================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
-------------------
For the Quarterly Period Ended Commission File Number
March 31, 1995 1-2328
GATX Corporation
Incorporated in the IRS Employer Identification No.
State of New York 36-1124040
500 West Monroe Street
Chicago, Illinois 60661-3676
312/621-6200
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 for 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
----- -----
Registrant had 19,935,798 shares of common stock outstanding
as of April 27, 1995.
=================================================================
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
------------------------
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
In Millions, Except Per Share Amounts
Three Months Ended
March 31
------------------
1995 1994
-------- -------
<S> <C> <C>
Gross income............................ $ 288.2 $ 260.7
Costs and expenses
Operating expenses.................... 137.2 128.5
Interest.............................. 38.8 33.1
Provision for depreciation and
amortization........................ 40.7 37.9
Provision for possible
losses.............................. 6.2 6.0
Selling, general and
administrative...................... 31.4 28.5
-------- --------
254.3 234.0
-------- --------
Income before income taxes and equity in
net earnings of affiliated
companies............................. 33.9 26.7
Income taxes............................ 15.1 10.9
-------- -------
Income before equity in net earnings of affiliated
companies............................. 18.8 15.8
Equity in net earnings of affiliated
companies............................. 6.9 4.4
------- ------
Net income.............................. $ 25.7 $ 20.2
======== =======
Per common share:
Net income............................ $ 1.11 $ .84
Net income, assuming full
dilution.......................... 1.06 .84
Dividends declared.................... .40 .375
<FN>
Note - The consolidated balance sheet at December 31, 1994 has
been derived from the audited financial statements at that date.
All other consolidated financial statements are unaudited but
include all adjustments, consisting only of normal recurring
items, which management considers necessary for a fair statement
of the consolidated results of operations and financial position
for the respective periods. Operating results for the three
months ended March 31, 1995 are not necessarily indicative of the
results that may be achieved for the entire year ending December
31, 1995.
</FN>
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Millions
ASSETS
March 31 December 31
1995 1994
(Unaudited)
---------- -----------
<S> <C> <C>
Cash and cash equivalents............. $ 10.8 $ 27.3
Receivables
Trade accounts...................... 82.8 101.6
Finance leases...................... 497.8 533.4
Secured loans....................... 218.1 231.2
Less-Allowance for possible losses.. (95.1) (89.6)
------- -------
703.6 776.6
Property, plant and equipment
Railcars and support facilities..... 1,949.4 1,857.4
Tank storage terminals and pipelines 1,166.1 1,171.8
Great Lakes vessels................. 203.5 203.4
Operating lease investments and other. 401.3 412.3
-------- --------
3,720.3 3,644.9
Less - Allowances for depreciation.. (1,468.8) (1,452.6)
--------- --------
2,251.5 2,192.3
Investments in affiliated companies... 373.8 365.3
Other assets.......................... 304.2 289.2
--------- -------
TOTAL ASSETS $3,643.9 $3,650.7
========= ========
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES, DEFERRED ITEMS AND SHAREHOLDERS' EQUITY
March 31 December 31
1995 1994
(Unaudited)
------------ ----------
<S> <C> <C>
Accounts payable..................... $ 175.3 $ 269.5
Accrued expenses..................... 58.8 49.6
Debt
Short-term debt.................... 349.3 268.2
Long-term debt..................... 1,542.9 1,549.7
Capital lease obligations.......... 249.4 255.4
-------- --------
2,141.6 2,073.3
Deferred income taxes................ 253.9 257.5
Other deferred items................. 332.5 338.4
-------- --------
Total liabilities and deferred items 2,962.1 2,988.3
Shareholders' equity
Preferred Stock.................... 3.4 3.4
Common Stock....................... 14.2 14.2
Additional capital................. 319.5 318.1
Reinvested earnings................ 367.9 353.5
Cumulative foreign currency
translation adjustment........... 23.9 20.3
------- -------
728.9 709.5
Less-Cost of common shares in
treasury......................... (47.1) (47.1)
------- -------
Total shareholders' equity 681.8 662.4
------- -------
TOTAL LIABILITIES, DEFERRED ITEMS
AND SHAREHOLDERS' EQUITY $ 3,643.9 $ 3,650.7
======== ========
</TABLE>
-3-
<PAGE>
<TABLE>
GATX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
In Millions
Three Months Ended
March 31
------------------
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 25.7 $ 20.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Realized gain on disposition of leased
equipment (11.3) (4.8)
Provision for depreciation and amortization 40.7 37.9
Provision for possible losses 6.2 6.0
Deferred income taxes 4.6 2.0
Net change in trade receivables, inventories,
accounts payable and accrued expenses (64.0) (3.3)
Other (23.2) (7.3)
------- ------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (21.3) 50.7
INVESTING ACTIVITIES
Additions to property, plant and equipment (120.0) (89.7)
Additions to equipment on lease, net of
nonrecourse financing (41.2) (91.3)
Secured loans extended (4.5) (39.6)
Investments in affiliated companies (2.0) (.4)
------- ------
Capital additions (167.7) (221.0)
Portfolio proceeds:
From disposition of leased equipment 69.5 13.2
From return of investment 30.0 18.3
------- ------
Total portfolio proceeds 99.5 31.5
Proceeds from other asset dispositions 14.4 2.7
------- ------
NET CASH USED IN INVESTING ACTIVITIES (53.8) (186.8)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 50.0 21.5
Repayment of long-term debt (56.9) (36.0)
Net increase in short-term debt 81.6 148.4
Repayment of capital lease obligations (6.0) (4.1)
Issuance of Common Stock under employee
benefit programs 1.2 3.6
Cash dividends (11.3) (10.7)
------- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 58.6 122.7
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (16.5) $ (13.4)
======= =======
</TABLE>
-4-
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS
COMPARISON OF FIRST THREE MONTHS OF 1995 TO FIRST THREE MONTHS OF 1994
GENERAL
GATX Corporation's net income for the first quarter of 1995 was
$26 million or $1.11 per common share compared to net income of
$20 million or $.84 per common share for the first quarter of
1994. First quarter 1995 gross income increased 11% while net
income increased 27% as a result of continuing strong performance
at GATX's largest subsidiaries. GATX's railcar leasing and
management subsidiary (Transportation) continued to operate at
high utilization rates while at the same time adding significant
numbers of railcars to its fleet. GATX's terminal and pipeline
subsidiary's (Terminals') results improved due to increased demand
at many of its foreign terminals, earnings from recently acquired
terminal facilities, and strong chemical demand. The increase at
Financial Services was principally due to increases in disposition
gains and fee income, both largely from rail equipment.
