprise as a director or officer.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of directors and officers under certain
circumstances, as therein set forth.
Item 8. EXHIBITS
The following are filed as exhibits to this registration statement:
4.1 Second Restated Certificate of Incorporation of the Registrant --
incorporated by reference to Exhibit 3(a) to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1991.
4.2 Certificate of Amendment of the Registrant's Second Restated
Certificate of Incorporation -incorporated by reference to Exhibit 3 to
the Registrant's Quarterly Report on Form 10-Q for the quarter ending
March 31, 1994.
4.3 Bylaws of the Registrant -- incorporated by referenced to Exhibit (d)
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1982.
4.4 Aon Stock Award Plan (as amended through 1997) - incorporated by
reference to Exhibit 10(b) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.
4.5 Aon Stock Option Plan (as amended through 1997) -- incorporated by
reference to Exhibit 10(a) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.
4.6 Aon 1998 Employee Stock Purchase Plan -- incorporated by reference to
Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998.
4.7 Rath & Strong, Inc. Employees' Stock Bonus Plan.
II-2
<PAGE>
5. Opinion of Jerome S. Hanner, Senior Counsel of the Registrant.
15. Acknowledgment of Ernst & Young LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Jerome S. Hanner (contained in the opinion filed as Exhibit
5 to the registration statement).
Item 9. UNDERTAKINGS
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 (the "Act"), each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-3
<PAGE>
(4) That, for the purposes of determining any liability under the Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 6 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on May 27, 1998.
Aon Corporation
By: /S/ PATRICK G. RYAN
-----------------------------
Patrick G. Ryan, Chairman,
President and Chief
Executive Officer
Each person whose signature appears below constitutes and appoints
Patrick G. Ryan, Raymond I. Skilling, and Jerome S. Hanner, and each of them as
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, pace and stead, in any and all
capacities, to sign any and all amendments to this registration statement, and
to file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement and the foregoing power of attorney has been signed by
the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ PATRICK G. RYAN Chairman, May 27, 1998
- ----------------------
(Patrick G. Ryan) President, Chief Executive
Officer and Director
(Principal Executive Officer)
II-5
<PAGE>
/S/ DANIEL T. CARROLL
- ----------------------
(Daniel T. Carroll) Director May 27, 1998
- ----------------------
(Franklin A. Cole) Director ________, 1998
/S/ EDGAR D. JANNOTTA
- ----------------------
(Edgar D. Jannotta) Director May 27, 1998
/S/ PERRY J. LEWIS
- ----------------------
(Perry J. Lewis) Director May 27, 1998
/S/ ANDREW J. MCKENNA
- ----------------------
(Andrew J. McKenna) Director May 27, 1998
/S/ NEWTON N. MINOW
- ----------------------
(Newton N. Minow) Director May 27, 1998
/S/ RICHARD C. NOTEBAERT
- ----------------------
(Richard C. Notebaert) Director May 27, 1998
/S/ DONALD S. PERKINS
- ----------------------
(Donald S. Perkins) Director May 27, 1998
/S/ JOHN W. ROGERS, JR.
- ----------------------
(John W. Rogers, Jr.) Director May 27, 1998
/S/ GEORGE A. SCHAEFER
- ----------------------
(George A. Schaefer) Director May 27, 1998
II-6
<PAGE>
/S/ RAYMOND I. SKILLING
- ----------------------
(Raymond I. Skilling) Director May 27, 1998
/S/ FRED L. TURNER
- ----------------------
(Fred L. Turner) Director May 27, 1998
/S/ ARNOLD R. WEBER
- ----------------------
(Arnold R. Weber) Director May 27, 1998
- ----------------------
(Carolyn Y. Woo) Director ________, 1998
/S/ HARVEY N. MEDVIN
- ----------------------
(Harvey N. Medvin) Executive Vice President and May 27, 1998
Chief Financial Officer (Principal
Financial and Accounting Officer)
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Second Restated Certificate of Incorporation of
the Registrant --incorporated by reference to
Exhibit 3(a) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991.
4.2 Certificate of Amendment of the Registrant's
Second Restated Certificate of Incorporation --
incorporated by reference to Exhibit 4 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ending March 31, 1994.
4.3 Bylaws of the Registrant -- incorporated by
referenced to Exhibit (d) to the Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1982.
4.4 Aon Stock Award Plan (as amended and restated
through 1997) -- incorporated by reference to
Exhibit 10(b) to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
4.5 Aon Stock Option Plan (as amended and restated
through 1997) incorporated by reference to Exhibit
10(a) to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.
4.6 Aon 1998 Employee Stock Purchase Plan -
incorporated by reference to Exhibit 10 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998.
4.7 Rath & Strong, Inc. Employees' Stock Bonus Plan.
5 Opinion of Jerome S. Hanner, Senior Counsel of the
Registrant.
15 Acknowledgment of Ernst & Young LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Jerome S. Hanner (contained in the
opinion filed as Exhibit 5 to the registration
statement).
II-8
EXHIBIT 4.7
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
TRUST AGREEMENT
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
THE TRUST ........................................................ 2
1.01 Purpose .................................................. 2
1.02 Creation of Trust ........................................ 2
1.03 Interpretation of Trust Agreement ........................ 2
ARTICLE II
DEFINITIONS. ..................................................... 3
2.01 "Account" ................................................ 3
2.02 "Affiliated Company" ..................................... 3
2.03 "Agreement" .............................................. 3
2.04 "Allocation Date" ........................................ 3
2.05 "Anniversary Date" ....................................... 3
2.06 "Beneficiary" ............................................ 4
2.07 "Board of Directors" ..................................... 4
2.08 "Company" ................................................ 4
2.09 "Compensation" ........................................... 4
2.10 "Effective Date" ......................................... 4
2.11 "Employee" ............................................... 5
2.12 "Hour of Service" ........................................ 5
2.13 "Member" ................................................. 6
2.14 "One-Year Break in Service" .............................. 6
2.15 "Plan" ................................................... 6
2.16 "Plan Year" .............................................. 6
2.17 "Semi-Annual Entry Date" ................................. 7
2.18 "Stock" .................................................. 7
2.19 "Trust" .................................................. 7
2.20 "Trustees" ............................................... 7
2.21 "Year of Eligibility Service" ............................ 7
2.22 "Year of Vesting Service" ................................ 7
ARTICLE III
MEMBERSHIP ....................................................... 8
3.01 Eligibility for Membership .............................. 8
3.02 Determination of Eligibility ............................ 8
3.03 Duration of Membership; Reemployment .................... 8
3.04 Unpaid Leaves of Absence ................................ 8
(i)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE IV
CONTRIBUTIONS .................................................... 9
4.01 Company's Contributions ................................. 9
4.02 Computation of Contributions ............................ 10
4.03 Payment of Contribution ................................. 10
4.04 Source of Contributions ................................. 10
4.05 Reversion of Certain Contributions ...................... 10
ARTICLE V
MEMBERS' ACCOUNTS ................................................ 11
5.01 Maintenance of Accounts ................................. 11
5.02 Compensation Schedule ................................... 11
5.03 Allocation of Contributions ............................. 12
5.04 Allocation of Forfeitures ............................... 12
5.05 Valuation of Assets Other Than Stock .................... 12
5.06 Allocation of Trust Assets Other Than Stock ............. 13
5.07 Distributions and Forfeitures ........................... 14
5.08 Limitations on Allocations .............................. 14
ARTICLE VI
BENEFITS ......................................................... 16
6.01 Restrictions on Payments and Distributions .............. 16
6.02 Retirement at or After Age 60 ........................... 16
6.03 Disability Retirement ................................... 16
6.04 Death Benefits .......................................... 17
6.05 Termination of Employment Prior to Retirement or Death .. 18
6.06 Reemployment ............................................ 19
6.07 Manner and Timing of Distributions ...................... 21
6.08 Put Option .............................................. 23
6.09 Withdrawals During Employment ........................... 25
6.10 Discharge of Trustees' Obligations to Make Payment ...... 25
ARTICLE VII
AMENDMENT AND TERMINATION ........................................ 26
7.01 Right to Amend or Terminate ............................. 26
7.02 Amendment for Tax Exemption ............................. 26
(ii)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
7.03 Liquidation of Trust in Event of Termination ............ 26
7.04 Termination of Plan and Trust ........................... 27
ARTICLE VIII
THE TRUSTEES ..................................................... 27
8.01 Trustees ................................................ 27
8.02 Powers of Trustees ...................................... 28
8.03 Investments ............................................. 28
8.04 Method of Purchasing, Holding and Selling Stock of
the Company ............................................. 28
8.05 Exercise of Voting Rights ............................... 29
8.06 Power to Borrow ......................................... 29
8.07 Reliance on Trustees as Owner ........................... 30
8.08 Liquidation of Assets ................................... 30
8.09 Evidence on which the Trustees may Act .................. 30
8.10 Action by Trustees ...................................... 31
8.11 Discretionary Action .................................... 31
8.12 Employment of Agents .................................... 31
8.13 Records and Accounting .................................. 32
8.14 Payment of Taxes ........................................ 32
8.15 Compensation and Expenses of Trustees ................... 33
8.16 Resignation or Removal of Trustees ...................... 33
8.17 Indemnification ......................................... 34
ARTICLE IX
THE COMPANY ...................................................... 34
9.01 Powers of the Company ................................... 34
9.02 No Contract of Employment ............................... 34
9.03 No Contract to Maintain Plan ............................ 34
9.04 Liability of Company .................................... 35
9.05 Action by Company ....................................... 35
9.06 Successor to Business of Company ........................ 35
9.07 Dissolution of the Company .............................. 36
ARTICLE X
ESOP LOANS ....................................................... 36
10.01 ESOP Loan ............................................... 36
10.02 Use of ESOP Loan Proceeds ............................... 36
10.03 Terms and Conditions .................................... 37
(iii)
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
10.04 Collateral for ESOP Loan ................................ 38
10.05 Suspense Accounts ....................................... 38
ARTICLE XI
ADDITIONAL PARTICIPATING COMPANIES ............................... 38
11.01 Participation ........................................... 38
11.02 Entry Date .............................................. 39
11.03 Administration .......................................... 39
11.04 Contributions and Forfeitures ........................... 39
11.05 Termination ............................................. 40
ARTICLE XII
TOP-HEAVY PROVISIONS ............................................. 40
12.01 Article Controls ........................................ 40
12.02 Definitions ............................................. 40
12.03 Top-Heavy Status ........................................ 42
12.04 Minimum Contribution .................................... 42
12.05 Termination of Top-Heavy Status ......................... 43
ARTICLE XIII
MISCELLANEOUS .................................................... 43
13.01 Spendthrift Provision ................................... 43
13.02 Appointment of Person to Receive Payment ................ 44
13.03 Construction ............................................ 44
13.04 Impossibility of Performance ............................ 44
13.05 Named Fiduciaries; Delegation of Responsibility ......... 44
13.06 Definition of Words ..................................... 45
13.07 Titles .................................................. 45
13.08 Merger or Consolidation ................................. 45
13.09 Service with Acquired Corporations ...................... 46
13.10 Claims Procedure ........................................ 46
13.11 Special Provisions for Certain Leased Employees ......... 47
13.12 Execution of Agreement .................................. 47
(iv)
<PAGE>
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
---------------------------
Trust Agreement
---------------
(Amended and Restated Effective January 1, 1989)
----------------------------------------------
The Trust Agreement made as of the 17th day of September, 1980, by and
between RATH & STRONG, INC., a Massachusetts corporation having its principal
place of business in Lexington, Massachusetts (the "Company"), and Arnold 0.
Putnam of Wellesley, Massachusetts, Romeyn Everdell of Boston, Massachusetts,
Raymond J. Arris of York Harbor, Maine, E. Robert Barlow of Winchester,
Massachusetts, Woodrow W. Chamberlain of Dallas, Texas, Dan Ciampa of Acton,
Massachusetts, and Gerald H. Dorman of Hingham, Massachusetts (the "Trustees")
is effective on and after January 1, 1989, amended and restated in its entirety
as follows:
W I T N E S S E T H T H A T:
WHEREAS, the Company recognizes the contribution being made to the
successful operation of its business by its employees and desires to reward such
contribution by establishing a stock bonus plan for its employees who are or
shall hereafter become eligible as participants under the plan embodied herein;
WHEREAS, several original and/or successor Trustees, have resigned and
are replaced hereunder by successor Trustees; and
WHEREAS, the Company desires to amend and restate the Plan and Trust,
in its entirety, effective as of January 1, 1989;
NOW, THEREFORE, the parties hereto, each in consideration of the
covenants, agreements and declarations of the other, mutually covenant, agree
and declare as follows:
<PAGE>
ARTICLE I
---------
THE TRUST
---------
1.01 Purpose. The Plan and Trust embodied in this Agreement are created
-------
for the sole purpose of providing retirement and other benefits in the form of
deferred stock bonuses to the eligible Employees. The Plan is hereby designated
as an employee stock ownership plan within the meaning of Section 407(d)(6) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
Section 4975(e)(7) of the Internal Revenue Code of 1986, as amended (the "Code")
and as such is designed to invest primarily in qualifying employer securities.
