<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
<TABLE>
<S> <C>
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
- ------- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
- ------- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5530
</TABLE>
ALLIED PRODUCTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 38-0292230
--------- -----------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
-------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (312) 454-1020
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of Each Class Name of Each Exchange on Which Registered
--------------------- ------------------------------------------
COMMON STOCK--$.01 PAR VALUE NEW YORK AND PACIFIC
</TABLE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
_X_
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes _X_ No ___
As of February 28, 1995, 9,104,482 shares of common stock, 146,800 shares of
Series B Variable Rate Cumulative Preferred Stock and 115,000 shares of $10.81
Series C Cumulative Preferred Stock were outstanding, and the aggregate market
value of the shares of common stock (based upon the closing price on the New
York Stock Exchange) and of the Preferred Stock (based upon such stock's stated
value) held by nonaffiliates of the Company was approximately $146,446,865.
Determination of common stock ownership by affiliates was made solely for the
purpose of responding to this requirement, and the Registrant is not bound by
this determination for any other purpose.
The Company's definitive Proxy Statement (which will be filed at a later date)
for the Annual Meeting of Stockholders scheduled to be held May 17, 1995 and
Annual Report to security holders for the year ended December 31, 1994 are
incorporated by reference in Part III and Part IV herein.
The Exhibit Index is located on page 43.
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<PAGE>
PART I
ITEM 1. BUSINESS
Allied Products Corporation (Company) was organized under Delaware law in
1967 as the successor to a Michigan corporation which was formed in 1928. Its
principal executive offices are at 10 South Riverside Plaza, Chicago, Illinois
60606 and its telephone number is (312) 454-1020.
The Company's operations involve a single industry segment, the
manufacturing and sale of agricultural and industrial machinery and other
products.
The operations of the Company were realigned into one business segment in
1993 reflecting the sale or closure of several operating divisions. This
restructuring of the Company, which began in 1991, was completed in 1994 with
the sale of the Cooper division. Reference is made to Note 3 of Notes to
Consolidated Financial Statements for a more complete description of these
closures and dispositions.
Approximately 2%, 8% and 6% of the Company's net sales from continuing
operations in 1994, 1993 and 1992, respectively, were exported.
PRODUCT LINES
FARM IMPLEMENTS--
PRODUCTS. The Bush Hog division offers a comprehensive line of farm
implements including rotary cutters, tractor mounted loaders, hay mowers, peanut
combines, tillers and cultivators. These products are marketed under two well
established brand names, Bush Hog and Lilliston.
Bush Hog rotary cutters are used to shred stalks after the crop has been
harvested, to mow pasture, for land maintenance and for governmental
right-of-way mowing. The use season for rotary cutters extends from early spring
to late fall, and even beyond in warmer climates. Bush Hog has a major market
share (35%) of rotary cutters sold in North America.
Front end loaders are used by farmers and ranchers for material handling,
and cultivators are used for weed control after crops have been planted.
Lilliston peanut combines are used in harvesting peanuts, and command
approximately 30% of the market. The use season for peanut combines is from late
summer to late fall.
Several other implements are sold under the Bush Hog name, including disc
mowers, rotary tillers, post hole diggers, flail mowers and rear mounted tractor
blades. These tools offer a variety of applications, and are sold to farmers,
ranchers, landscape contractors, large estate owners and municipalities.
Implements tend to have a shorter life than tractors and self-propelled
grain combines and purchases of implements are less likely to be deferred in
times of economic uncertainty, somewhat dampening cyclical swings in demand.
Parts accounted for almost one sixth of Bush Hog's total revenue in 1994.
In order to maintain and expand its market position, Bush Hog continually
updates and improves its product offerings. This is done through a combination
of internal development and external acquisition of technology.
MARKETING. Bush Hog implements are marketed through approximately 2,650
farm equipment dealers which play the primary role in sales of farm equipment.
In general, they are independent, local businessmen who have an established
local clientele developed over the years and represent more than 35% of the
total farm equipment dealerships in the United States and Canada. The Bush Hog
and Lilliston brand names are particularly strong in the southeastern and
southwestern states.
Marketing and sales activities in Canada and the United States are carried
out by 58 commissioned manufacturers' representatives or representative
organizations who operate as independent contractors and who, for the most part,
are exclusive. Commissions are payable when receivables are collected rather
than when sales are made.
To even out the seasonal variations in its production cycles, Bush Hog
provides incentives for off-season purchases, including extended payment terms
to dealers in the form of floor plan financing. Bush Hog retains a security
interest in this floor plan equipment. Under certain state and provincial
statutes, a dealer may return floor plan equipment to a manufacturer upon
termination of his relationship.
Bush Hog services its network of dealers through two manufacturing
facilities and eight service parts distribution centers, strategically located
in the United States and Canada.
COMPETITION. Competition for farm equipment includes the major line
manufacturers of tractors and several hundred companies producing one or more
models of shortline implements. Price, quality, service and availability are all
factors in brand selection. Bush Hog's objective is to be a low cost producer of
high quality products. To do this it must continue to modernize its facilities
to improve efficiency.
2
<PAGE>
INDUSTRY. The agricultural equipment industry in North America is a mature
industry engaged in producing replacement equipment for a declining number of
farmers. It is dominated by a small number of major line manufacturers, which
market a full range of farm machinery, including tractors, grain combines and
various implements through their own dealer organizations and account for
approximately 60% of the dollar volume of industry shipments. The remaining 40%
of the market is shared by approximately 700 companies which generally
concentrate their production on shortline implements such as plows, harrows,
cultivators, livestock equipment, grain handling equipment or hay equipment.
During the 1980's, the farm economy was in decline and this led to a
deterioration in farmers' financial condition. Capital expenditures by farmers
reached a low in 1986. Since then, commodity exports have improved due to
changes in governmental programs and foreign exchange rates. Individual farmers
have reduced their debt load and are much less leveraged after several years of
good earnings.
The year 1994 was a record year for corn, soybean and cotton production.
Accordingly, net farm income is estimated to have increased by $4 billion. Farm
land prices have improved, and farm debt is at a historically low level.
Future prospects of the industry depend largely on factors outside of
industry participants' control. These include the value of the U.S. dollar, the
relative level of interest rates between countries, the variations in the world
demand for supplies of farm commodities and U.S. government agricultural,
foreign and fiscal policies. A new government farm bill is to be enacted in
1995. It is too early to ascertain the impact this bill will have on existing
farm subsidy programs, and therefore on the farmers' income and spending.
METAL FORMING PRESSES--
PRODUCTS. The Verson division manufactures a broad line of both medium and
large technologically advanced mechanical and hydraulic metal forming presses.
These products are used in the manufacture of components for the automotive,
appliance, office equipment, farm equipment, ordnance, aerospace and general
metal working industries. A transfer press is a specialized mechanical press
which combines a series of operations by transferring a work piece from one
station to another inside of a single press. Each station in the press has a
separate die which is individually adjustable. This process allows all
operations from blank to finished product to take place in one press, resulting
in increased output and reduced labor expense. Prices vary by type and size; a
large transfer press may sell for in excess of $25 million.
Approximately one fifth of Verson's revenue is generated by customer special
services. Items included in the special services area are: repair parts,
complete remanufacturing capability for used presses, and contract machining and
manufacturing. In addition to the fabrication and machining of components,
Verson provides complete tooling and engineering services necessary for turnkey
systems. Verson also designs and supplies tools for metal forming, including
metal stamping and cold extrusion.
MARKETING. Verson's Marketing Group is headed by a Vice President of
Marketing and Sales, with responsibility for all Verson products and services.
Three Sales Managers, reporting to the Vice President, are responsible for press
sales, tooling sales, and press rebuilding and contract services, respectively.
Verson's major customers are the U.S. automobile manufacturers (both U.S.
and Japanese owned) and first and second tier automotive parts producing
companies, which, on average, account for about one-half Verson's annual
revenue. Verson's other major market served is the appliance industry and
customers include all major brand names.
Verson is the technology leader, having designed the world's first transfer
press in 1939, the world's first electronic feed in 1981 and, most recently, a
cross bar feed which significantly improves production.
COMPETITION. There are only a few companies world-wide that supply large
transfer press systems similar to those provided by Verson. Verson is now the
only American owned company competing in this upper end segment. Principal
competition comes from German and Japanese manufacturers. Press manufacturers
compete on the basis of technology, capability, reliability and price. The
larger presses are huge pieces of machinery standing over three stories tall and
weighing up to 2,000 tons. Consequently, the barriers to entry for new
competitors are almost impossible due to required capital.
INDUSTRY. Domestic automobile manufacturers are seeking to become more
cost-effective by requiring quality parts, implementing Just-In-Time concepts,
obtaining price reductions from suppliers, as well as redesigning cost out of
automobiles, and restructuring and automating their manufacturing processes.
Demand from the appliance industry remains strong as the major manufacturers
seek to increase capacity, reduce costs and gear up to produce water conserving
clothes washers.
3
<PAGE>
The Verson division of Allied Products is in a strong position to capitalize
on major retooling and modernization programs as they come on stream. The second
wave of this demand is being felt now with major suppliers to the automakers
converting to new technology. Demand from the appliance industry continues to
grow, more than offsetting declines in aerospace and ordnance. In response to
these market factors and an unprecedented incoming order rate in 1994, the
Verson division has begun a 40,000 square foot expansion of its assembly
facilities. This expansion will come on stream in the second quarter of 1995,
significantly expanding the division's capacity for manufacturing large transfer
presses.
THERMOPLASTIC RESINS--
PRODUCTS AND SERVICES. The Coz division provides a complete line of
thermoplastic resins and related services to the plastic molding and extrusion
industry. Coz offers a full line of materials supply to include specialty
thermoplastic compounds and compounding services, color and additive
concentrates, the reprocessing of scrap thermoplastic resins, and the brokering
of prime and secondary materials.
Coz purchases unmodified thermoplastic resins from major basic resin
suppliers and combines or alloys these resins with various additives to achieve
certain desired properties such as color, heat resistance, fire retardancy, etc.
The resins Coz purchases are generally in the form of small plastic pellets as
are the finished products supplied by Coz to its customers.
Coz's brokerage operation provides its customers with prime and
off-specification materials at competitive prices in large or small quantities
as required. Substantial on-site inventories facilitate short delivery cycles.
As an additional service to its customers, Coz also reprocesses scrap generated
in molding or extrusion activities, thereby economically turning scrap into
useful materials.
MARKETING. All sales are handled on a direct basis by salaried employees
who receive a significant part of their compensation from commissions. The sales
staff is strongly supported by technical personnel, both in product development
and in customer start-ups, applications, or training. Plant-to-plant visits and
technical conferences are commonplace. The bulk of Coz's sales activity is in
the northeastern United States.
COMPETITION. Coz's competition comes from several different levels in the
plastics industry, including basic resin producers, plastic distributors,
brokers, concentrate suppliers and independent thermoplastic compounders.
Coz differentiates itself from its competition by covering all aspects of
plastics material supply to include compounding, color and additives
concentrates, toll processing customers' materials, reprocessing scrap
materials, and brokering both prime and off-spec materials.
Over its thirty-five year business life, Coz has developed significant
technical capabilities supported by excellent laboratory and production
equipment which results in Coz being positioned as a high end co-developer for
special customer applications.
INDUSTRY. The thermoplastic compounding industry sales approximate $5
billion and are experiencing real growth at a rate of about 5 per cent annually.
Independent compounders such as Coz are numerous and generally focus on a
relatively small geographic area. Industry consolidation is occurring as some
larger companies have been attracted to the growth opportunities in
thermoplastic compounding.
SALES BACKLOG
Sales backlog from continuing operations as of December 31, 1994 was
$176,403,000 compared to $68,722,000 at December 31, 1993. The difference is
attributable to a large press order at the Verson division for which production
has yet to begin at the end of 1994. Approximately $55,000,000 of the sales
backlog at December 31, 1994 related to this large press order will be produced
in 1996. The remaining backlog of orders will be filled in 1995.
EMPLOYEES
Allied Products currently employs approximately 1,600 individuals.
Approximately 24% of Allied Products' employees are represented by unions.
RAW MATERIALS AND SOURCES OF SUPPLY
The principal raw material used by the farm implement and metal press
operations include steel and other metals and purchased components. The
thermoplastic division uses thermoplastics resins and other chemicals. During
1994, the materials needed by Allied Products have generally been available from
a variety of sources in adequate quantities and at prevailing market prices. No
one supplier is responsible for supplying more than 10% of the principal raw
materials used by Allied Products.
PATENTS, TRADEMARKS AND LICENSES
Allied Products owns the federally registered trademarks "Bush Hog" and
"Lilliston" used on its agricultural equipment products and "Verson" on its
metal forming presses, all of which it considers material to its business. While
Allied Products believes that the other
4
<PAGE>
trademarks used by each of its operations are important, none of the patents,
licenses, franchises or such other trademarks are considered material to the
operation of its business.
MAJOR CUSTOMERS
Net sales from continuing operations to the three major U.S. automobile
manufacturers accounted for approximately 14% of total consolidated sales from
continuing operations in 1994. Approximately 25% and 24% of Allied Products'
consolidated net sales from continuing operations in 1993 and 1992,
respectively, were derived from sales to the major U.S. automobile
manufacturers. With the exception of the three major automobile manufacturers,
no material part of Allied Products' business is dependent upon a single
customer.
SEASONALITY
Retail sales of and cash collected for farm equipment tend to occur during
or just preceding the use seasons previously described. Sales and cash receipts
for the other divisions are not effected by seasonality.
ENVIRONMENTAL FACTORS
Reference is made to Note 11 of Notes to Consolidated Financial Statements
regarding environmental factors and matters.
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages of the Company's Executive
Officers, together with all positions and offices held with the Company by such
officers as of February 28, 1995.
<TABLE>
<CAPTION>
NAME POSITION WITH ALLIED PRODUCTS AGE
- --------------------------------------------- ----------------------------------------------------------------- ---
<S> <C> <C>
Richard A. Drexler........................... Chairman, President and Chief Executive Officer 47
James J. Hayden*............................. Executive Vice President and Chief Financial Officer 59
Kenneth B. Light............................. Executive Vice President, Chief Administrative Officer and
Secretary 62
Martin A. German............................. Senior Vice President 58
Bobby M. Middlebrooks........................ Senior Vice President 59
Robert J. Fleck.............................. Vice President-Accounting and Chief Accounting Officer 47
Patrick J. Riley............................. Vice President and Treasurer 59
</TABLE>
No family relationships exist among the executive officers.
Each executive officer, except Messrs. Hayden and German, has been employed
by Allied Products for over ten years. Pursuant to Allied Products' By-laws,
each officer is elected annually by the Board of Directors.
Mr. Drexler, who became Chairman in 1993, has been President and a Director
of Allied Products since 1982, has been Chief Executive Officer since 1986 and
was Acting Chief Financial Officer from 1991 to 1992, Chief Financial Officer
from 1989 to 1990 and Chief Operating Officer from 1981 to 1986. He was also
Chief Financial Officer from 1977 to 1987. Prior to becoming President, Mr.
Drexler served as Executive Vice President, Senior Vice President of
Administration, Vice President of Administration, Staff Vice
President-Development, and Director of Planning.
Mr. Hayden has been Executive Vice President and Chief Financial Officer
since 1993 and was Senior Vice President and Chief Financial Officer from 1992
to 1993. He was Executive Vice President and Chief Financial Officer from 1987
to 1989, at which time he left to pursue private interests. Prior to joining
Allied Products in 1987, he was President of Rexnord Automation, a subsidiary of
Rexnord Inc., since 1983. He became a Director of Allied Products in 1993.
Mr. Light has been Executive Vice President and Chief Administrative Officer
since 1982 and has also served as Secretary since 1972. From 1980 to 1982, he
was Senior Vice President-Administration, from 1976 to 1980 he was Vice
President-General Counsel and prior to that he was General Counsel and Director
of the Corporate Law Department. He became a Director of Allied Products in
1993.
Mr. German was elected Senior Vice President in 1991 and was Vice President
from 1989 to 1991. Since joining Allied Products in 1986, he has been President
of the Verson Allsteel Press division. Prior to joining Allied Products, he was
Vice President and General Manager of the Turning Division of Warner & Swasey
Company.
Mr. Middlebrooks has been Senior Vice President since 1985 and was Vice
President of Allied Products from 1984 to 1985 in charge of the former
Agricultural Equipment Group. Prior to that, he was President-Bush Hog
Implements Division. He joined Bush Hog in 1955.
Mr. Fleck has been Vice President-Accounting since 1985 and Chief Accounting
Officer since 1986. From 1983 to 1985 he was Staff Vice President-Accounting and
prior to that he served as Corporate Controller and in various other accounting
positions for Allied Products. Prior to joining Allied Products in 1974, he was
an internal auditor with Marquette Cement Company, a national cement
manufacturing company.
Mr. Riley has been Vice President & Treasurer since 1993. Prior to that he
has been Treasurer of Allied Products since 1976. Prior to that he was Assistant
Treasurer and Director of Cash Management of Allied Products since 1969.
- ------------------------
* Mr. Hayden resigned on March 17, 1995.
6
<PAGE>
ITEM 2. PROPERTIES
Allied Products owns or leases four manufacturing facilities in three states
for the production of its various products and maintains warehouse facilities in
various locations throughout the United States and Canada.
Management is of the opinion that all facilities are of sound construction,
in good operating condition and are adequately equipped for carrying on the
business of the Company.
Operations at the Bush Hog division are conducted in Selma, Alabama in two
owned (one of which is mortgaged) facilities containing approximately 700,000
square feet in total. The division also maintains several leased facilities in
various states and Canada which are used as warehouses and parts depots.
Operations at the Verson division are conducted in Chicago, Illinois in an owned
facility containing approximately 350,000 square feet. Operations at the Coz
division are conducted in Northbridge, Massachusetts in a leased facility
containing approximately 231,000 square feet.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to Note 11 of Notes to Consolidated Financial Statements
with respect to the Company's involvement in legal proceedings as a defending
party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
7
<PAGE>
PART II
ITEM 5. MARKET PRICE OF THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock is listed on the New York and Pacific Stock
Exchanges. The price range of the common stock on the New York Stock Exchange is
as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
BEGINNING END OF
1994 OF YEAR YEAR 1994 QTR HIGH LOW DIVIDEND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common $12 1/2 $14 3/8 1 $17 3/8 $12 5/8 $--
- -----------------------------------------------------------------------------------------------------
2 15 12 1/4 --
- -----------------------------------------------------------------------------------------------------
3 14 7/8 12 1/2 --
- -----------------------------------------------------------------------------------------------------
4 15 1/8 12 --
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------
BEGINNING END OF
1993 OF YEAR YEAR 1993 QTR HIGH LOW DIVIDEND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common $ 3 $12 1/2 1 $ 8 1/4 $ 2 3/4 $--
- -----------------------------------------------------------------------------------------------------
2 15 7/8 7 1/4 --
- -----------------------------------------------------------------------------------------------------
3 15 1/8 9 1/2 --
- -----------------------------------------------------------------------------------------------------
4 13 3/8 10 1/4 --
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</TABLE>
As of February 10, 1995, the approximate number of holders of record of the
Company's common stock ($.01 par value) was 2,600.
The Company has paid no dividend since fiscal year 1982. At December 31,
1994, the Company was restricted from paying dividends on its common stock.
Reference is made to Note 5 of Notes to Consolidated Financial Statements
regarding the lifting of this restriction subsequent to the end of 1994.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---------------- ------------ ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales from continuing operations (A).......... $215,529,000 $217,988,000 $195,341,000 $159,023,000 $172,506,000
Income (loss) from continuing operations (A)...... $ 19,687,000 $ 5,951,000 $ 1,774,000(B) $ (4,500,000) $ (9,763,000)
Earnings (loss) per common share from continuing
operations (A).................................. $1.96 $.43 $(.08)(B) $(1.12) $(2.43)
Total assets...................................... $150,555,000 $192,040,000 $284,612,000 $326,702,000 $439,526,000
Long-term debt (including capitalized leases and
redeemable preferred stock)..................... $ 12,130,000 $ 23,522,000 $117,833,000 $ 37,799,000 $ 53,750,000
Cash dividend declared per common share........... $-- $-- $-- $-- $--
<FN>
- ------------------------
(A) Restated prior to 1993 to reflect the effects of discontinued operations.
(B) Excludes a charge of $1,739,000 ($.21 per common share) relating to the
transition effect of adopting SFAS No. 106--Employers' Accounting for
Postretirement Benefits Other Than Pensions--on an immediate recognition
basis.
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of this summary.
8
<PAGE>
ITEM 7: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
OPERATING RESULTS
Reference is made to Note 3 of Notes to Consolidated Financial Statements
regarding the sale/shutdown and restructuring of operations from 1992 through
the end of 1994.
During 1993, the Company sold the Smith Energy Services and White-New Idea
Farm Equipment divisions for cash. The Company also closed down and liquidated
the R/B Die & Prototype, International Agro, Kewanee Farm Equipment and Charles
City Foundry and Machining operations during 1993. During the second quarter of
1994, the Company sold the business and certain assets of the Cooper division.
The Company has included the results of these operations and, in years prior to
1994, an allocation of financing costs, administrative and interest expenses and
related restructuring cost provisions under the caption "Discontinued operations
(net of tax)--Income (loss) from operations" in the accompanying Consolidated
Statements of Income (Loss).
1994 COMPARED TO 1993
Net sales from continuing operations in 1994 were $215,529,000 compared to
net sales from continuing operations of $217,988,000 for the prior year. Income
from continuing operations in 1994 was $19,687,000 compared to income from
continuing operations of $5,951,000 reported in 1993. Net income in 1994 was
$14,333,000 compared to net income of $15,284,000 reported in 1993.
Net sales at the Bush Hog division increased by over 11% in 1994 compared to
1993. The most significant increases in net sales have occurred within the
loader and disc mower product lines in 1994. In general, the agricultural
equipment industry has experienced improvement over the prior year due to a
number of factors. The year of 1994 was a record year for corn, soybean and
cotton production. Planted acreage has also increased in 1994 over 1993 levels.
The most significant increase in net sales at the Bush Hog division was within
the loader product line. The overall market for the front end loaders has
increased this past year. The division manufactures adaptor kits so that loaders
can be mounted on more than 1200 different tractor models. The division expects
this growth to continue on into 1995. Disc mower and parts sales have also
increased in 1994. These increases were partially offset by decreased rotary
cutter sales. This decrease was primarily related to the effects of lower cattle
prices. Gross profits and gross profit margins have improved in 1994 at the Bush
Hog division. Approximately 60% of the increase in gross profits was directly
related to the increased sales volume as discussed above. The effects of sales
price increases during 1994 resulted in improved margins and increased gross
profits. On an overall basis, manufacturing variances increased slightly in
1994. Increases in direct manufacturing inefficiencies (resulting from increased
facility utilization and late receipt of purchased components) were mostly
offset by the effects of manufacturing cost reductions and decreased warranty
claims in 1994.
At the Verson division, net sales decreased by approximately 17% in 1994
compared to 1993. In late 1991, the division had received a large press order.
During 1993, production was completed on this order. Orders for production in
1994 to replace the work completed did not materialize in sufficient amounts.
During the last half of 1994 and the early part of 1995, the division has
received a significant amount of new press orders, including orders for three
"A" size transfer presses with a sales value of approximately $80,000,000. These
new orders should result in increased productivity and improved profitability in
1995 and 1996. While gross profits remained approximately equal to those of the
prior year, gross profit margins have improved in 1994. The increase was the
result of several factors, including improved margins on parts sales (prices
were increased in the early part of 1994), improved mix of products sold and
lower warranty expenses.
Net sales at the Coz division increased by approximately 6% in 1994 compared
to 1993. Processed compounds represent the largest product line increase due to
expansion of the customer base and increased selling prices. Gross profits at
the Coz division increased, due primarily to the effect of increased selling
prices and, to a lesser extent, the mix of products sold. Partially offsetting
this increase was the effect of increased material costs in 1994. Prices of
certain raw materials have increased significantly during the past year. Selling
prices were increased to offset these cost increases. While prices continued to
escalate in the early part of 1995, such increases were not as significant as
those in 1994. The division will increase selling prices where practical to
offset the effect of cost increases. The ultimate net impact of future
cost/selling price increases is not expected to have a material impact on the
operating results of this division. Shipping costs have also increased in 1994
due to the effects of increased sales volume and increased shipping container
costs. Utility expenses increased in 1994 due to additional space being leased
for offices with the old office space now being utilized for manufacturing
purposes. Gross profit margins remained constant in 1994 compared to 1993.
9
<PAGE>
Selling and administrative expenses decreased to $31,072,000 (14.4% of net
sales from continuing operations) from $31,427,000 (also 14.4% of net sales from
continuing operations) in 1993. On an overall basis, selling expenses increased
in 1994 compared to 1993. The most significant increase was related to
commissions, primarily at the Bush Hog division where sales have increased in
1994. The Coz division increased the employment level of its sales force in 1994
resulting in increased costs. These increases were offset by lower commission
expenses at the Verson division as this operation is phasing out the use of
commissioned brokers in the sale of presses. The increase in selling expenses
was more than offset by lower administrative expenses, primarily in the areas of
professional fees and insurance costs. Office related costs were also reduced
with the relocation of the Corporate Office during 1994. Staffing levels were
reduced from 1993 levels. These decreases were partially offset by a provision
of $450,000 as a supplemental contribution to the SMART pension plan, a $400,000
provision for the new Executive Retirement Plan and other normal increases
experienced in operations throughout the Company.
The decrease in interest expense ($1,859,000 for 1994 compared to $6,376,000
in 1993 after an allocation to discontinued operations) was directly related to
a significantly reduced borrowing level and the effects of lower average
interest rates associated with outstanding debt in 1994.
Other expense in 1994 was $1,198,000 compared to $4,614,000 in 1993.
Reference is made to Note 13 of Notes to Consolidated Financial Statements for
an analysis of other (income) expense in 1994 and 1993.
Loss from discontinued operations totaled $5,354,000 in 1994. Approximately
half of the loss was related to the operating results of the Cooper division
which was sold at the end of the second quarter following the termination of a
proposed sale earlier in the year. Other significant items included
environmental related issues (see Note 11 of Notes to Consolidated Financial
Statements) and insurance costs associated with discontinued operations, and the
final settlement of the disposition of the White-New Idea operation (see Note 3
of Notes to Consolidated Financial Statements). Reference is made to the 1993
management discussion below for an analysis of discontinued operation in 1993.
1993 COMPARED TO 1992
Net sales from continuing operations in 1993 were $217,988,000 compared to
net sales from continuing operations of $195,341,000 in 1992. Net sales at all
continuing operations in 1993 increased over levels reported in 1992. Income
from continuing operations in 1993 was $5,951,000 compared to income from
continuing operations of $1,774,000 in the previous year.
At the Bush Hog division, net sales increased by over 10% in 1993 over 1992.
Despite the significant flooding in the late spring and early summer months in
the midwest and summer drought in the southeast portion of the country, the Bush
Hog division did not feel any long-term negative impact and, in some product
lines, experienced increased sales volume due to the wetter than normal weather
conditions. The majority of the increase in net sales was associated with
increased unit sales within the cutter and loader product lines. Service parts
sales also increased with the addition of the Kewanee Farm Equipment service
parts. These increases were partially offset by the effect of lower peanut
combine sales in 1993. Unit sales decreased due to a larger than anticipated
carryover of dealer stock from the prior year. Production was reduced in
relation to this product in 1993. Gross profits and gross profit margins
improved at the Bush Hog division in 1993 compared to 1992. The increase in
gross profits was primarily related to the effects of increased sales volume in
1993 as discussed above. The increase in gross profit margins was primarily
associated with increased efficiencies and facility utilization in 1993. The
division was operating at very close to 100% capacity in 1993 and continued to
produce at this capacity level in 1994.
At the Verson division, net sales increased by almost 14% in 1993 over that
reported in 1992. During 1993, the division completed production on a large
press order received in the latter portion of 1991. The division also benefitted
from the large carryover of orders received in 1992 on which production was
completed in 1993. In addition, the rebuild press market has provided additional
opportunities for the Verson division in 1993. Receipt of new orders in 1993
remained strong. While gross profits at the Verson division in 1993 increased,
due primarily to increased sales volume as discussed above, gross profit margins
decreased slightly. This decrease related to the mix of products sold in 1993
compared to that of the prior year.
At the Coz division, net sales increased by almost 13% in 1993 compared to
net sales of 1992. The increase was related primarily to increased volume of
shipments and, to a lesser degree, mix of products sold. Gross profits
increased, principally due to the increase in sales volume. Gross profit margins
also improved slightly due to increased facility utilization in 1993.
Selling and administrative expenses increased in 1993 to $31,427,000 (14.4%
of net sales from continuing operations) from $31,117,000 (15.9% of net sales
from
10
<PAGE>
continuing operation). All manufacturing operations experienced slight increases
in these expenses in 1993, with most of the increases related to normal cost
changes in salaries and other employee related costs (fringe benefits, etc.).
These increases were partially offset by decreases in administrative costs at
the Corporate Office. These decreases were primarily represented by lower
professional fees and bank costs, most of which related to costs incurred in
1992 associated with the restructuring of the Company's finances in January 1993
as described in Note 5 of Notes to Consolidated Financial Statements. Other
costs savings at the Corporate Office included the elimination of the
centralized Management Information Systems operation during the third quarter of
1993.
Interest expense decreased to $6,376,000 in 1993 from $6,864,000 reported in
1992. These interest expense balances are net of amounts ($4,450,000 in 1993 and
$7,558,000 in 1992) allocated to "Discontinued operations--Income (loss) from
operations" based upon the proportionate share of invested capital of
discontinued operations to total consolidated invested capital. The overall
cause of the decrease in interest expense relates primarily to decreased debt
levels and, to a lesser extent, lower interest rates in 1993. The majority of
the cash generated from operations either shut down or sold in 1993 was used to
reduce outstanding debt, primarily under the amended and restated credit and
debt restructuring agreement entered into during the first quarter of 1993.
Other expense in 1993 was $4,614,000 compared to other expense of $3,494,000
in 1992. Reference is made to Note 13 of Notes to Consolidated Financial
Statements for an analysis of other (income) expense in 1993 and 1992.
In 1993, the Company made a provision of $700,000 for additional
restructuring costs, all of which was charged to "Discontinued
operations--Income (loss) from operations." In 1992, the Company made a
provision of $7,800,000 for restructuring costs as previously disclosed. Of this
amount, $7,044,000 was charged to "Discontinued operations--Income (loss) from
operations." The remaining balance in 1992 was associated with provisions for
elimination of the centralized MIS operation at the Corporate Office and the
consolidation of the Kewanee service parts operation into Bush Hog.
Income from discontinued operations in 1993 totaled $11,385,000 compared to
a loss from discontinued operations of $24,989,000 in 1992. Operating income
related to discontinued operations increased by over $19,000,000 (before
allocation of the provision for restructuring costs, financing costs and
administrative and interest expense) due primarily to improved results at the
White-New Idea and Charles City divisions in 1993. Production levels were
significantly reduced 1992 in order to reduce the Company's investment in
receivables at the White-New Idea division. Increased production in 1993 as well
as the effect of cost reduction measures implemented, resulted in an increase of
over $12,500,000 in operating income. At the Charles City division, operating
income related to discontinued operations increased by over $3,000,000 (before
allocation of costs described above) in 1993. In the early part of 1993, the
Company announced the closing of the operation. Upon notification of the
closure, customers ordered more than normal quantities of products from the
division to bridge their manufacturing needs until another source of product
could be identified, resulting in above normal sales and production at this
division in 1993. Interest expense allocated to discontinued operations in 1993
was $4,450,000 in 1993 compared to $7,558,000 in the prior year. The
restructuring reserve charged to discontinued operations ($700,000 in 1993,
$7,044,000 in 1992 and $6,200,000 in 1991) included provisions for 1993
operating losses subsequent to the respective closure of the operations for
which the reserve was set up. Operating losses charged to the reserve in 1993
totaled approximately $4,600,000. The gain on disposition of discontinued
operations in 1993 represents the gain (net of related expenses) associated with
the disposition of the White-New Idea division in the last quarter of 1993. The
gain on disposition of discontinued operations in 1992 was principally related
to the reversal of a reserve established in 1991 for the estimated loss on the
anticipated sale of the remaining receivables related to the tractor business.
The anticipated sale and loss did not take place; instead, the receivables were
collected without significant loss. Reference is made to Note 5 of Notes to
Consolidated Financial Statements relating to the $2,052,000 extraordinary loss
on the early extinguishment of debt in 1993.
FINANCIAL CONDITION
1994
The working capital at December 31, 1994 was $33,531,000 and the current
ratio was 1.53 to 1.0. Net accounts receivables increased by almost $2,000,000
in 1994. The majority of the increase was related to the Bush Hog division where
sales have increased in 1994 as noted above. Cash collections associated with
this division are generally dependant upon the retail sales of the product by
the dealer. Extended payment terms are offered in the form of floor plan
financing which is customary within the agricultural equipment industry. Coz
division receivables have also increased at the end of 1994. This increase was
primarily associated with strong sales in the fourth quarter of 1994.
Receivables at the end of 1994 also include a short-term secured note
11
<PAGE>
taken by the Company as part of the proceeds from the sale of the Cooper
division. This note was paid in full subsequent to the end of 1994. These
increases were partially offset by the effects of lower press shipments at the
Verson division in 1994 and the effects of the disposition of the Cooper
division.
On a consolidated basis, inventories have increased by approximately
$3,700,000 at the end of 1994 compared to the end of 1993. The majority of the
increase was related to the Bush Hog division. Production was increased in the
fourth quarter of 1994 to avoid capacity limitations in the first half of 1995.
Production is expected to increase at this division due to increased orders. Coz
inventory levels have also increased due to increased orders and the effects of
increased material prices. These increases were partially offset by the effects
of the sale of the Cooper division and lower net inventory levels at the Verson
division due to the effects of increased customer deposits for jobs in progress.
Fixed Asset additions of $7,072,000 were financed primarily through
internally generated funds.
The increase in payables and borrowings under the revolving credit agreement
at the end of 1994 reflects the effects of increased production at all operating
divisions of the Company. References is made to Note 2 of Notes to Consolidated
Financial Statements for an analysis of accrued expenses.
1993
The working capital at December 31, 1993 was $31,664,000 and the current
ratio was 1.31 to 1.0. Net accounts receivables decreased by over $56,000,000 in
1993. Of that amount, approximately $29,000,000 was associated with the sale of
the White-New Idea division in December 1993 and approximately $27,000,000 was
associated with the winding down of other discontinued operations during 1993.
There were no other significant changes in receivable levels during 1993.
Inventories decreased by over $52,000,000 since the end of 1992. Approximately
half of the decrease was related to the sale of the White-New Idea division
discussed above. An additional reduction of over $8,000,000 was associated with
the wind down of other discontinued operations. The Bush Hog division reduced
their net inventory levels by over $3,000,000 in 1993 due to improved purchasing
and manufacturing management and the effects of increased sales volume.
Inventories also decreased significantly at the Verson division. At the end of
1992, a large press order was in process. By the end of 1993, most of this order
was shipped to the customer.
The decrease in Other Assets reflects the collection of notes taken in
exchange for fixed assets and operation dispositions in prior years and the
amortization of deferred charges (goodwill). Fixed asset additions of $8,128,000
were financed primarily through internally generated funds.
Reduction in debt and accounts payable were primarily the result of funds
generated from the sale of businesses (Smith Energy Services and White-New Idea)
and the liquidation of assets (primarily receivables and inventories) associated
with other discontinued operations. During 1993, the Company had made an
additional provision of $700,000 to the restructuring reserve. In addition,
amounts totaling $9,515,000 were charged against the reserve. Charges included
operating results subsequent to the date of shutdown or disposition,
losses/gains on the disposition of assets associated with these operations,
severance costs and expenses associated with the moving of inventory and fixed
assets from discontinued operations to continuing operations. At December 31,
1993, the Company had a remaining reserve of $5,097,000 for additional future
costs associated with certain discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
At the end of 1993, the Company sold for cash substantially all of the
assets and liabilities of the White-New Idea Farm Equipment division. Proceeds
from the disposition were used to pay all amounts due under a restrictive credit
agreement which had, for the past four years, seriously hampered the Company's
ability to take actions that the Company believed were advisable and in the
interests of shareholders. The sale of the Cooper division in 1994 marks the
successful completion of the Company's operations divestiture program.
During the first quarter of 1994, the Company terminated separate debt
financing agreements at the Bush Hog, Verson and Coz divisions through the
completion of a new Revolving Credit Agreement. This agreement was
collateralized principally by the Company's receivables and inventories. Prior
to the end of 1994, this collateral was released by the banks as the Company
attained specified financial results in the first nine months of 1994. Reference
is made to Note 5 of Notes to Consolidated Financial Statements regarding a
further description of this financial arrangement. All amounts borrowed in March
1994 under this agreement were repaid prior to the end of the third quarter
through the internal generation of funds from operations and the sale of idle
facilities. In December, the Company drew down additional amounts ($10,300,000)
to fund seasonal manufacturing requirements. Additional repayments will come
from internally generated funds. Subsequent to the end of 1994, the Company
entered
12
<PAGE>
into an amendment to this agreement which reduced the borrowing rate and
provided greater flexibility within the financial operations of the Company.
Subsequent to the end of 1994, the Company announced that its Verson
division received an order for several large transfer presses. Production has
begun on this order. Funds necessary to complete this project will come from
several sources including borrowing against the above noted revolving credit
agreement, internally generated funds and deposits and progress payments from
the customer. Delivery of these presses will take place in 1996.
In order to complete this order and to increase plant efficiencies, the
Verson division also announced an expansion of its operations. The expansion
will include an additional 40,000 square feet of manufacturing space plus a
specialized facility for both subassembly and final assembly of presses. The
buildings should be ready for occupancy by the end of the second quarter of
1995. This expansion will result in this division having the greatest capacity
for transfer press manufacturing in North America. Funding for this project
(total cost, including necessary cranes and tooling, of approximately
$8,000,000) will primarily be internally generated.
The Bush Hog division is also in the process of upgrading its manufacturing
operations. The major improvement includes the purchase of a new cleaning/
painting/assembly system in the first half of 1995. The new system will result
in improved finished product quality and reduced costs. Funding for this project
(total cost approximately $3,200,000) will primarily be internally generated
with some temporary borrowings against the current revolving credit agreement.
Effective January 29, 1993, the Company entered into agreements with holders
of the Series B and Series C Preferred Stock pursuant to which the Company
agreed to pay cash and subordinated notes for the past due redemption of Series
B Preferred Stock as well as scheduled dividends and redemptions from January 2,
1993 to January 2, 1995. Subordinated notes issued to the preferred stockholders
provided for quarterly payments of interest in cash. During 1994, all amounts
due under the subordinated notes issued to the holders of the Series B and C
Preferred Stock were paid in cash.
The Company's failure to pay when due the October 2, 1992 dividend on its
Series C Cumulative Preferred Stock constituted a default in the payment of a
dividend pursuant to the Series C Preferred Stock Certificate of Designation. If
the Company defaults in the payment of two additional quarterly dividends or any
mandatory redemption, the Series C Preferred Stockholders shall have the right
to convert the Series C Preferred Stock into shares of common stock at a ratio
determined by reference to the lowest market price of the Company's Common Stock
during the calendar quarter preceding the date of such default.
As of December 31, 1994, the Company had cash balances of $1,654,000 and
additional funds of $24,700,000 available under its revolving credit agreement.
The Company believes that its expected operating cash flow and funds available
under its revolving credit agreement are adequate to finance its operations and
capital expenditures in the near future. During 1994, the Company has been in
compliance with all provisions of loan agreements in effect.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Allied Products Corporation
We have audited the consolidated balance sheets of Allied Products
Corporation and consolidated subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of income (loss), shareholders' investment
and cash flows for each of the three years in the period ended December 31,
1994. We have also audited the financial statement schedules listed in Part IV
of Form 10-K, Item 14(a)2 for each of the three years in the period ended
December 31, 1994. These financial statements and financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Allied Products
Corporation and consolidated subsidiaries as of December 31, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
As discussed in Note 1, the Company changed its method of accounting for
postretirement benefits other than pensions in 1992.
COOPERS & LYBRAND L. L. P.