Operating activities used $21 million of cash compared to cash
generated of $51 million in the 1994 first quarter. Net income
adjusted for non-cash items generated $66 million of cash, an
increase of $5 million over the 1994 first quarter due to
increased net income and an increase in noncash adjustments for
depreciation and disposition gains. The $6 million increase in
realized gains on disposition of leased equipment effectively
decreased cash from operating activities as the full amount of
proceeds was included under investing activities as portfolio
proceeds. Changes in working capital and other generated $77
million less cash in 1995 largely due to a $48 million refund of a
deposit as the result of the lessee's exercise of its option to
return four DC-10 aircraft.
Proceeds of $100 million were generated from the portfolio
compared to $32 million in the first quarter of 1994. Proceeds
from the disposition of leased equipment of $70 million, primarily
from the sale of aircraft and rail equipment, were $56 million
more than the prior year. Proceeds of $30 million from the
recovery of investment increased $12 million primarily due to
increased loan principal received.
Capital additions for the quarter totalled $168 million, a decrease
of $53 million from the 1994 quarter. Additions at Financial
Services of $48 million were $84 million less than the prior year
which included two large transactions. Transportation invested
$92 million in the railcar fleet, including $27 million for the
acquisition of used car fleets, versus $56 million in last year's
first quarter; in addition, $5 million was expended on the service
center expansion compared to $4 million in 1994. Terminals'
capital spending of $20 million decreased $7 million from 1994,
which included the acquisition of a terminal facility in the
United Kingdom. Full year 1995 capital spending is forecasted to
exceed the $728 million expended in 1994. A portion of the
1995 expenditures may not be effected depending on market
conditions. It is anticipated that capital expenditures will be
funded by both internally generated funds and GATX's available
external financing sources.
GATX had available unused committed lines of credit in the amount
of $268 million at March 31, 1995. General American
Transportation Corporation (GATC) has a $650 million shelf
registration for pass through trust certificates and debt
securities, under which $225 million of notes and $93 million of
pass through trust certificates have been issued as of quarter
end. GATC issued $50 million of ten-year medium-term notes during
the quarter. GATX Capital has a $300 million shelf registration
for medium-term notes under which $55 million of medium-term notes
have been issued. GATX Capital did not issue any medium-term
notes during the quarter.
-5-
<PAGE>
RESULTS OF OPERATIONS
Following is a discussion of the operating results of GATX's
business segments:
<TABLE>
<CAPTION>
RAILCAR LEASING AND MANAGEMENT (TRANSPORTATION)
- ------------------------------------------------------------------
Three Months Ended
(In Millions) March 31
1995 1994 Change
----------------- -----------
<S> <C> <C> <C> <C>
Gross Income $ 85.5 $ 78.0 $ 7.5 10 %
Net Income $ 14.8 $ 13.2 $ 1.6 12 %
- ------------------------------------------------------------------
</TABLE>
Transportation's gross income for the first quarter of 1995
increased 10% from the comparable prior year period due to
additional railcars on lease as a result of the high level of
railcar additions as well as increased utilization, and slightly
higher lease rates. Fleet utilization at March 31, 1995 was 95%
on a fleet size of 61,200 compared to 93% on a fleet size of
56,400 a year ago. At quarter end, the active fleet totaled
57,800 compared to 52,600 a year ago.
Net income increased 12% from the first quarter of 1994 as higher
revenues and investment earnings were partially offset by
increased fleet repair costs and ownership costs. Operating
margins increased slightly as the growth in revenues exceeded the
increase in fleet repair costs. Fleet repair costs increased 8%
due to the increased fleet size and increased number of cars
repaired, primarily at GATX service centers. Ownership costs,
consisting of rental expense, depreciation and interest, increased
19% due to the increased fleet size and higher interest rates.
<TABLE>
<CAPTION>
TERMINALS AND PIPELINES
- ------------------------------------------------------------------
Three Months Ended
(In Millions) March 31
1995 1994 Change
------------------ --------------
<S> <C> <C> <C> <C>
Gross Income $ 81.3 $ 72.3 $ 9.0 12 %
Net Income $ 8.4 $ 7.5 $ .9 12 %
- ------------------------------------------------------------------
</TABLE>
Terminals' 1995 gross income increased 12% reflecting higher
pipeline revenues and incremental revenues from newly-acquired
terminals . Throughput for the first quarter was 153 million
barrels compared to 174 million barrels a year ago, largely
reflecting the mild winter which reduced petroleum needs and
tankage out of service as a result of flood damage in Texas which
occurred late last year. Capacity utilization at Terminals'
wholly-owned facilities was 91% compared to 94% at year end and
87% at the end of the first quarter of 1994.
Terminals' net income increased 12% from 1994. Higher revenues
were offset by additional expenses incurred at new facilities and
at pipeline operations. Further, SG&A increased due to management
restructuring, salary progression and additional positions;
interest expense grew from financing last year's acquisitions.
Operating margins decreased slightly due to higher operating costs
and depreciation. Equity in net earnings of affiliated companies
of $4 million increased $1 million as the result of higher
earnings at all of the affiliates, except for one in Japan whose
earnings were lower as a result of the temporary shutdown of a
terminal due to earthquake damage.
-6-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL SERVICES
- --------------------------------------------------------------------
Three Months Ended
(In Millions) March 31
1995 1994 Change
------------------ -------------
<S> <C> <C> <C> <C>
Gross Income $ 58.0 $ 50.2 $ 7.8 16 %
Net Income $ 10.1 $ 5.9 $ 4.2 71 %
- --------------------------------------------------------------------
</TABLE>
Revenues at Financial Services increased 16% from the prior year
quarter primarily due to increased fee income and gains on
dispositions which were generated primarily from the remarketing
of rail equipment from the company's owned and managed portfolios.
Pretax disposition gains, which do not occur evenly period to
period, were $10 million for the first quarter of 1995 compared to
$4 million for the first quarter of 1994.
Net income increased $4 million from 1994 due to the increased
revenues partially offset by increased interest and SG&A expense.
The first quarter provision for losses of $6 million was equal to
the prior year period. The loss reserve at March 31, 1995 was $88
million, or 7% of total investments. Equity in net earnings of
affiliated companies increased $1 million from the comparable 1994
period primarily due to improved earnings at an international
aircraft joint venture.
<TABLE>
<CAPTION>
GREAT LAKES SHIPPING
- ------------------------------------------------------------------
Three Months Ended
(In Millions) March 31
-------------------
1995 1994 Change
-------- ------- ---------------
<S> <C> <C> <C> <C>
Gross Income $ 1.5 $ .8 $ .7 88 %
Net Income $ .6 $ .4 $ .2 50 %
- ------------------------------------------------------------------
</TABLE>
American Steamship traditionally does not begin operations until
late in the first quarter due to ice on the Great Lakes. Net
income of $.6 million was recorded in the 1995 first quarter
compared to net income of $.4 million in the 1994 quarter. The
increase this year reflects the early start of the 1995 shipping
season due to the relatively mild winter.