Except as expressly authorized in Section 4.05, in no event shall the corpus or
income of the Plan be paid or diverted to the Company or be used for any purpose
other than the exclusive benefit of the Members or their Beneficiaries;
provided, however, that neither the use of qualifying employer securities held
by the Plan as a pledge, as collateral or otherwise, to secure any ESOP Loan
pursuant to Article X nor any subsequent loss of such securities in connection
with a default of such loan shall constitute a violation of this provision.
1.02 Creation of Trust. There has been hereby established hereunder a
-----------------
trust known as the "RATH & STRONG, INC. EMPLOYEES' STOCK BONUS TRUST." The
Trustees shall receive any contributions paid to the Trust in cash or in other
property, and all contributions so received, together with the income therefrom,
shall be held, managed, and administered as a fund in trust pursuant to the
terms of this Agreement. The Trustees hereby affirm their acceptance of the
Trust created hereunder and agree to perform the provisions of this Agreement on
their part to be performed.
1.03 Interpretation of Trust Agreement. The Trust is established for
----------------------------------
the exclusive benefit of the eligible Employees and their Beneficiaries and, so
far as possible, this Agreement shall be interpreted in a manner consistent with
this intent, with the purposes expressed in Section 1.01, and with the intent of
the Company that the Trust established hereunder shall satisfy those provisions
of the Code and ERISA.
- 2 -
<PAGE>
ARTICLE II
----------
DEFINITIONS
-----------
Whenever used herein, unless the context clearly indicates otherwise,
the following words shall have the following meanings:
2.01 "Account" means the account established and maintained for each
Member pursuant to Article V.
2.02 "Affiliated Company" means (a) a member of a controlled group of
corporations of which Rath & Strong, Inc. is a member, (b) a corporation or an
unincorporated trade or business which is under common control with Rath &
Strong, Inc. as determined in accordance with Section 414(c) of the Code and
regulations promulgated thereunder, (c) a member of an "affiliated service
group" (within the meaning of Section 414(m) of the Code) of which Rath &
Strong, Inc. is a member or (d) an organization which is required to be
aggregated with Rath & Strong, Inc. pursuant to regulations promulgated under
Section 414(o) of the Code. For purposes hereof, a "controlled group of
corporations" shall mean a controlled group of corporations as defined in
Section 1563(a) of the Code, determined without regard to Section 1563(a)(4) and
(e)(3)(C).
2.03 "Agreement" means this Agreement as the same may be amended from
time to time.
2.04 "Allocation Date" means the last day of the Plan Year and any
other date which the Trustees in their sole discretion may select.
2.05 "Anniversary Date" means the first Saturday following December 25
of each year.
- 3 -
<PAGE>
2.06 "Beneficiary" means the person or persons (including the trustee
of a trust) designated pursuant to the provisions of Section 6.04 of this
Agreement to receive distribution of such Member's share upon his death, and
includes a co-beneficiary or a contingent beneficiary. The term "Beneficiary"
shall also include a Member's surviving spouse if such spouse is deemed the
Member's Beneficiary pursuant to Section 6.04.
2.07 "Board of Directors" means the board of directors of the Company
in office from time to time.
2.08 "Company" means RATH & STRONG, INC., or any successor to all or a
major portion of its business which adopts and continues the Plan and Trust
pursuant to Section 9.06.
2.09 "Compensation" means the amount paid by the Company to an Employee
as salary, wages, overtime, bonuses and sales commissions as well as the amount
of any salary adjustment contributions made by the Company to the Rath & Strong,
Inc. Employees' Savings Plan on behalf of such Employee pursuant to Section
401(k) of the Code and any amounts which would have been paid to an Employee as
regular compensation but for an election by an Employee under Section 125 of the
Code, but does not include contributions or benefits under this Plan or any
other employee benefit plan maintained by the Company. A Member's Compensation
for any Plan year shall not be taken into account for any purpose of the Plan to
the extent that such Compensation exceeds $200,000 (subject to cost-of-living
adjustments made by the Secretary of Treasury or his delegate under Section
401(a)(17) of the Code). In determining the Compensation of a Member for
purposes of this limitation, the rules of Section 414(q)(6) of the Code shall
apply, except in applying such rules the term "family" shall include only the
spouse of the Member and any lineal descendants of the Member who have not
attained age 19 before the close of the year.
2.10 "Effective Date" means January 1, 1989, the effective date of this
amended and restated Agreement, except as otherwise provided.
- 4 -
<PAGE>
2.11 "Employee" means any person who is employed by the Company. An
Employee's employment shall be deemed to have commenced on the date on which he
first performs an Hour of Service as an Employee.
2.12 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Company or an Affiliated Company.
These hours shall be credited to the Employee for the twelve (12) consecutive
month computation period or computation periods in which duties are performed;
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Company or an Affiliated Company on account of a period of time
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty or leave of absence; provided that no
more than 501 Hours of Service shall be credited under this paragraph with
respect to any single continuous period of absence in which no duties are
performed. Hours under this paragraph shall be calculated and credited pursuant
to Section 2530.200b-2(b) and (c) of the Department of Labor Regulations which
are incorporated herein by this reference;
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company or an Affiliated Company.
The same hours of service shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These hours
shall be credited to the Employee for the twelve (12) consecutive month
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made;
and
(d) Each hour for which an Employee is credited pursuant to
Section 3.04;
- 5 -
<PAGE>
(e) Solely for purposes of determining whether a One-Year Break
in Service has occurred in a twelve (12) consecutive month computation period,
an individual who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have been credited
to such individual but for such absence, or in any case in which such hours
cannot be determined, eight (8) Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence: (i) by reason of the pregnancy of the individual; (ii)
by reason of the birth of the child of the individual; (iii) by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual; or (iv) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The total number
of hours credited as Hours of Service under this paragraph (e) by reason of any
one such pregnancy or placement shall not exceed 501 hours. Hours of Service
credited under this paragraph (e) shall be credited in the first twelve
consecutive month computation period in which such crediting is necessary to
prevent a One-Year Break in Service.
2.13 "Member" means any Employee who is eligible to participate in the
Plan as determined under Article III of this Agreement.
2.14 "One-Year Break in Service" means any twelve consecutive month
computation period during which an Employee has not completed or been credited
with more than 500 Hours of Service due to a termination of his employment with
the Company, but only if such Member has not been reemployed during such
computation period.
2.15 "Plan" means the "RATH & STRONG, INC. EMPLOYEES' STOCK BONUS PLAN"
as set forth herein, as it may be amended from time to time.
2.16 "Plan Year" means the fiscal year of the Company and the Trust,
being the 52-53 week period ending on the Anniversary Date of each year.
- 6 -
<PAGE>
2.17 "Semi-Annual Entry Date" means the first day of each Plan Year and
the date six (6) months after the first day of each Plan Year.
2.18 "Stock" means shares of the voting common stock of the Company.
2.19 "Trust" means the Trust fund created by this Agreement and held by
the Trustees hereunder, including all income, profits and increments thereon.
2.20 "Trustees" means the trustees herein named and any duly appointed
successor trustee or trustees.
2.21 "Year of Eligibility Service" for any Employee means (a) the
twelve (12) consecutive month computation period beginning on the date he first
becomes an Employee (whether for the first time or upon reemployment), but only
if he has 1,000 or more Hours of Service during such period and (b) each Plan
Year commencing after the Employee's date of employment or reemployment during
which such Employee is credited with 1,000 or more Hours of Service. In
determining an Employee's Years of Eligibility Service, any periods of
employment with an Affiliated Company shall be included.
2.22 "Year of Vesting Service" for any Employee means each Plan Year,
and each comparable 52-53 week period prior to December 30, 1979, during which
such Employee is, or has been, credited with at least 1,000 Hours of Service. In
determining an Employee's Years of Eligibility Service, any periods of
employment with an Affiliated Company shall be included. All Years of Vesting
Service shall be included in determining an Employee's vested percentage under
Section 6.05.
- 7 -
<PAGE>
ARTICLE III
-----------
MEMBERSHIP
----------
3.01 Eligibility for Membership. Each Employee who is a Member on the
--------------------------
Effective Date shall continue to be a Member under the Plan. Each other
Employee, including each future Employee, regardless of age, shall become a
Member under the Plan on the Semi-Annual Entry Date coincident with or next
following the date on which he completes one (1) Year of Eligibility Service.
Notwithstanding the foregoing, the execution of a stock restriction agreement
(in the form of the agreement attached as Exhibit A to the Plan) requiring the
Employee to offer to sell all shares of Stock which he receives pursuant to the
Plan to the Company under certain specified circumstances shall be a condition
of eligibility for each Employee who would otherwise become a Member.
3.02 Determination of Eligibility. The determination of an Employee's
----------------------------
eligibility for membership under the Plan shall be made by the Trustees from the
Company's records, and the Trustees' decisions on these matters shall be
conclusive and binding upon all persons.
3.03 Duration of Membership; Reemployment. A Member shall continue as
-------------------------------------
an active Member until his employment with the Company is terminated and, except
as otherwise provided in Sections 5.02 and 5.03, shall cease to be an active
Member entitled to share in contributions hereunder immediately upon such
termination of employment. A former active Member shall once again become an
active Member on the date on which he again becomes an Employee of the Company.
3.04 Unpaid Leaves of Absence. Except as otherwise specifically
---------------------------
provided, an Employee who leaves the Company to enter the armed services of the
United States of America and who returns to its employ at or before the
expiration of ninety (90) days after the date on which he is first entitled to
be so released (or at such later date as the Company may approve or as may be
required by law) or an Employee who, with the approval of the Company, is absent
- 8 -
<PAGE>
from work without pay and on account of sickness, temporary disability,
temporary layoff, jury duty, vacation, or for any other similar reason, shall be
credited by the Trustees with the number of Hours of Service obtained by
multiplying the number of hours in such Employee's regular work week immediately
prior to the date such absence began by the duration (in weeks) of the absence.
For purposes of granting leaves of absence and determining the number of
credited hours, Employees in similar circumstances shall be treated alike in
accordance with the standards set forth in Section 8.11. Nothing herein
contained shall restrain the Company's right to terminate the employment of any
Employees whether or not during a leave of absence. If any Employee shall fail
to return from any such absence as required by the Company in accordance with
the Plan, such Employee shall retroactively lose all credit for those Years of
Eligibility Service and Years of Vesting Service attributable to Hours of
Service previously credited to him under this Section 3.04 and such Employee
shall be deemed to have terminated employment on the date of his failure to
return from his leave of absence as required by the Company or at such later
date as may be required by applicable Federal law.
ARTICLE IV
----------
CONTRIBUTIONS
-------------
4.01 Company's Contributions. For each Plan Year, the Company shall
contribute to the Trust that amount of cash and/or that number of shares of
Stock as may be voted by the Directors; provided, however, that the Company's
contributions to the Trust for any Plan Year, when added to contributions made
by the Company for such Plan Year to all other qualified pension, profit sharing
and stock bonus plans maintained by the Company, shall not exceed the amount
which equals the maximum amount allowable as a Federal income tax deduction by
the Company for such Plan Year under applicable provisions of the Code.
Notwithstanding the foregoing, if the Plan borrows money to acquire shares of
Stock, the Company may contribute cash to the Plan at such times and in such
amounts as are necessary to enable the Plan to meet its obligations under any
such loan. In the event that any contribution made by the Company is in
- 9 -
<PAGE>
excess of the maximum amount allocable as a Federal income tax deduction by the
Company for the Plan Year, such excess contribution shall be carried over to a
subsequent Plan Year when it can be deducted from the Company's income.
4.02 Computation of Contributions. The amount of the Company's
------------------------------
contributions for each Plan Year shall be subject to final computation by the
Trustees and verification by the Company's independent public accountants. The
amount of such contributions, as computed by the Trustees and verified by such
accountants, shall be conclusive and binding on all persons.
4.03 Payment of Contribution. The Company's contributions to the Trust
-----------------------
for each Plan Year shall be made at such time or times as the Company determines
but not later than the time required by law in order for the Company to obtain a
deduction of the amount of such contributions for Federal income tax purposes as
determined under the applicable provisions of the Code.
4.04 Source of Contributions. Contributions to the Rath & Strong, Inc.
-----------------------
Employees' Stock Bonus Trust shall be received only from the Company.
Contributions by Members shall not be permitted.
4.05 Reversion of Certain Contributions. Except as otherwise provided
-----------------------------------
in Section 4.01, all contributions made by the Company hereunder shall be made
upon the condition that such contributions are fully deductible for Federal
income tax purposes. In the event that any such deduction is disallowed in whole
or in part, then the Company may direct the Trustees to return such contribution
(to the extent disallowed) to the Company at any time within the twelve (12)
month period commencing on the date of disallowance. In the event the Company
shall make a contribution hereunder on the basis of a mistake of fact, the
Company may direct the Trustees to return such contribution to the Company at
any time within the twelve (12) month period commencing on the date of
contribution.
