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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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ELCO INDUSTRIES, INC.
(Name of Subject Company)
ELCO INDUSTRIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $5.00 PER SHARE
(Title of Class of Securities)
28442010
(CUSIP Number of Class of Securities)
JOHN C. LUTZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1111 SAMUELSON ROAD
P.O. BOX 7009
ROCKFORD, ILLINOIS 61125-7009
(815) 397-5151
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
With a copy to:
WILLIAM R. KUNKEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Elco Industries, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 1111 Samuelson Road, P.O. Box 7009, Rockford, Illinois
61125-7009. The title of the class of equity securities to which this
Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is the
common stock, par value $5.00 per share, of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF THE OFFEROR.
This Schedule 14D-9 relates to a tender offer (the "Offer") by E.I. Textron
Inc., a Delaware corporation (the "Offeror") and a wholly-owned subsidiary of
Textron Inc., a Delaware corporation ("Parent"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated September 19, 1995 (the "Schedule 14D-1"), to
purchase all outstanding shares of Common Stock, together with the associated
stock purchase rights (the "Rights" and, together with the Common Stock, the
"Shares") issued pursuant to the Rights Agreement, dated as of January 20, 1988,
as amended, between the Company and The First National Bank of Chicago, as
Rights Agent, at a price of $36.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated September 19, 1995 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 12, 1995 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and satisfaction or waiver of
all conditions to the merger, the Offeror will be merged with and into the
Company (the "Merger"), and the Company will continue as the surviving
corporation (the "Surviving Corporation"). A copy of the Merger Agreement has
been filed with the Securities and Exchange Commission (the "Commission") as
Exhibit 1 to this Schedule 14D-9 and is incorporated herein by reference.
Based on the information in the Offer to Purchase, the principal executive
offices of the Offeror and Parent are located at 40 Westminster Street,
Providence, Rhode Island 02093.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and (i) its executive officers, directors or affiliates and (ii) Parent, its
executive officers, directors or affiliates, is described in the attached
Schedule 1 or set forth below.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase,
which has been filed with the Commission, is incorporated herein by reference.
Such summary should be read in its entirety for a more complete description of
the terms and provisions of the Merger Agreement. The following summarizes
certain portions of the Merger Agreement which relate to arrangements among the
Company, Parent and the Company's executive officers and directors.
Board Representation. The Merger Agreement provides that promptly upon the
purchase of the Shares by the Parent pursuant to the Offer, Parent will be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors of the Company as will give Parent, subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), representation on the Board of Directors equal to the
product of (a) the total number of directors on the Board of Directors and (b)
the percentage that the number of Shares purchased by Parent bears to the number
of Shares outstanding, and the Company will, upon request by Parent, promptly
increase the size of the Board of Directors and/or exercise its reasonable best
efforts to secure the resignations of such number of directors as
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is necessary to enable Parent's designees to be elected to the Board of
Directors and will cause Parent's designees to be so elected.
Stock Options. At the time the Merger becomes effective (the "Effective
Time"), (i) each outstanding option to purchase shares of Common Stock
(including options granted to directors of the Company, each, a "Company Stock
Option") granted under the Company's stock option plans (the "Stock Plans")
whether or not exercisable, and whether or not vested, will become fully
exercisable and vested and (ii) each Company Stock Option which is then
outstanding will be cancelled. In consideration of such cancellation, the
Surviving Corporation will deliver on or promptly after the Effective Time to
each holder thereof cash in an amount per Share subject to such cancelled
Company Stock Option equal to the excess of the price per Share to be received
in the Offer over the exercise price per Share of such Company Stock Option.
Performance Shares. The Company also has agreed to terminate the Company's
1988 Performance Share Plan (the "Performance Share Plan") immediately prior to
the Effective Time and without prejudice to the holders of Performance Shares
(as defined in the Performance Share Plan) and grant no additional Performance
Shares from and after the date of the Merger Agreement. At the Effective Time,
all outstanding Performance Shares will be cancelled and all Performance Awards
(as defined in the Performance Share Plan) will be deemed 100 percent earned at
the target level for the relevant Performance Period (as defined in the
Performance Share Plan) and will be paid in cash by the Surviving Corporation as
soon as practicable after the Effective Time.
Agreement with Respect to Employee Matters. The Merger Agreement provides
that to the extent permitted by law, for a period of one year following the
Effective Time, Parent will cause the Surviving Corporation to provide the
current and former non-union employees of the Company and its Subsidiaries (as
defined in the Merger Agreement) employee benefits no less favorable, in
aggregate value, than those provided by the Company on the date of the Merger
Agreement to those employees, it being understood that (i) neither Parent nor
the Surviving Corporation will be obligated to provide an employee stock
ownership plan to such employees or to continue any one or more of such benefits
and (ii) neither Parent nor the Surviving Corporation will be obligated to
provide any benefits which are payable pursuant to a "change in control," except
as otherwise provided in the Merger Agreement. In addition, the Surviving
Corporation will pay for customary outplacement services to any executive
officer of the Company whose employment is terminated by the Surviving
Corporation and who is entitled to payments under an existing severance
agreement, on the same basis as outplacement services are provided to executive
officers of Parent or its subsidiaries of a comparable level.
In the Merger Agreement, Parent and Surviving Corporation agree to honor
(without modification) and assume employment agreements, severance agreements
and individual benefit arrangements disclosed to Parent, as in effect at the
Effective Time.
Agreement with Respect to Director and Officer Indemnification and
Insurance. The Merger Agreement provides that from and after the Effective Time,
Parent agrees to, and to cause the Surviving Corporation to, indemnify and hold
harmless all past and present officers, directors, employees and agents of the
Company and its Subsidiaries to the full extent such persons may be indemnified
by the Company pursuant to the Company's Certificate of Incorporation and Bylaws
as in effect as of the date of the Merger Agreement for acts and omissions
occurring at or prior to the Effective Time.
Pursuant to the Merger Agreement, Parent will provide, or cause the
Surviving Corporation to provide, for a period of not less than six years after
the Effective Time, the Company's current directors and officers an insurance
and indemnification policy that provides coverage for events occurring at or
prior to the Effective Time (the "D&O Insurance") that is no less favorable than
the existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Parent and the
Surviving Corporation will not be required to pay an annual premium for the D&O
Insurance in excess of $105,000, but in such case will purchase as much such
coverage as possible for such amount.
The Merger Agreement states that the provisions described in the preceding
two paragraphs will be binding on all successors and assigns of Parent, the
Offeror, the Company and the Surviving Corporation.
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CONFIDENTIALITY AGREEMENT
On September 1, 1995, Parent and the Company entered into a confidentiality
agreement (the "Confidentiality Agreement") pursuant to which Parent agreed to
(a) keep confidential certain information concerning the Company to be provided
to Parent in connection with its evaluation of a possible transaction involving
the Company, and (b) customary "standstill" provisions limiting Parent's freedom
of action with respect to proposals to acquire the Company and certain other
actions that would affect control of the Company. As a result of the Company
entering into the Merger Agreement with Parent, such standstill provisions
terminated. A copy of the Confidentiality Agreement has been filed with the
Commission as Exhibit 5 to this Schedule 14D-9 and is incorporated herein by
reference.
CERTAIN CONFLICTS
Stock Options. Pursuant to the terms of the Company's 1991 Stock Option
Plan (the "1991 Option Plan"), all outstanding stock options under the 1991
Option Plan, whether or not such stock options would otherwise then be
exercisable, will become immediately exercisable upon a change in control of the
Company (as defined in the 1991 Option Plan), which would occur upon completion
of the Offer. Pursuant to the Merger Agreement as described above, all stock
options which have been granted under either of the Stock Plans and are
outstanding at the Effective Time, whether or not then exercisable, and whether
or not vested, will be exchanged for, and the holder of each such option will be
entitled to receive upon surrender of such option for cancellation, cash equal
to the excess of the price per Share to be received in the Offer over the
exercise price of each such option. The directors and executive officers of the
Company as a group hold stock options granted under the Stock Plans to purchase
an aggregate of 48,500 Shares at an aggregate exercise price of $692,225.
Performance Awards. As stated above, at the Effective Time, all Performance
Awards will be deemed 100 percent earned for the relevant Performance Period at
the target level and will be paid in cash by the Surviving Corporation as soon
as practicable after the Effective Time. Executive officers of the Company as a
group will receive approximately $2,151,216 in cash as a result of the payment
of Performance Awards.
Change of Control Agreements. The Company maintains change of control
agreements with, among others, its executive officers (including the five
persons named in the summary compensation table which appears in Schedule I
hereto). These agreements provide for the payment of certain severance and other
benefits upon termination of the executive's employment by the Company without
Cause or by the executive for Good Reason (each as defined in such agreements)
within the two (2) years following a change in control of the Company (as
defined in such agreements). A change in control of the Company would occur upon
completion of the Offer. In the event that all of these agreements are
triggered, executive officers of the Company as a group (six persons) would
receive approximately $2,730,356 (not including additional payments required in
the event the initial payments are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended).
Deferred Compensation Agreements. The Company has entered into deferred
compensation agreements with a former executive officer (who is currently a
director) and certain of its current executive officers which deferred the
payment of certain compensation due such persons. Under the terms of such
agreements, the deferred amount, plus interest earned, is due upon a change of
control, which would occur upon consummation of the Offer. Such persons will
receive approximately $288,385, in the aggregate, under such agreements as a
result of the consummation of the Offer.
Supplemental Benefit and Supplemental Retirement Agreements. The Company
has entered into supplemental benefit and supplemental retirement agreements to
provide supplemental retirement benefits to certain key employees of the
Company. Such agreements contain provisions which provide for lump sum
distributions if a change of control occurs and the employee voluntarily leaves
the Company or is discharged. The acquisition by the Offeror of Shares pursuant
to the Offer will constitute a change of control under such agreements. In the
event that all of these agreements are triggered, executive officers of the
Company as a group would receive approximately $2,009,880.
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Indemnification of Officers and Directors. The Company's Certificate of
Incorporation provides that each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that the person is or was a director or officer
of the Company (or, while a director or officer of the Company, is or was
serving at the request of the Company as a director, officer, employee or agent
for another entity) shall be indemnified by the Company against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such
person reasonably believed was in or not opposed to the best interests of the
Company, and, with respect to any criminal action, such person had reasonable
cause to believe such conduct was not unlawful. The Certificate of Incorporation
further provides that rights conferred thereby include the right to have the
expenses incurred in defending the proceedings specified above in advance of
their final disposition paid by the Company; provided that, such payment will be
made only upon delivery to the Company by the indemnified party of an
undertaking to repay all amounts so advanced if it is ultimately determined that
the person receiving such payments is not entitled to be indemnified under the
Certificate of Incorporation.
The Certificate of Incorporation provides that the right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition is not exclusive of any other right which any person may have
or acquire under any agreement, by-law, vote of stockholders or disinterested
directors or otherwise. In addition, the Company may purchase and maintain
insurance, at its expense, to protect itself and any of its directors, officers,
employees or agents against any expense, liability or loss, whether or not the
Company would have the power to indemnify such person against such expense,
liability or loss under the Certificate of Incorporation. The Company currently
maintains such insurance for its directors and executive officers.
The Merger Agreement provides that the indemnification obligations set
forth in the Company's Certificate of Incorporation and By-laws on the date of
the Merger Agreement will survive the Merger.
Pursuant to the terms of the Merger Agreement and subject to certain
limitations, for a period of six years from the Effective Time, Parent will
provide the Company's current directors and officers with an insurance and
indemnification policy that is no less favorable than the existing policy, or if
unavailable, the best available coverage; provided, however, that it will not be
required to pay annual premiums in excess of $105,000, but in such case will
purchase as much such coverage as possible for such amount. See "-- The Merger
Agreement -- Agreement with Respect to Director and Officer Indemnification and
Insurance."
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors.
At meetings of the Board held on September 11 and 12, 1995, the Board met
with its financial and legal advisors to review the business, financial
condition and prospects of the Company and the terms and conditions of the Offer
and various matters related thereto, including reports by the Company's
financial advisor, The Chicago Dearborn Company ("Chicago Dearborn"), on the
financial condition and performance and potential value of the Company. Based on
the terms of the Merger Agreement presented to the Board on September 12, 1995,
in light of and subject to the terms and conditions set forth in the Merger
Agreement and after receiving advice from management of the Company
("Management"), Chicago Dearborn and the Company's legal advisors, the Board
unanimously approved the Merger Agreement, the Offer and the Merger, determined
that the terms of the Offer and the Merger are fair to, and in the best
interests of, the Company and its stockholders and resolved to recommend that
the Company's stockholders accept the Offer and tender their Shares pursuant to
the Offer.
A copy of a letter to stockholders communicating the recommendation of the
Board is filed as Exhibit 3 to this Schedule 14D-9 and is incorporated herein by
reference.
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(b)(1) Background.
In late 1994, a representative of Illinois Tool Works, Inc. ("ITW")
contacted a director of the Company and expressed ITW's interest in a possible
combination with the Company. In January 1995, ITW contacted the Company and
indicated that it was prepared to offer to acquire the Company for $22.00 per
Share in cash or ITW common stock. Following review of the expression of
interest by the Company's Board of Directors, the Company contacted ITW and
indicated that the Board concluded that the Company would remain independent and
pursue its strategic plan.
On January 16, 1995, the Company engaged Chicago Dearborn to provide the
Company with financial advisory and investment banking services in connection
with the financial evaluation of the Company and a review of strategic
alternatives available to the Company to maximize value for stockholders. During
February 1995, ITW contacted the Company and requested the Company reconsider
its position. After a meeting of the Board of Directors of the Company, the
Company responded to ITW that it had reaffirmed its decision to continue as an
independent public company.
During March and April 1995, the Company and its representatives met with
Okabe Company Limited, a principal stockholder of the Company, and its
representatives to discuss ITW's interest in the Company.
On August 10, 1995, ITW publicly announced that it had submitted a proposal
to the Company to acquire all outstanding shares of Common Stock of the Company
at a price of $27 per Share in cash.
On August 11, 1995, in response to ITW's offer to acquire the Company,
Herbert Henkel, President of Parent's Industrial Products Group, contacted
certain members of the Company's senior management regarding ITW's offer and,
over the next several days, expressed to such persons and other representatives
of the Company Parent's potential interest in acquiring the Company. In
addition, during the days immediately following ITW's announcement, the Company
and its representatives were contacted by another company which expressed
potential interest in acquiring the Company.
On August 17, 1995, after review of ITW's proposal by the Board of
Directors and Chicago Dearborn, the Company announced that it had rejected ITW's
unsolicited proposal and that the Board had unanimously concluded that the
proposal was inadequate. In addition, the Company announced that, in taking such
a position, the Company's Board of Directors was taking into account other
strategic alternatives available to the Company, as well as the Company's
prospects as an independent company. Following such announcement, the Board
authorized its financial advisor to contact Parent and the other company which
had expressed interest in acquiring the Company.
Shortly after the Company rejected the ITW offer, representatives of the
Company informed Mr. Henkel that, in response to Parent's potential interest in
acquiring the Company, the Company was prepared to provide certain non-public
information concerning the Company to Parent, if Parent entered into a
confidentiality agreement. During the course of negotiating the confidentiality
agreement, Mr. Henkel conveyed to representatives of the Company a preliminary,
nonbinding indication of interest to acquire the Company in a transaction valued
at approximately $35 per Share.
On August 21, 1995, ITW announced that it intended to submit a slate of
three nominees for election to the Company's Board of Directors and a written
demand for a list of the Company's stockholders in order to communicate with
them directly. ITW also stated that, on August 15, 1995, it had filed a
Notification and Report under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, with the Federal Trade Commission and the Department of
Justice regarding its proposed acquisition of the Company and that it intended
to file proxy materials with respect to its solicitation with the Commission.
On August 23 and September 7, 1995, the other company which had expressed
interest in acquiring the Company and ITW, respectively, signed confidentiality
and standstill agreements with the Company. Following the execution of such
agreements, the Company provided such parties with certain non-public business
and financial information.
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On September 1, 1995, Parent and the Company entered into the
Confidentiality Agreement. Immediately following the execution of the
Confidentiality Agreement, the Company provided Parent with certain non-public
business and financial information, including certain financial projections.
From September 5 through September 12, 1995, representatives of Parent and
the Company had numerous telephone meetings in which the terms of the Merger
Agreement were negotiated. During this period, Parent also conducted additional
due diligence with respect to the Company. As a result of this process, Parent
indicated that it was prepared to offer to acquire all outstanding shares of
Company Common Stock for $36 per Share in cash.
On September 11, 1995, the Company and Chicago Dearborn met with ITW to
allow ITW to conduct limited due diligence. On September 12, ITW had further
discussions with Chicago Dearborn regarding its interest in the Company and
improved its proposal, but not to a price that was competitive with Parent's
proposal.
In the evening of September 12, 1995, the Board of Directors of the Company
met to consider the final terms of the Merger Agreement. At this meeting,
Chicago Dearborn delivered its opinion to the Company's Board of Directors to
the effect that, as of such date, the $36 cash consideration proposed to be
received by the holders of Shares pursuant to the Offer and the Merger was fair
to such holders from a financial point of view. The Board of Directors of the
Company then determined that the terms of the Offer and the Merger were fair to,
and in the best interests of, the Company and its stockholders, approved the
Merger Agreement and resolved to recommend that the Company's stockholders
approve the Merger Agreement, accept the Offer and tender their shares of Common
Stock pursuant thereto and approve the Merger.
At approximately 8:00 a.m., New York City time, on September 13, 1995,
Parent and the Company issued a joint press release announcing the execution of
the Merger Agreement and the intention of the Offeror to commence the Offer to
purchase all outstanding Shares for $36 per Share, in cash.
On September 19, 1995, the Offeror commenced the Offer.
(b) (2) Reasons for Recommendation.
In reaching its determination and recommendation with respect to the Offer,
as indicated above, the Board reviewed in detail the proposed terms of the Offer
and deliberated extensively with its legal and financial advisors regarding the
foregoing. At the end of the meeting, the Board unanimously approved the Merger
Agreement, the Offer and the Merger, determined that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company and its
stockholders, resolved to recommend that the Company's stockholders accept the
Offer and tender their Shares pursuant to the Offer and authorized the execution
and delivery of the Merger Agreement. Numerous factors were taken into account
including, among other things, the following:
(i) the terms and conditions of the Offer and the Merger Agreement;
(ii) presentations by Management at the August 17, 1995 meeting of the
Board of Directors regarding the financial condition, results of
operations, business and prospects of the Company, including the prospects
of the Company were it to remain independent;
(iii) the fact that since August 10, 1995, the date ITW first publicly
announced its proposal to acquire the Company, no person had made an offer
superior to Parent's;
(iv) the trading price of the Shares over the past three years and
that the $36 per Share Offer price represents a premium of approximately
93% over the closing sales price of $18.625 for a Share on August 9, 1995,
the last trading day prior to the public announcement by ITW of its
interest in acquiring the Company for $27 per Share and approximately 22%
over the closing sales price of $29.50 for a Share on September 12, 1995,
the last trading day prior to the public announcement that the Company,
Parent and the Offeror entered into the Merger Agreement;
(v) the prices paid in other acquisition transactions deemed relevant
by Chicago Dearborn;
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(vi) the recommendation of Management that the Offer and the Merger be
approved;
(vii) the oral and written presentations by Chicago Dearborn at the
September 11 and September 12, 1995 Board meetings and the written opinion
of Chicago Dearborn, dated September 12, 1995, to the effect that, as of
the date of the opinion, the cash consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair
from a financial point of view to such stockholders. A copy of the opinion
of Chicago Dearborn which sets forth the procedures followed, the factors
considered and the assumptions made by Chicago Dearborn is attached hereto
as Exhibit 4 to this Schedule 14D-9 and incorporated in its entirety herein
by reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF CHICAGO
DEARBORN CAREFULLY AND IN ITS ENTIRETY;
(viii) the views expressed by Chicago Dearborn that it was unlikely
that any other party would propose a transaction that was more favorable to
the Company and its stockholders;
(ix) the Merger Agreement, subject to its terms, permits the Board, in
the exercise of its fiduciary duties after consultation with outside
counsel to the Company, to engage in negotiations with or to furnish
information to third parties in response to unsolicited, written
alternative acquisition proposals after the date of the Merger Agreement;
and
(x) the Merger Agreement permits the Company, subject, among other
things, to payment of a termination fee, to terminate the Merger Agreement
if any person shall have made a proposal or offer which the Board in good
faith determines represents a financially superior transaction for the
stockholders of the Company as compared to the Offer and the Merger and the
Board of the Company determines after consultation with outside counsel to
the Company that a failure to terminate the Merger Agreement would be
inconsistent with compliance by the Board with its fiduciary duties to
stockholders imposed by law.
The Board did not assign relative weights to the foregoing factors or
determine that any factor was of particular importance. Rather, the Board viewed
its position and recommendations as being based on the totality of the
information presented and considered by it.
The Board recognized that, while the consummation of the Offer gives the
stockholders the opportunity to realize a significant premium over the prices at
which the Shares were traded both prior to the announcement of ITW's proposal
and prior to the public announcement of the Merger and the Offer, tendering in
the Offer would eliminate the opportunity for stockholders to participate in the
future growth and profits of the Company.
It is expected that, if the Shares were not to be purchased by the Offeror
in accordance with the terms of the Offer, the Company's current management,
under the general direction of the Board, will continue to manage the Company as
an ongoing business in accordance with the Company's current long-term strategic
plan.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Board of Directors of the Company engaged Chicago Dearborn to provide
it with financial advisory and investment banking services in connection with a
financial evaluation of the Company and a review of strategic alternatives
available to the Company to maximize value for its stockholders. Pursuant to a
letter agreement, dated as of January 16, 1995, between the Company and Chicago
Dearborn, if the Offer and the Merger are consummated, the Company has agreed to
pay Chicago Dearborn an aggregate fee of approximately $1.7 million for acting
as financial advisor in connection with the transaction, including rendering its
opinion. Chicago Dearborn was paid a retainer fee of $150,000 and a fee of
$200,000 upon delivery of its written opinion. Such fees will be credited
against the aggregate fee to be paid to Chicago Dearborn by the Company pursuant
to the letter agreement. The Company has also agreed to reimburse Chicago
Dearborn for its reasonable out-of-pocket expenses, including the reasonable
fees and expenses of its counsel, and to indemnify Chicago Dearborn for certain
liabilities arising out of the rendering of its opinion, including liabilities
arising under the federal securities laws.
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Chicago Dearborn has provided certain investment banking services to the
Company from time to time for which it has received customary compensation. In
the ordinary course of its business, Chicago Dearborn (or its affiliate, The
Chicago Corporation) may actively trade the securities of the Company and Parent
for its own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
Except as disclosed herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth in Schedule II hereto, no transactions in the
Shares have been effected during the past 60 days by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, except for gifts of Shares to
family members or charitable organizations, each executive officer, director and
affiliate of the Company currently intends to tender all Shares over which he or
she has sole dispositive power to the Offeror.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described above or in Items 3(b) or 4(b) above, there are no
transactions, Board of Directors' resolutions, agreements in principle or signed
contracts in response to the Offer that relate to or would result in one or more
of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by the Offeror, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of the Company other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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EXHIBIT NO.
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<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of September 12, 1995, among Textron
Inc., E.I. Textron Inc. and Elco Industries, Inc. (filed as Exhibit (a)(11) to
Schedule 14D-1 of Parent and Offeror filed with the Securities and Exchange
Commission on September 19, 1995, and incorporated herein by reference).
Exhibit 2 Press Release issued jointly by Textron Inc. and Elco Industries, Inc., dated
September 13, 1995 (filed as Exhibit 1 to Form 8-K filed by Elco Industries,
Inc. with the Securities and Exchange Commission on September 15, 1995,
reporting an event on September 13, 1995, and incorporated herein by
reference).
Exhibit 3 Letter to Stockholders of Elco Industries, Inc., dated September 19, 1995.1
Exhibit 4 Opinion of The Chicago Dearborn Company, dated September 12, 1995.1
Exhibit 5 Confidentiality Agreement, dated September 1, 1995, between Textron Inc. and
Elco Industries, Inc.
</TABLE>
---------------
<TABLE>
<S> <C>
1 Included in copies mailed to stockholders.
</TABLE>
8
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT NO.
------------
<S> <C>
Exhibit 6 Elco Industries, Inc. Performance Share Plan adopted October 28, 1988 (filed
as Exhibit 10.13 to Registrant's Annual Report on Form 10-K for the year ended
June 30, 1995, and incorporated herein by reference).
Exhibit 7 Elco Industries, Inc. 1991 Stock Option Plan (filed as Exhibit 10.13 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1992, and
incorporated herein by reference).
Exhibit 8 Elco Industries, Inc. 1992 Stock Option Plan For Non-Employee Directors (filed
as Exhibit 10.14 to Registrant's Annual Report on Form 10-K for the year ended
June 30, 1993, and incorporated herein by reference).
Exhibit 9 Change of Control Agreement with John C. Lutz (filed as Exhibit 10.18 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 10 Change of Control Agreement with August F. DeLuca (filed as Exhibit 10.19 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 11 Change of Control Agreement with Derek M. Hasse (filed as Exhibit 10.20 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 12 Change of Control Agreement with Robert H. Rothkopf (filed as Exhibit 10.21 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 13 Change of Control Agreement with James R. Stenberg (filed as Exhibit 10.22 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 14 Change of Control Agreement with Kenneth L. Heal (filed as Exhibit 10.23 to
Registrant's Annual Report on Form 10-K for the year ended June 30, 1995, and
incorporated herein by reference).
Exhibit 15 Executive Supplemental Benefit Agreement dated May 30, 1988, between Elco
Industries, Inc. and August F. DeLuca.
Exhibit 16 Executive Supplemental Defined Contribution Benefit Agreement dated March 30,
1995, between Elco Industries, Inc. and August F. DeLuca.
Exhibit 17 Executive Supplemental Defined Contribution Benefit Agreement dated March 30,
1995, between Elco Industries, Inc. and John C. Lutz.
Exhibit 18 Executive Supplemental Benefit Agreement dated March 30, 1995, between Elco
Industries, Inc. and Derek M. Hasse.
Exhibit 19 Executive Supplemental Defined Contribution Benefit Agreement dated August 18,
1995, between Elco Industries, Inc. and Robert H. Rothkopf.
Exhibit 20 Executive Supplemental Defined Contribution Benefit Agreement dated August 18,
1995, between Elco Industries, Inc. and James R. Stenberg.
Exhibit 21 Executive Supplemental Defined Contribution Benefit Agreement dated March 30,
1995, between Elco Industries, Inc. and Kenneth L. Heal.
</TABLE>
9
<PAGE> 11
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C>
Dated: September 19, 1995 ELCO INDUSTRIES, INC.
By /s/ JOHN C. LUTZ
-----------------------------------------
John C. Lutz
President and Chief Executive Officer
</TABLE>
10
<PAGE> 12
SCHEDULE I
ELCO INDUSTRIES, INC.
1111 SAMUELSON ROAD
P.O. BOX 7009
ROCKFORD, ILLINOIS 61125-7009
(815) 397-5151
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
---------------------
This Information Statement is being mailed on or about September 19, 1995
as a part of the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") to the holders of record of the Shares at the close
of business on or about September 18, 1995. You are receiving this Information
Statement in connection with the possible election of persons designated by the
Offeror to a majority of the seats on the Board of Directors of the Company. The
Merger Agreement requires the Company, at the request of the Offeror. to take
all action necessary to cause the Offeror's designees to be elected to the Board
of Directors under the circumstances described therein. This Information
Statement is required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. See "Board of Directors and Executive Officers -- Right to Designate
Directors; The Offeror Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Offeror commenced the Offer on
September 19, 1995. The Offer is scheduled to expire at 12:00 midnight, New York
City time, on October 17, 1995 unless the Offer is extended.
The information contained in this Information Statement concerning the
Offeror has been furnished to the Company by the Offeror, and the Company
assumes no responsibility for the accuracy or completeness of such information.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of September 8, 1995, there were
4,982,869 Shares outstanding. The Board of Directors currently consists of nine
members and there are currently no vacancies on the Board of Directors. Each
director holds office until such director's successor is elected and qualified
or until such director's earlier resignation, removal, death or incapacity.
RIGHT TO DESIGNATE DIRECTORS; THE OFFEROR DESIGNEES
Pursuant to the Merger Agreement, promptly upon the purchase of Shares
pursuant to the Offer, Parent will be entitled to designate such number of
directors (the "Offeror Designees"), rounded up to the next whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors and (ii) the percentage that the
number of Shares owned by Parent bears to the total number of Shares
outstanding. The Company will, upon request of Parent, at the Company's
election, promptly increase the number of directors and/or exercise its
reasonable best efforts to secure the resignations of such number of directors
as is necessary to enable the Offeror's Designees to be so
I-1
<PAGE> 13
elected to the Board. Prior to the Effective Time, the Company and the Offeror
shall use all reasonable efforts to ensure that the Company's Board of Directors
at all times includes at least three directors who were directors on the date of
the Merger Agreement or persons designated by such directors and neither were
designated by the Offeror nor are employees of the Company.
The Offeror has informed the Company that it will choose the Offeror
Designees from Parent's or the Offeror's executive officers listed in Annex I to
the Offer to Purchase, a copy of which is being mailed to the Company's
stockholders together with this Schedule 14D-9. The Offeror has informed the
Company that any such Offeror Designee will act as a director, if so requested
by Parent. The information on such Annex I is incorporated herein by reference.
It is expected that the Offeror Designees may assume office at any time
following the purchase by the Offeror of a specified minimum number of Shares
pursuant to the Offer, which purchase cannot be earlier than October 17, 1995
and that, upon assuming office, the Offeror Designees will thereafter constitute
at least a majority of the Board of Directors.
The Board of Directors is divided into three classes serving staggered
terms in accordance with the Company's Certificate of Incorporation and By-laws.
The By-laws of the Company provide that the Board of Directors shall be
comprised of not less than six or more than twelve directors. The number of
directors is currently fixed at nine. The directors are currently divided into
three classes, with members of each class holding office for staggered
three-year terms.
CLASS 1 DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1995:
<TABLE>
<CAPTION>
OCCUPATION AND EMPLOYMENT FIRST BECAME
NAME AGE FOR PAST FIVE YEARS A DIRECTOR
------------------------------ --- ----------------------------------- ------------
<S> <C> <C> <C>
G. Robert Evans(2)............ 64 Chairman and Chief Executive 1992
Officer, Material Sciences
Corporation, a developer and
commercializer of continuously
processed, coated materials
technologies, since 1991; President
and Chief Executive Officer,
Corporate Finance Associates
Illinois, Inc., 1990-1991.
David D. Peterson(1).......... 63 President and Chief Executive 1987
Officer, Baker, Fentress & Company,
a non-diversified closed-end
management investment company.
James H. Rilott(1)(2)......... 58 President, Rockford Calibration 1989
Services, an industrial metrology
service, since January 1994;
Management Consultant, Anderson
Industries Inc., a diversified
holding company, 1992-1993;
President, Atwood Industries, Inc.,
a manufacturer of automotive
components, 1988-1992.
</TABLE>
I-2
<PAGE> 14
CLASS 2 DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1996:
<TABLE>
<S> <C> <C> <C>
Milton R. Brown(1)(2)......... 63 Chairman, President and Chief 1993
Executive Officer of Suntec
Industries, Incorporated,
manufacturer of fuel unit
components.
Wayne P. Lockwood(3).......... 59 Partner, William Blair & Company, 1970
investment bankers.
John C. Lutz.................. 56 President, Chief Executive Officer, 1991
Elco Industries, Inc. since June
1993; President, Chief Operating
Officer, Elco Industries, Inc. from
March 1991-June 1993; consultant to
small businesses from 1990-February
1991.
</TABLE>
CLASS 3 DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1997:
<TABLE>
<S> <C> <C> <C>
Robert L. Berner Jr.(3)....... 63 Partner, Baker & McKenzie, 1983
attorneys at law.
Carl J. Dargene(2)(3)......... 65 President and Chief Executive 1981
Officer, Amcore Financial, Inc., a
bank holding company.
James L. Packard(1)(3)........ 54 Chairman, President, Chief 1994
Executive Officer, Regal-Beloit
Corporation, producer of power
transmission systems and perishable
high speed steel rotary cutting
tools.
</TABLE>
---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Nominating and Director Affairs Committee.
There is no family relationship among any of the above-named directors.
Mr. Brown serves as a director of Amcore Financial, Inc., CLARCOR and
Suntec Industries, Inc.
Mr. Dargene serves as a director of Amcore Financial, Inc., Woodward
Governor Company, CLARCOR and Clinton Electronics.
Mr. Evans serves as director of Material Sciences Corporation, Consolidated
Freightways, Inc., The Old Second Bancorp, Inc. and Swift Energy Co.
Mr. Packard serves as a director of Regal-Beloit Corporation.
Mr. Peterson serves as a director of Baker, Fentress & Company,
Consolidated-Tomoka Land Co. and American Electronic Components, lnc.
OTHER INFORMATION
The Board of Directors holds four regular meetings during the year and
other special meetings as necessary. In addition, there is an organizational
meeting following the conclusion of the Annual Meeting of Stockholders. In
fiscal 1995, the Board held seven meetings, inclusive of special meetings and
the organizational meeting. Each director attended at least 75% of the aggregate
number of Board meetings and meetings of committees of which they are a member.
I-3
<PAGE> 15
The Board of Directors has three standing committees consisting of the
Compensation Committee, the Audit Committee and the Nominating and Director
Affairs Committee.
The Compensation Committee makes recommendations to the Board with respect
to compensation of senior management of the Company. The Compensation Committee
met five times in fiscal 1995.
The Audit Committee reviews the objectivity of the Company's financial
reporting. It also reviews and makes recommendations regarding the Company's
Code of Ethics. It meets with appropriate Company financial personnel, Company
internal audit personnel and with independent certified public accountants in
connection with such reviews. The independent certified public accountants have
the opportunity to meet, independent of Company personnel, with the Audit
Committee. The Audit Committee met twice in fiscal 1995.
The Nominating and Director Affairs Committee reviews qualifications and
makes recommendations of candidates to fill director vacancies and considers and
makes recommendations with respect to other director matters. The Nominating and
Director Affairs Committee will consider nominees recommended by stockholders in
writing to the Company addressed to the Secretary. The Nominating and Director
Affairs Committee met once in fiscal 1995.
Directors who are not employees of the Company receive an annual retainer
of $14,000 and fees of $1,000 for each Board of Directors meeting attended and
$900 for each committee meeting attended. Committee chairmen receive $1,800 for
each meeting attended. Pursuant to the Company's stock compensation plan for
non-employee directors under 60 years of age, the annual retainer is required to
be paid primarily in Common Stock of the Company rather than in cash.
Non-employee directors over 60 years of age may elect to have the annual
retainer paid primarily in Common Stock of the Company rather than in cash.
Under the terms of the plan, the Company has issued six participating directors
shares of Common Stock with a value of $60,000, the aggregate of intended annual
retainer fees for the five year period beginning October 31, 1991 (three
directors), October 30, 1992 (two directors) and October 29, 1993 (one
director). Additionally, two directors have been issued shares of Common Stock
with a value of $70,000 the aggregate of intended annual retainer fees for the
five-year period beginning November 4, 1994. Subsequent to the issuance of the
shares to the first six directors, the annual retainer was increased to $14,000.
These directors receive the differential in cash. The directors' rights to the
shares vest over a five-year period at the rate of twenty percent per year.
However, each director is entitled to receive dividends and exercise voting
rights with respect to all shares prior to vesting. Any unvested shares are
forfeited if the director ceases to be a director for any reason.
Under the 1992 Stock Option Plan for Non-Employee Directors, on October 23,
1992, each non-employee director was granted an option to purchase 1,000 shares
of the Company's Common Stock at a per share price of $11.75. Thereafter,
following each annual meeting each eligible director will automatically be
granted additional options of 1,000 shares. The per share exercise price of each
option is equal to 100% of the fair market value of Common Stock on the date of
grant. Options become vested and exercisable six months from the date of grant.
The expiration date of each option is ten years from the date of grant. However,
the right to exercise an option terminates six months from the date the optionee
ceases to be a member of the Board, unless the optionee dies, in which case the
exercise right is extended until the earlier of the second anniversary of the
date of death or the expiration of the option.
The Company has borrowed funds from time to time in the ordinary course of
business from the Amcore Bank -- Rockford of Rockford, Illinois of which Mr.
Lutz is a director. Mr. Dargene and Mr. Brown are directors of Amcore Financial,
Inc., a bank holding company of which Amcore Bank -- Rockford is a part. There
were no such borrowings outstanding at June 30, 1995.
Mr. Lockwood is a partner in the investment banking firm of William Blair &
Company, Chicago, Illinois, which firm has performed services for the Company
during its last fiscal year. William Blair & Company also maintains a market in
the Common Stock of the Company and, in connection therewith, may have a long or
short position in its trading account. Such position fluctuates and any shares
owned are not held for investment.