Chicago, Illinois
February 24, 1995, except for Note 11, as
to which the date is March 10, 1995
14
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1994 1993 1992
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net sales from continuing operations........................ $ 215,529,000 $ 217,988,000 $ 195,341,000
Cost of products sold....................................... 160,836,000 169,184,000 151,336,000
---------------- ---------------- ----------------
Gross profit.............................................. $ 54,693,000 $ 48,804,000 $ 44,005,000
---------------- ---------------- ----------------
Other costs and expenses:
Selling and administrative expenses....................... $ 31,072,000 $ 31,427,000 $ 31,117,000
Interest expense.......................................... 1,859,000 6,376,000 6,864,000
Other (income) expense, net............................... 1,198,000 4,614,000 3,494,000
Provision for restructuring costs......................... -- -- 756,000
---------------- ---------------- ----------------
$ 34,129,000 $ 42,417,000 $ 42,231,000
---------------- ---------------- ----------------
Income before taxes from continuing operations before
extraordinary charge and change in accounting principle... $ 20,564,000 $ 6,387,000 $ 1,774,000
Provision for income taxes.................................. 877,000 436,000 --
---------------- ---------------- ----------------
Income from continuing operations before extraordinary
charge and change in accounting principle................. $ 19,687,000 $ 5,951,000 $ 1,774,000
---------------- ---------------- ----------------
Discontinued operations (net of tax):
Income (loss) from operations............................. $ -- $ 5,847,000 $ (25,814,000)
Gain (loss) on disposition of discontinued operations and
other costs.............................................. (5,354,000) 5,538,000 825,000
---------------- ---------------- ----------------
Income (loss) from discontinued operations................ $ (5,354,000) $ 11,385,000 $ (24,989,000)
---------------- ---------------- ----------------
Income (loss) before extraordinary charge and change in
accounting principle...................................... $ 14,333,000 $ 17,336,000 $ (23,215,000)
Extraordinary loss on early extinguishment of debt, less
applicable income tax benefit............................. -- (2,052,000) --
---------------- ---------------- ----------------
Income (loss) before change in accounting principle......... $ 14,333,000 $ 15,284,000 $ (23,215,000)
Effect of change in accounting principle.................... -- -- (1,739,000)
---------------- ---------------- ----------------
Net income (loss)........................................... $ 14,333,000 $ 15,284,000 $ (24,954,000)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net income (loss) applicable to common stock................ $ 12,440,000 $ 13,211,000 $ (27,356,000)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Earnings (loss) per common share:
Continuing operations..................................... $1.96 $ .43 $ (.08)
Discontinued operations................................... (.59) 1.27 (3.03)
Extraordinary loss........................................ -- (.23) --
Effect of change in accounting principle.................. -- -- (.21)
----- ----- -----
Income (loss) per common share............................ $1.37 $1.47 $(3.32)
----- ----- -----
----- ----- -----
Average number of common shares outstanding................. 9,102,000 8,999,000 8,247,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
15
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................................ $ 1,654,000 $ 44,416,000
---------------- ----------------
Notes and accounts receivable, less allowances of $1,521,000 and
$1,996,000, respectively................................................ $ 46,267,000 $ 44,415,000
---------------- ----------------
Inventories:
Raw materials.......................................................... $ 11,556,000 $ 9,407,000
Work in process........................................................ 16,437,000 18,161,000
Finished goods......................................................... 20,462,000 17,156,000
---------------- ----------------
$ 48,455,000 $ 44,724,000
---------------- ----------------
Prepaid expenses......................................................... $ 456,000 $ 1,915,000
---------------- ----------------
Total current assets................................................. $ 96,832,000 $ 135,470,000
---------------- ----------------
Plant and Equipment, at cost:
Land..................................................................... $ 2,311,000 $ 2,454,000
Buildings and improvements............................................... 34,252,000 34,573,000
Machinery and equipment.................................................. 40,126,000 37,946,000
---------------- ----------------
$ 76,689,000 $ 74,973,000
Less--Accumulated depreciation and amortization.......................... 46,128,000 43,923,000
---------------- ----------------
$ 30,561,000 $ 31,050,000
---------------- ----------------
Other Assets:
Notes receivable, due after one year..................................... $ 7,658,000 $ 8,465,000
Deferred charges (goodwill), net of amortization......................... 14,626,000 16,693,000
Other.................................................................... 878,000 362,000
---------------- ----------------
$ 23,162,000 $ 25,520,000
---------------- ----------------
$ 150,555,000 $ 192,040,000
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
16
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
Current Liabilities:
Revolving credit agreement............................................... $ 10,300,000 $ --
Revolving loan........................................................... -- 4,382,000
Current portion of long-term debt........................................ 689,000 39,343,000
Accounts payable......................................................... 20,475,000 13,957,000
Accrued expenses......................................................... 31,837,000 46,124,000
---------------- ----------------
Total current liabilities...................................... $ 63,301,000 $ 103,806,000
---------------- ----------------
Long-term debt, less current portion shown above........................... $ 630,000 $ 10,622,000
---------------- ----------------
Other long-term liabilities................................................ $ 2,622,000 $ 2,701,000
---------------- ----------------
Redeemable preferred stock: $10.81 Series C Cumulative Preferred Stock;
stated value $100 per share, authorized 150,000 shares; issued and
outstanding 115,000 and 129,000 shares at December 31, 1994 and 1993,
respectively.............................................................. $ 11,500,000 $ 12,900,000
---------------- ----------------
Commitments and Contingencies
Shareholders' Investment:
Preferred stock:
Series B Variable Rate Cumulative Preferred Stock, stated value $50 per
share; authorized 350,000 shares; issued and outstanding 146,800 and
180,800 shares at December 31, 1994 and 1993, respectively............ $ 7,340,000 $ 9,040,000
Undesignated--authorized 1,500,000 shares at December 31, 1994 and
1993; none issued..................................................... -- --
Common stock, par value $.01 per share; authorized 25,000,000 shares;
issued 9,104,482 and 9,089,748 shares at December 31, 1994 and 1993,
respectively............................................................ 91,000 91,000
Additional paid-in capital............................................... 92,146,000 92,395,000
Retained earnings (deficit).............................................. (27,075,000) (39,515,000)
---------------- ----------------
$ 72,502,000 $ 62,011,000
---------------- ----------------
$ 150,555,000 $ 192,040,000
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
17
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1994 1993 1992
-------------- ---------------- --------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)........................................................ $ 14,333,000 $ 15,284,000 $ (24,954,000)
Adjustments to reconcile net income (loss) to net cash provided from
(used for) operating activities:
Income on disposition of discontinued operations....................... (50,000) (5,538,000) (825,000)
Extraordinary loss on early extinguishment of debt..................... -- 2,052,000 --
Effect of provision for restructuring costs............................ -- 700,000 7,800,000
Effect of change in accounting principle............................... -- -- 1,739,000
Depreciation and amortization.......................................... 5,159,000 7,402,000 11,020,000
Amortization of deferred charges and (credits), net.................... 2,067,000 (216,000) (216,000)
Amortization of noncash deferred loan costs............................ -- -- 1,657,000
Changes in noncash assets and liabilities, net of effects of
assets/businesses sold and noncash transactions:
(Increase) decrease in accounts receivable........................... (100,000) 29,581,000 26,411,000
(Increase) decrease in inventories................................... (5,596,000) 22,034,000 (4,739,000)
Decrease in prepaid expenses......................................... 1,459,000 784,000 919,000
Decrease in notes receivable, due after one year..................... 807,000 997,000 3,788,000
Decrease in accounts payable and accrued expenses.................... (8,490,000) (5,219,000) (12,280,000)
Other, net............................................................. (645,000) (107,000) 1,763,000
-------------- ---------------- --------------
Net cash provided from operating activities.............................. $ 8,944,000 $ 67,754,000 $ 12,083,000
-------------- ---------------- --------------
Cash Flows from Investing Activities:
Additions to plant and equipment......................................... $ (6,957,000) $ (7,741,000) $ (3,856,000)
Proceeds from sales of plant and equipment............................... 2,452,000 8,311,000 611,000
Proceeds from sales of assets/businesses................................. 343,000 62,834,000 2,098,000
-------------- ---------------- --------------
Net cash provided from (used for) investing activities................... $ (4,162,000) $ 63,404,000 $ (1,147,000)
-------------- ---------------- --------------
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt................................ $ -- $ 33,348,000 $ 7,975,000
Borrowings under the revolving loan agreements........................... 29,246,000 145,081,000 26,559,000
Payments under the revolving loan agreements............................. (48,508,000) (129,777,000) (22,945,000)
Borrowings under revolving credit agreement.............................. 52,100,000 -- --
Payments under revolving credit agreement................................ (41,800,000) -- --
Payments of short and long-term debt..................................... (33,881,000) (139,769,000) (24,637,000)
Payment of preferred stock redemptions and dividends..................... (4,993,000) (1,782,000) --
Stock option transactions................................................ 292,000 711,000 --
-------------- ---------------- --------------
Net cash used for financing activities................................... $ (47,544,000) $ (92,188,000) $ (13,048,000)
-------------- ---------------- --------------
Net increase (decrease) in cash and cash equivalents....................... $ (42,762,000) $ 38,970,000 $ (2,112,000)
Cash and cash equivalents at beginning of year............................. 44,416,000 5,446,000 7,558,000
-------------- ---------------- --------------
Cash and cash equivalents at end of year................................... $ 1,654,000 $ 44,416,000 $ 5,446,000
-------------- ---------------- --------------
-------------- ---------------- --------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
18
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1994 1993 1992
------------- -------------- --------------
<C> <S> <C> <C> <C>
Supplemental Information:
(A) Noncash investing and financing activities:
1. Assets acquired through the assumption of
debt................................................. $ 115,000 $ 387,000 $ 333,000
------------- -------------- --------------
------------- -------------- --------------
2. Series B Preferred stock dividends paid/payable through
the issuance of common stock......................... $ -- $ 398,000 $ 596,000
------------- -------------- --------------
------------- -------------- --------------
3. Series B Preferred stock redemptions ($3,200,000) and
dividends ($666,000) paid through the issuance of
subordinated debt, net of $722,000 cash paid......... $ -- $ 3,144,000 $ --
------------- -------------- --------------
------------- -------------- --------------
4. Series C Preferred stock dividends paid/payable through
the issuance of common stock......................... $ -- $ 405,000 $ 1,216,000
------------- -------------- --------------
------------- -------------- --------------
5. Series C Preferred stock redemptions ($2,100,000) and
dividends ($1,527,000) paid through the issuance of
subordinated debt, net of $1,060,000 cash paid....... $ -- $ 2,567,000 $ --
------------- -------------- --------------
------------- -------------- --------------
6. Interest expense paid through the issuance of
subordinated debt.................................... $ -- $ 161,000 $ --
------------- -------------- --------------
------------- -------------- --------------
7. Debt payments through use of funds held by trustee..... $ -- $ -- $ 437,000
------------- -------------- --------------
------------- -------------- --------------
8. Debt assumed by purchasers of businesses
sold................................................. $ -- $ 760,000 $ --
------------- -------------- --------------
------------- -------------- --------------
9. Proceeds (primarily notes receivable) received from the
sales of discontinued operations..................... $ 2,011,000 $ 100,000 $ 900,000
------------- -------------- --------------
------------- -------------- --------------
10. Deferred financing costs paid through the issuance of
common stock......................................... $ -- $ -- $ 1,657,000
------------- -------------- --------------
------------- -------------- --------------
11. Common stock issued in lieu of salary and other
miscellaneous liabilities............................ $ -- $ -- $ 74,000
------------- -------------- --------------
------------- -------------- --------------
(B) Interest paid during year.............................. $ 2,657,000 $ 10,311,000 $ 14,368,000
------------- -------------- --------------
------------- -------------- --------------
(C) Income/franchise taxes paid during year, net of
refunds.............................................. $ 522,000 $ 812,000 $ 778,000
------------- -------------- --------------
------------- -------------- --------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
19
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
PREFERRED AND COMMON STOCK
<TABLE>
<CAPTION>
SERIES B
PREFERRED ($50 COMMON ($.01
STATED VALUE PAR VALUE
PER SHARE) PER SHARE)
--------------- ---------------
<S> <C> <C>
Balance at December 31, 1991................................................. $ 12,240,000 $ 74,000
Issuance of 165,011 common shares for payment of Series B preferred
dividends................................................................. -- 2,000
Issuance of 422,999 common shares for payment of Series C preferred
dividends................................................................. -- 4,000
Issuance of 570,686 common shares for payment of deferred financing
costs..................................................................... -- 6,000
Issuance of 19,200 common shares in connection with the Company's incentive
stock and bonus plan...................................................... -- --
Issuance of 3,728 common shares for payment to the Company's SMART plan.... -- --
--------------- ---------------
Balance at December 31, 1992................................................. $ 12,240,000 $ 86,000
Redemption of 64,000 Series B preferred shares through the issuance of
subordinated notes and cash............................................... (3,200,000) --
Issuance of 127,296 common shares for payment of Series B preferred
dividends................................................................. -- 1,000
Issuance of 202,688 common shares for payment of Series C preferred
dividends................................................................. -- 2,000
Issuance of 133,515 common shares in connection with the exercises of stock
options................................................................... -- 2,000
--------------- ---------------
Balance at December 31, 1993................................................. $ 9,040,000 $ 91,000
Redemption of 34,000 Series B preferred shares............................. (1,700,000) --
Issuance of 14,734 common shares in connection with the exercises of stock
options................................................................... -- --
--------------- ---------------
Balance at December 31, 1994................................................. $ 7,340,000 $ 91,000
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
20
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
ADDITIONAL PAID-IN CAPITAL AND RETAINED EARNINGS (DEFICIT)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
PAID-IN EARNINGS
CAPITAL (DEFICIT)
-------------- ---------------
<S> <C> <C>
Balance at December 31, 1991.................................................................. $ 87,574,000 $ (25,355,000)
Net loss for the year....................................................................... -- (24,954,000)
Preferred dividends paid/declared:
Series B through the issuance of 165,011 common shares (variable based on prime
rate--$.8125 per share).................................................................. 442,000 (198,000)
Series B declared payable in January 1993--$1.625 per share............................... -- (398,000)
Series C through the issuance of 422,999 common shares--$5.405 per share.................. 1,212,000 (811,000)
Series C declared payable in January 1993--$2.7025 per share.............................. -- (405,000)
Issuance of 570,686 common shares for payment of deferred financing costs................... 1,651,000 --
Issuance of 19,200 common shares in connection with the Company's incentive stock and bonus
plan....................................................................................... 60,000 --
Issuance of 3,728 common shares for payment to the Company's SMART plan..................... 14,000 --
Excess of cost ($33,000) over fair market value of 4,571 common shares purchased and
reissued in connection with the Company's incentive stock plan............................. (23,000) --
-------------- ---------------
Balance at December 31, 1992.................................................................. $ 90,930,000 $ (52,121,000)
Net income for the year..................................................................... -- 15,284,000
Preferred dividends paid/declared:
Series B paid through the issuance of 127,296 common shares (variable based on prime
rate--$1.625 per share).................................................................. 397,000 --
Series B paid through the issuance of subordinated notes and cash (variable based on prime
rate--$3.00 per share)................................................................... -- (666,000)
Series B declared payable in January 1994--$.75 per share................................. -- (136,000)
Series C paid through the issuance of 202,688 common shares--$2.7025 per share............ 403,000 --
Series C paid through the issuance of subordinated notes and cash--$10.81 per share....... -- (1,527,000)
Series C declared payable in January 1994--$2.7025 per share.............................. -- (349,000)
Excess of proceeds received over cost for common shares purchased and reissued
in connection with the exercise of stock options to purchase 17,710 common shares.......... 22,000 --
Issuance of 133,515 common shares in connection with exercises of stock
options.................................................................................... 643,000 --
-------------- ---------------
Balance at December 31, 1993.................................................................. $ 92,395,000 $ (39,515,000)
Net income for the year..................................................................... -- 14,333,000
Preferred dividends declared and paid:
Series B (variable based on prime rate--$3.375 per share)................................. -- (574,000)
Series C--$10.81 per share................................................................ -- (1,319,000)
Excess of cost ($843,000) over fair market value of 59,979 common shares purchased and
reissued in connection with the Company's incentive stock plan............................. (375,000) --
Issuance of 14,734 common shares in connection with the exercises of stock
options.................................................................................... 126,000 --
-------------- ---------------
Balance at December 31, 1994.................................................................. $ 92,146,000 $ (27,075,000)
-------------- ---------------
-------------- ---------------
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
21
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ACCOUNTING CHANGES--
Effective January 1, 1992, the Company implemented on an immediate
recognition basis Statement of Financial Accounting Standards (SFAS) No.
106--Employers' Accounting for Postretirement Benefits Other Than Pensions. The
transition effect of adopting SFAS No. 106 on the immediate recognition basis,
as of the above noted date, resulted in a charge of $1,739,000 ($.21 per common
share) to 1992 operating results and is reflected in the accompanying
Consolidated Statements of Income (Loss) as "Effect of change in accounting
principle."
PRINCIPLES OF CONSOLIDATION--
The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. All significant intercompany items and
transactions have been eliminated.
REVENUE RECOGNITION--
Sales of agricultural equipment and service parts at the Bush Hog division
are recorded when they are shipped to independent dealers in accordance with
industry practices. Provisions for sales incentives and other sales related
expenses are made at the time of the sale. Revenues and profits are recognized
on a percentage of completion basis for major contracts at the Verson division.
ACCOUNTS RECEIVABLE--
Agricultural equipment current accounts receivables are net of provisions
for sales incentive programs and returns and allowances. Extended payment terms
(up to one year) are offered to dealers in the form of floor plan financing
which is customary within the industry. Agricultural equipment receivables (with
the exception of receivables associated with service parts and original
equipment manufacturing--OEM--arrangements) are generally not collected until
the dealer sells the related piece of equipment to a retail customer. The
Company maintains a security interest in the equipment related to such
receivables to minimize the risk of loss.
INVENTORIES--
The basis of all of the Company's inventories is determined by using the
lower of FIFO cost or market method.
Included in work in process inventory are accumulated costs ($11,055,000 at
December 31, 1994 and $15,397,000 at December 31, 1993) associated with
contracts under which the Company recognizes revenue on a percentage of
completion basis. These balances include unbilled actual production costs
incurred plus a measure of profit recognized in relation to the sales recorded,
less customer payments ($11,672,000 at December 31, 1994 and $7,750,000 at
December 31, 1993) associated with the work in process inventory. A significant
portion of the work in process inventory will be completed, shipped and invoiced
prior to the end of the following year.
PLANT AND EQUIPMENT--
Expenditures for the maintenance and repair of plant and equipment are
charged to expense as incurred. Expenditures for major replacement or betterment
are capitalized. The cost and related accumulated depreciation of plant and
equipment replaced, retired or otherwise disposed of is removed from the
accounts and any gain or loss is reflected in earnings.
DEPRECIATION--
Depreciation of the original cost of plant and equipment is charged to
expense over the estimated useful lives of such assets calculated under the
straight-line method. Estimated useful lives are 20 to 40 years for buildings
and improvements and 3 to 12 years for machinery and equipment.
22
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEFERRED CHARGES (GOODWILL)--
Deferred charges (goodwill) are amortized on a straight line basis over
periods of 10 to 20 years. The Company assesses at each balance sheet date
whether there has been a permanent impairment in the value of goodwill. Such
assessment includes obsolescence, demand, new technology, competition and other
pertinent economic factors and trends that may have an impact on the value of
remaining useful life of goodwill.
EARNINGS (LOSS) PER COMMON SHARE--
Earnings (loss) per common share is based on the average number of common
shares outstanding (9,102,000, 8,999,000 and 8,247,000 for the years ended
December 31, 1994, 1993 and 1992, respectively) after decreasing net income or
increasing the net loss for preferred dividend requirements ($1,893,000,
$2,073,000 and $2,402,000 for the years ended December 1994, 1993 and 1992,
respectively). The assumed exercise of stock options would not result in a
material dilution for the years ended December 31, 1994 and 1993, and would not
result in dilution for the year ended December 31, 1992.
INCOME TAXES--
Effective January 1, 1993, the Company implemented on an immediate
recognition basis SFAS No. 109--Accounting for Income Taxes. Under the
provisions of SFAS No. 109, the Company applies an asset and liability approach
to accounting for income taxes. Deferred tax assets and liabilities are
established for the expected future tax consequenses of temporary differences
between the financial statement and tax bases of assets and liabilities, using
tax rates in effect for the year in which the differences are expected to
reverse. A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized, including
deferred tax assets attributed to net operating loss carryforwards.
The adoption of SFAS No. 109 did not have an effect on 1993 financial
statements. Prior to 1993, the Company accounted for income taxes under SFAS No.
96.
STATEMENT OF CASH FLOWS--
For purpose of the Consolidated Statements of Cash Flows, the Company
considers investments with original maturities of three months or less to be
cash equivalents.
FINANCIAL INSTRUMENTS--
The fair value of cash and cash equivalents is assumed to approximate the
carrying value of these assets due to the short maturity of these instruments.
The fair value of the Company's debt, current and long-term, is estimated to
approximate the carrying value of these liabilities based upon borrowing rates
currently available to the Company for borrowings with similar terms. The fair
value of the Series B and C Preferred Stocks is estimated to approximate the
carrying value of these securities based upon the redemption features within the
Certificate of Designation on each series of preferred stock.
23
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. ACCRUED EXPENSES:
The Company's accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Salaries and wages.......................................................... $ 4,678,000 $ 7,051,000
Warranty.................................................................... 5,817,000 9,658,000
Self insurance accruals..................................................... 6,522,000 9,096,000
Restructuring and other costs, primarily related to discontinued
operations................................................................. 3,373,000 7,900,000
Pensions, including retirees' health........................................ 4,985,000 3,712,000
Taxes, other than income taxes.............................................. 1,288,000 1,742,000
Environmental matters....................................................... 3,045,000 2,245,000
Other....................................................................... 2,129,000 4,720,000
-------------- --------------
$ 31,837,000 $ 46,124,000
-------------- --------------
-------------- --------------
</TABLE>
Reclassification of certain amounts among accrued expenses was made during
1994. The reclassification resulted in a restatement of 1993 amounts in the
above table.
3. ACQUISITIONS AND DISPOSITIONS:
ACQUISITIONS--
Amortization of deferred charges (goodwill) associated with the 1986
acquisition of Lilliston, a part of the Bush Hog division, (approximately
$8,900,000 with a ten year amortization period) and the 1986 acquisition of
Verson (approximately $23,491,000 with a twenty year amortization period) was
$2,067,000 for each of the years ended December 31, 1994, 1993 and 1992, and is
included in "Other (income) expense, net" in the accompanying Consolidated
Statements of Income (Loss).
DISPOSITIONS--
During 1992, the Company announced the closing of manufacturing operations
at the Kewanee Farm Equipment division and the Charles City machining and
foundry division. Production was discontinued at these operations during 1993.
During 1993, the Company discontinued manufacturing operations at the R/B Die
and Prototype division. All machinery and equipment associated with these
operations were sold for cash during 1993. Also during 1993, the Company sold
for cash the majority of the assets of the Smith Energy Services division. The
resulting gains (approximately $1,400,000) from these asset dispositions were
credited to the restructuring reserve as discussed below. The Company's
International Agro division was also closed during 1993. At the end of 1993, the
Company sold for cash substantially all of the assets and liabilities of the
White-New Idea Farm Equipment division. Real estate used in connection with this
business, specifically, plants located in Coldwater, Ohio and Kewanee, Illinois,
is being leased by the Company to the purchaser of the business. In connection
with the sale of the White-New Idea division, the purchaser was required to
purchase the real estate pending a favorable review of environmental matters at
each location. The Company has completed a preliminary evaluation of the status
of environmental conditions at the Coldwater, Ohio facility. Reference is made
to Note 11 regarding the results of this evaluation. Subsequent to the end of
1994, the Company and the purchaser of the White-New Idea division agreed in
principle to a five year lease of the Coldwater, Ohio facility while the Company
resolves certain environmental issues. Sale of the facility to the purchaser of
the White-New Idea division is to be completed upon the resolution of the
environmental issues. The Company will retain ownership of the Kewanee, Illinois
facility under this agreement. During 1994, the Company provided additional
amounts under discontinued operations (based upon an independent review) for the
environmental clean up of both facilities. The Company also sold the business
and certain assets of the Cooper division for cash and a collateralized
short-term note. In 1994, discontinued operations include
24
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
operating losses at the Cooper division related to the delayed sale of this
business and additional provisions primarily related to environmental issues and
a dispute resolution on a business sold in 1993, net of an income tax benefit
allocation of $211,000. During 1993 and 1992, the Company also included an
allocation of financing costs and administrative and interest expense (the
latter based upon these operations' proportionate share of consolidated invested
capital) and related restructuring cost provisions (as discussed below) under
this same caption.
Summarized operating results of discontinued operations are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1993 1992
---------------- ----------------
<S> <C> <C>
Net sales................................................................ $ 152,592,000 $ 144,305,000
---------------- ----------------
---------------- ----------------
Operating income (loss).................................................. $ 11,851,000 $ (8,131,000)
Provision for restructuring costs........................................ (700,000) (7,044,000)
Finance costs, administrative and interest expense allocation............ (5,304,000) (10,639,000)
---------------- ----------------
Income (loss) from operations............................................ $ 5,847,000 $ (25,814,000)
---------------- ----------------
---------------- ----------------
</TABLE>
Gain on disposition of discontinued operations in 1992 was principally
related to the reversal of a reserve established in 1991 for the estimated loss
on the anticipated sale of the remaining receivables related to the tractor
business. The anticipated sale and estimated loss did not take place. Instead,
the receivables were collected without significant loss.
RESTRUCTURING COSTS--
During 1991, the Company provided $6,200,000 for the impact of an
operational restructuring plan designed to reduce operating losses by closing,
consolidating or scaling back certain operations. During 1992 and 1993, an
additional $7,800,000 and $700,000, respectively, was provided for additional
restructuring costs. The restructuring of operations called for several
significant changes within various operations of the Company.
The changes included the closing of manufacturing operations at the Kewanee
Farm Equipment division, the phase out of the operation at the Charles City,
Iowa machining and foundry division (production was completed in the third
quarter of 1993), the phase out of the manufacturing operations at the R/B Die
and Prototype division (production was completed in the second quarter of 1993)
and the sale of the Smith Energy Services division. The provision for
restructuring for these operations included non-recurring, non-operating costs
subsequent to the completion of production, including severance and other
employee benefits, costs associated with the relocation of machinery and
equipment from Charles City to other facilities, costs associated with
preparation for the auctions and other facility related costs into 1995.
In addition, the Company phased out its centralized Management Information
Services operation at the Corporate Office in 1993. The reserve for
restructuring includes a provision for severance and other employee related
expenses and the estimated costs of the termination of lease agreements for the
MIS facility and hardware/software.
During 1994, approximately $2,000,000 (primarily related to accruals for
environmental issues at discontinued operations) was reclassified from other
accrued expense classifications to the restructuring reserve. Net charges to the
restructuring reserve in 1994, 1993 and 1992 were $3,931,000, $9,515,000 and
$88,000, respectively.
As of December 31, 1994, the accompanying consolidated balance sheet
includes real estate with a net book value of $4,434,000 which is held for sale
including $2,403,000 related to real estate under lease to the purchaser of the
White-New Idea division discussed above.
25
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. INCOME TAXES:
Provision for income taxes in 1994 and 1993 consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993
----------- -----------
<S> <C> <C>
Federal (current)................................................................. $ 422,000 $ 514,000
State (current)................................................................... 244,000 232,000
----------- -----------
Total provision................................................................. $ 666,000 $ 746,000
----------- -----------
----------- -----------
</TABLE>
The Company recorded no benefit for income taxes in 1992 as the Company had
no tax loss carrybacks available to reduce the pre-tax loss of that year.
Allocation of the provision for income taxes in the 1994 and 1993
Consolidated Statements of Income (Loss) include the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993
----------- ------------
<S> <C> <C>
Continuing operations............................................................ $ 877,000 $ 436,000
Discontinued operations-income (loss) from operations............................ -- 182,000
Discontinued operations-gain (loss) on disposition of discontinued operations and
other costs..................................................................... (211,000) 200,000
Extraordinary loss on early extinguishment of debt............................... -- (72,000)
----------- ------------
Total provision................................................................ $ 666,000 $ 746,000
----------- ------------
----------- ------------
</TABLE>
The provision for income taxes in 1994 and 1993 differs from amounts
computed by applying the statutory rate to pre-tax income as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Income tax at statutory rate................................................. $ 5,250,000 $ 5,450,000
Utilization of net operating loss carryforwards.............................. (5,547,000) (4,972,000)
State income tax, net of federal tax benefit................................. 159,000 153,000
Permanent book over tax, net of tax over book, differences on acquired
assets...................................................................... 910,000 108,000
Other, net................................................................... (106,000) 7,000
-------------- --------------
Total provision............................................................ $ 666,000 $ 746,000
-------------- --------------
-------------- --------------
</TABLE>
26
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The significant components of deferred tax assets and liabilities were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
Deferred tax assets:
Net operating loss and investment tax credits carryforwards........... $ 87,546,000 $ 92,319,000
Self insurance accruals............................................... 2,941,000 3,731,000
Inventories........................................................... 2,636,000 2,983,000
Sale/leaseback transaction............................................ 3,730,000 3,629,000
Restructuring reserves................................................ 1,316,000 1,998,000
Employee benefits, including pensions................................. 4,150,000 3,759,000
Warranty.............................................................. 2,269,000 3,337,000
Sales allowances...................................................... 2,000,000 1,588,000
Environmental matters................................................. 1,120,000 876,000
Other................................................................. 900,000 212,000
---------------- ----------------
Total deferred tax asset............................................ $ 108,608,000 $ 114,432,000
---------------- ----------------
Deferred tax liabilities:
Depreciation.......................................................... $ 3,510,000 $ 4,044,000
Other................................................................. -- 366,000
---------------- ----------------
Total deferred tax liabilities...................................... $ 3,510,000 $ 4,410,000
---------------- ----------------
Net deferred tax asset before valuation allowance................... $ 105,098,000 $ 110,022,000
Valuation allowance................................................. (105,098,000) (110,022,000)
---------------- ----------------
Net deferred tax asset.............................................. $ -- $ --
---------------- ----------------
---------------- ----------------
</TABLE>
The valuation allowance is associated primarily with net operating loss
carryforwards. Such valuation allowance has been provided based on the inherent
uncertainty of predicting the taxable income necessary to realize net deferred
tax assets considering the Company's recent loss history and the cyclical nature
of the businesses in which the Company operates. At December 31, 1994, the
Company has available net operating loss carryforwards of up to $242,403,000 (of
which $160,384,000 results from various acquisitions) which expire between 1996
and 2008 and investment tax credit carryforwards of $2,704,000 (which expire
between 1995 and 2004) including up to $496,000 resulting from acquisitions.
Tax returns for the years subsequent to 1990 are potentially subject to
audit by the Internal Revenue Service.
27
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. FINANCIAL ARRANGEMENTS:
The Company's debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
SENIOR DEBT
Capitalized lease obligations, at interest rates from 7.3% to 12% (weighted average
of 8.7%), due in varying amounts through 1998 (Note 6)............................. $ 1,215 $ 7,090
Revolving credit agreement, interest at prime plus 2.0%............................. -- 14,883
Note payable with interest at prime plus 2.0%....................................... -- 10,000
Note payable with interest at prime plus 2.8%....................................... -- 10,000
Notes/mortgages payable at various interest rates................................... 104 392
--------- ---------
$ 1,319 $ 42,365
SUBORDINATED DEBT
Subordinated notes with interest at the prime rate plus 13%......................... -- 1,838
Subordinated notes with interest at 10.8%........................................... -- 3,062
Subordinated notes with interest at 13.5%........................................... -- 2,700
--------- ---------
$ 1,319 $ 49,965
Less current portion................................................................ 689 39,343
--------- ---------
$ 630 $ 10,622
--------- ---------
--------- ---------
</TABLE>
Scheduled maturities of the noncurrent poriton of long-term debt at December
31, 1994 are due as follows (in thousands of dollars):
<TABLE>
<CAPTION>
CAPITALIZED LEASE
OBLIGATION OTHER TOTAL
------------------ -------------- --------------
<S> <C> <C> <C>
1996....................................... $ 500 $ 54 $ 554
1997....................................... 70 -- 70
1998....................................... 6 -- 6
------------------ -------------- --------------
$ 576 $ 54 $ 630
------------------ -------------- --------------
------------------ -------------- --------------
</TABLE>
In March 1994, the Company terminated previous financing agreements through
the completion of a new Revolving Credit Agreement. The termination of these
agreements resulted in the payment of termination fees and the write-off of
unamortized loan costs related to these agreements. These amounts, net of a tax
benefit of $72,000, have been included in the accompanying Consolidated
Statement of Income (Loss) for 1993 under the caption "Extraordinary loss on
early extinguishment of debt, less applicable income tax benefit."
The new three year Revolving Credit Agreement with two banks provides for up
to $35,000,000 in working capital related loans and up to $15,000,000 in standby
letters of credit required for the Company's self-insurance programs and for
other commercial purposes, of which $10,300,000 has been borrowed and
approximately $13,000,000 of standby letters of credit are outstanding at
December 31, 1994. Interest is at prime rate or at other alternate variable
rates as provided within the agreement. This facility was collateralized
principally by the Company's receivables and inventories; however, all
collateral was released as the Company attained certain financial results for
the first nine months of 1994. The weighted average interest rate on borrowings
outstanding at December 31, 1994 was 8.5%. Under the Revolving Credit Agreement,
the Company must meet certain periodic financial tests, including minimum net
worth, minimum operating income, ratio of funded debt to operating income, and
ratio of operating income to interest expense.
28
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Subsequent to the end of 1994, the Company entered into an amendment of the
Revolving Credit Agreement. Under the terms of the amendment, interest rates
have been reduced. In addition, the amendment provides for an increase in
permitted capital expenditures for 1995 and allows the Company to accelerate
preferred stock redemptions, pay dividends on Common Stock, repurchase Common
Stock and permit limited acquisitions.
6. LEASES:
CAPITAL LEASES--
The Company conducts a portion of its business in leased facilities, one of
which is leased from a municipal agency under an Industrial Revenue Bond
arrangement. The Company also leases various types of manufacturing, office and
transportation equipment.
Capital leases included in Plant and Equipment in the accompanying balance
sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Land....................................................... $ 396 $ 605
Buildings and improvements................................. 2,013 4,806
Machinery and equipment.................................... 4,533 9,589
--------- ---------
$ 6,942 $ 15,000
Less--Accumulated amortization............................. 4,353 9,595
--------- ---------
$ 2,589 $ 5,405
--------- ---------
--------- ---------
</TABLE>
See Note 5 for information as to future debt payments relating to the above
leases.
OPERATING LEASES--
Rent expense for operating leases, which is charged against income, was as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Minimum rentals................................ $ 2,165 $ 4,062 $ 4,251
Contingent rentals............................. 657 1,084 916
--------- --------- ---------
$ 2,822 $ 5,146 $ 5,167
--------- --------- ---------
--------- --------- ---------
</TABLE>
Contingent rentals are composed primarily of truck fleet mileage charges for
actual usage. Some leases contain renewal and purchase options. The leases
generally provide that the Company pay taxes, maintenance, insurance and certain
other operating expenses.
29
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1994, future minimum rental payment commitments under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year are as follows:
<TABLE>
<CAPTION>
MINIMUM NET MINIMUM
ANNUAL SUBLEASE ANNUAL
RENTAL RENTAL RENTAL
PAYMENTS INCOME PAYMENTS
----------- ----------- -----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Year ending December 31,
1995.......................................... $ 1,549 $ (245) $ 1,304
1996.......................................... 1,535 (245) 1,290
1997.......................................... 1,456 (245) 1,211
1998.......................................... 1,420 (233) 1,187
1999.......................................... 1,131 (98) 1,033
Later......................................... 2,493 (197) 2,296
----------- ----------- -----------
$ 9,584 $ (1,263) $ 8,321
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
7. SERIES B PREFERRED STOCK:
The Company has 2,000,000 shares of authorized preferred stock.
Of this amount, 350,000 shares were designated as Series B Variable Rate
Cumulative Preferred Stock 146,800 and 180,800 shares of which were outstanding
at December 31, 1994 and 1993, respectively. The holder of the Series B
Preferred Stock is entitled to receive cumulative quarterly dividends at
variable rates, computed by multiplying $50 times 1/4 of the prime rate in
effect on the first day of the quarter preceding the dividend date. The shares
of Series B Preferred Stock are subject to redemption by the Company in whole or
in part at any time by payment of the price of $51.50 per share plus accrued and
unpaid dividends. The holder of the shares of Series B Preferred Stock shall be
entitled to a liquidation preference in the amount of $50 per share plus accrued
and unpaid cumulative dividends. Each share is entitled to one vote on all
corporate matters upon which shareholders of the Company are entitled to vote.
In addition, the affirmative vote of the holder of the Series B Preferred Stock
is required for certain corporate transactions.
In 1990, the Company entered into an agreement with the holder of the Series
B Preferred Stock to revise the original schedule of redemption. The redemption
amounts were payable in cash or, at the Company's option, in shares of the
Company's Common Stock. If paid in shares of the Company's Common Stock, the
value per share will be (1) its average closing price for the last ten or two
trading days prior to the rescheduled redemption date (whichever average price
is less), less (2) the lower of 10% of such average closing price or $1.00. In
1992, the holder of the Series B Preferred Stock agreed to extend the terms of
this agreement and the Company agreed to amend and restate the certificate of
designation of the Series B Preferred Stock to accelerate the scheduled
mandatory redemption. The terms of this agreement provide for the redemption of
the remaining outstanding shares as follows: semi-annual installments of 17,000
shares through November 30, 1998; and 10,800 shares on May 31, 1999. In 1993,
the Company entered into an agreement with the holder to pay cash and
subordinated notes for the past due redemption of the Series B Preferred Stock
scheduled for November 30, 1992, as well as all scheduled dividends and
redemptions from January 2, 1993 through January 2, 1995. This agreement was
terminated at the end of 1993. Series B Preferred Stock redemptions subsequent
to the end of 1993 may be satisfied through cash payments or, at the Company's
option, shares of Common Stock as described above using the revised redemption
schedule in the 1992 agreement described above. Future dividends will be paid in
cash. In January 1993, the Company issued 127,296 shares of Common Stock to the
holder of the Series B Preferred Stock in satisfaction of dividends declared
prior to December 31, 1992. During 1993, the Company also issued subordinated
notes ($3,144,000) and cash ($722,000) to satisfy redemptions of the Series B
Preferred
30
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock ($3,200,000) and dividends declared and paid ($666,000). Subordinated
notes outstanding at December 31, 1993 which were issued in connection with the
redemption of and dividends related to the Series B Preferred Stock were paid in
full during 1994.
Under the terms of the certificate of designation of the Series B Preferred
Stock, holders of such stock are entitled to elect two members to the Board of
Directors of the Company if the Company is in default of six full quarterly
dividends or two mandatory redemptions.
An additional 150,000 shares were designated in 1988 as Series C Cumulative
Preferred Stock (see Note 8). The remaining 1,500,000 shares of authorized
preferred stock are undesignated and unissued at December 31, 1994.
8. SERIES C PREFERRED STOCK:
The Company has 150,000 shares designated as Series C Cumulative Preferred
Stock, of which 115,000 and 129,000 shares were outstanding as of December 31,
1994 and 1993, respectively. Holders of the Series C Cumulative Preferred Stock
are entitled to receive cumulative quarterly dividends at the annual rate of
$10.81 per share and a liquidation preference in the amount of $100 per share
plus accrued and unpaid cumulative dividends. In 1992, the holders of the Series
C Cumulative Preferred Stock agreed to an amended redemption schedule. The
outstanding shares are redeemable as follows: 25,000 shares on October 2, 1995
and 30,000 shares in October of each year thereafter. Each share is entitled to
one vote on all corporate matters upon which shareholders of the Company are
entitled to vote. In addition, the affirmative vote of the holders of the
majority of the Series C Cumulative Preferred Stock, voting as a class, is
required for certain corporate transactions. During 1991, the Company obtained
an agreement with the holders that quarterly dividends through October 2, 1992
would be paid in shares of the Company's Common Stock.
In 1993, the Company entered into an agreement with the holders to pay cash
and subordinated notes for all scheduled dividends and redemptions from January
2, 1993 through January 2, 1995. This agreement was terminated at the end of
1993. Redemptions subsequent to the end of 1993, as well as dividends, will be
paid in cash. In January 1993, the Company issued 202,688 shares of Common Stock
to the holders of the Series C Cumulative Preferred Stock in satisfaction of
dividends declared prior to December 31, 1992. During 1993, the Company also
issued subordinated notes ($2,567,000) and cash ($1,060,000) to satisfy
redemptions of the Series C Cumulative Preferred Stock ($2,100,000) and
dividends declared and paid ($1,527,000). These notes were paid in full during
1994.
The Company's failure to pay when due the October 2, 1992 dividend
constituted a default in the payment of a dividend pursuant to the Series C
Cumulative Preferred Stock certificate of designation. If the Company defaults
in the payment of two additional quarterly dividends or any mandatory
redemption, the Series C Cumulative Preferred Stock holders shall have the right
to convert such shares into shares of common stock at a defined price based on
market prices at that time. In addition, under such circumstances holders of
such stock would be entitled to elect two members to the Board of Directors of
the Company.
9. COMMON STOCK AND OPTIONS:
The Company has an incentive stock plan (the 1977 plan) which authorizes
stock incentives for key employees in the form of stock awards, stock
appreciation rights and stock options. Options under the 1977 plan, which are
granted at fair market value at date of grant, are non-qualified options (not
"incentive stock options" as defined by the Internal Revenue Code). Options
currently outstanding under the 1977 plan become exercisable to the extent of
25% one year from date of grant and 25% in each of the next three years, and
expire ten years from the date of grant. There were no stock awards issued under
this plan in 1994, 1993 or 1992. No stock appreciation rights have been granted
to date under this plan. There are 160,799 options outstanding under this plan
at December 31, 1994 and are included in the table below.
31
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In 1990, the Company's Board of Directors approved a new incentive stock
plan, the 1990 Long Term Incentive Stock Plan (the 1990 plan) which authorizes
stock incentives for key employees in the form of stock awards and stock
options. The 1990 plan, as amended on March 1, 1993, authorizes the issuance of
up to 1,000,000 shares of the Company's Common Stock. Options under the 1990
plan, which are granted at fair market value at date of grant, may be granted as
either incentive stock options or non-statutory stock options. Options granted
become exercisable to the extent of 50% one year from date of grant and the
remaining 50% two years from date of grant. Since the inception of the 1990
plan, the Company issued options to purchase 762,250 shares of the Company's
Common Stock at prices between $1.50 and $12.50 per share. There are 523,550
options outstanding under this plan at December 31, 1994 and are included in the
table below.
In 1994, shareholders approved a new incentive plan, the 1993 Directors
Incentive Plan (the 1993 plan) which authorizes the issuance of stock options to
members of the Board of Directors who are not employees of the Company. Options
under the 1993 plan, which are granted at fair market value at date of grant,
are granted as non-statutory stock options. Options granted become exercisable
to the extent of 50% one year from date of grant and the remaining 50% two years
from date of grant. Since the inception of the 1993 plan, the Company issued
options to purchase 60,000 shares of the Company's Common Stock at $12.50 per
share. All options issued are outstanding under this plan at December 31, 1994
and are included in the table below.
Stock option transactions for 1993 and 1994 were as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING (SHARES)
---------------------------------------- AVERAGE OPTION
NOT PRICE AT DATE OF
EXERCISABLE EXERCISABLE TOTAL GRANT
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1992....................... 187,875 409,497 597,372 $ 8.90
Granted............................................ 103,000 -- 103,000 5.25
Became exercisable................................. (93,125) 93,125 -- 2.89
Exercised.......................................... -- (151,225) (151,225) 5.19
Expired............................................ -- -- -- --
Terminated......................................... (23,500) (6,010) (29,510) 5.33
------------ ------------ ------------ -------
Outstanding, December 31, 1993....................... 174,250 345,387 519,637 $ 9.45
Granted............................................ 318,500 -- 318,500 12.50
Became exercisable................................. (124,750) 124,750 -- 3.61
Exercised.......................................... -- (74,713) (74,713) 7.96
Expired............................................ -- (375) (375) 12.25
Terminated......................................... (7,000) (11,700) (18,700) 11.81
------------ ------------ ------------ -------
Outstanding, December 31, 1994....................... 361,000 383,349 744,349 $ 10.85
------------ ------------ ------------ -------
------------ ------------ ------------ -------
</TABLE>
32
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On February 15, 1991, the Company declared a dividend distribution of one
right ("Right") to purchase an additional share of the Company's Common Stock
for $50 on each share of Common Stock outstanding. The Rights become exercisable
ten days after a person or group acquires, or tenders for, 20% or more of the
Company's Common Stock. The Company is entitled to redeem the Rights at $.01 per
Right at any time until ten days after any person or group has acquired 20% of
the Common Shares. If a person or group acquires 20% or more of the Company's
Common Stock (other than pursuant to an acquisition from the Company or pursuant
to a tender offer deemed fair by the board of directors), then each Right, other
than Rights held by the acquiring person or group, entitles the holder to
purchase for $50 that number of shares of the Company's Common Stock having a
current market value of $100. If a person or group acquires 20% or more of the
Company's Common Stock and prior to the person or group acquiring 50% of such
outstanding stock, the Company may convert each outstanding Right, other than
the Rights held by the acquiring person or group, into one new share of the
Company's Common Stock. If a person or group acquiring more than 20% of the
Company's Common Stock merges with the Company or engages in certain other
transactions with the Company, each Right, other than Rights held by the
acquiring person or group, entitles the holder to purchase shares of common
stock of the acquiring person or group having a current market value of $100 for
$50. The Rights attach to all of the Company's Common Stock outstanding as of
February 15, 1991, or subsequently issued, and have a term of ten years. The
Rights also expire upon a merger or acquisition of the Company undertaken with
the consent of the Company's board of directors.
10. RETIREMENT, PENSION AND POSTRETIREMENT HEALTH PLANS:
The Company sponsors several defined benefit pension plans which cover
certain union and office employees. Benefits under these plans generally are
based on the employee's years of service and compensation during the years
immediately preceding retirement. The Company's general funding policy is to
contribute amounts deductible for Federal income tax purposes.
Effective January 1, 1994, the Company instituted an unfunded deferred
compensation defined benefit pension plan called the Executive Retirement Plan.
The noncontributory plan is designed to provide supplemental retirement benefits
to certain executive officers of the Company as determined by the Board of
Directors. Retirement benefits will be reduced by benefits received under the
Target Benefit Plan described below.
Net periodic pension costs as they relate to defined benefit plans for
continuing operations were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost.......................................................... $ 652 $ 411 $ 405
Interest cost......................................................... 2,260 2,152 2,113
Actual loss (gain) on plan assets..................................... 327 (7,903) (2,608)
Net amortization and deferral......................................... (2,422) 6,090 609
--------- --------- ---------
Net periodic pension cost............................................. $ 817 $ 750 $ 519
--------- --------- ---------
--------- --------- ---------
</TABLE>
Although the actual return on plan assets is shown, the expected long-term
rate of return used in determining the net periodic pension cost in all years
was approximately 7.5%. The difference between the actual return and the
expected return is included in the "Net amortization and deferral" in the above
table. The actuarial present value of benefits was determined using a discount
rate of approximately 7.25% in 1994 and 1993 (8% in 1992). The rate of
compensation increase used to measure the projected benefit obligation in two
plans was approximately 5%. All other plans are based on current compensation
levels.
33
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the funded status of the Company's defined
benefits plans:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
1994 1993
---------------------------- ----------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
------------- ------------- ------------- -------------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Plan assets at fair value........................... $ 19,724 $ 10,971 $ 17,173 $ 16,187
------------- ------------- ------------- -------------
Actuarial present value of benefit obligations:
Vested benefits................................... $ 16,730 $ 12,522 $ 12,587 $ 15,006
Nonvested benefits................................ 819 776 290 784
------------- ------------- ------------- -------------
Accumulated benefit obligation...................... $ 17,549 $ 13,298 $ 12,877 $ 15,790
Effect of projected future compensation increases... 1,933 -- -- 1,889
------------- ------------- ------------- -------------
Projected benefit obligation........................ $ 19,482 $ 13,298 $ 12,877 $ 17,679
------------- ------------- ------------- -------------
Plan assets in excess of (less than) projected
benefit obligation................................. $ 242 $ (2,327) $ 4,296 $ (1,492)
Unrecorded net (gain) loss from past experience
different from that assumed and effect of changes
in assumptions..................................... 1,568 (300) (2,041) 350
Unrecorded prior service cost....................... 1 700 1 --
Unrecognized net (asset) at date of initial
application........................................ (1,405) (968) (1,249) (1,596)
------------- ------------- ------------- -------------
Prepaid (accrued) pension costs..................... $ 406 $ (2,895) $ 1,007 $ (2,738)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The plans' assets include common stocks, fixed income securities, short-term
investments and cash. Common stock investments at December 31, 1994 and 1993
include approximately 315,000 and 479,000 shares, respectively, of the Company's
common stock.
The Company also has a defined contribution retirement plan which covers
certain employees. There are no prior service costs associated with this plan.
The Company follows the policy of funding retirement contributions under this
plan as accrued. Contributions to this plan for continuing operations were
$255,000 in 1994, $252,000 in 1993 and $261,000 in 1992.
The Company employees are also eligible to become participants in the Save
Money and Reduce Taxes (SMART) plan. Prior to January 1, 1993, voluntary
deposits by employees (up to 6% of their salaries) were matched by the Company
on the basis of $1 for every $3 deposited. A portion of the voluntary deposits
and all of the matching funds were used to purchase the Company's Common Stock
for the account of the participating employees. The trustee is directed by each
employee on how to invest the portion of the employee's deposit which was not
required by the plan to be put toward the purchase of the Company's stock. The
investment alternatives include a money market fund, two mutual funds, a fixed
income fund and additional investment in the Company's stock. The Company's
total contribution under this plan amounted to approximately $365,000 in 1992.
Effective January 1, 1993, the Company terminated its matching contribution to
the SMART plan. Under the revised provisions of this plan, employees can no
longer purchase Company stock with their voluntary contributions. Employees may
continue to invest their voluntary contribution in any of the other investment
alternatives noted above. As of December 31, 1994 and 1993, assets of the SMART
plan include approximately 532,000 and 630,000 shares, respectively, of the
Company's common stock.
34
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has a noncontributory defined contribution plan (the Employee
Stock Plan). All non-union employees not covered by pension plans are covered
under the Employee Stock Plan. Company contributions were $450,000 in 1994 and
$497,000 in 1992. No contribution was made in 1993.
Effective January 1, 1995, the Company instituted a noncontributory defined
contribution retirement plan called the Target Benefit Plan. All employees
covered by the Employee Stock Plan are covered under the Target Benefit Plan.
Under the terms of the Target Benefit Plan, the Company will make an actuarially
determined annual contribution based upon each eligible employee's years of
service and earnings as defined. Employee investment alternatives include a
money market fund, two mutual funds and a fixed income fund. Employees become
vested in the Company contribution after five years of service.
Effective January 1, 1992, the Company implemented on an immediate
recognition basis Statement of Financial Accounting Standards (SFAS) No.
106--Employers' Accounting for Postretirement Benefits Other Than Pensions. This
statement requires that the cost of these benefits, which are primarily for
health care, be recognized in the financial statements during the employee's
active working career. The Company's previous practice was to expense these net
costs as incurred. The transition effect of adopting SFAS No. 106 on an
immediate recognition basis as of January 1, 1992 resulted in a charge of
$1,739,000 ($.21 per common share) to 1992 operating results. At December 31,
1994, the Company provides medical benefits for retirees and their spouses at
one operating division and certain other individuals related to several
discontinued operations. Contributions are required of most retirees for medical
coverage. The current obligation was determined by application of the terms of
the related medical plans, including the effects of established maximums on
covered costs, together with relevant actuarial assumptions and health-care cost
trend rates projected at annual rates ranging ratably from 9% for retirees under
age 65 (7.8% for retirees age 65 and older) in 1995 to 5.5% over 27 years. The
effect of a 1% annual increase in these assumed cost trend rates would increase
the accumulated postretirement benefit obligation by approximately $47,000. The
annual service costs would not be materially affected. The total cost for all
plans amounted to $82,000 in 1994, ($782,000) in 1993 (net of a curtailment gain
of approximately $1,000,000 included in discontinued operations) and $189,000 in
1992.