- 10 -
<PAGE>
ARTICLE V
---------
MEMBERS' ACCOUNTS
-----------------
5.01 Maintenance of Accounts. The Trustees shall maintain a book
-------------------------
Account for each Member for the purpose of recording his interest in the Trust.
The Account of each Member shall be credited, as of each Allocation Date (except
that Company contributions and forfeitures shall be credited only as of an
Allocation Date which is also the last day of the Plan Year), with such Member's
share of Company contributions, his share of any forfeitures, and his share of
the net increase or decrease in the Trust assets by reason of any changes in the
value of the Trust assets other than Stock, any earnings on the Trust assets,
and any expenses charged against the Trust. Each Member's Account shall be in
two parts (Part A and Part B). Part A shall consist of that number of shares
representing the Member's share of the Stock (other than Stock held in a
suspense account pursuant to Article X) held by the Trust, and Part B shall
consist of that number of dollars representing the Member's share of the other
assets of the Trust. In maintaining the Accounts of Members and the parts
thereof, the Trustees shall adopt such accounting methods or make such equitable
adjustments as they determine to be necessary or appropriate as long as such
methods or adjustments are consistent with the standards set forth in this
Agreement. The Trustees shal1 maintain adequate records of the cost basis of all
shares of Stock allocated to each Member's Account. In the event that Trust
assets other than Stock are used to acquire Stock or that Stock is disposed of
in return for such other assets, the Trustees shall credit the acquired assets
to the Account of each Member in proportion to such Member's share of the
disposed assets. All determinations under this Section 5.01 shall be in the sole
discretion of the Trustees, and their decision with respect to any such matter
shall be conclusive and binding on all persons.
5.02 Compensation Schedule. As soon as practicable after the end of
----------------------
each Plan Year for which any contribution as provided for in Article IV is made
by the Company to the Trustees, the Company shall deliver to the Trustees a
schedule showing the name of each Member (a) who is an Employee on the last day
of such Plan Year and who has been credited with 1,000 or more Hours of Service
during such Plan Year or (b) who retired, became disabled or died within the
- 11 -
<PAGE>
meaning of Section 6.02, 6.03 or 6.04 during such Plan Year, and opposite the
name of each such Member the amount of his Compensation for such Plan Year,
excluding Compensation paid prior to his becoming a Member under the Plan. The
schedule shall also contain such other information as the Trustees may
reasonably require for the proper administration of the Plan and Trust.
5.03 Allocation of Contributions.
---------------------------
(a) Upon receiving the total contribution made by the Company
for any Plan Year and the schedule required to be furnished to the Trustees
pursuant to Section 5.02, and after the Account balances of the Members have
been adjusted as provided in Section 5.05 and forfeitures determined and
allocated under Section 5.04, the Trustees shall credit to the Account of each
Member whose Compensation is listed on said schedule, a portion of the total
amount of the Company's contribution for that Plan Year which bears the same
ratio to such total amount as the Member's Compensation listed on said schedule
bears to the total Compensation listed on said schedule for all Members.
(b) The fact that an allocation has been made of the Company
contribution pursuant to subsection (a) of this Section shall not operate to
vest in any Member or Beneficiary any right or interest in any specific assets
of the Trust, unless specifically stated to the contrary in this Agreement; nor
shall such allocation operate to vest any benefits in a Member or Beneficiary,
all rights to vested benefits hereunder being governed by the terms of Article
VI.
5.04 Allocation of Forfeitures. Any amounts held by the Trustees
---------------------------
representing amounts forfeited pursuant to Section 6.05(d) during the Plan Year
shall be allocated to the Members who are entitled to share in the Company
contributions for such Plan Year on the same basis as that described in Section
5.03 for the allocation of Company contributions to the Trust.
5.05 Valuation of Assets Other Than Stock. As of each Allocation Date,
------------------------------------
the Trustees shall determine the total net worth of the Trust assets (other than
Stock) by evaluating all of such
- 12 -
<PAGE>
assets and its liabilities (other than liabilities covered by Article X) as of
that date, but excluding from the assets (i) the amount of the contributions
made by the Company with respect to the Plan Year which includes said Allocation
Date, and (ii) any dividends on Stock which accrued after the preceding
Allocation Date ("Current Dividends"). In determining the net worth of such
Trust assets, the Trustees shall value such Trust assets at their fair market
value and shall determine the fair market value of assets with no readily
ascertainable market value on any reasonable basis they deem appropriate. There
shall be included as of the Allocation Date, without implied limitation, income
on hand, income accrued, dividends payable but not paid, and uninvested cash,
whether income or principal; and there shall be deducted as of the Allocation
Date, without implied limitation, liabilities accrued (other than liabilities
covered by Article X). A determination by the Trustees of the fair market value
of any of the Trust assets, or of the net worth of said Trust assets, shall be
conclusive and binding upon all persons.
5.06 Allocation of Trust Assets Other Than Stock. The net worth of such
-------------------------------------------
Trust assets as determined on each Allocation Date pursuant to Section 5.05
shall be compared with the total of all amounts (other than Stock) standing to
the credit of the Accounts of all Members in the Plan as of such Allocation
Date, excluding from the Accounts of said Members any Current Dividends and, in
the case of an Allocation Date which is also the last day of a Plan Year,
forfeitures reallocated to Accounts pursuant to section 5.04 and any amounts
credited from the contribution of the Company with respect to the Plan Year
ending with said Allocation Date. The excess or deficiency of the net worth as
so compared with the total Account balances (other than Stock) for all Members,
shall be credited or charged to the Accounts of all such Members in the
proportion that each such Account balance bears to the total of all such Account
balances. After the adjustments described above, Current Dividends, if any,
shall be credited to the Account of each Member in the same proportion as the
number of shares of Stock credited to his Account (excluding, in the case of an
Allocation Date which is also the last day of the Plan Year, Stock credited from
the Company's contribution for such Plan Year) bears to the total number of such
shares credited to the Accounts of all Members.
- 13 -
<PAGE>
5.07 Distributions and Forfeitures. Whenever the Trustees shall make
------------------------------
any distribution to or in behalf of a Member in accordance with the provisions
of Article VI, and whenever a Member shall forfeit all or any portion of the
amount standing to the credit of his Account in accordance with the provisions
of Section 6.05, such Member's Account shall be charged with the amount of such
distribution or forfeiture.
In the event that a Member forfeits a portion of his Account pursuant
to Section 6.05(d), such forfeiture shall be made with respect to the various
types of assets in his Account on the following basis:
(a) such forfeiture shall first be made with respect to assets
other than Stock, if any;
(b) to the extent that such forfeiture exceeds the amount of
assets available under (a), it shall next be made with respect to Stock, if any,
which had not been released to the Member's Account from a Suspense Account
established pursuant to Article X; and
(c) to the extent that such forfeiture exceeds the amount of
assets available under (a) and (b), it shall be made with respect to any other
Stock credited to the Member's Account.
5.08 Limitations on Allocations. Notwithstanding anything herein above
--------------------------
to the contrary, effective December 27, 1987, the amount credited to the Account
of any Member for any Plan Year pursuant to Section 5.03 or 5.04 above or this
Section 5.08 shall be reduced to the extent that such amount would cause the
Company contributions, employee contributions, and the forfeitures credited to
the accounts of such Member under the Plan and under any other defined
contribution plan maintained by the Company or an Affiliated Company for such
Plan Year, to exceed the lesser of
- 14 -
<PAGE>
(A) $30,000 (or if greater, one-fourth of the defined benefit
dollar limitation set forth in Section 415(b) of the Code, as adjusted
pursuant to Section 415(d) of the Code), or
(B) twenty-five percent (25%) of such Member's compensation
(within the meaning of Section 415 of the Code and the regulations
thereunder) from the Company and any Affiliated Company for such Plan
Year.
Any reductions required pursuant to the foregoing sentence shall first
be made proportionally against allocations of Company contributions and
forfeitures to such Member's accounts under this Plan and the Rath & Strong,
Inc. Employees' Profit Sharing Plan, and finally (if necessary) against
allocations of Company contributions under the Rath & Strong, Inc. Employees'
Savings Plan. Any reductions to be made in such Member's Account under this Plan
shall be allocated and credited pursuant to the procedures outlined in Section
5.03 above to the Accounts of remaining Members exclusive of any other Member
for whom a reduction in the Company's contributions and forfeitures for such
Plan Year has been required pursuant to this Section 5.08. Any amount which
cannot be allocated pursuant to the preceding sentence shall be held unallocated
by the Trustees and shall be treated as if it were a forfeiture to be allocated
pursuant to Section 5.04 with respect to the succeeding Plan Year.
Notwithstanding the foregoing, if no more than one-third (1/3) of the
Company contributions for any Plan Year are allocated to the group of Members
consisting of highly compensated employees (within the meaning of Section 414(q)
of the Code), (1) Company contributions applied to the repayment of interest on
an ESOP loan and forfeitures of Stock acquired with the proceeds of such a loan
allocated to a Member's Account shall be disregarded in determining the maximum
amount that can be allocated to his Account under this Section 5.08, and (2) the
amount described in clause (A) above for any Plan Year with respect to any
Member shall be equal to the sum of the amount described in clause (A) and the
lesser of the amount
- 15 -
<PAGE>
described in clause (A) or the amount of Stock contributed to the Plan or
purchased with cash contributed to the Plan on behalf of such Member. Clause (2)
above shall not apply to allocations for Plan Years beginning on or after
December 30, 1989.
ARTICLE VI
----------
BENEFITS
--------
6.01 Restrictions on Payments and Distributions. No shares of Stock or
------------------------------------------
other property of the Trust shall be paid out or distributed by the Trustees
except (a) for the purchase or other acquisition of Stock or other appropriate
investments, (b) for defraying the expenses, including taxes, if any, of
administering the Trust as elsewhere provided herein, (c) for the repayment of
loans or indebtedness or satisfaction of obligations incurred in connection with
loans made to the Trust or indebtedness incurred by it, (d) for the purpose of
making distributions to or for the benefit of Members in accordance with the
provisions of this Article VI, or (e) for the return of Company contributions
pursuant to Section 4.05.
All benefits payable under the Plan shall be paid or provided for
solely from the Trust, and the Company assumes no liability or responsibility
therefor.
6.02 Retirement at or After Age 60. Upon retirement of a Member, which
-----------------------------
shall be deemed to mean any termination of his employment with the Company at or
after his reaching age sixty (60), the Trustees shall distribute, in accordance
with the provisions of Section 6.07, the full amount standing to the credit of
such Member's Account.
6.03 Disability Retirement. If the Trustees shall determine, on the
----------------------
basis of such medical evidence as they may reasonably require, that a Member is
unable to continue in the employ of the Company by reason of sickness or
disability of such Member, the Trustees shall distribute, in accordance with the
provisions of Section 6.07, the full amount standing to the credit of such
- 16 -
<PAGE>
Member's Account. The Trustees' determination as to whether a Member has become
sick or disabled so as to be unable to continue in the employ of the Company
shall be conclusive and binding upon all persons.
6.04 Death Benefits.
---------------
(a) Upon the death of any Member who has a surviving spouse, the
Trustees shall distribute the full amount standing to the credit of such
Member's Account to the Member's surviving spouse, who shall be the Member's
sole Beneficiary unless the exception provided by paragraph (b) of this Section
6.04 applies.
(b) The requirement of paragraph (a) of this Section 6.04 shall
not apply if the Member elects to designate a Beneficiary other than his spouse
and his spouse irrevocably consents to such election in a writing that
acknowledges the effect of the election, including the identity of the
designated Beneficiary (which Beneficiary may not be changed without the consent
of the spouse) and the fact that such consent is irrevocable, and that is
witnessed by a notary public or a representative of the Plan, or if it is
established to the satisfaction of the Trustees that the consent of the
surviving spouse could not have been obtained because there is no spouse,
because the spouse cannot be located, or because of other circumstances
prescribed by regulations under Section 417(a)(2) of the Code.
A former spouse shall be treated as a surviving spouse to the extent
benefits must be paid to such former spouse upon the Member's death pursuant to
a qualified domestic relations order (as defined in Section 414(p) of the Code),
except that no consent shall be required from such former spouse with respect to
the designation of a Beneficiary to receive benefits not subject to said order.
(c) If, and only if, a Member is permitted under this Section
6.04 to designate a Beneficiary other than his surviving spouse, then such
Member's accounts shall be distributed
- 17 -
<PAGE>
in accordance with this paragraph (c) of Section 6.04. Such a Member shall have
the right to designate one or more Beneficiaries, including contingent
Beneficiaries, entitled to receive the amount payable in behalf of such Member
under the provisions of this Plan in the event of death. Such designation shall
be made in writing in such manner as the Trustees shall determine. A Member may
change such designation from time to time, and may revoke such designation,
provided, however, that any subsequent designation must meet the requirements of
this Section 6.04. Upon the death of any Member, the Trustees shall distribute,
for the benefit of such Member's Beneficiaries and in accordance with the
provisions of Section 6.07, the full amount standing to the credit of the
Member's Account. If a Member dies without having designated a Beneficiary, or
if none of the designated Beneficiaries survives the Member, the duly appointed
executor or administrator of the estate of such Member shall be deemed to be his
Beneficiary. If a Beneficiary entitled to receive any amount payable on behalf
of a Member under the Plan dies prior to having received the entire amount, the
undistributed balance, together with any accumulated interest thereon, shall be
distributed to such Beneficiary's estate in accordance with Section 6.07.