I-4
<PAGE> 16
Mr. Berner is a partner in the law firm of Baker & McKenzie, Chicago,
Illinois, which firm has been retained by the Company during its last fiscal
year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee ("Committee") is composed of four independent
non-employee directors: Messrs. David D. Peterson, Milton R. Brown, James L.
Packard and James H. Rilott. There are no Committee interlocks or insider
participation in decisions of the Committee; no current Elco officer serves on
the Committee and no officer serves as a director of a Committee member's
employer.
EXECUTIVE OFFICERS OF REGISTRANT
The following are the executive officers of the Company:
<TABLE>
<CAPTION>
POSITION AND BUSINESS EXPERIENCE DURING PAST
NAME AGE FIVE YEARS
-------------------------------- --- ---------------------------------------------
<S> <C> <C>
John C. Lutz.................... 56 President and Chief Executive Officer since
June 1993; President, Chief Operating
Officer March 1991-June 1993; consultant to
small businesses from 1990-February 1991;
Vice President and Division Manager, Barber
Colman Co., 1985-1989
August F. DeLuca................ 51 Vice President -- Finance and Chief Financial
Officer
Derek M. Hasse.................. 64 Vice President -- Administration
Kenneth L. Heal................. 52 Secretary and Treasurer
Robert H. Rothkopf.............. 50 President of Industrial Products Group since
June 1993; Vice President -- Marketing and
Sales from September 1989-June 1993;
previously served as President of Camcar
Division of Textron
James R. Stenberg............... 51 President of Home and Construction Products
Group since June 1993; previously was Group
Vice President, Consumer Products Group
</TABLE>
There is no family relationship among the above-named officers.
SECTION 16 COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Commission. Executive officers,
directors and greater than ten-percent stockholders are required by the
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the Company's 1995
fiscal year all Section 16(a) filing requirements applicable to its executive
officers, directors, and greater than ten-percent beneficial owners were
complied with.
I-5
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth as of September 5, 1995, all of the shares
of Common Stock of the Company beneficially owned by each person who is known by
the Company to own more than 5% thereof.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
TITLE NAME AND ADDRESS BENEFICIAL PERCENT
OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------- ------------------------------ ---------- --------
<S> <C> <C> <C>
Common Stock Okabe Company Limited 853,000(1) 17.1%
4-21-15 Mukohjima
Sumeda-ku
Tokyo, Japan
Common Stock Elco Industries, Inc., 508,952(2) 10.2%
Employee Stock Ownership Plan
c/o Amcore Trust Company
P.O. Box 1537
Rockford, IL 61110
Common Stock FMR Corp. 433,700(3) 8.7%
82 Devonshire Street
Boston, MA 02109
</TABLE>
---------------
(1) To the Company's knowledge, Okabe has sole voting and investment power with
respect to the shares owned.
(2) All of the shares held in the name of the ESOP are allocated to the accounts
of the participants. Participants exercise voting power over the shares
allocated to their account, but may not, under most circumstances, exercise
investment power over the shares until death, disability, retirement or
other termination of employment. The Trustee of the ESOP may, at its
discretion, vote those shares not voted by participants.
(3) This information is based on the most recent Schedule 13G filed by the named
person. FMR Corp. has sole power to dispose or to direct the disposition of
the indicated shares. Various persons have voting power and the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of the indicated shares.
No other stockholder beneficially owns, to the knowledge of the Company,
more than 5% of the Company's Common Stock.
I-6
<PAGE> 18
Management
The following table sets forth as of September 5, 1995, all of the shares
of Common Stock of the Company owned beneficially by all directors, nominees,
the five most highly-compensated executive officers and by directors and
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
TITLE OF NATURE OF PERCENT
NAME CLASS BENEFICIAL OWNERSHIP OF CLASS
-------------------------------------------- ------------- -------------------- --------
<S> <C> <C> <C>
Robert L. Berner Jr......................... Common Stock 19,818(1) .4%
Milton R. Brown............................. Common Stock 4,572(1) .1%
Carl J. Dargene............................. Common Stock 10,811(1) .2%
August F. DeLuca............................ Common Stock 4,521 .1%
G. Robert Evans............................. Common Stock 7,106(1) .1%
Derek M. Hasse.............................. Common Stock 30,018 .6%
Wayne P. Lockwood........................... Common Stock 23,511(1) .5%
John C. Lutz................................ Common Stock 7,156 .1%
James L. Packard............................ Common Stock 4,375(1) .1%
David D. Peterson........................... Common Stock 17,106(1)(3) .3%
James H. Rilott............................. Common Stock 9,312(1) .2%
Robert H. Rothkopf.......................... Common Stock 3,107 .1%
James R. Stenberg........................... Common Stock 4,366 .1%
Elco Industries, Inc. Profit Sharing and
Savings Plan.............................. Common Stock 110,019(2) 2.2%
All directors and officers as a group
(14 persons).............................. Common Stock 260,715(2) 5.2%
</TABLE>
---------------
(1) Includes 3,380 shares issued to Mr. Brown, 5,647 shares issued to Messrs.
Berner, Dargene and Lockwood, 5,106 shares issued to Messrs. Evans and
Peterson and 4,375 shares issued to Messrs. Packard and Rilott pursuant to a
non-employee director stock compensation plan. The shares become vested at
twenty percent per year over a five year period from the date of issue. The
director receives dividends and exercises voting rights on all shares
whether vested or unvested.
(2) These shares are held by the Elco Industries, Inc. Profit Sharing and
Savings Plan Trust over which Mr. Lutz and certain other officers share
voting and investment power.
(3) Includes 6,000 shares held in a trust in which Mr. Peterson is
co-beneficiary and has shared voting and investment power.
I-7
<PAGE> 19
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
received during each of the last three years by the Company's Chief Executive
Officer and the four other most highly paid executive officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
AWARDS
---------- PAYOUTS
ANNUAL COMPENSATION SECURITIES -------
------------------- UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS PAYOUTS COMPENSATION(1)
NAME & PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($)
--------------------------------- ---- -------- ------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John C. Lutz 1995 $293,529 $31,640 10,250 $88,485 $ 3,778
President, Chief Executive 1994 $268,017 $35,263 0 $43,469 $ 3,363
Office and Director 1993 $206,204 $0 2,00 $0 $ 2,515
Robert H. Rothkopf 1995 $192,533 $87,931 4,250 $20,687 $ 3,847
President of Industrial 1994 $184,994 $50,395 0 $13,719 $ 3,427
Products Group 1993 $160,331 $10,179 1,400 $0 $ 2,862
August F. DeLuca 1995 $153,817 $13,363 3,300 $43,224 $ 3,602
Vice President -- Finance 1994 $148,412 $15,733 0 $25,823 $ 3,181
and Chief Financial Officer 1993 $131,113 $0 1,200 $0 $ 2,366
James R. Stenberg 1995 $137,679 $0 3,050 $16,837 $ 4,705
President of Home and 1994 $128,671 $0 0 $ 9,197 $ 3,845
Construction Products Group 1993 $113,206 $0 1,000 $0 $ 2,990
Derek M. Hasse 1995 $132,421 $11,505 2,800 $40,795 $ 5,107
Vice
President -- Administration 1994 $127,933 $13,563 0 $23,494 $ 4,764
1993 $123,546 $0 1,100 $0 $ 3,847
</TABLE>
---------------
(1) Consists of the following: (a) contributions by the Company to the
executives' accounts under the Elco Industries, Inc. Profit Sharing and
Savings Plan; (b) contributions by the Company to the executives' accounts
under the Elco Industries, Inc. Employee Stock Ownership Plan and (c)
premiums related to group term life insurance. The 1995 values of the three
components for each executive officer are: Mr. Lutz (a) $747, (b) $2,131 and
(c) $900; Mr. Rothkopf (a) $805, (b) $2,172 and (c) $870; Mr. DeLuca (a)
$833, (b) $2,193 and (c) $576; Mr. Stenberg (a) $1,207, (b) $2,461 and (c)
$1,037; and Mr. Hasse (a) $1,294, (b) $2,409 and (c) $1,404.
Under the Elco Industries, Inc. Profit Sharing and Savings Plan (a defined
contribution plan), the Company contributed during the fiscal year ended June
30, 1995, 10% of its profits (as defined in the plan) from its Rockford-based
operations. The contribution is allocated to individual accounts of eligible
employees on the basis of years of service and limited proportionate
compensation.
Under the Elco Industries, Inc. Employee Stock Ownership Plan (a defined
contribution plan), the Company makes contributions to the plan in the form of
Company stock or cash as the Board of Directors, in its sole discretion,
determines. The contribution is allocated to the accounts of eligible employees
on the basis of years of service and limited proportionate compensation.
I-8
<PAGE> 20
OPTIONS
The Company has in effect a stock option plan pursuant to which options to
purchase Common Stock of the Company may be granted to key employees of the
Company and its subsidiaries, including the above-named executive officers.
The following table provides information related to options granted in
fiscal 1995 to the named executive officers.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(3)
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------
NAME (SHARES)(1) FISCAL YEAR ($/SHARE)(2) DATE 5%($) 10%($)
------------------------ ----------- ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John C. Lutz............ 10,250 27.0% $17.25 11/17/04 $111,196 $281,794
Robert H. Rothkopf...... 4,250 11.2% $17.25 11/17/04 $ 46,106 $116,841
August F. DeLuca........ 3,300 8.7% $17.25 11/17/04 $ 35,800 $ 90,724
James R. Stenberg....... 3,050 8.0% $17.25 11/17/04 $ 33,088 $ 83,851
Derek M. Hasse.......... 2,800 7.4% $17.25 11/17/04 $ 30,376 $ 76,978
</TABLE>
---------------
(1) All options were granted on November 17, 1994 and become exercisable after
five years. Except under specific conditions, no granted option is
exercisable before five years. In the event of a change of control, which
would occur upon completion of the Offer, all of the above options become
vested and immediately exercisable in full. The Merger Agreement provides
that, at the time of the Merger, all outstanding options to purchase shares
of Common Stock including options granted to non-employee directors (each a
"Company Stock Option") granted under the Company's stock option plans,
whether or not exercisable, and whether or not vested, shall become fully
exercisable and vested and cancelled. In consideration of such cancellation,
the Surviving Corporation will deliver on or promptly after the Effective
Time to each holder thereof cash in an amount per share subject to such
cancelled Company Stock Option equal to the excess of $36 over the exercise
price per share of such Company Stock Option.
(2) All options were granted at fair market value on the date of the grant. The
option exercise price and any required withholding obligations may be paid
in cash, shares of Common Stock having a fair market value equal to the
total of the exercise price and any required tax obligations or such other
consideration as the Compensation Committee of the Board of Directors of the
Company, in its sole discretion, deems appropriate.
(3) Values are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, overall stock
considerations, as well as the optionholders' continued employment through
the vesting period.
I-9
<PAGE> 21
The following table provides information with respect to the named
executive officers concerning option exercises and unexercised option values as
of June 30, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END(#) YEAR-END($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---------------------------------- ----------- ----------- --------------------- -----------------
<S> <C> <C> <C> <C>
John C. Lutz...................... 0 0 0/16,250 $ 0/$63,359
Robert H. Rothkopf................ 0 0 0/8,300 $ 0/$37,556
August F. DeLuca.................. 0 0 0/6,850 $ 0/$32,322
James R. Stenberg................. 0 0 0/5,850 $ 0/$26,110
Derek M. Hasse.................... 0 0 0/6,000 $ 0/$28,875
</TABLE>
---------------
(1) Computed based upon the difference between the aggregate fair market value
and the aggregate exercise price. The closing price for the Company's Common
Stock on June 30, 1995 was $18.6875.
The following table sets forth information with respect to the named
executive officers concerning Performance Share Awards granted during fiscal
1995 pursuant to the Company's Performance Share Plan.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLANS
OTHER PERIOD -------------------------------------------------
NUMBER OF UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS(1) OR PAYOUT (UNITS)(#)(2) (UNITS)(#)(3) (UNITS)(#)(4)
-------------------- --------- ---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
John C. Lutz........ 7,455 7/1/94 - 6/30/97 746 7,455 17,222
Robert H. Rothkopf.. 1,837 7/1/94 - 6/30/97 184 1,837 10,815
August F. DeLuca.... 3,145 7/1/94 - 6/30/97 315 3,145 8,641
James R. Stenberg... 1,307 7/1/94 - 6/30/97 131 1,307 7,771
Derek M. Hasse...... 2,708 7/1/94 - 6/30/97 271 2,708 7,439
</TABLE>
---------------
(1) Participation in the Performance Share Plan is primarily open to executive
officers and managers. Under the plan, participants are granted a target
incentive award expressed as a percentage of base salary. The dollar value
of the award is converted into units based on the then current market value
of the Company's Common Stock. The participant earns the right to receive
the monetary value of some or all of these units if the Company meets
predetermined performance goals measured over designated periods, except
that in the event of a change of control of the Company (such as
consummation of the Offer), all performance periods end and all performance
awards are paid as if 100% earned at the Target level. The Compensation
Committee of the Board of Directors approves the target incentive award,
establishes the performance goals, establishes performance periods and
determines whether earned awards will be paid in cash, shares of stock or a
combination thereof. Awards are subject to change depending on the Company
meeting predetermined performance goals over the remaining fiscal years
within the performance period and the market value of the Company's Common
Stock at the end of the performance period.
(2) The units shown under the heading "Threshold" are the units that would be
earned at the lowest level of performance above the minimum level of
performance that must be achieved before any units are earned.
(3) The units shown under the heading "Target" are the units that would be
earned at the desired level of performance.
(4) The "Maximum" units payable are calculated by dividing the base salary in
the final year of the performance period by the per share price at the
beginning of the performance period. Since the base salary in the final year
of the performance period is not presently known, the estimate in this
column is calculated using current base salary.
I-10
<PAGE> 22
RETIREMENT PLANS
Government regulations limit the benefits available to certain employees
through retirement plans which qualify for preferential tax treatment. In order
to provide a competitive level of retirement benefit (including Social Security)
that is comparable for all career employees, the Company has entered into
supplemental benefit agreements with Mr. Lutz, Mr. DeLuca and Mr. Hasse. The
agreements with Mr. Lutz and Mr. DeLuca are defined contribution plans providing
that a specified percentage of compensation has accrued in an account until
retirement at age 65 (15.8% for Mr. Lutz and 14.4% for Mr. DeLuca). The balance
in the executive's account at age 65 determines the amount of fifteen subsequent
annual payments. The agreement with Mr. Hasse is a defined benefit plan and
provides fifteen annual payments upon retirement at age 65 of $66,000. Payment
of benefits (as defined in the plans) is subject to the officers' continued
employment by the Company until age sixty-five (65). ln the event of retirement
at an earlier or later time, a benefit may be payable in such amount and upon
such terms as may be determined by the Board of Directors. In the event of any
change in control of the Company (such as consummation of the Offer) while any
officer is actively employed and in the event of an officer's termination or
discharge as a result of the change of control, the annual benefit indicated
above would be payable commencing with such termination or discharge.
The Company also has defined benefit pension plans covering a significant
portion of all employees. The plan covering the executive officers other than
Mr. Lutz and Mr. Rothkopf has been amended so that benefits are frozen as of
December 31, 1988 and no additional benefits accrued after that date. Mr. Lutz
and Mr. Rothkopf are not covered by a defined benefit plan. The maximum amount
of retirement benefits payable to a participant is 42% of the participant'
highest average compensation during any continuous five-year period within the
ten years immediately preceding December 31, 1988, reduced by a percentage
deduction of the participant's primary social security benefits based upon
credited service of the participant. The annual pension benefit payable at
normal retirement age for the named and covered executive officers will be as
follows: Mr. DeLuca -- $552, Mr. Hasse -- $15,276 and Mr. Stenberg -- $8,592.
CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control agreements with the named
executive officers and certain other key employees of the Company. The
agreements provide for benefits to be paid if the executive's employment is
terminated at any time within two years following a change of control of the
Company without Cause, or by the executive for Good Reason (each as defined in
the agreements). Benefits are also payable if the executive's employment is
terminated by the Company without Cause prior to a change of control at the
request of any individual or entity acquiring ownership or control of the
Company, or is reasonably shown to be related to a prospective change of
control. A change of control of the Company will occur upon consummation of the
Offer.
The agreements provide for the executive to receive a benefit of two times
the executive's base salary, annual incentive bonus and fringe benefits (as
defined in the agreements). Should any benefit paid be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, the executive shall be
entitled to receive an additional payment. The amount of the payment would be
such that, after payment by the executive of all taxes including, but not
limited to, income taxes and excise taxes imposed on the additional payment
itself, the executive would retain an amount equal to the excise tax.
ANNUAL INCENTIVE PLAN
This plan provides an annual cash incentive opportunity based upon
performance objectives established each year which are recommended by the
Compensation Committee to the Board for final approval prior to the start of the
performance year.
For 1995, the objective used by the Committee in determining the size of
the award for the Chief Executive Officer and the administrative officers was
operating income. For operating officers, the objectives were operating income
and return on assets. The Committee establishes the target value of an award
stated as a percentage of base salary according to the Committee's determination
of the officer's ability to influence short-term financial performance. For
1995, the range of this percentage was 12.5% to 32.5% with operating
I-11
<PAGE> 23
officers having a higher percentage than the Chief Executive Officer and
administrative officers. The target value for the Chief Executive Officer was
16.2%. The Committee also establishes a minimum threshold level of performance
for the fiscal year. Thus, the award to be earned increases proportionately
based on increases between the threshold level and the target level and beyond.
The value of each award earned is the product of multiplying the award target
value by the performance level achieved in excess of the threshold. Awards may
not exceed 50% of base salary for the Chief Executive Officer and the
administrative officers and may not exceed 65% for the operating officers.
PERFORMANCE SHARE PLAN
The Performance Share Plan provides an incentive opportunity based upon two
longer-term corporate factors: (1) three-year cumulative return on invested
capital relative to an established target, and exceeding threshold minimum; and
(2) the Common Stock price change from the beginning to the end of the same
three-year period.
At the beginning of each three-year period, all officers (including the
Chief Executive Officer) are granted target award units, payable at the end of a
three-year period if the Company achieves its target return on invested capital.
Each officer receives award units equivalent to the dollar value of a percentage
of base salary divided by the per share Common Stock price at the beginning of
the three-year period. The Compensation Committee has established a range of
17.5% to 48.8% of base salary according to the Committee's determination of the
officer's ability to influence long-term financial performance with operating
officers having a lower percentage and the Chief Executive Officer and
administrative officers having a higher percentage. The target value for the
Chief Executive Officer is 48.8%. In the event of a change of control (such as
consummation of the Offer), all performance awards that have been granted are
paid as if 100 percent earned at the target level.
At the end of each three-year period, each officer is credited with award
units equal to the same percentage of target units as the actual three-year
return on invested capital exceeding the threshold minimum represented as a
percentage of the predetermined range of target return less the threshold
minimum. The total dollar value of each award is the product of the credited
award units multiplied by the per share Common Stock price at the end of the
period. Awards may not exceed 100% of an officer's base salary for the last year
of the performance period and are payable in cash and stock as determined by the
Compensation Committee.
STOCK OPTIONS
Under the terms of the 1991 Stock Option Plan, which was approved by
stockholders, options to purchase Company Common Stock may be granted to key
employees approved by the Compensation Committee. The exercise price of each
option is equal to 100% of the fair market value on the date of grant. Except
under specific conditions, no granted option may be exercised prior to the fifth
anniversary of the grant date. In the event of a change of control (such as
consummation of the Offer), all options become vested and immediately
exercisable in full.
I-12
<PAGE> 24
SCHEDULE II
CERTAIN TRANSACTIONS IN SHARES OF COMMON STOCK OF
ELCO INDUSTRIES, INC. EFFECTED DURING THE PAST 60 DAYS
I. The following Shares were received by executive officers of the Company
in fulfillment of grants made on July 1, 1992 pursuant to the Performance Share
Plan for the Company's performance during the 1993, 1994 and 1995 fiscal years:
<TABLE>
<CAPTION>
PARTY EFFECTING DATE OF NUMBER OF PRICE
TRANSACTION TRANSACTION SHARES PURCHASED PER SHARE
-------------------------------------------- ---------------- ---------------- ---------
<S> <C> <C> <C>
John C. Lutz................................ August 17, 1995 3,500 $ 18.6875
August F. DeLuca............................ August 17, 1995 1,200 18.6875
Robert H. Rothkopf.......................... August 17, 1995 1,107 18.6875
Kenneth L. Heal............................. August 17, 1995 935 18.6875
James R. Stenberg........................... August 17, 1995 450 18.6875
</TABLE>
II. The following Shares were purchased by directors and executive officers
of the Company pursuant to the Company's dividend reinvestment plan:
<TABLE>
<CAPTION>
PARTY EFFECTING DATE OF NUMBER OF PRICE
TRANSACTION TRANSACTION SHARES PURCHASED PER SHARE
------------------------------------------ ------------------- ---------------- ---------
<S> <C> <C> <C>
Robert L. Berner, Jr. .................... September 15, 1995 83.1554 $ 35.75
Milton R. Brown........................... September 15, 1995 14.9902 35.75
August F. DeLuca.......................... September 15, 1995 15.6026 35.75
Robert H. Rothkopf........................ September 15, 1995 8.834 35.75
James R. Stenberg......................... September 15, 1995 5.8557 35.75
</TABLE>
II-1
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
------------ ------------------------------------------------------------------ -------------
<S> <C> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of September 12, 1995,
among Textron Inc., E.I. Textron Inc. and Elco Industries, Inc.
(filed as Exhibit (a)(11) to Schedule 14D-1 of Parent and Offeror
filed with the Securities and Exchange Commission on September 19,
1995, and incorporated herein by reference).
Exhibit 2 Press Release issued jointly by Textron Inc. and Elco Industries,
Inc., dated September 13, 1995 (filed as Exhibit 1 to Form 8-K
filed by Elco Industries, Inc. with the Securities and Exchange
Commission on September 15, 1995, reporting an event on September
13, 1995, and incorporated herein by reference).
Exhibit 3 Letter to Stockholders of Elco Industries, Inc., dated September
19, 1995.1
Exhibit 4 Opinion of The Chicago Dearborn Company, dated September 12,
1995.1
Exhibit 5 Confidentiality Agreement, dated September 1, 1995, between
Textron Inc. and Elco Industries, Inc.
Exhibit 6 Elco Industries, Inc. Performance Share Plan adopted October 28,
1988 (filed as Exhibit 10.13 to Registrant's Annual Report on Form
10-K for the year ended June 30, 1995, and incorporated herein by
reference).
Exhibit 7 Elco Industries, Inc. 1991 Stock Option Plan (filed as Exhibit
10.13 to Registrant's Annual Report on Form 10-K for the year
ended June 30, 1992, and incorporated herein by reference).
Exhibit 8 Elco Industries, Inc. 1992 Stock Option Plan For Non-Employee
Directors (filed as Exhibit 10.14 to Registrant's Annual Report on
Form 10-K for the year ended June 30, 1993, and incorporated
herein by reference).
Exhibit 9 Change of Control Agreement with John C. Lutz (filed as Exhibit
10.18 to Registrant's Annual Report on Form 10-K for the year
ended June 30, 1995, and incorporated herein by reference).
Exhibit 10 Change of Control Agreement with August F. DeLuca (filed as
Exhibit 10.19 to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995, and incorporated herein by reference).
Exhibit 11 Change of Control Agreement with Derek M. Hasse (filed as Exhibit
10.20 to Registrant's Annual Report on Form 10-K for the year
ended June 30, 1995, and incorporated herein by reference).
Exhibit 12 Change of Control Agreement with Robert H. Rothkopf (filed as
Exhibit 10.21 to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995, and incorporated herein by reference).
Exhibit 13 Change of Control Agreement with James R. Stenberg (filed as
Exhibit 10.22 to Registrant's Annual Report on Form 10-K for the
year ended June 30, 1995, and incorporated herein by reference).
Exhibit 14 Change of Control Agreement with Kenneth L. Heal (filed as Exhibit
10.23 to Registrant's Annual Report on Form 10-K for the year
ended June 30, 1995, and incorporated herein by reference).
Exhibit 15 Executive Supplemental Benefit Agreement dated May 30, 1988,
between Elco Industries, Inc. and August F. DeLuca.
</TABLE>
---------------
<TABLE>
<S> <C> <C>
1 Included in copies mailed to stockholders.
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
------------ ------------------------------------------------------------------ -------------
<S> <C> <C>
Exhibit 16 Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, between Elco Industries, Inc. and August F.
DeLuca.
Exhibit 17 Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, between Elco Industries, Inc. and John C.
Lutz.
Exhibit 18 Executive Supplemental Benefit Agreement dated March 30, 1995,
between Elco Industries, Inc. and Derek M. Hasse.
Exhibit 19 Executive Supplemental Defined Contribution Benefit Agreement
dated August 18, 1995, between Elco Industries, Inc. and Robert H.
Rothkopf.
Exhibit 20 Executive Supplemental Defined Contribution Benefit Agreement
dated August 18, 1995, between Elco Industries, Inc. and James R.
Stenberg.
Exhibit 21 Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, between Elco Industries, Inc. and Kenneth L.
Heal.
</TABLE>
<PAGE> 1
[Letterhead of Elco Industries, Inc.]
September 19, 1995
To Our Stockholders:
I am pleased to inform you that on September 12, 1995, Elco Industries,
Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Textron Inc. and E.I. Textron Inc. (the "Offeror"), a wholly owned subsidiary of
Textron Inc., pursuant to which the Offeror has commenced a cash tender offer to
purchase all of the outstanding shares of Elco Industries, Inc. Common Stock for
$36.00 per share. Under the Agreement, the Offer will be followed by a Merger in
which any remaining shares of Elco Common Stock will be converted into the right
to receive $36.00 per share in cash, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, AND
UNANIMOUSLY RECOMMENDS THAT ELCO'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of The Chicago Dearborn Company,
Elco's financial advisor, that the consideration to be received by the holders
of Elco Common Stock in the Offer and the Merger is fair to such holders from a
financial point of view.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated September 19, 1995, of the Offeror,
together with related materials, including a Letter of Transmittal, to be used
for tendering your shares of Common Stock. These documents set forth the terms
and conditions of the Offer and the Merger and provide instructions as to how to
tender your shares. I urge you to read the enclosed material carefully.
Sincerely,
/s/ JOHN C. LUTZ
John C. Lutz
President and Chief Executive
Officer
<PAGE> 1
Exhibit 4
[CHICAGO DEARBORN LETTERHEAD]
September 12, 1995
Board of Directors
Elco Industries, Inc.
1111 Samuelson Road
P.O. Box 7009
Rockford, IL 61125-7009
Members of the Board:
You have asked us to advise you with respect to the fairness to the
stockholders of Elco Industries, Inc. (the "Company"), from a financial point of
view, of the consideration to be received by such holders pursuant to the terms
of the Agreement and Plan of Merger, dated as of September 12, 1995 (the "Merger
Agreement"), by and among the Company, Textron Inc. ("Textron") and Merger Sub,
a wholly-owned subsidiary of Textron. The Merger Agreement provides for a cash
tender offer (the "Offer") by Merger Sub to acquire all of the issued and
outstanding shares of Common Stock, par value $5.00 per share (the "Common
Stock"), of the Company at $36.00 per share, net to the seller in cash (the
"Consideration"), and for the subsequent merger of Merger Sub with and into the
Company, pursuant to which each outstanding share of Common Stock not purchased
in the Offer will be converted into the right to receive Consideration of $36.00
in cash (the "Merger", and together with the Offer, the "Transaction").
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and Textron. In
addition to the Merger Agreement, we have also reviewed certain other
information, including financial forecasts for the Company, provided to us by
the Company, and have met with the Company's management to discuss the business
and prospects of the Company.
We have also considered certain financial and stock market data of the
Company, we compared that data with similar data for other publicly held
companies which we deemed relevant, and we have considered the financial terms
of certain other business combinations which have recently been effected. We
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not made an independent evaluation or appraisal of the assets
of the Company, nor have we been furnished with any such evaluations or
appraisals. There has been no public solicitation of indications of interest in
a possible acquisition of the Company. However, in connection with our
engagement, we have engaged in discussions with third parties who have expressed
interest in a transaction with the Company.
We have acted as financial advisor to the Company in connection with the
Transaction and will receive a fee for our services, including rendering this
opinion, a significant portion of which is contingent upon the consummation of
the Transaction.
In the past, The Chicago Dearborn Company has separately performed certain
investment banking services for the Company and received customary fees for such
services. In the ordinary course of our business, The Chicago Dearborn Company
and its affiliates may actively trade securities of both the Company and Textron
for their own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company solely in its consideration of the Transaction, and
may not be used for any other purpose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose without our prior
written consent except as set forth in the Merger Agreement and except that the
Company is authorized to include
III-1
<PAGE> 2
this letter in its entirety in the Offer documents, the Schedule 14D-9 and, if
applicable, the proxy materials contemplated by the Merger Agreement. This
letter does not constitute a recommendation to any stockholder with respect to
whether to tender shares of Common Stock pursuant to the Offer or whether to
vote in favor of the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Consideration to be received by the stockholders of the Company
in the Offer and the Merger is fair to such stockholders from a financial point
of view.
Very truly yours,
/s/ THE CHICAGO DEARBORN COMPANY
--------------------------------------
III-2
<PAGE> 1
Exhibit 5
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
September 1, 1995
PRIVATE AND CONFIDENTIAL
Mr. Herbert L. Henkel
President - Industrial Products Group
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Dear Mr. Henkel:
This letter agreement is in regard to our discussions concerning
possible negotiated business arrangements in our mutual interest involving Elco
Industries, Inc. (the "Company"). In connection therewith you may receive
certain written or oral information concerning the Company and its subsidiaries
from officers, directors, employees, agents or advisors of the Company. All
such information furnished to you, your officers, directors, employees, agents,
advisors, lenders or representatives (collectively, "Representatives") and all
analyses, compilations, computer disks, forecasts, studies or other documents
prepared by you or your Representatives based on any such information are
hereinafter referred to as the "Information." In consideration of our entering
into such discussions, you agree that:
The Information will be used by you and your Representatives solely for
the purpose of exploring possible negotiated business arrangements and not for
any other business or competitive purpose. The Information will be kept
confidential by you and your Representatives. Without the prior written consent
of the Company, neither you nor your Representatives nor the Company and its
Representatives will disclose to any person the fact that the Information has
been made available to you or that discussions between the parties hereto
concerning possible business arrangements or involving the Company are taking
place or any term, condition or other fact relating to any such business
arrangement between the parties (except as required by law and then only after
compliance with the next paragraph hereof).
<PAGE> 2
In the event that you or any of your Representatives are required by
law to disclose any of the Information, you will notify us promptly so that we
may seek a protective order or other appropriate remedy or, in our sole
discretion, waive compliance with certain terms of this letter agreement. In
the event that no such protective order or other remedy is obtained, or that we
waive compliance with certain terms of this letter agreement, you will furnish
only that portion of the Information which you are advised by counsel is
legally required and will exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the Information.
If we do not proceed with any business arrangement, or upon the
Company's request (i) all Information furnished to you will be promptly
returned to the Company and (ii) all other Information will be destroyed with
any such destruction confirmed by you in writing to the Company; provided, that
all Information (including, oral Information) will remain subject to the terms
of this Agreement. This letter agreement does not apply to such portions of the
Information which you demonstrate (i) are or become generally available to the
public (other than as a result of a disclosure by you or your Representatives),
(ii) are or become available to you from a source other than the Company or one
of its Representatives unless you have knowledge that such source is prohibited
by an agreement with the Company from disclosing such information to you or
(iii) was known to you prior to its being furnished to you by or on behalf of
the Company.
You understand that the Company, its agents and its Representatives
make no representations or warranties as to the accuracy or completeness of the
Information. You also agree that the Company, its agents and its
Representatives shall have no liability to you or any of your Representatives
resulting from the use of the Information by you or your Representatives.
For a period of two years after the date hereof, without the prior
written consent of the Company, you and your Subsidiaries (as defined below)
will not, singly or as part of a group, in any manner, directly or indirectly;
(i) own or acquire or publicly propose to acquire, by purchase or otherwise,
any equity securities of the Company ("Equity Securities"), except for Equity
Securities or any rights to acquire Equity Securities representing not more
than 5% of the outstanding Equity Securities of the Company acquired for
investment purposes only by or on behalf of your pension plans or insurance
companies, or any assets of the Company other than in the ordinary course of
business, (ii) participate in any solicitation of proxies or become a
participant in any election contest with respect to the Company, (iii) form,
join or in any way participate in a "group" (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934) with respect to any voting
securities of the Company or (iv) otherwise act, alone or in concert with
others, to seek or offer to control, in any manner, the management, Board of
Directors or policies of the Company. For a period of two years after the date
hereof, unless such shall have been specifically invited in writing by the
Company, you will not, and will cause each of your Subsidiaries not to,
directly or indirectly, make any public statement or publicly-
<PAGE> 3
announced proposal to the Company, its Representatives or any stockholder of
the Company, or otherwise make any public announcement with respect to (i) any
form of business combination or similar transaction involving the Company, (ii)
any form of restructuring, recapitalization or similar transaction with respect
to the Company, (iii) any request to amend waive or terminate the provisions of
this letter agreement or (iv) any proposal, or other statement inconsistent
with the terms of this letter agreement. For the purposes of this letter
agreement, the term "Subsidiaries" shall mean both your wholly-owned
subsidiaries as well as any corporation in which you have any ownership
interest and which you control.
Notwithstanding the immediately preceding paragraph, if (a) the Board
of Directors of the Company approves a transaction with any person (other than
the Company or any employee benefit plan of the Company) and such transaction
could result in such person beneficially owning more than 50% of the
outstanding Equity Securities or all or substantially all of the assets of the
Company, (b) any person or group commences a tender offer for the outstanding
Equity Securities of the Company, and such transaction could result in such
person or group beneficially owning more than 50% of the outstanding Equity
Securities of the Company, or (c) if any party or group mails to shareholders
of the Company a solicitation for proxies to elect one or more persons to the
Board of Directors of the Company who were not nominated by the current Board
of Directors of the Company, then the provisions of the immediately preceding
paragraph shall terminate and be of no further force and effect.
You acknowledge and agree that (a) we and our Representatives are free
to conduct the process leading up to a possible business arrangement as we and
our Representatives, in our sole discretion, determine (including, without
limitation, by negotiating with any prospective buyer and entering into a
preliminary or definitive agreement without prior notice to you or any other
person), (b) we reserve the right, in our sole discretion, to change the
procedures relating to our consideration of a business arrangement at any time
without prior notice to you or any other person, to reject any and all
proposals made by you and any of your Representatives with regard to any
business arrangement, and to terminate discussions and negotiations with you at
any time and for any reason and (c) unless and until a written definitive
agreement concerning a business arrangement has been executed, neither we nor
any of our Representatives will have any liability to you with respect to any
business arrangement, whether by virtue of this letter agreement, any other
written or oral expression with respect to any business arrangement or
otherwise except as specifically set forth in this letter agreement. The
Company agrees that neither you nor any of your representatives will have any
obligation to enter into any business arrangement with respect to the Company
except pursuant to a written definitive agreement concerning a business
arrangement executed by you, nor will you or any of your representatives have
any liability to the Company or any other party for not entering into a written
definitive agreement concerning any business arrangement with respect to the
Company. Notwithstanding the foregoing, the Company agrees that if, prior to
<PAGE> 4
entering into a definitive agreement with respect to an acquisition of the
Company, it agrees in writing to grant any prospective purchaser of Equity
Securities or substantially all of the assets of the Company any right to
review, match or outbid agreements with, offers by, or negotiations with other
prospective purchasers of Equity Securities or substantially all of the assets
of the Company, then the Company shall grant the same right to you. It is the
intention of the parties that the right granted to such prospective purchaser
shall be construed broadly to cover rights of first refusal, rights of last
view, and the like.
You further agree that for a period of two years from the date hereof,
those of your officers and employees who have knowledge of the Information will
not, without the Company's prior written consent, directly or indirectly
solicit for employment by you or your subsidiaries any person now employed by
the Company or its subsidiaries at the level of vice president or higher who
first became known to such person as a result of the process contemplated by
this letter, provided that the foregoing shall not apply to any general
employment searches not directed specifically at such individual or
individuals. It is understood that the Company will arrange for appropriate
contacts for due diligence purposes.
You acknowledge that, in the event of any breach of this letter
agreement by either party hereto, the other party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that in the event of such breach, the non-breaching party,
in addition to any other remedy to which it may be entitled, shall be entitled
to an injunction to prevent breaches of, and to compel specific performance of
this letter agreement, provided, however, that nothing in the foregoing shall
preclude the party allegedly in breach from asserting any defenses available to
it at law or in equity other than the defense that money damages would
constitute an adequate remedy.
Any proceeding relating to this letter agreement shall be brought in a
federal or state court of Delaware. You and the Company hereby consent to
personal jurisdiction in any such action and to service of process by mail, and
waive any objection to venue in any such Delaware court. This letter agreement
shall be governed by the internal laws of the State of Delaware and shall
inure to the benefit of and be binding upon the Company and you and our
respective affiliates, successors and assigns, including any successor to the
Company or you or substantially all of the Company's or your assets or business.