The following table provides information on the status of these plans:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
--------- ---------
(IN THOUSANDS
OF DOLLARS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and their dependents........................................... $ (266) $ (505)
Fully eligible active plan participants................................. (26) (19)
Active employees not fully eligible..................................... (395) (423)
--------- ---------
Accumulated postretirement benefit obligation............................. $ (687) $ (947)
Plan Assets............................................................... -- --
Unrecognized prior service costs.......................................... 15 --
Unamortized plan amendments............................................... -- --
Unamortized net (gain) loss............................................... (236) 55
--------- ---------
Accued postretirement benefit costs....................................... $ (908) $ (892)
--------- ---------
--------- ---------
</TABLE>
35
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net periodic postretirement benefit costs include the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
(IN THOUSANDS OF DOLLARS)
Service cost...................................................... $ 31 $ 58 $ 55
Interest cost..................................................... 53 154 134
Amortization of unrecognized net (gain) loss...................... (3) 11 --
Amortization of prior plan amendment.............................. 1 -- --
Curtailment (gain)................................................ -- (1,000) --
Settlement (gain)................................................. -- (5) --
--------- --------- ---------
Net periodic postretirement benefit cost (benefit)................ $ 82 $ (782) $ 189
--------- --------- ---------
--------- --------- ---------
</TABLE>
Measurement of the accumulated postretirement benefit obligation was based
on a discount rate of 8.0% in 1994, 7.5% in 1993 and 8% in 1992.
During 1993, the Company provided $1,261,000 (included in "Other (income)
expenses, net"-- see Note 13) for deferred compensation related to the
retirement of certain executive officers of the Company.
11. ENVIRONMENTAL, LEGAL AND CONTINGENT LIABILITIES:
ENVIRONMENTAL MATTERS --
The Company's manufacturing plants generate both hazardous and nonhazardous
wastes, the treatment, storage, transportation and disposal of which are subject
to federal, state and local laws and regulations. The Company believes that its
manufacturing plants are in substantial compliance with the various federal,
state and local laws and regulations, and does not anticipate any material
expenditures to remain in compliance.
Under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended (CERCLA), and other statutes, the United States
Environmental Protection Agency (EPA) and the states have the authority to
impose liability on waste generators, site owners and operators, and others
regardless of fault or the legality of the original disposal activity.
Accordingly, the Company has been named as a potentially responsible party
(PRP), or may otherwise face potential liability for environmental remediation
or cleanup, in connection with the sites described below that are in various
stages of investigation or remediation.
At one site, the Company is one of seven PRP's because of its apparent
absentee ownership of four parcels of land from 1967 to 1969 which may have held
part or all of one or more settling ponds operated by a tenant business. The
Company has already paid $85,000 as its share of a settlement of an EPA demand
for $415,000 in past response costs, and the EPA has sought payment from the
PRP's of an additional $572,000 in response costs. The EPA has ordered the
Company and one other PRP to undertake the design and construction of the
remediation project. All PRP's have agreed to undertake the design and
construction of the remediation project pursuant to a financial participation
agreement. The EPA estimates the present value of the cost to implement its
selected cleanup method to be approximately $1,868,900. The Company has accrued
its estimated share of the remaining cleanup cost which is not considered
significant. The Company has also filed a claim against its insurers.
Pursuant to a Consent Decree entered into in November 1991 with the EPA, the
Company has agreed to close and remediate a landfill leased by the Company and
formerly used for the disposal of spent foundry sands. The Company established a
reserve of $1,400,000 during 1990 and 1991 (of which approximately $750,000 for
remediation has been spent through December 31, 1994) which it believes is
adequate to cover the estimated cost of compliance with the Consent Decree.
36
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has also been named as a PRP, along with numerous parties, at
various hazardous waste sites undergoing cleanup or investigation for cleanup.
The Company believes that at each of these sites, it has been improperly named
or will be considered to be a "de minimis" party.
The Company is a defendant in two actions where a private party seeks
recovery of costs associated with an environmental cleanup at a site formerly
owned by the Company. At one site, which the Company or one of its subsidiaries
owned from 1968 until 1976, the plaintiff and current owner seeks to recover in
excess of $1,500,000 from the Company and other defendants. The estimated
present value of a remediation plan proposed by the state environmental agency
is approximately $1,900,000. The Company has denied liability and asserted a
counter-claim against plaintiff and cross-claims against the co-defendants.
At the other site, which the Company owned from 1967 until 1978, the
plaintiff, which owned the site from 1991 until 1993, filed suit seeking in
excess of $472,000 from the Company and other former owners and operators for
costs and damages allegedly incurred while cleaning up the property in
preparation for sale. The Company and the other defendants have recently entered
into an agreement with the plaintiff to settle all aspects of the litigation.
The Company has accrued its share of the settlement. The Company has also filed
claims against its insurers seeking indemnification against losses in this suit.
The Company is in the process of investigating or has determined the need to
perform environmental remediation or cleanup at certain manufacturing sites
formerly operated and still owned by the Company. At the sites where the Company
has determined that some remediation or cleanup will be required, the estimated
cost for such remediation or cleanup was provided for in 1994 and 1993.
At one site, located in Coldwater, Ohio, the Company had entered into an
agreement with the purchaser of the White-New Idea business to sell the related
real estate pending a favorable review of environmental matters. An independent
consultant retained by the Company indicated cleanup costs could range from
$500,000 to $5,300,000 for the Coldwater, Ohio facility. The Company has
provided in 1994 and 1993 for amounts equal to the lower value of this range.
The Company intends to seek financial participation from the prior owner of the
facility for any cleanup costs as a significant portion of the environmental
conditions existed prior to the Company's ownership of this facility. The
purchaser of the White-New Idea business retained an independent consultant who
had indicated estimated cleanup costs to be significantly greater than the above
noted range. Further studies are planned to better define site conditions and
necessary remediation.
During 1994 and 1993 the Company made provisions of approximately $1,383,000
and $3,136,000, respectively, (no significant amounts in 1992) toward various
environmental matters discussed above. At December 31, 1994, the Company has
accruals, including those discussed above, of $3,693,000 (including amounts
provided for within the restructuring reserve) for the estimated cost to resolve
its potential liability with the above and other, less significant, matters. The
above provisions and accruals exclude any potential recovery from insurers or
other third parties. Additional liabilities are possible and the ultimate
outcome of these matters may have a material effect on the financial position or
results of operations in a future period. However, the Company believes the
above accruals are adequate for the resolution of known environmental matters
and that the outcome of these matters is not expected to have a material adverse
effect on the Company's financial position or its ongoing results of operations.
JUSTICE DEPARTMENT INVESTIGATION--
During 1994, the Company learned the United States Department of Justice was
investigating possible improper payments made in connection with a foreign sale
by the Company's Cooper division in mid-1993. On August 5, 1993, the Company
announced that a routine internal audit had uncovered a diversion of $350,000 to
an account opened by a former employee of the Cooper division in Brady,
37
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Texas, and that up to $60,000 of this sum may possibly constitute improper
payments to a foreign government. At that time, the Company voluntarily turned
its findings over to the Department of Justice. The Company is cooperating fully
with the authorities in resolving this matter.
OTHER--
In connection with the sale of the business and assets of the Littell
division in 1991, the Company entered into a "License Agreement" pursuant to
which the Company licensed certain technology to the purchaser for which the
purchaser agreed to pay royalties totaling $8,064,000 plus interest, in minimum
quarterly installments of $312,500 commencing in November 1992, with a final
lump sum payment ($7,342,000) due May 22, 1996. The Company recorded this
agreement as a long-term note receivable. This receivable is secured by the
technology granted and is guaranteed by the purchaser. The license agreement
contains a non-compete covenant by the Company as well as a covenant to refer to
the purchaser relevant customer inquiries. The agreement provides that in the
event of a violation of the covenant not to compete, the purchaser's royalty
payments are reduced by approximately $8,000,000 and the purchaser is also
entitled to actual damages. Through the end of the third quarter of 1994, the
Company had received the required minimum quarterly payments, usually 30 days
after the due date.
During the fourth quarter of 1994, the purchaser withheld payment of the
minimum quarterly payment beyond 30 days and asserted that the Company had
violated the non-compete and non-referral covenants noted above. At December 31,
1994, the amount due the Company under this agreement was $8,052,000 (including
$7,457,000 classified as "Notes receivable, due after one year") plus $285,000
of accrued interest. On March 10, 1995, an action was filed by the purchaser in
the Circuit Court of Cook County, Illinois. After taking into consideration
counsel's evaluation of the above facts, the Company is of the opinion that the
outcome of this action would not have a significant adverse effect on the
Company's consolidated financial statements.
The Company is involved in a number of other legal proceedings as a
defending party, including product liability claims for which additional
liability is reasonably possible. It is the Company's policy to reserve on a
non-discounted basis for all known product liability claims, with necessary
reserves ($2,790,000 and $4,258,000 at December 31, 1994 and 1993, respectively)
determined in consultation with independent insurance companies and legal
counsel. Payment of these claims may take place over the next several years.
Additional liabilities are possible and the ultimate outcome of these matters
may have a material effect on the financial position or results of operations in
a future period. However, after consideration of relevant data (review of
insurance coverage, accruals, etc.), management believes that the eventual
outcome of these matters will not have a material adverse effect on the
Company's financial position or its ongoing results of operations.
At December 31, 1994, the Company was contingently liable for approximately
$1,898,000 primarily relating to outstanding letters of credit.
During 1994, the Company entered into agreements with certain executive
officers of the Company which provide that, if within one year following a
defined change in ownership or control of the Company there shall be an
involuntary termination of such executive's employment, or if there shall be
defined patterns of activity during such period by the Company causing such
executive to resign, then, subject to prevailing tax laws and regulations, the
executive shall be entitled to payments equal to approximately three years'
compensation.
Subsequent to the end of 1994, the Company entered into an agreement with
the purchaser of the Cooper business. As part of this agreement, the Company
would be a co-applicant on a letter of credit in the amount of $4,252,000. The
letter of credit secures the performance of the purchaser's obligation to
manufacture five rigs and certain related spare parts against a specific foreign
order. In exchange
38
<PAGE>
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
for this arrangement, the Company has received all amounts due under the
purchase agreement as well as a fee for expenses incurred in connection with
this arrangement. In addition, the Company received additional collateral
securing the letter of credit.
12. OPERATIONS BY INDUSTRY SEGMENT:
The Company's operations involve a single industry segment, the
manufacturing and sale of agricultural and industrial machinery and other
products.
Approximately 2%,8% and 6% of the Company's net sales from continuing
operations in 1994, 1993 and 1992, respectively, were exported principally to
Canada and Mexico.
Approximately 14%, 25% and 24% of the Company's net sales from continuing
operations in 1994, 1993 and 1992, respectively, were derived from sales to the
three major U.S. automobile manufacturers.
13. SUMMARY OF OTHER INCOME (EXPENSE):
Other income (expense) consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Interest income......................................................... $ 1,293 $ 1,832 $ 1,994
Goodwill amortization................................................... (2,067) (2,067) (2,067)
Loan cost expenses...................................................... (563) (988) (1,886)
Rent income............................................................. 35 61 236
Environmental related expenses.......................................... (410) (1,486) (266)
Net gain on sales of operating and non-operating assets................. 222 462 397
Loss on loan guarantee to affiliated company............................ -- -- (1,098)
Deferred compensation (Note 10)......................................... -- (1,261) --
Litigation settlement................................................... -- (650) --
Other miscellaneous..................................................... 292 (517) (804)
--------- --------- ---------
$ (1,198) $ (4,614) $ (3,494)
--------- --------- ---------
--------- --------- ---------
</TABLE>
39
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
See the Company's Proxy Statement incorporated by reference as part of this
Part III, under the caption "Proposal 1: Election of Directors" for information
with respect to the directors. In addition, see the information under the
caption "Executive Officers of the Company" as part of Part I, Item 1 of this
Report which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
See the Company's Proxy Statement incorporated by reference as part of Part
III, Item 10 of this report, under the captions "Management Compensation" for
information with respect to executive compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
See the Company's Proxy Statement incorporated by reference as part of Part
III, Item 10 of this report, under the captions "Outstanding Stock and Voting
Rights", "Beneficial Owners" and "Principal Stockholders and Management
Ownership" for information with respect to the ownership of certain beneficial
owners of Common Stock, Series B Variable Rate Cumulative Preferred Stock and
$10.81 Series C Cumulative Preferred Stock of the Company.
(b) Security Ownership of Management.
See the Company's Proxy Statement incorporated by reference as part of Part
III, Item 10 of this report, under the caption "Principal Stockholders and
Management Ownership" for information with respect to the beneficial ownership
by management of capital stock of the Company.
(c) Changes in Control.
There is no arrangement known to the Company, the operation of which may at
a subsequent date result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the Company's Proxy Statement incorporated by reference as part of Part
III, Item 10 of this report, under the captions "Proposal 1: Election of
Directors" and "Management Compensation" for information with respect to certain
relationships and related transactions with management.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Included in Part II of this report:
Report of Independent Accountants
Consolidated statements of income (loss) for the years ended December 31,
1994, 1993 and
1992
Consolidated balance sheets as of December 31, 1994 and 1993
Consolidated statements of cash flows for the years ended December 31,
1994, 1993
and 1992
Consolidated statements of shareholders' investment for the years ended
December 31, 1994,
1993 and 1992
Notes to consolidated financial statements
40
<PAGE>
(a) 2. FINANCIAL STATEMENT SCHEDULES
Included in Part IV of this report:
Schedule II--Allowance for losses in collection for the years ended
December 31, 1994, 1993 and 1992
(a) 3. EXHIBITS
The following exhibits are incorporated by reference as noted below:
<TABLE>
<S> <C>
3(a) The Registrant's Restated Certificate of Incorporation, as amended, is
incorporated by reference to Exhibit 3 of the Company's 1988 Annual Report
on Form 10-K (File No. 1-5530).
3(b) The Registrant's Amendments to Restated Certificate of Incorporation is
incorporated by reference to Exhibit 3 of the Company's 1990 Annual Report
on Form 10-K (File No. 1-5530).
3(c) The Registrant's By-Laws of the Company, as amended, are incorporated by
reference to Exhibit 3 of the Company's 1989 Annual Report on Form 10-K
(File No. 1-5530).
4(a) The Registrant's Certificate of Designation of a series of preferred stock as
Series B Variable Rate Cumulative Preferred Stock, as amended, is
incorporated by reference to Item 16, Exhibit 4.2 of the Company's
Registration Statement on Form S-1, Amendment No. 1 (Registration No.
33-4950).
4(b) The Registrant's Amendments to Certificate of Designation for Series B
Preferred Stock, are incorporated by reference to Exhibit 3(a) of the
Company's report on Form 8-K, dated February 10, 1993 (File No. 1-5530).
4(c) The Registrant's Series B Preferred Stock Agreement dated as of January 29,
1993 between Allied and the holder of Allied's Series B Preferred Stock is
incorporated by reference to Exhibit 4(a) of the Company's report on Form
8-K, dated February 10, 1993 (File No. 1-5530).
4(d) The Registrant's Form of Subordinated Note to be issued to Allied Series B
Preferred Stock holder is incorporated by reference to Exhibit 4(b) of the
Company's report on Form 8-K, dated February 10, 1993 (File No. 1-5530).
4(e) The Registrant's Certificate of Designation creating a series of preferred
stock as $10.81 Series C Cumulative Preferred Stock is incorporated by
reference to Exhibit 4 of the Company's report on Form 10-Q dated November
11, 1988 (File No. 1-5530).
4(f) The Registrant's Amendments of Certificate of Designation for Series C
Preferred Stock are incorporated by reference to Exhibit 3(b) of the
Company's report on Form 8-K dated February 10, 1993 (File No. 1-5530).
4(g) The Registrant's Series C Preferred Stock Agreement dated as of January 29,
1993 between Allied and the holders of Allied's Series C Preferred Stock is
incorporated by reference to Exhibit 4(c) of the Company's report on Form
8-K dated February 10, 1993 (File No. 1-5530).
4(h) The Registrant's Form of Subordinated Note issued to holders of Allied's
Series C Preferred Stock is incorporated by reference to Exhibit 4(d) of the
Company's report on Form 8-K, dated February 10, 1993 (File No. 1-5530).
4(i) The Registrant's Form of Amended and Restated Subordinated Note dated August
28, 1990 which are a part of a group of notes with the same terms and the
same date in the aggregate principal amount of $1,105,769 is incorporated by
reference to Exhibit 4(e) of the Company's report on Form 8-K dated February
10, 1993 (File No. 1-5530).
4(j) The Registrant's Form of Restated and Amended Subordinated Note dated
September 6, 1985 which is a part of a group of notes having the same terms
and same date in the aggregate principal amount of $733,000 is incorporated
by reference to Exhibit 4(f) of the Company's report on Form 8-K dated
February 10, 1993 (File No. 1-5530).
</TABLE>
41
<PAGE>
<TABLE>
<S> <C>
10(a) The Registrant's Credit and Debt Restructuring Agreement dated as of January
22, 1990 among Allied, Continental Bank N.A., as Agent, and the Lenders
named therein is incorporated by reference to Exhibit 10(a) of the Company's
report on Form 8-K dated February 6, 1990 (File No. 1-5530).
10(b) The Registrant's Amended and Restated Credit and Debt Restructuring Agreement
dated as of January 28, 1993 among Allied, Continental Bank N.A., as Agent,
and the Lenders named therein is incorporated by reference to Exhibit 10(a)
of the Company's report on Form 8-K dated February 10, 1993 (File No.
1-5530).
10(c) The Registrant's Credit Agreement dated as of January 28, 1993 among Verson
Corporation, Continental Bank N.A., as Agent, and the lenders named therein
is incorporated by reference to Exhibit 10(b) of the Company's report on
Form 8-K dated February 10, 1993 (File No. 1-5530).
10(d) The Registrant's Intercompany Service Agreement dated as of January 29, 1993
between Allied and Verson Corporation is incorporated by reference to
Exhibit 10(c) of the Company's report on Form 8-K dated February 10, 1993
(File No. 1-5530).
10(e) The Registrant's Tax Sharing Agreement dated as of January 29, 1993 between
Allied and Verson Corporation is incorporated by reference to Exhibit 10(d)
of the Company's report on Form 8-K dated February 10, 1993 (File No.
1-5530).
10(f) The Registrant's Accounts Financing Agreement dated as of January 29, 1993
between Congress Financial Corporation (Southern) and Bush Hog Corporation
is incorporated by reference to Exhibit 10(e) of the Company's report on
Form 8-K dated February 10, 1993 (File No. 1-5530).
10(g) The Registrant's Letter Agreement dated as of January 29, 1993 between Bush
Hog Corporation and Congress Financial Corporation (Southern) entitled
"Additional Representations, Covenants and Other Terms -- Supplement to
Accounts Financing Agreement . . ." is incorporated by reference to Exhibit
10(f) of the Company's report on Form 8-K dated February 10, 1993 (File No.
1-5530).
10(h) The Registrant's Letter Agreement dated as of January 29, 1993 between Bush
Hog Corporation and Congress Financial Corporation (Southern) regarding
Inventory Loans is incorporated by reference to Exhibit 10(g) of the
Company's report on Form 8-K dated February 10, 1993 (File No. 1-5530).
10(i) The Registrant's Intercompany Service Agreement dated as of January 29, 1993
between Allied and Bush Hog Corporation is incorporated by reference to
Exhibit 10(h) of the Company's report on Form 8-K dated February 10, 1993
(File No. 1-5530).
10(j) The Registrant's Tax Sharing Agreement dated as of January 29, 1993 between
Allied and Bush Hog Corporation is incorporated by reference to Exhibit
10(i) of the Company's report on Form 8-K dated February 10, 1993 (File No.
1-5530).
10(k) The Registrant's 1977 Incentive Stock Plan is incorporated by reference to
Exhibit 10(a) of the Company's 1980 Annual Report on Form 10-K (File No.
1-5530).
10(l) The Registrant's SMART Plan is incorporated by reference to Exhibit 10(d) of
the Company's 1984 Annual Report on Form 10-K (File No. 1-5530).
10(m) The Registrant's 1990 Long-Term Incentive Stock Plan is incorporated by
reference to Exhibit 10 of the Company's 1991 Annual Report on Form 10-K
(File No. 1-5530).
10(n) The Registrant's Agreement for the sale of the assets of the White-New Idea
Farm Equipment Division of Allied Products Corporation is incorporated by
reference to Exhibit (c)(2)(w)(i) of the Company's report on Form 8-K dated
January 14, 1994 (File No. 1-5530).
10(o) The Registrant's Credit Agreement dated as of March 17, 1994 among Allied
Products Corporation, the Banks Named Herein and Continental Bank N.A.,
individually and as agent is incorporated by reference to Exhibit 10(i) of
the Company's report on Form 8-K dated April 8, 1994 (File No. 1-5530).
</TABLE>
42
<PAGE>
The following exhibits are attached only to the copies of this report filed
with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
EXHIBIT NO. NAME OF EXHIBIT
- --------------- --------------------------------------------------------------------------------------
<C> <S>
10a Material Contract--Allied Products Corporation Executive Retirement Plan.
10b Material Contract--Executive Officer's Agreement in Event of Change in Control or
Ownership of Allied Products Corporation.
10c Material Contract--Second Amendment to Credit Agreement.
10d Material Contract--Allied Products Corporation Combined Retirement Plan.
10e Material Contract--Bush Hog Segment of the Allied Products Corporation Combined
Retirement Plan.
10f Material Contract--Verson Segment of the Allied Products Corporation Combined
Retirement Plan.
10g Material Contract--Littell Segment of the Allied Products Corporation Combined
Retirement Plan.
21 Subsidiaries of the Registrant.
23 Consents of Independent Accountants.
24 Powers of Attorney.
27 Financial Data Schedule.
</TABLE>
Reference is made to Note 1 of Notes to Consolidated Financial Statements
regarding the computation of earnings per share. Other financial statements,
schedules and exhibits not included above have been omitted as inapplicable or
because the required information is included in the consolidated financial
statements or notes thereto.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the fourth quarter
of the year ended December 31, 1994.
ALLIED PRODUCTS CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II--ALLOWANCE FOR LOSSES IN COLLECTION
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Balance at beginning of year.............. $ 1,996 $ 2,914 $ 3,108
Add (deduct)--
Provision charged to income............. 256 229 1,346
Receivables charged off as bad debts,
net of recoveries...................... (731) (1,147) (1,540)
--------- --------- ---------
Balance at end of year.................... $ 1,521 $ 1,996 $ 2,914
--------- --------- ---------
--------- --------- ---------
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALLIED PRODUCTS CORPORATION
(Registrant)
RICHARD A. DREXLER
BY:
------------------------------------------
RICHARD A. DREXLER, CHAIRMAN,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Date: March 13, 1995
43
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* [RICHARD A. DREXLER]
----------------------------------------------
Richard A. Drexler, CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER; DIRECTOR
* [JAMES J. HAYDEN]
----------------------------------------------
James J. Hayden, EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER; DIRECTOR
* [ROBERT J. FLECK]
----------------------------------------------
Robert J. Fleck, VICE PRESIDENT
--ACCOUNTING AND CHIEF
ACCOUNTING OFFICER
March 13, 1995
* [KENNETH B. LIGHT]
----------------------------------------------
Kenneth B. Light, EXECUTIVE VICE PRESIDENT,
CHIEF ADMINISTRATIVE OFFICER AND SECRETARY;
DIRECTOR
* [LLOYD DREXLER]
----------------------------------------------
Lloyd Drexler,
DIRECTOR
* [WILLIAM D. FISCHER]
----------------------------------------------
William D. Fischer,
DIRECTOR
* [STANLEY J. GOLDRING]
----------------------------------------------
Stanley J. Goldring,
DIRECTOR
* [JOHN E. JONES]
----------------------------------------------
John E. Jones,
DIRECTOR
* [JOHN W. PUTH]
----------------------------------------------
John W. Puth,
DIRECTOR
* [MITCHELL I. QUAIN]
----------------------------------------------
Mitchell I. Quain,
DIRECTOR
* [S. S. SHERMAN]
----------------------------------------------
S. S. Sherman,
DIRECTOR
* By: [KENNETH B. LIGHT]
-------------------------------------------
Kenneth B. Light,
ATTORNEY-IN-FACT
</TABLE>
44
<PAGE>
EXHIBIT 10A
ALLIED PRODUCTS CORPORATION
EXECUTIVE RETIREMENT PLAN
(ADOPTED EFFECTIVE JANUARY 1, 1994)
<PAGE>
PREAMBLE
The purpose of the Allied Products Corporation Executive Retirement Plan (the
"Plan") is to provide supplemental retirement benefits to a select group of
executives of Allied Products Corporation.
The Plan is intended to be an unfunded deferred compensation plan established
and maintained for a select group of highly compensated management employees.
All amounts payable under the Plan shall remain the property of Allied Products
Corporation until paid to the Participant or his Beneficiary, as provided
herein.
<PAGE>
CONTENTS
Page
----
ARTICLE ONE DEFINITIONS 1
ARTICLE TWO ELIGIBILITY 5
ARTICLE THREE BENEFITS 6
ARTICLE FOUR PLAN ADMINISTRATION 10
ARTICLE FIVE CLAIMS PROCEDURE 12
ARTICLE SIX AMENDMENT OR TERMINATION 13
ARTICLE SEVEN MISCELLANEOUS PROVISIONS 14
<PAGE>
ARTICLE ONE
DEFINITIONS
1.01 When used herein, the following terms shall have the following meanings:
BENEFICIARY means the person or entity designated by the
Participant in accordance with the rules adopted by the
Committee.
BOARD means the Board of Directors of Allied Products
Corporation.
CHANGE IN CONTROL means
(a) An acquisition by any "person" or "group" (as those
terms are defined or used in Section 13(d) of the
Exchange Act, as enacted and in force on the date
hereof) of "beneficial ownership" (within the meaning
of Rule 13d-3 under the Exchange Act, as enacted and in
force on the date hereof) of securities of the Company
representing 24.99% or more of the combined voting
power of the Company's securities then outstanding;
(b) A merger, consolidation, or other reorganization of the
Company, except where the resulting entity is
controlled, directly or indirectly, by the Company;
(c) A merger, consolidation, or other reorganization of the
Company, except where shareholders of the Company
immediately prior to consummation of any such
transaction continue to hold at least a majority of the
voting power of the outstanding voting securities of
the legal entity resulting from or existing after any
transaction and a majority of the members of the Board
of the legal entity resulting from or existing after a
transaction are former members of the Company's Board;
(d) A sale, exchange, transfer or other disposition of
substantially all of the assets of the Company to
another entity, except to an entity controlled,
directly or indirectly, by the Company;
(e) A sale, exchange, transfer, or other disposition of
substantially all of the assets of the Company to
another entity, or a corporate division involving the
Company; or
1
<PAGE>
(f) A contested proxy solicitation of the Company's
shareholders that results in the contesting party
obtaining the ability to cast 25% or more of the votes
entitled to be cast in an election of directors of the
Company.
COMMITTEE means the Stock Option and Compensation Committee of
the Board.
COMPANY means Allied Products Corporation and any successor
thereof.
COMPENSATION means the total cash compensation paid to an
Employee during a calendar year, including bonuses and overtime,
but excluding any income imputed to the Employee in accordance
with tax laws as a result of fringe benefits provided by the
Company and all other forms of unusual, special, or extraordinary
remuneration, as determined by the Committee. Compensation shall
include amy amount of remuneration deferred under a salary
reduction agreement pursuant to participation in the Allied
Products Corporation SMART Plan.
DISABILITY means the same as the term "Total and Permanent
Disability," as defined in the Allied Products Corporation SMART
Plan.
DISABILITY BENEFIT means the benefit payable pursuant to Section
3.02 of the Plan.
EFFECTIVE DATE means January 1, 1994.
EMPLOYEE means a person who is in the regular full-time employ of
the Company.
FINAL AVERAGE COMPENSATION means the average of the Participant's
Compensation during the thirty-six (36) months prior to the
Participant's separation from service.
MONTH OF SERVICE means any calendar month in which an Employee
completes at least an hour of service.
NORMAL RETIREMENT BENEFIT means the benefit payable pursuant to
Section 3.01 of the Plan.
NORMAL RETIREMENT DATE means the earlier of age sixty-five (65)
or completion of twenty-five (25) Years of Service, but in no
event prior to reaching age fifty-five (55).
2
<PAGE>
PARTICIPANT means an Employee who is designated by the Board as a
Participant pursuant to Section 2.01 of the Plan.
PLAN means the Allied Products Corporation Executive Retirement
Plan, as set forth in this document, as amended from time to
time.
PLAN YEAR means the twelve (12) month period beginning on January
1 and ending on the following December 31.
SURVIVOR'S BENEFIT means the benefit payable pursuant to Section
3.04 of the Plan.
YEAR OF SERVICE means a period of twelve (12) Months of Service.
1.02 CONSTRUCTION
Wherever appropriate, pronouns of any gender shall be deemed synonymous, as
shall singular and plural pronouns. The titles and headings of the
provisions in this document are inserted merely for convenience of
reference and shall be given no legal effect.
ARTICLE TWO
ELIGIBILITY
2.01 ELIGIBILITY
The Board shall have sole discretion to determine the Employees who become
Participants in the Plan. The class of eligible Employees, however, shall
be restricted to highly compensated or management Employees of the Company.
2.02 PARTICIPATION
An Employee who is within the class of eligible Employees, as defined in
Section 2.01, shall become a Participant in the Plan at such time as such
individual is designated by the Board in a written resolution adopted by
the Board.
3
<PAGE>
ARTICLE THREE
BENEFITS
3.01 NORMAL RETIREMENT BENEFIT
(a) A Participant who retires on or after his Normal Retirement Date shall
be eligible to receive a Normal Retirement Benefit equal to three (3)
times his Final Average Compensation.
(b) A Participant's Normal Retirement Benefit shall be paid in one hundred
twenty (120) equal monthly installments commencing as of the later of
January 1, 1997 or the first day of the month next following the date
the Participant terminates service with the Company. No interest
shall be credited or paid on such amounts.
3.02 DISABILITY BENEFIT
(a) A Participant who terminates employment with the Company on account of
Disability before his Normal Retirement Date shall be eligible to
receive a Disability Benefit equal to three (3) times his Final
Average Compensation.
(b) A Participant's Disability Benefit shall be paid in one hundred twenty
(120) equal monthly installments commencing as of the later of January
1, 1997 or the first day of the month next following the Participant's
Normal Retirement Date. No interest shall be credited or paid on such
amounts.
3.03 BENEFIT ON OTHER TERMINATION OF EMPLOYMENT
(a) A Participant whose employment is terminated for any reason prior to
his death, Disability, or attainment of his Normal Retirement Date
shall be eligible to receive a benefit equal to the sum of three (3)
times his Final Average Compensation multiplied by his vesting
percentage. Except as provided in Section 3.05, the Participant's
vesting percentage is determined according to the following schedule:
4
<PAGE>
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 1 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
</TABLE>
Notwithstanding the preceding sentence, if the number of years between
the Participant's date of hire and attainment of age 65 is less than
10 years, the Participant's vesting percentage shall equal a fraction
(not to exceed 1) the numerator of which is the Years of Service
completed by the Participant and the denominator of which is the
number of full years between the Participant's date of hire and
attainment of age 65.
(b) The benefit payable pursuant to this Section 3.03 shall be paid in one
hundred twenty (120) equal monthly installments commencing on the
later of January 1, 1997 or the first day of the month next following
the Participant's Normal Retirement Date.
3.04 SURVIVOR'S BENEFIT
(a) If the Participant dies after distribution of his benefit has
commenced, the remaining portion of such benefit will continue to be
distributed to his Beneficiary.
(b) If the Participant dies prior to retirement, the Participant's
Beneficiary shall be eligible to receive a Survivor's Benefit equal to
three (3) times the Participant's Average Compensation multiplied by
his vesting percentage (as determined pursuant to Section 3.03).
(c) The Beneficiary's Survivor Benefit, determined pursuant to Section
3.04(b), shall be paid in one hundred twenty (120) equal monthly
installments commencing on the first day of the month next following
the date of the Participant's death. No interest shall be credited or
paid on such amounts.
(d) Notwithstanding Section 3.04(c), if the Participant made and filed
with the Plan Administrator a valid election pursuant to Section 3.06,
the Beneficiary's Survivor shall be paid in a lump sum as soon as
practicable following the Participant's death.
5
<PAGE>
3.05 VESTING ON CHANGE IN CONTROL
In the event of a Change in Control, the Participant's vesting percentage
shall equal 100%.
3.06 COMPETITION FOLLOWING RESIGNATION
Notwithstanding any other provision in the Plan, all benefits otherwise
payable pursuant to this Article III shall be canceled, the Participant's
entire interest under the Plan shall be forfeited, and the Company shall be
relieved of any obligation to make any future payments under the Plan with
respect to the Participant if the Committee determines that the
Participant, directly or indirectly, by or for himself or as the agent of
another or through others as his agents, within one (1) year after
termination of employment:
(a) Owns, manages, operates, is employed by, participates in, renders
advice to, or controls any other business directly or indirectly
engaged in similar lines of business as the Company in the United
States or any foreign country; provided, however, that the Participant
may own securities of any publicly-held corporation as long as such
ownership in the aggregate does not exceed one percent (1%) of the
outstanding voting securities of that corporation;
(b) Solicits or accepts any business from customers of the Company or
requests, induces, or advises customers of that company to withdraw,
curtail, or cancel their business with the Company; or
(c) Solicits for employment any present or future employee of the Company,
or requests, induces, or advises any employee to leave the employ of
the Company.
3.07 CERTAIN DISCHARGES
In the event a Participant is discharged by the Company for serious cause,
all benefits otherwise payable pursuant to this Article III may be
canceled, and the Participant's entire interest under the Plan shall be
forfeited. For purposes of this Section 3.07, "serious cause" means:
(a) The Company determines that the Participant committed a fraud,
misappropriation, theft, or embezzlement involving Company property;
or
(b) Conviction of the Participant for the commission of a felony.
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3.08 LITIGATION
In the event the Company fails to make payments due a Participant under the
Plan, the Company shall pay all attorneys fees, court costs, and other
costs resulting from a suit brought by the Participant to enforce his
rights under the Plan, but only if the court rules that the Participant is
entitled to benefits under the Plan.
ARTICLE FOUR
PLAN ADMINISTRATION
4.01 ADMINISTRATION
The Committee shall act by a majority of its members at the time in office,
and such action may be taken either by a vote at a meeting or by written
consent without a meeting. No member of the Committee or any other
individual to whom administrative authority is delegated under the Plan
shall be entitled to act on or decide any matters relating solely to
himself or any of his rights or benefits under the Plan. The Committee may
authorize any one (1) or more of its members to execute any document or
documents on behalf of the Committee, in which event the Committee shall
notify the Company, in writing, or such authorization and the name or names
of its member or members so designated.
4.02 DUTIES OF THE COMMITTEE
The Committee shall have such authority as may be necessary to discharge
its responsibilities under the Plan, including the following rights,
powers, and duties:
(a) The Committee shall adopt rules governing its procedures not
inconsistent herewith, and shall keep a permanent record of its
meetings and actions. The Committee shall administer the Plan
uniformly and consistently with respect to persons who are similarly
situated.
(b) The Committee shall have the sole responsibility for the
administration of the Plan and, except as herein expressly provided,
the Committee shall have the exclusive right to interpret the
provisions of the Plan and to determine any question arising hereunder
or in connection with the administration of the Plan, including the
remedying of any omission, inconsistency, or ambiguity, and its
decision or action in respect thereof shall be conclusive and binding
upon any and all Participants, former Participants, Beneficiaries,
heirs, distributees, executors, administrators, and assigns. Any
final determination by the Committee shall be binding on all parties.
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(c) The Committee may employ such counsel and agents in such clerical,
accounting, and other services as it may require in carrying out the
provisions of the Plan.
4.03 INDEMNIFICATION
The Company shall indemnify the Committee and all officers and Employees
assigned any powers or duties under the Plan to the extent that such
officers or Employees incur loss or damage which may result from such
officers' or Employees' duties, exercises of discretion under the Plan, or
any other acts or omissions hereunder. Such duties, exercises of
discretion, acts, or omissions will not be indemnified by the Company in
the event that such loss or damage is judicially determined or agreed by
the officers or Employees to be due to their respective gross negligence or
willful misconduct.
4.04 COMPENSATION
Any individual who is acting as agent of the Committee shall serve without
compensation for services as such, but all proper expenses incurred by the
individual incident to the functioning of the Plan shall be paid by the
Company.
ARTICLE FIVE
CLAIMS PROCEDURE
5.01 PROCEDURE
The claims procedure shall be the same as the claims procedure in the
Allied Products Corporation SMART Plan as of January 1, 1994.
ARTICLE SIX
AMENDMENT OR TERMINATION
6.01 AMENDMENT AND TERMINATION
(a) Subject to Section 6.01(b), the Company reserves the right at any
time, by resolution of the Board, to amend, suspend, or terminate the
Plan for any reason and without the consent of any eligible Employee,
Beneficiary, or other person. Notwithstanding the previous sentence,
no such amendment shall result in the forfeiture of any benefit vested
under
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the Plan. If the Company shall amend the Plan to provide for a
reduction in benefits payable hereunder, the benefits earned prior to
the time of such amendment shall be determined without regard to such
amendment by assuming the Participant retired on the date of the
amendment and that the benefit is calculated at that time. If the
Company shall terminate the Plan, each Participant shall be 100%
vested in his benefit under the Plan.
(b) The Company shall give notice of any amendment, suspension, or
termination pursuant to Section 6.01 to all Participants.
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
7.01 NO CONTRACT OF EMPLOYMENT
Nothing contained herein shall give any individual the right to be retained
in the employment of the Company or affect the right of the Company to
terminate any individual's employment. The adoption and maintenance of the
Plan shall not constitute a contract between the Company and any
individual, or consideration for, inducement to, or condition of the
employment of any individual.
7.02 NO ASSIGNMENT
Except insofar as may otherwise be required by law, no amount payable at
any time under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment,
charge, or encumbrance of any kind, and any attempt to so alienate such
amount, whether presently or thereafter payable, shall be void. If any
person shall attempt to or shall so alienate any amount payable under the
Plan, or any part thereof, or if, by reason of bankruptcy or other event
happening at any time, such amount would not be enjoyed by the person to
whom it is payable under the Plan, then the Committee, if it so elects, may
direct that such amount be withheld and that the same or any part thereof
be paid to or for the benefit of such person, his spouse, children, or
other dependents, or any of them, in such manner and proportion as the
Committee may deem proper.
7.03 COMPANY'S ASSETS
All benefits hereunder shall be paid from the general assets of the
Company. All amounts to which a Participant is entitled under the Plan
shall remain (until paid to the Participant or Beneficiary) solely the
property and rights of the Company and shall be subject to the claims of
the Company's general creditors.
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<PAGE>
7.04 GOVERNING LAW
The Plan and all rights thereunder shall be governed by and construed in
accordance with the laws of the State of Illinois, to the extent that such
laws are not preempted by ERISA.
7.05 OTHER PLANS
If the Company shall implement a general retirement plan for all or
substantially all employees, the annual payment received by an Employee
hereunder shall be reduced by any annual payment received under such
general retirement plan.
IN WITNESS WHEREOF, this Plan has been executed this ____ day of
_______________, 1994.
ALLIED PRODUCTS CORPORATION
By:_________________________________
Receipt Acknowledged:
________________________
________________________
(Date)
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EXHIBIT 10b
EXECUTIVE OFFICER'S AGREEMENT
IN EVENT OF CHANGE IN CONTROL OR OWNERSHIP OF
ALLIED PRODUCTS CORPORATION
PARTIES:
ALLIED PRODUCTS CORPORATION (herein called the "Employer")
And
(herein called the "Employee" or the "Executive").
BACKGROUND STATEMENT:
The Employer is engaged in the business of manufacturing farm implements,
industrial presses, and additives for the plastic compounding industry. The
Employee is currently employed by Employer and is experienced in various phases
of the Employer's business. The Employer desires to extend to the Employee and
the Employee desires to accept as part of his employment conditions certain
protection in the event of change in control or ownership of Employer.
NOW THEREFORE, in consideration of the mutual promises set forth in this
Agreement, and intending to be legally bound, the parties agree as follows:
Section 1. CHANGE IN CONTROL OR OWNERSHIP
(A) CHANGE IN CONTROL OR OWNERSHIP MEANS:
i. An acquisition by any "person" or "group" (as those terms are defined
or used in Section 13(d) of the Exchange Act, as enacted and in force on the
date hereof) of "beneficial ownership" (within the meaning of Rule 13d-3 under
the Exchange Act, as enacted and in force on the date hereof) of securities of
the Employer representing 24.99% or more of the combined voting power of the
Employer's securities then outstanding;
ii. A merger, consolidation or other reorganization of the Employer,
except where the resulting entity is controlled, directly or indirectly, by the
Employer;
iii. A merger, consolidation or other reorganization of the Employer,
except where shareholders of the Employer immediately prior to consummation of
any such transaction continue to hold at least a majority of the voting power of
the outstanding voting securities of the legal entity resulting from or existing
after any
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transaction and a majority of the members of the Board of Directors of the legal
entity resulting from or existing after a transaction are former members of the
Employer's Board of Directors;
iv. A sale, exchange, transfer or other disposition of substantially all
of the assets of the Employer to another entity, except to an entity controlled,
directly or indirectly, by the Employer;
v. A sale, exchange, transfer or other disposition of substantially all
of the assets of the Employer to another entity, or a corporate division
involving the Employer; or
vi. A contested proxy solicitation of the Employer's shareholders that
results in the contesting party obtaining the ability to cast 25% or more of the
votes entitled to be cast in an election of directors of the Employer.
(B) RESIGNATION OF EXECUTIVE.
If a Change in Control or Ownership shall occur and if, within one year
thereafter, there shall be:
i. Any involuntary termination of the Executive's employment (other than
for Cause or Disability);
ii. Any reduction in the Executive's title, responsibilities, including
reporting responsibilities, or authority, including title, responsibilities or
authority as it may be increased from time to time;
iii. The assignment to the Executive of duties inconsistent with the
Executive's office immediately prior to a Change in Control or Ownership or as
the same may be increased from time to time after a change in Control or
Ownership;
iv. Any reassignment of the Executive to a location farther than a one
hour commute by automobile from Chicago, Illinois;
v. Any reduction in the Executive's annual base salary in effect
immediately prior to a Change in Control or Ownership or as the same may be
increased from time to time after a Change in Control or Ownership;
vi. Any failure to continue the Executive's participation, on
substantially similar terms, in any of the incentive compensation or bonus plans
of the Employer or an affiliate in which the Executive participated at the time
of the Change in Control or Ownership or any change or amendment to any of the
substantive provisions of any of such plans which would materially decrease the
potential benefits to the Executive under any of these plans;
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vii. Any failure to provide the Executive with benefits at least as
favorable as those enjoyed by the Executive under any of the pension, life
insurance, medical, health and accident, disability or other employee plans of
the Employer or an affiliate in which the Executive participated immediately
prior to a Change in Control or Ownership, or the taking of any action that
would materially reduce any of such benefits in effect at the time of the Change
in Control or Ownership, unless this reduction relates to a reduction in
benefits applicable to all employees generally;
viii. Any requirement that the Executive travel in performance of his
duties on behalf of the Employer or an affiliate for a materially greater period
of time during any year than was required of the Executive during the year
preceding the year in which the Change in Control or Ownership occurred;
ix. Any sustained pattern of interruption or disruption of the Executive
for matters substantially unrelated to the Executive's performance of the
Executive's duties on behalf of the Employer or an affiliate; or
x. Any breach of this Agreement of any nature whatsoever on the part of
the Employer;
then, at the option of the Executive, exercisable by the Executive within one
hundred eighty (180) days of the occurrence of each and every of the foregoing
events, the Executive may resign from employment (or, if involuntarily
terminated, give notice of intention to collect benefits hereunder) by
delivering a notice in writing (the "Notice of Termination") to the Employer,
and the Continuing Compensation and Benefits' provisions of this Agreement shall
apply.
(C) CONTINUING COMPENSATION AND BENEFITS.
i. (a) If, at the time of termination of the Executive's employment in
accordance with Section B hereof, a change in the ownership or effective control
of the Employer or in the ownership of a substantial portion of the assets of
the Employer, as defined in Section 280 G(b)(2)(A)(i) of the Internal Revenue
Code has also occurred, the Employer shall make a lump-sum cash payment to the
Executive no later than thirty (30) days following the date of such termination
in an amount ("X") determined pursuant to the following formula:
X=(2.99A-B)x(1+C).
For the purpose of the foregoing formula,
A=The Executive's W-2 earnings (determined pursuant to Internal
Revenue Code Section 280G(b)(3)(A)) on the date of the Tax Change;
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B=The present value of all other amounts which qualify as parachute
payments under Internal Revenue Code Section 280G(b)(2)(A) or (B) (without
regard to the provisions of Code Section 280G(b)(2)(A)(ii)), such present value
to be determined pursuant to the provisions of Internal Revenue Code Section
280G;
C=120% of one-half of the semiannual applicable federal rate in effect
on the date of the Tax Change, times the number of whole semiannual periods plus
any fraction of a semiannual period from the date of the Tax Change to the date
of payment of the Continuing Compensation and Benefits described herein.
Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, if the amount determined under "B" above equals or exceeds 2.99
times the amount determined under "A" above, no payment shall be made to the
Executive under this Section.