6.05 Termination of Employment Prior to Retirement or Death.
------------------------------------------------------
(a) If a Member's employment with the Company is terminated
under circumstances other than as provided in Sections 6.02 through 6.04, such
Member shall be entitled to a severance benefit equal to a percentage of the
amount standing to the credit of his Account, which percentage shall be based
upon his Years of Vesting Service and determined in accordance with the
following table:
Years of Percentage
Vesting Service of Account
--------------- ----------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
- 18 -
<PAGE>
Solely for purposes of this Section 6.05, in the case of an Employee
who terminates employment with the Company and immediately thereafter becomes an
employee of an Affiliated Company, such individual shall be deemed not to have
terminated his employment with the Company until he subsequently terminates his
employment with the Affiliated Company.
(b) The severance benefit determined in accordance with the
provisions of this Section 6.05 shall never be adjusted or altered in any
fashion on account of any Years Vesting Service which the Member completes upon
any reemployment with the Company, except as provided in Section 6.06.
(c) The determination of the amount to which such Member is
entitled in accordance with this Section 6.05 shall be made by the Trustees, and
the Trustees' determination shall be conclusive and binding upon all persons.
(d) Any amounts standing to the credit of a Member's Account to
which he is not entitled at the time of his termination of employment shall be
forfeited by him upon the earlier of the payment of the full amount to which
such Member is entitled under the Plan or the occurrence of five (5) consecutive
One-Year Breaks in Service by such Member. For purposes of the preceding
sentence, a terminated Member who is not entitled to receive any amount under
the Plan shall be deemed to have received the entire amount to which he is
entitled on the date his employment terminates and shall forfeit his entire
Account as of that date. The non-vested portion of a Member's Account shall be
retained in the Trust in a suspense account until forfeited in accordance with
this subsection. The suspense accounts shall not be adjusted for earnings or
losses.
6.06 Reemployment. If a terminated Member is reemployed by the Company,
------------
he shall again become a Member upon reemployment as provided in Section 3.03.
All future Company contributions on his behalf shall be credited to his Account,
and all his prior Years of Vesting Service shall be restored for the purpose of
calculating the vested portion of such Account.
- 19 -
<PAGE>
If such a terminated Member was not 100% vested under Section 6.05(a) at the
time of his prior termination, the following special provisions shall apply:
(a) If such a terminated Member is reemployed after incurring
five (5) or more consecutive One-Year Breaks in Service, he shall have no right
to the previously forfeited portion of his Account, and any undistributed vested
portion of his Account shall be held in a separate (fully vested) account until
such Member becomes 100% vested under Section 6.05(a) whereupon such separate
account shall be merged into his regular Account.
(b) If such a terminated Member is reemployed before incurring
five (5) consecutive One-Year Breaks in Service, the full amount, if any, which
was forfeited from his Account as a result of his prior termination shall be
restored to his Account, provided that no amounts have been forfeited from his
Account, or that no distribution has previously been made to such Member on
account of his prior termination of employment.
If the non-vested portion of the Member's Account has been forfeited on
account of a prior distribution to the Member, the Member shall have the right
to repay to the Trust the full amount which was distributed to him from the
Plan. Such repayment must be made before the earlier of five (5) years from the
Member's reemployment date, or the close of the first period of five (5)
consecutive Breaks in Service following the distribution. Upon such repayment,
the amount of such repayment, plus the amount which was previously forfeited,
shall be restored to the Member's Account. Such restoration shall be made
initially from amounts forfeited by other Members pursuant to Section 6.05(d)
and then, if necessary, from Company contributions. In making such restoration,
the Trustees shall first utilize any available forfeitures, then Company
contributions and finally, if necessary, the net investment earnings and gains
of the Trust.
(c) If such a terminated Member incurs his first One-Year Break
in Service prior to December 29, 1985, the provisions of the Plan as then in
effect shall control.
- 20 -
<PAGE>
6.07 Manner and Timing of Distributions.
----------------------------------
(a) Whenever a Member's Account becomes distributable pursuant
to Sections 6.02 through 6.05 hereof to such Member or his Beneficiary,
distribution of said Account shall be made by the payment of the full amount
distributable in one lump sum, in cash (to the extent of Part A of such Account)
and in shares of Stock (to the extent of Part B of such Account); provided,
however, that the Trustees may not distribute cash representing the value of
Part A of such Account unless such Member (or his Beneficiary) has been notified
that he has the right to demand that shares of Stock be distributed to him and
has failed to make such a demand by such date as the Trustees may reasonably
prescribe; and provided further that the Trustees may in any event distribute
cash in lieu of fractional shares. If cash is to be distributed in lieu of
shares of Stock, the Trustees may either sell such shares and distribute the
cash proceeds or utilize cash already held in the Trust.
(b) Whenever during any Plan Year, the amount standing to the
credit of a Member's Account becomes distributable pursuant to Sections 6.02
through 6.05, the Trustees shall distribute the number of shares of Stock and
the amount of cash, if any, due such Member or his Beneficiary hereunder as soon
as reasonably practicable after the event triggering the distribution, and any
additional amount credited to his Account for the year of retirement, disability
or death shall be distributed at such later time as that amount is ascertained.
(c) Notwithstanding any provision elsewhere herein to the
contrary, in order to comply with Sections 401(a)(9), 401(a)(14), 411(a)(ll),
414(p) and 417 of the Code the following provisions shall apply:
(i) If a Member's aggregate Account balance to be
distributed upon retirement, disability or severance under
Section 6.02, 6.03 or 6.05 are greater than $3,500, such
Account shall not be distributed in whole or in
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<PAGE>
part until the Member attains age sixty-two (62) or dies,
whichever is earlier, unless the Member consents to such
earlier distribution in writing.
(ii) In no event shall distribution of benefits to a Member
begin later than the April 1 next following the calendar
year in which such Member (A) attains age seventy and
one-half (70-1/2), or (B) terminates employment with the
Company, whichever is later. Clause (B) shall not apply in
the case of a Member who is a "5% owner" (within the meaning
of Section 416(i)(1)(B)(i) of the Code) at any time during
the five-Plan-Year period ending in the calendar year in
which the Member attains age 70-1/2 and in any case, shall
not apply to any Member who attains age 70-1/2 after
December 31, 1987. The date on which distribution is
required to begin under this subsection (ii) shall be known
as the "Required Distribution Date".
(iii) If a Member dies before his Required Distribution
Date, his entire interest shall be paid to the Member's
Beneficiary in a lump sum no later than December 31 of the
calendar year containing the fifth (5th) anniversary of the
Member's death. For purposes of this subsection (iii), a
Member's designated Beneficiary shall be determined in
accordance with regulations promulgated under Section
401(a)(9) of the Code.
(iv) In no event (unless the Member otherwise consents in
writing) shall the distribution of a Member's Account begin
later than the sixtieth (60th) day after the close of the
Plan Year in which the later of the following events occurs:
(A) the Member's sixtieth (60th) birthday; or
- 22 -
<PAGE>
(B) the tenth (10th) anniversary of the date on which
the Member first became a Member; or
(C) the Member's termination of employment with the
Company.
6.08 Put Option. In the event that shares of Stock are distributed by
----------
the Trustees to a Member or his Beneficiary, then such Member or Beneficiary, or
any donee of, any trustee or custodian of any individual retirement account
established by, or any person to whom such Stock passes by reason of the death
of, such Member or Beneficiary (all such persons being collectively referred to
herein as a "Covered Holder"), shall have a put option with respect to such
Stock containing the following terms and conditions:
(a) The put option shall be exercisable only by a Covered
Holder.
(b) The put option shall permit the Covered Holder to require
the Company to purchase all, but not less than all, of such Stock and shall be
exercisable at least during a sixty (60) day period commencing on the date the
Stock is distributed and, if the put option is not exercised within such sixty
(60) day period, during an additional sixty (60) day period in the following
Plan Year, in accordance with applicable regulations.
(c) The put option shall be exercisable at a price which is
equal to the fair market value of the Stock, determined as of the last day of
the Plan Year coincident with or immediately preceding the date on which the
Company receives notice of the exercise.
(d) The Company may in its discretion elect to pay the purchase
price in equal annual installments over a period of not more than five (5)
years.
- 23 -
<PAGE>
(e) At the time the put option is exercised, the Trustees may,
with the consent of the Company, assume all of the rights and obligations of the
Company with respect to the put option and upon the satisfaction of such
obligations by the Trustees, the Covered Holder shall have no further claim
against either the Company or the Trustees with respect to the put option.
(f) It is intended that the put option provided by this Section
6.08 shall satisfy the requirements of Section 409(h) of the Code and any
regulations promulgated thereunder; provided, however, that the provision of
Sections 409(h)(5) and (6) of the Code shall apply only to distributions
attributable to stock acquired after December 31, 1986. The foregoing provisions
of this Section 6.08 shall be effective only to the extent they are, and shall
be applied and interpreted in a manner which is, consistent with said Section
409(h) and any such regulations.
(g) The Company hereby agrees to execute such documents and take
such other action as it determines, in good faith, to be necessary for the
purpose of effecting the put option required by this Section 6.08.
(h) Notwithstanding the foregoing, if, in the opinion of legal
counsel to the Company, the purchase of shares of Stock by the Company pursuant
to this Section 6.08 would, at the time the Company receives notice from a
Covered Holder pursuant to (b) above, result in a violation of any applicable
Federal or state statute, law, regulation or rule, or any judicial or
administrative decree or order, or in the breach of any loan or other agreement
of the Company relating to indebtedness for borrowed money, or would cause any
director, officer or stockholder of the Company potentially to be liable to the
Company or its creditors pursuant to any applicable Federal or state statute,
law, regulation or rule, or any judicial or administrative decree or order, the
Company shall be relieved of any and all obligations to repurchase the shares of
Stock from such Covered Holder under this Section 6.08, and such Covered Holder
shall not have any further rights under this Section 6.08.
- 24 -
<PAGE>
6.09 Withdrawals During Employment. With respect to the first Plan Year
-----------------------------
in which a Member has both attained age fifty-five (55) and has completed at
least ten (10) years of Plan membership, and with respect to each of the five
(5) succeeding Plan Years, such Member may elect to receive an amount from his
Account not exceeding the "withdrawable amount" determined as of the end of such
Plan Year, provided that this Section 6.09 shall not apply if the fair market
value of the Stock acquired after December 31, 1986 and allocated to a Member's
Account is $500 or less on the day before the day on which a Member is first
eligible to make an election under this Section 6.09. Such election must be
filed in writing with the Trustees during the ninety (90)-day period immediately
following the end of the Plan Year to which it relates. Any distribution
required to be made under this Section 6.09 shall be made in accordance with the
provisions of Section 6.07(a) no later than one hundred eighty (180) days after
the end of the Plan Year to which such distribution relates.
For purposes of this Section 6.09, the "withdrawable amount" for any
Plan Year is equal to (i) twenty-five percent (25%) of the sum of (A) the
portion of the Member's Account balance as of the end of the Plan Year
attributable to Stock acquired by the Trust after December 31, 1986 and (B) all
amounts previously distributed to the Member pursuant to this Section 6.09,
minus (ii) all amounts previously distributed to the Member pursuant to this
Section 6.09; provided, however, that in calculating the withdrawable amount for
the sixth (and final) Plan Year to which this section relates, fifty percent
(50%) shall be used in lieu of twenty-five percent (25%). The portion of the
Member's Account balance attributable to Stock acquired by the Trust after
December 31, 1986 shall be determined by multiplying the number of shares of
Stock then credited to his Account by a fraction, the numerator of which is the
total number of shares of Stock acquired by the Trust after December 31, 1986
(not to exceed the number of shares held by the Trust on the date of
determination) and the denominator of which is the total number of shares of
Stock held by the Trust on the date of determination.
6.10 Discharge of Trustees' Obligations to Make Payment. Whenever the
---------------------------------------------------
Trustees are required to make any payment or payments to any person in
accordance with the provisions of this
- 25 -
<PAGE>
Article VI or Article VII, the Company shall notify the Trustees in writing of
such person's last known address as it appears in the Company's records; and the
obligation of the Trustees to make such payment or payments shall be fully
discharged by mailing the same to the address specified by the Company.