<PAGE> 5
If you are in agreement with the foregoing, please sign and return one
copy of this letter which thereupon will constitute an agreement with respect
to the subject matter hereof.
Very truly yours,
ELCO INDUSTRIES, INC.
By: /s/ John C. Lutz
--------------------------------
Title
Confirmed and agreed to as of
the date first above written:
TEXTRON INC.
By: /s/ Herbert L. Henkel
--------------------------------
President
Industrial Products Group
<PAGE> 1
EXHIBIT 15
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of May, 1988, by and
between Elco Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware hereinafter called the Corporation, and August F.
DeLuca, hereinafter called the Executive.
WITNESSETH:
WHEREAS, the Executive is serving the Corporation as its Chief Financial
Officer; and
WHEREAS, the Corporation desires to provide Executive with a supplemental
benefit subject to all of the terms and conditions set forth below.
NOW THEREFORE, in consideration of services performed in the past and to be
performed in the future as well as of the mutual promises and covenants herein
contained, it is agreed as follows:
ARTICLE I
1.1 Supplemental Benefit. If the Executive shall continue in the employment
of the Corporation until he attains the age of sixty-five (65), the date of such
occurrence is hereby established to be 10/10/2008 for purposes hereof (the
"Benefit Date"), and he retires from active daily employment no later than the
first day of the month next following the Benefit Date, then the Corporation
agrees that it will pay to the Executive the sum of Twenty-One Thousand Six
Hundred ($21,600.00) Dollars on the first day of the second month following the
Benefit Date and on each of the successive fourteen anniversary dates of the
date of such first payment, until he has received a total of fifteen (15)
payments of such amount. The aggregate amount of such fifteen (15) payments is
hereinafter referred to as the "Supplemental Benefit." The timing of the
payments of the Supplemental Benefit may be accelerated by the Board of
Directors in its sole discretion. In the event of retirement at any earlier or
later time, no benefit shall be payable except in such amount and upon such
terms as may be determined by the Board of Directors of the Corporation ("Board
of Directors") in its sole discretion. In the event that the Executive so
retires, but dies before receiving the entire Supplemental Benefit, then the
remaining payments shall be made in accordance with the foregoing schedule to
such individual or individuals as the Executive may have designated in writing,
filed with and been approved by the Corporation. In the absence of any effective
designation of
<PAGE> 2
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beneficiary, any such remaining amounts shall be payable to the Executive's duly
qualified executor or administrator.
ARTICLE II
2.1 Death Prior to Benefit Date. In the event the Executive should die
while actively employed by the Corporation at any time after the date of this
Agreement but prior to the Benefit Date, the Corporation will pay the
Supplemental Benefit to such individual or individuals as the Executive may have
designated in writing, filed with and been approved by the Corporation. Payment
of the Supplemental Benefit shall be made in accordance with the schedule
provided in Section 1.1 except that the date of the Executive's death shall be
substituted for the Benefit Date. In the absence of any effective designation of
beneficiary, any such remaining amounts shall be payable to the Executive's duly
qualified executor or administrator.
ARTICLE III
3.1 Disability Prior to Benefit Date. In the event that during the period
of active daily employment prior to termination of his employment with the
Corporation, the Executive shall become permanently and totally disabled,
mentally or physically, which disability renders him unable to perform his
duties as determined by the Board of Directors in its sole discretion, the
Corporation will pay the Supplemental Benefit to the Executive or his legal
representative in accordance with the schedule provided in Section 1.1 except
that the date of disability as so determined by the Board of Directors shall be
substituted for the Benefit Date. In the event that the Executive becomes
disabled within the terms of this section, but dies before receiving the entire
Supplemental Benefit, then the remaining payments shall be made in accordance
with the foregoing schedule to such individual or individuals as the Executive
may have designated in writing, filed with and been approved by the Corporation.
In the absence of any effective designation of beneficiary, any such remaining
amounts shall be payable to his duly qualified executor or administrator.
ARTICLE IV
4.1 Voluntary Termination of Service or Discharge. In the event that the
Executive shall voluntarily terminate his employment with the Corporation or be
discharged by the Corporation with or without cause, this Agreement shall
terminate upon the date of voluntary termination of employment or discharge and
no benefits or payments of any kind are to be made hereunder, except as provided
under Section 8.1.
<PAGE> 3
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4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors. In the event that Executive is actively employed by the Corporation
at the time of such termination, he shall be entitled to the cash surrender
value of any insurance policy obtained pursuant to Article VII and then in
effect. The amount of such cash surrender value and the timing and other terms
of payment thereof to Executive shall be determined by the Board of Directors in
its sole discretion provided that in the event that full payment is deferred
more that 30 days after such termination the Corporation shall pay Executive
interest compounded annually from the date of termination on the unpaid balance
at a floating rate equal to the prime rate as then announced from time to time
by The First National Bank of Chicago. Full payment of the cash surrender shall
be made no later than three years after such termination.
ARTICLE V
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owned by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer, or disposal of the benefit
hereunder the Corporation's liabilities shall forthwith cease and terminate.
ARTICLE VI
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE VII
7.1 Insurance Policies. The Corporation reserves the right in its sole
discretion to purchase an insurance policy or policies relating to the Executive
to allow the Corporation to recover the costs of providing the benefits
hereunder, in whole or in part. Should the Corporation elect to purchase such an
insurance policy or policies, the Corporation shall be the owner and beneficiary
<PAGE> 4
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thereof. The Corporation reserves the absolute right, in its sole discretion, to
terminate any such policy or policies, at any time, either in whole or in part.
At no time shall the Executive be deemed to have any right, title, or interest
in or to any specified asset or assets of the Corporation, including, but not by
way of restriction, any such insurance policy or policies or the proceeds
therefrom.
Any such policy shall not in any way be considered to be security for the
performance of the obligations of this Agreement. It shall be, and remain, a
general, unpledged, unrestricted asset of the Corporation.
If the Corporation purchases a life insurance or annuity policy on the life
of the Executive, he agrees to sign any papers that may be required for that
purpose and to undergo any medical examination or tests which may be necessary.
7.2 This Article shall not be construed as giving the Executive or his
beneficiary any greater rights than those of any other unsecured creditor of the
Corporation.
ARTICLE VIII
8.1 Change of Control. In the event of any change of control of the
Corporation while the Executive is actively employed by the Corporation, then
notwithstanding any provision in this Agreement to the contrary, the Corporation
shall pay the Supplemental Benefit to Executive in the event of (i) termination
of his employment with the Corporation, (ii) discharge by the Corporation, or
(iii) such other event as would require payment hereunder, whichever is
earliest. Payment of the Supplemental Benefit shall be made in accordance with
the schedule provided in Section 1.1 except that the date of such earliest event
shall be substituted for the Benefit Date. In the event that the Executive
becomes so entitled to the Supplemental Benefit but dies before receiving the
entire amount thereof, then the remaining payments shall be made in accordance
with the foregoing schedule to such individual or individuals as the Executive
may have designated in writing, filed with and been approved by the Corporation.
In the absence of any effective designation of beneficiary, any such remaining
amounts shall be payable to the Executive's duly qualified executor or
administrator. For purposes of this Article, "change of control" shall mean the
acquisition by any person or group of persons of direct or indirect control or
beneficial ownership of 30% or more of the common stock $5.00 par value, of the
Corporation.
<PAGE> 5
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ARTICLE IX
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect to the Corporation's responsibilities under this Agreement and to
allocate to such person or organization all, or part of, the responsibility for
the operation and administration of this Agreement.
ARTICLE X
10.1 Benefits and Burdens. This Agreement shall be binding upon and inure
to the benefit of the Executive and his personal representatives, and the
Corporation, and any successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE XI
11.1 Amendment. This Agreement shall not be amended, altered or modified
except by written agreement signed by the parties hereto, or their respective
successors or permitted assigns.
ARTICLE XII
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be made in writing and may either be
delivered personally or sent by first class mail to:
If to the Company:
Elco Industries, Inc.
1111 Samuelson Road
P.O. Box 7009
Rockford, Illinois 61125
If to the Executive:
<PAGE> 6
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Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE XIII
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE XIV
14.1 Claims Procedure. If an Executive or the Executive's beneficiary
fails to receive benefits to which such Executive or beneficiary feels entitled
under this Plan, such Executive or beneficiary shall submit a claim for such
benefits in writing to the Corporation within 60 days of the date the Executive
or beneficiary would have received such benefits if so entitled. Such claim
shall be reviewed by the Corporation. If the claim is denied, in full or in
part, the Corporation shall provide a written notice in a manner calculated to
be understood by the claimant within 90 days setting forth the specific reasons
for denial, specific reference to the provisions of this Agreement upon which
the denial is based, and any additional material or information necessary to
perfect the claim, if any, and an explanation of why such material or
information is necessary. Also, such written notice shall indicate the steps to
be taken if a review of the denial is desired.
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary shall so notify the Corporation in writing within
60 days after receiving a denial of claim and a claim shall be deemed denied if
the Corporation does not take any action within the aforesaid 90-day period. In
requesting a review, the Executive or his beneficiary may review this Plan
Agreement or any documents relating to it and submit any written issues and
comments he or she may feel appropriate. In its sole discretion, the Corporation
shall then review the claim and provide a written decision within 60 days after
receipt of the request for review unless special circumstances require an
extension of time for processing in which case a decision shall be rendered as
soon as possible, but no later than 120 days after
<PAGE> 7
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receipt of a request for review. This decision shall state the specific reasons
for the decision and shall include reference to specific provisions of this Plan
Agreement on which the decision is based and be written in a manner calculated
to be understood by the claimant.
ARTICLE XV
15.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand and seal at Rockford (town
& state) Illinois the day and year first above written.
ELCO INDUSTRIES, INC.
By: /s/ D. M. Hasse, V.P.
--------------------------------
/s/ August F. DeLuca
--------------------------------
Executive
<PAGE> 8
DESIGNATION OF BENEFICIARY
Pursuant to the terms of an Executive Supplemental Benefit Agreement dated
May 30, 1988, between myself and Elco Industries, Inc., I hereby designate the
following beneficiary(ies) to receive any payments which may be due under such
Agreement after my death:
Primary Beneficiary August F. DeLuca Trust, dated 10/7/82
-------------------------------------------------------------------------------
Secondary Beneficiary(ies) ----------------------------------------------------
-------------------------------------------------------------------------------
The Primary Beneficiary named above shall be the designated beneficiary
referred to in Article II of said Agreement if he or she is living at the time a
death benefit payment thereunder becomes due and payable, and the Secondary
Beneficiary named above shall be the designated beneficiary referred to in
Article II of said Agreement only if he or she is living at the time a death
benefit payment becomes payable and the Primary Beneficiary is not then living.
This designation hereby revokes any prior designation which may have been
in effect.
Date: May 30, 1988
------------------------------
D. M. Hasse /s/ August F. DeLuca
--------------------------------------- -----------------------------------
(Witness) (Executive)
Acknowledged By: D. M. Hasse V.P.
-----------------------------------
(Corporation Officer) (Title)
<PAGE> 9
AMENDMENT NUMBER ONE
TO THE
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
Elco Industries, Inc. ("Corporation") entered into the Executive
Supplemental Benefit Agreement ("Agreement") with August F. Deluca ("Executive")
on May 30, 1988 . The parties to the Agreement hereby amend the Agreement as
provided under Section 11.1 as follows:
1. This amendment shall be known as Amendment Number One.
2. The introductory material following the term "Witnesseth" shall be
amended in its entirety to read as follows:
WHEREAS, the Executive is serving the Corporation as its Chief
Financial Officer ; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set
forth below; and
WHEREAS, the Corporation has determined the amount of such
supplemental benefit based on the assumption that the Executive will
have completed 25 years of service with the Corporation at the
Executive's retirement.
NOW THEREFORE, in consideration of services performed in the past
and to be performed in the future as well as of the mutual promises
and covenants herein contained, it is agreed as follows:
3. Section 8.1 of Article VIII shall be amended in its entirety to read as
follows:
(a) In the event of any change of control of the Corporation while the
Executive is actively employed by the Corporation, then
notwithstanding any provision in this Agreement to the contrary, the
Corporation shall make a lump sum distribution, calculated as provided
below, to the Executive upon the occurrence of the earliest of the
following events: (i) the Executive's voluntary termination of
employment with the Corporation, (ii) the Executive's discharge by the
Corporation,
<PAGE> 10
Amendment Number One
Executive Supplemental Benefit Agreement
Page 2
or (iii) such other event as would require payment hereunder ("Benefit
Date"). The amount of the lump-sum distribution shall be the present
value of the fifteen (15) annual payments provided for in Section 1.1,
determined as of the Benefit Date, using as a discount rate the yield
on U.S. Treasury Bonds with a maturity date that is approximately
fifteen (15) years after the Benefit Date as reported in the Wall
Street Journal or other similar financial publication on the business
day coinciding with or next preceding the Benefit Date. Such
distribution shall be made to the Executive within fourteen (14) days
of the Benefit Date. If the executive dies after becoming entitled to
such lump-sum distribution, but before the distribution is made, such
distribution shall be made to such individual or individuals as the
Executive may have designated in writing, filed with and approved by
the Corporation. In the absence of an effective designation of
beneficiary, any such distribution shall be payable to the Executive's
duly qualified executor or administrator. For purposes of this
Article, "change of control" shall mean the acquisition by any person
or group of persons of direct or indirect control or beneficial
ownership of 30% or more of the common stock $5.00 par value, of the
Corporation.
(b) If the Executive's employment is terminated after a change of
control, with or without cause, for any reason other than death or on
or after the Executive attains age sixty-five (65), then, during the
three-year period after such termination, the Executive shall be
included to the extent eligible thereunder in any and all then
existing plans providing general benefits of the Corporation's
employees, including but not limited to, group life, hospitalization,
disability, medical and dental insurance at the expense of the
Corporation, or if such termination renders the Executive ineligible
to participate in any group plan, the Corporation will purchase such
individual insurance policies or other plans providing benefits at
least as favorable to the Executive as those provided prior to the
termination.
4. Except as hereby amended, the Agreement shall remain in full force and
effect.
DATE: May 30 , 1988 ELCO INDUSTRIES, INC.
--------------
By /s/ D M Hasse, V.P.
---------------------------------
Vice President
/s/ August F. DeLuca
---------------------------------
Executive
<PAGE> 1
EXHIBIT 16
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION
BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of March, 1995
("Effective Date"), by and between Elco Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
subsidiaries ("Corporation"), and August F. DeLuca, ("Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the Vice President-Finance and Chief Financial Officer of
Elco Industries, INC.; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
ARTICLE 1
1.1 Account. An account shall be maintained in the name of the Executive on
the books of the Corporation ("Account").
(a) Credits to Account. As of the Effective Date, for each calendar month
during the period of July 1, 1994 through the Effective Date, an amount equal to
14.4 percent (or such other percent as may from time to time be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion) of the
monthly base salary payable to the Executive by the Corporation for such month
shall be credited to the Executive's Account. As of the last day of each
calendar month thereafter, an amount shall be credited to the Executive's
Account which is equal to 14.4 percent (or such other percent as may from time
to time be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) of the monthly base salary payable to the Executive by the
Corporation for such month. The aforementioned amounts shall cease to be
credited to an Executive's Account as of the last day of the calendar month in
which occurs the Executive's Benefit Date (as defined in Section 1.2), voluntary
termination of employment with the Corporation or discharge by the Corporation
(with or without cause), death, Permanent Disability (as defined in Section 3.1)
or termination of this Agreement pursuant to Section 4.2. In addition to the
amounts based on the Executive's monthly base salary described above, there
shall be a monthly credit to the Executive's Account as of the last day of each
calendar month equal
<PAGE> 2
to 0.5654 percent (or such other percent as may from time to time be determined
by the Board of Directors of Elco Industries, Inc., in its sole discretion)
multiplied by the Executive's Account balance as of the last day of the
preceding calendar month. This credit shall continue until, as is applicable,
the Executive's Retirement Payment Commencement Date described in Section 1.2,
Early Benefit Payment Commencement Date described in Article 2 or Article 3,
voluntary termination of employment with the Corporation or discharge by the
Corporation as described in Section 4.1 or 8.1 or termination of this Agreement
as described in Section 4.2. Notwithstanding the foregoing, with respect to each
calendar month during the period of July 1, 1994 through the Effective Date, the
monthly credit amounts shall be determined as described above, but credited to
the Executive's Account as of the Effective Date.
(b) Monthly Base Salary Definition. For purposes of this Section 1.1,
"monthly base salary payable to the Executive by the Corporation for such month"
shall mean the monthly base salary payable to the Executive by the Corporation
determined on the first day of relevant calendar month without any reductions
made to it for tax or employee benefit plan purposes (including, but not limited
to, any reductions made to the Executive's actual compensation for the relevant
calendar month pursuant to an Internal Revenue Code Section 125 or 401(k) plan
or a nonqualified deferred compensation plan) and without any adjustments made
to it for any change in the Executive's monthly base salary rate after the first
day of the relevant calendar month.
1.2 Supplemental Benefit. If the Executive shall continue in the employment
of the Corporation until he attains the age of sixty-five (65), the date of such
occurrence is hereby established to be October 10, 2008 for purposes hereof (the
"Benefit Date"), and he retires from active daily employment with the
Corporation not later than the first day of the calendar month coinciding with
or next following the Benefit Date, or such later date as may be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion
("Retirement Date"), then the Corporation agrees that it will pay to the
Executive an amount equal to the Annual Amount on the first day of the second
calendar month following the Executive's Retirement Date (the "Retirement
Payment Commencement Date") and on each of the successive fourteen anniversary
dates of that date, until he has received a total of fifteen (15) equal payments
of the Annual Amount. The aggregate amount of such fifteen (15) equal payments
of the Annual Amount is hereinafter referred to as the "Supplemental Benefit"
With respect to the Supplemental Benefit:
(a) Annual Amount. The "Annual Amount" shall be calculated so that the
present value of the fifteen (15) equal payments of the Annual Amount, when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco Industries, Inc., in its sole discretion) per annum, is
-2-
<PAGE> 3
equal to the balance of the Executive's Account as defined in Section 1.1 on
the Retirement Payment Commencement Date.
(b) Acceleration of Payments. The timing of the payments comprising the
Supplemental Benefit may be accelerated by the Board of Directors of Elco
Industries, Inc., in its sole discretion.
(c) Early Retirement Benefit Amount. In the event of the Executive's
retirement prior to the Benefit Date, no benefit shall be payable except in such
amount and upon such terms as may be determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion.
(d) Death Benefit Amount. In the event that the Executive retires and is
entitled to a Supplemental Benefit pursuant to this Section 1.2, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or individuals
as the Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of beneficiary, any
such remaining amounts shall be payable to the Executive's duly qualified
executor or administrator.
ARTICLE 2
2.1 Death Prior to Retirement. In the event that the Executive should die
while actively employed by the Corporation at any time after the Effective Date
of this Agreement, the Corporation shall pay the Supplemental Benefit described
in this Article 2 to such individual or individuals as the Executive has
designated in writing, filed with and been approved by the Corporation. In the
absence of any effective designation of a beneficiary, any amounts payable under
this Article 2 shall be payable to the Executive's duly qualified executor or
administrator.
2.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 2 shall be made in accordance with the schedule provided in Section 1.2,
except that the date of the Executive's death (the "Early Benefit Date") shall
be substituted for the Benefit Date and the first day of the second calendar
month coinciding with or next following the Early Benefit Date (the "Early
Benefit Payment Commencement Date") shall be substituted for the Retirement
Payment Commencement Date.
2.3 Supplemental Benefit - Death. For purposes of this Article 2, the
"Supplemental Benefit" shall be the aggregate amount of fifteen (15) equal
payments of the Early Annual Amount. The "Early Annual Amount" shall be
calculated so that the present value
-3-
<PAGE> 4
of the fifteen (15) equal payments of the Early Annual Amount, when discounted
at 7 percent (or such other percent as determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion) per annum, is equal to the Early
Benefit Amount on the Early Benefit Payment Commencement Date. The "Early
Benefit Amount" shall be the greater of the following two amounts:
(a) Account Balance. The balance of the Executive's Account as defined in
Section 1.1 on the Early Benefit Date; or
(b) Projected 5-Year Account Balance. $140,089, or such greater dollar
amount as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion.
ARTICLE 3
3.1 Disability Prior to Retirement. "Permanent Disability" for purposes of
this Agreement means the Executive's inability, by reason of any physical or
mental impairment, to substantially perform the significant aspects of his
regular duties which inability is reasonably contemplated to continue for at
least one (1) year from its inception, as determined by the Board of Directors
of Elco Industries, Inc. In the event that during the period of active daily
employment prior to termination of his employment with the Corporation the
Executive shall incur a Permanent Disability, the Corporation shall pay the
Supplemental Benefit described in this Article 3 to the Executive or his legal
representative. In the event that the Executive incurs a Permanent Disability,
but dies before receiving the entire Supplemental Benefit described in this
Article 3, then the remaining payments shall be made in accordance with the
schedule described in this Article 3 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Article 3 shall be payable to the Executive's duly
qualified executor or administrator.
3.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 3 shall be made in accordance with Section 2.2 with the date of
Permanent Disability as determined by the Board of Directors of Elco Industries,
Inc. being the Early Benefit Date.
3.3 Supplemental Benefit - Permanent Disability. For purposes of this
Article 3, the "Supplemental Benefit" shall be the amount defined in Article 2.
-4-
<PAGE> 5
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge Prior to Retirement. In
the event that the Executive shall voluntarily terminate his employment with the
Corporation or be discharged by the Corporation with or without cause, this
Agreement shall terminate upon the date of voluntary termination of employment
or discharge and no benefits or payments of any kind are to be made hereunder,
except as provided under Section 1.2(c) or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the Early Benefit Amount described in Article 2, except that the
date of the Agreement's termination shall be substituted for the date of the
Executive's death as the Early Benefit Date. The timing and other terms of
payment of the Early Benefit Amount to Executive shall be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion, provided
that in the event that full payment is deferred more than 30 days after such
termination the Corporation shall pay Executive interest compounded annually
from the last day of the calendar month in which the Agreement is terminated on
the unpaid balance at a floating rate equal to the base rate as then announced
from time to time by The First National Bank of Chicago. Full payment of the
amounts described in this Section 4.2 shall be made no later than three years
after such termination of this Agreement. In the event that the Executive
becomes entitled to an Early Benefit Amount pursuant to this Section 4.2, but
dies before receiving the entire Early Benefit Amount, then the remaining
payments shall be made in the manner described in this Section 4.2 to such
individual or individuals as the Executive has designated in writing, filed with
and been approved by the Corporation. In the absence of any effective
designation of a beneficiary, any amounts payable under this Section 4.2 shall
be payable to the Executive's duly qualified executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary
attempts assignment, commutation,
-5-
<PAGE> 6
hypothecation, transfer, or disposal of the benefit hereunder the Corporation's
liabilities shall forthwith cease and terminate.
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 No Rights to Assets. The rights of the Executive and his beneficiary
shall be solely those of unsecured general creditors of the Corporation. The
Executive and his beneficiary shall only have the right to receive from the
Corporation those payments as are specified under this Agreement. The Executive
agrees that he and his beneficiary shall have no rights or interests whatsoever
in any asset of this Corporation.
ARTICLE 8
8.1 Change Of Control. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of any Change of Control while the Executive is
actively employed by the Corporation (or if the Executive's voluntary
termination of employment with the Corporation or discharge by the Corporation
occurs prior to a Change of Control at the request of any individual or entity
acquiring ownership or control of Elco Industries, Inc., or is reasonably shown
to be related to a prospective Change of Control), the Corporation shall make a
lump sum distribution to the Executive within fourteen days after the earlier to
occur of (i) the Executive's voluntary termination of employment with the
Corporation (including death or Permanent Disability) and (ii) the Executive's
discharge by the Corporation. The amount of the lump sum distribution in either
case shall be the present value of a lump sum payment of $665,410 as of the
Executive's Benefit Date when discounted at 7 percent (or such other percent as
may be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) per annum; provided that, notwithstanding the foregoing, if the
Executive's Benefit Date precedes the date on which the lump sum distribution is
made the lump sum distribution shall be equal to the Executive's Account balance
as of the date the lump sum distribution is paid, and if the Executive's
termination of employment is due to death or Permanent Disability arising after
the Change of Control, the amount of the lump sum distribution shall be the
Early Benefit
-6-
<PAGE> 7
Amount payable pursuant to Article 2 or 3, as is applicable. If the Executive
dies after becoming entitled to such lump sum distribution but before the
distribution is made, such distribution shall be made to the Executive's
beneficiary, and in the absence of an effective designation of a beneficiary,
any such distribution shall be payable to the Executive's duly qualified
executor or administrator.
(b) If the Executive's employment is terminated after a Change of Control,
with or without cause, for any reason other than death or on or after the date
on which the Executive attains age sixty-five (65), then, during the three-year
period after such termination, the Executive shall be included to the extent
eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) If the business conducted by the Corporation shall be discontinued
other than in a manner considered a Change of Control while the Executive is
actively employed by the Corporation, the Corporation shall make a lump sum
distribution to the Executive on or prior to the Corporation's discontinuance of
business. The amount of the lump sum distribution shall be the present value
of a lump sum payment of $665,410 as of the Executive's Benefit Date when
discounted at 7 percent as may be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) per annum; provided that,
notwithstanding the foregoing, if the Executive's Benefit Date precedes the date
on which the lump sum distribution is made, the lump sum distribution shall be
equal to the Executive's Account balance as of the date the lump sum
distribution is paid. If the Executive dies after becoming entitled to such lump
sum distribution but before the distribution is made, such distribution shall be
made to the Executive's beneficiary, and in the absence of an effective
designation of a beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
(d) Notwithstanding any provision in this Agreement to the contrary, in the
event of any Change of Control while the Executive is not actively employed by
the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco
-7-
<PAGE> 8
Industries, Inc., in its sole discretion) per annum. If the Executive dies after
becoming entitled to such lump sum distribution but before the distribution is
made, such distribution shall be made to the Executive's beneficiary, and in the
absence of an effective designation of beneficiary, any such distribution shall
be payable to the Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
(which generally provides for an additional payment to the Executive should any
payment, benefit or distribution (or combination thereof) by Elco Industries,
Inc. or one or more trusts established by Elco Industries, Inc. for the benefit
of its employees be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, as amended), shall be applicable with respect to this
Agreement and the benefits provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns,
directly or indirectly, at least seventy percent (70%) of the outstanding
voting securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock of
Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes and
approves any transaction which has either a reasonable likelihood or a purpose
of causing, whether directly or indirectly:
-8-
<PAGE> 9
(i) $5 par value common stock of Elco Industries, Inc. to be held of
record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be neither
listed on any national securities exchange nor authorized to be quoted on
an inter-dealer quotation system of any registered national securities
association;
(d) the date, during any period of twenty-four (24) consecutive months, on
which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc. at
the close of business on March 30, 1995.
(ii) any member of the Board of Directors of Elco Industries, Inc. who
succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including any
affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect
-9-
<PAGE> 10
to the Corporation's responsibilities under this Agreement and to allocate to
such person or organization all, or part of, the responsibility for the
operation and administration of this Agreement.
ARTICLE 10
10.1 Assignment; Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered or
modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be
-10-
<PAGE> 11
made in writing and may either be delivered personally or sent by registered or
certified mail, return receipt requested, to:
If to the Corporation:
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
If to the Executive:
August F. DeLuca
-----------------------------
5038 Parliament Pl.
-----------------------------
Rockford, IL 61107
-----------------------------
Each party shall have the right by written notice to change the place to
which any notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels entitled
under this Agreement, such Executive or beneficiary (or qualified executor or
administrator) shall submit a claim for such benefits in writing to the
Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in a
manner calculated to be understood by the claimant within 90 days setting forth
the specific reasons for denial, specific reference to the provisions of this
Agreement upon which the denial is based, and
-11-
<PAGE> 12
any additional material or information necessary to perfect the claim, if any,
and an explanation of why such material or information is necessary. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired.
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary (or qualified executor or administrator) may review this
Agreement or any documents relating to it and submit any written issues and
comments he may feel appropriate. In its sole discretion, the Corporation shall
then review the claim and provide a written decision within 60 days after
receipt of the request for review unless special circumstances require an
extension of time for processing in which case a decision shall be rendered as
soon as possible, but no later than 120 days after receipt of a request for
review. This decision shall state the specific reasons for the decision and
shall include reference to specific provisions of this Agreement on which the
decision is based and be written in a manner calculated to be understood by the
claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as may be required for purposes of complying with
the tax withholding provisions of the Internal Revenue Code of 1986, as amended,
any state's income tax act or any applicable similar laws.
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
-12-
<PAGE> 13
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco Industries, Inc. will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge, arbitrator or
other individual presiding over the proceeding affirmatively finds the Executive
instituted the proceeding in bad faith, the Executive shall pay all costs and
expenses, including attorney's fees and disbursements, of Elco Industries, Inc.
Elco Industries, Inc. shall pay prejudgment interest on any money judgment
obtained by the Executive as a result of such a proceeding, calculated at the
rate which The First National Bank of Chicago announces from time to time as its
base lending rate as in effect from time to time, from the date that payment
should have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
-13-
<PAGE> 14
17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Benefit Agreement
between Elco Industries, Inc. and the Executive dated May 30, 1988, as amended
("Defined Benefit Agreement") and upon an event entitling the Executive (or his
beneficiary or qualified executor or administrator) to a benefit payment under
this Agreement or the Defined Benefit Agreement, the Executive (or his
beneficiary or qualified executor or administrator) shall only be entitled to
benefit payments from whichever of the aforementioned Agreements entitles the
Executive (or his beneficiary or qualified executor or administrator) to the
greatest total benefit amount. Additionally, once an Executive becomes entitled
to benefit payments pursuant to this Agreement because of a particular event, he
is not eligible to receive benefit payments pursuant to this Agreement because
of a different event except to the extent explicitly provided in this Agreement,
such as with respect to a subsequent Change of Control or death.
18.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the Corporation and
the Executive.
-14 -
<PAGE> 15
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand at Rockford, Il. the day
and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/ D M Hasse
--------------------------------
Its: V.P. Administration
-------------------------------
/s/ August F. DeLuca
-----------------------------------
(ADD EXECUTIVE'S NAME)
/s/
---------------------------------------
Chairman, Compensation Committee
<PAGE> 16
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: August F. DeLuca
--------------------------------------------------------
DATE: 5-14-95
-------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, as amended, I hereby designate the person or persons named
below who are living at the time of my death to receive all amounts and benefits
due me under the terms of such Agreement as follows:
<TABLE>
<CAPTION>
===============================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
===============================================================================
<S> <C> <C> <C> <C>
1. Carolyn C. 5308 Parliament ###-##-#### Wife 100%
DeLuca Rockford, IL 61107
-------------------------------------------------------------------------------
2.
-------------------------------------------------------------------------------
3.
-------------------------------------------------------------------------------
4.