(b) If, at the time of termination of the Executive's employment in
accordance with Section B hereof, a Tax Change has not occurred, the Employer
shall make a lump-sum cash payment to the Executive no later than thirty (30)
days following the date of such termination in an amount equal to (A) 2.99 times
the lesser of (I) the Executive's base amount determined pursuant to the
principles set forth in the regulations promulgated under Code Section
280G(b)(3)(A) and as though a Tax Change has occurred on the date of the
Executive's termination of employment and (II) the Executive's base amount so
determined but as though a Tax Change will occur in the calendar year following
the date of the Executive's termination of employment, minus (B) any other
amounts paid or payable which would constitute (or be presumed to constitute)
parachute payments under Code Section 280G(b)(2)(A) or (B) (without regard to
the provisions of Code Section 280G(b)(2)(A)(ii)) if a Tax Change had occurred
on the date of such termination of employment.
ii. The Executive shall not be required to mitigate the amount of any
payment provided for in subsection C(i) by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
subsection C(i) be reduced by any compensation earned by the Executive as the
result of employment by another employer or by reason of the Executive's receipt
of or right to receive any retirement or other benefits not constituting
parachute payments under Section 280 (G) after the date of termination of
employment or otherwise, except as otherwise provided therein.
iii. Upon written request of the Executive, the Employer's obligation to
make the payment under this Section shall be secured in total (i) by a standby
letter of credit obtained by the Employer from a recognized financial
institution the long-term obligations of which are rated, on the date of the
request, investment grade or
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better by Standard & Poor's Corporation or Moody's Investors Service, Inc. or
(ii) by other security as the Executive shall approve, obtained within ten (10)
days of the Executive's written request following a Change in Control or
Ownership.
iv. The Employer shall pay all reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel and expenses included in
connection with an arbitration or in other litigation or appeal) incurred by the
Executive as a result of (i)(a) his delivery of a Notice of Termination or
(i)(b) his seeking to obtain or enforce any right or benefit provided by this
Agreement.
D. TERMINATION FOR CAUSE.
For purposes of this Section 15, the Employer may terminate the Executive's
Employment for "Cause." For purposes of this Agreement, "Cause" means the
occurrence of either of the following:
i. The Executive's conviction of, or plea of guilty or nolo contendere
to, a felony or a crime of falsehood or involving moral turpitude; or
ii. The willful failure by the Executive to substantially perform his
duties to the Employer, other than a failure resulting from the Executive's
incapacity as a result of the Executive's Disability, which willful failure
results in demonstrable material injury and damage to the Employer.
Notwithstanding the foregoing, the Executive's Employment shall not be deemed to
have been terminated for Cause if such termination took place as a result of:
a. Questionable judgment on the part of the Executive;
b. Any act or omission believed by the Executive in good faith, to have
been in or not opposed to the best interests of the Employer; or
c. Any act or omission in respect of which a determination could properly
be made that the Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the Employer's
By-laws or the laws of the State of Delaware, or the directors and officers'
liability insurance of the Employer or any Employer, in each case as in effect
at the time of such act or omission.
If the Executive's Employment is terminated for Cause, all rights of the
Executive under this Agreement shall cease as of the effective date of such
termination, except that the Executive (i) shall be entitled to receive accrued
Salary through the date of such termination and (ii) shall be entitled to
receive the payments and benefits to which he is then entitled under the
employee benefit plans of the Employer or any affiliate thereof as of the
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date of this termination.
Section 2. NOTICES. All notices, requests, demands, and other
communications that are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or sent by registered or certified mail, return receipt requested, postage
prepaid:
(a) To the Employer:
Allied Products Corporation
10 South Riverside Plaza
Chicago, Illinois 60606
(b) To the Employee:
At his home address as
shown on Employer's records
Section 3. ARBITRATION. Any dispute or disagreement arising out of this
Agreement or a claimed breach, except that which involves a right to injunctive
relief, shall be resolved by arbitration under the Voluntary Labor Arbitration
Rules of the American Arbitration Association. The arbitrator's decisions shall
be final and binding upon the parties and judgment may be entered in any court.
Section 4. GOVERNING LAWS. This Agreement shall be construed and enforced
in accordance with the laws of the State of Illinois.
Section 5. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to change in ownership and control. This
Agreement may not be amended or revised except by a writing signed by all the
parties.
Section 6. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the heirs, legal representatives, and successors of the
respective parties; provided however, that this Agreement and all its rights may
not be assigned by any party except by or with the written consent of the other
parties.
IN WITNESS WHEREOF, this Agreement has been executed effective this day
of , 199 .
EMPLOYER
BY: __________________________
EMPLOYEE
______________________________
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EXHIBIT 10C
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") is made
and entered into as of the 15th day of February, 1995 (the "Second Amendment
Effective Date"), by and among Allied Products Corporation (the "Company"), Bank
of America Illinois, formerly known as Continental Bank N.A. (individually and
as Agent for LaSalle National Bank), and LaSalle National Bank.
R E C I T A L S:
- - - - - - - -
A. The Company and the Banks are parties to a Credit Agreement dated
March 17, 1994 (the " Original Credit Agreement"), pursuant to which the Banks
agreed, among other things, to loan the Company up to $50,000,000 upon the terms
and subject to the conditions set forth therein.
B. On September 30, 1994, the Company and the Banks executed the First
Amendment to Credit Agreement (the "First Amendment") amending certain terms and
provisions of the Original Credit Agreement (the Original Credit Agreement and
the First Amendment are hereinafter collectively referred to as the "Credit
Agreement").
C. The Company and the Banks desire to amend the Credit Agreement further
in certain respects.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
1. AMENDMENT. Upon satisfaction by the Company of the conditions set
forth in Section 3 hereof, the Credit Agreement shall be amended as of the date
hereof as follows:
(a) The Company and the Banks acknowledge that the Banks have
terminated the Security Agreement and released the security interest in the
Collateral described in Section 4 of the Credit Agreement pursuant to Section
4.5 of the Credit Agreement, and that as such, all references to "Collateral,"
"Security Interest," "Security Agreement," "Borrowing Base," "Financing
Statements," and similar terms and descriptions relating thereto, including
certain definitions contained in Section 13 of the Credit Agreement, and certain
Exhibits and agreements attached
<PAGE>
and pertaining to the Credit Agreement, are of no further legal effect.
(b) Section 1.1.3 is hereby deleted in its entirety and a new Section
1.1.3 is added as follows:
"SECTION 1.1.3 COMMITMENT LIMITS. Notwithstanding any
other provision of this Agreement (i) the aggregate
principal amount of the Revolving Loans which all Banks are
committed to lend to the Company as of January 1, 1995 is
$25,000,000, (ii) the aggregate Stated Amount of all Letters
of Credit shall not at any time, except as provided herein,
exceed $15,000,000 (less any reductions made pursuant to
Section 6.1), and (iii) the aggregate of each Bank's
participation in the Revolving Loans shall not exceed the
amounts set forth opposite such Bank's name in column I of
Exhibit A and the aggregate amounts of each Bank's
participation in all Letters of Credit, except as provided
herein, shall not exceed the amounts set forth opposite such
Bank's name in Column II of Exhibit A (less the reductions
to the Facility or its availability pursuant to the terms of
this Agreement).
Notwithstanding the foregoing limitations in the
aggregate principal amount of Revolving Loans and the Stated
Amount of all Letters of Credit, and subject to the
Borrowing Procedures and the Letter of Credit Procedures as
set forth in Sections 1.3 and 1.6 respectively, the Company
may request, from time to time, that up to $5,000,000 of the
Revolving Loan aggregate principal amount be made available
to be redesignated as either includible in the Revolving
Loan Commitment or the Stated Amount of the Letter of
Credit. Upon expiration or reduction of any Letter of
Credit drawn upon such redesignated funds, such amount
redesignated as includible in the Stated Amount of all
Letters of Credit shall revert to and be redesignated as
includible in the aggregate principal amount of Revolving
Loans."
(c) A new Section 1.1.5 is hereby added as follows:
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<PAGE>
"SECTION 1.1.5 INCREASE IN REVOLVING LOAN COMMITMENT
LIMITS. Notwithstanding the provisions of SECTION 1.1.3 AND
1.1.4, as of the Second Amendment Effective Date the
aggregate amount of the Revolving Loan Commitment shall
permanently increase to $35,000,000 and the Facility shall
permanently increase to $50,000,000 (such increases shall be
pro rata among the Banks according to their respective
Percentages)."
(d) Section 5.2 is deleted, and a new Section 5.2 is added as
follows:
"SECTION 5.2 FACILITY FEE. The Company agrees to pay
each Bank a facility fee, for the period from and including
the Second Amendment Effective Date up to and including the
Revolving Termination Date, of 3/8 of 1% per annum on the
Facility of $50,000,000 (as may be reduced by Section 6.1).
Such facility fee shall be payable in arrears on the last
day of each Fiscal Quarter and on the Revolving Termination
Date for any period then ending for which such facility fee
shall not have been theretofore paid. The facility fee
shall be computed for the actual number of days elapsed on
the basis of a year of 360 days."
(e) Section 10.1.3 is deleted, and a new Section 10.1.3 is added as
follows:
"SECTION 10.1.3 MONTHLY REPORTS. Within 30 days after
the end of each month, the Directors' Statement which at a
minimum provides the unaudited financial statements of the
Company and its Subsidiaries prepared in substantially the
same manner as Schedule 10.1.3, and is signed by the Chief
Financial Officer of the Company. In addition, within
thirty (30) days after the end of each month, the Company
shall deliver to the Agent an updated Monthly Asset Report
in the form acceptable to the Agent. Notwithstanding the
foregoing, the Directors' Statement and Monthly Asset Report
for the last month of the Company's fiscal year shall be due
within forty-five (45) days after the end of that month."
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<PAGE>
(f) Section 10.1.4 is deleted, and a new Section 10.1.4 is added as
follows:
"SECTION 10.1.4 COMPLIANCE CERTIFICATES. Within 45
days after the end of each Fiscal Quarter, a certificate
signed by the President or the Chief Financial Officer of
the Company to the effect that no Event of Default or
Unmatured Event of Default has occurred and is continuing,
or, if there is any such event, describing it and the steps,
if any, being taken to cure it, and containing a computation
of, and showing compliance with, each of the financial
ratios, including the Margin Ratio, and the restrictions
contained in this SECTION 10."
(g) Section 10.9.2 is deleted, and a new Section 10.9.2 is added as
follows:
"SECTION 10.9.2 PURCHASE OR REDEMPTION OF COMPANY'S SECURITIES;
DIVIDEND RESTRICTIONS. Not purchase or redeem any shares of the
capital stock of the Company, declare or pay any dividends thereon
(other than stock dividends), make any distribution to stockholders or
set aside any funds for any such purpose, and not prepay, purchase or
redeem, and not permit any Subsidiary to purchase, any subordinated
indebtedness of the Company; PROVIDED, HOWEVER, that so long as no
Event of Default or Unmatured Event of Default exists or would result
therefrom, the Company may, in its sole discretion (i) pay or declare
cash dividends to the holders of common stock of the Company such that
no more than an aggregate of $2,500,000 in such dividends are paid or
declared during any consecutive twelve (12) month period; (ii) make
cash dividends to and repurchase the shares from the holders of the
Preferred Stock of the Company, in each case, in the amounts specified
in the Amended and Restated Certificate of Incorporation of the
Company as of the date hereof ("Scheduled Redemptions"); (iii)
repurchase Preferred Stock, and make payments for Scheduled
Redemptions, such that the aggregate total cost of such repurchase(s)
and Scheduled Redemptions, including prepayment premiums and/or
penalties, but excluding Scheduled Redemptions through May 31, 1995,
which, in the aggregate, shall not exceed $850,000, does not exceed
$19,500,000; and (iv) purchase the common stock of the Company to be
held by the Company as treasury shares for its own account or
otherwise considered
- 4 -
<PAGE>
treasury shares, or cancel the common stock of the Company, up to
$7,000,000 in the aggregate."
(h) Section 10.9.3 is deleted, and a new Section 10.9.3 is added as
follows:
"SECTION 10.9.3 CAPITAL EXPENDITURES. Effective December 31,
1994, except as otherwise permitted by SECTION 10.13(B) and the
exercise by the Company of its option to purchase certain equipment in
the CIT Sale/Leaseback, not, and not permit any Subsidiary to purchase
or otherwise acquire any fixed assets in the aggregate in excess of
$18,000,000 for the fiscal year of the Company ending on December 31,
1995, and $11,500,000 for the fiscal year of the Company ending on
December 31, 1996. The dollar amounts set forth in the preceding
sentence shall exclude future commitments and shall only include
capital expenditures actually made during the period being measured.
(i) Section 10.13(b) is deleted, and a new Section 10.13(b) is added
as follows:
"(b) a negotiated acquisition of any Person which, in the
Agent's sole discretion, is compatible with the business or the
Company or Subsidiaries and that the total consideration paid or given
for such acquisitions during any four consecutive calendar quarters
shall not exceed $12,500,000; and"
(j) Section 11.2.2 is hereby deleted in its entirety.
(k) Section 13 entitled "Definitions" is amended by deleting the
current definition of "Margin," and adding a new definition of "Margin" as
follows:
"MARGIN shall mean either 100, 125, 150 or 175 basis
points based on the Company's Margin Ratio (the "Ratio")
calculated initially as of March 31, 1995, and thereafter as
of the end of the second and third fiscal quarters of 1995,
in each case on an incremental quarterly annualized basis
(i.e., the Ratio determined as of March 31, 1995 shall be
based on annualized Consolidated Operating Income from the
first fiscal quarter of 1995 only; the Ratio determined as
of June 30, 1995 shall be based on annualized Consolidated
Operating Income from the first and second fiscal quarters
of
- 5 -
<PAGE>
1995; and the Ratio determined as of September 30, 1995 shall be based
on Consolidated Operating Income from the first, second and third
fiscal quarters of 1995). Thereafter, and through the remaining term
of this Agreement, the Ratio will be calculated on a rolling four-
quarter basis, with the Ratio during the most recent four fiscal
quarters determining the applicable Margin. As of the effective date
of the Second Amendment to Credit Agreement, the Margin is 100 basis
points; this Margin is subject to change 45 days after the end of the
first fiscal quarter of 1995, and each fiscal quarter thereafter,
pursuant to the foregoing calculations.
If the Ratio calculated as aforesaid is 1.50 or less,
the Margin shall be 100 basis points; if the Ratio is
greater than 1.50, but less than or equal to 2.00, the
Margin shall be 125 basis points; if the Ratio is greater
than 2.00, but less than or equal to 2.50, the Margin shall
be 150 basis points, and if the Ratio is greater than 2.50,
but less than or equal to 3.00, the Margin shall be 175
basis points.
If any certificate or report delivered by the Company
shall give rise to any adjustment in the Margin pursuant to
the foregoing, such adjustment shall be effective for all
Eurodollar Loans (including any then-outstanding Eurodollar
Loans) on the date which is 45 days (90 days in the case of
any certificate delivered in connection with the annual
audit report of the Company) after the end of the fiscal
quarter for which such certificate was prepared."
(l) Section 13 entitled "Definitions" is further amended by adding
the definition of Margin Ratio and Monthly Asset Report, which definitions are
as follows:
"MARGIN RATIO shall mean the ratio of (x) Consolidated
Total Funded Debt to (y) Consolidated Operating Income."
"MONTHLY ASSET REPORT shall mean the report, together
with the supporting calculations attached thereto, executed
on behalf of the Company by its chief financial
- 6 -
<PAGE>
officer or treasurer, in form reasonably acceptable to the Banks."
2. EFFECT OF AMENDMENT. From and after the effective date hereof,
reference in the Credit Agreement and all other documents executed pursuant to
the Credit Agreement (as each of the foregoing are amended hereby or pursuant
hereto) shall be deemed to be references to the Credit Agreement as amended
hereby.
3. EFFECTIVE DATE; CONDITIONS. This Second Amendment shall not become
effective until:
(a) The Company and the Banks shall have executed and delivered to
Bank of America Illinois this Second Amendment;
(b) The Company shall have delivered to the Banks resolutions of the
executive committee of the board of directors of the Company authorizing the
execution and delivery by the Company of this Second Amendment;
(c) The Company shall have delivered to the Banks such other
documents and instruments as the Banks may reasonably request in connection
herewith.
4. REPRESENTATIONS. To induce the Banks to enter into this Second
Amendment, the Company represents to the Banks as of the date hereof that:
(a) The representations and warranties contained in Section 9 of the
Credit Agreement are true and correct; and
(b) No Event of Default or Unmatured Event of Default (as defined in
the Credit Agreement) has occurred and is continuing.
5. DEFINITIONS; RATIFICATION. Any term used but not defined herein shall
have the meaning ascribed to it in the Credit Agreement. The Credit Agreement,
as amended, certificates and other documents, are hereby ratified and confirmed
and shall remain in full force and effect.
6. GOVERNING LAW. This Second Amendment shall be construed in accordance
with and governed by the laws of the State of Illinois applicable to contracts
made and to be performed therein without regard to the conflicts of law
provisions thereof.
7. COUNTERPARTS. This Second Amendment may be executed in counterparts,
each of which shall be deemed an original, but each of which together shall
constitute but one and the same instrument.
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<PAGE>
8. HEADINGS. The headings of the sections of this Second Amendment are
inserted for convenience only and shall not be deemed to constitute a part of
this Second Amendment.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to be
effective on the date provided herein.
ALLIED PRODUCTS CORPORATION
By_______________________________
Its____________________________
10 South Riverside Plaza
Chicago, Illinois 60606
Facsimile No.: (312) 454-9608
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<PAGE>
BANK OF AMERICA ILLINOIS,
individually and as Agent
By_______________________________
Barbara A. Hamel
Vice President
231 South LaSalle Street
Chicago, Illinois 60697
Facsimile No.: (312) 765-2193
LASALLE NATIONAL BANK
By_______________________________
Michael Foster
First Vice President
120 South LaSalle Street
Chicago, Illinois 60603
Facsimile No.: (312) 781-8544
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s<PAGE>
EXHIBIT 10D
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. HISTORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. History of Verson Retirement Plan . . . . . . . . . . . . . . . 1
1.2. History of Bush Hog Plan. . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . 2
2.1. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III. MERGER OF PLANS. . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Merger of Plans.. . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. Amendment and Restatement of Merged Plan. . . . . . . . . . . . 3
3.3. Segments of Merged Plan.. . . . . . . . . . . . . . . . . . . . 3
3.4. Incorporation By Reference. . . . . . . . . . . . . . . . . . . 4
ARTICLE IV. FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1. Method of Funding.. . . . . . . . . . . . . . . . . . . . . . . 4
4.2. Contributions.. . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3. Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4. Exclusive Benefit.. . . . . . . . . . . . . . . . . . . . . . . 5
4.5. No Right To Assets. . . . . . . . . . . . . . . . . . . . . . . 5
4.6. Separate Accounting.. . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1. Allocation of Responsibility Among Fiduciaries. . . . . . . . . 5
5.2. Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . 6
5.3. Claims Procedure. . . . . . . . . . . . . . . . . . . . . . . . 6
5.4. Records and Reports . . . . . . . . . . . . . . . . . . . . . . 7
5.5. Other Plan Administrator Powers and Duties. . . . . . . . . . . 7
5.6. Rules and Decisions . . . . . . . . . . . . . . . . . . . . . . 8
5.7. Administration Procedures.. . . . . . . . . . . . . . . . . . . 8
5.8. Authorization of Benefit Payments . . . . . . . . . . . . . . . 8
5.9. Application and Forms for Pension . . . . . . . . . . . . . . . 9
5.10. Facility of Payment . . . . . . . . . . . . . . . . . . . . . . 9
5.11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . .10
5.12. Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . .10
5.13. Agent For Service.. . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE VI. MAXIMUM PENSION . . . . . . . . . . . . . . . . . . . . . . . .10
6.1. Maximum Pension Benefits. . . . . . . . . . . . . . . . . . . .10
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE VII. RESTRICTED BENEFITS TO CERTAIN PARTICIPANTS. . . . . . . . . .12
7.1. Applicability of Restrictions.. . . . . . . . . . . . . . . . .12
7.2. Participants Whose Pension Payments Are Restricted. . . . . . .12
7.3. Restricted Benefit Definitions. . . . . . . . . . . . . . . . .13
7.4. Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . .13
7.5. Inapplicability of Restrictions.. . . . . . . . . . . . . . . .13
7.6. Restrictions On Termination.. . . . . . . . . . . . . . . . . .14
ARTICLE VIII. AMENDMENTS, TERMINATION, AND ACTION BY THE COMPANY. . . . . .14
8.1. Right to Terminate. . . . . . . . . . . . . . . . . . . . . . .14
8.2. Amendment of the Merged Plan. . . . . . . . . . . . . . . . . .14
8.3. Action by the Company.. . . . . . . . . . . . . . . . . . . . .15
ARTICLE IX. SUCCESSORS AND MERGER OR CONSOLIDATION OF PLANS . . . . . . . .15
9.1. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . .15
9.2. Conditions Applicable to Mergers or Consolidation of Plans. . .15
ARTICLE X. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.1. Termination.. . . . . . . . . . . . . . . . . . . . . . . . . .16
10.2. Terms.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
10.3. Partial Termination.. . . . . . . . . . . . . . . . . . . . . .16
10.4. Restricted Benefits.. . . . . . . . . . . . . . . . . . . . . .17
10.5. Vesting at Termination. . . . . . . . . . . . . . . . . . . . .17
10.6. Benefits in Pay Status or Paid Within Three Years Before Plan
Termination.. . . . . . . . . . . . . . . . . . . . . . . . . .17
10.7. Liquidation.. . . . . . . . . . . . . . . . . . . . . . . . . .17
10.8. Allocation of Assets. . . . . . . . . . . . . . . . . . . . . .19
10.9. Further Allocation. . . . . . . . . . . . . . . . . . . . . . .19
10.10. Reallocation Required by Secretary of the Treasury. . . . . . .20
10.11. Form of Distributions.. . . . . . . . . . . . . . . . . . . . .20
10.12. Reversion of Excess Assets. . . . . . . . . . . . . . . . . . .20
ARTICLE XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .20
11.1. Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . .20
11.2. Tax-Qualified Plan. . . . . . . . . . . . . . . . . . . . . . .21
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE XII. TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . .21
12.1. Determination of Top-Heavy. . . . . . . . . . . . . . . . . . .21
12.2. Minimum Benefit.. . . . . . . . . . . . . . . . . . . . . . . .21
12.3. Minimum Vesting.. . . . . . . . . . . . . . . . . . . . . . . .22
12.4. Death after Minimum Vesting.. . . . . . . . . . . . . . . . . .22
12.5. Change in Top-Heavy Status. . . . . . . . . . . . . . . . . . .22
12.6. Impact on Maximum Benefits. . . . . . . . . . . . . . . . . . .23
12.7. Aggregation with Other Plans. . . . . . . . . . . . . . . . . .23
12.8. Present Value . . . . . . . . . . . . . . . . . . . . . . . . .24
12.9. Computation of Benefit. . . . . . . . . . . . . . . . . . . . .24
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<PAGE>
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
ARTICLE I. HISTORY
1.1. HISTORY OF VERSON RETIREMENT PLAN. Allied Products Corporation (the
"Company") has from time to time maintained the Verson Division of Allied
Products Corporation Employees Retirement Plan (the "Verson Retirement Plan").
The Company transferred sponsorship of the Verson Retirement Plan to Verson
Corporation, effective January 29, 1993. Verson Corporation transferred
sponsorship of the Verson Retirement Plan back to the Company, effective
December 31, 1993.
(a) The Verson Allsteel Press Company Employees Retirement Plan (the
"Verson Plan") was established by Verson Allsteel Press Company, Inc.,
effective as of January 1, 1953. The F.J. Littell Machine Co. Pension Plan
for Office, Engineering, Sales and Supervisory Employees (the "Littell
Plan") was established by F.J. Littell Machine Co., effective as of
January 1, 1968. In 1986 both of these companies became divisions of the
Company, known as the Verson Allsteel Press Company Division (the "Verson
Division") and the F.J. Littell Machine Company Division (the "Littell
Division"), respectively. Both the Verson Plan and the Littell Plan
continued in existence under the sponsorship of the Company. The Verson
Plan was amended and restated as of August 1, 1984 and subsequently was
amended effective August 1 and October 31, 1986. The Littell Plan was
amended and restated as of January 1, 1976 and subsequently was amended
effective July 1, 1978, May 1, 1981, January 1, 1984, January 1, 1985 and
October 31, 1986.
(b) Effective October 31, 1986, the benefits of participants under
both the Verson Plan and the Littell Plan were frozen, and no further
accrual of benefits has occurred under either the Verson Plan or the
Littell Plan after that date.
(c) Effective as of August 19, 1991, the Company divested itself of
the Littell Division. As a result of this divestiture, all employees of
the Littell Division terminated employment with the Company, effective as
of August 19, 1991.
(d) Effective December 31, 1991, the Littell Plan was merged into the
Verson Plan under the name Verson Division of Allied Products Corporation
Employees Retirement Plan (the "Verson Retirement Plan").
<PAGE>
1.2. HISTORY OF BUSH HOG PLAN. The Company has from time to time
maintained the Bush Hog Division of Allied Products Corporation Salaried Pension
Plan (the "Bush Hog Plan"). The Company transferred sponsorship of the Bush Hog
Plan to Bush Hog Corporation, effective January 29, 1993. Bush Hog Corporation
transferred sponsorship of the Bush Hog Plan back to the Company, effective
December 31, 1993.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1. DEFINITIONS. The following terms, alphabetically arranged, when used
in the Merged Plan and initially capitalized as below indicated, shall, unless
expressly otherwise provided, have the following respective meanings:
"ACTUARY" means the individual enrolled actuary or firm of one or more
enrolled actuaries selected by the Company to provide actuarial services in
connection with the administration of the Merged Plan.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMPANY" means Allied Products Corporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"FIDUCIARIES" means the Company, the Plan Administrator, the Employers, the
Insurance Company, and the Trustee, but only with respect to the
responsibilities of each for administration of the Merged Plan, the Group
Annuity Contract and the Trust.
"FUND" means all assets of the Merged Plan, namely the Group Annuity
Contract and the Trust.
"GROUP ANNUITY CONTACT" means one or more contracts issued by an Insurance
Company for the payment of retirement benefits to Merged Plan participants who
become entitled to such benefits in accordance with the provisions of the Merged
Plan.
"INSURANCE COMPANY" means one or more legal reserve life insurance
company(ies) organized or incorporated under the laws of any one of the United
States of America and duly licensed in any State.
"MERGED PLAN" means the Allied Products Corporation Combined Retirement
Plan.
"PLAN ADMINISTRATOR" means the Plan Administrator of the Merged Plan
appointed as such under Section 5.2.
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<PAGE>
"PLAN YEAR" means, with respect to the Merged Plan and except as otherwise
provided in the Segments, the calendar year; provided however, that, prior to
January 1, 1995, "Plan Year" means the twelve month period from August 1 through
July 1, and the short period from August 1, 1994 through December 31, 1994.
"TRUST OR TRUST FUND" means the fund known as the Allied Products
Corporation Retirement Trust, maintained in accordance with the terms of the
trust agreement, as from time to time amended, and/or any other trust adopted by
the Company for purposes of funding the Merged Plan.
"TRUSTEE" means the corporation(s) and/or individual(s) appointed by the
Board of Directors of the Company to administer the Trust.
2.2. CONSTRUCTION. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise and wherever used herein a pronoun in the singular form
shall be considered as being in the plural form unless the context clearly
indicates otherwise. The words "hereof", "herein", "hereunder" and other
similar compounds of the word "here" shall mean and refer to this Merged Plan
document. All references herein to specific Articles and/or Sections shall mean
and refer to Articles and/or Sections of the Merged Plan document unless
otherwise qualified. Article and Section headings are included for convenience
of reference and are not intended to add to, or subtract from, the terms of the
Merged Plan. Terms used in this Merged Plan when not defined in this Merged
Plan shall have the meanings given them by the Segments of the Merged Plan; the
term Employers shall mean all three of the Employers defined in the Segments of
the Merged Plan.
ARTICLE III. MERGER OF PLANS
3.1. MERGER OF PLANS. The Bush Hog Plan was merged into the Verson
Retirement Plan, and the combined plan was renamed the Allied Products
Corporation Combined Retirement Plan (the "Merged Plan"), effective December 31,
1993.
3.2. AMENDMENT AND RESTATEMENT OF MERGED PLAN. The Merged Plan is hereby
amended and restated effective as of December 31, 1993, and it is renamed as of
that date as the Allied Products Corporation Combined Retirement Plan.
3.3. SEGMENTS OF MERGED PLAN. The Merged Plan consists of three Segments:
one which contains the provisions applicable to participants in the former
Verson Plan (the "Verson Segment"),one which contains the provisions applicable
to participants in the former Littell Plan (the "Littell Segment"), and one
which contains the provisions applicable to participants in the former Bush Hog
Plan (the "Bush Hog Segment").
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<PAGE>
3.4. INCORPORATION BY REFERENCE. The following three Segments of the
Merged Plan, each of which is hereby amended and restated effective as of
December 31, 1993, with certain provisions effective as of the dates specified
in certain provisions therein, are incorporated herein by this reference and are
made a part hereof as though fully set forth herein: the Verson Segment, which
is attached hereto as Exhibit 1, the Littell Segment, which is attached hereto
as Exhibit 2, and the Bush Hog Segment, which is attached hereto as Exhibit 3.
ARTICLE IV. FUNDING
4.1. METHOD OF FUNDING. The Company may fund the Merged Plan by purchase
of one or more Group Annuity Contracts. Alternatively or in addition, the
Company may fund the Merged Plan by use of one or more Trusts, in accord with
the provisions of ERISA. The Company expressly reserves the right to change
funding agencies or vehicles at any time at its own election and without the
consent of any person or organization.
4.2. CONTRIBUTIONS. The Company shall establish a funding method and
policy which will be consistent with Merged Plan objectives. No contributions
shall be required or permitted under the Merged Plan from any Merged Plan
participant. The Company and/or the Employers of Merged Plan participants shall
make contributions in such amounts and at such times as determined by their
Boards of Directors in accordance with the funding method and policy established
by the Company. Forfeitures arising under the Merged Plan because of severance
of employment before a Merged Plan participant becomes eligible for a Pension,
or for any other reason, shall be applied to reduce the contributions otherwise
required to be made to the Merged Plan and shall not be used to increase the
benefit otherwise payable to any Merged Plan participant.
4.3. ASSETS. All contributions made by the Company or by an Employer under
the Merged Plan shall be paid to the Insurance Company and deposited in the
Group Annuity Contract and/or shall be paid to the Trustee and deposited in the
Trust, as directed by the Company. However, all contributions made by the
Company or by an Employer are expressly conditioned upon the initial
qualification of the Merged Plan under the Code, and upon the deductibility
under Section 404 of the Code of contributions made to provide Merged Plan
benefits. Notwithstanding any provision of the Merged Plan to the contrary, any
portion of a contribution made to the Merged Plan by the Company or by an
Employer shall be returned to the Company or to such Employer if that portion of
the contribution was made by a mistake of fact or its
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<PAGE>
deductibility was disallowed, so long as it is returned within one year after
the mistaken payment of the portion of the contribution or the disallowance of
the deduction.
4.4. EXCLUSIVE BENEFIT. Except as otherwise provided in the Merged Plan
(including the Segments), all assets of the Merged Plan, however held, including
investment income, shall be retained for the exclusive benefit of Merged Plan
participants and their spouses or beneficiaries, shall be used to pay benefits
to such persons or to pay administrative expenses to the extent not paid by the
Company or by an Employer and shall not revert to or inure to the benefit of the
Company or of any Employer prior to the satisfaction of all liabilities under
the Merged Plan.
4.5. NO RIGHT TO ASSETS. No person shall have any interest in or right to
any of the funds contributed to or held under the Merged Plan, except as
expressly provided in the Merged Plan, the Group Annuity Contract and/or the
Trust, and then only to the extent that such funds have been contributed by the
Company or by an Employer to the Insurance Company or to the Trustee.
4.6. SEPARATE ACCOUNTING. There shall be separate accounting within the
Group Annuity Contract and/or Trust as between the assets held under each of the
Segments of the Merged Plan, namely, the Verson Segment, the Littell Segment,
and the Bush Hog Segment. Notwithstanding the separate accounting described in
this Section, all assets held under the Group Annuity Contract and/or under the
Trust shall be available to pay any Merged Plan benefit liabilities arising
under any of the three Segments of the Merged Plan.
ARTICLE V. ADMINISTRATION
5.1. ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES. The Fiduciaries shall
have only those powers, duties, responsibilities and obligations as are
specifically given them under this Merged Plan (including each of the Segments),
the Insurance Contract, and/or the Trust. The Company shall be the "Named
Fiduciary" within the meaning of ERISA and as such shall have the sole
responsibility for making the contributions necessary to provide benefits under
the Merged Plan. The Company shall have the sole authority to appoint and
remove the Insurance Company, the Trustee, the Plan Administrator, and any
Investment Manager, and to amend or terminate, in whole or in part, the Merged
Plan, the Group Annuity Contract, or the Trust. The Company shall also have
final responsibility for administration of the Merged Plan. The Plan
Administrator shall have the specific delegated powers and duties described in
the further provisions of this Article, and such further powers and duties as
hereinafter may be delegated to it by the Company. The Trustee shall have the
sole responsibility for the administration of the Trust and the management of
the assets held under the Trust, all as specifically provided in the Trust. The
Insurance Company shall have the sole responsibility for the administration of
the
-5-
<PAGE>
Group Annuity Contract and the management of the assets held under the Group
Annuity Contract, all as specifically provided in the Group Annuity Contract.
Each Fiduciary warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Merged
Plan, the Group Annuity Contract, or the Trust, as the case may be, authorizing
or providing for such direction, information or action. Furthermore, each
Fiduciary may rely upon any such direction, information or action of another
Fiduciary as being proper under the Merged Plan, the Group Annuity Contract, or
the Trust, and is not required under the Merged Plan, the Group Annuity
Contract, or the Trust to inquire into the propriety of any such direction,
information or action. It is intended under the Merged Plan, the Group Annuity
Contract, and the Trust that each Fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities and obligations under the
Merged Plan, the Group Annuity Contract, and the Trust and shall not be
responsible for any act or failure to act of another Fiduciary. No Fiduciary
guarantees the Trust Fund in any manner against investment loss or depreciation
in asset value.
5.2. PLAN ADMINISTRATOR. The Company shall appoint a Plan Administrator to
administer the Merged Plan in accordance with the Merged Plan, the Group Annuity
Contract and the Trust. In the absence of any appointment of a Plan
Administrator, the Company shall be the Plan Administrator. All usual and
reasonable expenses of the Plan Administrator may be paid in whole or in part by
the Company or by any of the Employers, and any expenses not so paid shall be
paid by the Insurance Company and/or by the Trustee out of the principal or
income of the Group Annuity Contract and/or of the Trust Fund, respectively. A
Plan Administrator who is an employee of the Company or of any of the Employers
shall not receive compensation with respect to his duties under the Merged Plan.
5.3. CLAIMS PROCEDURE. The Plan Administrator shall make all
determinations as to the right of any person to a benefit. If a Merged Plan
participant or his beneficiary files a claim for Pension benefits under the
Merged Plan, the claim should be submitted in writing to the Plan Administrator
which shall process it and approve or disapprove it within ninety (90) days of
the date that the claim is received. If special circumstances arise and the
Plan Administrator cannot process the claim within ninety (90) days, the Plan
Administrator shall notify the claimant that the time for making the decision is
extended for up to ninety (90) additional days. If the Plan Administrator fails
to notify the claimant within the applicable period, the claim shall be
considered denied. If the Plan Administrator makes a determination to deny
Pension benefits to a Merged Plan participant or his beneficiary, the denial
shall be stated in writing and delivered or mailed to such Merged Plan
participant or beneficiary. Such notice shall set forth the specific reasons
for the denial, written to the best of the Plan Administrator's ability in a
manner that may be understood by the Merged Plan participant or beneficiary
without legal or
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<PAGE>
actuarial counsel and shall describe the steps necessary for appeal. A Merged
Plan participant or beneficiary whose claim for Pension benefits has been denied
shall have a period of sixty (60) days in which to appeal to the Plan
Administrator and submit additional information to the Plan Administrator. The
Plan Administrator shall consider the request within a reasonable period of
time. If the claim is again denied in writing, the Merged Plan participant or
beneficiary may request a hearing within thirty (30) days after the second
denial, and the Plan Administrator shall afford a reasonable opportunity for a
hearing to any Merged Plan participant or beneficiary for a review of its
decision denying the claim, which hearing shall be held within sixty(60) days
after its receipt of the request. The claimant shall have an opportunity to
present evidence and appear before authorized representatives of the Plan
Administrator. The Plan Administrator shall review all evidence submitted by
the claimant, shall make its decision regarding the claim within one hundred
twenty (120) days after its receipt of the request for a hearing and shall
provide the claimant with a written decision. The decision of the Plan
Administrator regarding the claim shall be final and conclusive.
5.4. RECORDS AND REPORTS. The Plan Administrator shall exercise such
authority and responsibility as it deems appropriate in order to comply with
ERISA and governmental regulations issued thereunder relating to records of
Service, Accrued Benefits and the percentage of such Benefits which are
nonforfeitable under the Merged Plan; notification to Merged Plan participants;
annual registration with the Internal Revenue Service; annual reports to the
Department of Labor; and reports and premium payments to the Pension Benefit
Guaranty Corporation.
5.5. OTHER PLAN ADMINISTRATOR POWERS AND DUTIES. The Plan Administrator
shall have all such powers and duties as may be necessary to discharge its
duties hereunder, including, but not by way of limitation, the following:
(a) to construe and interpret the Merged Plan, decide all questions
of eligibility and determine the amount, manner and time of payment of any
benefits hereunder;
(b) to prescribe procedures to be followed by Merged Plan
participants or beneficiaries filing applications for benefits;
(c) to prepare and distribute, in such manner as the Plan
Administrator determines to be appropriate, information explaining the
Merged Plan;
(d) to receive from the Company, from the Employers, and from Merged
Plan participants, such information as shall be necessary for the proper
administration of the Merged Plan;
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(e) to furnish the Company, upon request, such annual reports with
respect to the administration of the Merged Plan as the Plan Administrator
deems advisable;
(f) to receive and review the periodic reports of the Actuary and the
Merged Plan accountant;
(g) to receive, review and keep on file (as it deems convenient or
proper) financial reports received from the Insurance Company and/or from
the Trustee;
(h) to receive, review and keep on file reports of benefit payments
and reports of disbursements for expenses as he or it deems advisable; and
(i) to appoint or employ individuals to assist in the administration
of the Merged Plan and any other agents it deems advisable, including
legal, accounting, and actuarial counsel.
The Plan Administrator shall have full discretionary authority to exercise these
powers. However, the Plan Administrator shall have no power to add to, subtract
from or modify any of the terms of the Merged Plan, or to change or add to any
benefits provided by the Merged Plan, or to waive or fail to apply any
requirements of eligibility for a Pension under the Merged Plan.
5.6. RULES AND DECISIONS. The Plan Administrator may adopt such rules as
it deems necessary, desirable, or appropriate. All rules and decisions of the
Plan Administrator shall be uniformly and consistently applied to all Merged
Plan participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon information
furnished by a Merged Plan participant or beneficiary, the Employers, the legal
counsel of the Company, the Insurance Company, the Trustee, the Merged Plan
accountant, or the Actuary.
5.7. ADMINISTRATION PROCEDURES. The Plan Administrator shall keep a record
of all meetings and forward all necessary communications to the Company, the
Insurance Company, the Trustee, or the Actuary. The Plan Administrator may
adopt such rules and regulations as it deems desirable for the conduct of its
affairs.
5.8. AUTHORIZATION OF BENEFIT PAYMENTS. The Plan Administrator shall issue
directions to the Insurance Company and/or to the Trustee concerning all
benefits which
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are to be paid from the Group Annuity Contract and/or from the Trust pursuant to
the provisions of the Merged Plan.
5.9. APPLICATION AND FORMS FOR PENSION. The Plan Administrator may require
a Merged Plan participant or beneficiary to complete and file with the Plan
Administrator an application for Pension benefits and all other forms approved
by the Plan Administrator, and to furnish all pertinent information requested by
the Plan Administrator. The Plan Administrator may rely upon all such
information so furnished to it, including a Merged Plan participant's current
mailing address.
5.10. FACILITY OF PAYMENT. If the Plan Administrator finds that a Merged
Plan participant, former participant or beneficiary is unable to care for his
affairs because of illness or accident, or is a minor, or, in the case of a
beneficiary who is entitled to a benefit under the Merged Plan, he dies before
such benefit is distributed in its entirety, the Plan Administrator may direct
that any payment due him, unless claim therefor shall have been made by a duly
appointed legal representative, shall be paid in any one or more of the
following ways:
(a) Directly to such person;
(b) To such person's duly appointed legal guardian or conservator;
(c) To such person's spouse, child, parent or other blood relative or
to a person with whom he resides;
(d) To a custodian under any applicable Uniform Transfers to Minors
Act;
(e) To a relative or friend of such person for the benefit of the
Merged Plan participant or beneficiary;
(f) By the Plan Administrator itself for the benefit of the Merged
Plan participant or beneficiary; or
(g) In the case of a deceased beneficiary who is entitled to a
benefit under the Merged Plan, to the estate of such beneficiary.
The decision of the Plan Administrator in each case shall be final and binding
upon all persons in interest and the Trustee shall be under no duty to see to
the proper application of
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such funds. In addition, any such payment so made shall be in complete
discharge of any liability for the making of such payment under the provisions
of the Merged Plan.
5.11. INDEMNIFICATION. The persons authorized to act on behalf of the
Plan Administrator shall be indemnified by the Company and not from the Group
Annuity Contract or from the Trust against any and all liability, joint or
several, for their acts and omissions and for the acts and omissions of their
agents and other Fiduciaries in the administration and operation of the Merged
Plan. The persons authorized to act on behalf of the Plan Administrator shall
also be indemnified by the company against all costs and expenses reasonably
incurred by them in connection with the defense of any action, suit or
proceeding in which they may be made party defendants by reason of their being
or having been persons authorized to act on behalf of the Plan Administrator,
whether or not then acting as such, including the cost of reasonable settlements
(other than amounts paid to the Company) made to avoid costs of litigation and
payment of any judgment or decree entered in such action, suit or proceeding.
The Company shall not, however, indemnify the persons authorized to act on
behalf of the Plan Administrator with respect to any act finally adjudicated to
have been caused by the willful misconduct of such an individual; or with
respect to the cost of any settlement unless the settlement has been approved by
a court of competent jurisdiction. The right of indemnification shall not be
exclusive of any other right to which the persons authorized to act on behalf of
the Plan Administrator may be legally entitled and it shall inure to the benefit
of the duly appointed legal representatives of such individual. The provisions
of this Section shall apply equally to any member of the Board of Directors of
the Company or of any of the Employers.
5.12. FIDUCIARY DUTIES. All Fiduciaries shall discharge their duties
solely in the interest of Merged Plan participants and beneficiaries and for the
exclusive purpose of (a) providing benefits to Merged Plan participants and
their beneficiaries, and (b) defraying reasonable expenses of administering the
Merged Plan
5.13. AGENT FOR SERVICE. The agent for service of legal process shall
be such person as may be designated by the Board of Directors of the Company; in
the absence of any such designation, the Plan Administrator shall be the agent
for service of legal process for the Merged Plan.
ARTICLE VI. MAXIMUM PENSION
6.1. MAXIMUM PENSION BENEFITS. Notwithstanding anything to the contrary in
the Merged Plan, Pension benefits shall be subject to Section 415 of the Code
and shall be reduced, to the extent necessary, to meet the requirements of such
Code Section as follows. The total maximum Pension benefits under the Merged
Plan for a limitation year
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shall not exceed the lesser of an amount equal to (i) $90,000 or (ii) 100% of a
Merged Plan participant's average annual compensation for the highest three
consecutive years during which the Merged Plan participant was participating in
the Merged Plan, subject to the following:
(a) The limits on the annual amount of Pension benefits are based on
payment in the form of a single life annuity or in the form of a qualified
joint and survivor annuity (as such term is defined in Section 417 of the
Code), if applicable. In the event payment is made under a different form
of annuity payment, such specified maximum annual amount shall be subject
to adjustment to reflect the Actuarial Equivalent of the form of payment
chosen hereunder as compared to the form of a single life annuity.
(b) If benefits begin prior to social security retirement age (as
that term is defined in Section 415(b)(8) of the Code), the maximum dollar
limitation will be the Actuarial Equivalent of the $90,000 maximum payable
at social security retirement age. For a Merged Plan participant whose
benefits begin after social security retirement age, the dollar limitation
shall be the Actuarial Equivalent of a $90,000 Pension payable at social
security retirement age; provided, however, that such Actuarial Equivalent
shall be based on an interest rate of 5% per annum, in lieu of the interest
rate otherwise used in the determination of the Actuarial Equivalent of
such maximum benefit payable at social security retirement age.
(c) If the Merged Plan participant has fewer than ten (10) years of
participation in the Merged Plan (and in the segment in which he
participated prior to December 31, 1993) at retirement, the applicable
maximum shall be multiplied by a fraction, the numerator of which is the
number of his years of participation in the Merged Plan (or appropriate
segment), and the denominator of which is ten (10).
(d) amount specified in Section 415(b)(1)(A) is adjusted by the
Internal Revenue Service pursuant to Section 415(d)(1)(A) of the Code.