ARTICLE VII
-----------
AMENDMENT AND TERMINATION
-------------------------
7.01 Right to Amend or Terminate. The Company reserves the right at any
---------------------------
time and from time to time to amend this Agreement, or discontinue or terminate
the Plan and Trust by delivering to the Trustees a copy of an amendment or
appropriate Board of Directors' resolution of discontinuance or termination
certified by an officer of the Company; provided, however, that except as
provided in Section 7.02, the Company shall have no power to amend or terminate
this Agreement in such manner as would cause or permit any of the trust assets
to be diverted to purposes other than for the exclusive benefit of the Employees
of the Company or their Beneficiaries or estates or would cause a reduction in
the amount theretofore credited to any Member's Account or would cause or permit
any portion of the Trust assets to revert to or become the property of the
Company; and provided further that the duties or liabilities of the Trustees
shall not be increased without their written consent.
7.02 Amendment for Tax Exemption. The Company reserves the right to
----------------------------
amend this Agreement and the Plan and Trust hereunder in such manner as may be
necessary or advisable so that said Trust may qualify and continue to qualify as
an exempt employees' trust under the provisions of the Code as now in force or
as it may hereafter be changed or amended; and any such amendment may be made
retroactively.
7.03 Liquidation of Trust in Event of Termination. In the event of
----------------------------------------------
termination or partial termination (within the meaning of Section 411(d)(3) of
the Code) of this Plan and Trust, or complete discontinuance of contributions
thereto by the Company, the rights of all Members (or,
- 26 -
<PAGE>
in the case of a partial termination, the Members affected thereby) to amounts
theretofore credited to their Accounts shall be fully vested and nonforfeitable.
In the event of such termination, partial termination or discontinuance, the
Trustees shall hold the assets of the Trust in accordance with the provisions of
the Plan and distribute such assets from time to time to Members entitled
thereto in accordance with such provisions; provided that the Company in its
discretion may direct the Trustees to apply the amount standing to the credit of
an affected Member's Account for his benefit, in accordance with Section 6.07,
at any time after such termination, partial termination or discontinuance but
prior to the time when such Member would otherwise become entitled thereto under
the Plan. In the event that the Company shall terminate the Trust at any time
prior to the complete distribution of all property held by the Trustees pursuant
to such provisions, the Trustees shall (a) pay the liabilities, if any, of the
Trust; (b) value the remaining assets of the Trust as of the date of termination
and adjust the Accounts of the Members in accordance with Section 5.06; and (c)
distribute the assets of the Trust in Stock or partly in Stock and partly in
cash to and among the Members in liquidation in proportion to the amounts
standing to the credit of their respective Accounts under the Trust as of the
termination date.
7.04 Termination of Plan and Trust. This Agreement and the Plan and
------------------------------
Trust hereunder shall in any event terminate whenever all property held by the
Trustees shall have been distributed in accordance with the terms hereof.
ARTICLE VIII
------------
THE TRUSTEES
------------
8.01 Trustees. There shall be such number of Trustees of the Trust fund
--------
as the Company may from time to time determine, any or all of whom may be
officers or employees of the Company or any other individuals or entities.
- 27 -
<PAGE>
8.02 Powers of Trustees. It shall be the duty of the Trustees to hold
-------------------
and, subject to the provisions of this Article, to invest and reinvest the funds
of the Trust and to make distributions therefrom in accordance with the Plan.
The Trustees are hereby vested with all powers and authority necessary in order
to carry out their duties and responsibilities in connection with the
administration of the Plan and Trust as herein provided, and are authorized to
make such rules and regulations as they may deem necessary to carry out the
provisions of the Plan and Trust. The Trustees shall determine any question
arising in the administration, interpretation and application of the Plan and
Trust, and the decision of the Trustees shall be conclusive and binding on all
persons. For all purposes of ERISA, the Trustees shall be the "administrator" of
the Plan.
8.03 Investments. Subject to all outstanding obligations of the Trust,
-----------
the Trustees shall invest and reinvest the funds of the Trust and keep the same
invested, without distinction between principal and income, in shares of Stock;
provided, however, that the Trustees may, in the event that Stock is not
reasonably available, hold the assets of the Trust in cash or invest in United
States Government obligations, savings or other depositary accounts maintained
by banks or trust companies, or other similar short-term, fixed-income
obligations. In accordance with the purposes of the Plan, it is intended that
all or a substantial portion of the assets of the Trust shall be invested in
shares of Stock, to the extent that such shares are reasonably available.
8.04 Method of Purchasing, Holding and Selling Stock of the Company.
-----------------------------------------------------------------
The Trustees may purchase Stock from the Company or from any stockholder of the
Company, in either case at a price not in excess of the fair market value of
such Stock at the time of purchase. The fair market value of any shares of Stock
shall be subject to final determination by the Trustees; and shall for all
purposes of the Plan be based upon the value of such Stock as determined by an
independent appraiser (within the meaning of Section 401(a)(28) of the Code) as
of an Allocation Date. The Trustees may keep the Stock and any other securities
or other property of the Trust in the name of some other person, firm or
corporation or in their own names without disclosing their
- 28 -
<PAGE>
fiduciary capacity. The Trustees may purchase or sell at public auction or by
private contract, redeem, or otherwise realize upon such Stock, securities, or
other property and for such purposes may execute such instruments and writings
and do such things as they shall deem proper.
8.05 Exercise of Voting Rights.
-------------------------
(a) Except as otherwise provided in subsection (b), the Trustees
are hereby authorized to vote upon the Stock and any other securities comprising
the Trust or otherwise consent to or request any action on the part of the
issuer of such securities, and to give general and special proxies or powers of
attorney, with or without power of substitution, and to participate in
reorganizations, recapitalizations, consolidations, mergers and similar
transactions with respect to such securities; and generally to exercise any of
the powers of an owner with respect to the Stock or other securities which the
Trustees deem to be for the best interest of the Trust to exercise.
(b) Each Member shall have the right and shall be afforded the
opportunity to direct the Trustees as to how the Stock (including fractional
interests therein) which has been allocated to such Member's Account shall be
voted with respect to any corporate matter which (by law or charter) must be
decided by more than a majority vote of outstanding shares voted, and the
Trustees shall vote such shares in accordance with such directions. The Trustees
shall take such action as they determine, in their sole discretion, to be
appropriate in order to enable the Members to direct the voting of Stock in
accordance with the preceding sentence. The Trustees shall not vote any such
shares as to which directions from the Members have not been received.
8.06 Power to Borrow. Subject to the provisions of Article X in the
---------------
case of an "ESOP Loan" as therein defined, the Trustees are hereby authorized to
borrow money for the purposes of this Trust upon such terms and conditions as
they, in their sole discretion, may determine, and for any amount so borrowed to
issue the promissory note of the Trustees and to secure the repayment thereof by
pledge, mortgage, hypothecation or other similar arrangement of all or any
- 29 -
<PAGE>
part of the property so purchased, and no person loaning money to the Trustees
shall be bound to see to the application of the money loaned or to inquire into
the validity of any such borrowing.
8.07 Reliance on Trustees as Owner. No person dealing with the Trustees
-----------------------------
shall be required to take any notice of this Agreement, but all persons so
dealing shall be protected in treating the Trustees as the absolute owners with
full power of disposition of all monies, Stock, securities and other property of
the Trust, and all persons dealing with the Trustees are released from inquiry
into the decision or authority of the Trustees and from seeing to the
application of monies, Stock, securities or other property paid or delivered to
the Trustees.
8.08 Liquidation of Assets. The Trustees shall not be required to make
---------------------
any payments hereunder in excess of the net realizable value of the assets of
the Trust at the time of such payment. In the event that cash is required by the
Trustees to effect any action or distribution under this Trust, or to pay any
expenses of this Trust, or for any reason deemed sufficient by the Trustees,
they shall take such action as to the sale or other disposition of the Stock or
other property comprising a part of the Trust as will provide an amount of cash
sufficient for the purpose.
8.09 Evidence on which the Trustees may Act. In taking any action or
----------------------------------------
determining any fact or question which may arise under this Trust, the Trustees
may, with respect to the affairs of the Company or its employees, rely upon any
statement by the Company with respect thereto. In the event that any dispute may
arise regarding the payment of any sums or regarding any act to be performed by
the Trustees, the Trustees may, in their sole discretion, retain such payment or
postpone the performance of such act until actual adjudication of such act shall
have been made in a court of competent jurisdiction, or until they have been
indemnified against loss to their satisfaction; provided, however, that in the
event of any such dispute, the Trustees may rely upon and act in accordance with
any directions received from the Company.
- 30 -
<PAGE>
8.10 Action by Trustees. The Trustees shall act by a majority of their
------------------
number at the time in office and such action may be taken either by vote at a
meeting or in writing without a meeting. The Trustees may by such majority
action authorize any one or more of their number to execute any document or
documents or to take any other action on behalf of the Trustees, and in such
event any one of the Trustees may certify in writing to any person the taking of
such action and the name or names of the Trustee or Trustees so authorized,
including himself. Any such person shall be protected in accepting and relying
upon any such document or certificate and is released from inquiry into the
authority of any of the Trustees.
8.11 Discretionary Action. Whenever under the provisions of this
---------------------
Agreement the Trustees are given any discretionary power or powers, such power
or powers shall not be exercised in any manner as to cause any discrimination in
favor of or against any Employee or class of Employees. Any discretionary action
taken by the Trustees hereunder shall, to the extent possible, be consistent
with any prior discretionary action taken by them under similar circumstances
and to this end the Trustees shall keep a record of all discretionary action
taken by them under any provisions hereof.
8.12 Employment of Agents. The Trustees may employ agents, including
--------------------
but not limited to investment counsels, insurers, custodians, appraisers,
accountants or attorneys, to exercise and perform such of the powers and duties
of the Trustees hereunder as the Trustees may delegate to them, and otherwise to
render such services in connection with the administration of the Trust Fund as
the Trustees may direct, and the Trustees may enter into agreements setting
forth the terms and conditions of such service. The compensation of such agents
shall be an expense chargeable to the Trust Fund in accordance with Section
8.15. The Trustees shall be fully protected in delegating any such power or duty
to or in acting upon the advice of any such agent, in whole or in part, and
shall not be liable for any act or omission of any such agent, the Trustees'
only duty being to use reasonable care in the selection of any such agent.
- 31 -
<PAGE>
8.13 Records and Accounting. The Trustees shall keep accurate and
-----------------------
detailed records of their transactions hereunder and all their accounts, books
and records relating thereto shall be open at all reasonable times to the
inspection of the Company and its authorized representatives. The Trustees shall
render in writing, at least once each twelve (12) months, accounts of their
transactions under this Agreement to the Company and the Company may approve
such accounts of the Trustees by an instrument in writing delivered to the
Trustees. In the absence of the filing in writing with the Trustees by the
Company of exceptions or objections to any such account within sixty (60) days
after the receipt by the Company of any such account, the Company shall be
deemed to have approved such account; and in such case, or upon the written
approval of the Company of any such account, the Trustees shall be released,
relieved and discharged by the Company with respect to all matters and things
set forth in such account. If the Trustees and the Company cannot amicably
settle the questions raised by any exception or objection raised by the Company
to any account, the Trustees and the Company shall have the right to have such
questions settled by judicial proceedings. Nothing herein contained shall be
construed as depriving the Trustees of the right to have a judicial settlement
of their accounts. Except as may otherwise be required by applicable Federal
law, no person interested in the Trust or otherwise than the Company may require
an accounting or bring any action against the Trustees with respect to the Trust
or with respect to their actions as Trustees. In any proceeding instituted by
the Trustees and the Company, or either of them, with respect to an accounting,
only the Company and the Trustees shall be the necessary parties. The Trustees
shall from time to time make such other reports and furnish such other
information concerning the Trust as the Company may in writing reasonably
request or as may be required by applicable Federal law.
8.14 Payment of Taxes. The Trustees shall upon the direction of the
----------------
Company pay out of the Trust Fund any and all taxes of any and all kinds,
including without limitation property taxes and income taxes levied or assessed
under existing or future laws upon or in respect of the Trust or any monies,
securities or other property forming a part thereof or the income therefrom
subject to the terms of any agreements or contracts made with respect to trust
investments which make other provision for such tax payments. The Trustees may
assume that any taxes assessed
- 32 -
<PAGE>
on or in respect of the Trust or its income are lawfully assessed unless the
Company shall in writing advise the Trustees that in the opinion of counsel for
the Company such taxes are or may be unlawfully assessed. In the event that the
Company shall so advise the Trustees, the Trustees will, if so requested in
writing by the Company, contest the validity of such taxes in any manner deemed
appropriate by the Company or its counsel; or the Company may itself contest the
validity of any such taxes in the name of the Trustees; and the Trustees agree
to execute all documents, instruments, claims and petitions necessary or
advisable in the opinion of the Company or its counsel for the refund,
abatement, reduction or elimination of any such taxes.
8.15 Compensation and Expenses of Trustees. The Trustees shall serve
--------------------------------------
without compensation for services as such, but all expenses of the Trust
(including those arising under Section 8.14 hereof) may be paid by the Company
at its option and unless or until so paid shall constitute a charge upon the
Trust to be paid by the Trustees out of the assets of the Trust. Such expenses
shall include any expenses incident to the functioning of the Plan, including,
but not limited to attorneys' fees and the compensation of other agents,
accounting and clerical charges, expenses, if any, of being bonded as required
by ERISA, and other costs of administering the Plan and managing the Trust.