-7-
<PAGE>
<TABLE>
<CAPTION>
LOGISTICS AND WAREHOUSING
- ------------------------------------------------------------------
Three Months Ended
(In Millions) March 31
------------------
1995 1994 Change
-------- ------- -----------
<S> <C> <C> <C> <C>
Gross Income $ 62.2 $ 59.9 $ 2.3 4 %
Net Loss $ (.3) $ (.7) $ .4 57 %
- ------------------------------------------------------------------
</TABLE>
GATX Logistics' gross income of $62 million increased 4% from the
1994 first quarter due to new customers, volume changes and some
rate increases. The net loss was $.4 million less than the 1994
quarter due to improved margins along with a reduction in empty
space. Margins improved due to sales volume, improved pricing and
adverse weather conditions in the 1994 quarter.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
GATX has previously reported a number of lawsuits which have been
filed in the Superior Court for the State of California and served
upon Terminals, Calnev Pipe Line Company or another GATX
subsidiary seeking an unspecified amount of damages arising out of
the May 1989 explosion in San Bernardino, California. One of
those suits, Ledbetter, et al, v. City of San Bernardino, et al,
filed May 1990 (No. 256173) was settled in April 1995. It remains
management's opinion, based on information known to management and
taking into consideration probable insurance recovery, that the
ultimate resolution of the lawsuits arising out of the May 1989
explosion will not have a material effect on GATX's consolidated
financial position or operations.
GATX has previously reported a potential action against Calnev
Pipe Line Company for allegedly failing to timely report the
purported release of hazardous materials. Calnev has entered into
a civil consent agreement with the San Bernardino California
District Attorney's office to settle the matter for a total
payment of $215,000 without admission of any violation.
-8-
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
(a) GATX's Annual Meeting of Stockholders was held on April 28,
1995.
(b) Matters voted upon at the meeting were:
<TABLE>
<CAPTION>
Number of Shares Voted
----------------------
For Withheld
---------- --------
1. Election of Directors
<S> <C> <C>
James J. Glasser 20,644,929 126,183
Franklin A. Cole 20,640,051 131,061
James W. Cozad 20,613,870 157,242
James M. Denny 20,646,095 125,017
William C. Foote 20,360,667 410,445
Deborah M. Fretz 20,619,587 151,525
Richard A. Giesen 20,636,881 134,231
Miles L. Marsh 20,645,845 125,267
Charles Marshall 20,641,131 129,981
Michael E. Murphy 20,646,501 124,611
Ronald H. Zech 20,646,796 124,316
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
2. Approval of GATX Corporation's 16,267,180 For
1995 Long Term Incentive 2,494,451 Against
Compensation Plan 188,587 Abstentions
1,820,894 Broker Non-
Votes
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
3. Ratification of appointment of 20,651,773 For
Ernst & Young LLP as independent 67,346 Against
public auditors for Fiscal 1995. 51,993 Abstentions
There were no broker non-votes with respect to the election of the
directors or the appointment of independent public auditors.
</TABLE>
-9-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K. Page
(a) 10A GATX Corporation 1995 Long Term Incentive
Compensation Plan, approved by the shareholders
of the Company on April 28, 1995, file number
1-2328. Submitted to the SEC along with the
electronic submission of this Quarterly Report
on Form 10-Q.
10B Management Incentive Compensation Plan dated
January 1, 1995, file number 1-2328. Submitted
to the SEC along with the electronic submission
of this Quarterly Report on Form 10-Q.
10C Agreement for Continued Employment Following
Change of Control or Disposition of a Subsidiary
between GATX Corporation and certain executive
officers dated as of January 1, 1995, file
number 1-2328. Submitted to the SEC along with
the electronic submission of this Quarterly
Report on Form 10-Q.
11A Statement regarding computation of earnings per
share. 11
11B Statement regarding computation of earnings per
share (full dilution). 12
27 Financial Data Schedule for GATX Corporation for
the quarter ended March 31, 1995. Submitted to
the SEC along with the electronic submission of
this Quarterly Report on Form 10-Q.
(b) No reports on Form 8-K were filed during the
reporting period.
SIGNATURES
Pursuant to the requirements 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.
GATX CORPORATION
(Registrant)
/s/ David M. Edwards
-------------------------
David M. Edwards
Vice President Finance,Chief
Financial Officer and Secretary
(Duly Authorized Officer)
Date: May 10, 1995
-10-
<PAGE>
Exhibit 11A
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
In Millions, Except Per Share Amounts
Three Months Ended
March 31
------------------
1995 1994
------- -----
<S> <C> <C>
Average number of shares of Common
Stock outstanding........................ 19.9 19.8
Shares issuable upon assumed exercise of stock
options, reduced by the number of shares which
could have been purchased with the proceeds
from exercise of such
options.................................... .4 .3
----- -----
Total...................................... 20.3 20.1
===== =====
Net income................................. $ 25.7 $ 20.2
Deduct - Dividends paid and accrued on
Preferred Stock.......................... 3.3 3.3
Net income, as adjusted.................... $ 22.4 $ 16.9
------- -------
Net income per share....................... $ 1.11 $ .84
</TABLE>
-11-
<PAGE>
Exhibit 11B
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
ASSUMING FULL DILUTION
In Millions, Except Per Share Amounts
Three Months Ended
March 31
------------------
1995 1994
------ ------
<S> <C> <C>
Average number of shares used to
compute primary earnings per share........ 20.3 20.1
Common Stock issuable upon assumed
conversion of Preferred Stock............. 4.0 4.0
------ -----
Total..................................... 24.3 24.1
====== =====
Net income, as adjusted per primary
computation............................... $ 22.4 $ 16.9
Add - Dividends paid and accrued on Preferred
Stock..................................... 3.3 3.3
------- ------
Net income, as adjusted................... $ 25.7 $ 20.2
======= =======
Net income per share, assuming full
dilution.................................. $ 1.06 $ .84
======= =======
</TABLE>
-12-
<PAGE>
GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
I. GENERAL
I. Purpose. The purpose of the 1995 Long Term Incentive
Compensation Plan (the "Plan") is to promote the long term financial
interests of the Company by (i) attracting and retaining executive
personnel possessing outstanding ability; (ii) further motivating such
individuals by means of growth-related incentives to achieve long-range
goals; (iii) providing incentive compensation opportunities, in the form of
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Rights, Restricted Common Stock, Performance
Awards and Individual Performance Units (each as described below) which
are competitive with those of other major corporations; and (iv) furthering
the identity of interests of participating employees with those of the
Company's shareholders through opportunities for increased stock
ownership.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee shall have such powers to administer the
Plan as are delegated to it by the Plan or the Board of Directors, including
full authority to: (i) interpret the Plan; (ii) prescribe, amend and rescind
rules and regulations pertaining to the Plan; (iii) determine the terms and
provisions of each Stock Option and Stock Appreciation Right, and
Restricted Common Stock agreement between the Company and a
Participant, and the number of Individual Performance Units to be
granted to a Participant; (iv) establish Company performance goals for
purposes of the Plan; and (v) make all other determinations deemed
necessary or advisable for the administration of the Plan. To the extent
necessary to conform the Plan, and the awards under the Plan, to Rule
16b-3 of the Securities and Exchange Commission, no member of the
Committee shall be eligible, or within one year prior to appointment to the
Committee shall have been eligible, to participate in the Plan or in any
other plan of the Company or any affiliate of the Company under which
stock, stock options or stock appreciation rights may be granted.