(e) Notwithstanding the foregoing, the Pension payable under the
Merged Plan will be reduced to the extent necessary to prevent
disqualification of the Merged Plan and other qualified plans of the
Company under Section 415 of the Code. These additional limitations
provide that, if an individual participates at any time in both a defined-
benefit plan and a defined-contribution plan maintained by the Company, the
sum of the "defined-benefit plan fraction" and the "defined-contribution
plan fraction" for any limitation year may not exceed 1.0. For purposes of
this Section, the limitation year is the Plan Year. The "defined-benefit
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plan fraction" for any Plan Year is a fraction, the numerator of which is
the sum of the Merged Plan participant's projected annual benefits under
all defined-benefit plans (whether or not terminated) maintained by the
Company in the current and all prior limitation years, and the denominator
of which is the lesser of (i) 1.25 multiplied by the annual dollar
limitation in effect under the Merged Plan or (ii) 1.4 multiplied by 100%
of the Merged Plan participant's compensation, as defined in
Section 1.415-2(d)(1)(i) of the Income Tax Regulations, during the three
consecutive limitation years when his compensation was the highest. The
"defined-contribution plan fraction" for any Plan Year is a fraction, the
numerator of which is the sum of the annual additions to the Merged Plan
participant's accounts under all defined-contribution plans (whether or not
terminated) maintained by the Company in the current and all prior
limitation years, and the denominator of which is the sum of the maximum
aggregate amounts which could have been paid under Section 415(c) of the
Code for the current and all prior limitation years of such Merged Plan
participant's employment. The "maximum aggregate amount" for any
limitation year shall be equal to the lesser of 1.25 multiplied by the
dollar limitation in effect for such limitation year under
Section 415(c)(1)(A) of the Code or 1.4 multiplied by 25% of the Merged
Plan participant's total compensation for the limitation year.
(f) The Plan Administrator shall advise any Merged Plan participant
of any additional limitation on his Pension required by this Section.
ARTICLE VII. RESTRICTED BENEFITS TO CERTAIN PARTICIPANTS
7.1. APPLICABILITY OF RESTRICTIONS. This Article is effective as of
August 1, 1989 with respect to the Verson Segment, and it is effective as of
January 1, 1989 with respect to the Littell Segment and the Bush Hog Segment.
The purpose of this Article is to conform the Merged Plan to the requirements of
Section 1.401(a)(4)-5(b) of the Income Tax Regulations. Notwithstanding any
contrary provision of the Merged Plan, all Pension distributions under the
Merged Plan are restricted as described in Sections 7.4 and 7.6; the
restrictions set forth in Section 7.4 below are subject, however, to the
exception set forth in Section 7.5.
7.2. PARTICIPANTS WHOSE PENSION PAYMENTS ARE RESTRICTED. The Merged Plan
participants to whom Pension payments are restricted are all HCEs and all former
HCEs (as such terms are defined in Treasury Regulation Section 1.401(a)(4)-12;
that is, as the terms highly compensated employees and highly compensated former
employees, respectively, are defined in Treasury Regulation Section 1.410(b)-9)
who benefit under the Merged Plan for the Plan Year; provided however, that
distributions of Pension benefits shall not be restricted under this Article to
such an individual if he is not one of the 25 nonexcludable employees and former
employees (as both such terms are defined in
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Treasury Regulation Section 1.401(a)(4)-12) with the largest amount of
compensation in the current or any prior year.
7.3. RESTRICTED BENEFIT DEFINITIONS. For the purposes of these
restrictions:
(a) "Benefit" includes, among other benefits, loans in excess of the
amounts set forth in Section 72(p)(2)(A) of the Code, any periodic income,
any withdrawal values payable to a living employee or former employee, and
any death benefits not provided for by insurance on the employee's or
former employee's life.
(b) "Current liabilities" and the "value of Merged Plan assets" means
any reasonable and consistent method for determining the value of current
liabilities and the value of Merged Plan assets, as determined by the
actuary for the Merged Plan.
7.4. RESTRICTIONS. Except as provided in Section 7.5, in any year, Pension
payments made to or on behalf of a Merged Plan participant described in
Section 7.2 shall not exceed an amount equal in each year to the payments that
would be made to or on behalf of the Merged Plan participant under:
(a) A straight life annuity that is the Actuarial Equivalent of the
Accrued Benefit and other benefits to which the Employee is entitled under
the Merged Plan, and
(b) The amount of payments that the Merged Plan participant is
entitled to receive under a social security supplement.
7.5. INAPPLICABILITY OF RESTRICTIONS. However, the restrictions do not
apply if one of the following requirements is satisfied:
(a) After taking into account payment to or on behalf of a Merged
Plan participant described in Section 7.2 of all Pension benefits payable
to the Merged Plan participant, the value of Merged Plan assets equals or
exceeds one hundred ten percent (110%) of the value of current liabilities,
as defined in Section 412(l)(7) of the Code;
(b) The value of benefits payable under the Merged Plan to or on
behalf of a Merged Plan participant described in Section 7.2 is less than
one percent (1%) of the current liabilities before distribution; or
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(c) The value of benefits payable under the Merged Plan to or on
behalf of a Merged Plan participant described in Section 7.2 does not
exceed the amount described in Section 411(a)(11)(A) of the Code
(restrictions on certain mandatory distributions).
7.6. RESTRICTIONS ON TERMINATION. In the event of termination of the
Merged Plan, the benefit of any Merged Plan participant described in Section 7.2
is limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the
Code.
ARTICLE VIII. AMENDMENTS, TERMINATION, AND ACTION BY THE COMPANY
8.1. RIGHT TO TERMINATE. The Company intends to continue its sponsorship
of the Merged Plan and payment of contributions to the Merged Plan indefinitely;
but continuance of such sponsorship and such contributions is not assumed as a
contractual obligation of the Company, and the right is reserved by the Company
to cease its sponsorship of the Merged Plan or to reduce, suspend, or
discontinue its contributions under the Merged Plan at any time.
8.2. AMENDMENT OF THE MERGED PLAN. The Company may amend the Merged Plan
at any time and from time to time, but such power of amendment shall under no
circumstances include the right in any way or to any extent to revest or
otherwise transfer any interest in or to the Group Annuity Contract and/or the
Trust, or any income therefrom, to the Company or to any of the Employers,
except as otherwise provided in the Merged Plan; nor shall the power of
amendment include the right in any way or to any extent to divest any Merged
Plan participant of the benefit to which he would be entitled if he had resigned
as of the date of such amendment. Neither shall such power of amendment be
exercised in any way which would or could give to any Merged Plan participant
any right or thing of exchangeable value in advance of the receipt of
distributions in accordance with the terms provided therefor. No amendment
shall ever operate to enable any part of the corpus or income or other assets of
the Group Annuity Contract and/or of the Trust to be used for or diverted to any
purpose other than the exclusive benefit of Merged Plan participants or their
beneficiaries. Notwithstanding the foregoing provisions of this Section,
however, the Merged Plan may be amended in any manner whatsoever, with
prospective or retroactive effect, for the purpose of qualifying it under ERISA
or the Code. The Company shall file a certified copy of each amendment to the
Merged Plan with the Insurance Company, if any, the Trustee, if any, and the
Plan Administrator, if any, promptly upon its adoption.
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8.3. ACTION BY THE COMPANY. Any action by the Company under the Merged
Plan may be by resolution of its Board of Directors, or by any person or persons
duly authorized by resolution of said Board to take such action.
ARTICLE IX. SUCCESSORS AND MERGER OR CONSOLIDATION OF PLANS
9.1. SUCCESSORS. In the event of the dissolution, merger, consolidation or
reorganization of the Company, provision may be made by which the Merged Plan,
the Group Annuity Contract and/or the Trust will be continued by the successor;
and, in that event, such successor shall be substituted for the Company under
the Merged Plan. The substitution of the successor shall constitute an
assumption of Merged Plan liabilities by the successor and the successor shall
have all of the powers, duties and responsibilities of the Company under the
Merged Plan. In the event of the dissolution, merger, consolidation or
reorganization of an Employer, provision may be made by which the successor
shall be substituted for such Employer under the Segment applicable to such
Employer's employees.
9.2. CONDITIONS APPLICABLE TO MERGERS OR CONSOLIDATION OF PLANS. In the
event of any merger or consolidation of the Merged Plan with, or transfer in
whole or in part of the assets and liabilities of the Group Annuity Contract
and/or the Trust to another trust fund held under any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Merged Plan participants, the assets of the Group Annuity Contract and/or of
the Trust Fund applicable to such participants shall be merged or consolidated
with or transferred to the other trust fund only if:
(a) Each Merged Plan participant would (if either the Merged Plan or
the other plan then terminated) receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer (if the Merged Plan had then terminated),
and the determination of such benefits shall be made in the manner and at
the time prescribed in regulations issued under ERISA;
(b) Resolutions of the Boards of Directors of the Company, and of any
new or successor employer of the affected Merged Plan participants, shall
authorize such transfer of assets; and, in the case of the new or successor
employer of the affected Merged Plan participants, its resolutions shall
include an assumption of liabilities with respect to such Merged Plan
participants' inclusion in the new employer's plan; and
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(c) Such other plan and trust are qualified under Sections 401(a) and
501(a) of the Code.
ARTICLE X. TERMINATION
10.1. TERMINATION. In accordance with the procedures set forth in this
Article, the Company may terminate the Merged Plan at any time. In the event of
the dissolution, merger, consolidation or reorganization of the Company, the
Merged Plan shall terminate and the Group Annuity Contract and the Trust Fund
shall be liquidated unless the Merged Plan is continued by a successor to the
Company in accordance with Section 9.1. Subject to the applicable requirements,
if any, of ERISA governing termination of "employee pension benefit plans"
and/or the applicable requirements, if any, of the Code governing termination of
retirement plans which satisfy the requirements of Section 401(a) of the Code,
the Company shall direct and require the Insurance Company to liquidate the
Group Annuity Contract and shall direct and require the Trustee to liquidate the
Trust Fund, or the applicable portion thereof, in accordance with the provisions
of this Article.
10.2. TERMS. The terms termination, partial termination and date thereof,
as used in the Merged Plan, shall have the same meaning imparted thereto under
ERISA. If the termination or partial termination of the Merged Plan occurs,
such of the following procedures as may be required in the circumstances under
ERISA shall be carried out with respect to those Merged Plan participants
affected by such termination or partial termination.
10.3. PARTIAL TERMINATION. Upon termination of the Merged Plan with
respect to a group of Merged Plan participants which constitutes a partial
termination of the Merged Plan, the Company shall cause the proportionate
interest of the Merged Plan participants affected by such partial termination to
be determined. The determination of such proportionate interest shall be done
in an equitable manner, considering the remaining Merged Plan participants as
well as the Merged Plan participants affected by the termination, on the basis
of the contributions made by the Company and by the Employers under the terms of
the Merged Plan, the provisions of this Article, and other appropriate
considerations. After such proportionate interest has been determined, the
Company shall allocate portions of the Group Annuity Contract and/or of the
Trust and shall direct the Insurance Company and/or the Trustee to segregate the
assets of the Group Annuity Contract and/or of the Trust according to such
proportionate interest. Neither the Insurance Company, the Trustee nor the Plan
Administrator shall have any responsibility with respect to the determination of
any such proportionate interest. The assets of the Group Annuity Contract
and/or of the Trust so allocated and segregated shall be used by the Insurance
Company and/or by the Trustee to pay benefits to or on behalf of Merged Plan
participants in accordance with Section 10.7.
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10.4. RESTRICTED BENEFITS. If the termination of partial termination
of the Merged Plan occurs, the provisions of Article VII hereof, if not
previously carried out, shall then be carried out.
10.5. VESTING AT TERMINATION. If the termination or partial termination
of the Merged Plan occurs, the rights of all affected Merged Plan participants
to Accrued Benefits to the date of such termination or partial termination, to
the extent funded as of such date, shall then become nonforfeitable, except to
the extent that certain forfeitures may be required in accordance with the
provisions of this Article and those of Article VII. As to those Merged Plan
participants whose employment with an Employer was terminated prior to the date
of termination or partial termination of the Merged Plan, the provisions of
this Section shall not increase the nonforfeitable rights, if any, applicable
to such Merged Plan participants as of their respective dates of termination of
employment with such Employer except to the extent required by the Internal
Revenue Service as a condition to its granting a favorable determination letter
in connection with the termination of the Merged Plan.
10.6. BENEFITS IN PAY STATUS OR PAID WITHIN THREE YEARS BEFORE PLAN
TERMINATION. If the termination or partial termination of the Merged Plan
occurs, all benefits then in pay status with respect to retired Merged Plan
participants and their spouses or beneficiaries shall be subject to reduction
only as required under ERISA to the extent that such benefit amounts exceed the
benefit amounts allocable to such retired Merged Plan participants, spouses and
beneficiaries under Section 10.7. Further, with respect to benefits under the
Merged Plan which commenced within the three (3) year period ending on the date
of termination or partial termination of the Merged Plan, such previously paid
benefits shall be subject to recovery from the retired Merged Plan participant
for the benefit of the Merged Plan, as required under ERISA, to the extent that
such previously paid benefit amounts exceed limitations applicable thereto under
ERISA.
10.7. LIQUIDATION. If the termination or partial termination of the
Merged Plan occurs, the assets of the Merged Plan available to provide benefits
shall be allocated among those Merged Plan participants, spouses and
beneficiaries affected by such termination or partial termination in the
following order:
(a) First, equally among individuals in the following two categories:
(i) in the case of each benefit of a retired Merged Plan
participant, spouse or beneficiary which was in pay status
under the Merged Plan as of the beginning of the three (3)
year period ending on the date of termination or partial
termination of the Merged Plan, to each such benefit, based
upon the provisions of the Merged Plan (as in effect during
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the five (5) year period ending on the effective date of
Merged Plan termination) under which such benefit would be
the least.
(ii) in the case of a Merged Plan participant's, spouse's or
beneficiary's benefit (other than a benefit described in (1)
above) which would have been in pay status under the Merged
Plan as of the beginning of such three (3) year period if
the Merged Plan participant had retired prior to the
beginning of such three (3) year period and if his benefits
had commenced as of the beginning of such period, to each
such benefit based on the provisions of the Merged Plan (as
in effect during the five (5) year period ending on the
effective date of Merged Plan termination) under which such
benefit would be the least.
(b) Second, in the case of each benefit of a retired Merged Plan
participant, spouse or beneficiary which was in pay status under the Merged
Plan immediately prior to the date of termination or partial termination of
the Merged Plan, to the extent that such benefits are not otherwise
provided for under (a) above, to each such benefit based upon the
provisions of the Merged Plan but subject to such limitations on amounts of
such benefits as shall then be applicable under ERISA.
(c) Third, in the case of all other benefits guaranteed under Title
IV of ERISA which are not otherwise provided for under (a) or (b) above, to
each such benefit based upon the provisions of the Merged Plan but subject
to such limitations on amount of such benefits as shall then be applicable
under ERISA.
(d) Fourth, in the case of all other benefits which were
nonforfeitable immediately prior to the date of termination or partial
termination of the Merged Plan which are not otherwise provided for under
(a), (b) or (c) above, to each such benefit based upon the provisions of
the Merged Plan.
(e) Fifth, in the case of all other benefits under the Merged Plan
which are not otherwise provided for under (a), (b), (c) or (d) above, to
each such benefit based upon the provisions of the Merged Plan.
If the assets of the Group Annuity Contract and of the Trust applicable to any
of the above categories are insufficient to provide full benefits for all
persons in such group, the benefits otherwise payable to such persons shall be
reduced proportionately. The Actuary
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shall calculate the allocation of the assets of the Group Annuity Contact and of
the Trust in accordance with the above priority categories, and certify his
calculations to the Fiduciaries. The provisions of this Section are intended to
comply with the provisions of ERISA (and any regulations issued thereunder). If
there is any discrepancy between the provisions of this Section and the
provisions of ERISA, such discrepancy shall be resolved in such a way as to
comply with ERISA. No liquidation of assets and payment of benefit (or
provisions therefor) shall actually be made by the Insurance Company and/or by
the Trustee until after it is or they are advised by the Company in writing that
applicable requirements, if any, of ERISA governing termination of "employee
pension benefit plans" have been, or are being, complied with or that
appropriate authorizations, waivers, exemptions or variances have been, or are
being, obtained.
For purposes of this Section, references to the provisions of the Merged Plan at
a time prior to December 31, 1993 shall be considered to be references to
provisions of each of the Segments at that time.
10.8. ALLOCATION OF ASSETS. If the assets of the Merged Plan available
for allocation under any subparagraph of Section 10.7, other than
subparagraph (d) thereof, are insufficient to satisfy in full the benefits of
all individuals which are described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of the present value (as of
the date of termination or partial termination of the Merged Plan) of their
respective benefits described in that subparagraph.
10.9. FURTHER ALLOCATION. If the assets of the Merged Plan available
for allocation under Section 10.7(d) are insufficient to satisfy in full the
benefits of individuals described in Section 10.7(d), the following shall apply:
(a) Except as provided in Section 10.7(b), the assets shall be
allocated to the benefits of individuals described in Section 10.7(d) on
the basis of the benefits of individuals which would have been described in
Section 10.7(d) under the Merged Plan as in effect at the beginning of the
five (5) year period ending on the date of termination or partial
termination of the Merged Plan.
(b) If the assets available for allocation under Section 10.9(a) are
sufficient to satisfy in full the benefits described therein (without
regard to this Section 10.9(b)) then for purposes of Section 10.9(a),
benefits of individuals described therein shall be determined on the basis
of the Merged Plan as amended by the most recent amendment to the Merged
Plan effective during such five (5) year period under which the assets
available for allocation are sufficient to satisfy in full the benefits of
individuals described in Section 10.9(a) and shall be allocated thereunder
on the basis of the Merged Plan effective during such period.
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(c) If the assets of the Merged Plan available for allocation under
any category set forth in this Section are insufficient to satisfy in full
the benefits which are described in that category, the assets shall be
allocated pro rata among such benefits on the basis of present value (as of
the date of termination or partial termination of the Merged Plan) of the
respective benefits described in that category.
10.10. REALLOCATION REQUIRED BY SECRETARY OF THE TREASURY. If the
Secretary of the Treasury determines that the allocation made pursuant to this
Article (without regard to this paragraph) results in discrimination prohibited
by Section 401(a)(4) of the Code then, if required to prevent the
disqualification of the Merged Plan under Section 401(a) of the Code, the assets
allocated under subparagraphs (b), (c), (d) or (e) of Section 10.7 shall be
reallocated to the extent necessary to avoid such discrimination.
10.11. FORM OF DISTRIBUTIONS. The allocation procedures described in
this Article may be carried out by means of the annuities purchased under the
Group Annuity Contract prior to the date of termination or partial termination
of the Merged Plan, by means of further purchases of annuities under the Group
Annuity Contract after such date or by any other means selected by the Company
and permitted by law. Further, subject to the foregoing provisions of this
Article and any applicable regulations promulgated by the Pension Benefit
Guaranty Corporation or the Internal Revenue Service, any distribution after
termination of the Merged Plan may be made, in whole or in part, to the extent
that no discrimination in value results, in cash, in securities or other assets
in kind, or in nontransferable annuity contracts, as the Plan Administrator, in
its sole discretion, shall determine.
10.12. REVERSION OF EXCESS ASSETS. Any assets of the Merged Plan which
remain after provision has been made to satisfy all liabilities of the Merged
Plan to Merged Plan participants, their spouses and their beneficiaries shall,
unless in contravention of any provision of law, be deemed to have become
available as a result of actuarial error and shall be distributed to the Company
in cash.
ARTICLE XI. MISCELLANEOUS
11.1. GOVERNING LAW. The Merged Plan, the Group Annuity Contract and
the Trust shall be construed and administered according to the laws of the State
of Illinois to the extent such laws are not preempted by ERISA or subsequent
amendments thereto or any other laws of the United States of America.
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11.2. TAX-QUALIFIED PLAN. The Merged Plan, the Group Annuity Contract,
and the Trust are intended to be qualified under the provisions of Sections
401(a) and 501(a) of the Code. The Plan Administrator or the Company shall seek
a determination letter to that effect and keep the Company, the Insurance
Company, and the Trustee advised of any changes in the federal income tax
qualification status of the Merged Plan, the Group Annuity Contract or the
Trust.
ARTICLE XII. TOP-HEAVY PROVISIONS
12.1. DETERMINATION OF TOP-HEAVY. The Merged Plan will be considered a
"Top-Heavy Plan" for the Plan Year if, as of the last day of the preceding Plan
Year, (1) the present value of the Accrued Benefits of Merged Plan participants
who are Key Employees (as defined in Section 416(i) of the Code, but in making
such determination considering compensation as defined in Section 1.415-2(d) of
the Income Tax Regulations) exceeds 60% of the present value of the Accrued
Benefits of all Merged Plan participants (the "60% Test") or (2) the Merged Plan
is part of a required aggregation group (as defined below) and the required
aggregation group is top-heavy. However, and notwithstanding the results of the
60% Test, the Merged Plan shall not be considered a Top-Heavy Plan for any Plan
Year in which the Merged Plan is a part of a required or permissive aggregation
group (as defined below) which is not top-heavy.
For the purposes of making the "60% Test" for any Plan Year, Accrued
Benefits shall be those amounts calculated as of the first day of the preceding
Plan Year and the present value of those amounts shall be based on the actuarial
assumptions used by the Actuary in the actuarial valuation made as of the first
day of such preceding Plan Year.
12.2. MINIMUM BENEFIT. For any Plan Year in which the Merged Plan is
determined to by a Top-Heavy Plan, the minimum Normal Retirement Pension for a
Merged Plan participant who is not a Key Employee terminating employment at or
after age 65, and the minimum Accrued Benefit, payable at Normal Retirement Date
for a Merged Plan participant who terminates employment prior thereto with
entitlement to a Pension, shall be equal to the lesser of (1) the product of 2%
of his "average monthly compensation", as defined in Section 1.415-2(d) of the
Income Tax Regulations, during his five highest-paid consecutive calendar "years
of service" as determined under Section 411(a)(4), (5), and (6) of the Code (or
during his period of such service, if less than 5 years) excluding such years of
service before June 30, 1984 and such years of service after the last Plan Year
in which the Merged Plan is a Top-Heavy Plan; and (2) 20% of such compensation.
In computing the minimum benefit under this Section, it will be assumed that
such benefit shall be payable at the Merged Plan participant's Normal Retirement
Date in the form of a single-life annuity. No minimum benefit will be required
for a Merged Plan participant if the company maintains another plan which
satisfies the requirements of Section 401(a) of the Code under which a minimum
benefit
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or contribution is being made or funded for such year for the Merged Plan
participant and the Company elects by written resolution or in such other plan
to have such other plan satisfy such minimum benefit or contribution
requirements. However, if the other plan does not satisfy the minimum benefit
or contribution requirements for both that plan and the Merged Plan, the minimum
benefit will be provided under the Merged Plan; provided, however, that any
benefit or contribution under that plan may be used in a comparability analysis
to prove that both plans are providing benefits at least equal to the defined-
benefit minimum, as provided in Treasury Regulation Section 1.416-1, Q&A-12.
12.3. MINIMUM VESTING. Notwithstanding the requirements under each of
the Segments for a Merged Plan participant to be eligible for a deferred vested
Pension, a Merged Plan participant shall be eligible for a deferred vested
Pension if, while the Merged Plan is a Top-Heavy Plan, his employment is
terminated before death or Retirement after he has completed at least 3 years of
Service. If he has completed at least 3 years of Service, the amount of his
Deferred Vested Pension on a single-life basis, commencing as of the first day
of the month following the Merged Plan participant's Normal Retirement Date,
shall be equal to his Accrued Benefit. If he has not completed at least 3 years
of Service, he shall forfeit all rights to benefits under the Merged Plan.
12.4. DEATH AFTER MINIMUM VESTING. Upon the death of a Merged Plan
participant whose death occurs prior to the date his Pension commences
hereunder, who has completed less than 5 years of Service at the date of his
death but who has a vested interest under the Merged Plan prior to his death
pursuant to the provisions of Section 12.3, a Pension shall be payable to his
eligible spouse, if any. The Pension payable to the eligible spouse of such a
Merged Plan participant shall be equal to the amount the eligible spouse would
have been entitled to receive had the Merged Plan participant commenced to
receive a deferred vested Pension in the form of a qualified joint and survivor
annuity (as defined in Section 417(b) of the Code) as of his Normal Retirement
Date, based on his Service and Credited Service immediately prior to the earlier
of his death or termination of employment, and then died immediately thereafter.
The Pension payable to such an eligible spouse shall commence as of the Merged
Plan participant's Normal Retirement Date and shall continue until the beginning
of the month in which the death of the eligible spouse occurs.
12.5. CHANGE IN TOP-HEAVY STATUS. If the Merged Plan becomes a Top-
Heavy Plan and subsequently ceases to be such, the minimum benefit accrued under
Section 12.2 while the Merged Plan was a Top-Heavy Plan shall continue to apply.
If the Merged Plan becomes a Top-Heavy Plan and subsequently ceases to be such,
the vesting provisions in Section 12.3 shall continue to apply in determining
the deferred vested Pension of any Merged Plan participant who had at least
three years of Service as of the last day of the last Plan Year during which the
Merged Plan was a Top-Heavy Plan.
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12.6. IMPACT ON MAXIMUM BENEFITS. For any Plan Year in which the Merged
Plan is a Top-Heavy Plan, for purposes of the limitations of Section 415 of
the Code described in Section 6.1, the defined-benefit plan fraction and the
defined-contribution plan fraction shall be changed by substituting the number
"1.00" for the number "1.25" therein, except such substitution shall not have
the effect of reducing any benefit accrued under a defined benefit plan prior to
the first day of the Plan Year in which this provision becomes applicable.
Alternately, in the discretion of the Plan Administrator, for any Plan Year when
the Merged Plan is a Top-Heavy Plan, the minimum benefit under Section 12.2
shall be increased to not more than the lesser of three percent (3%) per "year
of service" (as defined in Section 12.2) or thirty percent (30%) of such Merged
Plan participant's "average monthly compensation" (as defined in Section 12.2)
for any year in which the Company also maintains a defined contribution plan if
necessary to avoid the application of Section 416(h)(1) of the Code (relating to
the adjustment of the combined plan contributions and benefits limitation which
would substitute 1.00 for 1.25 in the defined contribution and benefit plan
fractions under Section 415 of the Code).
12.7. AGGREGATION WITH OTHER PLANS.
(a) REQUIRED AGGREGATION. If a Key Employee under the Merged Plan
also participates in another plan of the Company, an Employer or a Related
Employer which is qualified under Section 401(a) of the Code or which is a
simplified employee pension plan under Section 408(k) of the Code, or if
the Merged Plan and another plan must be aggregated so that either the
Merged Plan or the other plan will meet the anti-discrimination and
coverage requirements of Sections 401(a)(4) or 410(b) of the Code, then the
Merged Plan and any such other plan will be aggregated for purposes of
determining top-heaviness. The Merged Plan automatically will be deemed
top-heavy if such required aggregation of plans is top-heavy as a group and
automatically will be deemed not top-heavy if such required aggregation of
plans is not top-heavy as a group.
(b) PERMISSIVE AGGREGATION. Any other plan of the Company, an
Employer or a Related Employer which is qualified under Section 401(a) of
the Code or which is a simplified employee pension plan under
Section 408(k) of the Code, and which is not in the required aggregation
referenced in (1) above, may be aggregated with the Merged Plan (and with
any other plan(s) in the required aggregation group in (1) above) for
purposes of determining top-heaviness if such aggregation would continue to
meet the nondiscrimination and coverage requirements of Sections 401(a)(4)
and 410(b) of the Code. The Merged Plan automatically will be deemed not
top-heavy if such permissive aggregation of plans is not top-heavy as a
group.
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<PAGE>
(c) DETERMINING AGGREGATE TOP-HEAVY STATUS. The top-heavy status of
the plans as a group is determined by aggregating the plans' respective
top-heavy determinations that are made as of determination dates that fall
within the same calendar year.
12.8. PRESENT VALUE. For the purposes of this Article, the present
value of Accrued Benefits shall be the amounts calculated as of the most recent
valuation date which is within the twelve month period ending with the date of
the Top-Heavy Plan determination. For this purpose, Accrued Benefits shall be
determined using the accrual method used for all plans maintained by the Company
or, if there is no common method, using the slowest accrual rate permitted under
Section 411(b)(1)(C) of the Code.
12.9. COMPUTATION OF BENEFIT. If the form of benefit determined in
accordance with the Merged Plan is in a form of annuity other than a single life
annuity, the Merged Plan participant must receive the greater of:
(a) the Merged Plan participant's Accrued Benefit; or
(b) an amount which is the Actuarial Equivalent of the Merged Plan
participant's minimum benefit determined under this Article.
If a benefit becomes payable to a Merged Plan participant at a date other than
on such Merged Plan participant's Normal Retirement Date, the Merged Plan
participant must receive the greater of:
(a) the Merged Plan participant's Accrued Benefit; or
(b) an amount which is the Actuarial Equivalent of the Merged Plan
participant's minimum benefit determined under this Article.
Executed as of this ___ day of_________, 1994.
Attest: ALLIED PRODUCTS CORPORATION
By: ______________________ By:____________________________
Assistant Secretary Its: ________________________
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<PAGE>
EXHIBIT 10E
BUSH HOG SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. Types of Service. . . . . . . . . . . . . . . . . . . . . . . 5
2.1. Participation Service. . . . . . . . . . . . . . . . . . 5
2.2. Vesting Service. . . . . . . . . . . . . . . . . . . . . 5
2.3. Credited Service.. . . . . . . . . . . . . . . . . . . . 6
2.4. Qualified Leave of Absence.. . . . . . . . . . . . . . . 6
ARTICLE III. Conditions for Participation. . . . . . . . . . . . . . . . . 6
3.1. Requirements for Participation.. . . . . . . . . . . . . 6
3.2. Exclusions from Participation. . . . . . . . . . . . . . 7
ARTICLE IV. Retirement Dates. . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Normal Retirement Date . . . . . . . . . . . . . . . . . 7
4.2. Early Retirement Date. . . . . . . . . . . . . . . . . . 7
4.3. Deferred Retirement Date.. . . . . . . . . . . . . . . . 7
4.4. Terminations Prior to Effective Date.. . . . . . . . . . 7
ARTICLE V. Accrued Benefits and Pensions . . . . . . . . . . . . . . . . 8
5.1. Accrued Benefit. . . . . . . . . . . . . . . . . . . . . 8
5.2. Normal Retirement Pension. . . . . . . . . . . . . . . . 8
5.3. Early Retirement Pension.. . . . . . . . . . . . . . . . 8
5.4. Deferred Retirement Pension. . . . . . . . . . . . . . . 9
5.5. Suspended Pension Adjustment.. . . . . . . . . . . . . . 9
5.6. Pension Offset.. . . . . . . . . . . . . . . . . . . . . 9
5.7. Termination Prior to Effective Date. . . . . . . . . . . 9
5.8. Special Employment/Re-employment Provisions. . . . . . . 9
ARTICLE VI. Form and Payment of Benefits. . . . . . . . . . . . . . . . .10
6.1. Joint and Survivor Annuity Form. . . . . . . . . . . . .10
6.2. Life Annuity Form. . . . . . . . . . . . . . . . . . . .12
6.3. Life Annuity with Guaranteed Number of Monthly Payments
Form.. . . . . . . . . . . . . . . . . . . . . . . . . .12
6.4. Pre-Retirement Death Benefit.. . . . . . . . . . . . . .13
6.5. Pre-Retirement Survivor Annuity. . . . . . . . . . . . .13
6.6. Pension Protection.. . . . . . . . . . . . . . . . . . .14
6.7. Termination Prior to Effective Date. . . . . . . . . . .14
6.8. Minimum Distribution Requirements. . . . . . . . . . . .14
6.9. Pension Payment Commencement.. . . . . . . . . . . . . .14
6.10. Direct Rollover Provisions.. . . . . . . . . . . . . . .14
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<PAGE>
TABLE OF CONTENTS
(continued)
ARTICLE VII. Termination of Employment . . . . . . . . . . . . . . . . . .15
7.1. Retirement.. . . . . . . . . . . . . . . . . . . . . . .15
7.2. Other Employment Termination.. . . . . . . . . . . . . .15
7.3. Death. . . . . . . . . . . . . . . . . . . . . . . . . .15
7.4. Early Retirement.. . . . . . . . . . . . . . . . . . . .16
7.5. Termination Prior to Effective Date. . . . . . . . . . .16
ARTICLE VIII. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . .16
8.1. No Guarantee of Employment.. . . . . . . . . . . . . . .16
8.2. Cash-Out of Small Pensions.. . . . . . . . . . . . . . .16
8.3. Nonalienation of Pensions. . . . . . . . . . . . . . . .16
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<PAGE>
BUSH HOG SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
ARTICLE I.
DEFINITIONS
1.1. APPLICATION OF BUSH HOG SEGMENT. Effective December 31, 1993, the
Bush Hog Division of Allied Products Corporation Salaried Pension Plan (the
"Bush Hog Segment") was merged into the Verson Division of Allied Products
Corporation Employees Retirement Plan and the resulting combined plan was
renamed the Allied Products Corporation Combined Retirement Plan (the "Merged
Plan"). The segment of the Merged Plan applicable to salaried employees of the
Employer is now being amended and restated as of December 31, 1993, with certain
amendments effective as of the dates specified in the affected provisions. This
amendment and restatement of the Bush Hog Segment shall apply only to Employees
(and their Beneficiaries) who complete at least one Hour of Work on or after the
Effective Date.
1.2. "Employer," for purposes of the Bush Hog Segment, means Bush Hog
Division of Allied Products Corporation, a Delaware corporation.
Notwithstanding the preceding provisions of this Section, effective from January
29, 1993 through March 18, 1994 "Employer," for purposes of the Bush Hog Segment
means Bush Hog Corporation, a Delaware corporation.
1.3. "Employee" means any person enrolled on the active employment rolls of
the Employer at its Selma Plant who is not an hourly-paid employee. The term
Employee includes any leased employee who performs services for the Employer
only to the extent required by Section 414(n) of the Code. Any employer
contribution to a tax-qualified pension plan provided on behalf of such leased
employee by the leasing organization for service provided to the Employer shall
for all purposes of the Bush Hog Segment be treated as Employer contributions.
1.4. "Participant" means an Employee or former Employee who has met the
requirements of Article III.
1.5. "Bush Hog Segment" means the Bush Hog Segment of the Allied Products
Corporation Combined Retirement Plan, effective as of the Effective Date, as it
may from time to time be amended; "Bush Hog Segment" also means prior versions
of the Bush Hog Segment known as the Bush Hog Division of Allied Products
Corporation Salaried Pension Plan until December 31, 1993; the Bush Hog, Inc.
Salaried Employees Pension Trust and the Bush Hog, Inc. Hourly Employees Pension
Trust, both adopted effective as of September 1, 1967, and the Retirement Plan
for Non-Bargaining Employees of Bush Hog Division of Allied Products
Corporation, all as in effect prior to the Effective Date.
<PAGE>
1.6. "Plan Year" means the calendar year; provided, however, that, prior to
January 1, 1995, "Plan Year" means the twelve month period from August 1 through
July 31 and the short period beginning August 1, 1994 and ending December 31,
1994.
1.7. "Effective Date" means the effective date of this amendment and
restatement of the Bush Hog Segment, namely, December 31, 1993. Notwithstanding
the preceding provisions of this Section, certain amendments are effective as of
the dates specified in the affected provisions.
1.8. "Retired Participant" means a former Participant who is retired under
this Bush Hog Segment and who is receiving Pension benefits provided for
hereunder.
1.9. "Pension" means the monthly payments to which a Participant shall
become entitled hereunder.
1.10. "Average Monthly Compensation" means the monthly average for the
five (5) consecutive twelve (12) month periods (or, if shorter, the Employee's
period of employment) of highest Compensation received or accrued by the
Participant during the previous ten (10) consecutive twelve (12) month periods
ending on the last day of the calendar month coincident with or immediately
preceding the date such Participant's Vesting Service terminates. The monthly
average shall be determined by dividing the average for the five (5) consecutive
twelve (12) month periods of highest Compensation by twelve (12).
Notwithstanding any contrary provision of the Bush Hog Segment, a Participant's
Compensation for each twelve (12) month period considered under this Section
shall be limited to (a) effective on and after January 1, 1989, $200,000, as
such figure is adjusted from time to time by the Secretary of the Treasury
pursuant to Section 401(a)(17) of the Code; and (b) effective as of January 1,
1994, $150,000, as such figure is adjusted from time to time by the Secretary
of the Treasury pursuant to Section 401(a)(17) of the Code; provided, however,
that if, during any Plan Year beginning on or after January 1, 1994, a
Participant's Pension is based on Compensation for a year beginning prior to
January 1, 1994 that exceeded $150,000, his Pension shall be the greater of:
(a) the Participant's Pension determined with respect to the benefit
formula applicable for the Plan Year beginning on or after January 1, 1994,
as applied to the Participant's Credited Service; or
(b) the sum of:
(i) the Participant's Pension as of the last day of the last
Plan Year beginning before January 1, 1994, frozen in accordance with
Treasury Regulation Section 1.401(a)(4)-13; and
(ii) the Participant's Pension determined under the benefit
formula applicable for the Plan Year beginning on or after January 1,
1994, as applied to
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<PAGE>
the Participant's Credited Service credited for Plan Years
beginning on or after January 1, 1994.
1.11. "Hour of Work" means:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties are
performed.
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
permanent disability), layoff, jury duty, military duty or other Qualified
Leave of Absence authorized by the Employer under its standard personnel
practices administered in a uniform and nondiscriminatory manner. No more
than 501 Hours of Work shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference;
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer; provided, however,
that in the event the Employer agrees to back pay pursuant to an
enforceable, arm's-length negotiation with an Employee, nothing in this
paragraph (c) shall preclude the Employee from waiving his right to credit
for such hours in consideration for the Employer's agreement. The same
Hours of Work shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c). These
hours shall be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is made;
(d) Employees for whom the Employer does not maintain records of the
number of hours worked shall be credited under paragraph (a), (b) or (c)
with forty-five(45) Hours of Work per week;
(e) Notwithstanding anything in the Bush Hog Segment to the contrary,
an Employee who is absent from work due to (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the placement
of a child in connection with the adoption of the child by the Employee,
or (iv) the caring for the child by the Employee during the period
immediately following the child's birth or placement for adoption, shall
be treated as having completed certain Hours of Work for a limited period.
The Employee will be treated as completing either (i) the number of Hours
of Work that normally would have been credited but for the absence or,
(ii) if the normal work hours are unknown, eight Hours of Work for each
normal workday during the leave, to a maximum of 501 Hours of Work in a
twelve-month period beginning on the Employee's date of hire or anniversary
thereof (the "Twelve-Month Period"). The Hours of Work
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<PAGE>
required to be credited under this subsection must be credited only for the
purpose of preventing a one-year break in Vesting Service in the Twelve-
Month Period in which the absence begins for one of the permitted reasons
or, if crediting in such Twelve-Month Period is not necessary to prevent a
one-year break in Vesting Service in the following Twelve-Month Period.
1.12. "Actuarial (or Actuarially) Equivalent" means equality in value
of the aggregate amounts expected to be received under different forms of
payment, based on actuarial assumptions selected by the actuary. The actuarial
assumptions used in determining Actuarial Equivalents for the Bush Hog Segment
are as follows: Interest: 7% compounded annually; Mortality: Unisex Pension
1984.
1.13. "Company" means the Bush Hog Division of Allied Products
Corporation, a Delaware corporation, and any successor thereof which continues
the Bush Hog Segment, as provided in Article IX of the Merged Plan document.
Notwithstanding the preceding provisions of this Section:
(a) Effective from January 29, 1993 through December 31, 1993,
"Company" means Bush Hog Corporation, a Delaware corporation;
(b) Effective on and after December 31, 1993, "Company" means Allied
Products Corporation.
1.14. "Accrued Benefit" means such term as it is described in Section 5.1.
1.15. "Merged Plan" means the Allied Products Corporation Combined
Retirement Plan.
1.16. "Compensation" means all of the taxable compensation paid to the
Employee by the Employer as reported on IRS Form W-2 for the period in question.
1.17. GENDER, NUMBER AND CROSS REFERENCES. Wherever used herein, a
pronoun in the masculine gender shall be considered as including the feminine
gender unless the context clearly indicates otherwise, and wherever used herein
a pronoun in the singular form shall be considered as being in the plural form
unless the context clearly indicates otherwise. The words "hereof", "herein",
"hereunder" and other similar compounds of the word "here" shall mean and refer
to the entire Bush Hog Segment and not to any particular provision of the Bush
Hog Segment. All references herein to specific Articles and/or Sections shall
mean and refer to Articles and/or Sections of the Bush Hog Segment unless
otherwise qualified. Article and Section headings are included for convenience
of reference and are not intended to add to, or subtract from, the terms of the
Bush Hog Segment. Terms used in the Bush Hog Segment when not defined in this
Bush Hog Segment shall have the meanings given them by the Merged Plan.
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<PAGE>
ARTICLE II.
TYPES OF SERVICE
For purposes of the Bush Hog Segment an Employee's years of service with
the Employer shall be determined and reported by the Plan Administrator in
accordance with the following:
2.1. PARTICIPATION SERVICE. Participation Service shall be any twelve (12)
month period determined from the Employee's latest date of hire or anniversary
thereof in which he completes one thousand (1,000) Hours of Work for the
Employer, regardless of employment classification. Service with a "related
employer" shall be included in determining an Employee's Participation Service.
A "related employer" is (i) any trade or business under common control (as
defined in Sections 414(b) and (c) of the Code) with the Employer, and/or
(ii) members of a controlled group of corporations (as defined in Section
1563(a) of the Code, applied without regard to subsections 1563(a)(4) and
1563(e)(3)(C)) of which the Employer is also a member, and/or (iii) any member
of an affiliated service group (as defined in Section 414(m) of the Code) of
which the Employer is also a member, and/or (iv) any other entity required to
be aggregated with the Employer under Section 414(o) of the Code and
applicable Treasury Regulations.
If a Participant incurs a break in Vesting Service, as provided in Section
2.2, and is later re-employed by the Employer, he shall begin to participate in
the Bush Hog Segment again on the date he performs his first Hour of Work after
his re-employment, provided that the Vesting Service he completed prior to such
break is not disregarded under Section 2.2. Any other Participant who incurs a
break in Vesting Service and who is later re-employed by the Employer shall
recommence participation in the Bush Hog Segment when he again satisfies the
requirements of Article III after his re-employment.
2.2. VESTING SERVICE. Vesting Service for a Participant shall be the sum
of all twelve (12) month periods during which the Participant has completed one
thousand (1,000) Hours of Work for the Employer, regardless of employment
classification. Such twelve (12) month periods shall be computed from a
Participant's date of hire to the anniversary of his date of hire coincident
with or next following the date of his termination of employment. Service with
a "related employer" (as defined in Section 2.1) shall be included in
determining an Employee's Vesting Service.
A break in Vesting Service shall occur when a Participant completes less
than five hundred one (501) Hours of Work during any twelve (12) month period as
set forth above. Should a break in Vesting Service actually occur, Vesting
Service completed prior to such break shall not be counted until such time as
the Participant completes one (1) full year of Participation Service subsequent
to such break. If a Participant does not have a nonforfeitable right to any
Accrued Benefit as set forth in Article VII before a break in Vesting Service
occurs, the years of Vesting Service completed prior to the break in Vesting
Service shall not be taken into account for Plan Years beginning before
September 1, 1985, if the number of consecutive one (1) year breaks in Vesting
Service equals or exceeds the total number of years of Vesting Service
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<PAGE>
completed prior to such break. For Plan Years beginning on or after September
1, 1985, years of Vesting Service completed prior to such break shall not be
taken into account if the number of consecutive one (1) year breaks equals or
exceeds the greater of five (5) or the total number of years of Vesting Service
completed prior to such break.
If any break in Vesting Service occurs as a result of a Qualified Leave of
Absence, it shall not restrict any Participant from immediately beginning to
receive credit for Vesting Service immediately upon his return from such
Qualified Leave of Absence. Upon his return to work his original date of hire
shall be advanced by the period of the Qualified Leave of Absence and Vesting
Service shall be treated as continuous from such advanced date of hire.
2.3. CREDITED SERVICE. Credited Service for a Participant shall be the sum
of:
(a) The number of full years and fractions of Credited Service
credited to the Participant immediately prior to the Effective Date under
the terms of the Bush Hog Segment in effect at that time; plus
(b) The number of full years and fractions of Participation Service
completed by the Participant as a Participant on or after the Effective
Date.
2.4. QUALIFIED LEAVE OF ABSENCE. A Qualified Leave of Absence shall
consist of one of the following:
(a) Absence with the consent of the Plan Administrator during a
period not in excess of one (1) year except that the Plan Administrator
may consent to extend the period of leave.
(b) Absence from work because of occupational injury or disease
incurred as a result of employment with the Employer, for which absence a
Participant shall be entitled to Worker's Compensation payments.
(c) Absence in the service of the armed forces of the United States
provided the Participant shall reenter the employ of the Employer within
the statutory period during which his right to re-employment is guaranteed
after he has first become eligible for discharge or separation from active
duty.
In interpreting the provisions of this Section, the Plan Administrator
will apply uniform rules in a like manner to all Participants under
similar circumstances.
ARTICLE III.
CONDITIONS FOR PARTICIPATION
3.1. REQUIREMENTS FOR PARTICIPATION. An Employee who was a Participant in
the Bush Hog Segment immediately prior to the Effective Date will continue to be
a Participant on the Effective Date if he continues to be an Employee on that
date. Any other Employee will be
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included in the Bush Hog Segment as a Participant on the first day of the month
coincident with or next following the later of:
(a) attainment of age eighteen (18), or
(b) the completion of one (1) year of Participation Service completed
from and after the Participant's date of hire.
3.2. EXCLUSIONS FROM PARTICIPATION. No Employee will be included in the
Bush Hog Segment if he is an hourly-paid Employee at the Selma Plant.
ARTICLE IV.
RETIREMENT DATES
4.1. NORMAL RETIREMENT DATE. A Participant's Normal Retirement Date shall
be the first day of the month coincident with or next following the later of:
(a) the Participant's sixty-fifth (65th) birthday; or
(b) the fifth (5th) anniversary of the date the Employee first became
a Participant in the Bush Hog Segment.
4.2. EARLY RETIREMENT DATE. A Participant may elect to retire on an Early
Retirement Date which shall be the first day of any month specified by the
Participant which coincides with or follows the latest of:
(a) the Participant's completion of fifteen (15) years of Vesting
Service,
(b) the date which is five (5) years prior to the Participant's
Normal Retirement Date, or
(c) the Participant's termination of employment with the Employer.
4.3. DEFERRED RETIREMENT DATE. Subject to the provisions of Section 6.8,
the Deferred Retirement Date of any Participant who is in the employment of the
Employer beyond his Normal Retirement Date shall be the first day of the month
coincident with or next following the date the Participant terminates employment
with the Employer.