8.16 Resignation or Removal of Trustees. Any Trustee acting hereunder
----------------------------------
may resign at any time upon thirty (30) days' written notice to the Company, and
the Company may remove any Trustee upon thirty (30) days' written notice to the
Trustee; but the parties may by written instrument waive such notice.
If any Trustee shall die, resign, be removed or for any other reason
cease to be Trustee, he shall be replaced by a successor to be appointed by the
Board of Directors. Any resignation or removal of the Trustee or appointment of
a new Trustee shall be by instrument in writing and shall become effective on
the date therein specified. Any successor Trustee shall have the same powers and
duties as the succeeded Trustee, subject to such changes as the Company may then
determine. The appointment of any successor Trustee or Trustees hereunder shall
without any
- 33 -
<PAGE>
separate instrument or conveyance immediately vest title to the
assets of the Trust in such successor Trustee or Trustees.
8.17 Indemnification. The Company shall indemnify and hold harmless the
---------------
Trustees from and against any and all claims, losses, damages, expenses
(including reasonable attorneys' fees approved by the Company), and liability
(including any reasonable amounts paid in settlement with the Company's
approval), arising from any act or omission of the Trustees, except when the
same is judicially determined to be due to the willful misconduct of the
Trustees.
ARTICLE IX
----------
THE COMPANY
-----------
9.01 Powers of the Company. The Company shall have the power to amend
---------------------
or terminate the Plan and Trust as provided in Article VII, to appoint and
remove the Trustees as provided in Article VIII, and to do such other acts and
things as are provided elsewhere herein.
9.02 No Contract of Employment. This Trust shall not be construed as
--------------------------
creating any contract of employment between the Company and any Member, Employee
or other person, and nothing herein contained shall give any person the right to
be retained in the employ of the Company or otherwise restrain the Company's
right to deal with its employees, including Members and Employees, and their
hiring, discharge, layoff, compensation, and all other conditions of employment
in all respects as though this Trust did not exist.
9.03 No Contract to Maintain Plan. The Company does not, by the
--------------------------------
creation of the Trust, enter into any agreement to maintain the Trust or to make
any future contributions thereto or to reimburse expenses incurred hereunder.
Each contribution by the Company shall be voluntary, and the Company reserves
the right to suspend payment of its contributions hereunder, and no party hereto
nor any Member nor any other person shall have any cause or right of action
- 34 -
<PAGE>
against the Company by reason of any failure by the Company to make
contributions to the Trust, or by reason of any action by the Company in
terminating the Plan and Trust.
9.04 Liability of Company. Subject to its agreement to indemnify the
--------------------
Trustees as provided in Section 8.17 and except as otherwise provided by
applicable Federal law, neither the Company nor any person acting on behalf of
the Company shall be liable for any act or omission on the part of any Trustee,
or for any act performed or the failure to perform any act by any person with
respect to this Agreement, the Plan or Trust, the Company's only duty being to
use reasonable care in the selection of the Trustees.
9.05 Action by Company. Whenever under the terms of this Agreement the
-----------------
Company is permitted or required to take any action, such action shall be taken
by the Board of Directors or by any officer of the Company thereunto duly
authorized, by the Board of Directors or otherwise. In such event, any such
officer may certify to the Trustees or any person the taking of such action and
the name and names of the officers so authorized, including himself. The
execution of any direction, document or certificate on behalf of the Company by
any of its officers shall constitute his certification of his authority with
respect thereto, and the Trustees or other person shall be protected in
accepting and relying upon any such direction, document or certificate and are
released from inquiry into the authority of any officer of the Company.
9.06 Successor to Business of Company. Unless this Plan and Trust be
---------------------------------
sooner terminated, a successor to the business of the Company, by whatever form
or manner resulting, may continue the Plan and Trust by executing an appropriate
supplemental agreement and such successor shall ipso facto succeed to all the
rights, powers and duties of the Company hereunder. The employment of any
Employee who has continued in the employ of such successor shall not be deemed
to have been terminated or severed for any purposes hereunder by reason of such
succession.
- 35 -
<PAGE>
9.07 Dissolution of the Company. In the event that the Company is
----------------------------
dissolved by reason of bankruptcy or insolvency or otherwise, without any
provision being made for the continuation of this Plan and Trust by a successor
to the business of the Company, the Plan and Trust hereunder shall terminate,
and the Trustees shall proceed in the same manner as though the Plan and Trust
were being terminated by the Company as provided in Section 7.01.
ARTICLE X
---------
ESOP LOANS
----------
10.01 ESOP Loan. For purposes of this Article X, an "ESOP Loan" means a
---------
loan (including any installment payment obligation incurred in connection with
an acquisition of Stock) made to the Trust by a party in interest (as that term
is defined in Section 3(14) of ERISA) or a loan (including any installment
payment obligation incurred in connection with an acquisition of Stock) to the
Trust which is guaranteed by a party in interest and which, in either case,
satisfies all of the requirements for an exempt loan under Section 408(b)(3) of
ERISA and Section 4975(d)(3) of the Code and all applicable regulations
thereunder (such statutes and regulations being collectively referred to herein
as the "ESOP Rules").
10.02 Use of ESOP Loan Proceeds. The Plan and Trust are designed to
--------------------------
invest primarily in Stock and the Trustees are hereby authorized and directed to
acquire shares of Stock to the extent such Stock is reasonably available. To
effectuate this purpose, the Trustees are hereby authorized to enter into ESOP
Loans and are directed to apply the proceeds thereof to the acquisition of
shares of Stock in accordance with Section 8.04 or to the repayment of a prior
ESOP Loan. All Stock acquired with the proceeds of an ESOP Loan shall, both
while held by the Trustees and while held by a "Covered Holder" (as defined in
Section 6.08), be free from any put, call or other option, or any buy-sell or
similar arrangement; provided, however, that all such Stock shall be subject to
(a) the restrictions on transfer set forth in the stock restriction agreement
appended hereto as Exhibit A, and (b) the put option described in Section 6.08
The provisions
- 36 -
<PAGE>
of this Section 10.02 and of Section 6.08 shall continue in effect with respect
to any shares of Stock acquired with the proceeds of an ESOP Loan
notwithstanding the fact that the ESOP Loan has been repaid or that the Plan has
ceased to be an employee stock ownership plan within the meaning of Section
407(d)(6) of ERISA and Section 4975(e)(7) of the Code.
10.03 Terms and Conditions. Any such ESOP Loan shall be upon such terms
--------------------
and conditions, consistent with the ESOP Rules and this Article X, as the
Trustees shall determine. Such terms and conditions shall in addition to those
terms and conditions required by the ESOP Rules, include the following:
(a) the recourse of the lender against the Trust shall be
limited to one or more of the following: (i) any collateral given for the ESOP
Loan, (ii) Company contributions made subsequent to the date of the ESOP Loan,
and (iii) earnings attributable to such collateral or the investment of such
contributions;
(b) the aggregate of all payments under the ESOP Loan by the
Trust shall not exceed the aggregate of items (ii) and (iii) under (a) above at
the date of any such payment;
(c) in the event of a default under an ESOP Loan, the value of
Trust assets transferred to the lender shall not exceed the amount of the
default, provided further that if the lender is a party in interest a transfer
of Trust assets upon default shall be made only if, and to the extent of, the
Trust's failure to meet the ESOP Loan's payment schedule;
(d) the interest rate must not be in excess of a reasonable
rate;
(e) the ESOP Loan must be for a specific term and may not be
payable at the demand of any person, except in the case of default.
- 37 -
<PAGE>
10.04 Collateral for ESOP Loan. The Trustees are hereby authorized to
------------------------
collateralize an ESOP Loan by giving a security interest in all or any portion
of the Stock acquired with the proceeds of said Loan (or the proceeds of a
previous ESOP Loan repaid by said Loan). No other Trust assets may be so used as
collateral. In the event that Stock is used by the Trustees as collateral for an
ESOP Loan, such Stock shall be released from such encumbrance at an annual rate
which is geared to either the rate of total repayment (principal plus interest)
of the ESOP Loan or the rate of principal repayment of the ESOP Loan, provided
that all applicable requirements of the ESOP Rules shall be satisfied in either
case.
10.05 Suspense Accounts. All Stock acquired with the proceeds of an
------------------
ESOP Loan shall be credited to a Suspense Account rather than allocated among
the Members' Accounts. If such Stock is being used as collateral, it shall be
withdrawn from the Suspense Account at the same time and on the same basis as it
is released from encumbrance. If such Stock is not used as collateral, it shall
be withdrawn from the Suspense Account as if it had been so used and was being
released from encumbrance at a rate geared to total (principal plus interest)
repayment of the ESOP Loan. At the time such stock is withdrawn from the
Suspense Account, it shall be allocated among the Members' Accounts in
accordance with the terms of the Plan. No Member shall have any interest in, or
rights with respect to, any Stock while it is held in a Suspense Account. In the
event that any Stock held in a Suspense Account is sold, the proceeds may be
used to repay the ESOP Loan, and any excess amount (including any shares of
Stock released from encumbrance by reason of such repayment) shall be allocated
among the Accounts of all Members in accordance with the provisions of Section
5.05.
ARTICLE XI
----------
ADDITIONAL PARTICIPATING COMPANIES
----------------------------------
11.01 Participation. Any subsidiary or affiliate of Rath & Strong, Inc.
-------------
may, with the consent of Rath & Strong, Inc., become a participating employer by
action of the board of directors of such subsidiary or affiliate to adopt the
Plan and Trust as a Plan and Trust for the
- 38 -
<PAGE>
benefit of its Employees, but only if shares of Stock constitute "qualifying
employer securities" within the meaning of Section 407(d)(5) of ERISA with
respect to a plan maintained by such subsidiary or affiliate. Any such
additional participating employer is hereinafter referred to in this Article XI
as a "Participating Subsidiary." A Participating Subsidiary may, with the
consent of Rath & Strong, Inc., continue to be a Participating Subsidiary under
the Plan even though it ceases to be a subsidiary or affiliate of Rath & Strong,
Inc. Prior to March 19, 1985, Rath & Strong Systems Products, Inc. was a
participating employer in the Plan. As of such date, Rath & Strong Systems
Products, Inc. ceased to be a participating employer and all members of the Plan
who were Employees of Rath & Strong Systems Products, Inc. became fully vested
in amounts theretofore credited to their Accounts.
11.02 Entry Date. The participation of any Participating Subsidiary
----------
shall take effect as of the Semi-Annual Entry Date coincident with or next
following the date of its action to adopt the Plan and Trust or such other date
as it may specify.
11.03 Administration. Each Participating Subsidiary shall be deemed the
--------------
"Company" and shall have and exercise all the rights, powers, and duties thereof
with respect to the Plan as applied to itself and its Employees and that part of
the Trust which represents Accounts of Members employed by it. Subject to
Section 11.05, each Participating Subsidiary hereby authorizes Rath & Strong,
Inc. to exercise on its behalf all such rights, powers, and duties, including
amendment or termination of the Plan.
11.04 Contributions and Forfeitures. Each participating employer,
-------------------------------
including the Company and each Participating Subsidiary, shall make
contributions hereunder, on behalf of its Employees, in accordance with Section
4.01 and as determined by its Board of Directors. Whenever part or all of the
Account of any Member shall be forfeited by him and reallocated to the Accounts
of other Members pursuant to Section 5.04, such amounts shall be reallocated to
the Accounts of all remaining Members, without regard to whether a Member is an
Employee of the Company or of a Participating Subsidiary.
- 39 -
<PAGE>
11.05 Termination. If the Plan shall be terminated by any one
-----------
Participating Subsidiary or if any Participating Subsidiary elects to withdraw
from the Plan, the Trust shall be valued pursuant to Section 5.05 and Members'
Accounts adjusted pursuant to Section 5.06, and assets representing the Accounts
of all Members employed by such Participating Subsidiary shall be segregated
into a separate trust and held subject to the provisions of the Plan, and all
rights, powers, and duties of the Company with respect to such separate trust
shall thereafter be exercised by such Participating Subsidiary.
ARTICLE XII
-----------
TOP-HEAVY PROVISIONS
--------------------
12.01 Article Controls. Any provisions of the Plan to the contrary
-----------------
notwithstanding, the provisions of this Article XII shall control the Plan to
the extent required to cause the Plan to comply with the requirements imposed by
Section 416 of the Code.
12.02 Definitions. Where the following words and phrases appear in this
-----------
Article XII, they shall have the respective meanings set forth below, unless
their context clearly indicates to the contrary:
(a) Account Balance. As of any Valuation Date, the aggregate
----------------
amount credited to an individual's account or accounts under the Plan and all
other qualified defined contribution plans maintained by the Company or an
Affiliated Company increased by (i) the aggregate distributions made to such
individual from the Plan or any other such plan during a five (5) year period
ending on the Determination Date, and (ii) the amount of any contributions due
as of the Determination Date immediately following such Valuation Date;
- 40 -
<PAGE>
(b) Affiliated Company. Any corporation or other business entity
------------------
which is required to be aggregated with the Company by reason of Section 414(b),
414(c), or 414(m) of the Code.