3. Participants. Except as otherwise specifically provided,
Participants in the Plan shall consist of such key employees of the
Company and its subsidiaries as the Committee in its sole discretion may
select from time to time to receive Stock Options, Stock Appreciation
Rights, Restricted Stock Rights, Restricted Common Stock, Performance
Awards or Individual Performance Units. The Committee may delegate to
appropriate officers of the Company who are also directors of the
Company authority to determine participation in the Plan by other than
officers of the Company, and the extent of participation by each non-
officer employee of the Company or any subsidiary.
4. Shares. One million five hundred thousand (1,500,000) shares of
Common Stock, together with any shares of Common Stock authorized
under the 1985 Long Term Incentive Compensation Plan (the "1985 Plan")
which are unissued as of the date of adoption hereof, and which are not
subsequently issued pursuant to awards under the 1985 Plan that are
outstanding on that date, with such adjustment in such number of shares
as may be made pursuant to the last sentence of this paragraph I-4, shall
be available for issue upon the exercise of Stock Options, Stock
Appreciation Rights and Restricted Stock Rights granted under the Plan,
for award in the form of Restricted Common Stock and for redemption of
Individual Performance Units. Such shares may be authorized and
unissued shares or treasury shares (including, in the discretion of the
Board of Directors of the Company, shares purchased in the open market)
of Common Stock. If a Stock Option granted under the Plan expires or is
terminated for any reason without having been exercised in full for
Common Stock (including those which terminate by reason of the exercise
of a Stock Appreciation Right in accordance with the provisions of Part IV
below) or if a Restricted Stock Right, Restricted Common Stock or
Individual Performance Unit awarded under the Plan is forfeited for any
reason, the shares not acquired or forfeited shares, as the case may be,
shall (unless the Plan shall have terminated) again become available for
purposes of the Plan. In the event of a merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, spin-off or
other change in corporate structure or capitalization affecting the
Common Stock, appropriate adjustment shall be made with respect to the
number and kind of shares (or other securities) optioned or awarded or
subject to being optioned or awarded under the Plan and in the sole
2
<PAGE>
discretion of the Board of Directors such adjustments in price and other
adjustments as it deems equitable may be made.
5. Amendment. The Board of Directors of the Company may amend
the Plan from time to time, except that without the approval of the holders
of a majority of the outstanding shares of Common Stock entitled to vote
at a duly held meeting of the shareholders, the number of shares of
Common Stock which may be issued under the Plan may not be increased
except as provided in paragraph I-4. No amendment of the Plan, however,
may, without the consent of a Participant, make any changes in any
outstanding Stock Options, Stock Appreciation Rights, Restricted Stock
Rights, Restricted Common Stock, Performance Award or Individual
Performance Units theretofore granted the Participant which would
adversely affect the Participant's rights under the Plan.
6. Termination. The Board of Directors of the Company may
terminate the Plan at any time. No Stock Option or Stock Appreciation
Right shall be granted and no Restricted Stock Right, Restricted Common
Stock, Performance Award or Individual Performance Unit shall be
awarded after the Plan is terminated for any reason. However,
termination of the Plan shall not affect the validity of any Stock Option or
Stock Appreciation Right theretofore granted under the Plan or any award
of Restricted Stock Rights, Restricted Common Stock, Performance Award
or Individual Performance Units theretofore made under the Plan.
7. No Employment Right. Participation in the Plan does not confer
upon any employee any right with respect to continued employment by the
Company or any subsidiary, or limit in any way the right of the Company
or any subsidiary to terminate an employee's services, responsibilities,
duties and authority to represent the Company or any subsidiary at any
time for any reason.
II. INCENTIVE STOCK OPTIONS
1. Grants. The Committee shall designate the Participants to whom
Incentive Stock Options, as described in the Internal Revenue Code of
1986, as amended (the "Code"), are to be granted under this Part II and
determine the number of shares to be offered to each of them. Each
Incentive Stock Option shall be evidenced by an agreement between the
3
<PAGE>
Participant and the Company. The aggregate fair market value of shares
of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year
under this Plan and each other stock option plan of the Company and any
parent or subsidiary thereof shall not exceed $100,000. Subject to any
adjustment made under the last sentence of paragraph I-4, the aggregate
number of Incentive Stock Options and Non-Qualified Stock Options
granted to any Participant during any calendar year, regardless of when
first exercisable, shall not exceed seventy-five thousand (75,000). For all
purposes of the Plan, the term "fair market value" of a share of Common
Stock means the average of the highest and lowest prices at which a share
of Common Stock is traded on the date as of which the determination is
being made as quoted on the New York Stock Exchange Composite
Transactions or other principal market quotation selected by the
Committee or, if Common Stock is not traded on that date, the average of
the highest and lowest prices on the next preceding day on which such
stock is traded.
2. Price. The purchase price of each Incentive Stock Option shall be
determined by the Committee; provided, however, that in no instance shall
such price be less than one hundred percent of the fair market value of a
share of Common Stock on the date the option is granted (the "Option
Date") or par value, whichever is higher. The full purchase price of each
share purchased upon the exercise of any Incentive Stock Option shall be
paid in cash or shares of Common Stock, or both, at the time of such
exercise (or by such other method as may be satisfactory to the Committee)
and, as soon as practicable thereafter, a certificate representing the shares
so purchased shall be delivered to the person entitled thereto. A
Participant shall not have any rights of a shareholder with respect to the
shares of Common Stock subject to an option granted the Participant until
such shares are purchased upon exercise of the option.
3. Exercise. Subject to the following provisions of this paragraph and
the following provisions of paragraph II-4, unless sooner terminated, all
Incentive Stock Options granted to a Participant on an Option Date may
be exercised commencing on a date no earlier than one year from the
Option Date as determined by the Committee. The Committee may, in its
discretion, accelerate the date on which all, or any portion, of the
Incentive Stock Options granted to a Participant may be exercised.