4.4. TERMINATIONS PRIOR TO EFFECTIVE DATE. The Normal or Early Retirement
Date for a Participant who terminated employment prior to the Effective Date,
who is not subsequently re-employed and who retains a nonforfeitable right to a
Pension hereunder shall be determined in accordance with the provisions of the
Bush Hog Segment in effect as of the date of such Participant's termination of
employment.
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ARTICLE V.
ACCRUED BENEFITS AND PENSIONS
5.1. ACCRUED BENEFIT. A Participant's Accrued Benefit as of any date of
determination shall be an amount equal to one percent (1%) of the Participant's
Average Monthly Compensation as of such date of determination multiplied by the
number of years of his Credited Service as of such date of determination.
In computing an Accrued Benefit, it will be assumed that such benefit shall
be payable in accordance with the terms of the Life Annuity with One Hundred
Twenty (120) Monthly Payments Guaranteed Form as set forth in Section 6.3.
Pensions payable in accordance with any other form will be the Actuarial
Equivalent of the same Pension payable in accordance with the Life Annuity with
One Hundred Twenty (120) Monthly Payments Guaranteed Form.
In no event will the Accrued Benefit be less than the paid-up annuity
amount, if any, purchased under Group Annuity Contract GR-11105; issued by The
Travelers Insurance Company, Hartford, Connecticut.
If payment of a Participant's Pension begins while he is still employed by
an Employer or by the Company pursuant to Section 6.8, any subsequent increases
in his Pension (as a result of Credited Service earned after his Pension
payments begin) for a Plan Year shall be reduced (but not below zero) by the
Actuarial Equivalent (as specified in Section 1.12) of the Pension payment(s) he
received during the preceding Plan Years; provided, however, that the Actuarial
equivalent value of a Participant's Pension shall not be reduced by application
of this sentence.
5.2. NORMAL RETIREMENT PENSION. The monthly amount of Normal Retirement
Pension payable to a Participant retiring on his Normal Retirement Date shall be
equal to his Accrued Benefit determined as of such Participant's Normal
Retirement Date.
5.3. EARLY RETIREMENT PENSION. The monthly amount of Early Retirement
Pension payable to a Participant retiring on his Early Retirement Date shall be
equal to his Accrued Benefit determined as of such Participant's Early
Retirement Date multiplied by the appropriate percentage below:
<TABLE>
<CAPTION>
NUMBER OF YEARS EARLY RETIREMENT DATE
-------------------------------------
PRECEDES NORMAL RETIREMENT DATE
-------------------------------
<S> <C> <C> <C> <C> <C>
0 1 2 3 4 5
----- ---- ---- ---- ---- ----
100.0 93.3 86.6 79.9 73.2 66.5
</TABLE>
If the period between the Early Retirement Date and Normal Retirement Date is
not an integral number of years, the percentage to be applied shall be the
percentage for the next higher integral number of years, increased by a
proportionate part of the difference between that percentage and the percentage
for the next lower integral number of years.
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<PAGE>
5.4. DEFERRED RETIREMENT PENSION. The monthly amount of Deferred
Retirement Pension payable to a Participant retiring on his Deferred Retirement
Date shall be equal to his Accrued Benefit determined as of such Participant's
Deferred Retirement Date. Notwithstanding the preceding provisions of this
Section, if payment of a Participant's Pension begins while he is still employed
by an Employer or by the Company pursuant to Section 6.8, any subsequent
increases in his Pension (as a result of Credited Service earned after his
Pension payments begin) for a Plan Year shall be reduced (but not below zero) by
the Actuarial Equivalent (as specified in Section 1.12) of the Pension
payment(s) he received during the preceding Plan Years; provided, however, that
the Actuarial equivalent value of a Participant's Pension shall not be reduced
by application of this sentence.
5.5. SUSPENDED PENSION ADJUSTMENT. The Early, Normal or Deferred Pension
payable to any Participant who has already received Pension payments and whose
payments shall have been subsequently suspended by reason of his re-employment
with the Employer shall be actuarially adjusted to reflect the Pension payments
previously received.
5.6. PENSION OFFSET. The monthly amount of Pension payable to a
Participant covered under the Bush Hog Segment will be determined in accordance
with the Bush Hog Segment and the benefit payable will be offset by the amount
of paid-up annuity, if any, unless the Participant had previously received the
value of his paid-up annuity, in which event the monthly amount of Pension
payable will be actuarially reduced in order to avoid any duplication of
benefits.
5.7. TERMINATION PRIOR TO EFFECTIVE DATE. Retired Participants will
continue to receive Pension payments in the same amount as was being paid
immediately prior to the Effective Date. A Participant who terminated
employment prior to the Effective Date who is not subsequently re-employed and
who retains a nonforfeitable right to a Pension hereunder, shall have such
Pension determined in accordance with the provisions of the Bush Hog Segment in
effect as of the date of such Participant's termination of employment. Such
Pensions shall be subject to the limitations set forth in Article VI of the
Merged Plan document.
5.8. SPECIAL EMPLOYMENT/RE-EMPLOYMENT PROVISIONS. The provisions of this
Section shall apply only if:
(a) A Participant has his Pension payments suspended for any month of
re-employment after his Normal Retirement Date in which he has forty or
more Hours of Work; or
(b) A Participant remains in employment after his Normal Retirement
Date without commencement of Pension payments for forty or more Hours of
Work in a month.
Upon a suspension of Pension payments described in paragraph (a) or
(b) above, the Plan Administrator shall notify the Participant of such
suspension, shall afford him an opportunity to obtain a review of such
suspension and shall otherwise administer such
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<PAGE>
suspension and any subsequent resumption of Pension payments in a manner
consistent with final U.S. Department of Labor Regulations Section
2530.203-3.
Notwithstanding any provision of the Bush Hog Segment to the contrary,
(i) no Pension payments once they have commenced shall be suspended for any
month in which a Participant is re-employed after his Normal Retirement
Date for fewer than forty Hours of Work; and (ii) in the event a
Participant remains in the employ of the Employer after his Normal
Retirement Date for fewer than forty Hours of Work in any month, his
Pension shall be payable and begin as of the first day of the calendar
month in which he first has fewer than forty of such Hours of Work.
ARTICLE VI.
FORM AND PAYMENT OF BENEFITS
If a Participant has a spouse who satisfies the length of marriage
requirement in Section 6.1(f)(i) at the date of his actual retirement and he has
not made any other annuity election provided for in this Article, the Pension
payable to him hereunder shall be in the form of a Joint and Survivor Annuity.
If a Participant has no qualified spouse at the date of his actual retirement
and he has not made any other annuity election provided for in this Article, the
Pension payable to him hereunder shall be in the Life Annuity Form, as provided
in Section 6.2.
6.1. JOINT AND SURVIVOR ANNUITY FORM.
(a) The Joint and Survivor Annuity Form shall provide for the payment
of a Pension, actuarially adjusted, in accordance with Section 5.1, to the
Retired Participant during his lifetime and shall further provide for the
continuation of such Pension payments to the surviving spouse, if living,
after the death of the Retired Participant.
The amount of such Pension payments made to the surviving spouse shall
be a specified percentage of the Pension payments then being paid to the
Retired Participant determined as of the first of the month in which the
Retired Participant died.
(b) The Participant must designate in writing to the Plan
Administrator the specified percentage of his Pension payments to be
payable to his surviving spouse upon his death. He may elect either a
fifty percent (50%), seventy-five percent (75%) or one hundred percent
(100%) continuation. If no election in writing is received by the Plan
Administrator prior to a Participant's Retirement Date, such Participant
shall be deemed to have elected the fifty percent (50%) continuation and
benefits will be payable accordingly.
(c) Pension payments to the surviving spouse shall commence on the
first day of the month following the month in which the Retired Participant
dies, and shall continue monthly with the last payment due for the month in
which the surviving spouse's death occurs.
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<PAGE>
(d) If the surviving spouse predeceases the Retired Participant, the
Pension payments will cease upon the Retired Participant's death.
(e) No Pension will be payable under this form to a surviving spouse
if the Participant dies before his first Pension payment becomes due. If,
however, this form is in effect and the Participant should die after his
Normal Retirement Date and prior to his Deferred Retirement Date, then the
spouse, if living, shall become a surviving spouse and shall be entitled to
Pension payments in an amount equal to the amount which would have been
payable to the spouse had the Participant retired on the date of his death
with the Joint and Survivor Annuity Form operative. Such Pension payments
shall be payable for the surviving spouse's further lifetime and shall
cease upon the surviving spouse's death.
(f) General Provisions
(i) The surviving spouse, to be eligible to receive a benefit
hereunder, must be married to the Participant at all times during the
one-year period ending on the earlier of (A) the Participant's annuity
starting date or (B) the date of the Participant's death.
(ii) No more than 90 days and no less than 30 days prior to a
Participant's annuity starting date, the Plan Administrator shall
provide such Participant, either by mail or personal delivery, (A)
with a written explanation of the terms and conditions of the Joint
and Survivor Annuity provided under this Section; (B) the
Participant's right to make, and the financial effect of an election
to have his Pension paid to him in the Life Annuity Form or Life
Annuity with Guaranteed Number of Monthly Payments Form; (C) the
rights of a Participant's spouse; and (D) the right to make, and the
effect of, a revocation of a previous election to waive the Joint and
Survivor Annuity.
(iii) The period within which the Participant may elect to
have his Pension paid in any other form offered hereunder shall be the
90-day period ending on his annuity starting date. Any election shall
be in writing in such form as the Plan Administrator shall require.
If a Participant elects not to receive the Joint and Survivor Annuity,
such election shall be effective only if his spouse consents on a form
provided by the Plan Administrator. The spouse's consent must
acknowledge the financial effect of the waiver and must be witnessed
by a notary public or the Plan Administrator. The spouse's consent
shall be valid only with respect to the specified non-spouse
beneficiary, class of beneficiaries or contingent beneficiaries
designated, if any; if such non-spouse beneficiary(ies) is or are
subsequently changed, a new consent by the spouse will be required.
Notwithstanding the provisions of the preceding sentence, a spouse may
make a general consent, as described in Treasury Regulation Section
1.401(a)-20, Q&A-31(c).
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<PAGE>
6.2. LIFE ANNUITY FORM.
(a) In lieu of the Joint and Survivor Annuity Form, a Participant who
has a spouse who satisfies the length of marriage requirement of Section
6.1(f)(i) may elect a Life Annuity which provides for a Pension payable to
the Participant, commencing on his actual retirement date and ceasing with
the last payment due immediately preceding the Retired Participant's death.
(b) This form may be elected by any Participant pursuant to the rules
specified in Sections 6.1(f)(ii) and 6.1(f)(iii) above.
(c) No monthly benefit will be payable under this form if the
Participant dies before his first Pension payment becomes due.
6.3. LIFE ANNUITY WITH GUARANTEED NUMBER OF MONTHLY PAYMENTS FORM.
(a) In lieu of the Joint and Survivor Annuity Form, a Participant may
elect a Life Annuity with a specified number of monthly payments (60, 120
or 180) guaranteed; provided, however, that such specified number of
monthly payments cannot exceed the life expectancy of the Participant or
the joint life expectancies of the Participant and his beneficiary. This
form would provide for an actuarially adjusted Pension payable to the
Retired Participant during his lifetime with the guarantee that not less
than a total of the specified number of monthly Pension payments will be
made to the Retired Participant and his named beneficiary.
(b) If this form is elected and the Retired Participant dies prior to
the receipt of the specified number of monthly payments, the balance of the
guaranteed number of monthly payments will be paid to the Retired
Participant's named beneficiary until a total of the number of specified
monthly payments has been made to the Retired Participant and his named
beneficiary. The first such payment to the beneficiary shall be due and
payable as of the first day of the month following the Retired
Participant's death.
(c) In the event there is no named beneficiary living at the death of
the Retired Participant, the balance of the specified number of guaranteed
monthly payments, which would otherwise have become payable to the Retired
Participant's beneficiary, shall be commuted to a single sum and shall be
paid to the Retired Participant's executors or administrators.
(d) If the beneficiary of a deceased Retired Participant should die
prior to receiving the balance of the specified number of guaranteed
monthly payments, the balance of the specified number of guaranteed monthly
payments which would otherwise have become payable to the Retired
Participant's beneficiary shall be commuted to a single sum and shall be
paid to the beneficiary's executors or administrators.
(e) No monthly benefit will be payable under this form to a
beneficiary if the Participant dies before his first Pension payment
becomes due. If a Participant, however,
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<PAGE>
who has elected this form should die after his Normal Retirement Date and
prior to his Deferred Retirement Date, his beneficiary shall become a
beneficiary annuitant and shall be entitled to benefits payable for the
specified number of months in an amount equal to the amount which would
have been payable to the Participant had the Participant retired on the
date of his death with this form effective.
(f) This form may be elected by the Participant by written notice to
the Plan Administrator pursuant to the rules specified in Sections
6.1(f)(ii) and 6.1(f)(iii).
6.4. PRE-RETIREMENT DEATH BENEFIT. Upon the death of a Participant prior
to his actual retirement, there shall be payable to a designated beneficiary a
lump sum Death Benefit in an amount equal to one hundred (100) times the
Participant's estimated Accrued Benefit. For purposes of this Section, the
estimated Accrued Benefit will be determined on the basis of the Participant's
Average Monthly Compensation and Credited Service as of his date of death. The
lump sum Death Benefit provided in this Section shall be reduced (but not below
zero) by the Actuarial Equivalent of the Pre-Retirement Survivor Annuity
described in Section 6.5.
6.5. PRE-RETIREMENT SURVIVOR ANNUITY. A Participant who is legally married
under the laws of any jurisdiction, and has completed at least 5 years of
Vesting Service, shall have a Pre-Retirement Survivor Annuity paid to the
surviving spouse to whom he is married on the date of his death in the event of
the Participant's death prior to his Normal or Early Retirement Date or annuity
starting date. Such Pre-Retirement Survivor Annuity shall be paid over the life
of the surviving spouse and shall be in an amount equal to the amount that would
have been payable as a Joint and Survivor Annuity had the Participant retired or
had his annuity starting date been on the day immediately preceding the date of
his death. If the Participant had not attained his Early Retirement Date on the
date of his death and if his surviving spouse is eligible for a Pre-Retirement
Survivor Annuity, then the amount payable shall be equal to the amount that
would have been payable had the Participant (i) separated from service on the
date of his death; (ii) survived to his Early Retirement Date; (iii) retired
with an immediate Joint and Survivor Annuity at his Early Retirement Date; and
(iv) died on the day after the day he would have attained his Early Retirement
Date.
The Plan Administrator shall provide each Participant within the period
beginning on the first day of the Plan Year in which the Participant attains age
32 and ending with the close of the Plan Year in which the Participant attains
age 35, a written explanation of the Pre-Retirement Survivor Annuity in such
terms and in such manner as would be comparable to the explanation provided for
meeting the above requirements applicable to the Joint and Survivor Annuity
Form. Subject to the spousal consent requirements of Section 6.1(f)(iii), the
Participant may elect to waive the Pre-Retirement Survivor Annuity during the
period beginning on the first day of the Plan Year in which the Participant
attains age 35 and ending on the date of the Participant's death. If a
Participant separates from service before the first day of the Plan Year in
which he attains age 35, the waiver period shall begin on the date of such
separation. If a Participant enters the Bush Hog Segment after the first day of
the Plan Year in which the Participant attained age 32, the Plan Administrator
shall provide notice no later than the close of the second Plan Year succeeding
the entry of the Participant in the Bush Hog Segment.
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In lieu of receiving monthly payments, eligible spouses shall have the
option of electing to receive the lump sum Actuarial Equivalent of the Pre-
Retirement Survivor Annuity subject to the election rules described in this
Section.
6.6. PENSION PROTECTION. Anything in the Bush Hog Segment to the contrary
notwithstanding, the Participant shall not have the right prior to his
retirement irrevocably to elect to have all or part of his interest in the Bush
Hog Segment, which would otherwise become available to him during his lifetime,
paid only to his beneficiary after his death. In no event shall a beneficiary
be entitled to receive Pension payments in excess of 49.99% of the total value
of a Participant's Pension payments.
6.7. TERMINATION PRIOR TO EFFECTIVE DATE. A Retired Participant who
commenced receiving Pension payments prior to the Effective Date shall have such
benefits continued in the same form as such benefits were being paid to him
immediately preceding the Effective Date.
6.8. MINIMUM DISTRIBUTION REQUIREMENTS. Notwithstanding any of the
provisions herein to the contrary, distribution of a Participant's Pension shall
commence no later than the April 1 immediately following the calendar year in
which he attains age 70-1/2 and shall comply with the requirements of Section
401(a)(9) of the Code.
6.9. PENSION PAYMENT COMMENCEMENT. Distributions made hereunder on account
of (i) retirement, (ii) death or (iii) termination of employment for any reason
after a Participant's Normal Retirement Date shall commence within 60 days after
the Participant's retirement, death or other termination of employment. Any
other distributions shall commence no later than 60 days after the end of the
Plan Year in which occurs the latest of the following:
(a) the Participant's Normal Retirement Date;
(b) the tenth (10th) anniversary of the Participant's commencement of
participation in the Bush Hog Segment; or
(c) the Participant's termination of employment with the Employer.
6.10. DIRECT ROLLOVER PROVISIONS. For distributions made on or after
January 1,1993, a "distributee" who is reasonably expected to receive one or
more "eligible rollover distributions" in one taxable year of the distributee
may elect, at the time and in the manner prescribed by the Company in accordance
with reasonable administrative procedures as may from time to time be
established by the Company to the extent permitted by law, to have any such
eligible rollover distribution made in the form of a direct rollover to an
"eligible retirement plan" specified by the distributee, provided that such
eligible retirement plan provides for the acceptance of a direct rollover,
subject to the requirements of Section 401(a)(31) of the Code, and regulations
thereunder.
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For purposes of this Section, the term "eligible rollover
distribution" means, subject to the limitations of Section 401(a)(31) of the
Code, and regulations thereunder, any distribution of all or any portion of the
balance to the credit of the distributee (including a distribution the value of
which does not exceed $3,500), except that such term shall not include any
distribution which is: (i) one of a series of substantially equal periodic
payments (made not less frequently than annually) for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated Beneficiary or for a
specified period of 10 years or more; (ii) required under Section 401(a)(9) of
the Code; or (iii) not includible in gross income. For purposes of this
Section, the term "distributee" means (i)a Participant, (ii) a Participant's
surviving spouse, and (iii) a Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code. For purposes of this Section, subject to the
requirements of Section 401(a)(31) of the Code, and regulations thereunder and
including any additional eligible retirement plans as may be included therein,
"eligible retirement plan" means (i) an individual retirement account described
in Section 408(a) of the Code, (ii) an individual retirement annuity described
in Section 408(b) of the Code, (iii) a defined contribution plan qualified under
Section 401(a) of the Code, or (iv) an annuity plan described in Section 403(a)
of the Code; provided, however, that in the case of an eligible rollover
distribution to a surviving spouse, a direct rollover may be made only to an
individual retirement account or individual retirement annuity.
ARTICLE VII.
TERMINATION OF EMPLOYMENT
7.1. RETIREMENT. A Participant who terminates his employment with the
Employer on or after attaining age sixty-five(65), shall have a nonforfeitable
right to his Accrued Benefit determined as of the date of his termination of
employment.
7.2. OTHER EMPLOYMENT TERMINATION. A Participant who terminates his
employment prior to attaining age sixty-five (65), and prior to the termination
of the Merged Plan, with less than five (5) years of Vesting Service, shall
forfeit all rights to benefits under the Bush Hog Segment. A Participant who
has at least five (5) years of Vesting Service on the date his employment
terminates, or who terminates his employment with the Employer on or after
attaining age sixty-five (65), shall retain a nonforfeitable right to 100% of
his Accrued Benefit determined as of the date his employment terminates. The
Participant's nonforfeitable Accrued Benefit shall be payable at either the
Participant's Normal Retirement Date or his Early Retirement Date (as described
in Section 7.4) in a form as determined in accordance with Article VI.
7.3. DEATH. Should a Participant's termination of employment with the
Employer be caused by the Participant's death or should the Participant die
subsequent to his date of termination and prior to his Early or Normal
Retirement Date, he shall not, in the absence of any contrary provision of
Article VI, retain any nonforfeitable rights hereunder.
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7.4. EARLY RETIREMENT. If a Participant meets the years of Vesting Service
requirement as set forth in Section 4.2(a) at the date of his termination of
employment and the date described in Section 4.2(b) subsequently occurs, such
Participant may elect, in lieu of a Pension payable at his Normal Retirement
Date, to receive a Pension payable on an Early Retirement Date. Such Early
Retirement Pension will be payable in accordance with Section 5.3 and will be
payable in a form as determined in accordance with Article VI.
7.5. TERMINATION PRIOR TO EFFECTIVE DATE. A Participant who terminated
employment prior to the Effective Date who is not subsequently re-employed and
who retains a nonforfeitable right to a Pension hereunder shall have the amount
of his nonforfeitable right determined in accordance with the provisions of the
Bush Hog Segment in effect as of the date of such Participant's termination of
employment.
ARTICLE VIII.
MISCELLANEOUS
8.1. NO GUARANTEE OF EMPLOYMENT. Inclusion in the Bush Hog Segment shall
not be construed as giving the Participant any right to be retained in the
service of the Employer without the Employer's consent, nor shall it interfere
with the right of the Employer to discharge the Participant, nor shall it give
the Participant any right, claim or interest in any Pension benefits herein
described except upon fulfillment of the provisions and requirements of the Bush
Hog Segment.
8.2. CASH-OUT OF SMALL PENSIONS. If Pension payments have not yet
commenced and the Actuarial Equivalent lump sum value of the Pension payable to
a Participant who has terminated employment with the Employer or the person
designated by him to receive payments upon his death (if applicable) does not
exceed $3,500, such Pension shall be paid to such individual in a lump sum even
if the recipient is not otherwise entitled to commencement of Pension payments
at such time. For purposes of this Section, the Actuarial Equivalent lump sum
value of a Pension shall be the Actuarial Equivalent of such benefits calculated
using the immediate and deferred interest rates which would be used (as of the
date of distribution) by the Pension Benefit Guaranty Corporation for purposes
of determining the present value of a lump sum distribution on a plan
termination.
8.3. NONALIENATION OF PENSIONS. Except as required for Federal income tax
withholding purposes or pursuant to a "qualified domestic relations order" under
Sections 401(a)(13) and 414(p) of the Code and Section 206(d)(3) of ERISA, no
person entitled to benefits under the Bush Hog Segment shall have the right to
assign, commute or encumber the benefits herein provided. To the maximum extent
permitted by law, the benefits or payments herein provided shall not in any way
be liable to attachment, garnishment or other process, or to be seized, taken,
appropriated or applied by any legal or equitable process, to pay any debt or
liability of such person.
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EXHIBIT 10F
VERSON SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. Definitions and Construction. . . . . . . . . . . . . . . 2
2.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Principal Entities . . . . . . . . . . . . . . . . . . . . 2
2.3. Determination of Benefits. . . . . . . . . . . . . . . . . 3
2.4. Other Definitions. . . . . . . . . . . . . . . . . . . . . 7
2.5. Construction . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III. Participation and Service. . . . . . . . . . . . . . . . 7
3.1. Participation. . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Service. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3. Credited Service . . . . . . . . . . . . . . . . . . . . . 8
3.4. Participation and Service Upon Re-employment . . . . . . . 10
3.5. Transfers. . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV. Requirements for Retirement Benefits. . . . . . . . . . 13
4.1. Normal Retirement. . . . . . . . . . . . . . . . . . . . . 13
4.2. Early Retirement . . . . . . . . . . . . . . . . . . . . . 13
4.3. Disability Retirement. . . . . . . . . . . . . . . . . . . 13
4.4. Deferred Vested Pension. . . . . . . . . . . . . . . . . . 14
4.5. Commencement of Benefits . . . . . . . . . . . . . . . . . 15
ARTICLE V. Amount of Retirement Benefits. . . . . . . . . . . . . . 15
5.1. Normal Retirement Pension. . . . . . . . . . . . . . . . . 15
5.2. Early Retirement Pension . . . . . . . . . . . . . . . . . 16
5.3. Disability Retirement Pension. . . . . . . . . . . . . . . 16
5.4. Deferred Vested Pension. . . . . . . . . . . . . . . . . . 16
5.5. Minimum Pensions for Participants Included Under Prior
Provisions of the Verson Segment as of August 1, 1976. . . 17
ARTICLE VI. Manner of Payment and Other Benefits. . . . . . . . . . 17
6.1. Payment of Pensions. . . . . . . . . . . . . . . . . . . . 17
6.2. Death Before Retirement. . . . . . . . . . . . . . . . . . 19
6.3. Death After Retirement . . . . . . . . . . . . . . . . . . 19
6.4. Death After Termination of Employment and Before Pension
Payments Commence or While Receiving a Disability Retirement
Pension. . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5. Contingent Beneficiary Option. . . . . . . . . . . . . . . 20
6.6. Level Income Option. . . . . . . . . . . . . . . . . . . . 21
6.7. Designation of Beneficiary . . . . . . . . . . . . . . . . 22
6.8. Small Pensions . . . . . . . . . . . . . . . . . . . . . . 23
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TABLE OF CONTENTS
CONTINUED
6.9. Re-employment and Continued Employment After Retirement. . 24
6.10. Non-alienation of Benefits . . . . . . . . . . . . . . . . 25
6.11. Lump Sum Option. . . . . . . . . . . . . . . . . . . . . . 27
6.12. Direct Rollover. . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 28
7.1. Non-guarantee of Employment. . . . . . . . . . . . . . . . 28
7.2. Rights to Fund Assets. . . . . . . . . . . . . . . . . . . 28
7.3. Non-forfeitability of Benefits . . . . . . . . . . . . . . 28
ARTICLE VIII. Adoption of the Verson Segment. . . . . . . . . . . . 28
8.1. Adoption Procedure . . . . . . . . . . . . . . . . . . . . 28
8.2. Joint Employers. . . . . . . . . . . . . . . . . . . . . . 29
8.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . 29
8.5. Superseded Plans . . . . . . . . . . . . . . . . . . . . . 29
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<PAGE>
VERSON SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
ARTICLE I.
PURPOSE
The Verson Allsteel Press Company, Inc. ("Verson") adopted the Verson
Allsteel Press Company Employees Retirement Plan (the "Plan") effective as of
January 1, 1953, to provide retirement benefits for its employees. The Plan was
amended and restated effective as of August 1, 1976. The Plan was again amended
and restated effective August 1, 1984, and it subsequently was amended effective
August 1, and October 31, 1986. Verson was acquired by Allied Products
Corporation ("Allied") in 1986, became a division of Allied at that time, and
Allied became the sponsor of the Plan at that time. Participants' benefits
under the Plan were frozen as of October 31, 1986, and no further accrual of
benefits has occurred under the Plan after that date. Effective December 31,
1991, the F.J. Littell Machine Co. Pension Plan for Office, Engineering, Sales
and Supervisory Employees was merged into the Plan under the name Verson
Division of Allied Products Corporation Employees Retirement Plan (the "Combined
Plan"). Effective January 29, 1993, sponsorship of the Combined Plan was
transferred to Verson Corporation. Effective December 31, 1993, sponsorship of
the Combined Plan was transferred to Allied. Also effective December 31, 1993,
the Bush Hog Division of Allied Products Corporation Salaried Pension Plan was
merged into the Combined Plan and the resulting plan was renamed the Allied
Products Corporation Combined Retirement Plan (the "Merged Plan"). The segment
of the Merged Plan applicable to employees of the Employer (the "Verson
Segment") is now being amended and restated, effective as of December 31, 1993,
with certain amendments effective as of the dates indicated in the affected
provisions.
The Merged Plan and the Fund are intended to meet the requirements of
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
The provisions of the Merged Plan shall apply only to a Participant who
terminates employment with the Company or another Employer on or after the
Effective Date. Except as otherwise specifically provided for herein, a former
employee's eligibility for benefits, and the amount of benefits, if any, payable
to or on behalf of a former employee shall be determined in accordance with the
provisions of the Plan, the Combined Plan or the Merged Plan in effect on the
date his employment terminated. The benefit payable to or on behalf of a
Participant included under such plan shall not be affected by the terms of
<PAGE>
any plan amendment effective after such Participant's employment terminates,
unless the amendment expressly provides otherwise.
ARTICLE II.
DEFINITIONS AND CONSTRUCTION
2.1. DEFINITIONS: Words and phrases appearing in the Verson Segment shall
have the respective meanings set forth in this Article, unless the context
clearly indicates to the contrary.
2.2. Principal Entities:
(a) MERGED PLAN: The Allied Products Corporation Combined Retirement
Plan.
(b) VERSON SEGMENT: The Verson Allsteel Press Company Employees
Retirement Plan until December 31, 1991; effective from December 31, 1991,
through December 31, 1993, the portion of the Verson Division of Allied
Products Corporation Employees Retirement Plan As Applicable to Employees
Other Than Former Employees of the F.J. Littell Machine Co. Division of
Allied Products Corporation; and, effective from and after December 31,
1993, the segment of the Allied Products Corporation Combined Retirement
Plan set forth herein, as amended from time to time.
(c) COMPANY: Allied Products Corporation, a corporation organized
and existing under the laws of the state of Delaware, or its successor or
successors. Notwithstanding the preceding provisions of this subsection,
from January 29, 1993 through December 31, 1993, the term "Company" means
Verson Corporation, a corporation organized and existing under the laws of
the state of Delaware.
(d) EMPLOYER: For purposes of the Verson Segment, the term EMPLOYER
means the Verson Division of Allied Products Corporation and such other
subsidiary or affiliated companies that adopt the Verson Segment with the
consent of the Company in accordance with the provisions of Article VIII.
The term Employer, for purposes of the Verson Segment, may refer to an
individual Employer or to all Employers collectively, as the context
requires. Notwithstanding the preceding provisions of this subsection,
effective from January 29, 1993 through March 18, 1994, the term EMPLOYER
means Verson Corporation in lieu of the Verson Division of Allied Products
Corporation.
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(e) EMPLOYEE: Any person who, on or before October 31, 1986, is
receiving remuneration in an employer-employee relationship for personal
services rendered to the Employer (or would be receiving such remuneration
except for an Authorized Leave of Absence), other than an Employee covered
under the terms of the Littell Segment of the Allied Products Corporation
Combined Retirement Plan (covering former employees of the F.J. Littell
Machine Co. Division of Allied Products Corporation). Employee does not
include leased employees (as defined under Section 414(n)(2) of the Code)
who perform services for the Employer, except to the extent required by
applicable law.
(f) NON-UNION EMPLOYEE: An Employee who is not within a collective
bargaining unit recognized as such by the Employer and represented by a
Union, whereby pensions are the subject of collective bargaining.
(g) PARTICIPANT: A Non-Union Employee participating in the Verson
Segment in accordance with the provisions of Section 3.1.
(h) ELIGIBLE SPOUSE: The husband or wife of a Participant to whom he
or she is married on the date the Participant's Pension payments under the
Verson Segment commence. However, if the Participant should die prior to
the date Pension payments under the Verson Segment would have commenced to
him or her, then the Eligible Spouse shall be the husband or wife to whom
the Participant had been married throughout the one-year period preceding
the date of his or her death.
2.3. DETERMINATION OF BENEFITS:
(a) PENSION: A series of monthly amounts which are payable to a
person who is entitled to receive benefits under the Verson Segment.
(b) RETIREMENT: Termination of employment for any reason other than
death after a Participant has fulfilled all requirements for a Normal,
Early or Disability Retirement Pension. A Participant's Retirement date
shall be deemed to be the day immediately following his last day of Service
under Section 3.2. Additionally, a Participant will be deemed to be
retired if after his Retirement he continues to perform services for the
Employer or receives payment for vacation, holiday, illness, incapacity
including disability, layoff, jury duty, military duty or leave of absence
for less than 8 days of employment in any calendar month. A Participant
who is deemed to be retired under the provisions of the preceding sentence
shall be considered to have commenced (or continued) his Retirement on
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<PAGE>
the first day of the calendar month in which such Participant received
remuneration for less than 8 days of employment.
(c) NORMAL RETIREMENT DATE: The Participant's 65th birthday, and, as
of such date, benefits shall be nonforfeitable.
(d) SERVICE: The period of a Participant's employment considered in
accordance with Section 3.2 in determining his eligibility for benefits
under the Verson Segment.
(e) CREDITED SERVICE: The period of a Participant's employment
through October 31, 1986 considered in accordance with Section 3.3 in
determining the amount of benefits payable to or on behalf of the
Participant.
(f) AUTHORIZED LEAVE OF ABSENCE: Any absence authorized by the
Employer under the Employer's standard personnel practices, provided that
all persons under similar circumstances are treated alike in the granting
of such Authorized Leaves of Absence, and provided further that the
Participant returns or retires within the period specified in the
Authorized Leave of Absence. An absence due to service in the Armed Forces
of the United States shall be considered an Authorized Leave of Absence
provided that the Employee complies with all of the requirements of Federal
law in order to be entitled to re-employment and provided further that the
Employee returns to employment with the Employer within the period provided
by such law.
(g) AUTOMATIC LEAVE OF ABSENCE: Any period of absence before or
after termination of active employment during which an Employee is directly
or indirectly paid by the Employer, but limited to a maximum of 12 months
for each such period (and without duplication of a period of Authorized
Leave of Absence). Such periods shall not include any period for which a
payment is made or due under the Verson Segment or under a plan maintained
solely for the purpose of complying with workmen's compensation or
unemployment compensation or disability insurance laws, or solely to
reimburse the Employee for medical or medically-related expenses. An
Employee shall be deemed to be "directly or indirectly paid or entitled to
payment" regardless of whether such payment is made by or due from the
Employer directly, or made indirectly through a trust fund, insurer or
other entity to which the Employer contributes or pays premiums.
(h) COMPENSATION: The amounts paid to an Employee through
October 31, 1986 for personal services during the period considered as
Service under the Verson Segment (1) by an Employer, and (2) by an
affiliate of an Employer while the Employee is on a special assignment by
that Employer. For
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<PAGE>
purposes of the Verson Segment, Compensation shall not include commissions,
premium payments for overtime, supplemental payments for employees serving
outside the United States, or severance pay. If benefits in the Verson
Segment are ever not frozen so Participants earn Compensation after July
31, 1989, the limit on annual compensation contained in Section 401(a)(17)
of the Code shall apply.
(i) AVERAGE MONTHLY COMPENSATION: The result obtained by dividing
the total Compensation of a Participant during the 5 consecutive completed
calendar years of Service in which Compensation was highest within the last
10 completed calendar years of Service through his Normal Retirement Date
(or, if earlier, October 31, 1986) by 60 (or by the actual number of months
of Service if fewer than 60) or; if greater, the Compensation of a
Participant during the 4 consecutive completed calendar years plus the
partial calendar year ending coincident with or immediately prior to his
Normal Retirement Date (or, if earlier, October 31, 1986) divided by 60.
(j) PRIMARY SOCIAL SECURITY BENEFIT: The monthly amount available to
the Participant at age 65 determined under the provisions of Title II of
the Social Security Act in effect at the time of the earliest to occur of
his termination of employment, his attainment of age 65 or October 31, 1986
(such earliest date being referred to in this subsection as the
"determination date"), without regard to any increases in the wage base or
benefit levels that take effect after such date, subject to the following:
(1) If the determination date occurs before the Participant
reaches age 65, the Participant's Primary Social Security Benefit
shall be calculated by assuming continuation of his Compensation until
age 65 at the same rate as in effect on the determination date.
However, if the determination date is the date on which employment
terminates because of Disability and the Participant qualifies for a
Disability Insurance Benefit under the Social Security Act, the
Primary Social Security Benefit shall be the monthly amount payable as
a Disability Insurance Benefit.
(2) If records of a Participant's Compensation for any years
prior to the determination date are not reasonably accessible from the
records of the Employer, then for the purposes of calculating a
Primary Social Security Benefit hereunder, the amount of Compensation
for any given year shall be equal to the Participant's Compensation in
the earliest calendar year for which Compensation records are
available, reduced on a compounded basis by 6% for each year that the
year in question precedes the earliest year for which Compensation
records are available. In lieu of such assumed Compensation, actual
wages will be used if, within the time period
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<PAGE>
described below, a Participant furnishes the Plan Administrator with
an accurate record of his actual wages. The Plan Administrator shall
notify a Participant of his right to provide the Plan Administrator
with an accurate record of his actual wages and the Participant shall
have 180 days from the later of the determination date or the date of
such notification to furnish the accurate record of his actual wages.
(3) The Plan Administrator may adopt rules which do not conflict
with the previous provisions of this subsection, but which govern the
computation of a Primary Social Security Benefit hereunder, and the
fact that an Employee does not actually receive such amount from the
Social Security Administration because of failure to apply or
continuance of work, or for any other reason, shall be disregarded.
(k) ACCRUED BENEFIT: The amount of the pension benefit under the
Verson Segment earned by a Participant as of the earlier of his Retirement
or October 31, 1986, determined in accordance with Section 5.1.
(l) INTEGRATED BENEFITS: Temporary disability benefits available to
a retired Participant under any Workmen's Compensation or Occupational
Disease law or under any Federal, State or other system to which the
Employer is required by law to contribute or pay all or part of the costs,
exclusive of Unemployment Compensation benefits and any benefit payable
under Title II of the Social Security Act.
(m) ACTUARIAL (OR ACTUARIALLY) EQUIVALENT: For purposes of the
Verson Segment, equality in value of the aggregate amounts expected to be
received under different forms of payment, and except as provided below,
based on the UP-1984 Mortality Table with no set forward or set back for
Participants, Participants' spouses, contingent beneficiaries or
beneficiaries and with interest at 7-1/2% per annum. However, with respect
to any lump sum payment that may be payable under the Verson Segment, the
Actuarial Equivalent lump sum value for payments made in any Plan Year
shall be based on immediate and deferred rates which would be used (as of
the beginning of the Plan Year) by the Pension Benefit Guaranty Corporation
for purposes of valuing immediate annuities on a plan termination.
(n) DISABILITY: A physical or mental condition which totally and
presumably permanently prevents a Participant from engaging in any
substantially gainful activity, as determined in accordance with the
provisions of Section 4.3. Entitlement to a Disability Insurance Benefit
under the Social Security Act is sufficient but not required evidence of
Disability.
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<PAGE>
2.4. OTHER DEFINITIONS:
(a) EFFECTIVE DATE: December 31, 1993, the date of this amendment
and restatement of the Verson Segment. Notwithstanding the preceding
provisions of this paragraph, certain provisions of the Verson Segment are
effective as of the dates specified therein.
(b) PLAN YEAR: The calendar year; provided, however, that, prior to
January 1, 1995, the Plan Year is the 12-month period commencing on
August 1, and ending on July 31 and the short year commencing on August 1,
1994 and ending on December 31, 1994.
2.5. CONSTRUCTION: The masculine gender, where appearing in the Verson
Segment, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary. The
words "hereof", "herein", "hereunder" and other similar compounds of the word
"here" shall mean and refer to the entire Verson Segment, not to any particular
provision or Section of the Verson Segment. All references herein to Articles
and/or Sections shall mean and refer to Articles and/or Sections of the Verson
Segment unless otherwise qualified. Article and Section headings are included
for convenience of reference and are not intended to add to, or subtract from,
the terms of the Verson Segment. Terms used in the Verson Segment when not
defined in the Verson Segment shall have the meanings given them by the Merged
Plan.
ARTICLE III.
PARTICIPATION AND SERVICE
3.1. PARTICIPATION: Any Non-Union Employee included under the prior
provisions of the Verson Segment as of the day before the Effective Date shall
continue to participate in accordance with the provisions of this amended and
restated Verson Segment. In addition, any Employee who participates in the
Verson Segment under the provisions of the Verson Segment in effect as of
October 30, 1986 shall continue to participate after such date. Because the
Verson Segment was frozen as of October 31, 1986, an Employee hired after that
date shall not be eligible to participate in the Verson Segment.
After a termination of employment, a rehired Employee's subsequent
participation in the Verson Segment shall be subject to the re-employment
provisions of Section 3.4.
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<PAGE>
A former Employee entitled to receive a Pension under the Verson Segment shall
continue as a Participant until the date of his death.
3.2. SERVICE: A Participant's eligibility for benefits under the Verson
Segment shall be determined by his period of Service. Subject to the re-
employment provisions of Section 3.4, a Participant shall receive Service for
years of employment with the Employer from and after the date his last period of
continuous employment commenced.
Service shall terminate under the Verson Segment as of the date of
termination of employment or the subsequent expiration of an Automatic Leave of
Absence, subject to the following:
(a) If re-employment occurs within 12 months after the Participant's
first day of absence from employment, the re-employment provisions of
Section 3.4(b) shall be applicable.
(b) If upon termination of employment a Participant receives
Compensation for an accrued vacation extending beyond the 12-month period
of an Automatic Leave of Absence, his Service and Credited Service shall
terminate as of the date such period of accrued vacation ends.
(c) An Authorized Leave of Absence (whether or not compensated),
including an Authorized Leave of Absence for service in the Armed Forces of
the United States, which extends beyond 12 months shall be included in a
Participant's period of Service, subject to the provisions of
Section 2.3(f). Service also shall include periods of temporary illness
and an Automatic Leave of Absence.
(d) With respect to all Employees who were in the employ of the
Company or its predecessor on November 19, 1973, Service shall not be
considered to have been broken by reason of the last termination of
employment prior to November 19, 1973, no matter how such termination of
employment occurred.
The transfer provisions of Section 3.5 shall apply in the case of a
transferred employee.
Notwithstanding the foregoing, Service prior to August 1, 1976 under this
Section shall not be less than that determined under the prior provisions of the
Verson Segment for Employees who were included under the prior provisions of the
Verson Segment on July 31, 1976.
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<PAGE>
3.3. CREDITED SERVICE: The amount of benefit payable to or on behalf of a
Participant shall be determined on the basis of his Credited Service earned
through October 31, 1986. Subject to the re-employment provisions of
Section 3.4 and the transfer provisions of Section 3.5, a Participant shall
receive Credited Service during his years of employment as a Non-Union Employee,
from and after the date his last period of employment by the Employer commenced,
and ending no later than the earlier of his employment termination or
October 31, 1986, subject to the following:
(a) Credited Service shall not include the months between two periods
of a Participant's employment unless he is re-employed by the Employer
within a twelve consecutive month period after his first day of absence
from employment, as described in the re-employment provisions of
Section 3.4(b).
(b) Credited Service prior to August 1, 1976 for a Participant who
was included under the prior provisions of the Verson Segment on July 31,
1976 shall be determined in accordance with the prior provisions of the
Verson Segment (but without duplication of credit for employment as a Union
and Non-union Employee). With respect to all Employees who were in the
employ of the Company on November 19, 1973, Credited Service shall not be
considered to have been broken by reason of the last termination of
employment prior to November 19, 1973, no matter how such termination of
employment occurred.
(c) Credited Service shall include the same periods of Automatic
Leaves of Absence considered as Service in Section 3.2(b), any Authorized
Leave of Absence for illness, or while on special assignment by the
Employer, or service in the Armed Forces of the United States pursuant to
the provisions of Section 2.3(f), and a maximum of 30 days for any other
uncompensated Authorized Leave of Absence.
(d) A fractional year of Credited Service shall provide proportional
credits in the computation of the Participant's Pension.
(e) In the event a Participant ceases to be an Employee eligible to
accrue benefits under the Verson Segment but remains in the employ of the
Employer, he shall receive no Credited Service until he is again in
eligible employment.
(f) Anything in the Verson Segment to the contrary notwithstanding,
Credited Service shall not include any service, period of employment or
period of Automatic Leave of Absence or Authorized Leave of Absence after
October 31, 1986. The Credited Service of each Employee who was a
Participant on October 31, 1986 shall be determined as of October 31, 1986
and shall not exceed that figure.
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<PAGE>
3.4. PARTICIPATION AND SERVICE UPON RE-EMPLOYMENT: The following rules
shall apply upon re-employment:
(a) Upon re-employment of an Employee whose termination of employment
with the Employer occurred before August 1, 1976 without entitlement to a
Pension, he shall be treated as a new Employee for all purposes of the
Verson Segment.
(b) The first day of absence from employment shall commence a twelve
consecutive month period to be used to determine whether the Employee had a
one-year break in employment. Re-employment within such twelve-month
period shall result in no break in employment; and for purposes of
determining Verson Segment participation under Section 3.1 and the
Employee's Service under Section 3.2, the period of absence shall be
considered a part of his period of continuous employment. However,
Credited Service under Section 3.3 shall consist of the sum of the
Employee's calendar months of actual employment, subject to the rules in
Section 3.3(f).
(c) Upon re-employment of an Employee who previously terminated
employment with the Employer after becoming entitled to a Pension under the
Verson Segment, his prior Service and Credited Service shall be added to
his new Service and Credited Service in determining his rights and benefits
under the Verson Segment, subject to the rules in Section 3.3(f).
(d) Upon re-employment of an Employee who previously terminated
employment with the Employer without entitlement to a Pension under the
Verson Segment, his prior Service and Credited Service shall be canceled;
provided, however, that his prior Service and Credited Service shall not be
canceled and shall be restored if at least one of the following is
applicable:
(1) the period between his termination of employment and his
date of re-employment is shorter than the length of his prior period
of Service, or
(2) as of July 31, 1985, the period between his termination of
employment and July 31, 1985 is shorter than the length of his prior
period of Service, and upon re-employment the period between his
termination of employment and his re-employment was shorter than 5
years, or
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<PAGE>
(3) the Employee's termination of employment commenced on or
after August 1, 1985 and the period between his termination of
employment and his date of re-employment is less than 5 years, or
(4) the Employee's termination of employment commenced on or
after August 1, 1985 due to a "maternity or paternity leave" and the
period between his termination of employment and his re-employment is
shorter than the length of his prior period of Service plus one year,
or
(5) the Employee's termination of employment commenced on or
after August 1, 1985 due to a "maternity or paternity leave" and the
period between his termination of employment and his re-employment is
shorter than 6 years.