(c) Aggregation Group. The group of qualified plans maintained
------------------
by the Company and each Affiliated Company consisting of (i) each plan in which
a Key Employee participates and each other plan which enables a plan in which a
Key Employee participates to meet the requirements of Sections 401(a)(4) and 410
of the Code, or (ii) each plan in which a Key Employee participates, each other
plan which enables a plan in which a Key Employee participates to meet the
requirements of Sections 401(a)(4) and 410 of the Code, and any other plan which
the Company elects to include as a part of such group; provided, however, that
the Company may not elect to include a plan if its inclusion would cause the
group to fail the requirements of Sections 401(a)(4) and 410 of the Code.
(d) Compensation. An individual's earned income, wages,
------------
salaries, and other amounts actually paid by the Company or an Affiliated
Company to such individual during a Plan Year for personal services actually
rendered in the course of employment with the Company or an Affiliated Company
(subject to exclusion of amounts specified by regulations promulgated under
Section 415 of the Code).
(e) Determination Date. For the first Plan Year of any plan, the
------------------
last day of such Plan Year, and for each subsequent Plan Year of such plan, the
last day of the preceding Plan Year.
(f) Former Key Employee. With respect to any Plan Year, any
--------------------
individual who was a Key Employee in a previous Plan Year but who is not a Key
Employee with respect to such Plan Year. For purposes of this definition, a
beneficiary (who would not otherwise be a Key Employee) of a deceased former Key
Employee shall be deemed to be a Former Key Employee in substitution for such
deceased Former Key Employee.
- 41 -
<PAGE>
(g) Key Employee. With respect to any Plan Year, any employee
-------------
(and any beneficiary of a deceased employee) of the Company or an Affiliated
Company who is a "Key Employee" as determined in accordance with Section
416(i)(1) of the Code.
(h) Plan Year. With respect to any plan, the annual accounting
---------
period used by such plan for annual reporting purposes.
(i) Valuation Date. With respect to any Plan Year, the most
---------------
recent date within the twelve (12) month period ending on a Determination Date
as of which the Trust fund established was valued and the net income (or loss)
thereof allocated to Members' accounts.
12.03 Top-Heavy Status. The Plan shall be deemed to be top-heavy if, as
----------------
of any Determination Date, (i) the sum (computed in accordance with Section
416(g) of the Code and the regulations promulgated thereunder) of the Account
Balances of Key Employees under the Plan exceeds sixty percent (60%) of the sum
of the Account Balances of all individuals (excluding Former Key Employees and
individuals who have not performed any services for the Company or an Affiliated
Company at any time during the five-year period ending on the Determination
Date) under the Plan unless an Aggregation Group including the Plan is not
top-heavy or (ii) an Aggregation Group including the Plan is top-heavy. An
Aggregation Group shall be deemed to be top-heavy as of a Determination Date if
the sum (computed in accordance with Section 416(g)(2)(B) of the Code and the
regulations promulgated thereunder) of the Account Balances of the Key Employees
under all plans included in the Aggregation Group exceeds sixty percent (60%) of
the sum of the Account Balances of all individuals (excluding former Key
Employees and individuals who have not received any Compensation from the
Company or an Affiliated Company at any time during the five year period ending
on the Determination Date) under such plans.
12.04 Minimum Contribution. If the Plan is determined to be top-heavy
---------------------
for a Plan Year, the minimum contribution required by Section 416(c)(2) of the
Code shall be provided under the
- 42 -
<PAGE>
Rath & Strong, Inc. Employees' Profit Sharing Plan. In the event the minimum
contribution is not provided in said profit sharing plan, then each Member who
is not a Key Employee and who is employed on the last day of the Plan Year shall
be entitled to receive an allocation of Company contributions which, when added
to the amount of Company contributions and forfeitures allocated to his accounts
under this Plan and all other qualified defined contribution plans maintained by
the Company for such Plan Year, will cause the sum of such contributions and
forfeitures to equal the lesser of:
(a) three percent (3%) of such Member's Compensation for such
Plan Year, or
(b) a percent of such Member's Compensation for such Plan Year
equal to the greatest percent determined by dividing for each Key Employee the
sum of Company contributions and forfeitures allocated to such Key Employee's
accounts under all such plans for such Plan Year by such Key Employee's
Compensation for such Plan Year.
12.05 Termination of Top-Heavy Status. If the Plan has been top-heavy
--------------------------------
for one or more Plan Years and thereafter ceases to be top-heavy, the provisions
of this Article XII shall cease to apply to the Plan effective as of the day
following the Determination Date as of which the Plan is determined to no longer
be top-heavy.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.01 Spendthrift Provision. Beneficial interests of Members or their
----------------------
Beneficiaries in the Trust shall not be assignable nor subject to attachment nor
receivership, nor shall they pass to any trustee in bankruptcy or be reached or
applied by any legal process for the payment of any obligations of any such
person, except obligations of a Member pursuant to a qualified domestics
relations order within the meaning of Sections 401(a) (13)(B) and 414(p) of the
Code.
- 43 -
<PAGE>
13.02 Appointment of Person to Receive Payment. Upon the appointment by
----------------------------------------
a court having jurisdiction of a legal representative for a Member or
Beneficiary, following a judicial determination that such Member or Beneficiary
is of unsound mind, any payment or distribution hereunder shall thereafter be
made to such legal representative. In the event any amount shall become payable
hereunder to any person (or his Beneficiary or estate), and if after written
notice from the Trustees mailed to such person's last known address as shown on
the Company's records, such person or his personal representative shall not have
presented himself to the Trustees or notified the Trustees in writing of his
address within one (1) year after the mailing of such notice, then the Trustees
shall in their discretion appoint one or more of the spouse or blood relatives
of such person to receive such amount, including any amount thereafter becoming
due to such person (or his estate), in the proportions determined by the
Trustees. Any action of the Trustees hereunder shall be binding and conclusive
upon all persons.
13.03 Construction. In any question of interpretation or other matter
------------
of doubt, the Trustees and the Company may rely upon the opinion of counsel for
the Company or any other attorney-at-law designated by the Company with the
approval of the Trustees. The provisions of this Agreement shall be construed,
administered and enforced according to the laws of the United States and, to the
extent permitted by such laws, by the laws of the Commonwealth of Massachusetts.
All contributions to the Trust shall be deemed to be made in the Commonwealth of
Massachusetts.
13.04 Impossibility of Performance. In case it becomes impossible for
----------------------------
the Company or the Trustees to perform any act under this Plan and Trust, that
act shall be performed which in the judgment of the Company or the Trustees,
respectively, will most nearly carry out the intent and purpose of this Plan and
Trust. All parties to this Agreement or in any way interested in this Plan and
Trust shall be bound by any acts performed under such condition.
13.05 Named Fiduciaries; Delegation of Responsibility. The Company and
------------------------------------------------
the Trustees shall be "named fiduciaries" within the meaning of Section
402(a)(2) of ERISA. The
- 44 -
<PAGE>
responsibilities of the named fiduciaries shall be allocated as provided herein
and each fiduciary shall have only those responsibilities and obligations that
are specifically imposed on it by the Trust Agreement. It is intended that each
fiduciary shall be responsible for the proper exercise and discharge of its own
powers, duties and obligations with respect to the Plan and shall not be
responsible for any act or omission of any other fiduciary. Each named fiduciary
shall be entitled to delegate all or any part of his fiduciary responsibilities
and obligations (except those related to the management of the assets held
hereunder) to any other person or entity. In the event of such delegation, (i)
the named fiduciary shall not be liable for any act or omission of the person to
whom responsibility has been delegated as long as the selection and retention of
such person is prudent and (ii) the person to whom the fiduciary powers and
obligations are delegated shall be responsible only for the proper exercise of
the powers, duties, responsibilities and obligations that have been specifically
delegated to him.
13.06 Definition of Words. Feminine or neuter pronouns shall be
---------------------
substituted for those of the masculine form, and the plural shall be substituted
for the singular, in any place or places herein where the context may require
such substitution or substitutions.
13.07 Titles. The titles of articles and sections are included only for
------
convenience and shall not be construed as a part of this Agreement or in any
respect affecting or modifying its provisions.
13.08 Merger or Consolidation. In the event that this Plan is merged
------------------------
with or consolidated with any other plan, or the assets or liabilities accrued
under this Plan are transferred to any other plan, each Member's benefit under
such other plan shall be at least as great immediately after such merger,
consolidation or transfer (if such plan were then to terminate) as the benefit
to which he would have been entitled under this Plan immediately before such
merger, consolidation or transfer (if the Plan were then to terminate).
- 45 -
<PAGE>
13.09 Service with Acquired Corporations. In any case in which
-------------------------------------
Employees participating in the Plan become Employees upon the acquisition of
their former employer by the Company, whether by merger, acquisition of assets
or stock or otherwise, their service with the former employer shall be included
in determining their Years of Eligibility Service, Years of Vesting Service, and
One-Year Breaks in Service (and Hours of Service for these limited purposes)
only to the extent that such service is required to be credited hereunder by
Section 414(a) of the Code and any regulations promulgated thereunder, by the
terms of the agreement pursuant to which such former employer was acquired by
the Company, or by vote of the Board of Directors of the Company.
13.10 Claims Procedure. In accordance with applicable Federal law and
----------------
the regulations of the Secretary of Labor prescribed thereunder:
(a) All claims for benefits or for determination of the
qualified status of a domestic relations order under this Plan shall be filed in
writing with the Trustees in accordance with such procedures as the Trustees
shall reasonably establish;
(b) The Trustees shall, within ninety (90) days of submission of
a claim, provide adequate notice in writing to any claimant whose claim for
benefits under the Plan has been denied, setting forth the specific reasons for
such denial and such other information as is required by said regulations
written in a manner calculated to be understood by the claimant;
(c) The Trustees shall, upon written request by a claimant
submitted within sixty (60) days of the receipt of the notice that his claim has
been denied, afford a reasonable opportunity to such claimant for a full and
fair review by the Trustees of the decision denying the claim; and
- 46 -
<PAGE>
(d) The Trustees shall, within sixty (60) days of receipt of a
request for a review, render a written decision on their review setting forth
the specific reasons for such decision, written in a manner calculated to be
understood by the claimant.
13.11 Special Provisions for Certain Leased Employees. Effective
----------------------------------------------------
December 27, 1987, a "leased employee" shall receive credit for Hours of Service
and Years of vesting Service for the entire period during which he is a leased
employee of the Company as if he were a Employee; provided, however, that a
leased employee shall not be an Employee eligible to participate in the Plan as
long as he remains a leased employee. For purposes of this Section 13.11, the
term "leased employee" means any person (a) who is not an Employee, (b) who
pursuant to an agreement between the Company and any other person (a "leasing
organization") has performed services for the Employer of a type historically
performed by Employees in the business field of the Company on a substantially
full-time basis for a period of at least one (1) year, and (c) who is not
covered by a money purchase pension plan maintained by the leasing organization
which provides a non-integrated employer contribution rate of at least ten
percent (10%) of compensation, immediate participation and full and immediate
vesting.
13.12 Execution of Agreement. This Agreement may be executed in any
-----------------------
number of counterparts and each fully executed counterpart shall be deemed an
original.
- 47 -
<PAGE>
IN WITNESS WHEREOF these presents have been signed and sealed for and
in behalf of the parties hereto, in the case of the Company by its duly
authorized officer, this 27th day of November, 1991.
---- --------
Company: RATH & STRONG, INC.
By: /S/ D. CIAMPA
--------------------------
President
( /S/ JOHN W. BURNS
----------------------------
( John W. Burns
(
(
( /S/ D. CIAMPA
----------------------------
Trustees: ( Dan Ciampa
(
(
( /S/ EDWARD J. HAY
----------------------------
( Edward J. Hay, Jr.
- 48 -
<PAGE>
FIRST AMENDMENT
TO
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
A. The Rath & Strong, Inc. Employees' Stock Bonus Plan, as amended and
restated effective January 1, 1989, is hereby further amended as
follows:
1. Effective January 1, 1994, Section 2.09 is hereby amended by
adding the following to the end thereof:
"Notwithstanding the foregoing, for Plan Years beginning
on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed
$150,000, as adjusted for increases in the cost of living
pursuant to Section 401(a)(17) of the Code."
2. Section 2.14 is hereby amended by adding the following to the
end thereof:
"For purposes of this Section 2.14, `computation period'
shall mean the applicable computation period as defined in
Section 2.22."
3. Section 3.01 is amended by deleting the third sentence of said
Section.