-------------------------------------------------------------------------------
TOTAL: 100%
===============================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
/s/ August F. DeLuca
-----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ D M Hasse May 10, 1995
------------------------------ ----------------------
Date
<PAGE> 17
25-Apr-95
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
07/94 $151,000.00 $12,583.33 14.40% $1,812.00 $1,812.00
08/94 $151,000.00 $12,583.33 14.40% $1,812.00 $10.25 $3,634.25
09/94 $151,000.00 $12,583.33 14.40% $1,812.00 $20.55 $5,466.80
10/94 $151,000.00 $12,583.33 14.40% $1,812.00 $30.91 $7,309.71
11/94 $151,000.00 $12,583.33 14.40% $1,812.00 $41.33 $9,163.04
12/94 $151,000.00 $12,583.33 14.40% $1,812.00 $51.81 $11,026.85
01/95 $151,000.00 $12,583.33 14.40% $1,812.00 $62.35 $12,901.20
02/95 $155,530.00 $12,960.83 14.40% $1,866.36 $72.94 $14,840.50
03/95 $155,530.00 $12,960.83 14.40% $1,866.36 $83.91 $16,790.77
04/95 $155,530.00 $12,960.83 14.40% $1,866.36 $94.94 $18,752.07
05/95 $155,530.00 $12,960.83 14.40% $1,866.36 $106.02 $20,724.45
06/95 $155,530.00 $12,960.83 14.40% $1,869.36 $117.18 $22,707.99
07/95 $155,530.00 $12,960.83 14.40% $1,866.36 $128.39 $24,702.74
08/95 $155,530.00 $12,960.83 14.40% $1,866.36 $139.67 $26,708.77
09/95 $155,530.00 $12,960.83 14.40% $1,866.36 $151.01 $28,726.14
10/95 $155,530.00 $12,960.83 14.40% $1,866.36 $162.42 $30,754.92
11/95 $155,530.00 $12,960.83 14.40% $1,866.36 $173.89 $32,795.17
12/95 $155,530.00 $12,960.83 14.40% $1,866.36 $185.42 $34,846.95
01/96 $155,530.00 $12,960.83 14.40% $1,866.36 $197.02 $36,910.33
02/96 $161,751.20 $13,479.27 14.40% $1,941.01 $208.69 $39,060.03
03/96 $161,751.20 $13,479.27 14.40% $1,941.01 $220.85 $41,221.89
04/96 $161,751.20 $13,479.27 14.40% $1,941.01 $233.07 $43,395.97
05/96 $161,751.20 $13,479.27 14.40% $1,941.01 $245.36 $45,582.34
06/96 $161,751.20 $13,479.27 14.40% $1,941.01 $257.72 $47,781.07
07/96 $161,751.20 $13,479.27 14.40% $1,941.01 $270.15 $49,992.23
08/96 $161,751.20 $13,479.27 14.40% $1,941.01 $282.66 $52,215.90
09/96 $161,751.20 $13,479.27 14.40% $1,941.01 $295.23 $54,452.14
10/96 $161,751.20 $13,479.27 14.40% $1,941.01 $307.87 $56,701.02
11/96 $161,751.20 $13,479.27 14.40% $1,941.01 $320.59 $58,962.62
12/96 $161,751.20 $13,479.27 14.40% $1,941.01 $333.37 $61,237.00
01/97 $161,751.20 $13,479.27 14.40% $1,941.01 $346.23 $63,524.24
02/97 $168,221.25 $14,018.44 !4.40% $2,018.66 $359.17 $65,902.07
03/97 $168,221.25 $14,018.44 14.40% $2,018.66 $372.61 $68,293.34
04/97 $168,221.25 $14,018.44 14.40% $2,018.66 $386.13 $70,698.13
05/97 $168,221.25 $14,018.44 14.40% $2,018.66 $399.73 $73,116.52
06/97 $168,221.25 $14,018.44 14.40% $2,018.66 $413.40 $75,548.58
07/97 $168,221.25 $14,018.44 14.40% $2,018.66 $427.15 $77,994.39
08/97 $168,221.25 $14,018.44 14.40% $2,018.66 $440.98 $80,454.03
09/97 $168,221.25 $14,018.44 14.40% $2,018.66 $454.89 $82,927.58
10/97 $168,221.25 $14,018.44 14.40% $2,018.66 $468.87 $85,415.11
11/97 $168,221.25 $14,018.44 14.40% $2,018.66 $482.94 $87,916.71
12/97 $168,221.25 $14,018.44 14.40% $2,018.66 $497.08 $90,432.45
01/98 $168,221.25 $14,018.44 14.40% $2,018.66 $511.31 $92,962.42
02/98 $174,950.10 $14,579.18 14.40% $2,099.40 $525.61 $95,587.43
03/98 $174,950.10 $14,579.18 14.40% $2,099.40 $540.45 $98,227.28
04/98 $174,950.10 $14,579.18 14.40% $2,099.40 $555.38 $100,882.06
05/98 $174,950.10 $14,579.18 14.40% $2,099.40 $570.39 $103,551.85
06/98 $174,950.10 $14,579.18 14.40% $2,099.40 $585.48 $106,236.73
07/98 $174,950.10 $14,579.18 14.40% $2,099.40 $600.66 $108,936.79
08/98 $174,950.10 $14,579.18 14.40% $2,099.40 $615.93 $111,652.12
09/98 $174,950.10 $14,579.18 14.40% $2,099.40 $631.28 $114,382.80
10/98 $174,950.10 $14,579.18 14.40% $2,099.40 $646.72 $117,128.92
11/98 $174,950.10 $14,579.18 14.40% $2,099.40 $662.25 $119,890.57
12/98 $174,950.10 $14,579.18 14.40% $2,099.40 $677.86 $122,667.83
01/99 $174,950.10 $14,579.18 14.40% $2,099.40 $693.56 $125,460.79
02/99 $181,948.10 $15,162.34 14.40% $2,183.38 $709.36 $128,353.53
03/99 $181,948.10 $15,162.34 14.40% $2,183.38 $725.71 $131,262.62
</TABLE>
<PAGE> 18
25-Apr-95
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/99 $181,948.10 $15,162.34 14,40% $2,183.38 $742.16 $134,188.16
05/99 $181,948.10 $15,162.34 14.40% $2,183.38 $758.70 $137,130.24
06/99 $181,948.10 $15,162.34 14.40% $2,183.38 $775.33 $140,088.95
07/99 $181,948.10 $15,162.34 14.40% $2,183.38 $792.06 $143,064.39
08/99 $181,948.10 $15,162.34 14.40% $2,183.38 $806.89 $146,056.66
09/99 $181,948.10 $15,162.34 14.40% $2,183.38 $825.80 $149,065.84
10/99 $181,948.10 $15,162.34 14.40% $2,183.38 $842.82 $152,092.04
11/99 $181,948.10 $15,162.34 14.40% $2,183.38 $859.93 $155,135.35
12/99 $181,948.10 $15,162.34 14.40% $2,183.38 $877.14 $158,195.87
01/00 $181,948.10 $15,162.34 14.40% $2,183.38 $894.44 $161,273.69
02/00 $189,226.02 $15,768.84 14.40% $2,270.71 $911.84 $164,456.24
03/00 $189,226.02 $15,768.84 14.4Q% $2,270.71 $929.84 $167,656.79
04/00 $189,226.02 $15,768.84 14.40% $2,270.71 $947.93 $170,875.43
05/00 $189,226.02 $15,768.84 14.40% $2,270.71 $966.13 $174,112.27
06/00 $189,226.02 $15,768.84 14.40% $2,270.71 $984.43 $177,367.41
07/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,002.84 $180,640.96
08/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,021.34 $183,933.01
09/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,039.96 $187,243.68
10/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,058.68 $190,573.07
11/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,077.50 $193,921.28
12/00 $189,226.02 $15,768.84 14.40% $2,270.71 $1,096.43 $197,288.42
01/01 $189,226.02 $15,768.84 14.40% $2,270.71 $1,115.47 $200,674.60
02/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,134.61 $204,170.75
03/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,154.38 $207,686.67
04/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,174.26 $211,222.47
05/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,194.25 $214,778.26
06/01 $195,795.06 $16,399.59 14.40% $2,361.54 $1,214.36 $218,354.16
07/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,234.57 $221,950.27
08/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,254.91 $225,566.72
09/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,275.35 $229,203.61
10/01 $195,795,06 $16,399.59 14.40% $2,361.54 $1,295.92 $232,861.07
11/01 $196,795.06 $16,399.59 14.40% $2,361.54 $1,316.60 $236,539.21
12/01 $195,795.06 $16,399.59 14.40% $2,361.54 $1,337.39 $240,238.14
01/02 $196,795.06 $16,399.59 14.40% $2,361.54 $1,358.31 $243,957.99
02/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,379.34 $247,793.33
03/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,401.02 $251,650.35
04/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,422.83 $255,529.18
05/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,444.76 $259,429.94
06/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,466.82 $263,352.76
07/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,489.00 $267,297.76
08/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,511.30 $271,265.06
09/02 $204,666.86 $17,055.57 14,40% $2,456.00 $1,533.73 $275,254.79
10/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,556.29 $279,267.08
11/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,578.98 $283,302.06
12/02 $204,666.86 $17,055.57 14.40% $2,456.00 $1,601.79 $287,359.85
01/03 $204,666.86 $17,055.57 14.40% $2,456.00 $1,624.73 $291,440.58
02/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,647.81 $295,642.63
03/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,671.56 $299,868.43
04/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,695.46 $304,118.13
05/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,719.48 $308,391.85
06/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,743.65 $312,689.74
07/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,767.95 $317,011.93
08/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,792.39 $321,358.56
09/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,816.96 $325,729.76
10/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,841.68 $330,125.68
11/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,866.53 $334,546.45
12/03 $212,853.53 $17,737.79 14.40% $2,554.24 $1,891.53 $338,992.22
01/04 $212,853.53 $17,737.79 14.40% $2,554.24 $1,916.66 $343,463.12
02/04 $221,367.67 $18,447.31 14.40% $2,656.41 $1,941.94 $348,061.47
03/04 $221,367.67 $18,447.31 14.40% $2,656.41 $1,967.94 $352,685.82
04/04 $221,367.67 $18,447.31 14.40% $2,656.41 $1,994.09 $357,336.32
05/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,020.38 $362,013.11
06/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,046.82 $366,716.34
07/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,073.41 $371,446.16
</TABLE>
<PAGE> 19
25-Apr-95
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,100.16 $376,202.73
09/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,127.05 $380,986.19
10/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,154.10 $385,796.70
11/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,181.29 $390,634.40
12/04 $221,367.67 $18,447.31 14.40% $2,656.41 $2,208.65 $395,499.46
01/05 $221,367.67 $18,447.31 14.40% $2,656.41 $2,236.15 $400,392.02
02/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,263.82 $405,418.51
03/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,292.24 $410,473.42
04/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,320.82 $415,556.91
05/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,349.56 $420,669.14
06/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,378.46 $425,810.27
07/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,407.53 $430,980.47
08/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,436.76 $436,179.90
09/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,466.16 $441,408.73
10/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,495.72 $446,667.12
11/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,525.46 $451,955.25
12/05 $230,222.38 $19,185.20 14.40% $2,762.67 $2,555.35 $457,273.27
01/06 $230,222.38 $19,185.20 14.40% $2,762.67 $2,585.42 $462,621.36
02/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,615.66 $468,110.20
03/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,646.70 $473,630.08
04/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,677.90 $479,181.16
05/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,709.29 $484,763.63
06/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,740.85 $490,377.66
07/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,772.60 $496,023.44
08/08 $239,431.28 $19,952.61 14.40% $2,873.18 $2,804.52 $501,701.14
09/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,836.62 $507,410.94
10/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,868.90 $513,153.02
11/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,901.37 $518,927.57
12/06 $239,431.28 $19,952.61 14.40% $2,873.18 $2,934.02 $524,734.77
01/07 $239,431.28 $19,952.61 14.40% $2,873.18 $2,966.85 $530,574.80
02/07 $249,008.53 $20,750.71 14.40% $2,988.10 $2,999.87 $536,562.77
03/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,033.73 $542,584.60
04/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,067.77 $548,640.47
05/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,102.01 $554,730.58
06/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,136.45 $560,855.13
07/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,171.07 $567,014.30
08/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,205.90 $573,208.30
09/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,240.92 $579,437.32
10/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,276.14 $585,701.56
11/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,311.56 $592,001.22
12/07 $249,008.53 $20,750.71 14.40% $2,988.10 $3,347.17 $598,336.49
01/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,382.99 $604,707.58
02/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,419.02 $611,114.70
03/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,455.24 $617,558.04
04/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,491.67 $624,037.81
05/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,528.31 $630,554.22
06/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,565.15 $637,107.47
07/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,602.21 $643,697.78
08/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,639.47 $650,325.35
09/08 $249,008.53 $20,750.71 14.40% $2,988.10 $3,676.94 $656,990.39
10/08 $80,325.33 $6,693.78 14.40% $963.90 $3,714.62 $661,668.91
11/08 $3,741.08 $665,409.99
12/08 $3,483.26 $68,278.92 $600,614.33
01/09 $3,483.26 $604,097.59
02/09 $3,483.26 $607,580.85
03/09 $3,483,26 $611,064.11
04/09 $3,483.26 $614,547.37
05/09 $3,483.26 $618,030.63
06/09 $3,483.26 $621,513.89
07/09 $3,483.26 $624,997.15
08/09 $3,483.26 $628,480.41
09/09 $3,483.26 $631,963.67
10/09 $3,483.26 $635,446.93
11/09 $3,483.26 $638,930.19
</TABLE>
<PAGE> 20
25-Apr-95
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
12/09 $3,328.80 $68,278.92 $573,980.07
01/10 $3,328.80 $577,308.87
02/10 $3,328.80 $580,637.67
03/10 $3,328.80 $583,966.47
04/10 $3,328.80 $587,295.27
05/10 $3,328.80 $590,624.07
06/10 $3,328.80 $593,952.87
07/10 $3,328.80 $597,281.67
08/10 $3,328.80 $600,610.47
09/10 $3,328.80 $603,939.27
10/10 $3,328.80 $607,268.07
11/10 $3,328.80 $610,596.87
12/10 $3,163.52 $68,278.92 $545,481.47
01/11 $3,163.52 $548,644.99
02/11 $3,163.52 $551,808.51
03/11 $3,163.52 $554,972.03
04/11 $3,163.52 $558,135.55
05/11 $3,163.52 $561,299.07
06/11 $3,163.52 $564,462.59
07/11 $3,163.52 $567,626.11
08/11 $3,163.52 $570,789.93
09/11 $3,163.52 $573,953.15
10/11 $3,163.52 $577,116.67
11/11 $3,163.52 $580,280.19
12/11 $2,986.67 $68,278.92 $514,987.94
01/12 $2,986.67 $517,974.61
02/12 $2,986.67 $520,961.28
03/12 $2,986.67 $523,947.95
04/12 $2,986.67 $526,934.62
05/12 $2,986.67 $529,921.29
06/12 $2,986.67 $532,907.96
07/12 $2,986.67 $535,894.63
08/12 $2,986.67 $538,881.30
09/12 $2,986.67 $541,867.97
10/12 $2,986.67 $544,854.64
11/12 $2,986.67 $547,841.31
12/12 $2,797.45 $68,278.92 $462,359.84
01/13 $2,797.45 $485,157.29
02/13 $2,797.45 $487,954.74
03/13 $2,797.45 $490,752.19
04/13 $2,797.45 $493,549.64
05/13 $2,797.45 $496,347.09
06/13 $2,797.45 $499,144.54
07/13 $2,797.45 $501,941.99
08/13 $2,797.45 $504,739.44
09/13 $2,797.45 $507,536.89
10/13 $2,797.45 $510,334.34
11/13 $2,797.45 $513,131.79
12/13 $2,594.98 $68,278.92 $447,447.85
01/14 $2,594.98 $450,042.83
02/14 $2,594.98 $452,637.81
03/14 $2,594.98 $455,232.79
04/14 $2,594.98 $457,827.77
05/14 $2,594.98 $460,422.75
06/14 $2,594.98 $463,017.73
07/14 $2,594.98 $465,612.71
08/14 $2,594.98 $468,207.69
09/14 $2,594.98 $470,802.67
10/14 $2,594.98 $473,397.65
11/14 $2,594.98 $475,992.63
12/14 $2,378.33 $68,278.92 $410,092.04
01/15 $2,378.33 $412,470.37
02/15 $2,378.33 $414,848.70
03/15 $2,378.33 $417,227.03
</TABLE>
<PAGE> 21
25-Apr-95
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/15 $2,378.33 $419,605.36
05/15 $2,378.33 $421,983.69
06/15 $2,378.33 $424,362.02
07/15 $2,378.33 $426,740.35
08/15 $2,378.33 $429,118.68
09/15 $2,378.33 $431,497.01
10/15 $2,378.33 $433,875.34
11/15 $2,378.33 $436,253.67
12/15 $2,146.52 $68,278.92 $370,121.27
01/16 $2,146.52 $372,267.79
02/16 $2,146.52 $374,414.31
03/16 $2,146.52 $376,560.83
04/16 $2,146.52 $378,707.35
05/16 $2,146.52 $380,853.87
06/16 $2,146.52 $383,000.39
07/16 $2,146.52 $385,146.91
08/16 $2,146.52 $387,293.43
09/16 $2,146.52 $389,439.95
10/16 $2,146.52 $391,586.47
11/16 $2,146.52 $393,732.99
12/16 $1,898.48 $68,278.92 $327,352.55
01/17 $1,898.48 $329,251.03
02/17 $1,898.48 $331,149.51
03/17 $1,898.48 $333,047.99
04/17 $1,898.48 $334,946.47
05/17 $1,898.48 $336,844.95
06/17 $1,898.46 $338,743.43
07/17 $1,898.48 $340,641.91
08/17 $1,898.48 $342,540.39
09/17 $1,898.48 $344,438.87
10/17 $1,896.48 $346,337.35
11/17 $1,898.48 $348,235.83
12/17 $1,633.08 $68,278.92 $281,589.99
01/18 $1,633.08 $283,223.07
02/18 $1,633.08 $284,856.15
03/18 $1,633.08 $286,489.23
04/18 $1,633.08 $288,122.31
05/18 $1,633.98 $289,755.39
06/18 $1,633.08 $291,388.47
07/18 $1,633.08 $293,021.55
08/18 $1,633.08 $294,654.63
09/18 $1,633.08 $296,287.71
10/18 $1,633.08 $297,920.79
11/18 $1,633.08 $299,553.87
12/18 $1,349.10 $68,278.92 $232,624.05
01/19 $1,349.10 $233,973.15
02/19 $1,349.10 $235,322.25
03/19 $1,349.10 $236,671.35
04/19 $1,349.10 $238,020.45
05/19 $1,349.10 $239,369.55
06/19 $1,349.10 $240,718.65
07/19 $1,349.10 $242,067.75
08/19 $1,349.10 $243,416.85
09/19 $1,349.10 $244,765.95
10/19 $1,349.10 $246,115.05
11/19 $1,349.10 $247,464.15
12/19 $1,045.25 $68,278.92 $180,230.46
01/20 $1,045.25 $181,275.73
02/20 $1,045.25 $182,320.98
03/20 $1,045.25 $183,366.23
04/20 $1,045.25 $184,411.48
05/20 $1,045.25 $185,456.73
06/20 $1,045.25 $186,501.98
07/20 $1,045.25 $187,547.23
</TABLE>
<PAGE> 22
Augie DeLuca
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/20 $1,045.25 $188,592.48
09/20 $1,045.25 $189,637.73
10/20 $1,045.25 $190,682.98
11/20 $1,045.25 $191,728.23
12/20 $720.12 $68,278.92 $124,169.43
01/21 $720.12 $124,889.55
02/21 $720.12 $125,609.67
03/21 $720.12 $126,329.79
04/21 $720.12 $127,049.91
05/21 $720.12 $127,770.03
06/21 $720.12 $128,490.15
07/21 $720.12 $129,210.27
08/21 $720.12 $129,930.39
09/21 $720.12 $130,650.51
10/21 $720.12 $131,370.63
11/21 $720.12 $132,090.75
12/21 $372.24 $68,278.92 $64,184.07
01/22 $372.24 $64,556.31
02/22 $372.24 $64,928.55
03/22 $372.24 $65,300.79
04/22 $372.24 $65,673.03
05/22 $372.24 $66,045.27
06/22 $372.24 $66,417.51
07/22 $372.24 $66,789.75
08/22 $372.24 $67,161.99
09/22 $372.24 $67,534.23
10/22 $372.24 $67,906.47
11/22 $372.24 $68,278.71
12/22 $0.00 $68,278.92 ($0.21)
</TABLE>
<PAGE> 1
EXHIBIT 17
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION
BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of March, 1995
("Effective Date"), by and between Elco Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
subsidiaries ("Corporation"), and John C. Lutz, ("Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the President and Chief Executive Officer of Elco Industries.
Inc.; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to be
performed in the future as well as of the mutual promises and covenants herein
contained, it is agreed as follows:
ARTICLE 1
1.1 Account. An account shall be maintained in the name of the Executive
on the books of the Corporation ("Account").
(a) Credits to Account. As of the Effective Date, for each calendar
month during the period of July 1, 1994 through the Effective Date, an amount
equal to 15.8 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) of the monthly base salary payable to the Executive by the
Corporation for such month shall be credited to the Executive's Account. As of
the last day of each calendar month thereafter, an amount shall be credited to
the Executive's Account which is equal to 15.8 percent (or such other percent as
may from time to time be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) of the monthly base salary payable to
the Executive by the Corporation for such month. The aforementioned amounts
shall cease to be credited to an Executive's Account as of the last day of the
calendar month in which occurs the Executive's Benefit Date (as defined in
Section 1.2), voluntary termination of employment with the Corporation or
discharge by the Corporation (with or without cause), death, Permanent
Disability (as defined in Section 3.1) or termination of this Agreement pursuant
to Section 4.2. In addition to the amounts based on the Executive's monthly base
salary described above, there shall be a monthly credit to the Executive's
Account as of the last day of each calendar month equal
<PAGE> 2
to 0.5654 percent (or such other percent as may from time to time be determined
by the Board of Directors of Elco Industries, Inc., in its sole discretion)
multiplied by the Executive's Account balance as of the last day of the
preceding calendar month. This credit shall continue until, as is applicable,
the Executive's Retirement Payment Commencement Date described in Section 1.2,
Early Benefit Payment Commencement Date described in Article 2 or Article 3,
voluntary termination of employment with the Corporation or discharge by the
Corporation as described in Section 4.1 or 8.1 or termination of this Agreement
as described in Section 4.2. Notwithstanding the foregoing, with respect to each
calendar month during the period of July 1, 1994 through the Effective Date, the
monthly credit amounts shall be determined as described above, but credited to
the Executive's Account as of the Effective Date.
(b) Monthly Base Salary Definition. For purposes of this Section 1.1,
"monthly base salary payable to the Executive by the Corporation for such month"
shall mean the monthly base salary payable to the Executive by the Corporation
determined on the first day of relevant calendar month without any reductions
made to it for tax or employee benefit plan purposes (including, but not limited
to, any reductions made to the Executive's actual compensation for the relevant
calendar month pursuant to an Internal Revenue Code Section 125 or 401(k) plan
or a nonqualified deferred compensation plan) and without any adjustments made
to it for any change in the Executive's monthly base salary rate after the first
day of the relevant calendar month.
1.2 Supplemental Benefit. If the Executive shall continue in the
employment of the Corporation until he attains the age of sixty-five (65), the
date of such occurrence is hereby established to be October 29, 2003 for
purposes hereof (the "Benefit Date"), and he retires from active daily
employment with the Corporation not later than the first day of the calendar
month coinciding with or next following the Benefit Date, or such later date as
may be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion ("Retirement Date"), then the Corporation agrees that it will
pay to the Executive an amount equal to the Annual Amount on the first day of
the second calendar month following the Executive's Retirement Date (the
"Retirement Payment Commencement Date") and on each of the successive fourteen
anniversary dates of that date, until he has received a total of fifteen (15)
equal payments of the Annual Amount. The aggregate amount of such fifteen (15)
equal payments of the Annual Amount is hereinafter referred to as the
"Supplemental Benefit". With respect to the Supplemental Benefit:
(a) Annual Amount. The "Annual Amount" shall be calculated so that the
present value of the fifteen (15) equal payments of the Annual Amount, when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco Industries, Inc., in its sole discretion) per annum, is
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<PAGE> 3
equal to the balance of the Executive's Account as defined in Section 1.1 on the
Retirement Payment Commencement Date.
(b) Acceleration of Payments. The timing of the payments comprising the
Supplemental Benefit may be accelerated by the Board of Directors of Elco
Industries, Inc., in its sole discretion.
(c) Early Retirement Benefit Amount. In the event of the Executive's
retirement prior to the Benefit Date, no benefit shall be payable except in such
amount and upon such terms as may be determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion.
(d) Death Benefit Amount. In the event that the Executive retires and is
entitled to a Supplemental Benefit pursuant to this Section 1.2, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or individuals
as the Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of beneficiary, any
such remaining amounts shall be payable to the Executive's duly qualified
executor or administrator.
ARTICLE 2
2.1 Death Prior to Retirement. In the event that the Executive should
die while actively employed by the Corporation at any time after the Effective
Date of this Agreement, the Corporation shall pay the Supplemental Benefit
described in this Article 2 to such individual or individuals as the Executive
has designated in writing, filed with and been approved by the Corporation.
In the absence of any effective designation of a beneficiary, any amounts
payable under this Article 2 shall be payable to the Executive's duly qualified
executor or administrator.
2.2 Payment Schedule. Payment of the Supplemental Benefit described in
this Article 2 shall be made in accordance with the schedule provided in Section
1.2, except that the date of the Executive's death (the "Early Benefit Date")
shall be substituted for the Benefit Date and the first day of the second
calendar month coinciding with or next following the Early Benefit Date (the
"Early Benefit Payment Commencement Date" ) shall be substituted for the
Retirement Payment Commencement Date.
2.3 Supplemental Benefit - Death. For purposes of this Article 2, the
"Supplemental Benefit" shall be the aggregate amount of fifteen (15) equal
payments of the Early Annual Amount. The "Early Annual Amount" shall be
calculated so that the present value
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<PAGE> 4
of the fifteen (15) equal payments of the Early Annual Amount, when discounted
at 7 percent (or such other percent as determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion) per annum, is equal to the Early
Benefit Amount on the Early Benefit Payment Commencement Date. The "Early
Benefit Amount" shall be the greater of the following two amounts:
(a) Account Balance. The balance of the Executive's Account as defined
in Section 1.1 on the Early Benefit Date; or
(b) Projected 5-Year Account Balance. $303,087, or such greater dollar
amount as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion.
ARTICLE 3
3.1 Disability Prior to Retirement. "Permanent Disability" for purposes
of this Agreement means the Executive's inability, by reason of any physical or
mental impairment, to substantially perform the significant aspects of his
regular duties which inability is reasonably contemplated to continue for at
least one (1) year from its inception, as determined by the Board of Directors
of Elco Industries, Inc. In the event that during the period of active daily
employment prior to termination of his employment with the Corporation the
Executive shall incur a Permanent Disability, the Corporation shall pay the
Supplemental Benefit described in this Article 3 to the Executive or his legal
representative. In the event that the Executive incurs a Permanent Disability,
but dies before receiving the entire Supplemental Benefit described in this
Article 3, then the remaining payments shall be made in accordance with the
schedule described in this Article 3 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Article 3 shall be payable to the Executive's duly
qualified executor or administrator.
3.2 Payment Schedule. Payment of the Supplemental Benefit described in
this Article 3 shall be made in accordance with Section 2.2 with the date of
Permanent Disability as determined by the Board of Directors of Elco Industries,
Inc. being the Early Benefit Date.
3.3 Supplemental Benefit - Permanent Disability. For purposes of this
Article 3, the "Supplemental Benefit" shall be the amount defined in Article 2.
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<PAGE> 5
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge Prior to Retirement.
In the event that the Executive shall voluntarily terminate his employment with
the Corporation or be discharged by the Corporation with or without cause, this
Agreement shall terminate upon the date of voluntary termination of employment
or discharge and no benefits or payments of any kind are to be made hereunder,
except as provided under Section 1.2(c) or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the Early Benefit Amount described in Article 2, except that the
date of the Agreement's termination shall be substituted for the date of the
Executive's death as the Early Benefit Date. The timing and other terms of
payment of the Early Benefit Amount to Executive shall be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion, provided
that in the event that full payment is deferred more than 30 days after such
termination the Corporation shall pay Executive interest compounded annually
from the last day of the calendar month in which the Agreement is terminated on
the unpaid balance at a floating rate equal to the base rate as then announced
from time to time by The First National Bank of Chicago. Full payment of the
amounts described in this Section 4.2 shall be made no later than three years
after such termination of this Agreement. In the event that the Executive
becomes entitled to an Early Benefit Amount pursuant to this Section 4.2, but
dies before receiving the entire Early Benefit Amount, then the remaining
payments shall be made in the manner described in this Section 4.2 to such
individual or individuals as the Executive has designated in writing, filed with
and been approved by the Corporation. In the absence of any effective
designation of a beneficiary, any amounts payable under this Section 4.2 shall
be payable to the Executive's duly qualified executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation,
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<PAGE> 6
hypothecation, transfer, or disposal of the benefit hereunder the Corporation's
liabilities shall forthwith cease and terminate.
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement
shall be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 No Rights to Assets. The rights of the Executive and his beneficiary
shall be solely those of unsecured general creditors of the Corporation. The
Executive and his beneficiary shall only have the right to receive from the
Corporation those payments as are specified under this Agreement. The Executive
agrees that he and his beneficiary shall have no rights or interests whatsoever
in any asset of this Corporation.
ARTICLE 8
8.1 Change of Control. (a) Notwithstanding any provision in this
Agreement to the contrary, in the event of any Change of Control while the
Executive is actively employed by the Corporation (or if the Executive's
voluntary termination of employment with the Corporation or discharge by the
Corporation occurs prior to a Change of Control at the request of any individual
or entity acquiring ownership or control of Elco Industries, Inc., or is
reasonably shown to be related to a prospective Change of Control), the
Corporation shall make a lump sum distribution to the Executive within fourteen
days after the earlier to occur of (i) the Executive's voluntary termination of
employment with the Corporation (including death or Permanent Disability) and
(ii) the Executive's discharge by the Corporation. The amount of the lump sum
distribution in either case shall be the present value of a lump sum payment of
$721,268 as of the Executive's Benefit Date when discounted at 7 percent (or
such other percent as may be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) per annum; provided that,
notwithstanding the foregoing, if the Executive's Benefit Date precedes the date
on which the lump sum distribution is made the lump sum distribution shall be
equal to the Executive's Account balance as of the date the lump sum
distribution is paid, and if the Executive's termination of employment is due
to death or Permanent Disability arising after the Change of Control, the amount
of the lump sum distribution shall be the Early Benefit
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<PAGE> 7
Amount payable pursuant to Article 2 or 3, as is applicable. If the Executive
dies after becoming entitled to such lump sum distribution but before the
distribution is made, such distribution shall be made to the Executive's
beneficiary, and in the absence of an effective designation of a beneficiary,
any such distribution shall be payable to the Executive's duly qualified
executor or administrator.
(b) If the Executive's employment is terminated after a Change of
Control, with or without cause, for any reason other than death or on or after
the date on which the Executive attains age sixty-five (65), then, during the
three-year period after such termination, the Executive shall be included to the
extent eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) If the business conducted by the Corporation shall be discontinued
other than in a manner considered a Change of Control while the Executive is
actively employed by the Corporation, the Corporation shall make a lump sum
distribution to the Executive on or prior to the Corporation's discontinuance of
business. The amount of the lump sum distribution shall be the present value of
a lump sum payment of $721,268 as of the Executive's Benefit Date when
discounted at 7 percent as may be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) per annum; provided that,
notwithstanding the foregoing, if the Executive's Benefit Date precedes the date
on which the lump sum distribution is made, the lump sum distribution shall be
equal to the Executive's Account balance as of the date the lump sum
distribution is paid. If the Executive dies after becoming entitled to such
lump sum distribution but before the distribution is made, such distribution
shall be made to the Executive's beneficiary, and in the absence of an effective
designation of a beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
(d) Notwithstanding any provision in this Agreement to the contrary, in
the event of any Change of Control while the Executive is not actively employed
by the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco
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<PAGE> 8
Industries, Inc., in its sole discretion) per annum. If the Executive dies after
becoming entitled to such lump sum distribution but before the distribution is
made, such distribution shall be made to the Executive's beneficiary, and in the
absence of an effective designation of beneficiary, any such distribution shall
be payable to the Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control
Agreement between Elco Industries, Inc. and the Executive dated March 30, 1995,
as amended (which generally provides for an additional payment to the Executive
should any payment, benefit or distribution (or combination thereof) by Elco
Industries, Inc. or one or more trusts established by Elco Industries, Inc. for
the benefit of its employees be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code, as amended), shall be applicable with respect
to this Agreement and the benefits provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns, directly
or indirectly, at least seventy percent (70%) of the outstanding voting
securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock of
Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes
and approves any transaction which has either a reasonable likelihood or a
purpose of causing, whether directly or indirectly:
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<PAGE> 9
(i) $5 par value common stock of Elco Industries, Inc. to be held
of record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be
neither listed on any national securities exchange nor authorized to be
quoted on an inter-dealer quotation system of any registered national
securities association;
(d) the date, during any period of twenty-four (24) consecutive months,
on which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc.
at the close of business on March 30, 1995.
(ii) any member of the Board of Directors of Elco Industries, Inc.
who succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including
any affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect
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<PAGE> 10
to the Corporation's responsibilities under this Agreement and to allocate to
such person or organization all, or part of, the responsibility for the
operation and administration of this Agreement.
ARTICLE 10
10.1 Assignment; Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered
or modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be
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<PAGE> 11
made in writing and may either be delivered personally or sent by registered or
certified mail, return receipt requested, to:
If to the Corporation:
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
If to the Executive:
John C. Lutz
7828 McCurry Rd.
Roscoe, IL 61073
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels entitled
under this Agreement, such Executive or beneficiary (or qualified executor or
administrator) shall submit a claim for such benefits in writing to the
Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in a
manner calculated to be understood by the claimant within 90 days setting forth
the specific reasons for denial, specific reference to the provisions of this
Agreement upon which the denial is based, and
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<PAGE> 12
any additional material or information necessary to perfect the claim, if any,
and an explanation of why such material or information is necessary. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired.
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary (or qualified executor or administrator) may review this
Agreement or any documents relating to it and submit any written issues and
comments he may feel appropriate. In its sole discretion, the Corporation shall
then review the claim and provide a written decision within 60 days after
receipt of the request for review unless special circumstances require an
extension of time for processing in which case a decision shall be rendered as
soon as possible, but no later than 120 days after receipt of a request for
review. This decision shall state the specific reasons for the decision and
shall include reference to specific provisions of this Agreement on which the
decision is based and be written in a manner calculated to be understood by the
claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as may be required for purposes of complying with
the tax withholding provisions of the Internal Revenue Code of 1986, as amended,
any state's income tax act or any applicable similar laws.
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
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<PAGE> 13
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco Industries, Inc. will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge, arbitrator or
other individual presiding over the proceeding affirmatively finds the Executive
instituted the proceeding in bad faith, the Executive shall pay all costs and
expenses, including attorney's fees and disbursements, of Elco Industries, Inc.
Elco Industries, Inc. shall pay prejudgment interest on any money judgment
obtained by the Executive as a result of such a proceeding, calculated at the
rate which The First National Bank of Chicago announces from time to time as its
base lending rate as in effect from time to time, from the date that payment
should have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely
for convenience of reference and shall not control the meaning or interpretation
of any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
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17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Benefit Agreement
between Elco Industries, Inc. and the Executive dated February 3, 1993 as
amended ("Defined Benefit Agreement") and upon an event entitling the Executive
(or his beneficiary or qualified executor or administrator) to a benefit payment
under this Agreement or the Defined Benefit Agreement, the Executive (or his
beneficiary or qualified executor or administrator) shall only be entitled to
benefit payments from this Supplemental Defined Contribution Agreement.
Additionally, once an Executive becomes entitled to benefit payments pursuant to
this Agreement because of a particular event, he is not eligible to receive
benefit payments pursuant to this Agreement because of a different event except
to the extent explicitly provided in this Agreement, such as with respect to a
subsequent Change of Control or death.
18.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the Corporation and
the Executive.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand at Rockford, IL (town &
state) the day and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/
------------------------------
Its: V.P. Administration
------------------------------
/s/ JOHN C. LUTZ
------------------------------
(ADD EXECUTIVE'S NAME)
/s/
--------------------------------
Chairman, Compensation Committee
<PAGE> 16
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: JOHN C. LUTZ
------------------------------------------------------------
DATE: MAR. 30, 1995
---------------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, as amended, I hereby designate the person or persons named
below who are living at the time of my death to receive all amounts and benefits
due me under the terms of such Agreement as follows:
<TABLE>
<CAPTION>
===============================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
===============================================================================
<S> <C> <C> <C> <C>
1. Barbara J. Lutz 7828 McCurry Rd.
Roscoe, IL 61073 Wife 100%
-------------------------------------------------------------------------------
2.
-------------------------------------------------------------------------------
3.
-------------------------------------------------------------------------------
4.