(e) When Service and Credited Service are restored under
subparagraph (d) above, (1) in the case of a Participant, active
participation in the Verson Segment shall be deemed to have recommenced as
of the date of re-employment, and (2) in the case of a non-Participant, the
re-employed Employee shall become a Participant on the date as of which he
has completed the requirements of Section 3.1 and, for this purpose, his
employment during both his prior and new periods of employment shall be
recognized. If an Employee's pre-break Service and Credited Service are
not restored due to the length of the period between this termination of
employment and his re-employment, his participation in the Verson Segment
shall be determined under Section 3.1 as if he were a new Employee.
Subject to the provisions of Sections 4.5 and 6.9, no Pension payments
shall be made during a period of employment; and if the Participant had received
any Pension payments under the Verson Segment, the Pension payable upon his
subsequent Retirement shall be reduced by the Actuarial Equivalent of the
Pension payments, except Disability Retirement Pension payments, he received
prior to his Normal Retirement Date.
The Pension subsequently payable to any Participant who has a break in
continuity of employment shall not be reduced, because of increases in benefits
payable under the Social Security Act, below the amount of Pension (if any) that
would have been payable under the Verson Segment before the Participant's break
in continuity of employment.
For the purposes of the Verson Segment, "maternity or paternity leave"
means separation from employment or absence from work due to the pregnancy of
the Employee, the birth of a child of the Employee, the placement of a child in
connection with the adoption of the child by an Employee, or the caring for an
Employee's child
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<PAGE>
during the period immediately following the child's birth or placement for
adoption. The Plan Administrator shall determine, under rules of uniform
application and based on information provided to the Plan Administrator by the
Employee, whether or not the Employee's termination of employment or absence
from work is due to "maternity or paternity leave".
3.5. TRANSFERS:
(a) BETWEEN EMPLOYERS: If a Participant is transferred to the
employment of another Employer, he shall maintain all of his rights under
the Verson Segment and his employment and participation herein shall be
considered uninterrupted as if no transfer had been made.
(b) EMPLOYMENT BY RELATED EMPLOYER: A Participant shall receive
Service in accordance with the provisions of Section 3.2 for all employment
by a Related Employer, but subject to the re-employment provisions of
Section 3.4. For purposes of this Section, "Related Employer" shall mean
(1) any corporation which is a member of the controlled group of
corporations of which the Employer is a part, (2) any trade or business
which is under common control with the Employer, and (3) any member of an
affiliated service group which includes the Employer, all as defined by
Section 414 of the Code.
(c) EMPLOYMENT BY PREDECESSOR COMPANY: Employment for predecessor or
affiliated companies, if certified by the Employer, prior to inclusion in
the Verson Segment, for which no retirement benefits are payable under a
qualified retirement plan of any such predecessor or affiliate, shall be
considered as employment by the Employer under the Verson Segment.
(d) TO AND FROM VERSON SEGMENT COVERAGE: In the event of transfer to
or from employment providing coverage by another defined benefit retirement
plan that is qualified under Section 401(a) of the Code maintained by the
Company, the Employer or a Related Employer, a Participant shall receive
Credited Service under Section 3.3 only for the period of his employment by
the Employer while participating under the prior provisions of the Verson
Segment before August 1, 1976 and while participating in the Verson Segment
from and after August 1, 1977 except as is otherwise provided in the
following sentence. Upon retirement or other termination of employment
with the Employer and all Related Employers, the Pension (if any) to which
the Employee becomes entitled under the Verson Segment shall be computed on
the basis of his Credited Service under Section 3.3, and the provisions of
the Verson Segment in effect as of the date of termination of employment
with all such organizations. However, if employment terminates under the
Verson Segment after a transfer from
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employment that had provided coverage by either the Verson Allsteel Press
Company Pension Plan or the Retirement Plan for Employees of the Hearne,
Texas Plant of Verson Allsteel Press Company ("Other Plan"), the
Participant's benefit under the Verson Segment shall be determined on the
following basis: (a) the vested portion of the Participant's Accrued
Benefit shall be determined under the Verson Segment as if his Credited
Service under both the Verson Segment and the Other Plan had been Credited
Service under the Verson Segment; and there shall then be deducted (b) the
Actuarial Equivalent of the vested portion of the Participant's accrued
benefit under the Other Plan. The time and manner of payment of the
Participant's Pension shall then determine the factors to be applied to
such vested Accrued Benefit, in accordance with the provisions of the
Verson Segment, to compute the amount of Pension payable under the Verson
Segment to or on behalf of the Participant.
(e) ADDITIONAL PROVISIONS: Notwithstanding anything herein contained
to the contrary, if an individual was an employee of Verson Manufacturing
Company (or any subsidiary or affiliate thereof) immediately prior to the
merger of Verson Manufacturing Company with Verson Allsteel Press Company,
and if he became an employee of the Employer as a consequence of the
merger, the period he was an employee of Verson Manufacturing Company (or
any of its subsidiaries or affiliates) shall be considered employment by
the Employer.
ARTICLE IV.
REQUIREMENTS FOR RETIREMENT BENEFITS
4.1. NORMAL RETIREMENT: A Participant shall be eligible for a Normal
Retirement Pension if his employment is terminated on or after his Normal
Retirement Date. Payment of a Normal Retirement Pension shall commence as of
the first day of the month coinciding with or next following the date of
Retirement.
4.2. EARLY RETIREMENT: A Participant shall be eligible for an Early
Retirement Pension if his employment is terminated on or after his 55th birthday
and after he has completed 10 or more years of Service. Payment of an Early
Retirement Pension shall commence as of the first day of the month following the
Participant's Normal Retirement Date. However, if a Participant requests the
Plan Administrator to authorize the commencement of his Early Retirement Pension
as of the first day of the month coinciding with or next following his
Retirement, or as of the first day of any subsequent month which precedes his
Normal Retirement Date, his Pension shall commence as of the beginning of the
month so requested, but the amount thereof shall be reduced as provided in
Section 5.2.
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4.3. DISABILITY RETIREMENT: A Participant shall be eligible for a
Disability Retirement Pension if his employment is terminated by reason of
Disability after he has completed 10 or more years of Service. Payment of a
Disability Retirement Pension shall commence as of the first day of the month
coinciding with or next following Retirement.
"Disability" under the Verson Segment shall mean a physical or mental
condition which totally and presumably permanently prevents a Participant from
engaging in any substantially gainful activity, based on a medical examination
by a doctor or clinic appointed by the Plan Administrator. Entitlement to a
Disability Insurance Benefit under the Social Security Act is sufficient but not
required evidence of Disability.
Notwithstanding any other provision of this Section, no Participant shall
qualify for a Disability Retirement Pension if, on the basis of a medical
examination, the Plan Administrator determines that his Disability results from
(a) an injury suffered while engaged in a criminal act or enterprise, (b) a
self-inflicted injury, or (c) service in the Armed Forces of the United States
which entitles the Participant to a veteran's disability pension; but this
provision shall not prevent the Participant from qualifying for a Pension under
another provision of the Verson Segment.
Disability shall be considered to have ended and entitlement to a
Disability Retirement Pension shall cease if, prior to his Normal Retirement
Date, the Participant (1) is re-employed by the Employer, (2) engages in any
substantially gainful activity, except for such occupation or employment as is
found by the Plan Administrator to be for the primary purpose of rehabilitation
or not incompatible with a finding of total and permanent disability, or (3) has
sufficiently recovered, in the opinion of the Plan Administrator based on a
medical examination by a doctor or clinic appointed by the Plan Administrator,
to be able to engage in regular employment with the Employer and refuses an
offer of employment by the Employer, (4) refuses to undergo any medical
examination requested by the Plan Administrator, provided that a medical
examination shall not be required more frequently than twice in any calendar
year, or (5) becomes ineligible, before attainment of age 65, to receive
additional Disability Insurance Benefits under the Social Security Act. If
entitlement to a Disability Retirement Pension ceases in accordance with the
provisions of this paragraph for a reason other than re-employment by the
Employer, such a Participant shall not be prevented from qualifying for a
Pension under another provision of the Verson Segment based on his Credited
Service and Compensation prior to Disability Retirement; and the Disability
Retirement Pension payments received shall be disregarded. If a Participant
recovers from Disability and returns to employment with the Employer, subsequent
entitlement to a Pension shall be determined in accordance with the provisions
of the Verson Segment based on both periods of Service and Credited Service, and
the Disability Retirement Pension payments previously received shall be
disregarded.
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4.4. DEFERRED VESTED PENSION: A Participant shall be eligible for a
Deferred Vested Pension in accordance with the provisions of Section 5.4 if his
employment is terminated before death or Retirement after he has completed 5 or
more years of Service. Payment of a Deferred Vested Pension shall commence as
of the first day of the month following the Participant's Normal Retirement
Date. However, if a Participant who had 10 or more years of Service requests
the Plan Administrator to authorize the commencement of his Deferred Vested
Pension as of the first day of any calendar month within the 10-year period
preceding his Normal Retirement Date, his Pension shall commence as of the date
so requested, but the amount thereof shall be reduced as is provided in the
second paragraph of Section 5.4.
4.5. COMMENCEMENT OF BENEFITS: Subject to the following sentence, payment
of any benefit provided under the Verson Segment shall commence no later than
the 60th day after the end of the Plan Year in which the Participant both has
attained age 65 and terminated his employment with the Employer. Regardless of
the foregoing, the payment of benefits under the Verson Segment to a Participant
must commence by the April 1st after the end of the calendar year in which he
reaches age 70-1/2.
ARTICLE V.
AMOUNT OF RETIREMENT BENEFITS
5.1. NORMAL RETIREMENT PENSION: Subject to the provisions of Section 5.5,
the monthly amount of the Normal Retirement Pension on a single-life basis shall
be equal to the greater of the following:
(a) One percent (1%) of the Participant's Average Monthly
Compensation multiplied by his years of Credited Service, except that such
amount shall be reduced by Integrated Benefits and the lesser of $85 or 75%
of the Primary Social Security Benefit; or
(b) The Participant's years of Credited Service multiplied by Fifteen
Dollars ($15.00).
If a Participant retires after his Normal Retirement Date, his Pension
shall not be less than the amount that would have been payable had Retirement
occurred as of his Normal Retirement Date.
If payment of a Participant's Pension begins while he is still employed by
the Employer pursuant to the second sentence of Section 4.5, any subsequent
increases in his
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Normal Retirement Pension (as a result of Credited Service earned after his
Pension payments begin) for a Plan Year shall be reduced (but not below zero) by
the Actuarial Equivalent (as specified in the first sentence of Section 2.3(m))
of the Pension payment(s) he received during the preceding Plan Years; provided,
however, that the Actuarial Equivalent value of a Paricipant's Pension shall not
be reduced by application of this sentence.
5.2. EARLY RETIREMENT PENSION: Subject to the provisions of Section 5.5,
the monthly amount of the Early Retirement Pension on a single-life basis
payable at the Participant's Normal Retirement Date shall be equal to his
Accrued Benefit as of October 31, 1986.
If payment of an Early Retirement Pension commences prior to the
Participant's Normal Retirement Date, the amount of the Pension shall be reduced
on an Actuarially Equivalent basis. However, there shall be no reduction by
reason of payments commencing prior to attainment of age 65 in the Pension of a
Participant whose Retirement occurs after attainment of (a) age 64 and on or
after August 1, 1979, or (b) age 63 and on or after August 1, 1980, or (c) age
62 and on or after August 1, 1981.
5.3. DISABILITY RETIREMENT PENSION: Subject to the provisions of
Section 5.5, the monthly amount of the Disability Retirement Pension shall be
computed in the same manner as a Normal Retirement Pension under Section 5.1;
except that, if subsection 5.1(a) becomes applicable, (1) there shall be no
reduction for Integrated Benefits, (2) if the Employee is eligible for a
Disability Insurance Benefit under the Social Security Act, the reduction shall
be the lesser of $85 or 64% of said Disability Insurance Benefit, and
(3) otherwise, the Participant's Primary Social Security Benefit shall be deemed
to be zero (and there shall be no offset based on the lesser of 75% thereof or
$85) for any period prior to age 65 during which the Participant is not eligible
for a Disability Insurance Benefit under the Social Security Act. A Disability
Retirement Pension shall not be reduced because of payments commencing before
the Participant's Normal Retirement Date.
5.4. DEFERRED VESTED PENSION: Subject to the provisions of Section 5.5,
the amount of a Deferred Vested Pension on a single-life basis, commencing as of
the Participant's Normal Retirement Date shall be equal to the Vested Percentage
of the Participant's Accrued Benefit as of October 31, 1986 computed in
accordance with Section 5.1 hereof. A Participant's Vested Percentage shall be
100% if he has 5 years of Service (regardless of age), and it shall be 0% until
he has 5 years of Service.
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If payment of a Deferred Vested Pension commences prior to the
Participant's Normal Retirement Date (pursuant to the last sentence of
Section 4.4), the amount of the Pension shall be reduced on an Actuarially
Equivalent basis.
5.5. MINIMUM PENSIONS FOR PARTICIPANTS INCLUDED UNDER PRIOR PROVISIONS OF
THE VERSON SEGMENT AS OF AUGUST 1, 1976: Anything to the contrary
notwithstanding, if a Participant was included under the prior provisions of the
Verson Segment as of August 1, 1976 and a Pension becomes payable under the
Verson Segment resulting from termination of employment on or after August 1,
1976, such Pension shall not be less than the Pension which would have been
payable had the provisions of the Verson Segment which were in effect
immediately prior to August 1, 1976 remained in effect until the Participant's
termination of employment.
ARTICLE VI.
MANNER OF PAYMENT AND OTHER BENEFITS
6.1. PAYMENT OF PENSIONS: If a Participant who is entitled to receive a
Normal or an Early Retirement Pension, a Deferred Vested Pension, or a
Disability Retirement Pension commencing at or after attainment of age 55 has an
Eligible Spouse on the date as of which his Pension payments commence, his
Pension shall be paid in the form of a 50% Joint and Survivor Pension, unless he
elects otherwise in writing and his Eligible Spouse, if necessary, consents to
such election.
Under a 50% Joint and Survivor Pension, a reduced monthly amount shall be
paid to the Participant for his lifetime; and his Eligible Spouse, if surviving
at the Participant's death, shall be entitled to receive thereafter a lifetime
survivorship Pension in a monthly amount equal to 50% of the reduced monthly
amount which had been payable to the Participant. Subject to the following
sentence, the reduced amount payable to the Participant under the 50% Joint and
Survivor Pension shall be determined so that the aggregate of the Pension
payments expected to be made to the Participant and his Eligible Spouse shall be
the Actuarial Equivalent of the single-life Pension determined under Article V.
Notwithstanding the foregoing sentence, the Pension payable to the Eligible
Spouse of a Participant who retired by reason of Disability shall be based on
the portion of the Disability Retirement Pension which would have been payable
to the Participant as an Early Retirement Pension. The last payment of the 50%
Joint and Survivor Pension shall be made as of the first day of the month in
which the death of the survivor occurs.
In lieu of the 50% Joint and Survivor Pension, a Participant may elect in
writing, within the 90-day period prior to the date his Pension payments
commence, only with the consent of his Eligible Spouse, to receive a monthly
amount in the form of the single-life Pension computed under Article V. A
Participant entitled to receive a Normal Retirement
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Pension also may elect instead an optional form of benefit under Section 6.5 and
a Participant entitled to receive an Early Retirement Pension may elect instead
a Level Income Option under Section 6.6.
A Participant also may revoke any election made under this Section at any
time during the 90-day period preceding the date the Participant's Pension
commences if the purpose of such revocation is to reinstate coverage under the
50% Joint and Survivor Pension.
The Eligible Spouse's consent to any election made pursuant to the Verson
Segment and requiring the Eligible Spouse's consent shall be in writing and
shall acknowledge the effect of such consent. In addition, the Eligible
Spouse's signature on the written consent must be witnessed by a Merged Plan
representative or by a notary public. The Eligible Spouse's consent need not be
obtained if the Plan Administrator is satisfied that there is no Eligible
Spouse, that the Eligible Spouse cannot be located or because of any other
circumstances which may be prescribed in regulations issued by the Secretary of
the Treasury. An Eligible Spouse's consent under the Verson Segment shall be
valid only with respect to the specified alternate beneficiary or beneficiaries
designated by the Participant; if such alternate beneficiary of beneficiaries is
or are subsequently changed, a new consent by the Eligible Spouse will be
required. Notwithstanding the provisions of the preceding sentence, a spouse
may make a general consent, as described in Treasury Regulation Section
1.401(a)-20, Q&A-31(c). The Eligible Spouse's consent to any election made by a
Participant pursuant to the Verson Segment, once made, may not be revoked by the
Eligible Spouse.
Within a reasonable period of time preceding the date his Pension
commences, and subject to regulations issued by the Secretary of the Treasury, a
Participant shall be supplied with a written explanation of (a) the terms and
conditions of the 50% Joint and Survivor Pension, (b) the Participant's right,
if any, to elect a single-life Pension or an optional form of payment under
Section 6.5 or 6.6 in lieu of the 50% Joint and Survivor Pension and subject, in
certain cases, to his Eligible Spouse's consent and (c) the Participant's right
to reinstate coverage under the 50% Joint and Survivor Pension prior to his
Pension commencement date by revoking an election of a single-life Pension or an
optional form of benefit under Section 6.5 or 6.6.
If a Participant is entitled to receive a Disability Retirement Pension
commencing before age 55, or if a Participant does not have an Eligible Spouse
on the date his Pension payments commence, he shall receive the single-life
Pension computed under Article V, subject to his right, if any, to elect an
optional form of benefit; provided that, the Eligible Spouse of a Participant
who receives a Disability Retirement Pension prior to age 55 shall be covered by
the 50% Joint and Survivor Pension pursuant to the provisions of
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Section 6.4. The last payment of the single-life Pension shall be made as of
the first day of the month in which the death of the Participant occurs.
6.2. DEATH BEFORE RETIREMENT: Upon the death of a Participant before other
termination of employment, but after he has attained age 65 or after he has
completed at least 5 years of Service, a Pension shall be payable to his
Eligible Spouse, if any.
The Pension payable to an Eligible Spouse of a Participant who was age 55
or older on the date of his death shall be equal to the amount the Eligible
Spouse would have been entitled to receive had the Participant retired
immediately preceding death and commenced to receive a Normal Retirement Pension
or an Early Retirement Pension, whichever is applicable, under either
Section 5.1 or Section 5.2 and the 50% Joint and Survivor Pension provisions of
Section 6.1. The Pension payable to such an Eligible Spouse shall commence as
of the first day of the month coinciding with or next following the
Participant's death and shall continue until the beginning of the month in which
the death of the Eligible Spouse occurs.
The Pension payable to an Eligible Spouse of a Participant who was younger
than age 55 on the date of his death shall be equal to the amount the Eligible
Spouse would have been entitled to receive had the Participant (a) terminated
employment immediately prior to death, (b) commenced to receive a Deferred
Vested Pension under the provisions of Sections 4.4 and 5.4 and under the 50%
Joint and Survivor Pension provisions of Section 6.1 as of the beginning of the
month coincidental with or next following the date he would have attained age 55
and (c) then died immediately thereafter. The Pension payable to such an
Eligible Spouse of a Participant who was younger than age 55 on the date of his
death shall commence as of the beginning of the month coincidental with or next
following the date the Participant would have attained age 55 and shall continue
until the beginning of the month in which the death of the Eligible Spouse
occurs.
No benefit shall be payable under this Section for death during employment
after the Participant has satisfied the requirements for Normal Retirement if an
option is effective under Section 6.6.
6.3. DEATH AFTER RETIREMENT: In addition to any benefit that may become
payable under the Verson Segment, a lump-sum benefit shall be payable upon the
death after Retirement of a Participant entitled to receive a Normal, Early or
Disability Retirement Pension. The benefit shall be payable in accordance with
the Designation of Beneficiary provisions of Section 6.7, in the amount of
$2,500.
6.4. DEATH AFTER TERMINATION OF EMPLOYMENT AND BEFORE PENSION PAYMENTS
COMMENCE OR WHILE RECEIVING A DISABILITY RETIREMENT PENSION: A Participant who
has
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terminated employment with entitlement to a Normal Retirement Pension, an Early
Retirement Pension or a Deferred Vested Pension hereunder, but whose Pension has
not commenced, and who has not elected an effective option under Sections 6.5 or
6.6, shall be covered by the 50% Joint and Survivor Pension provisions of
Section 6.1 until the date his Pension payments commence. In the event of his
death prior thereto, his surviving Eligible Spouse shall receive a Pension
computed in accordance with the applicable provisions of Section 5.1, 5.2 or 5.4
and Section 6.1 as if the Participant's Pension payments had commenced on the
first day of the month in which the later of his date of death or his attainment
of age 55 occurred. The Pension payable to such an Eligible Spouse shall
commence on the first day of the month in which the later of the Participant's
date of death or his 55th birthday occurred, and shall continue until the
beginning of the month in which the death of the Eligible Spouse occurs.
A Participant who has terminated employment with entitlement to a
Disability Retirement Pension, but whose Pension has not commenced, and a
Participant who commences to receive a Disability Retirement Pension prior to
attainment of age 55 shall be covered by the 50% Joint and Survivor Pension
provisions of Section 6.1. In the event of his death prior thereto, his
surviving Eligible Spouse shall receive a Pension computed in accordance with
the applicable provisions of Sections 5.3 and 6.1 as if the Participant's
Pension payments had commenced on the first day of the month in which the
Participant's death occurred; provided that the Pension payable to the Eligible
Spouse shall be based on the Disability Retirement Pension which would have been
payable to the Participant if such Pension had been reduced for early
commencement.
The provisions of this Section shall not affect the right of a Participant
to elect the single-life Pension computed under Article V, pursuant to the
provisions of Section 6.1.
6.5. CONTINGENT BENEFICIARY OPTION: In lieu of a Normal Retirement
Pension, by filing a timely election with the Plan Administrator, a Participant
may designate his spouse as his contingent beneficiary and elect to receive a
Pension payable in accordance with one of the options described below. Such
option may be elected by a Participant only on behalf of a spouse to whom he has
been married for a period of at least three years immediately prior to his date
of election and from whom he is not legally separated as of such date.
An option shall be elected in writing on a form approved by the Plan
Administrator, and the aggregate of the Pension payments expected to be made
shall be the Actuarial Equivalent of the Pension which the Participant is
otherwise entitled to receive upon Retirement.
(a) OPTION 1: A Participant may elect to receive a reduced Pension
payable during the joint lives of the Participant and his spouse; so that,
following
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the death of the Participant, payment of the Pension in an amount equal to
100 percent of the Participant's reduced Pension shall continue to his
spouse, if surviving, during the lifetime of the spouse, with the last
payment to be made as of the first day of the month in which the death of
the survivor occurs.
(b) OPTION 2: A Participant may elect to receive a reduced Pension
payable during the joint lives of the Participant and his spouse; so that,
following the death of the Participant, payment of the Pension in an amount
equal to 75 percent of the Participant's reduced Pension shall continue to
his spouse, if surviving, during the lifetime of the spouse, with the last
payment to be made as of the first day of the month in which the death of
the survivor occurs.
Subject to the provisions of Sections 6.1 and 6.7(b), a Participant may
elect, change or revoke an option without the approval of the Plan Administrator
if such decision is filed in writing with the Plan Administrator at least two
years but not more than three years prior to the Participant's Retirement. An
option may not be elected, changed or revoked at any other time except with the
approval of the Plan Administrator and the Participant's submission of such
evidence of the good health of the Participant or his contingent beneficiary as
the Plan Administrator shall require and which shall be satisfactory to the Plan
Administrator. In no event may an option be changed or revoked after a
Participant retires.
Subject to the provisions of Section 6.9 with respect to employment after
age 65, an election made pursuant to this Section shall become inoperative
(1) if the Participant's employment terminates before he becomes eligible for a
Normal Retirement Pension, (2) if the Participant dies or is divorced from the
contingent beneficiary while employed but before his Normal Retirement Date, or
(3) if his contingent beneficiary dies before his Retirement or other
termination of employment. If an option under this Section is effective upon a
Participant's Normal Retirement, it will be in place of any benefit otherwise
payable under the Verson Segment, and the form made available by the Employer
for election of the option shall so specify.
6.6. LEVEL INCOME OPTION: If payment of an Early Retirement Pension
commences prior to the earliest age as of which the Participant will become
eligible for an Old-Age, Survivor and Disability Insurance Benefit under the
Social Security Act, the Participant may elect upon written application filed
with the Plan Administrator, only with the consent of his Eligible Spouse within
the 90 day-period prior to the date his Pension payments commence, to have the
amount of his Early Retirement Pension adjusted so that an increased amount will
be paid until he attains such age, and a reduced amount thereafter. The purpose
of this adjustment is to enable the Participant to receive, from the Verson
Segment and under the Social Security Act, aggregate income in an approximately
level amount for life. Such adjusted Pension payments shall be the
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Actuarial Equivalent of the Pension otherwise payable to such Participant.
Application of this option shall be in place of any benefit otherwise payable
under the Verson Segment, and the form made available by the Plan Administrator
for election of the option shall so specify.
6.7. DESIGNATION OF BENEFICIARY: Designation of a beneficiary or
beneficiaries under the Verson Segment shall be governed by the following rules:
(a) DESIGNATION PROCEDURE: Subject to the provisions of
Section 6.7(b), each Participant or former Participant from time to time
may designate any person or persons (who may be designated primarily,
contingently or successively and who may be an entity other than a natural
person) as his beneficiary or beneficiaries to receive the death benefit
provided under Section 6.3.
Each beneficiary designation filed with the Plan Administrator will
cancel all beneficiary designations previously filed with the Plan
Administrator. The revocation of a beneficiary designation no matter how
effected, shall not require the consent of any designated beneficiary
except as provided in subparagraph (b) below.
(b) SPOUSAL CONSENT: No beneficiary designation shall be effective
under the Verson Segment unless the Participant's Eligible Spouse consents
in writing to such designation, the Eligible Spouse's consent acknowledges
the effect of such designation and the Eligible Spouse's signature is
witnessed by the Plan Administrator or a notary public. Consequently, any
beneficiary designation previously made by a Participant shall be
automatically revoked on the marriage or remarriage of a Participant.
A spouse's consent shall be valid under the Verson Segment only with
respect to the specified beneficiary or beneficiaries designated by the
Participant. If the beneficiary or beneficiaries subsequently are changed
by the Participant, a new consent by the Eligible Spouse will be required.
The Eligible Spouse's consent to any beneficiary designation made by a
Participant pursuant to the Verson Segment, once made, may not be revoked
by the Eligible Spouse.
Notwithstanding the foregoing, spousal consent to a Participant's
beneficiary designation shall not be required if it is established to the
satisfaction of the Plan Administrator that spousal consent cannot be
obtained because there is no Eligible Spouse, because the Eligible Spouse
cannot be located or because of such other circumstances as may be
prescribed in regulations issued by the Secretary of the Treasury.
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Any consent by an Eligible Spouse or any determination that the
consent is not required pursuant to the above paragraph shall be effective
only with respect to such spouse.
(c) LACK OF DESIGNATION: If any Participant or former Participant
fails to designate a beneficiary in the manner provided above, or if the
beneficiary designated by a deceased Participant dies before him or before
complete distribution of the Participant's benefits, the amount payable
upon the death of the Participant or former Participant shall be paid in
accordance with the following order of priority:
(1) to the Participant's Eligible Spouse, or if there be none
surviving,
(2) to the Participant's surviving spouse, or if there be none
surviving,
(3) to the Participant's children, in equal parts, or if there
be none surviving,
(4) to the Participant's father and mother, in equal parts, or
if there be none surviving,
(5) to the Participant's estate.
6.8. SMALL PENSIONS: If the Actuarial Equivalent lump sum value of a
Pension payable under the Verson Segment is no more than $3,500, the Plan
Administrator shall direct that, in lieu of such Pension, such lump sum shall be
paid, but subject to the following sentence. A lump sum settlement of a small
amount may not be directed if the Participant is age 55 or older, unless the
Participant and his Eligible Spouse (or where the Participant has died, the
Eligible Spouse) consent in writing, not more than 90 days before the
distribution, to such lump sum settlement. A lump sum settlement of a small
amount shall be made at any time after the Participant's termination of
employment even though the Participant and/or his Eligible Spouse is not
otherwise entitled to commencement of a Pension at such time under other
provisions of the Verson Segment.
If a lump sum settlement is made, the Plan Administrator shall provide each
recipient receiving such a settlement with an official notice supplied by the
Secretary of the Treasury which specifies certain information regarding the
federal income tax treatment of certain Verson Segment benefits.
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6.9. RE-EMPLOYMENT AND CONTINUED EMPLOYMENT AFTER RETIREMENT: Subject to
the provisions of Section 4.5, no Participant, regardless of his vesting status
hereunder, shall receive a Pension payment for any month including or following
the month in which he completes the requirements for a Normal Retirement
Pension, if during each such month he receives payment for hours of service
performed on at least 8 days of employment with the Employer or receives payment
for vacation, holiday, illness, incapacity including disability, layoff, jury
duty, military duty or leave of absence for at least 8 days in any calendar
month.
If a Participant who continues to be employed by the Employer after he
completes the requirements for a Normal Retirement Pension receives remuneration
for less than 8 days in any given calendar month, such Participant is considered
retired according to the provisions of Section 2.3(b) and is entitled to Pension
payments hereunder. Any employment by the Participant during the month he
receives remuneration for less than 8 days of employment and for any month
thereafter shall be disregarded as Service and Credited Service hereunder.
If a former Participant who is entitled to receive a Pension hereunder is
re-employed on or after his Normal Retirement Date, he shall not receive a
Pension payment for any month in which he receives payment for hours of service
performed on at least 8 days of employment with the Employer. If pension
payments have been suspended pursuant to this paragraph, they shall resume no
later than the first day of the third month after the calendar month in which he
ceases to be employed for at least 8 days in a calendar month, and the initial
payment upon resumption shall include the payment scheduled to occur in that
month and any amounts withheld during the period from cessation of employment
and resumption of payments. Upon a suspension of such pension payments, the
Plan Administrator shall notify the Participant of such suspension, shall afford
him an opportunity to obtain a review of such suspension and shall otherwise
administer such suspension and any subsequent resumption of pension payments in
a manner consistent with final U.S. Department of Labor Regulations Section
2530.203-3.
Upon the death of a Participant who continues his employment beyond his
Normal Retirement Date and who is not considered retired in accordance with the
foregoing provisions of this Section, the provisions of Section 6.1 or an
effective election under Section 6.5 shall be operative, and the survivorship
Pension to his Eligible Spouse, if any, shall commence as of the first day of
the month next following the Participant's death in the amount which would have
been payable had the Participant retired immediately prior to his death.
However, if the death of the Eligible Spouse occurs while the Participant is in
such continued employment, his Pension shall not be reduced for the 50% Joint
and Survivor Pension under Section 6.1 or a Contingent Beneficiary Option under
Section 6.5.
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<PAGE>
6.10. NON-ALIENATION OF BENEFITS: Except with respect to federal
income tax withholding, benefits payable under the Verson Segment shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either
voluntary or involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse or for any other
relative of the Employee, prior to actually being received by the person
entitled to the benefit under the terms of the Verson Segment; and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder, shall be void.
The Fund shall not in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
hereunder.
Notwithstanding the above, the Plan Administrator may direct the Insurance
Company and/or the Trustee to comply with a Qualified Domestic Relations Order.
A Qualified Domestic Relations Order is a judgment, decree or order
(including approval of a property settlement agreement) made pursuant to a state
domestic relations law (including community property law) that relates to the
provision of child support, alimony payments or marital property rights to a
spouse, former spouse, child or other dependent of a Participant ("Alternate
Payee") and which:
(a) creates or recognizes the existence of an Alternate Payee's right
to, or assigns to an Alternate Payee the right to, receive all or a portion
of the benefits payable to a Participant under the Verson Segment; and
(b) specifies (1) the name and last known mailing address (if any) of
the Participant and each Alternate Payee covered by the order, (2) the
amount or percentage of the Participant's Verson Segment benefits to be
paid to any Alternate Payee, or the manner in which such amount or
percentage is to be determined and (3) the number of payments or the period
to which the order applies and each plan to which the order relates; and
(c) does not require the Verson Segment to
(1) provide any type or form of benefit or any option not
otherwise provided under the Verson Segment,
(2) pay any benefits to any Alternate Payee prior to the
earliest age that the affected Participant could have received a
Pension under the Verson Segment (whether for reason of Disability or
other termination of employment), except that the fact that the
Participant may not have terminated his employment shall be
disregarded,
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<PAGE>
(3) provide increased benefits, or
(4) pay benefits to an Alternate Payee that are required to be
paid to another Alternate Payee under a prior Qualified Domestic
Relations Order.
For purposes of the Verson Segment, an Alternate Payee who had been married
to the Participant for at least one year may be treated as an Eligible Spouse
with respect to the portion of the Participant's benefit in which such Alternate
Payee has an interest provided that the Qualified Domestic Relations Order
provides for such treatment. However, under no circumstances may the spouse of
any Alternate Payee (who is not a Participant hereunder) be treated as an
Eligible Spouse under the terms of the Verson Segment.
Upon receipt of any judgment, decree or order (including approval of a
property settlement agreement) relating to the provision of payment by the
Verson Segment to an Alternate Payee pursuant to a state domestic relations law,
the Plan Administrator promptly shall notify the affected Participant and any
Alternate Payee of the receipt of such judgment, decree or order and shall
notify the affected Participant and any Alternate Payee of the Plan
Administrator's procedure for determining whether or not the judgment, decree or
order is a Qualified Domestic Relations Order.
The Plan Administrator shall establish a procedure to determine the status
of a judgment, decree or order as a Qualified Domestic Relations Order and to
administer Verson Segment distributions in accordance with Qualified Domestic
Relations Orders. Such procedure shall be in writing, shall include a provision
specifying the notification requirements enumerated in the preceding paragraph,
shall permit an Alternate Payee to designate a representative for receipt of
communications from the Plan Administrator and shall include such other
provisions as the Plan Administrator shall determine, including provisions
required under regulations promulgated by the Secretary of the Treasury.
During any period in which the issue of whether a judgment, decree or order
is a Qualified Domestic Relations Order is being determined (by the Plan
Administrator, a court of competent jurisdiction or otherwise), the Plan
Administrator shall segregate in a separate account under the Verson Segment the
amount, if any, which would have been payable to the Alternate Payee during such
period if the judgment, decree or order had been determined to be a Qualified
Domestic Relations Order. Such segregated account under the Verson Segment
shall be held as uninvested cash.
If the judgment, decree or order is determined to be a Qualified Domestic
Relations Order within the 18-month period following the receipt by the Plan
Administrator of the Qualified Domestic Relations Order, then payment from the
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<PAGE>
segregated account shall be paid to the appropriate Alternate Payee. If such a
determination is not made within the 18-month period, the segregated account
shall be returned to the general assets of the Fund and shall be paid at the
time and in the manner provided under the Verson Segment as if no order,
judgment or decree had been received by the Plan Administrator.
6.11. LUMP SUM OPTION: In addition to the circumstances for lump sum
settlements outlined in Section 6.8 above, with the consent of the Participant,
a lump sum settlement is available, as an optional form of distribution, to or
on behalf of a Participant if his/her employment terminates with the Employer as
a result of a plant closure of the Employer. For purposes of this Section, the
determination of the amount of such lump sum settlements shall be based on the
interest rates and mortality tables, issued by the Pension Benefit Guaranty
Corporation ("PBGC") in Appendices B and C of PBGC Regulation Section 2619.65,
in effect at the time the Participant election process commences.
6.12. DIRECT ROLLOVER: For distributions made on or after
January 1, 1993, a "distributee" who is reasonably expected to receive one or
more "eligible rollover distributions" from the Verson Segment in one taxable
year of the distributee may elect, at the time and in the manner prescribed by
the Plan Administrator in accordance with reasonable administrative procedures
as may from time to time be established by the Plan Administrator to the extent
permitted by law, to have any such eligible rollover distribution made in the
form of a direct rollover to an "eligible retirement plan" specified by the
distributee, provided that such eligible retirement plan provides for the
acceptance of a direct rollover, subject to the requirements of Section
401(a)(31) of the Code and regulations thereunder.
For purposes of this Section, the term "eligible rollover distribution"
means, subject to the limitations of Section 401(a)(31) of the Code and
regulations thereunder, any distribution of all or any portion of the balance to
the credit of the distributee (including a distribution the value of which does
not exceed $3,500), except that such term shall not include any distribution
which is: (i) one of a series of substantially equal periodic payments (made
not less frequently than annually) for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated Beneficiary or for a specified period of 10
years or more; (ii) required under Section 401(a)(9) of the Code; or (iii) not
includible in gross income. For purposes of this Section, the term
"distributee" means (i) a Participant, (ii) a Participant's surviving spouse,
and (iii) a Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code. For purposes of this Section, subject to the requirements of Section
401(a)(31) of the Code and regulations thereunder and including any additional
eligible retirement plans as may be included therein, "eligible retirement plan"
means
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(i) an individual retirement account described in Section 408(a) of the Code,
(ii) an individual retirement annuity described in Section 408(b) of the Code,
(iii) a defined contribution plan qualified under Section 401(a) of the Code, or
(iv) an annuity plan described in Section 403(a) of the Code; provided, however,
that in the case of an eligible rollover distribution to a surviving spouse, a
direct rollover may be made only to an individual retirement account or
individual retirement annuity.
ARTICLE VII.
MISCELLANEOUS
7.1. NON-GUARANTEE OF EMPLOYMENT: Nothing contained in the Verson Segment
will be construed as a contract of employment between the Employer and any
Employee, or as a right of any Employee to be continued in the employment of the
Employer, or as a limitation of the right of the Employer to discharge any of
its Employees, with or without cause.
7.2. RIGHTS TO FUND ASSETS: No Employee shall have any right to, or
interest in, any assets of the Fund upon termination of his employment or
otherwise, except as provided from time to time under the Verson Segment, and
then only to the extent of the benefits payable under the Verson Segment to such
Employee out of the assets of the Fund. Except as otherwise may be provided
under Title IV of ERISA, all payments of benefits as provided for in the Verson
Segment shall be made solely out of the assets of the Fund and none of the
Fiduciaries shall be liable therefor in any manner.
7.3. NON-FORFEITABILITY OF BENEFITS: Subject only to the specific
provisions of the Verson Segment, nothing shall be deemed to divest a
Participant during his lifetime of his right to the nonforfeitable benefit to
which he becomes entitled in accordance with the provisions of the Verson
Segment.
ARTICLE VIII.
ADOPTION OF THE VERSON SEGMENT
8.1. ADOPTION PROCEDURE: With the written consent of the Company, any
other organization may adopt the Verson Segment, the Group Annuity Contract and
the Trust for its eligible Employees by appropriate resolution, which shall
specify the effective date of such adoption and which may contain such changes
and variations in Verson Segment terms as the Company approves. An Employer
adopting the Verson Segment shall
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compile and submit all information required by the Plan Administrator with
reference to its eligible Employees.
8.2. JOINT EMPLOYERS: If an Employee receives compensation simultaneously
from more than one participating Employer, the total amount of such compensation
shall be considered for the purposes of the Verson Segment as having been paid
by one participating Employer, the respective participating Employers shall
share proratably in contributions to the Merged Plan on account of said
Employee, and any benefits paid from the Fund to him or to his beneficiaries
also shall be allocated proratably between the applicable portions of the Fund.
8.3. EXPENSES: Each participating Employer shall pay such proportionate
part of actuarial and other necessary expenses incurred in the administration of
the Verson Segment as the Company shall determine.
8.4. WITHDRAWAL: A participating Employer may withdraw from the Verson
Segment (and the Merged Plan) by giving 60 days' written notice of its intention
to the Company, the Insurance Company, and the Trustee, unless a shorter notice
shall be agreed to by the Company.
8.5. SUPERSEDED PLANS: If an Employer adopting the Verson Segment already
maintains a pension plan covering employees who will be covered by the Verson
Segment, it may, with the consent of the Company, provide in its resolution
adopting the Verson Segment for the merger, restatement and continuance, without
discontinuance or termination, of its plan by the Verson Segment.
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<PAGE>
EXHIBIT 10G
LITTELL SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. Purpose, Intent and Effective Date . . . . . . . . . . . 1
1.1. Purpose and History. . . . . . . . . . . . . . . . . . . . 1
1.2. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Effective Date . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. Definitions. . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Gender, Number . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. Eligibility and Participation . . . . . . . . . . . . . 9
3.1. Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 9
3.2. Duration . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV. Pension Benefits . . . . . . . . . . . . . . . . . . . . 10
4.1. Normal Retirement. . . . . . . . . . . . . . . . . . . . . 10
4.2. Deferred Retirement. . . . . . . . . . . . . . . . . . . . 10
4.3. Early Retirement . . . . . . . . . . . . . . . . . . . . . 11
4.4. Disability Retirement. . . . . . . . . . . . . . . . . . . 11
4.5. Vested Benefit Commencing at Normal (or Early) Retirement
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6. Pre-Retirement Survivor Annuity. . . . . . . . . . . . . . 12
4.7. Transfer to Shop Plan. . . . . . . . . . . . . . . . . . . 14
4.8. Payment of Benefits; Required Distributions. . . . . . . . 15
4.9. Required Joint and Survivor Benefit. . . . . . . . . . . . 16
4.10. Re-Employment After Retirement . . . . . . . . . . . . . . 16
4.11. Effect of Amendments to Littell Segment Changing Benefits. 17
4.12. No Additional Benefits From Forfeitures. . . . . . . . . . 17
4.13. Consents . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14. Actuarial Equivalent . . . . . . . . . . . . . . . . . . . 17
4.15. Information to be Provided by Plan Administrator . . . . . 17
ARTICLE V. Alternative Optional Forms of Pensions . . . . . . . . . . 18
5.1. Election to Decline Qualified Joint and Survivor Annuity . 18
5.2. Payment in Optional Form . . . . . . . . . . . . . . . . . 19
5.3. Effect of Participant's Death Before Retirement. . . . . . 20
5.4. Failure of Beneficiary . . . . . . . . . . . . . . . . . . 20
5.5. Designation of Beneficiary . . . . . . . . . . . . . . . . 21
5.6. Small Payment Provisions . . . . . . . . . . . . . . . . . 21
5.7. Direct Rollover Provisions . . . . . . . . . . . . . . . . 22
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TABLE OF CONTENTS
CONTINUED
ARTICLE VI. Miscellaneous Provisions Respecting Participants . . . . 22
6.1. Information on Employees . . . . . . . . . . . . . . . . . 22
6.2. Regularly Kept Records Are Binding . . . . . . . . . . . . 23
6.3. Spendthrift Clause . . . . . . . . . . . . . . . . . . . . 23
6.4. Not a Contract of Employment . . . . . . . . . . . . . . . 23
6.5. Addresses. . . . . . . . . . . . . . . . . . . . . . . . . 23
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<PAGE>
LITTELL SEGMENT OF THE
ALLIED PRODUCTS CORPORATION
COMBINED RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 31, 1993)
ARTICLE I.
PURPOSE, INTENT AND EFFECTIVE DATE
1.1. PURPOSE AND HISTORY. The F.J. Littell Machine Co. Pension Plan For
Office, Engineering, Sales and Supervisory Employees (the "Plan") was originally
established by F. J. Littell Machine Co., which was acquired by and became a
Division of Allied Products Corporation ("Allied") in 1986. Allied has
continued to maintain the Plan to aid its eligible office, engineering, sales
and supervisory employees in the Littell Division of Allied to attain a greater
degree of post-retirement financial security for themselves and their families.
The Plan was amended and restated as of January 1, 1976, and it was subsequently
amended by amendments effective July 1, 1978, May 1, 1981, January 1, 1984,
January 1, 1985 and October 31, 1986. Participants' benefits under the Plan
were frozen as of October 31, 1986, and no further accrual of benefits shall
occur under the Plan after that date. Effective as of August 19, 1991, Allied
divested itself of the Littell Division. As a result of this divestiture, all
employees of the Littell Division terminated employment with Allied effective as
of August 19, 1991. Effective December 31, 1991, the Plan was merged into the
Verson Allsteel Press Company Employees Retirement Plan under the name Verson
Division of Allied Products Corporation Employees Retirement Plan (the "Combined
Plan"). Effective January 29, 1993, sponsorship of the Combined Plan was
transferred to Verson Corporation. Effective December 31, 1993, sponsorship of
the Combined Plan was transferred to Allied. Also effective December 31, 1993,
the Bush Hog Division of Allied Products Corporation Salaried Pension Plan was
merged into the Combined Plan under the name Allied Products Corporation
Combined Retirement Plan (the "Merged Plan"). The segment of the Merged Plan
applicable to Employees (the "Littell Segment") is now being amended and
restated as of December 31, 1993, with certain amendments effective as of the
dates specified in the affected provisions.
1.2. INTENT. The Company intends that the Littell Segment provided by this
amendment and restatement, and as the same may from time to time be further
amended, shall constitute a qualified plan under the provisions of
Section 401(a) (and further or successor applicable provisions) of the Code and
shall be in full compliance with the provisions of ERISA. The Company intends
that the Littell Segment shall be
<PAGE>
a frozen plan, subject, always, however, to the rights reserved in the Company
to amend and terminate as herein below set forth.
1.3. EFFECTIVE DATE. The provisions of the Littell Segment as herein
amended and restated shall be effective December 31, 1993, with certain
amendments effective as of the dates specified therein.
ARTICLE II.
DEFINITIONS
2.1. DEFINITIONS. The following terms, alphabetically arranged, when used
herein and initially capitalized as below indicated, shall, unless expressly
otherwise provided, have the following respective meanings:
"ACCRUED BENEFIT" means the Pension benefit under the Littell Segment
earned by a Participant as of the earlier of his Retirement or October 31, 1986.
A Participant's Accrued Benefit shall be computed in the same manner as a normal
retirement pension under Section 4.1.
"ACTUARIAL (OR ACTUARIALLY) EQUIVALENT" means the equality in value of the
aggregate amounts expected to be received under different forms of payment, as
specified in Section 4.14. The basic form of payment, subject to Sections 4.6
and 4.9, is a life annuity with 60 guaranteed monthly payments.