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4. Termination. Each Incentive Stock Option granted to a Participant
shall terminate on the earlier of the tenth anniversary of the Option Date
or, subject to the provisions of the following sentence, three months after
the date the Participant's employment by the Company and its subsidiaries
is terminated for any reason. That portion of an Incentive Stock Option
which is exercisable as of the date on which a Participant's employment is
terminated by reason of his death, disability (as determined by the
Committee) or retirement under a Company or subsidiary retirement plan
shall terminate on the earlier of the tenth anniversary of the Option Date
on which it was granted or one year after the date of termination of
employment by reason of death or disability (as determined by the
Committee) or five years after the date of retirement, as the case may be.
5. Transferability. An Incentive Stock Option, by its terms, may not
be transferred by a Participant other than by will or the laws of descent
and distribution and during the lifetime of a Participant shall be
exercisable only by the Participant.
III. NON-QUALIFIED STOCK OPTIONS
1. Grants. The Committee shall designate the Participants to whom
Non-Qualified Stock Options are to be granted under this Part III and
determine the number of shares to be offered to each of them. Each Non-
Qualified Stock Option shall be evidenced by an agreement between the
Participant and the Company. Subject to any adjustment made under the
last sentence of paragraph I-4, the aggregate number of Non-Qualified
Stock Options and Incentive Stock Options granted to any Participant
during any calendar year shall not exceed seventy-five thousand (75,000).
2. Price. The purchase price of each Non-Qualified Stock Option
shall be determined by the Committee; provided, however, that in no
instance shall such price be less than one hundred percent of the fair
market value of a share of Common Stock of the Company on the date the
option is granted (the "Option Date") or par value, whichever is higher.
The full purchase price of each share purchased upon the exercise of any
Non-Qualified Stock Option shall be paid in cash or shares of Common
Stock, or both, at the time of such exercise (or by such other method as
may be satisfactory to the Committee) and, as soon as practicable
thereafter, a certificate representing the shares so purchased shall be
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delivered to the person entitled thereto. A Participant shall not have any
rights of a shareholder with respect to the shares of Common Stock of the
Company subject to an option granted the Participant until such shares
are purchased upon exercise of the option.
3. Exercise. Subject to the provisions of this paragraph and the
provisions of paragraph III-4, unless sooner terminated, all Non-Qualified
Stock Options granted to a Participant on an Option Date may be
exercised commencing on a date no earlier than one year from the Option
Date as determined by the Committee. The Committee may, in its
discretion, accelerate the date on which all, or any portion, of the Non-
Qualified Stock Options granted to a participant may be exercised.
4. Termination. Each Non-Qualified Stock Option granted to a
Participant shall terminate on the earlier of the tenth anniversary of the
Option Date or, subject to the provisions of the following sentence, three
months after the date the Participant's employment by the Company and
its subsidiaries is terminated for any reason. That portion of a Non-
Qualified Stock Option which is exercisable as of the date on which a
Participant's employment is terminated by reason of the Participant's
death, disability (as determined by the Committee) or retirement under a
Company or subsidiary retirement plan shall terminate on the earlier of
the tenth anniversary of the Option Date on which it was granted or one
year after the date of termination by reason of death or disability (as
determined by the Committee) or five years after the Participant's
retirement, as the case may be.
5. Transferability. A Non-Qualified Stock Option granted to a
Participant may not be transferred by the Participant other than by will
or the laws of descent and distribution and during the lifetime of a
Participant shall be exercisable only by the Participant.
IV. STOCK APPRECIATION RIGHTS
1. Grantees. The Committee shall designate the Participants to whom
Stock Appreciation Rights are to be granted under this Part IV and
determine the number to be granted to each of them. Each Stock
Appreciation Right shall be evidenced by an agreement between the
Participant and the Company. If a Participant to whom a Stock
Appreciation Right has been granted is subject to Sections 16(a) and 16(b)
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of the Securities Exchange Act of 1934, the Committee may, at any time,
impose such conditions and limitations to the exercise of such Stock
Appreciation Right as the Committee deems necessary or desirable in
order to comply with the requirements of Sections 16(a) and 16(b) and the
rules and regulations issued thereunder, or to obtain exemption therefrom.
2. Grants. Stock Appreciation Rights may be granted in tandem with
a related Stock Option, in which event the Participant may elect to exercise
either the Stock Appreciation Right or the Stock Option but not both, as
to any of the same shares subject to the Stock Option and the Stock
Appreciation Right. A Stock Appreciation Right granted to a Participant
may be granted on the Option Date of such option or in the case of Non-
Qualified Stock Options as of that Option Date or at any time thereafter.
3. Exercise. Subject to the following provisions of this paragraph and
the provisions of paragraph IV-5, unless sooner terminated, all Stock
Appreciation Rights granted to a Participant may be exercised commencing
on a date no earlier than the later of six (6) months from the date of grant
or one year from the Option Date as determined by the Committee;
provided, however, that a Stock Appreciation Right may be exercised only
to the extent a related Stock Option is surrendered. The Committee may,
in its discretion, accelerate the date on which all, or any portion, of the
Stock Appreciation Rights granted to a Participant may be exercised to the
date to which a related Stock Option has been accelerated in accordance
with the provisions of either paragraph II-3 or III-3.
4. Payment. A Participant to whom a Stock Appreciation Right has
been granted may elect, during any period that such Stock Appreciation
Right is exercisable and subject to such limitations as the Committee may
have imposed, to receive from the Company in exchange therefor an
amount (net of applicable employee withholding taxes) equal to the
product of (i) the excess, if any, of the fair market value of a share of
Common Stock on the date of the exchange over the option price of the
related Stock Option and (ii) the number of shares of Common Stock
covered by the related Stock Option, or portion thereof, surrendered.
Payment of the Company's obligations arising out of the exchange of a
Stock Appreciation Right may be made in cash, Common Stock (valued at
its fair market value at date of exchange) or partly in each, as the
Committee shall decide.
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5. Termination. Subject to the following sentence, each Stock
Appreciation Right shall terminate on the earlier of the tenth anniversary
of the Option Date or, subject to the provisions of the following sentence,
three months after the date the Participant's employment by the Company
and its subsidiaries is terminated for any reason. Any Stock Appreciation
Right which is exercisable as of the date on which a Participant's
employment is terminated by reason of the Participant's death, disability
(as determined by the Committee) or retirement under a Company or
subsidiary retirement plan shall terminate on the earlier of the tenth
anniversary of the Option Date on which it was granted or one year after
the date of termination by reason of death or disability (as determined by
the Committee) or five years after the Participant's retirement, as the case
may be.
6. Transferability. A Stock Appreciation Right granted to a
Participant may not be transferred by the Participant other than by will
or the laws of descent and distribution and during the lifetime of a
Participant shall be exercisable only by the Participant.