-------------------------------------------------------------------------------
TOTAL: 100%
===============================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
JOHN C. LUTZ
------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ May 10, 1995
---------------------------- ------------------
Date
<PAGE> 17
25-Apr-95
John Lutz
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
07/94 $275,000.00 $22,916.67 15.80% $3,620.83 $3,620.83
08/94 $275,000.00 $22,916.67 15.80% $3,620.83 $20.47 $7,262.13
09/94 $275,000.00 $22,916.67 15.80% $3,620.83 $41.06 $10,924.02
10/94 $275,000.00 $22,916.67 15.80% $3,620.83 $61.76 $14,606.61
11/94 $275,000.00 $22,916.67 15.80% $3,620.83 $82.59 $18,310.03
12/94 $275,000.00 $22,916.67 15.80% $3,620.83 $103.52 $22,034.38
01/95 $275,000.00 $22,916.67 15.80% $3,620.83 $124.58 $25,779.79
02/95 $310,000.00 $25,833.33 15.80% $4,081.67 $145.76 $30,007.22
03/95 $310,000.00 $25,833.33 15.80% $4,081.67 $169.66 $34,258.55
04/95 $310,000.00 $25,833.33 15.80% $4,081.67 $193.70 $38,533.92
05/95 $310,0OO.00 $25,833.33 15.80% $4,081.67 $217.87 $42,833.46
06/95 $310,000.00 $25,833.33 15.80% $4,081.67 $242.18 $47,157.31
07/95 $310,000.00 $25,833.33 15.80% $4,081.67 $266.63 $51,505.61
08/95 $310,000.00 $25,833.33 15.80% $4,081.67 $291.21 $55,878.49
09/95 $310,000.00 $25,833.33 15.80% $4,081.67 $315.94 $60,276.10
10/95 $310,000.00 $25,833.33 15.80% $4,081.67 $340.80 $64,698.57
11/95 $310,000.00 $25,833.33 15.80% $4,081.67 $365.81 $69,146.05
12/95 $310,000.00 $25,833.33 15.80% $4,081.67 $390.95 $73,618.67
01/96 $310,000.00 $25,833.33 15.80% $4,081.67 $416.24 $78,116.58
02/96 $322,400.00 $26,866.67 15.80% $4,244.93 $441.67 $82,803.18
03/96 $322,400.00 $26,866.67 15.80% $4,244.93 $468.17 $87,516.28
04/96 $322,400.00 $26,866.67 15.80% $4,244.93 $494.82 $92,256.03
05/96 $322,400.00 $26,866.67 15.80% $4,244.93 $521.62 $97,022.58
06/96 $322,400.00 $26,866.67 15.80% $4,244.93 $548.57 $101,816.08
07/96 $322,400.00 $26,866.67 15.80% $4,244.93 $575.67 $106,636.68
08/96 $322,400.00 $26,866.67 15.80% $4,244.93 $602.92 $111,484.53
09/96 $322,400.00 $26,866.67 15.80% $4,244.93 $630.33 $116,359.79
10/96 $322,400.00 $26,866.67 15.80% $4,244.93 $657.90 $121,262.62
11/96 $322,400.00 $26,866.67 15.80% $4,244.93 $685.62 $126,193.17
12/96 $322,400.00 $26,866.67 15.80% $4,244.93 $713.50 $131,151.60
01/97 $322,400.00 $26,866.67 15.80% $4,244.93 $741.53 $136,138.06
02/97 $335,296.00 $27,941.33 15.80% $4,414.73 $769.72 $141,322.51
03/97 $335,296.00 $27,941.33 15.80% $4,414.73 $799.04 $146,536.28
04/97 $335,296.00 $27,941.33 15.80% $4,414.73 $828.52 $151,779.53
05/97 $335,296.00 $27,941.33 15.80% $4,414.73 $858.16 $157,052.42
06/97 $335,296.00 $27,941.33 15.80% $4,414.73 $887.97 $162,355.12
07/97 $335,296.00 $27,941.33 15.80% $4,414.73 $917.96 $167,687.81
08/97 $335,296.00 $27,941.33 15.80% $4,414.73 $948.11 $173,050.65
09/97 $335,296.00 $27,941.33 15.80% $4,414.73 $978.43 $178,443.81
10/97 $335,296.00 $27,941.33 15.80% $4,414.73 $1,008.92 $183,867.46
11/97 $335,296.00 $27,941.33 15.80% $4,414.73 $1,039.59 $189,321.78
12/97 $335,296.00 $27,941.33 15.80% $4,414.73 $1,070.43 $194,806.94
01/98 $335,296.00 $27,941.33 15.80% $4,414.73 $1,101.44 $200,323.11
02/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,132.63 $206,047.06
03/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,164.99 $211,803.37
04/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,197.54 $217,592.23
05/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,230.27 $223,413.82
06/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,263.18 $229,268.32
07/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,296.28 $235,155.92
08/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,329.57 $241,076.81
09/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,363.05 $247,031.18
10/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,396.71 $253,019.21
11/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,430.57 $259,041.10
12/98 $348,707.84 $29,058.99 15.80% $4,591.32 $1,464.62 $265,097.04
01/99 $348,707.84 $29,058.99 15.80% $4,591.32 $1,498.86 $271,187.22
02/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,533.29 $277,495.48
03/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,568.96 $283,839.41
</TABLE>
<PAGE> 18
25-Apr-95
John Lutz
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,604.83 $290,219.21
05/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,640.90 $296,635.08
06/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,677.17 $303,087.22
07/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,713.66 $309,575.85
08/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,750.34 $316,101.16
09/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,787.24 $322,663.37
10/99 $362,656.15 $30,221,35 15.80% $4,774.97 $1,824.34 $329,262.68
11/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,861.65 $335,899.30
12/99 $362,656.15 $30,221.35 15.80% $4,774.97 $1,899.17 $342,573.44
01/00 $362,656.15 $30,221.35 15.80% $4,774.97 $1,936.91 $349,285.32
02/00 $377,162.40 $31,430.20 15.80% $4,965.97 $1,974.86 $356,226.15
03/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,014.10 $363,206.22
04/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,053.57 $370,225.76
05/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,093.26 $377,284.99
06/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,133.17 $384,384.13
07/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,173.31 $391,523.41
08/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,213.67 $398,703.05
09/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,254.27 $405,923.29
10/00 $377,162.40 $31,430,20 15.80% $4,985.97 $2,295.09 $413,184.35
11/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,336.14 $420,486.46
12/00 $377,162.40 $31,430.20 15.80% $4,965.97 $2,377.43 $427,829.86
01/01 $377,162.40 $31,430.20 15.80% $4,965.97 $2,418.95 $435,214.78
02/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,460.70 $442,840.09
03/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,503.82 $450,508.52
04/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,547.18 $458,220.31
05/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,590.78 $465,975.70
06/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,634.63 $473,774.94
07/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,678.72 $481,618.27
08/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,723.07 $489,505.95
09/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,767.67 $497,438.23
10/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,812.52 $505,415.36
11/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,857.62 $513,437.59
12/01 $392,248.90 $32,687.41 15.80% $5,164.61 $2,902.98 $521,505.18
01/02 $392,248.90 $32,687.41 15.80% $5,164.61 $2,948.59 $529,618.38
02/02 $407,938.86 $33,994.91 15.80% $5,371.20 $2,994.46 $537,984.04
03/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,041.76 $546,397.00
04/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,089.33 $554,857.53
05/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,137.16 $563,385.89
06/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,185.27 $571,922.36
07/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,233.65 $580,527.21
08/02 $407,938.86 $33,994.91 15.50% $5,371.20 $3,282.30 $589,180.71
09/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,331.23 $597,883.14
10/02 $407,938.86 $33,994.91 15.50% $5,371.20 $3,380.43 $606,634.77
11/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,429.91 $615,435.88
12/02 $407,938.86 $33,994.91 15.80% $5,371.20 $3,479.67 $624,286.75
01/03 $407,938.86 $33,994.91 15.50% $5,371.20 $3,529.72 $633,187.67
02/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,580.04 $642,353.75
03/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,631.87 $651,571.66
04/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,683.99 $660,841.69
05/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,736.40 $670,164.13
06/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,789.11 $679,539.28
07/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,842.12 $688,967.44
08/03 $424,256.41 $35,354.70 15.80% $5,586.04 $3,895.42 $698,448.90
09/03 $424,256.41 $35,354.70 15.50% $5,586.04 $3,949.03 $707,983.97
10/03 $396,885.03 $33,073.75 15.80% $5,225.65 $4,002.94 $717,212.56
11/03 $4,055.12 $721,267.68
12/03 $3,775.67 $74,010.57 $651,032.78
01/04 $3,775.67 $654,808.45
02/04 $3,775.67 $658,584.12
03/04 $3,775.67 $662,359.79
04/04 $3,775.67 $666,135.46
05/04 $3,775.67 $669,911.13
06/04 $3,775.67 $673,686.80
07/04 $3,775.67 $677,462.47
</TABLE>
<PAGE> 19
25-Apr-95
John Lutz
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/04 $3,775.67 $681,238.14
09/04 $3,775.67 $685,013.81
10/04 $3,775.67 $688,789.48
11/04 $3,775.67 $692,565.15
12/04 $3,608.24 $74,010.57 $622,162.82
01/05 $3,608.24 $625,771.06
02/05 $3,608,24 $629,379.30
03/05 $3,608.24 $632,987.54
04/05 $3,608.24 $636,595.78
05/05 $3,608.24 $640,204.02
06/05 $3,608.24 $643,812.26
07/05 $3,608.24 $647,420.50
08/05 $3,608.24 $651,028.74
09/05 $3,608.24 $654,636.98
10/05 $3,608.24 $658,245.22
11/05 $3,608.24 $661,853.48
12/05 $3,429.08 $74,010.57 $591,271.97
01/06 $3,429.08 $594,701.05
02/06 $3,429.08 $598,130.13
03/06 $3,429.08 $601,559.21
04/06 $3,429.08 $604,988.29
05/06 $3,429.08 $608,417.37
06/06 $3,429.08 $611,846.45
07/06 $3,429.08 $615,275.53
08/06 $3,429.08 $618,704.61
09/06 $3,429.08 $622,133.69
10/06 $3,429.08 $625,562.77
11/06 $3,429,08 $628,991.85
12/06 $3,237.39 $74,010,57 $558,218.67
01/07 $3,237.39 $561,456.06
02/07 $3,237.39 $564,693.45
03/07 $3,237.39 $567,930.84
04/07 $3,237.39 $571,168.23
05/07 $3,237.39 $574,405.62
06/07 $3,237.39 $577,643.01
07/07 $3,237.39 $580,880.40
08/07 $3,237.39 $584,117.79
09/07 $3,237.39 $587,355.18
10/07 $3,237.39 $590,592.57
11/07 $3,237.39 $593,829.96
12/07 $3,032.28 $74,010.57 $522,851.67
01/08 $3,032.28 $525,883.95
02/08 $3,032.28 $528,916.23
03/08 $3,032.28 $531,948.51
04/08 $3,032.28 $534,980.79
05/08 $3,032.28 $538,013.07
06/08 $3,032.28 $541,045.35
07/08 $3,032.28 $544,077.63
08/08 $3,032.28 $547,109.91
09/08 $3,032.28 $550,142.19
10/08 $3,032.28 $553,174.47
11/08 $3,032.28 $556,206.75
12/08 $2,812.81 $74,010.57 $485,008.99
01/09 $2,812.81 $487,821.80
02/09 $2,812.81 $490,634.61
03/09 $2,812.81 $493,447.42
04/09 $2,812.81 $496,260.23
05/09 $2,812.81 $499,073.04
06/09 $2,812.81 $501,885.85
07/09 $2,812.81 $504,698.66
08/09 $2,812.81 $507,511.47
09/09 $2,812.81 $510,324.28
10/09 $2,812.81 $513,137.09
11/09 $2,812.61 $515,949.90
</TABLE>
<PAGE> 20
25-Apr-95
John Lutz
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
12/09 $2,577.98 $74,010.57 $444,517.31
01/10 $2,577.98 $447,095.29
02/10 $2,577.98 $449,673.27
03/10 $2,577.98 $452,251.25
04/10 $2,577.98 $454,829.23
05/10 $2,577.98 $457,407.21
06/10 $2,577.98 $459,985.19
07/10 $2,577.98 $462,563.17
08/10 $2,577.98 $465,141.15
09/10 $2,577.98 $467,719.13
10/10 $2,577.98 $470,297.11
11/10 $2,577.98 $472,875.09
12/10 $2,326.71 $74,010.57 $401,191.23
01/11 $2,326.71 $403,517.94
02/11 $2,326.71 $405,844.65
03/11 $2,326.71 $408,171.36
04/11 $2,326.71 $410,498.07
05/11 $2,326.71 $412,824.78
06/11 $2,326.71 $415,151.49
07/11 $2,326.71 $417,478.20
08/11 $2,326.71 $419,804.91
09/11 $2,326.71 $422,131.62
10/11 $2,326.71 $424,458.33
11/11 $2,326.71 $426,785.04
12/11 $2,057.85 $74,010.57 $354,832.32
01/12 $2,057.85 $356,890.17
02/12 $2,057.85 $358,948.02
03/12 $2,057.85 $361,005.87
04/12 $2,057.85 $363,063.72
05/12 $2,057.85 $365,121.57
06/12 $2,057.85 $367,179.42
07/12 $2,057.85 $369,237.27
08/12 $2,057.85 $371,295.12
09/12 $2,057.85 $373,352.97
10/12 $2,057.85 $375,410.82
11/12 $2,057.85 $377,468.67
12/12 $1,770.17 $74,010.57 $305,228.27
01/13 $1,770.17 $306,998.44
02/13 $1,770.17 $308,768.61
03/13 $1,770.17 $310,538.78
04/13 $1,770.17 $312,308.95
05/13 $1,770.17 $314,079.12
06/13 $1,770.17 $315,849.29
07/13 $1,770.17 $317,619.46
08/13 $1,770.17 $319,389.63
09/13 $1,770.17 $321,159.80
10/13 $1,770.17 $322,929.97
11/13 $1,770.17 $324,700.14
12/13 $1,462.36 $74,010.57 $252,151.93
01/14 $1,462.36 $253,614.29
02/14 $1,462.36 $255,076.65
03/14 $1,462.36 $256,539.01
04/14 $1,462.36 $258,001.37
05/14 $1,462.36 $259,463.73
06/14 $1,462.36 $260,926.09
07/14 $1,462.36 $262,388.45
08/14 $1,462.36 $263,850.81
09/14 $1,462.36 $265,313.17
10/14 $1,462.36 $266,775.53
11/14 $1,462.36 $268,237.89
12/14 $1,132.99 $74,010.57 $195,360.31
01/15 $1,132.99 $196,493.30
02/15 $1,132.99 $197,626.29
03/15 $1,132.99 $198,759.28
</TABLE>
<PAGE> 21
25-Apr-95
John Lutz
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/15 $1,132.99 $199,892.27
05/15 $1,132.99 $201,025.26
06/15 $1,132.99 $202,158.25
07/15 $1,132.99 $203,291.24
08/15 $1,132.99 $204,424.23
09/15 $1,132.99 $205,557.22
10/15 $1,132.99 $206,690.21
11/15 $1,132.99 $207,823.20
12/15 $780.57 $74,010.57 $134,593.20
01/16 $780.57 $135,373.77
02/16 $780.57 $136,154.34
03/16 $780.57 $136,934.91
04/16 $780.57 $137,715.48
05/16 $780.57 $138,496.05
06/16 $780.57 $139,276.62
07/16 $780.57 $140,057.19
08/16 $780.57 $140,837.76
09/16 $780.57 $141,618.33
10/16 $780.57 $142,398.90
11/16 $780.57 $143,179.47
12/16 $403.49 $74,010.57 $69,572.39
01/17 $403.49 $69,975.88
02/17 $403.49 $70,379.37
03/17 $403.49 $70,782.86
04/17 $403.49 $71,186.35
05/17 $403.49 $71,589.84
06/17 $403.49 $71,993.33
07/17 $403.49 $72,396.82
08/17 $403.49 $72,800.31
09/17 $403.49 $73,203.80
10/17 $403.49 $73,607.29
11/17 $403.49 $74,010.78
12/17 $0.00 $74,010.57 $0.21
</TABLE>
<PAGE> 1
EXHIBIT 18
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of March, 1995, by and
between Elco Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware, and its subsidiaries ("Corporation") and Derek M.
Hasse ("Executive") on May 10, 1995.
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the Vice President of Administration; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
ARTICLE 1
1.1 Supplemental Benefit. If the Executive shall continue in the employment
of the Corporation until he attains the age of sixty-five (65), the date of such
occurrence is hereby established to be February 23, 1996 for purposes hereof
(the "Benefit Date"), and he retires from active daily employment with the
Corporation not later than the first day of the calendar month coinciding with
or next following the Benefit Date, or such later date as may be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion
("Retirement Date"), then the Corporation agrees that it will pay to the
Executive the sum of Sixty-Six Thousand Dollars and no/100 ($66,000.00) Dollars
on the first day of the second calendar month following the Executive's
Retirement Date and on each of the successive fourteen anniversary dates of that
date, until he has received a total of fifteen (15) payments of such amount. The
aggregate amount of such fifteen (15) payments is hereinafter referred to as the
"Supplemental Benefit." The timing of the payments comprising the Supplemental
Benefit may be accelerated by the Board of Directors of Elco Industries, Inc.,
in its sole discretion. In the event of the Executive's retirement prior to the
Benefit Date, no benefit shall be payable except in such amount and upon such
terms as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion. In the event that the Executive retires and is entitled
to a Supplemental
<PAGE> 2
Benefit pursuant to this Section 1.1, but dies before receiving the entire
Supplemental Benefit, then the remaining payments shall be made in accordance
with the foregoing schedule to such individual or individuals as the Executive
has designated in writing, filed with and been approved by the Corporation. In
the absence of any effective designation of beneficiary, any such remaining
amounts shall be payable to the Executive's duly qualified executor or
administrator.
ARTICLE 2
2.1 Death Prior to Benefit Date. In the event the Executive should die
while actively employed by the Corporation at any time after the date of this
Agreement but prior to the Executive's Retirement Date, the Corporation will pay
the Supplemental Benefit to such individual or individuals as the Executive has
designated in writing, filed with and been approved by the Corporation. Payment
of the Supplemental Benefit shall be made in accordance with the schedule
provided in Section 1.1 except that the date of the Executive's death shall be
substituted for the Executive's Retirement Date. In the absence of any effective
designation of beneficiary, any such remaining amounts shall be payable to the
Executive's duly qualified executor or administrator.
ARTICLE 3
3.1 Disability Prior to Benefit Date. "Permanent Disability" for purposes
of this Agreement means the Executive's inability, by reason of any physical or
mental impairment, to substantially perform the significant aspects of his
regular duties which inability is reasonably contemplated to continue for at
least one (1) year from its inception as determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion. In the event that during the
period of active daily employment prior to termination of his employment with
the Corporation the Executive shall incur a Permanent Disability, the
Corporation shall pay the Supplemental Benefit to the Executive or his legal
representative in accordance with the schedule provided in Section 1.1 except
that the date of Permanent Disability as determined by the Board of Directors of
Elco Industries, Inc. shall be substituted for the Executive's Retirement Date.
In the event that the Executive incurs a Permanent Disability, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or individuals
as the Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of beneficiary, any
such remaining amounts shall be payable to his duly qualified executor or
administrator.
<PAGE> 3
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge. In the event that the
Executive shall voluntarily terminate his employment with the Corporation or be
discharged by the Corporation with or without cause, this Agreement shall
terminate upon the date of voluntary termination of employment or discharge and
no benefits or payments of any kind are to be made hereunder, except as provided
under Section 1.1 or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that the Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the cash surrender value of any insurance policy obtained pursuant
to Article 7 and then in effect. The amount of such cash surrender value and the
timing and other terms of payment thereof to the Executive shall be determined
by the Board of Directors of Elco Industries, Inc., in its sole discretion,
provided that in the event that full payment is deferred more than 30 days after
such termination the Corporation shall pay the Executive interest compounded
annually from the date of termination on the unpaid balance at a floating rate
equal to the base rate as then announced from time to time by The First National
Bank of Chicago. Full payment of the cash surrender value shall be made no later
than three years after such termination. In the event that the Executive becomes
entitled to a benefit pursuant to this Section 4.2, but dies before receiving
the entire benefit, then the remaining payments shall be made in the manner
described in this Section 4.2 to such individual or individuals as the Executive
has designated in writing, filed with and been approved by the Corporation. In
the absence of any effective designation of a beneficiary, any amounts payable
under this Section 4.2 shall be payable to the Executive's duly qualified
executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer, or disposal of the benefit
hereunder the Corporation's liabilities shall forthwith cease and terminate.
- 3 -
<PAGE> 4
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 Insurance Policies. The Corporation reserves the right in its sole
discretion to purchase an insurance policy or policies relating to the Executive
to allow the Corporation to recover the costs of providing the benefits
hereunder, in whole or in part. Should the Corporation elect to purchase such an
insurance policy or policies, the Corporation shall be the owner and beneficiary
thereof. The Corporation reserves the absolute right, in its sole discretion, to
terminate any such policy or policies, at any time, either in whole or in part.
At no time shall the Executive be deemed to have any right, title, or interest
in or to any specified asset or assets of the Corporation, including, but not by
way of restriction, any such insurance policy or policies or the proceeds
therefrom.
Any such policy shall not in any way be considered to be security for the
performance of the obligations of this Agreement. It shall be, and remain, a
general, unpledged, unrestricted asset of the Corporation.
If the Corporation purchases a life insurance or annuity policy on the life
of the Executive, he agrees to sign any papers that may be required for that
purpose and to undergo any medical examination or tests which may be necessary.
7.2 This Article shall not be construed as giving the Executive or his
beneficiary any greater rights than those of any other unsecured creditor of the
Corporation.
ARTICLE 8
8.1 Change of Control. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of any Change of Control while the Executive is
actively employed by the Corporation (or if the Executive's voluntary
termination of employment with the Corporation or discharge by the Corporation
occurs prior to a Change of Control at the request of any individual or entity
acquiring ownership or control of Elco Industries, Inc., or is reasonably shown
to be related to a
- 4 -
<PAGE> 5
prospective Change of Control), the Corporation shall make a lump sum
distribution to the Executive within fourteen days after the earlier to occur of
(i) the Executive's voluntary termination of employment with the Corporation
(including death or Permanent Disability) and (ii) the Executive's discharge by
the Corporation. The amount of the lump sum distribution in either case shall be
the present value of all or of the remaining annual payments, as the case may
be, provided for in Section 1.1 or Section 2.1 or Section 3.1 determined as of
the date of distribution, using a discount rate equal to 7% (Seven percent) per
annum. If the Executive dies after becoming entitled to such lump sum
distribution but before the distribution is made, such distribution shall be
made to the Executive's beneficiary and in the absence of an effective
designation of beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
(b) If the Executive's employment is terminated after a Change of Control,
with or without cause, for any reason other than death or on or after the date
on which the Executive attains age sixty-five (65), then, during the three-year
period after such termination, the Executive shall be included to the extent
eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) Notwithstanding any provision in this Agreement to the contrary, in the
event of any Change of Control while the Executive is not actively employed by
the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at the market yield listed in The Wall Street Journal as of the date
of the Change of Control (or the next following business day if the Change of
Control does not occur on a business day) of U.S. Treasury Bonds/Notes which
mature as of the date on which the last remaining payment will be made or, if no
U.S. Treasury Bond/Note matures on such date, the next closest date immediately
following such date. If the Executive dies after becoming entitled to such lump
sum distribution but before the distribution is made, such distribution shall be
made to the Executive's beneficiary, and in the absence of an effective
designation of beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control Agreement
between Elco Industries, Inc. and the
- 5 -
<PAGE> 6
Executive dated March 30, 1995, as amended (which generally provides for an
additional payment to the Executive should any payment, benefit or distribution
(or combination thereof) by Elco Industries, Inc. or one or more trusts
established by Elco Industries, Inc. for the benefit of its employees be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code, as
amended), shall be applicable with respect to this Agreement and the benefits
provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns,
directly or indirectly, at least seventy percent (70%) of the outstanding
voting securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock of
Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes and
approves any transaction which has either a reasonable likelihood or a purpose
of causing, whether directly or indirectly:
(i) $5 par value common stock of Elco Industries, Inc. to be held of
record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be neither
listed on any national securities exchange nor authorized to be quoted on
an inter-dealer quotation system of any registered national securities
association;
- 6 -
<PAGE> 7
(d) the date, during any period of twenty-four (24) consecutive months, on
which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc. at
the close of business on May 10, 1995.
(ii) any member of the Board of Directors of Elco Industries, Inc. who
succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including any
affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect to the Corporation's responsibilities under this Agreement and to
allocate to such person or organization all, or part of, the responsibility for
the operation and administration of this Agreement.
ARTICLE 10
- 7 -
<PAGE> 8
10.1 Assignment; Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered or
modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be made in writing and may either be
delivered personally or sent by registered or certified mail, return receipt
requested, to:
If to the Corporation:
- 8 -
<PAGE> 9
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125
If to the Executive:
5535 LaCumbre Ln.
------------------------
Rockford, IL.
------------------------
61107
------------------------
Each party shall have the right by written notice to change place to which any
notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels entitled
under this Agreement, such Executive or beneficiary (or qualified executor or
administrator) shall submit a claim for such benefits in writing to the
Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in a
manner calculated to be understood by the claimant within 90 days setting forth
the specific reasons for denial, specific reference to the provisions of this
Agreement upon which the denial is based, and any additional material or
information necessary to perfect the claim, if any, and an explanation of why
such material or information is necessary. Also, such written notice shall
indicate the steps to be taken if a review of the denial is desired.
- 9 -
<PAGE> 10
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary may review this Agreement or any documents relating to it and
submit any written issues and comments he may feel appropriate. In its sole
discretion, the Corporation shall then review the claim and provide a written
decision within 60 days after receipt of the request for review unless special
circumstances require an extension of time for processing in which case a
decision shall be rendered as soon as possible, but no later than 120 days
after receipt of a request for review. This decision shall state the specific
reasons for the decision and shall include reference to specific provisions of
this Agreement on which the decision is based and be written in a manner
calculated to be understood by the claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as may be required for purposes of complying with
the tax withholding provisions of the Internal Revenue Code of 1986, as amended,
any state's income tax act or any applicable similar laws.
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco
- 10 -
<PAGE> 11
Industries, Inc. will continue to pay the Executive his full compensation in
effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge, arbitrator or
other individual presiding over the proceeding affirmatively finds the Executive
instituted the proceeding in bad faith, the Executive shall pay all costs and
expenses, including attorney's fees and disbursements, of Elco Industries, Inc.
Elco Industries, Inc. shall pay prejudgment interest on any money judgment
obtained by the Executive as a result of such a proceeding, calculated at the
rate which The Bank of America (Bank) announces from time to time as its prime
lending rate as in effect from time to time, from the date that payment should
have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
- 11 -
<PAGE> 12
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Defined Contribution
Benefit Agreement between Elco Industries, Inc. and the Executive dated March
30, 1995, as amended ("Defined Contribution Benefit Agreement") and upon an
event entitling the Executive (or his beneficiary or qualified executor or
administrator) to a benefit payment under this Agreement or the Defined
Contribution Benefit Agreement, the Executive (or his beneficiary or qualified
executor or administrator) shall only be entitled to benefit payments from
whichever of the aforementioned Agreements entitles the Executive (or his
beneficiary or qualified executor or administrator) to the greatest total
benefit amount. Additionally, once an Executive becomes entitled to benefit
payments pursuant to this Agreement because of a particular event, he is not
eligible to receive benefit payments pursuant to this Agreement because of a
different event except to the extent explicitly provided in this Agreement, such
as with respect to a subsequent Change of Control or death.
18.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the Corporation and
the Executive.
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand at Rockford, Illinois (town
& state) the day and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/ JOHN C. LUTZ
--------------------------------
Its: President
-------------------------------
/s/ DEREK M. HASSE
-----------------------------------
(ADD EXECUTIVE'S NAME)
/s/
--------------------------------
Chairman, Compensation Committee
<PAGE> 14
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: DEREK M. HASSE
-------------------------------
DATE: May 15, 1995
-------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Benefit Agreement dated March 30, 1995,
as amended, I hereby designate the person or persons named below who are living
at the time of my death to receive all amounts and benefits due me under the
terms of such Agreement as follows:
<TABLE>
<CAPTION>
====================================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
====================================================================================
<S> <C> <C> <C> <C>
1. Sally F. Hasse 5535 LaCumbre ###-##-#### Wife 100%
Rockford, IL 61107
------------------------------------------------------------------------------------
2.
------------------------------------------------------------------------------------
3.
------------------------------------------------------------------------------------
4.
------------------------------------------------------------------------------------
TOTAL: 100%
====================================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
/s/ DEREK M. HASSE
-----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ JOHN C. LUTZ 5-15-95
------------------------------ ----------------------
Date
<PAGE> 1
EXHIBIT 19
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION
BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 18th day of August, 1995
("Effective Date"), by and between Elco Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
subsidiaries ("Corporation"), and Robert Rothkopf, ("Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the President, Industrial Products Group of Elco Industries
inc.; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
ARTICLE 1
1.1 Account. An account shall be maintained in the name of the Executive on
the books of the Corporation ("Account").
(a) Credits to Account. As of the Effective Date, for each calendar month
during the period of July 1, 1995 through the Effective Date, an amount equal to
13.77 percent (or such other percent as may from time to time be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion) of the
monthly base salary payable to the Executive by the Corporation for such month
shall be credited to the Executive's Account. As of the last day of each
calendar month thereafter, an amount shall be credited to the Executive's
Account which is equal to 13.77 percent (or such other percent as may from time
to time be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) of the monthly base salary payable to the Executive by the
Corporation for such month. The aforementioned amounts shall cease to be
credited to an Executive's Account as of the last day of the calendar month in
which occurs the Executive's Benefit Date (as defined in Section 1.2 ),
voluntary termination of employment with the Corporation or discharge by the
Corporation (with or without cause), death, Permanent Disability (as defined in
Section 3.1) or termination of this Agreement pursuant to Section 4.2. In
addition to the amounts based on the Executive's monthly base salary described
above, there shall be a monthly credit to the Executive's Account as of the last
day of each calendar month equal to 0.5654 percent (or such other percent as may
from time to time be determined by the Board of Directors of Elco Industries,
Inc., in its sole discretion) multiplied by the Executive's Account balance as
of the last day of the preceding calendar month. This credit shall continue
until, as is applicable, the Executive's Retirement Payment Commencement Date
described in Section 1.2, Early Benefit Payment Commencement Date described
<PAGE> 2
in Article 2 or Article 3, voluntary termination of employment with the
Corporation or discharge by the Corporation as described in Section 4.1 or 8.1
or termination of this Agreement as described in Section 4.2. Notwithstanding
the foregoing, with respect to each calendar month during the period of July 1,
1995 through the Effective Date, the monthly credit amounts shall be determined
as described above, but credited to the Executive's Account as of the Effective
Date.
(b) Monthly Base Salary Definition. For purposes of this Section 1.1,
"monthly base salary payable to the Executive by the Corporation for such month"
shall mean the monthly base salary payable to the Executive by the Corporation
determined on the first day of relevant calendar month without any reductions
made to it for tax or employee benefit plan purposes (including, but not limited
to, any reductions made to the Executive's actual compensation for the relevant
calendar month pursuant to an Internal Revenue Code Section 125 or 401(k) plan
or a nonqualified deferred compensation plan) and without any adjustments made
to it for any change in the Executive's monthly base salary rate after the first
day of the relevant calendar month.
1.2 Supplemental Benefit. If the Executive shall continue in the employment
of the Corporation until he attains the age of sixty-five (65), the date of such
occurrence is hereby established to be June 26, 2010 for purposes hereof (the
"Benefit Date"), and he retires from active daily employment with the
Corporation not later than the first day of the calendar month coinciding with
or next following the Benefit Date, or such later date as may be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion
("Retirement Date"), then the Corporation agrees that it will pay to the
Executive an amount equal to the Annual Amount on the first day of the second
calendar month following the Executive's Retirement Date (the "Retirement
Payment Commencement Date") and on each of the successive fourteen anniversary
dates of that date, until he has received a total of fifteen (15) equal payments
of the Annual Amount. The aggregate amount of such fifteen (15) equal payments
of the Annual Amount is hereinafter referred to as the "Supplemental Benefit".
With respect to the Supplemental Benefit:
(a) The "Annual Amount" shall be calculated so that the present value of
the fifteen (15) equal payments of the Annual Amount, when discounted at 7
percent (or such other percent as may from time to time be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion) per annum,
is equal to the balance of the Executive's Account as defined in Section 1.1 on
the Retirement Payment Commencement Date.
(b) Acceleration of Payments. The timing of the payments comprising the
Supplemental Benefit may be accelerated by the Board of Directors of Elco
Industries, Inc., in its sole discretion.
(c) Early Retirement Benefit Amount. In the event of the Executive's
retirement prior to the Benefit Date, no benefit shall be payable except in such
amount and upon such terms as may be determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion.
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<PAGE> 3
(d) Death Benefit Amount. In the event that the Executive retires and is
entitled to a Supplemental Benefit pursuant to this Section 1.2, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or
individuals as the Executive has designated in writing, filed with and been
approved by the Corporation. In the absence of any effective designation of
beneficiary, any such remaining amounts shall be payable to the Executive's duly
qualified executor or administrator.
ARTICLE 2
2.1 Death Prior to Retirement. In the event that the Executive should die
while actively employed by the Corporation at any time after the Effective Date
of this Agreement, the Corporation shall pay the Supplemental Benefit described
in this Article 2 to such individual or individuals as the Executive has
designated in writing, filed with and been approved by the Corporation. In the
absence of any effective designation of a beneficiary, any amounts payable under
this Article 2 shall be payable to the Executive's duly qualified executor or
administrator.
2.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 2 shall be made in accordance with the schedule provided in Section 1.2,
except that the date of the Executive's death (the "Early Benefit Date") shall
be substituted for the Benefit Date and the first day of the second calendar
month coinciding with or next following the Early Benefit Date (the "Early
Benefit Payment Commencement Date") shall be substituted for the Retirement
Payment Commencement Date.
2.3 Supplemental Benefit - Death. For purposes of this Article 2, the
"Supplemental Benefit" shall be the aggregate amount of fifteen (15) equal
payments of the Early Annual Amount. The "Early Annual Amount" shall be
calculated so that the present value of the fifteen (15) equal payments of the
Early Annual Amount, when discounted at 7 percent (or such other percent as may
from time to time be determined by the Board of Directors of Elco Industries,
Inc., in its sole discretion) per annum, is equal to the Early Benefit Amount on
the Early Benefit Payment Commencement Date. The "Early Benefit Amount" shall be
the greater of the following two amounts:
(a) Account Balance. The balance of the Executive's Account as defined in
Section 1.1 on the Early Benefit Date; or
(b) Projected 5-Year Account Balance. $174,170, or such greater dollar
amount as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion.
ARTICLE 3
3.1 Disability Prior to Retirement. "Permanent Disability" for purposes of
this Agreement means the Executive's inability, by reason of any
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<PAGE> 4
physical or mental impairment, to substantially perform the significant aspects
of his regular duties which inability is reasonably contemplated to continue for
at least one (1) year from its inception, as determined by the Board of
Directors of Elco Industries, Inc. In the event that during the period of active
daily employment prior to termination of his employment with the Corporation the
Executive shall incur a Permanent Disability, the Corporation shall pay the
Supplemental Benefit described in this Article 3 to the Executive or his legal
representative. In the event that the Executive incurs a Permanent Disability,
but dies before receiving the entire Supplemental Benefit described in this
Article 3, then the remaining payments shall be made in accordance with the
schedule described in this Article 3 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Article 3 shall be payable to the Executive's duly
qualified executor or administrator.
3.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 3 shall be made in accordance with Section 2.2 with the date of
Permanent Disability as determined by the Board of Directors of Elco Industries,
Inc. being the Early Benefit Date.
3.3 Supplemental Benefit - Permanent Disability. For purposes of this
Article 3, the "Supplemental Benefit" shall be the amount defined in Article 2.
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge Prior to Retirement. In
the event that the Executive shall voluntarily terminate his employment with the
Corporation or be discharged by the Corporation with or without cause, this
Agreement shall terminate upon the date of voluntary termination of employment
or discharge and no benefits or payments of any kind are to be made hereunder,
except as provided under Section 1.2(c) or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the Early Benefit Amount described in Article 2, except that the
date of the Agreement's termination shall be substituted for the date of the
Executive's death as the Early Benefit Date. The timing and other terms of
payment of the Early Benefit Amount to Executive shall be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion, provided
that in the event that full payment is deferred more than 30 days after such
termination the Corporation shall pay Executive interest compounded annually
from the last day of the calendar month in which the Agreement is terminated on
the unpaid balance at a floating rate equal to the base rate as then announced
from time to time by The First National Bank of Chicago. Full payment of the
amounts described in this
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<PAGE> 5
Section 4.2 shall be made no later than three years after such termination of
this Agreement. In the event that the Executive becomes entitled to an Early
Benefit Amount pursuant to this Section 4.2, but dies before receiving the
entire Early Benefit Amount, then the remaining payments shall be made in the
manner described in this Section 4.2 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary,
any amounts payable under this Section 4.2 shall be payable to the Executive's
duly qualified executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer, or disposal of the benefit
hereunder the Corporation's liabilities shall forthwith cease and terminate.
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 No Rights to Assets. The rights of the Executive and his beneficiary
shall be solely those of unsecured general creditors of the Corporation. The
Executive and his beneficiary shall only have the right to receive from the
Corporation those payments as are specified under this Agreement. The Executive
agrees that he and his beneficiary shall have no rights or interests whatsoever
in any asset of this Corporation.
ARTICLE 8
8.1 Change of Control. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of any Change of Control while the Executive is
actively employed by the Corporation (or if the Executive's voluntary
termination of employment with the Corporation or discharge by the Corporation
occurs prior to a Change of Control at the request of any individual
- 5 -
<PAGE> 6
or entity acquiring ownership or control of Elco Industries, Inc., or is
reasonably shown to be related to a prospective Change of Control), the
Corporation shall make a lump sum distribution to the Executive within fourteen
days after the earlier to occur of (i) the Executive's voluntary termination of
employment with the Corporation (including death or Permanent Disability) and
(ii) the Executive's discharge by the Corporation. The amount of the lump sum
distribution in either case shall be the present value of a lump sum payment of
$901,223 as of the Executive's Benefit Date when discounted at 7 percent (or
such other percent as may from time to time be determined by the Board of
Directors of Elco Industries, Inc., in its sole discretion) per annum; provided
that, notwithstanding the foregoing, if the Executive's Benefit Date precedes
the date on which the lump sum distribution is made the lump sum distribution
shall be equal to the Executive's Account balance as of the date the lump sum
distribution is paid, and if the Executive's termination of employment is due to
death or Permanent Disability arising after the Change of Control, the amount of
the lump sum distribution shall be the Early Benefit Amount payable pursuant to
Article 2 or 3, as is applicable. If the Executive dies after becoming entitled
to such lump sum distribution but before the distribution is made, such
distribution shall be made to the Executive's beneficiary, and in the absence of
an effective designation of a beneficiary, any such distribution shall be
payable to the Executive's duly qualified executor or administrator.
(b) If the Executive's employment is terminated after a Change of Control,
with or without cause, for any reason other than death or on or after the date
on which the Executive attains age sixty-five (65), then, during the three-year
period after such termination, the Executive shall be included to the extent
eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) If the business conducted by the Corporation shall be discontinued
other than in a manner considered a Change of Control while the Executive is
actively employed by the Corporation, the Corporation shall make a lump sum
distribution to the Executive on or prior to the Corporation's discontinuance of
business. The amount of the lump sum distribution shall be the present value of
a lump sum payment of $901,223 as of the Executive's Benefit Date when
discounted at 7 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) per annum; provided that, notwithstanding the foregoing, if the
Executive's Benefit Date precedes the date on which the lump sum distribution is
made, the lump sum distribution shall be equal to the Executive's Account
balance as of the date the lump sum distribution is paid. If the Executive dies
after becoming entitled to such lump sum distribution but before the
distribution is made, such distribution shall be made to the Executive's
beneficiary, and in the absence of an effective designation of a beneficiary,
any such distribution shall be payable to the Executive's duly qualified
executor or administrator.
- 6 -
<PAGE> 7
(d) Notwithstanding any provision in this Agreement to the contrary, in the
event of any Change of Control while the Executive is not actively employed by
the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at 7 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) per annum. If the Executive dies after becoming entitled to such
lump sum distribution but before the distribution is made, such distribution
shall be made to the Executive's beneficiary, and in the absence of an effective
designation of beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
(which generally provides for an additional payment to the Executive should any
payment, benefit or distribution (or combination thereof) by Elco Industries,
Inc. or one or more trusts established by ElCO Industries, Inc. for the benefit
of its employees be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code, as amended), shall be applicable with respect to this
Agreement and the benefits provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns,
directly or indirectly, at least seventy percent (70%) of the outstanding
voting securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock of
Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes and
approves any transaction which has either a reasonable likelihood
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<PAGE> 8
or a purpose of causing, whether directly or indirectly:
(i) $5 par value common stock of Elco Industries, Inc. to be held of
record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be neither
listed on any national securities exchange nor authorized to be quoted on
an inter-dealer quotation system of any registered national securities
association;
(d) the date, during any period of twenty-four (24) consecutive months, on
which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc. at
the close of business on August 18, 1995
(ii) any member of the Board of Directors of Elco Industries, Inc. who
succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including any
affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect to the Corporation's responsibilities under this Agreement and to
allocate to such person or organization all, or part of, the responsibility for
the operation and administration of this Agreement.
- 8 -
<PAGE> 9
ARTICLE 10
10.1 Assignment: Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered or
modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be made in writing and may either be
delivered personally or sent by registered or certified mail, return receipt
requested, to:
If to the Corporation:
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
If to the Executive:
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<PAGE> 10
Robert H. Rothkopf
------------------------------
5203 Deer Point
------------------------------
Rockford, IL
------------------------------
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels
entitled under this Agreement, such Executive or beneficiary (or qualified
executor or administrator) shall submit a claim for such benefits in writing to
the Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in a
manner calculated to be understood by the claimant within 90 days setting forth
the specific reasons for denial, specific reference to the provisions of this
Agreement upon which the denial is based, and any additional material or
information necessary to perfect the claim, if any, and an explanation of why
such material or information is necessary. Also, such written notice shall
indicate the steps to be taken if a review of the denial is desired.