4. Section 6.07 is hereby amended by deleting paragraph (a) of said
section and substituting in lieu thereof the following:
"(a) whenever a Member's Account becomes distributable
pursuant to Sections 6.02 through 6.05 hereof to such Member or
his Beneficiary, distribution of said Account shall be made by
the payment of the full amount distributable in one lump sum, in
shares of Stock (to the extent of Part A of such Account) and in
cash (to the extent of Part B of such Account); provided,
however, that the Trustees may not distribute cash representing
the value of Part B of such Account unless such member (or his
Beneficiary) has been notified that he has the right to demand
that shares of Stock be distributed to him and has failed to
make a demand by such date as the Trustees may reasonably
prescribe; and, provided further that the Trustees may in any
event distribute cash in lieu of fractional shares. If cash is
to be distributed in lieu of fractional shares of Stock, the
Trustees shall either sell such shares and distribute the cash
proceeds or utilize cash already held in Trust."
<PAGE>
5. Section 6.08 is amended by deleting paragraph (d) in its
entirety and substituting therefore the following two paragraphs
at the end of Section 6.08:
"(d) The Company may in its discretion elect to pay the purchase
price in substantially equal periodic payments (not less
frequently than annually) over a period beginning not later than
thirty (30) days after the exercise of the put and not exceeding
five (5) years."
6. Section 6.08 is further amended by deleting paragraph (h) in its
entirety and substituting therefore the following two paragraphs
at the end of Section 6.08:
"(h) Notwithstanding the foregoing, if, in the opinion of legal
counsel to the Company, the purchase of shares of Stock by the
Company pursuant to this Section 6.08 would, at the time the
Company receives notice from a Covered Holder pursuant to (b)
above, result in a violation of any applicable Federal or state
law, the put option exercise period referenced in (b) above
shall be suspended until the Company is no longer so prohibited
from honoring such put option; provided, however, that if it is
known at the time an ESOP Loan is made that any applicable
Federal or state law will be violated by the Company's honoring
such put option, the Company shall arrange, in a manner
consistent with any such applicable Federal or state law, and in
accordance with ERISA and the rules and regulations promulgated
thereunder, for the shares of Stock subject to any such put
option to be put to a third party (other than the Plan) that has
substantial net worth at the time the ESOP Loan is made and
whose net worth at the time the ESOP Loan is made and whose net
worth is reasonably expected to remain substantial. In such
case, such third party shall purchase the shares of Stock on the
same terms as would be applicable to the Company.
(i) It is intended that the put option provided by this Section
6.08 shall satisfy the requirements of Section 409(h) of the
code and any regulations promulgated thereunder. The foregoing
provisions of this Section 6.08 shall be effective only to the
extent that they are, and shall be applied in a manner which is,
consistent with said Section and any such regulations."
7. Effective January 1, 1993, the following Article XIV is added
immediately following the end of Article XIII:
- 2 -
<PAGE>
"ARTICLE XIV
Direct Rollovers. This Article applies to distributions
----------------
made on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a
distributee's election under this Article, a distributee may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
Definitions. Whenever used in this Article, the
-----------
following words shall have the following meanings:
(a) Eligible rollover distribution: 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: (i) 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; (ii) any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code;
and (iii) 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).
(b) Eligible retirement plan: 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
individual retirement annuity.
(c) Distributee: A distributee includes an employee or
-----------
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
- 3 -
<PAGE>
(d) Direct rollover: A direct rollover is a payment by
----------------
the Plan to the eligible retirement plan specified by the
distributee."
B. The provisions of this First Amendment shall be effective as of January
1, 1989, unless otherwise specified.
IN WITNESS WHEREOF, these presents have been signed and sealed for on
behalf of the parties hereto, in the case of the Company by its duly authorized
officer, this 28th day of September, 1994.
RATH & STRONG, INC.
By: /S/ EDWARD J. HAY
----------------------------
Title: Sr. Vice President
( /S/ JOHN W. BURNS
------------------------
( John W. Burns
( /S/ DAN CIAMPA
------------------------
Trustees: ( Dan Ciampa
( /S/ EDWARD J. HAY
------------------------
( Edward J. Hay, Jr.
70858.bl
- 4 -
<PAGE>
SECOND AMENDMENT
TO THE
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
THIS SECOND AMENDMENT made this 28th day of June, 1996, by Rath &
Strong, Inc., a Massachusetts corporation (hereinafter referred to as the "Plan
Sponsor").
WHEREAS, the Plan Sponsor has established the Rath & Strong, Inc.
Employees' Stock Bonus Plan (the "Plan"), as most recently amended and restated
generally effective January 1, 1989; and
WHEREAS, the Plan Sponsor has reserved the right to amend the Plan
pursuant to Section 7.01 thereof; and
WHEREAS, the Plan Sponsor desires to further amend the Plan.
NOW, THEREFORE, the Plan is hereby amended, effective June 28, 1996, as
follows:
1. By adding to Section 6.07(a), the following final sentence:
"Notwithstanding the foregoing, effective June 28, 1996, when a
Member's Account becomes distributable as provided above,
distribution of the Member's Account will be made in
substantially equal annual payments over five (5) years or, if
longer, in the case of a Member with an account balance in excess
of $690,000 (as indexed by the U.S. Treasury Secretary for cost
of living), five (5) years plus one (1) additional year (not
exceeding five (5) additional years) for each $135,000 (indexed)
or fraction thereof by which such balance exceeds $690,000 (or
such higher indexed amount); provided, however, that this
sentence shall not apply to any Member who is entitled to a
benefit distribution and has submitted a formal written request
therefor to the Trustees prior to June 28, 1996. For purposes of
the preceding sentence, the amount of each annual payment shall
be the quotient obtained by dividing the balance in the Member's
Account at each applicable valuation date by the number of
remaining installments to be paid.
<PAGE>
2. By adding to Section 6.07(b), the following final sentences:
"Notwithstanding the foregoing, effective for benefit accruals on
and after June 28, 1996, distribution of a Member's Account will
commence during the Plan Year immediately following the Plan Year
(i) in which the Member separates from service pursuant to
Sections 6.02, 6.03 or 6.04, or
(ii) which is the fifth (5th) Plan year following the Plan
Year in which the Member otherwise separates from
service, unless he is reemployed by an Affiliated
Employer before distribution is otherwise required.
In all other respects, the Plan remains in full force and effect.
IN WITNESS WHEREOF, the Plan Sponsor has caused this Second Amendment to
be executed by its President on the day and year first above written.
RATH & STRONG, INC.
By: /S/ DANIEL L. QUINN
----------------------------
Daniel L. Quinn, President
<PAGE>
THIRD AMENDMENT
TO THE
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
THIS THIRD AMENDMENT made this 27th day of December, 1997, by Rath &
Strong, Inc., a Massachusetts corporation (hereinafter referred to as the "Plan
Sponsor").
WHEREAS, the Plan Sponsor has established the Rath & Strong, Inc.
Employees' Stock Bonus Plan (the "Plan"), as most recently amended and restated
generally effective January 1, l989; and
WHEREAS, the Plan Sponsor has reserved the right to amend the Plan
pursuant to Section 7.01 thereof; and
WHEREAS, the Plan Sponsor desires to further amend the Plan.
NOW, THEREFORE, the Plan is hereby amended, effective December 27, 1997,
by adding the following new Section 6.05(e):
"(e) Notwithstanding the foregoing, effective December 27, 1997, all
active Members shall be fully vested in their Accounts at all
times, regardless of their Years of Vesting Service."
In all other respects, the Plan remains in full force and effect.
IN WITNESS WHEREOF, the Plan Sponsor has caused this Third Amendment to
be executed by its President on the day and year first above written.
RATH & STRONG, INC.
By: /S/ DANIEL L. QUINN
--------------------------
Daniel L. Quinn, President
<PAGE>
FOURTH AMENDMENT
TO THE
RATH & STRONG, INC.
EMPLOYEES' STOCK BONUS PLAN
THIS FOURTH AMENDMENT made this 30th day of December, 1997, by Rath &
Strong, Inc., a Massachusetts corporation (hereinafter referred to as the "Plan
Sponsor").
WHEREAS, the Plan Sponsor has established the Rath & Strong, Inc.
Employees' Stock Bonus Plan (the "P1an"), as most recently amended and restated
generally effective January 1, 1989; and
WHEREAS, the Plan Sponsor has reserved the right to amend the Plan
pursuant to Section 7.01 thereof; and
WHEREAS, the Plan Sponsor desires to further amend the Plan.
NOW, THEREFORE, the Plan is hereby amended, effective December 28, 1997,
by deleting Section 2.09 in its entirety and substituting the following
therefor:
"2.09 `Compensation' means the amount paid by the Company
to an Employee as salary, wages, overtime, bonuses and sales
commissions as well as the amount of any salary adjustment
contributions made by the Company to the Rath & Strong, Inc.
Employees' Savings Plan on of such Employee pursuant to Section
401(k) of the Code and any amounts which would have been paid to
an Employee as regular compensation but for an election by an
Employee under Section 125 of the Code, but does not include
contributions or benefits under this Plan or any other employee
benefit plan maintained by the Company. For any Member who is a
nonresident alien, Compensation shall be the amount agreed to be
paid by the Company as salary, wages, overtime, bonuses and sales
commissions in United States dollars. A Member's Compensation for
any Plan year shall not be taken into account for any purpose of
the Plan to the extent that such Compensation exceeds $200,000
(subject to cost-of-living adjustments made by the Secretary of
Treasury or his delegate under Section 401(a)(17) of the Code).
In determining the Compensation of a Member for purposes of this
limitation, the rules of Section 41t4(q)(6) of the Code shall
apply, except in applying such rules the term `family' shall
include only the spouse of the Member and any lineal descendants
of the Member who have not attained age 19 before the close of
the year. Notwithstanding the foregoing, for Plan Years beginning
on or after January l, 1994, the annual Compensation of each
Employee taken into account under the
<PAGE>
Plan shall not exceed $150,000, as adjusted for increases in the
cost of living pursuant to Section 401(a)(17) of the Code."
In all other respects, the Plan remains in full force and effect.
IN WITNESS WHEREOF, the Plan Sponsor has caused this Fourth Amendment to
be executed by its President on the day and year first above written.
RATH & STRONG, INC.
By: /S/ DANIEL L. QUINN
-----------------------------
Daniel L. Quinn, President
<PAGE>
FIFTH AMENDMENT
TO THE
RATH & STRONG, INC.
EMPLOYEES' SAVINGS PLAN
(Amended and Restated Effective January 1, 1989)
The Rath & Strong, Inc. Employees' Savings Plan, as amended and restated
effective January 1, 1989, is hereby further amended by adding the following new
Section 12.12, effective December 12, 1994:
"12.12 USERRA. Notwithstanding any provision of the Plan to the
------
contrary, contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with
ss.414(u) of the Internal Revenue Code."
In all other respects, the Plan remains in full force and effect.
IN WITNESS WHEREOF, this Fifth Amendment has been signed and sealed for,
and on behalf of, Rath & Strong, Inc. by its duly authorized officer, this 4th
day of May, 1998.
RATH & STRONG, INC.
By: /S/ DANIEL L. QUINN
Daniel L. Quinn, President
EXHIBIT 5 and 23.2
May 28, 1998
Aon Corporation
123 N. Wacker Drive
Chicago, Illinois 60606
Ladies and Gentlemen:
I have participated in the preparation of the Registration Statement on
Form S-8 to be filed with the Securities and Exchange Commission covering
12,633,154 shares of common stock $1.00 par value per share (the "Shares") of
Aon Corporation (the "Company") with respect to the Aon Stock Award Plan (as
amended and restated through 1997), the Aon Stock Option Plan (as amended and
restated through 1997) and the Aon 1998 Employee Stock Purchase Plan and the
Rath & Strong, Inc. Employees' Stock Bonus Plan (the "Plans"). I am familiar
with the Company's Second Restated Certificate of Incorporation, as amended, its
Bylaws, and the terms of the Plans. I have also made or caused to be made such
further examination as I have deemed necessary in order for me to render this
opinion.
Based on the foregoing, I am of the opinion that the 12,633,154 Shares
of the Company being registered will, when issued in accordance with the terms
of the Plan, be legally issued, fully paid, and non-assessable.
My opinion is limited to matters governed by the laws of the State of
Illinois and the General Corporation Law of the State of Delaware.
I hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement and to the use of my name in the Registration Statement.
Very truly yours,
/S/ JEROME S. HANNER
Jerome S. Hanner
Senior Counsel
Exhibit 15
Board of Directors and Stockholders
Aon Corporation
We are aware of the incorporation by reference in this Registration Statement of
Aon Corporation for the registration of 12,633,154 shares of its common stock of
our report dated May 5, 1998 relating to the unaudited condensed consolidated
interim financial statements of Aon Corporation that are included in its Form
10-Q for the quarter ended March 31, 1998.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
May 28, 1998
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Aon Stock Award Plan, Aon Stock Option
Plan, Aon 1998 Employee Stock Purchase Plan, and the Rath & Strong, Inc.
Employees' Stock Bonus Plan of our reports dated February 10, 1998, with respect
to the consolidated financial statements and schedules of Aon Corporation
included in or incorporated by reference in its Annual Report (Form 10-K) for
the year ended December 31, 1997, filed with the Securities and Exchange
Commission.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
May 28, 1998