V. RESTRICTED STOCK AWARDS
1. Grants. Grants of Restricted Common Stock or Restricted Stock
Rights may be made from time to time to such officers and key employees
of the Company and its subsidiaries as may be selected by the Committee.
On each Common Stock dividend payment date, each Participant shall be
credited with an amount equal to the dividend paid on that date on a
share of Common Stock, multiplied by the Participant's number of shares
of Restricted Common Stock or Restricted Stock Rights that have not been
terminated in accordance with the following provisions of this Part V.
Such amounts together with interest thereon shall be paid to the
Participant at such time or times as the Committee shall decide.
2. Awards. Such grant of Restricted Common Stock or Restricted
Stock Rights shall be contingent upon the Participant's continuing
employment with the Company or its subsidiaries for a period to be
specified by the Committee (the "Performance Period") and shall be subject
to such additional terms and conditions as the Committee in its sole
discretion deems appropriate, including, but not by way of limitation,
restrictions on the sale or other disposition of such shares during the
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Performance Period or for a period of time thereafter. The length of
Performance Periods may vary among Participants.
At the end of such period of employment by the Company and its
subsidiaries as shall be determined by the Committee (but not less than
six months and not extending beyond the last day of the Performance
Period), the Restricted Stock Right granted to a Participant shall be
automatically exchanged for a number of shares of Restricted Common
Stock equal to the number of Restricted Stock Rights exchanged.
Each stock certificate issued in respect of shares of Restricted
Common Stock shall be registered in the name of the Participant and
deposited with the Company.
Subject to the foregoing restrictions, and unless and until the shares
are forfeited, a Participant shall have all of the rights of a holder of
Common Stock with respect to the shares of Restricted Common Stock
awarded the Participant in accordance with the provisions of this Part V;
provided, however, that as provided in paragraph 1 of this Part V, any
dividends paid on a share of such stock, together with interest thereon,
shall be accrued and paid to the Participant at such time or times as the
Committee shall decide.
3. Distribution. The shares of Restricted Common Stock awarded to
a Participant with respect to a Performance Period shall be distributed to
the Participant, free of all restrictions, in such number (usually three) of
equal, or substantially equal, annual installments, measured from the last
day of that Performance Period, as the Committee shall determine.
4. Forfeitures. Except as provided below, or except as otherwise
determined by the Committee, if a Participant's employment with the
Company and its subsidiaries is terminated for any reason, the Participant
shall forfeit all Restricted Stock Rights, any undistributed Restricted
Common Stock previously awarded to the Participant with respect to any
Performance Period, any undistributed dividends accrued for the
Participant and any undistributed dividend equivalents credited to the
Participant, together with any interest accrued thereon. If a Participant's
employment with the Company and its subsidiaries is terminated by
reason of a Participant's death, disability (as determined by the
Committee) or retirement under a Company or subsidiary retirement plan,
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the Participant or, in the event of the Participant's death, the person or
persons entitled thereto by will or the laws of descent and distribution,
shall be entitled to receive, free of restrictions, a distribution of the
undistributed shares of Restricted Common Stock, if any, previously
awarded to the Participant, all Performance Awards under Part VI for
which Performance Goals have been met and, together with interest
thereon, any undistributed dividends accrued for the Participant and any
undistributed dividend equivalents credited to the Participant.
VI. PERFORMANCE AWARDS
1. Awards. Any Participant designated by the Committee to
participate in Part V of the Plan may be designated as a Participant under
this Part VI.
2. Performance Goal. For each Performance Period the Committee
may establish Performance Goals. In establishing any Performance Goal
the Committee may use such measures of the performance of the Company
over the Performance Period as the Committee deems appropriate.
Performance Goals may vary among Participants. For each Performance
Period, the Committee shall also establish appropriate criteria to
determine the basis upon which a Performance Award shall be made under
the Plan with respect to that period.
3. Payment and Amount. If the criteria for payment established by
the Committee relating to a Performance Goal established for any
Performance Period is met, a Participant receiving an installment
distribution of Restricted Common Stock in accordance with the
provisions of paragraph V-3 with respect to that Performance Period, who
has also been designated as a Participant under this Part VI, shall also be
paid a Performance Award at the time the distribution is made to the
Participant. The amount of a Participant's Performance Award shall not
in any event exceed the aggregate fair market value of the installment
distribution of shares of Restricted Common Stock.
4. Forfeiture. Except as provided below, and except as otherwise
determined by the Committee, if a Participant's employment with the
Company and its subsidiaries is terminated for any reason prior to the
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payment of any portion of a Performance Award, the Participant shall
forfeit all rights to receive any portion of the Performance Award
remaining unpaid at such termination. If a Participant's employment with
the Company and its subsidiaries is terminated by reason of the
Participant's death, disability (as determined by the Committee) or
retirement under a Company or subsidiary retirement plan, the Participant
or, in the event of the Participant's death, the person or persons entitled
thereto by will or the laws of descent and distribution, shall be entitled to
receive, free of restrictions, a distribution of all Performance Awards
under Part VI for which Performance Goals have been met.
VII. INDIVIDUAL PERFORMANCE UNITS
1. Grant. For each Performance Period, the Committee may, from
time to time, grant Individual Performance Units to such officers and
other key employees of the Company and its subsidiaries as it may select.
The number of Individual Performance Units granted will be determined
by dividing a specified percentage (as determined by the Committee and
not exceeding one hundred percent (100%)) of the Participant's base salary
by the fair market value of the Company's Common Stock on the date of
grant. On each Common Stock dividend payment date, each Individual
Performance Unit (including additional Individual Performance Units
previously credited to it) shall be increased by an amount equal to the
dividend paid on that date on a share of the Company's Common Stock,
reinvested in additional Individual Performance Units in an amount
equivalent to an investment of such dividend in shares of the Company's
Common Stock at its fair market value on such date.
2. Award. Except as provided in paragraph VII-5, awards of
Individual Performance Units shall be contingent upon the Participant's
continuing employment with the Company or its subsidiaries throughout
the specified Performance Period, and shall be subject to such additional
terms and conditions as the Committee in its sole discretion deems
appropriate. The length of Performance Periods may vary among
Participants.
3. Performance Goals. For each Performance Period the Committee
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may establish Performance Goals which shall be based upon achievement
of specific levels of return on equity. In determining the extent to which
a Performance Goal has been achieved, the Committee shall exclude the
effect, if any, on the Company's income or equity, of changes in generally
accepted accounting principles or Federal income tax laws or regulations,
adopted or effective subsequent to the establishment of such Performance
Goal as it deems appropriate. Performance Goals may vary among
Participants.