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary (or qualified executor or administrator) may review this
Agreement or any documents relating to it and submit any written issues and
comments he may feel appropriate. In its sole discretion, the Corporation shall
then review the claim and provide a written decision within 60 days after
receipt
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<PAGE> 11
of the request for review unless special circumstances require an extension of
time for processing in which case a decision shall be rendered as soon as
possible, but no later than 120 days after receipt of a request for review. This
decision shall state the specific reasons for the decision and shall include
reference to specific provisions of this Agreement on which the decision is
based and be written in a manner calculated to be understood by the claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as may be required for purposes of complying with
the tax withholding provisions of the Internal Revenue Code of 1986, as amended,
any state's income tax act or any applicable similar laws,
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco Industries, Inc. will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge,
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<PAGE> 12
arbitrator or other individual presiding over the proceeding affirmatively finds
the Executive instituted the proceeding in bad faith, the Executive shall pay
all costs and expenses, including attorney's fees and disbursements, of Elco
Industries, Inc. Elco Industries, Inc. shall pay prejudgment interest on any
money judgment obtained by the Executive as a result of such a proceeding,
calculated at the rate which The First National Bank of Chicago announces from
time to time as its prime lending rate as in effect from time to time, from the
date that payment should have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Benefit Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
("Defined Benefit Agreement") and upon an event entitling the Executive (or his
beneficiary or qualified executor or administrator) to a benefit payment under
this Agreement or the Defined Benefit Agreement, the Executive (or his
beneficiary or qualified executor or administrator) shall only be entitled to
benefit payments from whichever of the aforementioned Agreements entitles the
Executive (or his beneficiary or qualified executor or administrator) to the
greatest total benefit amount. Additionally, once an Executive becomes entitled
to benefit payments pursuant to this Agreement because of a particular event, he
is not eligible to receive benefit payments pursuant to this Agreement because
of a different event except to the extent explicitly provided in this Agreement,
such as with respect to a subsequent Change of Control or death.
18.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof
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<PAGE> 13
and supersedes all prior agreements and understandings between the Corporation
and the Executive.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand at Rockford, Illinois (town
& state) the day and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/ JOHN C. LUTZ
--------------------------------
Its: President & CEO
-------------------------------
/s/ ROBERT H. ROTHKOPF
-----------------------------------
(ADD EXECUTIVE'S NAME)
/s/
---------------------------------------
Chairman, Compensation Committee
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<PAGE> 14
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: /s/ ROBERT H. ROTHKOPF
--------------------------------------------------------
DATE: 8/18/95
-------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, as amended, I hereby designate the person or persons named
below who are living at the time of my death to receive all amounts and benefits
due me under the terms of such Agreement as follows:
<TABLE>
<CAPTION>
=======================================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
=======================================================================================
<S> <C> <C> <C> <C>
1. Patricia L. Rothkopf 5203 Deer Pointe ###-##-#### Wife 100%
---------------------------------------------------------------------------------------
2.
---------------------------------------------------------------------------------------
3.
---------------------------------------------------------------------------------------
4.
---------------------------------------------------------------------------------------
TOTAL: 100%
=======================================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
/s/ ROBERT H. ROTHKOPF
-----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ D.M. HASSE 8/21/95
------------------------------ ----------------------
Date
<PAGE> 15
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
07/95 $194,670.00 $16,222.50 13.77% $2,233.84 $2,233.84
08/95 $194,670.00 $16,222.50 13.77% $2,233.84 $12.63 $4,480.31
09/95 $194,670.00 $16,222.50 13.77% $2,233.84 $25.33 $6,739.48
10/95 $194,670.00 $16,222.50 13.77% $2,233.84 $38.11 $9,011.43
11/95 $194,670.00 $16,222.50 13.77% $2,233.84 $50.95 $11,296.22
12/95 $194,670.00 $16,222.50 13.77% $2,233.84 $63.87 $13,593.93
01/96 $194,670.00 $16,222.50 13.77% $2,233.84 $76.86 $15,904.63
02/96 $202,456.80 $16,871.40 13.77% $2,323.19 $89.92 $18,317.74
03/96 $202,456.80 $16,871.40 13.77% $2,323.19 $103.57 $20,744.50
04/96 $202,456.80 $16,871.40 13.77% $2,323.19 $117.29 $23,184.98
05/96 $202,456.80 $16,871.40 13.77% $2,323.19 $131.09 $25,639.26
06/96 $202,456.80 $16,871.40 13.77% $2,323.19 $144.96 $28,107.41
07/96 $202,456.80 $16,871.40 13.77% $2,323.19 $158.92 $30,589.52
08/96 $202,456.80 $16,871.40 13.77% $2,323.19 $172.95 $33,085.66
09/96 $202,456.80 $16,871.40 13.77% $2,323.19 $187.07 $35,595.92
10/96 $202,456.80 $16,871.40 13.77% $2,323.19 $201.26 $38,120.37
11/95 $202,456.80 $16,871.40 13.77% $2,323.19 $215.53 $40,659.09
12/95 $202,456.80 $16,871.40 13.77% $2,323.19 $229.89 $43,212.17
01/97 $202,456.80 $16,871.40 13.77% $2,323.19 $244.32 $45,779.68
02/97 $210,555.07 $17,546.26 13.77% $2,416.12 $258.84 $48,454.64
03/97 $210,555.07 $17,546.26 13.77% $2,416.12 $273.96 $51,144.72
04/97 $210,555.07 $17,546.26 13.77% $2,416.12 $289.17 $53,850.01
05/97 $210,555.07 $17,546.26 13.77% $2,416.12 $304.47 $56,570.60
06/97 $210,555.07 $17,546.26 13.77% $2,416.12 $319.85 $59,306.57
07/97 $210,555.07 $17,546.26 13.77% $2,416.12 $335.32 $62,058.01
08/97 $210,555.07 $17,546.26 13.77% $2,416.12 $350.88 $64,825.01
09/97 $210,555.07 $17,546.26 13.77% $2,416.12 $366.52 $67,607.65
10/97 $210,555.07 $17,546.26 13.77% $2,416.12 $382.25 $70,406.02
11/97 $210,555.07 $17,546.26 13.77% $2,416.12 $398.08 $73,220.22
12/97 $210,555.07 $17,546.26 13.77% $2,416.12 $413.99 $76,050.33
01/98 $210,555.07 $17,546.26 13.77% $2,416.12 $429.99 $78,896.44
02/98 $218,977.27 $18,248.11 13.77% $2,512.76 $446.08 $81,855.28
03/98 $218,977.27 $18,248.11 13.77% $2,512.76 $462.81 $84,830.85
04/98 $218,977.27 $18,248.11 13.77% $2,512.76 $479.63 $87,823.24
05/98 $218,977.27 $18,248.11 13.77% $2.512.76 $496.55 $90,832.55
06/98 $218,977.27 $18,248.11 13.77% $2,512.76 $513.57 $93,858.88
07/98 $218,977.27 $18,248.11 13.77% $2,512.76 $530.68 $96,902.32
08/98 $218,977.27 $18,248.11 13.77% $2,512.76 $547.89 $99,962.97
09/98 $218,977.27 $18,248.11 13.77% $2,512.76 $565.19 $103,040.92
10/98 $218,977.27 $18,248.11 13.77% $2,512.76 $582.59 $106,136.27
11/98 $218,977.27 $18,248.11 13.77% $2,512.76 $600.09 $109,249.12
12/98 $218,977.27 $18,248.11 13.77% $2,512.76 $617.69 $112,379.57
01/99 $218,977.27 $18,248.11 13.77% $2,512.76 $635.39 $115,527.72
02/99 $227,736.36 $18,978.03 13.77% $2,613.27 $653.19 $118,794.18
03/99 $227,736.36 $18,978.03 13.77% $2,613.27 $671.66 $122,079.11
04/99 $227,736.36 $18,978.03 13.77% $2,613.27 $690.24 $125,382.62
05/99 $227,735.36 $18,978.03 13.77% $2,613.27 $708.91 $128,704.80
06/99 $227,736.36 $18,978.03 13.77% $2,613.27 $727.70 $132,045.77
07/99 $227,736.36 $18,978.03 13.77% $2,613,27 $746.59 $135,405.63
08/99 $227,736.36 $18,978.03 13.77% $2.613.27 $765.58 $138,784.48
09/99 $227,736.36 $18,978.03 13,77% $2,613.27 $784.69 $142,182.44
10/99 $227,736.36 $18,978.03 13.77% $2,613.27 $803.90 $145,599.61
11/99 $227,736.36 $18,978.03 13.77% $2,613.27 $823.22 $149,036.10
12/99 $227,736.38 $18,978.03 13.77% $2,613.27 $842.65 $152,492.02
01/00 $227,736.36 $18,978.03 13.77% $2,613.27 $862.19 $155,967.48
02/00 $238,845.81 $19.737.15 13.77% $2,717.81 $881.84 $159,567.13
03/00 $236,845.81 $19,737.15 13.77% $2,717.81 $902.19 $163,187.13
</TABLE>
<PAGE> 16
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/00 $236,845.81 $19,737.15 13.77% $2,717.81 $922.66 $166,827.60
05/00 $236,845.81 $19,737.15 13.77% $2,717.81 $943.24 $170,488.65
06/00 $236,845.81 $19,737.15 13.77% $2,717.81 $963.94 $174,170.40
07/00 $236,845.81 $19,737.15 13.77% $2,717.81 $984.76 $177,872.97
08/00 $236,845.81 $19,737.15 13.77% $2,717.81 $1,005.69 $181,596.47
09/00 $236,845.81 $19,737.15 13.77% $2,717.81 $1,026.75 $185,341.03
10/00 $236,845.81 $19,737.15 13.77% $2,717.81 $1,047.92 $189,106.76
11/00 $236,845.81 $19,737.15 13.77% $2,717.81 $1,069.21 $192,893.78
12/00 $236,845.81 $19,737.15 13.77% $2,717.81 $1,090.62 $196,702.21
01/01 $236,845.81 $19,737.15 13.77% $2,717.81 $1,112.15 $200,532.17
02/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,133.81 $204,492.50
03/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,156.20 $208,475.22
04/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,178.72 $212,480.46
05/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,201.36 $216,508.34
06/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,224.14 $220,559.00
07/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,247.04 $224,632.56
08/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,270.07 $228,729.15
09/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,293.23 $232,848.90
10/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,316.53 $236,991.95
11/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,339.95 $241,158.42
12/01 $246,319.64 $20,526.64 13.77% $2,826.52 $1,363.51 $245,348.45
01/02 $246,319.64 $20,526.64 13.77% $2,826.52 $1,387.20 $249,562.17
02/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,411.02 $253,912.77
03/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,435.62 $258,287.97
04/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,460.36 $262,687.91
05/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,485.24 $267,112.73
06/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,510.26 $271,562.57
07/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,535.41 $276,037.56
08/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,560.72 $280,537.86
09/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,586.16 $285,063.60
10/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,611.75 $289,614.93
11/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,637.48 $294,191.99
12/02 $256,172.43 $21,347.70 13.77% $2,939.58 $1,663.36 $298,794.93
01/03 $256,172.43 $21,347.70 13.77% $2,939.58 $1,689.39 $303,423.90
02/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,715.56 $308,196.62
03/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,742.54 $312,996.32
04/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,769.68 $317,823.16
05/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,796.97 $322,677.29
06/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,824.42 $327,558.87
07/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,852.02 $332,468.05
08/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,879.77 $337,404.98
09/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,907.69 $342,369.83
10/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,935.76 $347,362.75
11/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,963.99 $352,383.90
12/03 $266,419.33 $22,201.61 13.77% $3,057.16 $1,992.38 $357,433.44
01/04 $266,419.33 $22,201.61 13.77% $3,057.16 $2,020.93 $362,511.53
02/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,049.64 $367,740.62
03/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,079.21 $372,999.28
04/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,108.94 $378,287.67
05/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,138.84 $383,605.96
06/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,168.91 $388,954.32
07/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,199.15 $394,332.92
08/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,229.56 $399,741.93
09/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,260.14 $405,181.52
10/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,290.90 $410,651.87
11/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,321.83 $416,153.15
12/04 $277,076.10 $23,089.68 13.77% $3,179.45 $2,352.93 $421,685.53
01/05 $277,076.10 $23,089.68 13.77% $3,179.45 $2,384.21 $427,249.19
02/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,415.67 $432,971.49
03/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,448.02 $438,726.14
04/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,480.56 $444,513.33
05/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,513.28 $450,333.24
06/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,546.18 $456,186.05
07/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,579.28 $462,071.96
</TABLE>
<PAGE> 17
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,612.55 $467,991.14
09/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,646.02 $473,943.79
10/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,679.68 $479,930.10
11/05 $288,159.14 $24,013.26 13.77% $3.306.63 $2,713.52 $485,950.25
12/05 $288,159.14 $24,013.26 13.77% $3,306.63 $2,747.56 $492,004.44
01/06 $288,159.14 $24,013.26 13.77% $3,306.63 $2,781.79 $498,092.86
02/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,816.22 $504,347.97
03/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,851.58 $510,638.44
04/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,887.15 $516,964.48
05/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,922.92 $523,326.29
06/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,958.89 $529,724.07
07/06 $299,685.51 $24,973.79 13.77% $3,438.89 $2,995.06 $536,158.02
08/06 $299,685.51 $24,973.79 13.77% $3,438.89 $3,031.44 $542,628.35
09/06 $299,685.51 $24,973.79 13.77% $3,438.89 $3,068.02 $549,135.26
10/06 $299,685.51 $24,973.79 13.77% $3,438.89 $3,104.81 $555,678.96
11/06 $299,685.51 $24,973.79 13.77% $3,438.89 $3,141.81 $562,259.66
12/O6 $299,685.51 $24,973.79 13.77% $3,438.89 $3,179.02 $568,877.57
01/07 $299,685.51 $24,973.79 13.77% $3,438.89 $3,216.43 $575,532.89
02/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,254.06 $582,363.40
03/07 $311,672.93 $25,972,74 13.77% $3,576.45 $3,292.68 $589,232.53
04/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,331.52 $596,140.50
05/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,370.58 $603,087.53
06/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,409.86 $610,073.84
07/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,449.36 $617,099.65
O8/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,489.08 $624,165.18
09/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,529.03 $631,270.66
10/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,569.20 $638,416.31
11/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,609.61 $645,602.37
12/07 $311,672.93 $25,972.74 13.77% $3,576.45 $3,650.24 $652,829.06
01/08 $311,672.93 $25,972.74 13.77% $3,576.45 $3,691.10 $660,096.61
02/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,732.19 $667,548.30
03/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,774.32 $675,042.12
04/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,816.69 $682,578.31
05/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,859.30 $690,157.11
06/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,902.15 $697,778.76
07/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,945.24 $705,443.50
O8/08 $324,139.85 $27,011.65 13.77% $3,719.50 $3,988.58 $713,151.58
09/08 $324,139.85 $27,011.65 13.77% $3,719.50 $4,032.16 $720,903.24
10/08 $324,139.85 $27,011.65 13.77% $3,719.50 $4,075.99 $728,698.73
11/08 $324,139.85 $27,011.65 13.77% $3,719.50 $4,120.06 $736,538.29
12/08 $324,139.85 $27,011.65 13.77% $3,719.50 $4,164.39 $744,422.18
01/09 $324,139.85 $27,011.65 13.77% $3,719.50 $4,208.96 $752,350.64
02/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,253.79 $760,472.71
03/O9 $337,105.44 $28,092.12 13.77% $3,868.28 $4,299.71 $768,640.70
04/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,345.89 $776,854.87
05/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,392.34 $785,115.49
06/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,439.04 $793,422.81
07/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,486.01 $801,777.10
08/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,533.25 $810,178.63
09/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,580.75 $818,627.66
10/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,628.52 $827,124.46
11/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,676.56 $835,669.30
12/09 $337,105.44 $28,092.12 13.77% $3,868.28 $4,724.87 $844,262.45
01/10 $337,105.44 $28,092.12 13.77% $3,868.28 $4,773.46 $852,904.19
02/10 $350,589.66 $29,215.81 13.77% $4,023.02 $4,822.32 $861,749.53
03/10 $350,589.66 $29,215.81 13.77% $4,023.02 $4,872.33 $870,644.88
04/10 $350,589.66 $29,215.81 13.77% $4,023.02 $4,922.63 $879,590.53
05/10 $350,589.66 $29,215.81 13.77% $4,023.02 $4,973.20 $888,586.75
06/10 $280,921.20 $23,410.10 13.77% $3,223.57 $4,345.89 $896,156.21
07/10 $5,066.87 $901,223.08
08/10 $4,717.69 $92,476.12 $813,464.65
09/10 $4,717.69 $818,182.34
</TABLE>
<PAGE> 18
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
10/10 $4,717.69 $822,900.03
11/10 $4,717.69 $827,617.72
12/10 $4,717.69 $832,335.41
01/11 $4,717.69 $837,053.10
02/11 $4,717.69 $841,770.79
03/11 $4,717.69 $846,488.48
04/11 $4,717.69 $851,206.17
05/11 $4,717.69 $855,923.86
06/11 $4,717.69 $860,641.55
07/11 $4,717.69 $865,359.24
08/11 $4,508.49 $92,476.12 $777,391.61
09/11 $4,508.49 $781,900.10
10/11 $4,508.49 $786,408.59
11/11 $4,508.49 $790,917.08
12/11 $4,508.49 $795,425.57
01/12 $4,508.49 $799,934.06
02/12 $4,508.49 $804,442.55
03/12 $4,508.49 $808,951.04
04/12 $4,508.49 $813,459.53
05/12 $4,508.49 $817,968.02
06/12 $4,508.49 $822,476.51
07/12 $4,508.49 $826,985.00
08/12 $4,284.64 $92,476.12 $738,793.52
09/12 $4,284.64 $743,078.16
10/12 $4,284.64 $747,362.80
11/12 $4,264.64 $751,647.44
12/12 $4,284.64 $755,932.08
01/13 $4,284.64 $760,216.72
02/13 $4,284.64 $764,501.36
03/13 $4,284.64 $768,786.00
04/13 $4,284.64 $773,070.64
O5/13 $4,284.64 $777,355,28
06/13 $4,284.64 $781,639.92
07/13 $4,284.64 $785,924.56
08/13 $4,045.12 $92,476.12 $697,493.56
O9/13 $4,045.12 $701,538.68
10/13 $4,045.12 $705,583.80
11/13 $4,045.12 $709,628.92
12/13 $4,045.12 $713,674.04
01/14 $4,045.12 $717,719.16
02/14 $4,045.12 $721,764.28
03/14 $4,045.12 $725,809.40
04/14 $4,045.12 $729,854.52
O5/14 $4,045.12 $733,899.64
O6/14 $4,045.12 $737,944.76
07/14 $4,045.12 $741,989.88
08/14 $3,788.83 $92,476.12 $653,302.59
09/14 $3,788.83 $657,091.42
10/14 $3,788.83 $660,880.25
11/14 $3,788.83 $664,669.08
12/14 $3,788.83 $668,457.91
01/15 $3,788.83 $672,246.74
02/15 $3,788.83 $676,035.57
03/15 $3,788.83 $679,824.40
04/15 $3,788.83 $683,613.23
05/15 $3,788.83 $687,402,06
06/15 $3,788.83 $691,190.89
07/15 $3,788.83 $694,979.72
08/15 $3,514.60 $92,476.12 $606,018.20
09/15 $3,514.60 $609,532.80
10/15 $3,514.60 $613,047.40
11/15 $3,514.60 $616,562.00
12/15 $3,514.60 $620,076.60
</TABLE>
<PAGE> 19
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
01/16 $3,514.60 $623,591.20
02/16 $3,514.60 $627,105.80
03/16 $3,514.60 $630,620.40
04/16 $3,514.60 $634,135.00
05/16 $3,514.60 $637,649.60
06/16 $3,514.60 $641,164.20
07/16 $3,514.60 $644,678.80
08/16 $3,221.18 $92,476.12 $555,423.86
09/16 $3,221.18 $558,645.04
10/16 $3,221.18 $561,866.22
11/16 $3,221.18 $565,087.40
12/16 $3,221.18 $558,308.58
01/17 $3,221.18 $571,529.76
02/17 $3,221.18 $574,750.94
03/17 $3,221.18 $577,972.12
04/17 $3,221.18 $581,193.30
05/17 $3,221.18 $584,414.48
06/17 $3,221.18 $587,635.66
07/17 $3,221.18 $590,856.94
08/17 $2,907.22 $92,476.12 $501,287.94
09/17 $2,907.22 $504,195.16
10/17 $2,907.22 $507,102.38
11/17 $2,907.22 $510,009.60
12/17 $2,907.22 $512,916.82
01/18 $2,907.22 $515,824.04
02/18 $2,907.22 $518,731.26
03/18 $2,907.22 $521,638.48
04/18 $2,907.22 $524,645.70
05/18 $2,907.22 $527,452.92
06/18 $2,907.22 $530,360.14
07/18 $2,907.22 $533,267.36
08/18 $2,571.28 $92,476.12 $443,362.52
09/18 $2,571.28 $445,933.80
10/18 $2,571.28 $448,505.08
11/18 $2,571.28 $451,076.36
12/18 $2,571.28 $453,647.64
01/19 $2,571.28 $456,218.92
02/19 $2,571.28 $458,790.20
03/19 $2,571.28 $461,361.48
04/19 $2,571.28 $463,932.76
05/19 $2,571.28 $466,504.04
06/19 $2,571.28 $469,075.32
07/19 $2,571.28 $471,646.60
08/19 $2,211.83 $92,476.12 $381,382.31
09/19 $2,211.83 $383,594.14
10/19 $2,211.83 $385,805.97
11/19 $2,211.83 $388,017.80
12/19 $2,211.83 $390,229.63
01/20 $2,211.83 $392,441.46
02/20 $2,211.83 $394,653.29
03/20 $2,211.83 $396,865.12
04/20 $2,211.83 $399,076.95
05/20 $2,211.83 $401,288.78
06/20 $2,211.83 $403,500.61
07/20 $2,211.83 $405,712.44
08/20 $1,827.21 $92,476.12 $315,063.53
09/20 $1,827.21 $316,890.74
10/20 $1,827.21 $318,717.95
11/20 $1,827.21 $320,545.16
12/20 $1,827.21 $322,372.37
01/21 $1,827.21 $324,199.58
02/21 $1,827.21 $326,026.79
</TABLE>
<PAGE> 20
16-Aug-95
Bob Rothkopf
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
03/21 $1,827.21 $327,854.00
04/21 $1,827.21 $329,681.21
05/21 $1,827.21 $331,508.42
06/21 $1,827.21 $333,335.63
07/21 $1,827.21 $335,162.84
08/21 $1,415.67 $92,476.12 $244,102.39
09/21 $1,415.67 $245,518.06
10/21 $1,415.67 $246,933.73
11/21 $1,415.67 $248,349,40
12/21 $1,415.67 $249,765.07
01/22 $1,415.67 $251,180.74
02/22 $1,415.67 $252,596.41
03/22 $1,415.67 $254,012.08
04/22 $1,415.67 $255,427.75
O5/22 $1,415.67 $256,843.42
06/22 $1,415.67 $258,259.09
07/22 $1,415.67 $259,674.76
08/22 $975.33 $92,476.12 $168,173.97
09/22 $975.33 $169,149.30
10/22 $975.33 $170,124.63
11/22 $975.33 $171,099.96
12/22 $975.33 $172,075.29
01/23 $975.33 $173,050.62
02/23 $975.33 $174,025.95
03/23 $975.33 $175,001.28
04/23 $975.33 $175,976.61
05/23 $975.33 $176,951.94
06/23 $975.33 $177,927.27
07/23 $975.33 $178,902.60
08/23 $504.15 $92,476.12 $86,930.63
09/23 $304.15 $87,434.78
10/23 $504.15 $87,938.93
11/23 $504.15 $88,443.08
12/23 $504.15 $88,947.23
01/24 $504.15 $89,451.38
02/24 $504.15 $89,955.53
03/24 $504.15 $90,459.68
04/24 $504.15 $90,963.83
05/24 $504.15 $91,467.98
06/24 $504.15 $91,972.13
07/24 $504.15 $92,476.28
08/24 $0.00 $92,476.12 $0.16
</TABLE>
<PAGE> 1
EXHIBIT 20
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION
BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 18th day of August, 1995
("Effective Date"), by and between Elco Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
subsidiaries ("Corporation"), and James R. Stenberg, ("Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the President, Home and Construction Products Group of Elco
Industries, Inc.; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
ARTICLE 1
1.1 Account. An account shall be maintained in the name of the Executive on
the books of the Corporation ("Account").
(a) Credits to Account. As of the Effective Date, for each calendar month
during the period of July 1, 1995 through the Effective Date, an amount equal to
14.63 percent (or such other percent as may from time to time be determined by
the Board of Directors of Elco industries, Inc., in its sole discretion) of the
monthly base salary payable to the Executive by the Corporation for such month
shall be credited to the Executive's Account. As of the last day of each
calendar month thereafter, an amount shall be credited to the Executive's
Account which is equal to 14.63 percent (or such other percent as may from time
to time be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) of the monthly base salary payable to the Executive by the
Corporation for such month. The aforementioned amounts shall cease to be
credited to an Executive's Account as of the last day of the calendar month in
which occurs the Executive's Benefit Date (as defined in Section 1.2), voluntary
termination of employment with the Corporation or discharge by the Corporation
(with or without cause), death, Permanent Disability (as defined in Section 3.1)
or termination of this Agreement pursuant to Section 4.2. In addition to the
amounts based on the Executive's monthly base salary described above, there
shall be a monthly credit to the Executive's Account as of the last day of each
calendar month equal to 0.5654 percent (or such other percent as may from time
to time be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) multiplied by the Executive's Account balance as of the last
day of the preceding calendar month. This credit shall continue until, as is
applicable, the Executive's Retirement Payment Commencement
<PAGE> 2
Date described in Section 1.2, Early Benefit Payment Commencement Date described
in Article 2 or Article 3, voluntary termination of employment with the
Corporation or discharge by the Corporation as described in Section 4.1 or 8.1
or termination of this Agreement as described in Section 4.2. Notwithstanding
the foregoing, with respect to each calendar month during the period of July 1,
1995 through the Effective Date, the monthly credit amounts shall be determined
as described above, but credited to the Executive's Account as of the Effective
Date.
(b) Monthly Base Salary Definition. For purposes of this Section 1.1,
"monthly base salary payable to the Executive by the Corporation for such month"
shall mean the monthly base salary payable to the Executive by the Corporation
determined on the first day of relevant calendar month without any reductions
made to it for tax or employee benefit plan purposes (including, but not limited
to, any reductions made to the Executive's actual compensation for the relevant
calendar month pursuant to an Internal Revenue Code Section 125 or 401(k) plan
or a nonqualified deferred compensation plan) and without any adjustments made
to it for any change in the Executive's monthly base salary rate after the first
day of the relevant calendar month.
1.2 Supplemental Benefit. If the Executive shall continue in the employment
of the Corporation until he attains the age of sixty-five (65), the date of such
occurrence is hereby established to be April 22, 2009 for purposes hereof (the
"Benefit Date"), and he retires from active daily employment with the
Corporation not later than the first day of the calendar month coinciding with
or next following the Benefit Date, or such later date as may be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion
("Retirement Date"), then the Corporation agrees that it will pay to the
Executive an amount equal to the Annual Amount on the first day of the second
calendar month following the Executive's Retirement Date (the "Retirement
Payment Commencement Date") and on each of the successive fourteen anniversary
dates of that date, until he has received a total of fifteen (15) equal payments
of the Annual Amount. The aggregate amount of such fifteen (15) equal payments
of the Annual Amount is hereinafter referred to as the "Supplemental Benefit".
With respect to the Supplemental Benefit:
(a) Annual Amount. The "Annual Amount" shall be calculated so that the
present value of the fifteen (15) equal payments of the Annual Amount, when
discounted at 7 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) per annum, is equal to the balance of the Executive's Account as
defined in Section 1.1 on the Retirement Payment Commencement Date.
(b) Acceleration of Payments. The timing of the payments comprising the
Supplemental Benefit maybe accelerated by the Board of Directors of Elco
Industries, Inc., in its sole discretion.
(c) Early Retirement Benefit Amount. In the event of the Executive's
retirement prior to the Benefit Date, no benefit shall be payable except in such
amount and upon such terms as may be determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion.
-2-
<PAGE> 3
(d) Death Benefit Amount. In the event that the Executive retires and is
entitled to a Supplemental Benefit pursuant to this Section 1.2, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or individuals
as the Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of beneficiary, any
such remaining amounts shall be payable to the Executive's duly qualified
executor or administrator.
ARTICLE 2
2.1 Death Prior to Retirement. In the event that the Executive should die
while actively employed by the Corporation at any time after the Effective Date
of this Agreement, the Corporation shall pay the Supplemental Benefit described
in this Article 2 to such individual or individuals as the Executive has
designated in writing, filed with and been approved by the Corporation. In the
absence of any effective designation of a beneficiary, any amounts payable under
this Article 2 shall be payable to the Executive's duly qualified executor or
administrator.
2.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 2 shall be made in accordance with the schedule provided in Section
1.2, except that the date of the Executive's death (the "Early Benefit Date")
shall be substituted for the Benefit Date and the first day of the second
calendar month coinciding with or next following the Early Benefit Date (the
"Early Benefit Payment Commencement Date") shall be substituted for the
Retirement Payment Commencement Date.
2.3 Supplemental Benefit - Death. For purposes of this Article 2, the
"Supplemental Benefit" shall be the aggregate amount of fifteen (15) equal
payments of the Early Annual Amount. The "Early Annual Amount" shall be
calculated so that the present value of the fifteen (15) equal payments of the
Early Annual Amount, when discounted at 7 percent (or such other percent as may
from time to time be determined by the Board of Directors of Elco Industries,
Inc., in its sole discretion) per annum, is equal to the Early Benefit Amount on
the Early Benefit Payment Commencement Date. The "Early Benefit Amount" shall be
the greater of the following two amounts:
(a) Account Balance. The balance of the Executive's Account as defined in
Section 1.1 on the Early Benefit Date; or
(b) Protected 5-Year Account Balance. $132,966, or such greater dollar
amount as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion.
ARTICLE 3
3.1 Disability Prior to Retirement. "Permanent Disability" for purposes of
this Agreement means the Executive's inability, by reason of any
-3-
<PAGE> 4
physical or mental impairment, to substantially perform the significant aspects
of his regular duties which inability is reasonably contemplated to continue for
at least one (1) year from its inception, as determined by the Board of
Directors of Elco Industries, Inc. In the event that during the period of active
daily employment prior to termination of his employment with the Corporation the
Executive shall incur a Permanent Disability, the Corporation shall pay the
Supplemental Benefit described in this Article 3 to the Executive or his legal
representative. In the event that the Executive incurs a Permanent Disability,
but dies before receiving the entire Supplemental Benefit described in this
Article 3, then the remaining payments shall be made in accordance with the
schedule described in this Article 3 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Article 3 shall be payable to the Executive's duly
qualified executor or administrator.
3.2 Payment Schedule. Payment of the Supplemental Benefit described in this
Article 3 shall be made in accordance with Section 2.2 with the date of
Permanent Disability as determined by the Board of Directors of Elco Industries,
Inc. being the Early Benefit Date.
3.3 Supplemental Benefit - Permanent Disability. For purposes of this
Article 3, the "Supplemental Benefit" shall be the amount defined in Article 2.
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge Prior to Retirement. In
the event that the Executive shall voluntarily terminate his employment with the
Corporation or be discharged by the Corporation with or without cause, this
Agreement shall terminate upon the date of voluntary termination of employment
or discharge and no benefits or payments of any kind are to be made hereunder,
except as provided under Section 1.2(c) or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the Early Benefit Amount described in Article 2, except that the
date of the Agreement's termination shall be substituted for the date of the
Executive's death as the Early Benefit Date. The timing and other terms of
payment of the Early Benefit Amount to Executive shall be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion, provided
that in the event that full payment is deferred more than 30 days after such
termination the Corporation shall pay Executive interest compounded annually
from the last day of the calendar month in which the Agreement is terminated on
the unpaid balance at a floating rate equal to the base rate as then announced
from time to time by The First National Bank of Chicago. Full payment of the
amounts described in this
-4-
<PAGE> 5
Section 4.2 shall be made no later than three years after such termination of
this Agreement. In the event that the Executive becomes entitled to an Early
Benefit Amount pursuant to this Section 4.2, but dies before receiving the
entire Early Benefit Amount, then the remaining payments shall be made in the
manner described in this Section 4.2 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Section 4.2 shall be payable to the Executive's duly
qualified executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation, hypothecation, transfer, or disposal of the benefit
hereunder the Corporation's liabilities shall forthwith cease and terminate.
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 Rights to Assets. The rights of the Executive and his beneficiary shall
be solely those of unsecured general creditors of the Corporation. The Executive
and his beneficiary shall only have the right to receive from the Corporation
those payments as are specified under this Agreement. The Executive agrees that
he and his beneficiary shall have no rights or interests whatsoever in any asset
of this Corporation.
ARTICLE 8
8.1 Change of Control. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of any Change of Control while the Executive is
actively employed by the Corporation (or if the Executive's voluntary
termination of employment with the Corporation or discharge by the Corporation
occurs prior to a Change of Control at the request of any individual
-5-
<PAGE> 6
or entity acquiring ownership or control of Elco Industries, Inc., or is
reasonably shown to be related to a prospective Change of Control), the
Corporation shall make a lump sum distribution to the Executive within fourteen
days after the earlier to occur of (i) the Executive's voluntary termination of
employment with the Corporation (including death or Permanent Disability) and
(ii) the Executive's discharge by the Corporation. The amount of the lump sum
distribution in either case shall be the present value of a lump sum payment of
$595,632 as of the Executive's Benefit Date when discounted at 7 percent (or
such other percent as may be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) per annum; provided that,
notwithstanding the foregoing, if the Executive's Benefit Date precedes the date
on which the lump sum distribution is made the lump sum distribution shall be
equal to the Executive's Account balance as of the date the lump sum
distribution is paid, and if the Executive's termination of employment is due to
death or Permanent Disability arising after the Change of Control, the amount of
the lump sum distribution shall be the Early Benefit Amount payable pursuant to
Article 2 or 3, as is applicable. If the Executive dies after becoming entitled
to such lump sum distribution but before the distribution is made, such
distribution shall be made to the Executive's beneficiary, and in the absence of
an effective designation of a beneficiary, any such distribution shall be
payable to the Executive's duly qualified executor or administrator.
(b) If the Executive's employment is terminated after a Change of Control,
with or without cause, for any reason other than death or on or after the date
on which the Executive attains age sixty-five (65), then, during the three-year
period after such termination, the Executive shall be included to the extent
eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) If the business conducted by the Corporation shall be discontinued
other than in a manner considered a Change of Control while the Executive is
actively employed by the Corporation, the Corporation shall make a lump sum
distribution to the Executive on or prior to the Corporation's discontinuance of
business. The amount of the lump sum distribution shall be the present value of
a lump sum payment of $595,632 as of the Executive's Benefit Date when
discounted at 7 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) per annum; provided that, notwithstanding the foregoing, if the
Executive's Benefit Date precedes the date on which the lump sum distribution is
made, the lump sum distribution shall be equal to the Executive's Account
balance as of the date the lump sum distribution is paid. If the Executive dies
after becoming entitled to such lump sum distribution but before the
distribution is made, such distribution shall be made to the Executive's
beneficiary, and in the absence of an effective designation of a beneficiary,
any such distribution shall be payable to the Executive's duly qualified
executor or administrator.
-6-
<PAGE> 7
(d) Notwithstanding any provision in this Agreement to the contrary, in the
event of any Change of Control while the Executive is not actively employed by
the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at 7 percent (or such other percent as may from time to time be
determined by the Board of Directors of Elco Industries, Inc., in its sole
discretion) per annum. If the Executive dies after becoming entitled to such
lump sum distribution but before the distribution is made, such distribution
shall be made to the Executive's beneficiary, and in the absence of an effective
designation of beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
(which generally provides for an additional payment to the Executive should any
payment, benefit or distribution (or combination thereof) by Elco Industries,
Inc. or one or more trusts established by Elco Industries, Inc. for the benefit
of its employees be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, as amended), shall be applicable with respect to this
Agreement and the benefits provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns,
directly or indirectly, at least seventy percent (70%) of the outstanding
voting securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock
of Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes and
approves any transaction which has either a reasonable likelihood
-7-
<PAGE> 8
or a purpose of causing, whether directly or indirectly:
(i) $5 par value common stock of Elco Industries, Inc. to be held
of record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be
neither listed on any national securities exchange nor authorized to be
quoted on an inter-dealer quotation system of any registered national
securities association;
(d) the date, during any period of twenty-four (24) consecutive months, on
which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc. at
the close of business on August 18, 1995.
(ii) any member of the Board of Directors of Elco Industries, Inc. who
succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including any
affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect to the Corporation's responsibilities under this Agreement and to
allocate to such person or organization all, or part of, the responsibility for
the operation and administration of this Agreement.