"AVERAGE MONTHLY COMPENSATION" means the Participant's monthly
Compensation averaged over the last five years of Employment prior to
October 31, 1986.
"BENEFICIARY" means such person or persons as are concurrently or
successively entitled to receive benefits under the Littell Segment by reason of
the death of a Participant.
"BOARD" means the Board of Directors of the Company as from time to time
constituted.
"COMPANY" means Allied Products Corporation, a Delaware corporation.
Notwithstanding the preceding provisions of this paragraph:
(a) Effective from January 29, 1993 through December 31, 1993,
"Company" means Verson Corporation, a Delaware corporation.
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<PAGE>
(b) Effective on and after December 31, 1993, "Company" means
Allied Products Corporation, a Delaware corporation.
"COMPENSATION" means the Participant's basic compensation from the
Employer exclusive of any special compensation, such as, but not limited to,
overtime, premium pay, bonuses, Christmas cash gifts and contributions under the
Merged Plan or the Shop Plan. If benefits in the Littell Segment are ever not
frozen so Participants earn Compensation after July 31, 1989, the limit on
annual compensation contained in Code Section 401(a)(17) shall apply.
"CREDITED SERVICE" when used in reference to a Participant means the
following years of service prior to October 31, 1986:
(c) each year (and fraction of a year) of service prior to
January 1, 1976 which counted as credited service under the
Littell Segment (as that term is defined in the Littell
Segment as in existence immediately prior to December 31,
1991), and
(d) each Plan Year after December 31, 1975 in which he completes
at least 1730 Hours of Service as a Participant
PROVIDED, HOWEVER, that if he completes less than 1730 Hours of Service
during a Plan Year, he shall be given credit for a fraction of a year of
Credited Service for whichever of the following two methods of calculation
((i) or (ii)) yields the greater fraction:
(i) if he completes at least 1000 Hours of Service as a
Participant during such Plan Year, a fraction (not
exceeding 1) the numerator of which is the number of
such completed Hours of Service and the denominator of
which is 1730; or
(ii) a fraction (not exceeding 1) equal to 1/10 multiplied
by the number of calendar months in such Plan Year
during which he completes at least the number of Hours
of Service arrived at by multiplying the number of
normal work days in such month by 8;
PROVIDED, HOWEVER, that in case of an Employee who does not have any
nonforfeitable right to an Accrued Benefit, years of service which would
otherwise be Credited Service before any period of One-Year Breaks in
Service shall not be taken into account if the number of successive One-
Year Breaks in Service equals or exceeds the greater of five, or the
aggregate number of years of
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<PAGE>
such Credited Service prior to such period of One-Year Breaks in Service;
and the aggregate number of years of Credited Service before such period of
One-Year Breaks in Service shall be deemed not to include any Credited
Service similarly not required to be taken into account by reason of one or
more prior One-Year Breaks in Service.
"DEFERRED RETIREMENT DATE" means the date on which a Participant, who has
remained in Employment after his Normal Retirement Date, retires.
"DISABLED" or "DISABILITY" when used in reference to a Participant means a
physical or mental impairment that substantially limits a Participant's ability
to engage in a major life activity. A substantial impairment is one that
significantly limits or restricts a major life activity such as hearing, seeing,
speaking, breathing, performing manual tasks, walking, caring for oneself,
learning or working. Participants who have a record of, or are regarded as
suffering from a substantial impairment are also considered disabled.
"DISABILITY RETIREMENT DATE" when used in reference to a Participant,
means the date on which his Employment terminates by reason of Disability which
has continued for not less than 6 months, provided he has attained age 50 and
completed at least 15 years of Vesting Service by that date.
"EARLY RETIREMENT DATE" when used in reference to a Participant, means the
date on which his Employment terminates after he has completed at least 15 years
of Credited Service prior to October 31, 1986 and has attained age 55.
"EFFECTIVE DATE" means the effective date of this amendment and restatement
of the Littell Segment, namely December 31, 1993. Notwithstanding the preceding
provisions of this paragraph, certain provisions of the Littell Segment are
effective as of the dates specified therein.
"EMPLOYEE" means each person who, on or before October 31, 1986, was in an
employee-employer relationship with the Company in its F.J. Littell Machine Co.
Division, which subsequently became part of its Verson Division. Employee does
not include leased employees (as defined under Section 414(n)(2) of the Code)
who perform services for the Employer, except to the extent required by
applicable law.
"EMPLOYER", for purposes of the Littell Segment, means F.J. Littell Machine
Co. and/or F.J. Littell Machine Co. Division of Allied Products Corporation
through August 18, 1991; effective August 19, 1991, "EMPLOYER", for purposes of
the Littell Segment, means the Verson Division of Allied Products Corporation.
Notwithstanding
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<PAGE>
the preceding provisions of this paragraph, from January 29, 1993 through March
18, 1994, "EMPLOYER", for purposes of the Littell Segment, means Verson
Corporation.
"EMPLOYMENT" means service with the Employer as an Employee.
"FORFEITURE" means a Participant's Accrued Benefit which shall not be
distributable to him or his Beneficiary by reason of his Retirement or as a
vested benefit under Section 4.5 and is thus forfeited.
"HOUR OF SERVICE" means
(a) Each hour for which an Employee is paid, or entitled to
payment by the Employer for the performance of duties.
Hours under this paragraph shall be credited to the Employee
for the computation period or periods in which the duties
are performed; and
(e) Each hour for which an Employee is paid, or entitled to
payment by the Employer on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence. No more than 501 hours shall be credited under
this paragraph for any single period (whether or not such
period occurs in a single computation period). Hours under
this paragraph shall be credited to the Employee for the
computation period or periods in which the period during
which no duties are performed occurs; and
(f) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.
The same hours shall not be credited under both
paragraph (a) or paragraph (b), as the case may be, and this
paragraph (c). Hours under this paragraph shall be credited
to the Employee for the computation period or periods to
which the award or agreement pertains rather than the
computation period in which the award or agreement is made.
(g) Solely for the purpose of determining whether an Employee
has incurred a One-Year Break in Service, if an Employee
begins a maternity/paternity leave of absence described in
Section 411(a)(6)(E)(i) of the Code, his Hours of Service
shall include the Hours of Service that would have been
credited to him if he had not been so absent (or eight (8)
Hours of Service for each normal work day of such absence if
the
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<PAGE>
actual Hours of Service cannot be determined). An Employee shall
be credited for such Hours of Service (up to a maximum of 501
Hours of Service) in the Plan Year in which his absence begins
(if such crediting will prevent him from incurring a One-Year
Break in Service in such Plan Year) or in the following Plan
Year.
(h) The provisions of this definition shall be construed so as
to resolve any ambiguities in favor of crediting an Employee
with Hours of Service.
(i) Each Hour of Service shall be credited in accordance with
Section 2530.200b-2 of the Department of Labor Regulations.
"LITTELL SEGMENT" means the F.J. Littell Machine Co. Pension Plan For
Office, Engineering, Sales and Supervisory Employees until December 31, 1991;
effective from December 31, 1991 through December 31, 1993, "LITTELL SEGMENT"
means the Littell Segment of the Verson Division of Allied Products Corporation
Employees Retirement Plan (covering former employees of the F.J. Littell Machine
Co. Division of Allied Products Corporation); and, effective from and after
December 31, 1993, "LITTELL SEGMENT" means the segment of the Allied Products
Corporation Combined Retirement Plan set forth herein, as amended from time to
time.
"MERGED PLAN" means the Allied Products Corporation Combined Retirement
Plan.
"NORMAL RETIREMENT DATE" means the later of:
(a) the time a Participant attains age 65; or
(b) the fifth anniversary of the date the Employee became a Participant in
the Littell Segment.
"OFFICE EMPLOYEE" means an Employee who, on or before October 31, 1986,
was employed in an office, engineering, sales or supervisory position by F.J.
Littell Machine Co. or the F.J. Littell Machine Co. Division of Allied Products
Corporation, which subsequently became the Verson Division of Allied Products
Corporation.
"ONE-YEAR BREAK IN SERVICE" when used in reference to an Employee means a
Plan Year during which he has completed not more than 500 Hours of Service and,
for these purposes only, credit shall be given at the rate of 40 Hours of
Service per week (8 Hours of Service per day for fractions of weeks) for
absences due to the following:
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(a) Lay-off by the Employer;
(b) Non-occupational sickness or injury;
(c) Occupational injury or disease incurred as a result of employment with
the Employer, for which absence the Employee is entitled to Worker's
Compensation payments;
(d) Leaves of absence with Employer consent;
(e) Service in the armed forces of the United States of America entitling
such Employee to a guaranteed right of re-employment, provided he
shall return to employment with the Employer within the statutory
period during which such right to re-employment is guaranteed; and
(f) A maternity/paternity leave of absence described in
Section 411(a)(6)(E)(i) of the Code.
"PARTICIPANT" means an Employee or a former Employee who is eligible to
participate in the Littell Segment or in its benefits, or who is receiving such
benefits or who is eligible to receive a vested benefit the payment of which is
deferred and also includes a Beneficiary who is receiving or has become entitled
to receive a benefit under the Littell Segment.
"PENSION" means a series of monthly amounts which are payable to a person
who is entitled to receive benefits under the Littell Segment.
"PLAN YEAR" means the calendar year; provided however, that, prior to
January 1, 1995, "Plan Year" means the twelve month period from August 1 through
July 31 and the short period from August 1, 1994 through December 31, 1994.
"QUALIFIED JOINT AND SURVIVOR ANNUITY" when used in reference to a
Participant means a monthly annuity for the life of the Participant with a
survivor annuity for the life of his spouse, the monthly payments of which are
equal to one-half of the monthly amount paid or payable to the Participant.
"RETIRES" or "RETIREMENT" or "RETIRING" when used in reference to a
Participant means the termination of such Participant's service with the
Employer when he is entitled to a normal, deferred, early or disability
retirement pension under Article IV.
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"SHOP PLAN" means the Littell Division Shop Plan (formerly known as the
F.J. Littell Machine Co. Shop Pension Plan), which has been assumed by the
purchaser of the assets of the Littell Division of Allied Products Corporation,
effective August 19, 1991.
"SOCIAL SECURITY RETIREMENT AGE" means the age defined in Code
Section 415(b)(8). Under that Code Section, a person's Social Security
Retirement Age is (a) 65 if the year of birth is before 1938, (b) 66 if the year
of birth is after 1937 but before 1955, or (c) 67 if the year of birth is after
1954.
"VESTING SERVICE" when used in reference to a Participant means the
following years of service:
(a) Each year of service prior to January 1, 1976 which counted as
"continuous service" under the Littell Segment as in effect prior to
January 1, 1976 (as that term is therein defined); and
(b) Each Plan Year after December 31, 1975 during which he has completed
at least 1,000 Hours of Service; provided, however, that a Participant
shall be credited with five-twelfths (5/12) of a year of Vesting
Service if he completes 416.67 Hours of Service during the short Plan
Year beginning August 1, 1994 and ending December 31, 1994. For
purposes of this paragraph, the following two periods shall each be
treated as a Plan Year: January 1, 1991 through December 31, 1991 and
August 1, 1991 through July 31, 1992.
(c) Upon his resumption of employment a former Employee's years of service
which would otherwise be Vesting Service which follow five consecutive
One-Year Breaks in Service shall be disregarded for the purpose of
determining the nonforfeitable percentage of his benefit which accrued
before such 5-year period.
(d) Notwithstanding paragraph (c) of this definition if a former Employee
had completed a year of service but did not have a nonforfeitable
right to any portion of his benefits under the Littell Segment and the
number of his consecutive One-Year Breaks In Service equals or exceeds
the greater of (i) five or (ii) the aggregate number of his Years of
Service [as modified by prior application of this definition] prior to
such break, upon his resumption of employment such years of service
which would otherwise be Vesting Service, shall be permanently
disregarded and he
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shall be considered as a new Employee for all purposes of the Littell
Segment.
(e) Vesting Service may be earned by a Participant after October 31, 1986.
2.2 GENDER, NUMBER AND REFERENCES. The masculine pronoun whenever used
herein shall be deemed to include the feminine and the neuter, and the singular
shall be deemed to include the plural whenever the context requires. The words
"hereof", "herein", "hereunder" and other similar compounds of the word "here"
shall mean and refer to the entire Littell Segment and not to any particular
provision of the Littell Segment. All references herein to specific Articles
and/or Sections shall mean and refer to Articles and/or Sections of the Littell
Segment unless otherwise qualified. Article and Section headings are included
for convenience of reference and are not intended to add to, or subtract from,
the terms of the Littell Segment. Terms used in the Littell Segment when not
defined in the Littell Segment shall have the meanings given them by the Merged
Plan.
ARTICLE III.
ELIGIBILITY AND PARTICIPATION
3.1. ELIGIBILITY. Each Participant in the Littell Segment who upon the
Effective Date continues as an Office Employee shall, from and after said date,
be and continue to be a Participant until he no longer has any right to benefits
hereunder. Because the Littell Segment was frozen as of October 31, 1986, an
Employee who on or after the Effective Date is not already a Participant by
reason of having been a Participant in the Littell Segment as aforesaid shall
not be eligible to become a Participant.
3.2. DURATION. An Office Employee who is a Participant shall continue to
be a Participant until he no longer has any right to benefits hereunder. If a
Participant has a One-Year Break in Service before becoming entitled to receive
(then or thereafter) a benefit hereunder, he thereupon shall cease to be a
Participant unless and until he is re-employed; upon his reemployment, he shall
again become a Participant. If an Employee has a One-Year Break in Service
before becoming a Participant and is subsequently rehired, he shall be treated
as a new Employee upon his rehire.
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ARTICLE IV.
PENSION BENEFITS
4.1. NORMAL RETIREMENT PENSION. Subject to the provisions of Sections 4.6
and 4.9, each Participant who Retires on his Normal Retirement Date shall be
entitled to a monthly Pension equal to his Accrued Benefit as of October 31,
1986, based on the number of full years and fractions of a year of Credited
Service as of October 31, 1986 (subject to the maximum described below)
multiplied by the sum of:
(a) 1% of his Average Monthly Compensation up to $800; and
(b) 1/2 of 1% of that part, if any, of his Average Monthly Compensation
exceeding $800 but not exceeding $2,200.
Credited Service shall be limited to a maximum of 25 years earned prior to
October 31, 1986, PROVIDED, HOWEVER, that in the event the Participant is
entitled to a pension benefit under any other plan or plans meeting the
requirements of Section 401 of the Code to which the Company has made
contributions by reason of his Employment, such maximum shall bear the same
ratio to 25 years as his total Credited Service under the Littell Segment prior
to October 31, 1986 (without maximum limitations) bears to the sum of his total
number of years of Credited Service under the Littell Segment prior to
October 31, 1986 and the total number of years of service with the Company taken
into account in determining his benefit under such plan or plans. Such Pension
shall be payable monthly on the first day of each calendar month commencing with
the month next following the month in which he Retires and ending with the
payment for the month in which his death occurs; and if his death occurs within
the 60-month period after such commencement date, such monthly payments for the
remainder of such 60-month period shall be paid to his Beneficiary. If payment
of a Participant's Pension begins while he is still employed by an Employer or
by the Company pursuant to Section 4.8(a), any subsequent increases in his
Pension (as a result of Credited Service earned after his Pension payments
begin) for a Plan Year shall be reduced (but not below zero) by the Actuarial
Equivalent (as specified in Section 4.14) of the Pension payment(s) he received
during the preceding Plan Years; provided, however, that the Actuarial
Equivalent value of a Paricipant's Pension shall not be reduced by application
of this sentence.
4.2. DEFERRED RETIREMENT PENSION. Subject to the provisions of
Section 4.9, each Participant who Retires on his Deferred Retirement Date shall
be entitled to receive a monthly Pension computed in accordance with Section 4.1
hereof equal to his Accrued Benefit as of October 31, 1986, but in no event
shall the monthly amount of his Pension commencing at his Deferred Retirement
Date be less than the monthly
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amount of Pension he would have been entitled to had he retired at his Normal
Retirement Date. If payment of a Participant's Pension begins while he is still
employed by an Employer or by the Company pursuant to Section 4.8(a), any
subsequent increases in his Pension (as a result of Credited Service earned
after his Pension payments begin) for a Plan Year shall be reduced (but not
below zero) by the Actuarial Equivalent (as specified in Section 4.14) of the
Pension payment(s) he received during the preceding Plan Year. Such Pension
shall be payable monthly on the first day of each calendar month commencing with
the month next following the month in which he Retires and ending with the
payment for the month in which his death occurs; and if his death occurs within
the 60-month period after such commencement date, such monthly payments for the
remainder of such 60-month period shall be paid to his Beneficiary.
4.3. EARLY RETIREMENT PENSION. Subject to the provisions of Section 4.9,
each Participant who Retires on his Early Retirement Date shall be entitled to
receive, commencing at such first day of a calendar month between his Early
Retirement Date and his Normal Retirement Date as he shall elect in writing
delivered to the Plan Administrator (or the Company if there is no Plan
Administrator) a monthly Pension computed in accordance with Section 4.1 hereof
but based on his Accrued Benefit as of October 31, 1986, reduced, however, in
the event such Pension commences before his Normal Retirement Date by 1/2 of 1%
for each full calendar month by which such commencement date precedes his Normal
Retirement Date. Such Pension shall be payable monthly on the first day of each
calendar month commencing with the commencement date thereof as aforesaid and
ending with the payment for the month in which his death occurs; and if his
death occurs within the 60-month period after such commencement date, such
monthly payments for the remainder of such 60-month period shall be paid to his
Beneficiary.
4.4. DISABILITY RETIREMENT PENSION. Subject to the provisions of
Section 4.9, each Participant who Retires at his Disability Retirement Date
shall be entitled to receive a monthly Pension commencing on such Date which is
computed in accordance with Section 4.1 hereof but based on his Accrued Benefit
as of October 31, 1986. Such Pension shall be payable monthly on the first day
of each calendar month commencing with the month next following the month in
which he Retires and ending with the month in which the earliest of the
following occurs:
(a) his death,
(b) his Disability terminates, or
(c) his Normal Retirement Date
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and in the event such occurrence is (c) above, his Normal Retirement Pension
shall then commence but the 60-month certain payment period shall be deemed to
commence on his Disability Retirement Date.
4.5. VESTED BENEFIT COMMENCING AT NORMAL (OR EARLY) RETIREMENT DATE.
(a) Subject to the provisions of Section 4.9, each Participant whose
Employment is terminated other than by Retirement after he has
attained Normal Retirement Age or completed 5 years of Vesting Service
shall be entitled to receive, commencing at his Normal Retirement
Date, a monthly Pension equal to his Accrued Benefit as of October 31,
1986 computed in accordance with Section 4.1 hereof. Except as set
forth in Section 4.5, any Participant whose Employment is terminated
other than by Retirement before he has completed at least 5 years of
Vesting Service shall be entitled to no benefits under the Littell
Segment and any amounts accumulated for his benefit shall be
forfeited.
(b) If a Participant who is entitled to a benefit under this Section has
completed at least 15 years of Credited Service at October 31, 1986,
upon attaining age 55 he may elect to commence receiving, at any
month-end between his Early Retirement Date and his Normal Retirement
Date, such benefit reduced, however, by 1/2 of 1% for each full
calendar month by which such commencement date precedes his Normal
Retirement Date. Such Pension shall be payable monthly on the first
day of each calendar month commencing with the month next following
the month in which he elects the early retirement pension benefit (if
qualified as aforesaid) or in which his Normal Retirement Date occurs
and ending with payment for the month in which his death occurs; and
if his death occurs within the 60-month period after such commencement
date, such monthly payments for the remainder of such 60-month period
shall be paid to his Beneficiary.
4.6. PRE-RETIREMENT SURVIVOR ANNUITY. Unless otherwise elected as provided
below, a Participant who dies before the Annuity Starting Date and who has a
surviving spouse shall have a death benefit paid to his surviving spouse in the
form of a Pre-Retirement Survivor Annuity. Payment of such benefits must
commence by the earlier of the date the Participant would have reached his Early
Retirement Date or his Normal Retirement Date under the Littell Segment, unless
the surviving spouse elects a later date.
(a) "Pre-Retirement Survivor Annuity" shall mean an annuity for the life
of the Participant's spouse equal to the amount of the annuity payment
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which would have been paid to the spouse if (i) in the case of a
Participant who would have attained Early Retirement Age if he had
terminated employment before death, he had retired and commenced to
receive his Pension in the form of a Qualified Joint and Survivor
Annuity on the day immediately preceding his death, or (ii) in the
case of any other Participant, he separated from service at the
earlier of the date of his actual separation or his death, survived
until his Early Retirement Date or Normal Retirement Date, and
commenced to receive his Pension in the form of a Qualified Joint and
Survivor Annuity on the day before his death.
(b) For purposes of this Section, the "Annuity Starting Date" means the
first day of the first period for which an amount is received as an
annuity (whether by reason of retirement or disability).
(c) A Participant may designate a Beneficiary other than his spouse if:
(i) the Participant and his spouse have validly waived the Pre-
Retirement Survivor Annuity in the same manner prescribed in
Section 5.1 for waiving the Qualified Joint and Survivor
Annuity, and the spouse has waived his or her right to be
the Participant's Beneficiary, or
(ii) the Participant has no spouse, or
(iii) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Plan Administrator. A Participant may at any
time revoke his designation of a Beneficiary or change his Beneficiary
(in accordance with the rules set forth herein) by filing written
notice of such revocation or change with the Plan Administrator. In
the event no valid designation of Beneficiary exists at the time of
the Participant's death, the death benefit shall be payable to the
Participant's executor or administrator.
(d) Any election to waive the Pre-Retirement Survivor Annuity must be made
by the Participant in writing during the election period and shall
require the spouse's consent in the same manner provided for in
Section 5.1.
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The election period to waive the Pre-Retirement Survivor Annuity shall
begin on the first day of the Plan Year in which the Participant
attains age 35 and end on the date of the Participant's death. In the
event a Participant separates from service prior to the beginning of
the election period, the election period shall begin on the date of
such separation from service; provided however, that any waiver of the
Pre-Retirement Survivor Annuity which is made before the first day of
the Plan Year in which a Participant attains age 35 (the "35 Date")
shall become invalid on the 35 Date, at which time the Participant may
again waive the Pre-Retirement Survivor Annuity with the appropriate
spousal consent.
With regard to the election, the Plan Administrator shall provide each
Participant with a written explanation of the Pre-Retirement Survivor
Annuity containing comparable information to that required pursuant to
Section 5.1 by the end of whichever of the following periods ends
last:
(i) the period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending
with the close of the Plan Year preceding the Plan Year
in which the Participant attains age 35;
(ii) a reasonable period after the individual becomes a
Participant; and
(iii) in the case of a Participant who separates from service
before attaining age 35, the period beginning one year
before such separation and ending one year after such
separation.
4.7. TRANSFER TO SHOP PLAN. Subject to the provisions of Section 4.9, an
Office Employee who is transferred to Employment pursuant to which he becomes a
participant in the Shop Plan prior to October 31, 1986, and whose Employment is
terminated after he has completed at least 5 years of Vesting Service shall be
entitled to receive a monthly Pension, the computation and commencement date of
which are to be determined in accordance with Section 4.5 hereof but based on
his Credited Service to such transfer date prior to October 31, 1986, except
that for the purpose of determining whether he is entitled to commence receiving
his Pension at an Early Retirement Date, his Credited Service shall be the sum
of his Credited Service under the Littell Segment and his credited service for
benefit accrual purposes under the Shop Plan through October 31, 1986.
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4.8. PAYMENT OF BENEFITS; REQUIRED DISTRIBUTIONS. Pensions will be payable
on the first day of the month coincident with or next following the
Participant's actual Retirement date, or if applicable, the date of the
Participant's death. In no event, however, will payment of a Pension be
postponed or delayed beyond the 60th day after the close of the Plan Year in
which the Participant actually retires. If it is impossible for the
Administrator to determine the amount of Pension payable to the Retired
Participant then benefits shall commence no later than 60 days after the date on
which the amount of his Pension can be determined. Notwithstanding anything
contained in the Littell Segment to the contrary:
(a) The entire interest of each Participant shall be distributed to such
Participant not later than April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2, or such
interest shall be distributed, beginning not later than the time
specified above, over the life of the Participant, the lives of the
Participant and a designated individual beneficiary, a period not
extending beyond the life expectancy of the Participant or a period
not extending beyond the life expectancy of the Participant and a
designated individual beneficiary.
(b) In the event that a distribution of a Participant's interest has begun
in accordance with the terms of this Section and such Participant dies
before his entire interest is distributed, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution being used as of the date of the Participant's
death. In the event that a Participant dies before distribution of
his interest has begun, the entire interest of the Participant shall
be distributed within 5 years after the death of the Participant;
provided that this sentence shall not apply if:
(i) any portion of the Participant's interest is payable to or for
the benefit of a designated beneficiary, such portion will be
distributed over the life of the beneficiary or over a period not
extending beyond the life expectancy of the beneficiary, and
distributions commence no later than one year after the date of
the Participant's death; or
(ii) the portion of the Participant's interest to which the
surviving spouse is entitled will be distributed over the
life of the surviving spouse or over a period not extending
beyond the life expectancy of the surviving spouse, and
distributions commence no later than the date on which the
Participant would have attained age 70-1/2.
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4.9. REQUIRED JOINT AND SURVIVOR BENEFIT. If a Participant is married on
the date of the commencement of his Pension pursuant to Section 4.1 (Normal),
4.2 (Deferred), 4.3 (Early) or 4.4 (Disability) or of his vested benefit
pursuant to Section 4.5, whichever is applicable, and if at that time such
Participant has been married to the same spouse for at least one year, then,
unless he has elected otherwise in accordance with the provisions of Section 5.1
hereof (after having received a written explanation of the terms and conditions
of a Qualified Joint and Survivor Annuity and the effect of such election as
described in Section 4.15 hereof), the Pension payable under the Littell Segment
shall be in the form of a Qualified Joint and Survivor Annuity which shall be
the Actuarial Equivalent of such Pension.
4.10. RE-EMPLOYMENT AFTER RETIREMENT. Subject to the provisions of
Section 4.8(a) if a Participant who has Retired or otherwise terminated
Employment and has commenced receiving a Pension hereunder is re-employed by the
Employer after his Normal Retirement Date, his Pension shall be suspended for
any month of re-employment in which he has 40 or more Hours of Service under the
following rules:
(a) No payment of benefits shall be suspended unless the Plan
Administrator notifies the Participant by personal delivery or first
class mail during the first calendar month or payroll period in which
payment is suspended that his benefits are suspended;
(b) Such notification shall contain a description of the specific reasons
why benefit payments are being suspended, a general description of the
Littell Segment provisions relating to the suspension of payments, a
copy of such provisions, information relating to the claims review
procedure available to him under Section 5.3 of the Merged Plan
document, and a statement that the applicable Department of Labor
regulations may be found in Section 2530.203-3 of the Code of Federal
Regulations.
No benefit payments shall be suspended for a month during which a Participant's
Employment after his Normal Retirement Date is for fewer than 40 Hours of
Service. A Participant who remains in Employment after his Normal Retirement
Date shall continue to receive Credited Service only through October 31, 1986.
If such a Participant who has Retired at his Early Retirement Date, or for
Disability or whose service has been terminated under circumstances entitling
him to a vested Pension benefit (under Sections 4.3 through 4.5, inclusive) is
re-employed by the Employer before his Normal Retirement Date, any Pension he
may be receiving under the Littell Segment shall be suspended during the period
of such re-employment and the Pension to which he is entitled upon his
subsequent Retirement or other termination of service, shall be redetermined in
accordance with the Littell Segment, provided, however, that
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the Credited Service of such Participant shall include the Credited Service
earned prior to October 31, 1986 accumulated before such prior Retirement or
other termination and any subsequent Credited Service earned prior to
October 31, 1986. The re-hired Participant's Pension as so redetermined will be
reduced by amounts determined by the Plan Administrator to be the Actuarial
Equivalent of such Pension benefits as may have been already paid him under the
Littell Segment.
4.11. EFFECT OF AMENDMENTS TO LITTELL SEGMENT CHANGING BENEFITS. All
rights and benefits, if any, provided under the Littell Segment for any
Participant or the Beneficiary of any Participant shall be determined under the
terms and provisions of the Littell Segment as they exist at the time such
Participant's Employment terminates, whether by death, Retirement, resignation,
discharge or otherwise, and such benefits, so determined and fixed, shall not be
changed by amendments to the Littell Segment effective after such termination of
Employment.
4.12. NO ADDITIONAL BENEFITS FROM FORFEITURES. In no event shall any
forfeitures of benefits hereunder for any reason be applied to increase the
benefits any Participant would otherwise receive under the Littell Segment.
4.13. CONSENTS. In no event shall the consent of any person (other
than the Participant's spouse of at least one year), who is entitled to receive
payments upon the death of the Participant be required as a condition to the
right of a Participant to revoke or change, in accordance with the terms of the
Littell Segment, any option previously elected.
4.14. ACTUARIAL EQUIVALENT. The amount of benefit payable in any form
of benefit other than the life annuity with 60 monthly payments guaranteed shall
be the Actuarial Equivalent of the amount payable in the form of a life annuity
with 60 monthly payments guaranteed. Actuarial Equivalent shall be the adjusted
benefit payable hereunder, as of any Participant's Retirement Date which would
provide for equality in value of the aggregate amount expected to be received
under the life annuity form as compared to the value of the aggregate amount
expected to be received under another form of benefit, based upon the interest
and mortality assumptions specified in Appendix A to the Littell Segment which
is incorporated herein by this reference.
4.15. INFORMATION TO BE PROVIDED BY PLAN ADMINISTRATOR. The Plan
Administrator shall provide each Participant, or if applicable, such
Participant's spouse or beneficiary with:
(a) A written nontechnical explanation of the forms of annuity available
under the Littell Segment including the Qualified Joint and Survivor
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Annuity, the circumstances under which the Qualified Joint and
Survivor Annuity form of annuity will be provided unless an election
to receive Pension benefits in a form other than the Qualified Joint
and Survivor Annuity is made, the availability of any such election
and the relative financial effect on a Participant's annuity of such
election.
(b) The Plan Administrator shall provide each Participant with a written
nontechnical explanation of the benefits described in Section 5.2, the
circumstances under which they will be provided if elected, the
availability of such election and the relative financial effect on a
Participant's annuity of such election.
(c) The information described in subparagraphs (a) and (b) above shall
include a statement informing Participants of the availability of
additional information and how such information may be obtained.
(d) A Participant may request the information described in subparagraph
(c) above at any time prior to the Participant's actual retirement
date. The Plan Administrator shall provide such information within 30
days of receipt of the Participant's written request and such
information shall be in the form of a written explanation in
nontechnical language. The Plan Administrator shall not be required
to comply with any more than one request from any Participant.
ARTICLE V.
ALTERNATIVE OPTIONAL FORMS OF PENSIONS
5.1. ELECTION TO DECLINE QUALIFIED JOINT AND SURVIVOR ANNUITY. Any
election to waive the Qualified Joint and Survivor Annuity must be made by the
Participant in writing during the election period and be consented to by the
Participant's spouse. The Participant's waiver and the spouse's consent
(a) must identify both the Beneficiary and the form of payment (unless the
spouse executes a general consent as described in Treasury Regulation Section
1.401(a)-20, Q&A-31(c)), and (b) must acknowledge the effect of such election
and be witnessed by a Merged Plan representative or a notary public. Spousal
consent shall not be required if it is established to the satisfaction of the
Plan Administrator that the required consent cannot be obtained because there is
no spouse, the spouse cannot be located, or other circumstances that may be
prescribed by Treasury regulations. The election made by the Participant and
consented to by his spouse may be revoked by the Participant in writing without
the consent of the spouse at any time during the election period. Any new
election must comply with the
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requirements of this paragraph. A former spouse's waiver shall not be binding
on a new spouse. The following rules shall apply to the election:
(a) The election period to waive the Qualified Joint and Survivor Annuity
shall be the 90-day period ending on the "annuity starting date."
(b) For purposes of this Section, the "annuity starting date" means the
first day of the first period for which an amount is received as an
annuity (whether by reason of retirement or disability).
(c) With regard to the election, the Plan Administrator shall provide the
Participant within a reasonable period of time before the "annuity
starting date" (and consistent with Treasury regulations), a written
explanation of:
(i) the terms and conditions of the Qualified Joint and Survivor
Annuity, and
(ii) the Participant's right to make an election to waive the
Qualified Joint and Survivor Annuity, and
(iii) the right of the Participant's spouse to consent to any
election to waive the Qualified Joint and Survivor Annuity,
and
(iv) the right of the Participant to revoke such election, and
the effect of such revocation.
5.2. PAYMENT IN OPTIONAL FORM. Subject to the following provisions of this
Section and to those of Article IV, in lieu of the Pension benefit payable to a
Participant in accordance with Section 4.1, 4.2, 4.3, 4.4, or 4.5, a Participant
may choose an optional form of payment which is the Actuarial Equivalent of the
monthly benefit as specified in such Section in one of the following forms and
amounts:
(a) LIFE-ONLY. A monthly pension payable to the Participant for his
lifetime;
(b) JOINT-AND-SURVIVOR ANNUITY. A monthly pension amount payable to the
Participant for his lifetime and after his death, either 100%, 66-2/3%
or 50% of such amount, payable monthly to a Beneficiary for the
lifetime of such Beneficiary, which percentage and Beneficiary shall
be designated by the Participant in his written request for such
optional form of pension, PROVIDED, HOWEVER, that the value of the
single-sum Actuarial
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Equivalent of the pension thus payable to the Participant shall be
greater than the value of the single-sum Actuarial Equivalent of the
pension thus payable to any such Beneficiary other than his spouse,
computed at the date of the commencement of such monthly pension; or
(c) 60-MONTHS CERTAIN. A monthly pension amount payable to the
Participant for his lifetime and, in the event of the Participant's
death before the end of the 60-month period commencing with the
pension commencement date the same monthly pension amount shall be
payable for the remainder of such 60-month period to the Beneficiary
designated by the Participant in writing filed with the Plan
Administrator (or the Company if there is no Plan Administrator)
before his death;
PROVIDED, HOWEVER, that no such election shall be given effect if the
Participant dies within two years of the date such election is made, except that
any such election shall be given effect in any case in which:
(i) such Participant dies from accidental causes, and
(ii) the failure to give effect would deprive the Participant's
surviving spouse of a survivor annuity, and
(iii) such election is made before the accident occurs which
resulted in his death.
5.3. EFFECT OF PARTICIPANT'S DEATH BEFORE RETIREMENT. If a Participant
shall die prior to the time when he first becomes entitled to a Pension
hereunder, no death benefit will be payable to his Beneficiary, EXCEPT:
(a) as provided in Section 4.6, and
(b) if such Participant dies after becoming eligible for Normal or Early
Retirement but before actually Retiring, his Beneficiary shall be
entitled to receive the death benefit under option (b) or (c) of
Section 5.2 if effectively elected, or under Section 4.6 or 4.9 (if
applicable) or under Section 4.1, 4.2 or 4.3 (if applicable) as if
such Participant had Retired and had become entitled to commence
receiving a pension immediately before his death.
5.4. FAILURE OF BENEFICIARY. A Participant who has elected option (c)
under Section 5.2 or for whom the Pension benefit provided in Sections 4.1
through 4.5 is applicable, may change his designation of Beneficiary (subject to
Sections 4.9 and 5.1)
-20-
<PAGE>
at any time before his death. If no Beneficiary has been properly designated or
if the Beneficiary does not survive the Participant, the remaining monthly
Pension amounts due thereunder (or their Actuarial Equivalent in a lump-sum if
requested by the executor or personal representative of the Participant) shall
be paid to the estate of such Participant. If the Beneficiary shall die
subsequent to such Beneficiary becoming entitled to such payments but before all
required payments have been made and no successor Beneficiary shall have been
properly designated by Participant, any remaining monthly Pension amounts due
thereunder (or their Actuarial Equivalent in a lump-sum if requested by the
executor or personal representative of the decedent Beneficiary) shall be paid
to the estate of such decedent Beneficiary. If the Beneficiary designated under
Section 5.2 or 5.5 shall die before the Participant's Pension benefit commences,
the joint and-survivor benefit under Section 4.9 or as elected under Section 5.2
will be canceled automatically and the monthly Pension payable to such
Participant hereunder will be made as if no such joint-and-survivor benefit had
been in effect or elected, except that the Participant again may elect an
optional form of Pension in accordance with Sections 5.1 and 5.2.
5.5. DESIGNATION OF BENEFICIARY. Subject to the provisions of Sections 4.9
and 5.1, each Participant may designate any legal or natural person to receive
any benefits, including those of an annuity payable under the Littell Segment on
account of his death. Unless a qualified domestic relations order as defined in
Section 414(p) of the Code provides otherwise, a designation by the Participant
naming his spouse as a Beneficiary shall be deemed to be revoked in the event of
a subsequent divorce from such spouse. Each designation by a Participant shall
be in writing, shall include a direction (consistent with the provisions of
Articles IV and V) as to the manner in which such benefits will be paid to his
Beneficiary, and shall be filed with the Plan Administrator in such form as it
may require. A Participant, by a writing filed with the Plan Administrator, may
change such beneficiary designation, in accordance with the terms of the Littell
Segment, at any time and from time to time, without the consent of or notice to
any person or persons previously designated by him.
5.6. SMALL PAYMENT PROVISIONS. Whenever the amount of the monthly benefit
payable hereunder is less than $10.00, the Actuarial Equivalent of such monthly
benefit shall be paid in equal annual or quarterly amounts. If, when a
Participant separates from service, the actuarial equivalent lump sum value of
the benefit hereunder is no more than $3,500, it shall be paid in a lump sum
without the consent of the Participant as soon thereafter as is practicable; for
this purpose, the actuarial equivalent shall be determined without regard to the
recipient's sex based upon the interest rate and mortality assumptions which
would be used (as of the first day of the Plan Year in which occurs the proposed
date of distribution) by the PBGC for purposes of determining the present value
of a lump sum distribution on plan termination.
-21-
<PAGE>
5.7. DIRECT ROLLOVER PROVISIONS. For distributions made on or after
January 1, 1993, a "distributee" who is reasonably expected to receive one or
more "eligible rollover distributions" in one taxable year of the distributee
may elect, at the time and in the manner prescribed by the Company in accordance
with reasonable administrative procedures as may from time to time be
established by the Company to the extent permitted by law, to have any such
eligible rollover distribution made in the form of a direct rollover to an
"eligible retirement plan" specified by the distributee, provided that such
eligible retirement plan provides for the acceptance of a direct rollover,
subject to the requirements of Section 401(a)(31) of the Code, and regulations
thereunder.
For purposes of this Section, the term "eligible rollover distribution"
means, subject to the limitations of Section 401(a)(31) of the Code, and
regulations thereunder, any distribution of all or any portion of the balance to
the credit of the distributee (including a distribution the value of which does
not exceed $3,500), except that such term shall not include any distribution
which is: (i) one of a series of substantially equal periodic payments (made
not less frequently than annually) for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated Beneficiary or for a specified period of 10
years or more; (ii) required under Section 401(a)(9) of the Code; or (iii) not
includible in gross income. For purposes of this Section, the term
"distributee" means (i) a Participant, (ii) a Participant's surviving spouse,
and (iii) a Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code. For purposes of this Section, subject to the requirements of Section
401(a)(31) of the Code, and regulations thereunder and including any additional
eligible retirement plans as may be included therein, "eligible retirement plan"
means (i) an individual retirement account described in Section 408(a) of the
Code, (ii) an individual retirement annuity described in Section 408(b) of the
Code, (iii) a defined contribution plan qualified under Section 401(a) of the
Code, or (iv) an annuity plan described in Section 403(a) of the Code; provided,
however, that in the case of an eligible rollover distribution to a surviving
spouse, a direct rollover may be made only to an individual retirement account
or individual retirement annuity.
ARTICLE VI.
MISCELLANEOUS PROVISIONS RESPECTING PARTICIPANTS.
6.1. INFORMATION ON EMPLOYEES. Each Participant shall furnish promptly to
the Plan Administrator (or the Company if there is no Plan Administrator) such
information as it reasonably considers necessary or advisable for the purposes
of administering the Littell Segment. If such information is not submitted, or
shows that such information previously has been misstated on the records of the
Littell Segment,
-22-
<PAGE>
the Plan Administrator (or the Company if there is no Plan Administrator) will
make such corrections and adjustments in accordance with the available facts as
it considers appropriate.
6.2. REGULARLY KEPT RECORDS ARE BINDING The regularly kept records of the
Company and/or the Employer shall be conclusive and binding upon all persons
with respect to the nature and length of employment, the type and amount of
compensation paid and the manner of payment thereof, the type and length of
absence from work and all other matters contained therein relating to Employees.
6.3. SPENDTHRIFT CLAUSE. Amounts payable under the Littell Segment to a
Participant or to a Beneficiary shall be paid only to him and upon his personal
receipt (except as provided in Section 5.10 of the Merged Plan document
regarding facility of payment). No benefit payable under the provisions hereof
shall be assigned or alienated, or be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge. Any
attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge shall be void; and neither the Fund nor any part thereof shall be in any
manner liable for or subject to the debts, contracts, liabilities, engagements
or torts of the person entitled to any benefit payment. Notwithstanding the
foregoing, the Plan Administrator shall direct the Insurance Company and/or the
Trustee to make all payments required by a qualified domestic relations order
within the meaning of Section 414(p) of the Code from the Group Annuity Contract
and/or from the Trust. The Plan Administrator shall establish reasonable
procedures to determine the qualified status of domestic relations orders and to
administer distributions under such orders.
6.4. NOT A CONTRACT OF EMPLOYMENT. Nothing contained herein shall be
construed as a contract of employment between the Employer and any Employee, or
as giving a right to any Employee to be continued in the employment of the
Employer, or as a limitation of the right of the Employer to discharge any
Employee at any time with or without cause.
6.5. ADDRESSES. Each person entitled to benefits hereunder shall file with
the Company from time to time in writing his complete mailing address and each
change of mailing address. Any check representing payment hereunder, and any
communication, addressed to a Participant or to any other person at his last
address so filed (or if no such address has been filed, then at his last address
indicated on the records of the Company) shall be deemed to have been received
by such person for all purposes of the Littell Segment, and the Company shall
not be obliged to search for or ascertain the location of any such person.
-23-
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
State or Other % Of
Jurisdiction Securities
In Which Owned by
Subsidiaries of Registrant (1) Incorporated Registrant
- ---------------------------------------------------------------------------
<S> <C> <C>
Allied Products Finance Corporation Delaware 100% (2)
Aurora Corporation of Illinois..... Illinois 100% (2)
Allied Products Financial Services
Corporation..................... Delaware 100% (2)
<FN>
(1) Unnamed subsidiaries considered in the aggregate do not
constitute a significant subsidiary.
(2) Subsidiary included in consolidated financial statements.
</TABLE>
03/06/95
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Allied Products Corporation
registration statement (File No. 33-60058) on Form S-8 of our report dated
February 24, 1995, except for Note 11, as to which the date is March 10, 1995,
on our audits of the consolidated financial statements and financial statement
schedules of Allied Products Corporation and consolidated subsidiaries as of
December 31, 1994 and 1993 and for each of the three years in the period ended
December 31, 1994, which report is included in this 1994 Annual Report of Form
10-K.
Coopers & Lybrand L.L.P.
Chicago, Illinois
March 23, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
WHEREAS, ALLIED PRODUCTS CORPORATION, a Delaware corporation (herein
referred to as the "Company"), is about to file with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, its annual report on Form 10-K for the year ended December 31, 1994 and
WHEREAS, each of the undersigned holds the office or offices in the Company
hereinbelow set opposite his name, respectively;
NOW THEREFORE, each of the undersigned hereby constitutes and appoints
KENNETH B. LIGHT and DAVID B. CORWINE, and each of them individually, his
attorney, with full power to act for him and in his name, place and stead, to
sign his name in the capacity or capacities set forth below to said Form 10-K
and to any and all amendments thereto, and hereby ratifies and confirms all said
attorney may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
13th day of March, 1995.
Richard A. Drexler, Chairman of
the Board, President and Chief /s/ Richard A. Drexler
Executive Officer; Director ------------------------
James J. Hayden, Executive Vice
President and Chief Financial /s/ James J. Hayden
Officer; Director ------------------------
Kenneth B. Light, Executive Vice
President and Chief /s/ Kenneth B. Light
Administrative Officer, Director ------------------------
Robert J. Fleck, Vice President -
Accounting and Chief Accounting /s/ Robert J. Fleck
Officer ------------------------
Lloyd Drexler, Director /s/ Lloyd Drexler
------------------------
William D. Fischer, Director /s/ William D. Fischer
------------------------
Stanley J. Goldring, Director /s/ Stanley J. Goldring
------------------------
John E. Jones, Director /s/ John E. Jones
------------------------
John W. Puth, Director /s/ John W. Puth
------------------------
Mitchell I. Quain, Director /s/ Mitchell I. Quain
------------------------
S. S. Sherman, Director /s/ S. S. Sherman
------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1994 AND THE CONSOLIDATED STATEMENT
OF INCOME (LOSS) AND THE CONSOLIDATED STATEMENT OF CASH FLOW FOR THE TWELVE
MONTHS ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,654
<SECURITIES> 0
<RECEIVABLES> 47,788
<ALLOWANCES> 1,521
<INVENTORY> 48,455
<CURRENT-ASSETS> 96,832
<PP&E> 76,689
<DEPRECIATION> 46,128
<TOTAL-ASSETS> 150,555
<CURRENT-LIABILITIES> 63,301
<BONDS> 0
<COMMON> 91
18,840
0
<OTHER-SE> 65,071
<TOTAL-LIABILITY-AND-EQUITY> 150,555
<SALES> 215,529
<TOTAL-REVENUES> 215,529
<CGS> 160,836
<TOTAL-COSTS> 160,836
<OTHER-EXPENSES> 34,129
<LOSS-PROVISION> 256
<INTEREST-EXPENSE> 1,859
<INCOME-PRETAX> 20,564
<INCOME-TAX> 877
<INCOME-CONTINUING> 19,687
<DISCONTINUED> (5,354)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,333
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