4. Payment and Amount. If the Performance Goal established by the
Committee for a Performance Period has been achieved, the Company
shall redeem the Individual Performance Units and pay to the Participant
an amount (the "Redemption Amount") equal to not more than three (3)
times - depending upon the extent to which the Performance Goal has been
achieved or exceeded - the product of (i) the number of Individual
Performance Units credited to the Participant's account at the end of a
Performance Period (including reinvested dividends), and (ii) the fair
market value of the Company's Common Stock on the date of payment.
Payment of the Redemption Amount to the Participant may, in the
discretion of the Committee, be made in cash and in Common Stock of the
Company, and will be made as soon as practicable following expiration of
the applicable Performance Period and certification by the Committee of
the Redemption Amount. The cash payment shall in no event exceed fifty
percent (50%) of the Redemption Amount.
5. Forfeitures. Except as provided below, or except as otherwise
determined by the Committee, if a Participant's employment with the
Company and its subsidiaries is terminated for any reason, the Participant
shall forfeit all unredeemed Individual Performance Units previously
granted to the Participant with respect to any Performance Period and any
undistributed dividends allocable thereto. To the extent the Performance
Goals are not achieved, Individual Performance Units not redeemed shall
be forfeited. If, prior to completion of a Performance Period, a
Participant's employment with the Company and its subsidiaries is
terminated by reason of the Participant's death, disability (as determined
by the Committee) or retirement under a Company or subsidiary
retirement plan, the Participant, or in the event of the Participant's death,
the person(s) entitled thereto by will or the laws of descent and
distribution, shall, if the applicable Performance Goal is attained, receive
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<PAGE>
the Redemption Amount at the time of payment to other Participants. In
the event of a Participant's retirement, the Redemption Amount shall be
prorated to the date of such Participant's retirement. Individual
Performance Units shall be forfeited to the extent not redeemed.
VIII. SPECIAL ACCELERATION IN CERTAIN EVENTS
1. Special Acceleration. Notwithstanding any other provisions of the
Plan, a Special Acceleration of awards outstanding under the Plan shall
occur with the effect set forth in paragraph VIII-2 at any time when any
one of the following events has taken place:
(a) The Company receives a report on Schedule 13D
reporting the beneficial ownership by any person
(other than a Participant in the Plan) of 20% or
more of the Company's outstanding Common Stock,
except that if such receipt shall occur during a
tender offer or exchange offer by any person other
than the Company or a wholly owned subsidiary of
the Company, or a Participant in the Plan, Special
Acceleration shall not take place until the
conclusion of such offer;
(b) If, upon conclusion of a tender or exchange offer,
any person other than the Company or a wholly
owned subsidiary of the Company, or a Participant
in the Plan; announces that it has accepted for
purchase a sufficient number of shares of Common
Stock pursuant to such tender offer or exchange
offer which will result in such person becoming
directly or indirectly the beneficial owner of 20% or
more of the Company's outstanding Common
Stock;
(c) Holders of the necessary number of shares of
Common Stock authorize or approve any merger in
which the Company is not the surviving
corporation or survives only as a subsidiary of
another corporation, or consolidation or sale of all
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or substantially all of the assets of the Company; or
(d) During any period of twelve months or less
individuals who at the beginning of such period
constituted a majority of the Board of Directors
cease for any reason to constitute a majority
thereof unless the nomination or election of such
new directors was approved by a vote of at least
two-thirds of the directors then still in office who
were directors at the beginning of such period.
The terms used in this Part VIII and not defined elsewhere in the
Plan shall have the same meaning as such terms have in the Securities
Exchange Act of 1934, as amended, and the rules and regulations adopted
thereunder.
2. Effect on Outstanding Awards. Upon a Special Acceleration pursuant to
paragraph VIII-I:
(a) All Stock Options then outstanding under Parts II
and III shall immediately become exercisable in full
for the remainder of their terms, provided that no
Stock Option may be exercised by an officer of the
Company within six months of its date of grant;
and each optionee shall have the right during a
period of thirty days following a Special
Acceleration to have the Company purchase any
Non-Qualified Stock Options which are then
exercisable and as to which no Stock Appreciation
Rights have been granted at a cash purchase price
computed in accordance with paragraph (e) below
and any Incentive Stock Options which are then
exercisable and as to which no Stock Appreciation
Rights have been granted at a cash purchase price
equal to the product of (i) the excess, if any, of the
fair market value of a share of Common Stock
computed in accordance with paragraph II-I over
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the option price and (ii) the number of shares of
Common Stock covered by the Incentive Stock
Option or portion thereof surrendered, provided
that the Company shall have the right during such
period to purchase any Incentive Stock Option as to
which no Stock Appreciation Rights have been
granted at the purchase price computed in
accordance with paragraph (e) below;
(b) All Stock Appreciation Rights outstanding under
Part IV shall immediately become exercisable in full
for a period of thirty days following a Special
Acceleration, subject to the provisions of paragraph
IV-5, with payment to be made solely in cash upon
any exercise during such period of a Stock
Appreciation Right granted with respect to a Non-
Qualified Stock Option in an amount computed in
accordance with paragraph (e) below and in cash
upon exercise during such period of a Stock
Appreciation Right granted with respect to an
Incentive Stock Option in an amount equal to the
product of (i) the excess, if any, of the fair market
value of a share of Common Stock computed in
accordance with paragraph II-I over the exercise
price of the related Stock Option and (ii) the
number of shares of Common Stock covered by the
related Stock Option, provided that the Company
shall have the right during such period to purchase
any Stock Appreciation Right granted with respect
to an Incentive Stock Option (and cancel the
related option) at the purchase price computed in
accordance with paragraph (e) below, provided
further that no Stock Appreciation Right may be
exercised by an officer within six months of its date
of grant;
(c) All Restricted Stock Rights under Part V
outstanding for at least six months from the date of
grant shall immediately be exchanged for a number
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of shares of Common Stock equal to the number of
Restricted Stock Rights so exchanged, and all such
shares of Common Stock, all other shares of
Common Stock and all interest, dividends or
dividend equivalents then held by the Company for
Participants under Part V and all Performance
Awards under Part VI for which Performance Goals
have been met shall then be immediately
distributed to Participants, free of all restrictions;
(d) The Company shall immediately redeem all
Individual Performance Units granted under Part
VII. For purposes of calculation of the Redemption
Amount, it shall be assumed that the Performance
Goal has been achieved, and the Fair Market Value
of the Company's Common Stock shall be
calculated in accord with paragraph (e) below; and
(e) Except as otherwise specified in paragraphs (a) and
(b) above, the purchase price for a Stock Option or
a Stock Appreciation Right and the amount to be
paid upon exercise of a Stock Appreciation Right
shall be an amount equal to the product of (i) the
excess, if any, of the highest of (A) the highest
reported sales price during the sixty days preceding
such exercise, (B) the highest purchase price shown
in any Schedule 13D referred to in paragraph VIII-I
(a) as paid within the sixty days prior to the date of
such report, (C) the highest price paid in any tender
offer referred to in Paragraph VIII-I (b) during the
sixty days preceding such exercise, or (D) the fixed
formula cash price per share specified in any
transaction referred to in paragraph VIII-I (c) if
such price is determined on the date of such
exercise, over the option price, and (ii) the number
of shares of Common Stock covered by the Stock
Option or Stock Appreciation Right, or portions
thereof, surrendered. The fair market value to be
used in the calculation of the Redemption Amount
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<PAGE>
shall be equal to the average price of the Common
Stock during the five business days preceding the
occurrence of a Special Acceleration.