-8-
<PAGE> 9
ARTICLE 10
10.1 Assignment; Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered or
modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be made in writing and may either be
delivered personally or sent by registered or certified mail, return receipt
requested, to:
If to the Corporation:
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
If to the Executive:
-9-
<PAGE> 10
James R. Stenberg
5727 Wedgewood Ct.
Rockford, IL 61107
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels entitled
under this Agreement, such Executive or beneficiary (or qualified executor or
administrator) shall submit a claim for such benefits in writing to the
Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in a
manner calculated to be understood by the claimant within 90 days setting forth
the specific reasons for denial, specific reference to the provisions of this
Agreement upon which the denial is based, and any additional material or
information necessary to perfect the claim, if any, and an explanation of why
such material or information is necessary. Also, such written notice shall
indicate the steps to be taken if a review of the denial is desired.
If a claim is denied in full or in part and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary (or qualified executor or administrator) may review this
Agreement or any documents relating to it and submit any written issues and
comments he may feel appropriate. In its sole discretion, the Corporation shall
then review the claim and provide a written decision within 60 days after
receipt
-10-
<PAGE> 11
of the request for review unless special circumstances require an extension of
time for processing in which case a decision shall be rendered as soon as
possible, but no later than 120 days after receipt of a request for review. This
decision shall state the specific reasons for the decision and shall include
reference to specific provisions of this Agreement on which the decision is
based and be written in a manner calculated to be understood by the claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as maybe required for purposes of complying with the
tax withholding provisions of the Internal Revenue Code of 1986, as amended, any
state's income tax act or any applicable similar laws.
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco Industries, Inc. will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge,
-11-
<PAGE> 12
arbitrator or other individual presiding over the proceeding affirmatively
finds the Executive instituted the proceeding in bad faith, the Executive shall
pay all costs and expenses, including attorney's fees and disbursements, of
Elco Industries, Inc. Elco Industries, Inc. shall pay prejudgment interest on
any money judgment obtained by the Executive as a result of such a proceeding,
calculated at the rate which The First National Bank of Chicago announces from
time to time as its prime lending rate as in effect from time to time, from the
date that payment should have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Benefit Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
("Defined Benefit Agreement") and upon an event entitling the Executive (or his
beneficiary or qualified executor or administrator) to a benefit payment under
this Agreement or the Defined Benefit Agreement, the Executive (or his
beneficiary or qualified executor or administrator) shall only be entitled to
benefit payments from whichever of the aforementioned Agreements entitles the
Executive (or his beneficiary or qualified executor or administrator) to the
greatest total benefit amount. Additionally, once an Executive becomes entitled
to benefit payments pursuant to this Agreement because of a particular event, he
is not eligible to receive benefit payments pursuant to this Agreement because
of a different event except to the extent explicitly provided in this Agreement,
such as with respect to a subsequent Change of Control or death.
18.2 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof
-12-
<PAGE> 13
and supersedes all prior agreements and understandings between the Corporation
and the Executive.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and the Executive has hereunto set his hand at Rockford, Illinois (town
& state) the day and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/ JOHN C. LUTZ
-------------------------
Its: President, CEO
-------------------------
/s/ JAMES R. STENBERG
-------------------------
(ADD EXECUTIVE'S NAME)
/s/
--------------------------------
Chairman, Compensation Committee
<PAGE> 14
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: JAMES R. STENBERG
------------------------------------------------------------
DATE: August 22, 1995
---------------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, as amended, I hereby designate the person or persons named
below who are living at the time of my death to receive all amounts and benefits
due me under the terms of such Agreement as follows:
<TABLE>
<CAPTION>
====================================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
====================================================================================
<S> <C> <C> <C> <C>
1. Kathryn R. Stenberg 5227 Wedgewood Ct.
Rockford, IL 61107 ###-##-#### Spouse 100%
------------------------------------------------------------------------------------
2.
------------------------------------------------------------------------------------
3.
------------------------------------------------------------------------------------
4.
------------------------------------------------------------------------------------
TOTAL: 100%
====================================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
/s/ JAMES R. STENBERG
------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ D.M. HASSE 8/25/95
---------------------------- ------------------
Date
<PAGE> 15
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
07/95 $139,880.00 $11,656.67 14.63% $1,705.37 $1,705.37
08/95 $139,880.00 $11,656.67 14.63% $1,705.37 $9.64 $3,420.38
09/95 $139,880.00 $11,656.67 14.63% $1,705.37 $19.34 $5,145.09
10/95 $139,880.00 $11,656.67 14.63% $1,705.37 $29.09 $6,879.55
11/95 $139,880.00 $11,656.67 14.63% $1,705.37 $38.90 $8,623.82
12/95 $139,880.00 $11,656.67 14.63% $1,705.37 $48.76 $10,377.95
01/96 $139,880.00 $11,656.67 14.63% $1,705.37 $58.68 $12,142.00
02/96 $145,475.20 $12,122.93 14.63% $1,773.58 $68.65 $13,984.23
03/96 $145,475.20 $12,122.93 14.63% $1,773.58 $79.07 $15,836.88
04/96 $145,475.20 $12,122.93 14.63% $1,773.58 $89.54 $17,700.00
05/96 $145,475.20 $12,122.93 14.63% $1,773.58 $100.08 $19,573.66
06/96 $145,475.20 $12,122.93 14.63% $1,773.58 $110.67 $21,457.91
07/96 $145,475.20 $12,122.93 14.63% $1,773.58 $121.32 $23,352.81
08/96 $145,475.20 $12,122.93 14.63% $1,773.58 $132.04 $25,258.43
09/96 $145,475.20 $12,122.93 14.63% $1,773.58 $142.81 $27,174.82
10/96 $145,475.20 $12,122.93 14.63% $1,773.58 $153.65 $29,102.05
11/96 $145,475.20 $12,122.93 14.63% $1,773.58 $164.54 $31,040.17
12/96 $145,475.20 $12,122.93 14.63% $1,773.58 $176.50 $32,989.25
01/97 $145,475.20 $12,122.93 14.63% $1,773.58 $186.52 $34,949.35
02/97 $151,294.21 $12,607.85 14.63% $1,844.53 $197.60 $36,991.48
03/97 $151,294.21 $12,607.85 14.63% $1,844.53 $209.15 $39,045.16
04/97 $151,294.21 $12,607.85 14.63% $1,844.53 $220.76 $41,110.45
05/97 $151,294.21 $12,607.85 14.63% $1,844.53 $232.44 $43,187.42
06/97 $151,294.21 $12,607.85 14.63% $1,844.53 $244.18 $45,276.13
07/97 $151,294.21 $12,607.85 14.63% $1,844.53 $255.99 $47,376.65
08/97 $151,294.21 $12,607.85 14.63% $1,844.53 $267.87 $49,489.05
09/97 $151,294.21 $12,607.85 14.63% $1,844.53 $279.81 $51,613.39
10/97 $151,294.21 $12,607.85 14.63% $1,844.53 $291.82 $53,749.74
11/97 $151,294.21 $12,607.85 14.63% $1,844.53 $303.90 $55,898.17
12/97 $151,294.21 $12,607.85 14.63% $1,844.53 $316.05 $58,058.75
01/98 $151,294.21 $12,607.85 14.63% $1,844.53 $328.26 $60,231.54
02/98 $157,345.98 $13,112.17 14.63% $1,918.31 $340.55 $62,490.40
03/98 $157,345.98 $13,112.17 14.63% $1,918.31 $353.32 $64,762.03
04/98 $157,345.98 $13,112.17 14.63% $1,918.31 $366.16 $67,046.50
05/98 $157,345.98 $13,112.17 14.63% $1,918.31 $379.08 $69,343.89
06/98 $157,345.98 $13,112.17 14.63% $1,918.31 $392.07 $71,654.27
07/98 $157,345.98 $13,112.17 14.63% $1,918.31 $405.13 $73,977.71
08/98 $157,345.98 $13,112.17 14.63% $1,918.31 $418.27 $76,314.29
09/98 $157,345.98 $13,112.17 14.63% $1,918.31 $431.48 $78,664.08
10/98 $157,345.98 $13,112.17 14.63% $1,918.31 $444.77 $81,027.16
11/98 $157,345.98 $13,112.17 14.63% $1,918.31 $458.13 $83,403.60
12/98 $157,345.98 $13,112.17 14.53% $1,918.31 $471.56 $85,793.47
01/99 $157,345.98 $13,112.17 14.63% $1,918.31 $485.08 $88,196.86
02/99 $163,639.82 $13,636.65 14.63% $1,995.04 $498.67 $90,690.57
03/99 $163,639.82 $13,636.65 14.63% $1,995.04 $512.76 $93,198.37
04/99 $163,639.82 $13,636.65 14.63% $1,995.04 $526.94 $95,720.35
05/99 $163,639.82 $13,636.65 14.63% $1,995.04 $541.20 $98,256.59
06/98 $193,639.82 $13,636.65 14.83% $1,995.04 $555.54 $100,807.17
07/99 $163,639.82 $13,636.65 14.63% $1,995,04 $569.96 $103,372.17
08/99 $163,639.82 $13,636.65 14.63% $1,995.04 $584.47 $105,951.58
09/99 $t63,639.82 $13,636.65 14.63% $1,995.04 $599.05 $108,545.77
10/99 $163,639.82 $13,636.65 14.63% $1,995.04 $613.72 $111,154.53
11/99 $163,639.82 $13,636.65 14.63% $1,995.04 $628.47 $113,778.04
12/99 $163,639.82 $13,636.65 14.63% $1,995.04 $643.30 $116,416.38
01/00 $163,639.82 $13,636.65 14.63% $1,995.04 $658.22 $119,069.64
02/00 $170,185.41 $14,182.12 14.63% $2,074.84 $673.22 $121,817.70
03/00 $170,185.41 $14,182.12 14.63% $2,074.84 $688.76 $124,581.30
</TABLE>
<PAGE> 16
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/00 $170,185.41 $14,182.12 14.63% $2,074.84 $704.38 $127,360.52
05/00 $170,185.41 $14,182.12 14.63% $2,074.84 $720.10 $130,155.46
06/00 $170,185.41 $14,182.12 14.63% $2,074.84 $735.90 $132,966.20
07/00 $170,185.41 $14,182.12 14.63% $2,074.84 $751.79 $135,792.83
08/00 $170,185.41 $14,182.12 14.63% $2,074.84 $767.77 $138,635.44
09/00 $170,185.41 $14,182.12 14.63% $2,074.84 $783.84 $141,494.12
10/00 $170,185.41 $14,182.12 14.63% $2,074.84 $800.01 $144,368.97
11/00 $170,185.41 $14,182.12 14.63% $2,074.84 $816.26 $147,260.07
12/00 $170,185.41 $14,182.12 14.63% $2,074.84 $832.61 $150,167.52
01/01 $170,185.41 $14,182.12 14.63% $2,074.84 $849.05 $153,091.41
02/01 $176,992.83 $14,749.40 14.63% $2,157.84 $865.58 $156,114.83
03/01 $176,992.83 $14,749.40 14.63% $2,157.84 $882.67 $159,155.34
04/01 $176,992.83 $14,749.40 14.63% $2,157.84 $899.86 $162,213.04
05/01 $176,992.83 $14,749.40 14.63% $2,157.84 $917.15 $165,288.03
06/01 $176,992.83 $14,749.40 14.63% $2,157.64 $934.54 $168,380.41
07/01 $176,992.83 $14,749.40 14.63% $2,157.64 $952.02 $171,490.27
08/01 $176,992.83 $14,749.40 14.63% $2,157.64 $969.61 $174,617.72
09/01 $176,992.83 $14,749.40 14.63% $2,157.84 $987.29 $177,762.85
10/01 $176,992.83 $14,749.40 14.63% $2,157.64 $1,005.07 $180,925.76
11/01 $176,992.83 $14,749.40 14.63% $2,157.64 $1,022.95 $184,106.55
12/01 $176,992.83 $14,749.40 14.63% $2,157.64 $1,040.94 $187,305.33
01/02 $176,992.83 $14,749.40 14.63% $2,157.64 $1,059.02 $190,522.19
02/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,077.21 $193,843.55
03/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,095.99 $197,183.69
04/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,114.88 $200,542.72
05/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,133.87 $203,920.74
06/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,152.97 $207,317.86
07/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,172.18 $210,734.19
08/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,191.49 $214,169.83
09/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,210.92 $217,624.90
10/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,230.45 $221,099.50
11/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,250.10 $224,593.75
12/02 $184,072.54 $15,339.38 14.63% $2,244.15 $1,269.85 $228,107.75
01/03 $184,072.54 $15,339.38 14.63% $2,244.15 $1,289.72 $231,641.62
02/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,309.70 $235,285.24
03/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,330.30 $238,949.46
04/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,351.02 $242,634.40
05/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,371.85 $246,340.17
06/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,392.81 $250,066.90
07/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,413.88 $253,814.70
08/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,435.07 $257,583.69
09/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,456.38 $261,373.99
10/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,477.81 $265,185.72
11/03 $191,435.44 $15,952.95 14.63% $2,333.92 $1,499.36 $269,019.00
12/03 $191,435.44 $15,952.95 14.83% $2,333.92 $1,521.03 $272,873.95
01/04 $191,435.44 $15,952.95 14.63% $2,333.92 $1,542.83 $276,750.70
02/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,564.75 $280,742.72
03/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,587.32 $284,757.31
04/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,610.02 $288,794.60
05/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,632.84 $292,854.71
06/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,655.80 $296,937.78
07/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,678.89 $301,043.94
08/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,702.10 $305,173.31
09/04 $199,092.86 $18,561.07 14.63% $2,427.27 $1,725.45 $309,326.03
10/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,748.93 $313,502.23
11/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,772.54 $317,702.04
12/04 $199,092.86 $16,591.07 14.63% $2,427.27 $1,796.29 $321,925.60
01/05 $199,092.86 $16,591.07 14.63% $2,427.27 $1,820.17 $326,173.04
02/05 $207,056.57 $17,254.71 14.63% $2,524.36 $1,844.18 $330,541.58
03/05 $207,056.57 $17,254.71 14.63% $2,524.36 $1,868.88 $334,934.82
04/05 $207,058.57 $17,254.71 14.63% $2,524.36 $1,893.72 $339,352.90
05/05 $207,056.57 $17,254.71 14.63% $2,524,36 $1,918.70 $343,795.96
06/05 $207,056.57 $17,254.71 14.63% $2,524.36 $1,943.82 $348,264.14
07/05 $207,056.57 $17,254.71 14.63% $2,524.36 $1,969.09 $352,757.59
</TABLE>
<PAGE> 17
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/05 $207,056.57 $17,254.71 14.63% $2,524.36 $1,994.49 $357,276.44
09/05 $207,056.57 $17,254.71 14.63% $2,524.36 $2,020.04 $361,820.84
10/05 $207,056.57 $17,254,71 14.63% $2,524.36 $2,045.74 $366,390.94
11/05 $207,056.57 $17,254,71 14.63% $2,524.36 $2,071.57 $370,986.87
12/05 $207,056.57 $17,254,71 14.83% $2,524.36 $2,097.56 $375,608.79
01/06 $207,056.57 $17,254.71 14.63% $2,524.36 $2,123.69 $380,256.84
02/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,149.97 $385,032.15
03/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,176.97 $389,834.46
04/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,204.12 $394,663,92
05/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,231.43 $399,520.69
06/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,258.89 $404,404.92
07/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,286.51 $409,316.77
08/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,314.28 $414,256.39
09/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,342.21 $419,223.94
10/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,370.29 $424,219.57
11/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,398.54 $429,243.45
12/06 $215,338.83 $17,944.90 14.63% $2,625.34 $2,426.94 $434,295.73
01/07 $215,338.83 $17,944.90 14.63% $2,625.34 $2,455.51 $439,376.58
02/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,484.24 $444,591.17
03/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,513.72 $449,835.24
04/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,543.37 $455,108.96
05/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,573.19 $460,412.50
06/07 $223,952.38 $18,662.70 14,63% $2,730.35 $2,603.17 $465,746.02
07/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,633.33 $471,109.70
08/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,663.65 $476,503.70
09/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,694.15 $481,928.20
10/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,724.82 $487,383.37
11/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,755.87 $492,869.39
12/07 $223,952.38 $18,662.70 14.63% $2,730.35 $2,786.68 $498,386.42
01/08 $223,952.38 $18,662.70 14.63% $2,730.35 $2,817.88 $503,934.65
02/08 $232,910.48 $19,409.21 14.63% $2,839.57 $2,849.25 $509,623.47
03/08 $232,910.48 $19,409.21 14.63% $2,839.57 $2,881.41 $515,344.45
04/08 $232,910.48 $19,409.21 14.63% $2,839.57 $2,913.76 $521,097.78
05/08 $232,910.48 $19,409.21 14.63% $2,839.57 $2,946.29 $526,883.64
06/08 $232,910.48 $19,409.21 14.63% $2,839.57 $2,979.00 $532,702.21
07/08 $232,910.48 $19,409.21 14.63% $2,839.57 $3,011.90 $538,553.68
08/08 $232,910.48 $19,409.21 14.63% $2,839.57 $3,044.98 $544,438.23
09/08 $232,910.48 $19,409.21 14.63% $2,839,57 $3,078.25 $550,356.05
10/08 $232,910.48 $19,409.21 14.63% $2,839.57 $3,111.71 $556,307.33
11/08 $232,910.48 $19,409.21 14.63% $2,839.57 $3,145.36 $562,292.26
12/08 $232,910.48 $19,409.21 14.63% $2,839.57 $3,179.20 $568,311.03
01/09 $232,910.48 $19,409.21 14.63% $2,839.57 $3,213.23 $574,363.83
02/09 $242,226.90 $20,185.58 14.63% $2,953.15 $3,247.45 $580,564.43
03/09 $242,226.90 $20,185.58 14.63% $2,953.15 $2,282.51 $586,800.09
04/09 $177,633.06 $14,802.76 14.63% $2,165.64 $3,317.77 $592,283.50
05/09 $3,348.77 $595,632.27
06/09 $3,118.00 $61,118.90 $537,631.37
07/09 $3,118.00 $540,749.37
08/09 $3,118.00 $543,867.37
09/09 $3,118.00 $546,985.37
10/09 $3,118.00 $550,103,37
11/09 $3,118.00 $553,221.37
12/09 $3,118.00 $556,339.37
01/10 $3,118.00 $559,457.37
02/10 $3,118.00 $562,575.37
03/10 $3,118.00 $565,693.37
04/10 $3,118.00 $568,811.37
05/10 $3,118.00 $571,929.37
06/10 $2,979.73 $61,118.90 $513,790.20
07/10 $2,979.73 $516,769.93
08/10 $2,979.73 $519,749.66
09/10 $2,979.73 $522,729.39
10/10 $2,979.73 $525,709.12
</TABLE>
<PAGE> 18
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
11/10 $2,979.73 $528,688.85
12/10 $2,979.73 $531,668.58
01/11 $2,979.73 $534,648.31
02/11 $2,979.73 $537,628.04
03/11 $2,979.73 $540,607.77
04/11 $2,979.73 $543,587.50
05/11 $2,979.73 $546,567.23
06/11 $2,831.78 $61,118.90 $488,280.11
07/11 $2,831.78 $491,111.89
08/11 $2,831.78 $493,943.67
09/11 $2,831.78 $496,775.45
10/11 $2,831.78 $499,607.23
11/11 $2,831.78 $502,439.01
12/11 $2,831.78 $505,270.79
01/12 $2,831.78 $508,102.57
02/12 $2,831.78 $510,934.35
03/12 $2,831.78 $513,766.13
04/12 $2,831.78 $516,597.91
05/12 $2,831.78 $519,429.69
06/12 $2,673.48 $61,118.90 $460,984.27
07/12 $2,673.48 $463,657.75
08/12 $2,673.48 $466,331.23
09/12 $2,673,48 $469,004.71
10/12 $2,673.48 $471,678.19
11/12 $2,673.48 $474,351.67
12/12 $2,673.48 $477,025.15
01/13 $2,673.48 $479,698.63
02/13 $2,673.48 $482,372.11
03/13 $2,673.48 $485,045.59
04/13 $2,673.48 $487,719.07
05/13 $2,673.48 $490,392.55
06/13 $2,504.10 $61,118.90 $431,777.75
07/13 $2,504.10 $434,281.85
08/13 $2,504.10 $436,785.95
09/13 $2,504.10 $439,290.05
10/13 $2,504.10 $441,794.15
11/13 $2,504.10 $444,298.25
12/13 $2,504.10 $446,802.35
01/14 $2,504.10 $449,306.45
02/14 $2,504.10 $451,810.55
03/14 $2,504.10 $454,314.65
04/14 $2,504.10 $456,818.75
05/14 $2,504.10 $459,322.85
06/14 $2,322.86 $61,118.90 $400,526.81
07/14 $2,322.86 $402,849.67
08/14 $2,322.86 $405,172.53
09/14 $2,322.86 $407,495.39
10/14 $2,322.86 $409,818.25
11/14 $2,322.86 $412,141.11
12/14 $2,322.86 $414,463.97
01/15 $2,322.86 $416,786.83
02/15 $2,322.86 $419,109.69
03/15 $2,322.86 $421,432.55
04/15 $2,322.86 $423,755.41
05/15 $2,322.86 $426,078.27
06/15 $2,128.93 $61,118.90 $367,088.30
07/15 $2,128.93 $369,217.23
08/15 $2,128.93 $371,346.16
09/15 $2,128.93 $373,475.09
10/15 $2,128.93 $375,604.02
11/15 $2,128.93 $377,732.95
12/15 $2,128.93 $379,861.88
01/16 $2,128.93 $381,990.81
02/16 $2,128.93 $384,119.74
</TABLE>
<PAGE> 19
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
03/16 $2,128.93 $386,248.67
04/16 $2,128.93 $388,377.60
05/16 $2,128.93 $390,506.53
06/16 $1,921.43 $61,118.90 $331,309.06
07/16 $1,921.43 $333.230.49
O8 16 $1,921.43 $335,151.92
09/16 $1,921.43 $337,073.35
10/16 $1,921.43 $338,994.78
11/16 $1,921.43 $340,916,21
12/16 $1,921.43 $342,837.64
01/17 $1,921.43 $344,759.07
02/17 $1,921.43 $346,680.50
03/17 $1,921.43 $348,601.93
04/17 $1,921.43 $350,523.36
O5 17 $1,921.43 $352,444.79
06/17 $1,699.40 $61,118.90 $293,025.29
07/17 $1,699.40 $294,724.69
08/17 $1,699.40 $296,424.09
09/17 $1,699.40 $298,123.49
10/17 $1,699.40 $299,822.89
11/17 $1,699.40 $301,522.29
12/17 $1,699.40 $303,221.69
01/18 $1,699.40 $304,921.09
02/18 $1,699.40 $306,620.49
03/18 $1,699.40 $308,319.89
04/18 $1,699.40 $310,019.29
05/18 $1,699.40 $311,718.69
O6/18 $1,461.83 $61,118.90 $252,061.62
07/18 $1,461.83 $253,523.45
08/18 $1,461.83 $254,985,28
09/18 $1,461.83 $256,447.11
10/18 $1,461.83 $257,908.94
11/18 $1.461.83 $259,370.77
12/18 $1,461.83 $260.832.60
01/19 $1,461.83 $262,294.43
02/19 $1,461.83 $263,756.26
03/19 $1,461.83 $265,218.09
04/19 $1,461.83 $266,679.92
05/19 $1,461.83 $268,141.75
06/19 $1,207.63 $61,118.90 $208,230.48
07/19 $1,207.63 $209,438.11
08/19 $1,207.63 $210,645.74
09/19 $1,207.63 $211,853.37
10/19 $1,207.63 $213,061.00
11/19 $1,207.63 $214,268.63
12/19 $1,207.63 $215,476.26
01/20 $1,207.63 $216,683.89
02/20 $1,207.63 $217,891.52
03/20 $1,207.63 $219,099.15
04/20 $1,207.63 $220,306.78
05/20 $1,207.63 $221,514.41
06/20 $935.64 $61,118.90 $161,331.15
07/20 $935.64 $162,266.79
08/20 $935.64 $163,202.43
09/20 $935.64 $164,138.07
10/20 $935.64 $165,073.71
11/20 $935.64 $166,009.35
12/20 $935.64 $166,944.99
01/21 $935.64 $167,880.63
02/21 $935.64 $168,816.27
03/21 $935.64 $169,751.91
04/21 $935.64 $170,687.55
05/21 $935.64 $171,623.19
</TABLE>
<PAGE> 20
21-Jul-95
Jim Stenberg
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
06/21 $644.61 $61,118.90 $111,148.90
07/21 $644.61 $111,793.51
08/21 $644.61 $112,438.12
09/21 $644.61 $113,082.73
10/21 $644.61 $113,727.34
11/21 $644.61 $114,371.95
12/21 $644.61 $115,016.56
01/22 $644.61 $115,661.17
02/22 $644.61 $116,305.78
03/22 $644.61 $116,950.39
04/22 $644.61 $117,595,00
05/22 $644.61 $118,239.61
O6/22 $333.20 $61,118.90 $57,453.91
07/22 $333.20 $57,787.11
O8/22 $333.20 $58,120.31
09/22 $333.20 $58,453.51
10/22 $333.20 $58,786.71
11/22 $333.20 $59,119.91
12/22 $333.20 $59,453.11
01/23 $333.20 $59,786.31
02/23 $333.20 $60,119.51
03/23 $333.20 $60,452.71
04/23 $333.20 $60,785.91
05/23 $333.20 $61,119.11
06/23 $0.00 $61,118.90 $0.21
</TABLE>
<PAGE> 1
EXHIBIT 21
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION
BENEFIT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of March, 1995
("Effective Date"), by and between Elco Industries, Inc., a corporation
organized and existing under the laws of the State of Delaware, and its
subsidiaries ("Corporation"), and Kenneth L. Heal, ("Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation and is serving
the Corporation as the Secretary, Treasurer and Controller of Elco Industries,
Inc.; and
WHEREAS, the Corporation desires to provide the Executive with a
supplemental benefit subject to all of the terms and conditions set forth below.
NOW, THEREFORE, in consideration of services performed in the past and to
be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
ARTICLE 1
1.1 Account. An account shall be maintained in the name of the Executive on
the books of the Corporation ("Account").
(a) Credits to Account. As of the Effective Date, for each calendar month
during the period of July 1, 1994 through the Effective Date, an amount equal to
8.46 percent (or such other percent as may from time to time be determined by
the Board of Directors of Elco Industries, Inc., in its sole discretion) of the
monthly base salary payable to the Executive by the Corporation for such month
shall be credited to the Executive's Account. As of the last day of each
calendar month thereafter, an amount shall be credited to the Executive's
Account which is equal to 8.46 percent (or such other percent as may from time
to time be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) of the monthly base salary payable to the Executive by the
Corporation for such month. The aforementioned amounts shall cease to be
credited to an Executive's Account as of the last day of the calendar month in
which occurs the Executive's Benefit Date (as defined in Section 1.2), voluntary
termination of employment with the Corporation or discharge by the Corporation
(with without cause), death, Permanent Disability (as defined in Section 3.1) or
termination of this Agreement pursuant to Section 4.2. In addition to the
amounts based on the Executive's monthly base salary described above, there
shall be a monthly credit to the Executive's Account as of the last day of each
calendar month equal
<PAGE> 2
to 0.5654 percent (or such other percent as may from time to time be determined
by the Board of Directors of Elco Industries, Inc., in its sole discretion)
multiplied by the Executive's Account balance as of the last day of the
preceding calendar month. This credit shall continue until, as is applicable,
the Executive's Retirement Payment Commencement Date described in Section 1.2,
Early Benefit Payment Commencement Date described in Article 2 or Article 3,
voluntary termination of employment with the Corporation or discharge by the
Corporation as described in Section 4.1 or 8.1 or termination of this Agreement
as described in Section 4.2. Notwithstanding the foregoing, with respect to each
calendar month during the period of July 1, 1994 through the Effective Date, the
monthly credit amounts shall be determined as described above, but credited to
the Executive's Account as of the Effective Date.
(b) Monthly Base Salary Definition. For purposes of this Section 1.1,
"monthly base salary payable to the Executive by the Corporation for such month"
shall mean the monthly base salary payable to the Executive by the Corporation
determined on the first day of relevant calendar month without any reductions
made to it for tax or employee benefit plan purposes (including, but not limited
to, any reductions made to the Executive's actual compensation for the relevant
calendar month pursuant to an Internal Revenue Code Section 125 or 401(k) plan
or a nonqualified deferred compensation plan) and without any adjustments made
to it for any change in the Executive's monthly base salary rate after the first
day of the relevant calendar month.
1.2 Supplemental Benefit. If the Executive shall continue in the
employment of the Corporation until he attains the age of sixty-five (65), the
date of such occurrence is hereby established to be December 20, 2007 for
purposes hereof (the "Benefit Date"), and he retires from active daily
employment with the Corporation not later than the first day of the calendar
month coinciding with or next following the Benefit Date, or such later date as
may be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion ("Retirement Date"), then the Corporation agrees that it will
pay to the Executive an amount equal to the Annual Amount on the first day of
the second calendar month following the Executive's Retirement Date (the
"Retirement Payment Commencement Date") and on each of the successive fourteen
anniversary dates of that date, until he has received a total of fifteen (15)
equal payments of the Annual Amount. The aggregate amount of such fifteen (15)
equal payments of the Annual Amount is hereinafter referred to as the
"Supplemental Benefit". With respect to the Supplemental Benefit:
(a) Annual Amount. The "Annual Amount" shall be calculated so that the
present value of the fifteen (15) equal payments of the Annual Amount, when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco Industries, Inc., in its sole discretion) per annum, is
- 2 -
<PAGE> 3
equal to the balance of the Executive's Account as defined in Section 1.1 on the
Retirement Payment Commencement Date.
(b) Acceleration of Payments. The timing of the payments comprising the
Supplemental Benefit may be accelerated by the Board of Directors of Elco
Industries, Inc., in its sole discretion.
(c) Early Retirement Benefit Amount. In the event of the Executive's
retirement prior to the Benefit Date, no benefit shall be payable except in such
amount and upon such terms as may be determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion.
(d) Death Benefit Amount. In the event that the Executive retires and is
entitled to a Supplemental Benefit pursuant to this Section 1.2, but dies before
receiving the entire Supplemental Benefit, then the remaining payments shall be
made in accordance with the foregoing schedule to such individual or individuals
as the Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of beneficiary, any
such remaining amounts shall be payable to the Executive's duly qualified
executor or administrator.
ARTICLE 2
2.1 Death Prior to Retirement. In the event that the Executive should die
while actively employed by the Corporation at any time after the Effective Date
of this Agreement, the Corporation shall pay the Supplemental Benefit described
in this Article 2 to such individual or individuals as the Executive has
designated in writing, filed with and been approved by the Corporation. In the
absence of any effective designation of a beneficiary, any amounts payable under
this Article 2 shall be payable to the Executive's duly qualified executor or
administrator.
2.2 Payment Schedule. Payment of the Supplemental Benefit described in
this Article 2 shall be made in accordance with the schedule provided in Section
1.2, except that the date of the Executive's death (the "Early Benefit Date")
shall be substituted for the Benefit Date and the first day of the second
calendar month coinciding with or next following the Early Benefit Date (the
"Early Benefit Payment Commencement Date") shall be substituted for the
Retirement Payment Commencement Date.
2.3 Supplemental Benefit - Death. For purposes of this Article 2, the
"Supplemental Benefit" shall be the aggregate amount of fifteen (15) equal
payments of the Early Annual Amount. The "Early Annual Amount" shall be
calculated so that the present value
- 3 -
<PAGE> 4
of the fifteen (15) equal payments of the Early Annual Amount, when discounted
at 7 percent (or such other percent as determined by the Board of Directors of
Elco Industries, Inc., in its sole discretion) per annum, is equal to the Early
Benefit Amount on the Early Benefit Payment Commencement Date. The "Early
Benefit Amount" shall be the greater of the following two amounts:
(a) Account Balance. The balance of the Executive's Account as defined in
Section 1.1 on the Early Benefit Date; or
(b) Projected 5-Year Account Balance. $61,180, or such greater dollar
amount as may be determined by the Board of Directors of Elco Industries, Inc.,
in its sole discretion.
ARTICLE 3
3.1 Disability Prior to Retirement. "Permanent Disability" for purposes of
this Agreement means the Executive's inability, by reason of any physical or
mental impairment, to substantially perform the significant aspects of his
regular duties which inability is reasonably contemplated to continue for at
least one (1) year from its inception, as determined by the Board of Directors
of Elco Industries, Inc. In the event that during the period of active daily
employment prior to termination of his employment with the Corporation the
Executive shall incur a Permanent Disability, the Corporation shall pay the
Supplemental Benefit described in this Article 3 to the Executive or his legal
representative. In the event that the Executive incurs a Permanent Disability,
but dies before receiving the entire Supplemental Benefit described in this
Article 3, then the remaining payments shall be made in accordance with the
schedule described in this Article 3 to such individual or individuals as the
Executive has designated in writing, filed with and been approved by the
Corporation. In the absence of any effective designation of a beneficiary, any
amounts payable under this Article 3 shall be payable to the Executive's duly
qualified executor or administrator.
3.2 Payment Schedule. Payment of the Supplemental Benefit described in
this Article 3 shall be made in accordance with Section 2.2 with the date of
Permanent Disability as determined by the Board of Directors of Elco Industries,
Inc. being the Early Benefit Date.
3.3 Supplemental Benefit - Permanent Disability. For purposes of this
Article 3, the "Supplemental Benefit" shall be the amount defined in Article 2.
- 4 -
<PAGE> 5
ARTICLE 4
4.1 Voluntary Termination of Service or Discharge Prior to Retirement. In
the event that the Executive shall voluntarily terminate his employment with the
Corporation or be discharged by the Corporation with or without cause, this
Agreement shall terminate upon the date of voluntary termination of employment
or discharge and no benefits or payments of any kind are to be made hereunder,
except as provided under Section 1.2(c) or 8.1.
4.2 Other Termination of Benefits. The Corporation reserves the right to
terminate this Agreement at any time in the sole discretion of the Board of
Directors of Elco Industries, Inc. In the event that Executive is actively
employed by the Corporation at the time of such termination, he shall be
entitled to the Early Benefit Amount described in Article 2, except that the
date of the Agreement's termination shall be substituted for the date of the
Executive's death as the Early Benefit Date. The timing and other terms of
payment of the Early Benefit Amount to Executive shall be determined by the
Board of Directors of Elco Industries, Inc., in its sole discretion, provided
that in the event that full payment is deferred more than 30 days after such
termination the Corporation shall pay Executive interest compounded annually
from the last day of the calendar month in which the Agreement is terminated on
the unpaid balance at a floating rate equal to the base rate as then announced
from time to time by The First National Bank of Chicago. Full payment of the
amounts described in this section 4.2 shall be made no later than three years
after such termination of this Agreement. In the event that the Executive
becomes entitled to an Early Benefit Amount pursuant to this Section 4.2, but
dies before receiving the entire Early Benefit Amount, then the remaining
payments shall be made in the manner described in this Section 4.2 to such
individual or individuals as the Executive has designated in writing, filed with
and been approved by the Corporation. In the absence of any effective
designation of a beneficiary, any amounts payable under this Section 4.2 shall
be payable to the Executive's duly qualified executor or administrator.
ARTICLE 5
5.1 Alienability. Neither the Executive, his widow, nor any other
beneficiary under this Agreement shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony
or separate maintenance, owed by the Executive or his beneficiary or any of
them, or be transferable by operation of law in the event of bankruptcy,
insolvency, or otherwise. In the event the Executive or any beneficiary attempts
assignment, commutation,
- 5 -
<PAGE> 6
hypothecation, transfer, or disposal of the benefit hereunder the Corporation's
liabilities shall forthwith cease and terminate.
ARTICLE 6
6.1 Participation in Other Plans. Nothing contained in this Agreement shall
be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit-sharing, group insurance, bonus stock or similar employee plans which the
Corporation may now or hereafter have.
ARTICLE 7
7.1 No Rights to Assets. The rights of the Executive and his beneficiary
shall be solely those of unsecured general creditors of the Corporation. The
Executive and his beneficiary shall only have the right to receive from the
Corporation those payments as are specified under this Agreement. The Executive
agrees that he and his beneficiary shall have no rights or interests whatsoever
in any asset of this Corporation.
ARTICLE 8
8.1 Change of Control. (a) Notwithstanding any provision in this Agreement
to the contrary, in the event of any Change of Control while the Executive is
actively employed by the Corporation (or if the Executive's voluntary
termination of employment with the Corporation or discharge by the Corporation
occurs prior to a Change of Control at the request of any individual or entity
acquiring ownership or control of Elco Industries, Inc., or is reasonably shown
to be related to a prospective Change of Control), the Corporation shall make a
lump sum distribution to the Executive within fourteen days after the earlier to
occur of (i) the Executive's voluntary termination of employment with the
Corporation (including death or Permanent Disability) and (ii) the Executive's
discharge by the Corporation. The amount of the lump sum distribution in either
case shall be the present value of a lump sum payment of $262,501 as of the
Executive's Benefit Date when discounted at 7 percent (or such other percent as
may be determined by the Board of Directors of Elco Industries, Inc., in its
sole discretion) per annum; provided that, notwithstanding the foregoing, if the
Executive's Benefit Date precedes the date on which the lump sum distribution is
made the lump sum distribution shall be equal to the Executive's Account balance
as of the date the lump sum distribution is paid, and if the Executive's
termination of employment is due to death or Permanent Disability arising after
the Change of Control, the amount of the lump sum distribution shall be the
Early Benefit
- 6 -
<PAGE> 7
Amount payable pursuant to Article 2 or 3, as is applicable. If the Executive
dies after becoming entitled to such lump sum distribution but before the
distribution is made, such distribution shall be made to the Executive's
beneficiary, and in the absence of an effective designation of a beneficiary,
any such distribution shall be payable to the Executive's duly qualified
executor or administrator.
(b) If the Executive's employment is terminated after a Change of Control,
with or without cause, for any reason other than death or on or after the date
on which the Executive attains age sixty-five (65), then, during the three-year
period after such termination, the Executive shall be included to the extent
eligible thereunder in any and all then existing plans providing general
benefits of the Corporation's employees, including but not limited to, group
life, hospitalization, disability, medical and dental insurance at the expense
of the Corporation, or if such termination renders the Executive ineligible to
participate in any group plan, the Corporation will purchase such individual
insurance policies or other plans providing benefits at least as favorable to
the Executive as those provided prior to the termination.
(c) If the business conducted by the Corporation shall be discontinued
other than in a manner considered a Change of Control while the Executive is
actively employed by the Corporation, the Corporation shall make a lump sum
distribution to the Executive on or prior to the Corporation's discontinuance of
business. The amount of the lump sum distribution shall be the present value of
a lump sum payment of $262,501 as of the Executive's Benefit Date when
discounted at 7 percent as may be determined by the Board of Directors of Elco
Industries, Inc., in its sole discretion) per annum; provided that,
notwithstanding the foregoing, if the Executive's Benefit Date precedes the date
on which the lump sum distribution is made, the lump sum distribution shall be
equal to the Executive's Account balance as of the date the lump sum
distribution is paid. If the Executive dies after becoming entitled to such lump
sum distribution but before the distribution is made, such distribution shall be
made to the Executive's beneficiary, and in the absence of an effective
designation of a beneficiary, any such distribution shall be payable to the
Executive's duly qualified executor or administrator.
(d) Notwithstanding any provision in this Agreement to the contrary, in the
event of any Change of Control while the Executive is not actively employed by
the Corporation but is entitled to one or more payments pursuant to this
Agreement, the Corporation shall make a lump sum distribution to the Executive
within fourteen days after the Change of Control. The amount of the lump sum
distribution shall be the present value of the remaining payment(s) when
discounted at 7 percent (or such other percent as may be determined by the Board
of Directors of Elco
- 7 -
<PAGE> 8
Industries, Inc., in its sole discretion) per annum. If the Executive dies after
becoming entitled to such lump sum distribution but before the distribution is
made, such distribution shall be made to the Executive's beneficiary, and in the
absence of an effective designation of beneficiary, any such distribution shall
be payable to the Executive's duly qualified executor or administrator.
8.2 Taxes - Gross-Up Payment. Section 3 of the Change of Control Agreement
between Elco Industries, Inc. and the Executive dated March 30, 1995, as amended
(which generally provides for an additional payment to the Executive should any
payment, benefit or distribution (or combination thereof) by Elco Industries,
Inc. or one or more trusts established by Eico Industries, Inc. for the benefit
of its employees be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, as amended), shall be applicable with respect to this
Agreement and the benefits provided herein.
8.3 Change of Control. For purposes of this Article, "Change of Control"
means the first to occur of any of the following dates:
(a) the date the Board of Directors of Elco Industries, Inc. votes to
approve:
(i) any consolidation or merger of Elco Industries, Inc.;
(ii) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the
assets of Elco Industries, Inc. other than any sale, lease, exchange or
other transfer to any corporation where Elco Industries, Inc. owns,
directly or indirectly, at least seventy percent (70%) of the outstanding
voting securities of such corporation after any such transfer; or
(iii) any plan or proposal for the liquidation or dissolution of Elco
Industries, Inc.;
(b) the date any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, hereinafter the "1934 Act"), other than one or
more trusts established by Elco Industries, Inc. or its subsidiaries, shall
become the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of thirty percent (30%) or more of outstanding $5 par value common stock of
Elco Industries, Inc.;
(c) the date the Board of Directors of Elco Industries, Inc. authorizes and
approves any transaction which has either a reasonable likelihood or a purpose
of causing, whether directly or indirectly:
- 8 -
<PAGE> 9
(i) $5 par value common stock of Elco Industries, Inc. to be held of
record by less than 300 persons; or
(ii) $5 par value common stock of Elco Industries, Inc. to be neither
listed on any national securities exchange nor authorized to be quoted on
an inter-dealer quotation system of any registered national securities
association;
(d) the date, during any period of twenty-four (24) consecutive months, on
which individuals who at the beginning of such period constitute the entire
Board of Directors of Elco Industries, Inc. shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by Elco Industries, Inc. stockholders, of each new director comprising
the majority was approved by a vote of at least a majority of the Continuing
Directors as hereinafter defined, in office on the date of such election or
nomination for election of the new director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of Directors of Elco Industries, Inc. at
the close of business on March 30, 1995.
(ii) any member of the Board of Directors of Elco Industries, Inc. who
succeeds any Continuing Director described in Section 8.2(d)(i) above if
such successor was elected, or nominated for election by Elco Industries,
Inc. stockholders, by a majority of the Continuing Directors then still in
office; or
(iii) any director elected, or nominated for election by Elco
Industries, Inc. stockholders, to fill any, vacancy or newly created
directorship on the Board of Directors of Elco Industries, Inc. by a
majority of the Continuing Directors then still in office; or
(e) the date of commencement by any entity, person, or group (including any
affiliate thereof, other than Elco Industries, Inc.) of a tender offer or
exchange offer for more than twenty percent (20%) of the outstanding $5 par
value common stock of Elco Industries, Inc.
ARTICLE 9
9.1 Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement and to
employ or designate any person or organization to advise or perform services
with respect
- 9 -
<PAGE> 10
to the Corporation's responsibilities under this Agreement and to allocate to
such person or organization all, or part of, the responsibility for the
operation and administration of this Agreement.
ARTICLE 10
10.1 Assignment; Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
Elco Industries, Inc. and the Executive and their respective heirs, personal or
legal representatives, executors, administrators, successors, assigns,
distributees, divisees and legatees. If Elco Industries, Inc. shall be merged
into or consolidated with another entity, the provisions of this Agreement shall
be binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation. Elco Industries, Inc. will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of Elco
Industries, Inc. by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Elco Industries, Inc. would be required to
perform it if no such succession had taken place. The provisions of this Section
10.1 shall continue to apply to each subsequent employer of the Executive
hereunder in the event of any subsequent merger, consolidation or transfer of
assets of such subsequent employer.
ARTICLE 11
11.1 Amendment and Waiver. This Agreement shall not be amended, altered or
modified except by written agreement signed by the parties hereto, or their
respective successors or permitted assigns. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
Article 8 and all Change of Control provisions applicable to the Executive and
contained in this Agreement shall remain in effect through the date of a Change
of Control, and for such period thereafter as is necessary to carry out such
provisions and provide the benefits payable thereunder, and may not be altered
in a manner which adversely affects the Executive without the Executive's prior
written approval.
ARTICLE 12
12.1 Communications. Any notice or communication required of either party
with respect to this Agreement shall be
- 10 -
<PAGE> 11
made in writing and may either be delivered personally or sent by registered or
certified mail, return receipt requested, to:
If to the Corporation:
Elco Industries, Inc.
1111 Samuelson Road
Rockford, Illinois 61125-7009
If to the Executive:
1231 Cerasus Dr.
-----------------------------
Rockford, IL 61108
-----------------------------
-----------------------------
Each party shall have the right by written notice to change the place to which
any notice may be addressed.
ARTICLE 13
13.1 Not a Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
13.2 Not in Lieu of Other Compensation. The salary continuation benefits
provided by this Agreement are granted by the Corporation as a fringe benefit to
the Executive and are not part of any salary reduction plan or an arrangement
deferring a bonus or a salary increase. The Executive has no option to take any
current payment or bonus in lieu of these salary continuation benefits.
ARTICLE 14
14.1 Claims Procedure. If an Executive or the Executive's beneficiary (or
qualified executor or administrator) fails to receive benefits to which such
Executive or beneficiary (or qualified executor or administrator) feels entitled
under this Agreement, such Executive or beneficiary (or qualified executor or
administrator) shall submit a claim for such benefits in writing to the
Corporation within 60 days of the date the Executive or beneficiary (or
qualified executor or administrator) would have received such benefits if so
entitled. Such claim shall be reviewed by the Corporation. If the claim is
denied, in full or in part, the Corporation shall provide a written notice in
a manner calculated to be understood by the claimant within 90 days setting
forth the specific reasons for denial, specific reference to the provisions of
this Agreement upon which the denial is based, and
-11-
<PAGE> 12
any additional material or information necessary to perfect the claim, if any,
and an explanation of why such material or information is necessary. Also, such
written notice shall indicate the steps to be taken if a review of the denial is
desired.
If a claim is denied in full or inpart and a review is desired, the
Executive or his beneficiary (or qualified executor or administrator) shall so
notify the Corporation in writing within 60 days after receiving a denial of
claim and a claim shall be deemed denied if the Corporation does not take any
action within the aforesaid 90-day period. In requesting a review, the Executive
or his beneficiary (or qualified executor or administrator) may review this
Agreement or any documents relating to it and submit any written issues and
comments he may feel appropriate. In its sole discretion, the Corporation shall
then review the claim and provide a written decision within 60 days after
receipt of the request for review unless special circumstances require an
extension of time for processing in which case a decision shall be rendered as
soon as possible, but no later than 120 days after receipt of a request for
review. This decision shall state the specific reasons for the decision and
shall include reference to specific provisions of this Agreement on which the
decision is based and be written in a manner calculated to be understood by the
claimant.
All determinations made by the Corporation shall be conclusive upon the
Executive, his beneficiary (or qualified executor or administrator) or any other
person claiming benefits pursuant to this Agreement.
ARTICLE 15
15.1 Withholding for Taxes. Notwithstanding any other provision of the
Agreement, the Corporation may withhold from any payment to be made pursuant to
this Agreement such amounts as may be required for purposes of complying with
the tax withholding provisions of the Internal Revenue Code of 1986, as amended,
any state's income tax act or any applicable similar laws.
ARTICLE 16
16.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Illinois.
16.2 Disputes. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Chicago,
Illinois, or, at the option of the Executive, in the county where the Executive
then resides, in accordance with the Rules of the American Arbitration
Association then in effect, except that if the Executive institutes an action
-12-
<PAGE> 13
relating to this Agreement, the Executive may, at the Executive's option, bring
that action in a court of competent jurisdiction. Judgement may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.
Notwithstanding the pendency of any dispute in connection with this Agreement,
Elco Industries, Inc. will continue to pay the Executive his full compensation
in effect when the notice giving rise to the dispute was given and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
16.2. Amounts paid under this Section 16.2 are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
16.3 Costs of Proceedings. Elco Industries, Inc. shall pay all costs and
expenses, including attorneys' fees and disbursements, at least monthly, of the
Executive in connection with any legal proceeding (including arbitration),
whether or not instituted by Elco Industries, Inc. or the Executive, relating to
the interpretation or enforcement of any provision of this Agreement, except
that if the Executive instituted the proceeding and the judge, arbitrator or
other individual presiding over the proceeding affirmatively finds the Executive
instituted the proceeding in bad faith, the Executive shall pay all costs and
expenses, including attorney's fees and disbursements, of Elco Industries, Inc.
Elco Industries, Inc. shall pay prejudgment interest on any money judgment
obtained by the Executive as a result of such a proceeding, calculated at the
rate which The First National Bank of Chicago announces from time to time as its
base lending rate as in effect from time to time, from the date that payment
should have been made to the Executive under this Agreement.
ARTICLE 17
17.1 Headings. The headings used in this Agreement are included solely for
convenience of reference and shall not control the meaning or interpretation of
any provision of this Agreement.
17.2 Severability. If, for any reason, any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each other provision shall to the full extent
consistent with the law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with the law continue in full force and effect.
- 13 -
<PAGE> 14
17.3 Gender and Number. The masculine pronoun whichever used herein shall
be deemed to include the feminine and the neuter, the singular shall be deemed
to include the plural and the plural shall be deemed to include the singular
wherever the context requires.
ARTICLE 18
18.1 No Duplication of Benefits. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall not receive benefit payments
pursuant to this Agreement and the Executive Supplemental Benefit Agreement
between Elco Industries, Inc. and the Executive dated February 19, 1988, as
amended ("Defined Benefit Agreement") and upon an event entitling the Executive
(or his beneficiary or qualified executor or administrator) to a benefit payment
under this Agreement or the Defined Benefit Agreement, the Executive (or his
beneficiary or qualified executor or administrator) shall only be entitled to
benefit payments from whichever of the aforementioned Agreements entitles the
Executive (or his beneficiary or qualified executor or administrator) to the
greatest total benefit amount. Additionally, once an Executive becomes entitled
to benefit payments pursuant to this Agreement because of a particular event, he
is not eligible to receive benefit payments pursuant to this Agreement because
of a different event except to the extent explicitly provided in this Agreement,
such as with respect to a subsequent Change of Control or death.
18.2 Entire Aqreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the Corporation and
the Executive.
- 14 -
<PAGE> 15
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed and tbe Executive has hereunto set his hand at Rockford, IL (town &
state) the day and year first above written.
ELCO INDUSTRIES, INC. and its
subsidiaries
By: /s/ D.M. Hasse
--------------------------------
Its: V.P. Administration
-------------------------------
/s/ Kenneth L. Heal
-----------------------------------
(ADD EXECUTIVE'S NAME)
/s/
---------------------------------------
Chairman, Compensation Committee
<PAGE> 16
EXECUTIVE SUPPLEMENTAL DEFINED CONTRIBUTION BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
TO: Elco Industries, Inc.
FROM: Kenneth L. Heal
--------------------------------------------------------
DATE: May 10, 1995
-------------------------------
-------------------------------------------------------------------------------
In the event of my death prior to my receipt of all payments and benefits
due me under the Executive Supplemental Defined Contribution Benefit Agreement
dated March 30, 1995, as amended, I hereby designate the person or persons
named below who are living at the time of my death to receive all amounts and
benefits due me under the terms of such Agreement as follows:
<TABLE>
<CAPTION>
===============================================================================
SOCIAL
SECURITY PERCENTAGE
NAME ADDRESS NUMBER RELATIONSHIP OF TOTAL
===============================================================================
<S> <C> <C> <C> <C>
1. BA 1231 Cerasus Dr. ###-##-#### Spouse 100%
Rockford, IL 61108
-------------------------------------------------------------------------------
2.
-------------------------------------------------------------------------------
3.
-------------------------------------------------------------------------------
4.
-------------------------------------------------------------------------------
TOTAL: 100%
===============================================================================
</TABLE>
I hereby revoke all prior Beneficiary Designations made previously and
expressly reserve the right to change or revoke this Beneficiary Designation,
but understand that no such change or revocation shall be effective unless it is
signed by me and filed with Elco Industries, Inc.
/s/ KENNETH L. HEAL
-----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Accepted by Elco Industries, Inc.
By: /s/ D.M. HASSE May 10, 1995
------------------------------ ----------------------
Date
<PAGE> 17
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
07/94 $111,300.00 $9,275.00 8.46% $784.67 $784.67
08/94 $111,300.00 $9,275.00 8.46% $784.67 $4.44 $1,573.78
09/94 $111,300.00 $9,275.00 8.46% $784.67 $8.90 $2,367.35
10/94 $111,300.00 $9,275.00 8.46% $784.67 $13.38 $3,165.40
11/94 $111,300.00 $9,275.00 8.46% $784.67 $17.90 $3,967.97
12/94 $111,300.00 $9,275.00 8.46% $784.67 $22.43 $4,775.07
01/95 $111,300.00 $9,275.00 8.46% $784.67 $27.00 $5,586.74
02/95 $115,752.00 $9,646.00 8.46% $816.05 $31.59 $6,434.38
03/95 $115,752.00 $9,646.00 8.46% $816.05 $38.38 $7,286.81
04/95 $115,752.00 $9,646.00 8.46% $816.05 $41.20 $8,144.06
05/95 $115,752.00 $9,646.05 8.46% $816.05 $46.05 $9.006.16
06/95 $115,752.00 $9,646.00 8.46% $816.05 $50.92 $9,873.13
07/95 $115,752.00 $9,646.00 8.46% $816.05 $55.82 $10,745.00
08/95 $115,752.00 $9,646.00 8.46% $816.05 $60.75 $11,621.80
09/95 $115,752.00 $9,646.00 8.46% $816.05 $65.71 $12,503.56
10/95 $115,752.00 $9,646.00 8.46% $816.05 $70.70 $13,390.31
11/95 $115,752.00 $9,646.00 8.46% $816.05 $75.71 $14,282.07
12/95 $115,752.00 $9,646.00 8.46% $616.05 $80.75 $15,178.87
01/96 $115,752.00 $9,646.00 8.46% $816.05 $85.82 $16,080.74
02/96 $120,382.08 $10,031.84 8.46% $848.69 $90.92 $17,020.35
03/96 $120,382.08 $10,031.84 8.46% $848.69 $96.23 $17,965.27
04/96 $120,382.08 $10.031.84 8.46% $848.69 $101.58 $18,915.54
05/96 $120,382.08 $10,031.84 8.46% $848.69 $106.95 $19,871.18
06/96 $120,382.08 $10,031.84 8.46% $848.69 $112.35 $20,832.22
07/96 $120,382.08 $10,031.84 8.46% $848.69 $117.79 $21,798.70
08/96 $120,382.08 $10.031.84 8.46% $848.69 $123.25 $22,770.64
09/96 $120,382.08 $10,031.84 8.46% $848.69 $128.75 $23,748.08
10/96 $120,382.08 $10 031.84 8.46% $848.69 $134.27 $24,731.04
11/96 $120,382.08 $10 031.84 8.46% $848.69 $139.83 $25,719.56
12/96 $120,382.08 $10,031.84 8.46% $848.69 $145.42 $26,713.67
01/97 $120,382.08 $10,031.84 8.46% $848.69 $151.04 $27,713.40
02/97 $125,197.36 $10,433.11 8.46% $882.64 $156.69 $28,752.73
03/97 $125,197.36 $10,433.11 8.46% $882.64 $162.57 $29,797.94
04/97 $125,197.36 $10,433.11 8.46% $882.64 $168.48 $30,849.06
05/97 $125,197.36 $10,433.11 8.46% $882.64 $174.42 $31,906.12
06/97 $125,197.36 $10,433.11 8.46% $882.64 $180.40 $32,969.16
07/97 $125,197.36 $10,433.11 8.46% $882.64 $186.41 $34,038.21
08/97 $125,197.36 $10,433.11 8.46% $882.64 $192.45 $35,113.30
09/97 $125,197.36 $10,433.11 8.46% $882.64 $198.53 $36,194.47
10/97 $125,197.36 $10,433.11 8.46% $882.64 $204.64 $37,281.75
11/97 $125,197.36 $10,433.11 8.46% $882.64 $210.79 $38,375.18
12/97 $125,197.36 $10,433.11 8.46% $882.64 $216.97 $39,474.79
01/98 $125,197.36 $10,433.11 8.46% $882.64 $223.19 $40,580.62
02/98 $130,205.25 $10 850.44 8.46% $917.95 $229.44 $41,728.01
03/98 $130,205.25 $10,850.44 8.46% $917.95 $235.93 $42,881.89
04/98 $130,205.25 $10,850.44 8.46% $917.95 $242.45 $44,042.29
05/98 $130,205.25 $10,850.44 8.46% $917.95 $249.02 $45,209.26
06/98 $130,205.25 $10,850.44 8.46% $917.95 $255.61 $46,382.82
07/98 $130,205.25 $10,850.44 8.46% $917.95 $262.25 $47,563.02
08/98 $130,205.25 $10,850.44 8.46% $917.95 $268.92 $48,749.89
09/98 $130,205.25 $10,850.44 8.46% $917.95 $275.63 $49,943.47
10/98 $130,205.25 $10,850.44 8.46% $917.95 $282.38 $51,143.80
11/98 $130,205.25 $10,850.44 8.46% $917.95 $289.17 $52,350.92
12/98 $130,205.25 $10,850.44 8.48% $917.95 $295.99 $53,564.86
01/99 $130,205.25 $10,850.44 8.46% $917.95 $302.86 $54,785.67
02/99 $135,413.46 $11,284.46 8.46% $954.67 $309.76 $56,050.10
03/99 $135,413.46 $11,284.46 8.46% $954.67 $316.91 $57,321.68
</TABLE>
<PAGE> 18
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/99 $135,413.46 $11,284.46 8.46% $954.67 $324.10 $58,600.45
05/99 $135,413.46 $11,284.46 8.46% $954.67 $331.33 $59,886.45
06/99 $135,413.46 $11,284.46 8.46% $954.67 $338.60 $61,179.72
07/99 $135,413.46 $11,284.46 8.46% $954.67 $345.91 $62,480.30
08/99 $135,413.46 $11,284.46 8.46% $954.67 $353.26 $63,788.23
09/99 $135,413.46 $11,284.46 8.46% $954.67 $360.66 $65,103.56
10/99 $135,413.46 $11,284.46 8.46% $954.67 $368.10 $66,426.33
11/99 $135,413.46 $11,284.46 8.46% $954.67 $375.57 $67,756.57
12/99 $135,413.46 $11,284.46 8.46% $954.67 $383.10 $69,094.34
01/00 $135,413.46 $11,284.46 8.46% $954.67 $390.66 $70,439.67
02/00 $140,830.00 $11,735.83 8.46% $992.85 $398.27 $71,830.79
03/00 $140,830.00 $11,735.83 8.46% $992.85 $406.13 $73,229.77
04/00 $140,830.00 $11,735.83 8.46% $992.85 $414.04 $74,636.66
05/00 $140,830.00 $11,735.83 8.46% $992.85 $422.00 $76,051.51
06/00 $140,830.00 $11,735.83 8.46% $992.85 $430.00 $77,474.36
07/00 $140,830.00 $11,735.83 8.46% $992.85 $438.04 $78,905.25
08/00 $140,830.00 $11,735.83 8.46% $992.85 $446.13 $80,344.23
09/00 $140,830.00 $11,735.83 8.46% $992.85 $454.27 $81,791.35
10/00 $140,830.00 $11,735.83 8.46% $992.85 $462.45 $83,246.65
11/00 $140,830.00 $11,735.83 8.46% $992.85 $470.68 $84,710.18
12/00 $140,830.00 $11,735.83 8.46% $992.85 $478.95 $86,181.98
01/01 $140,830.00 $11,735.83 8.46% $992.85 $487.27 $87,662.10
02/01 $146,463.20 $12,205.27 8.46% $1,032.57 $495.64 $89,190.31
03/01 $146,463.20 $12,205.27 8.46% $1,032.57 $504.28 $90,727.16
04/01 $146,463.20 $12,205.27 8.46% $1,032.57 $512.97 $92,272.70
05/01 $146,463.20 $12,205.27 8.46% $1,032.57 $521.71 $93,826.98
06/01 $146,463.20 $12,205.27 8.46% $1,032.57 $530.50 $95,390.05
07/01 $146,463.20 $12,205.27 8.46% $1,032.57 $539.34 $96,961.96
08/01 $146,463.20 $12,205.27 8.46% $1,032.57 $548.22 $98,542.75
09/01 $146,463.20 $12,205.27 8.46% $1,032.57 $557.16 $100,132.48
10/01 $146,463.20 $12,205.27 8.46% $1,032.57 $566.15 $101,731.20
11/01 $146,463.20 $12,205.27 8.46% $1,032.57 $575.19 $103,338.96
12/01 $146,463.20 $12,205.27 8.46% $1,032.57 $584.28 $104,955.81
01/02 $146,463.20 $12,205.27 8.46% $1,032.57 $593.42 $106,581.80
02/02 $152,321.73 $12,693.48 8.46% $1,073.87 $602.61 $108,258.28
03/02 $152,321.73 $12,693.48 8.46% $1,073.87 $612.09 $109,944.24
04/02 $152,321.73 $12,693.48 8.46% $1,073.87 $621.62 $111,639.73
05/02 $152,321,73 $12,693.48 8.46% $1,073.87 $631.21 $113,344.81
06/02 $152,321.73 $12,693.48 8.46% $1,073.87 $640.85 $115,059.53
07/02 $152,321.73 $12,693.48 8.46% $1,073.87 $650.55 $116,783.95
08/02 $152,321.73 $12,693.48 8.46% $1,073.87 $660.30 $118,518.12
09/02 $152,321.73 $12,693.48 8.46% $1,073.87 $670.10 $120,262.09
10/02 $152,321.73 $12,693.48 8.46% $1,073.87 $679.96 $122,015.92
11/02 $152,321.73 $12,693.48 8.46% $1,073.87 $689.88 $123,779.67
12/02 $152,321.73 $12,693.48 8.46% $1,073.87 $699.85 $125,553.39
01/03 $152,321.73 $12,693.48 8.46% $1,073.87 $709.88 $127,337.14
02/03 $158,414.60 $13,201.22 8.46% $1,116.82 $719.96 $129,173.92
03/03 $158,414.60 $13,201.22 8.46% $1,116.82 $730.35 $131,021.09
04/03 $158,414.60 $13,201.22 8.46% $1,116.82 $740.79 $132,878.70
05/03 $158,414.60 $13,201.22 8.46% $1,116.82 $751.30 $134,746.82
06/03 $158,414.60 $13,201.22 8.46% $1,116.82 $761.86 $136,625.50
07/03 $158,414.60 $13,201.22 8.46% $1,116.82 $772.48 $138,514.80
08/03 $158,414.60 $13,201.22 8.46% $1,116.82 $783.16 $140,414.78
09/03 $158,414.60 $13,201.22 8.46% $1,116.82 $793.91 $142,325.51
10/03 $158,414.60 $13,201.22 8.46% $1,116.82 $804.71 $144,247.04
11/03 $158,414.60 $13,201.22 8.46% $1,116.82 $815.57 $146,179.43
12/03 $158,414.60 $13,201.22 8.46% $1,116.82 $826.50 $148,122.75
01/04 $158,414.60 $13,201.22 8.46% $1,116.82 $837.49 $150,077.06
02/04 $164,751.18 $13,729.27 8.46% $1,161.50 $848.54 $152,087.10
03/04 $164.751.18 $13,729.27 8.46% $1,161.50 $859.90 $154,108.50
04/04 $164,751.18 $13,729.27 8.46% $1,161.50 $871.33 $156,141.33
05/04 $164,751.18 $13,729.27 8.46% $1,161.50 $882.82 $158,185.65
06/04 $164,751.18 $13,729.27 8.46% $1,161.50 $894.38 $160,241.53
07/04 $164,751.18 $13,729.27 8.46% $1,161.50 $906.01 $162,309.04
</TABLE>
<PAGE> 19
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.0% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/04 $164,751.18 $13,729.27 8.46% $1,161.50 $917.70 $164,388.24
09/04 $164,751.18 $13,729.27 8.46% $1,161.50 $929.45 $166,479.19
10/04 $164,751.18 $13,729.27 8.46% $1,161.50 $941.27 $168,581.96
11/04 $164,751.18 $13,729.27 8.46% $1,161.50 $953.16 $170,696.62
12/04 $164,751.18 $13,729.27 8.46% $1,161.50 $965.12 $172,823.24
01/05 $164,751.18 $13,729.27 8.46% $1,161.50 $977.14 $174,961.88
02/05 $171,341.23 $14,278.44 8.46% $1,207.96 $989.23 $177,159.07
03/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,001.66 $179,368.69
04/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,014.15 $181,590.80
05/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,026.71 $183,825.47
06/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,039.35 $186,072.78
07/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,052.06 $188,332.80
08/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,064.83 $190,605.59
09/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,077.68 $192,891.23
10/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,090.61 $195,189.80
11/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,103.60 $197,501.36
12/05 $171,341.23 $14,278.44 8.46% $1,207.96 $1,116.67 $199,825.99
01/06 $171,341.23 $14,278.44 8.46% $1,207.96 $1,129.82 $202,163.77
02/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,143.03 $204,563.07
03/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,156.60 $206,975.94
04/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,170.24 $209,402.45
05/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,183.96 $211,842.68
06/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,197.76 $214,296.71
07/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,211.63 $216,764.61
O8/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,225.59 $219,246.47
09/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,239.62 $221,742.36
10/06 $178,194.88 $14.849.57 8.46% $1,256.27 $1,253.73 $224,252.36
11/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,267.92 $226,776.55
12/06 $178,194.88 $14,849.57 8.46% $1,256.27 $1,282.19 $229,315.01
01/07 $178,194.88 $14,849.57 8.46% $1,256.27 $1,296.55 $231,867.83
02/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,310.98 $234,485.34
03/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,325.78 $237,117.65
04/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,340.66 $239,764.84
05/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,355.63 $242,427.00
06/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,370.68 $245,104.21
07/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,385.82 $247,796.56
08/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,401.04 $250,504.13
09/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,416.35 $253,227.01
10/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,431.75 $255,965.29
11/07 $185,322.68 $15,443.56 8.46% $1,306.53 $1,447.23 $258,719.05
12/07 $119,563.02 $9,963.58 8.46% $842.92 $1,462.80 $261,024.77
01/08 $1,475.83 $262,500.60
02/08 $1,374.13 $26,935.66 $236,939.07
03/08 $1,374.13 $238,313.20
04/08 $1,374.13 $239,687.33
05/08 $1,374.13 $241,061.46
06/08 $1,374.13 $242,435.59
07/08 $1,374.13 $243,809.72
O8/08 $1,374.13 $245,183.85
09/08 $1,374.13 $246,557.98
10/08 $1,374.13 $247,932.11
11/08 $1,374.13 $249,306.24
12/08 $1,374.13 $250,680.37
01/09 $1,374.13 $252,054.50
02/09 $1,313.19 $26,935.66 $226,432.03
03/09 $1,313.19 $227,745.22
04/09 $1,313.19 $229,058.41
05/09 $1,313.19 $230,371.60
06/09 $1,313.19 $231,684.79
07/09 $1,313.19 $232,997.98
O8/09 $1,313.19 $234,311.17
09/09 $1,313.19 $235,624.36
10/09 $1,313.19 $236,937.55
11/09 $1,313.19 $238,250.74
</TABLE>
<PAGE> 20
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
12/09 $1,313.19 $239,563.93
01/10 $1,313.19 $240,877.12
02/10 $1,247.99 $26,935.66 $215,189.45
03/10 $1,247.99 $216,437.44
04/10 $1,247.99 $217,685.43
05/10 $1,247.99 $218,933.42
06/10 $1,247.99 $220,181.41
07/10 $1,247.99 $221,429.40
08/10 $1,247.99 $222,677.39
09/10 $1,247.99 $223,925.38
10/10 $1,247.99 $225,173.37
11/10 $1,247.99 $226,421.36
12/10 $1,247.99 $227,669.35
01/11 $1,247.99 $228,917.34
02/11 $1,178.23 $26,935.66 $203,159.91
03/11 $1,178.23 $204,338.14
04/11 $1,178.23 $205,516.37
05/11 $1,178.23 $206,694.60
06/11 $1,178.23 $207,872.83
07111 $1,178.23 $209,051.06
08/11 $1,178.23 $210,229.29
09/11 $1,178.23 $211,407.52
10/11 $1,178.23 $212,585.75
11/11 $1,178.23 $213,763.98
12/11 $1,178.23 $214,942.21
01/12 $1,178.23 $216,120.44
02/12 $1,103.58 $26,935.66 $190,288.36
03/12 $1,103.58 $191,391.94
04/12 $1,103.58 $192,495.52
05/12 $1,103.58 $193,599.10
06/12 $1,103.58 $194,702.68
07/12 $1,103.58 $195,806.26
08/12 $1,103.58 $196,909.84
09/12 $1,103.58 $198,013.42
10/12 $1,103.58 $199,117.00
11/12 $1,103.58 $200,220.58
12/12 $1,103.58 $201,324.16
01/13 $1,103.58 $202,427.74
02/13 $1,023.70 $26,935.66 $176,515.78
03/13 $1,023.70 $177,539.48
04/13 $1,023.70 $178,563.18
05/13 $1,023.70 $179,586.88
06/13 $1,023.70 $180,610.58
07/13 $1,023.70 $181,634.28
08/13 $1,023.70 $182,657.98
09/13 $1,023.70 $183,681.68
10/13 $1,023.70 $184,705.38
11/13 $1,023.70 $185,729.08
12/13 $1,023.70 $186,752.78
01/14 $1,023.70 $187,776.48
02/14 $938.24 $26,935.66 $161,779.06
03/14 $938.24 $162,717.30
04/14 $938.24 $163,655.54
05/14 $938.24 $164.593.78
06/14 $938.24 $165,532.02
07/14 $938.24 $166,470.26
08/14 $938.24 $167,408.50
09/14 $938.24 $168,346.74
10/14 $938.24 $169,284.98
11/14 $938.24 $170,223,22
12/14 $938.24 $171,161.46
01/15 $938.24 $172,099.70
02/15 $846.79 $26,935.66 $146,010.83
03/15 $846.79 $146,857.62
</TABLE>
<PAGE> 21
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
04/15 $846.79 $147,704.41
05/15 $846.79 $148,551.20
06/15 $846.79 $149,397.99
07/15 $846.79 $150,244.78
08/15 $846.79 $151,091.57
09/15 $846.79 $151,938.36
10/15 $846.79 $152,785.15
11/15 $846.79 $153,631.94
12/15 $846.79 $154,478.73
01/16 $846.79 $155,325.52
02/16 $748.94 $26,935.66 $129,138.80
03/16 $748.94 $129,887.74
04/16 $748.94 $130,636.68
05/16 $748.94 $131,385.62
06/16 $748.94 $132,134.56
07/16 $748.94 $132,883.50
08/16 $748.94 $133,632.44
09/16 $748.94 $134,381.38
10/16 $748.94 $135,130.32
11/16 $748.94 $135,879.26
12/16 $748.94 $136,628.20
01/17 $748.94 $137,377.14
02/17 $644.24 $26,935.66 $111,085.72
03/17 $644.24 $111,729.96
04/17 $644.24 $112,374.20
05/17 $644.24 $113,018.44
06/17 $644.24 $113,662.68
07/17 $644.24 $114,306.92
08/17 $644.24 $114,951.16
09/17 $644.24 $115,595.40
10/17 $644.24 $116,239.54
11/17 $644.24 $116,883.88
12/17 $644.24 $117,528.12
01/18 $644.24 $118,172.36
02/18 $532.21 $26,935.66 $91,768.91
03/18 $532.21 $92,301.12
04/18 $532.21 $92,833.33
05/18 $532.21 $93,365.54
06/18 $532.21 $93,897.75
07/18 $532.21 $94,429.96
08/18 $532.21 $94,962.17
09/18 $532.21 $95,494.38
10/18 $532.21 $95,026.59
11/18 $532.21 $96,558.80
12/18 $532.21 $97,091.01
01/19 $532.21 $97,623.22
02/19 $412.34 $26,935.66 $71,099.90
03/19 $412.34 $71,512.24
04/19 $412.34 $71,924.58
05/19 $412.34 $72,336.92
06/19 $412.34 $72,749.26
07/19 $412.34 $73,161.60
08/19 $412.34 $73,573.94
09/19 $412.34 $73,986.28
10/19 $412.34 $74,398.62
11/19 $412.34 $74,810.96
12/19 $412.34 $75,223.30
01/20 $412.34 $75,635.64
02/20 $284.08 $26,935.66 $48,984.06
03/20 $284.08 $49,268.14
04/20 $284.08 $49,552.22
05/20 $284.08 $49,836.30
06/20 $284.08 $50,120.38
07/20 $284.08 $50,404.46
</TABLE>
<PAGE> 22
25-Apr-95
Kenneth Heal
Supplemental Benefit Agreement
<TABLE>
<CAPTION>
Annual Monthly 7.O% Annual
Base Base Contribution Contribution 0.5654% Benefit Account
Month Salary Salary % Amount Interest Amount Balance
<S> <C> <C> <C> <C> <C> <C> <C>
08/20 $284.08 $50,688.54
09/20 $284.08 $50,972.62
10/20 $284.08 $51,256.70
11/20 $284.08 $51,540.78
12/20 $284.08 $51,824.86
01/21 $284.08 $52,108.94
02/21 $146.84 $26,935,66 $25,320.12
03/21 $146.84 $25,466.96
04/21 $146.84 $25,613.80
05/21 $146.84 $25,760.64
06/21 $146.84 $25,907.48
07/21 $146.84 $26,054.32
08/21 $146.84 $26,201.16
09/21 $146.84 $26,348.00
10/21 $146.84 $26,494.84
11/21 $146.84 $26,641.68
12/21 $146.84 $26,788.52
01/22 $146.84 $26,935.36
02/22 $0.00 $26,935.66 ($0.30)
</TABLE>