17
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January 1, 1995
GATX CORPORATION
MANAGEMENT INCENTIVE PLAN
1. OBJECTIVE.
This Management Incentive Plan (the "Plan"), which is administered by the
Compensation Committee of the Board of Directors (the "Committee"), is
established for the period January 1 through December 31, 1995 (the "Plan
Year"), to motivate and reward those employees whose activities and
contributions have a significant bearing on the success and profitability of
GATX Corporation and its Subsidiaries (collectively, the "Company").
2. ELIGIBILITY.
Recommendation for participation in the Plan is initiated by the
Subsidiary Presidents or the Vice President of Human Resources, and approved
by the Chief Executive Officer.
3. PARTICIPATION.
Participants under this Plan will be exempt salaried employees with
the Company who are individually authorized to participate (the
"Participants"). Each Participant will be notified by the Subsidiary
President or Corporate Department Head of his or her participation and
participation level ("Target Bonus").
4. DEFINITIONS.
For purposes of this Plan, the following terms will have the following
meanings:
A. "Base Salary" will mean (1) the total salary (excluding any
incentive compensation or lump sum payments) paid to a Participant by the
Company before reduction for any contribution authorized under the GATX
Corporation Salaried Employees Retirement Savings Plan, plus (2) any
compensation which the Participant elects to defer under any deferred
compensation plan of the Company.
B. "Income Goals" will mean the net income goals established annually
by the Committee for GATX and each subsidiary. See Exhibit II.
C. "Bonus" will mean the amount payable to a Participant under this
Plan for the current Plan Year, calculated in accordance with the provisions
of this Plan, and approved by the Committee.
D. "Target Bonus" will mean the percentage of base salary payable if
100% of income goals and individual performance goals (if applicable) are
attained.
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Page 2
E. "Profit Attainment Percentage" will mean the quotient of income
divided by income goal expressed as a percentage.
F. "Payout Percentage" will mean the percentage of the Bonus paid for
the Company or Subsidiary performance as determined by the Profit Attainment
Percentage. The relationship between the Profit Attainment Percentage and
the Payout Percentage is approved by the Committee and presented in
Exhibit III.
G. "Personal Evaluation Percentage" will mean the percentage of the Bonus
paid for the Participant's individual performance during the Plan Year . See
Exhibit IV.
H. "Threshold" will mean the minimum level of income required for payout
under the Earnings Portion of this Plan. See Exhibit II.
5. COMPONENTS OF THE BONUS.
The Bonus is composed of a GATX Earnings Portion, a Subsidiary Earnings
Portion and a Personal Portion. As soon as practical following the start of
each Plan Year, the Committee will establish Income Goals for GATX and each
participating subsidiary.
A. GATX Earnings Portion - The extent to which GATX meets its Income
Goal - determined by reference to the Profit Attainment Percentages (Exhibit
III) - will be the basis for the GATX Earnings Portion of the Bonus for both
corporate and subsidiary participants.
B. Subsidiary Earnings Portion - For subsidiary Participants, the
extent to which each subsidiary meets its Income Goal - determined by
reference to the Profit Attainment Percentages (Exhibit III) - will be the
basis for that subsidiary's Earnings Portion of the Bonus.
For corporate Participants, the Subsidiary Earnings Portion will recognize
the relative proportion of the Income Goals established for each participating
subsidiary. At the start of the Plan Year, each participating subsidiary will
be assigned a weight by the Committee calculated on the basis of its Income
Goal as a percent of the total of the Income Goals of all participating
subsidiaries, with a minimum weight of 5.0% (Exhibit II). The extent to which
each subsidiary meets its Income Goal - determined by reference to the Profit
Attainment Percentages (Exhibit III) - will be the basis for the Subsidiary
Earnings Portion of the Bonus.
C. Personal Portion - The Personal Portion recognizes the level of the
Participant's individual performance (Exhibit IV). The percentage of the
Bonus represented by the Personal Portion may vary depending upon whether or
not the Threshold levels established annually for the GATX Earnings Portion
(for corporate Participants) and the Subsidiary Earnings Portion (for
subsidiary Participants) are met.
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Page 3
6. WEIGHTING OF THE COMPONENTS OF THE BONUS.
As soon as practical following the start of each Plan Year, the
Committee will determine the weight to be allocated to each of the component
parts of the Bonus identified in paragraph 5 hereof. For the current Plan
Year, the component parts of the Bonus for each category of Participant are
attached as Exhibit I.
7. CALCULATION OF THE BONUS.
A. The weighting of the Income Goals is multiplied by a Participant's
Target Bonus to determine the Target Value for the Income Goal. (Exhibit V,
Section A).
B. Payout Percentages are determined from the Profit Attainment
Percentages as described in paragraph 5 (Exhibit V, Section B.)
C. Payout Percentages are multiplied by the Target Values of the
Income Goals to determine the Earnings Portion of the Bonus. (Exhibit V,
Section C.) The Personal Portion is determined by multiplying the Target
Value of the Personal Portion by the Personal Evaluation Percentage as
determined from the table attached as Exhibit IV.
D. The Bonus will be the sum of the Earnings Portions and the Personal
Portion of the Bonus, provided that no Bonus payment will be made with respect
to the Earnings Portions unless the Company and participating subsidiaries
reach Threshold levels as established by the Committee.
E. The Company or Subsidiary President may increase or decrease the
Bonus to an individual Participant by a maximum of 25%, based on an assessment
of that Participant's overall contribution or performance related to a
special project.
8. ADMINISTRATION OF THE PLAN.
A. Administration.
Administration of the Plan will be the responsibility of the
Committee which may delegate responsibility thereunder to the Corporate
Director of Compensation and Benefits, Corporate Human Resources Department.
B. New Participants.
Subject to the provisions of the following sentence, new
employees who join the Company during the Plan Year may be authorized to
participate in the Plan on a pro-rata basis with the approval of the Chief
Executive Officer. Participation under this Plan will not be available to
any new employee after October 1st of any Plan Year.
C. Transfers and Promotions.
If a Participant is transferred or promoted during the Plan
Year causing an adjustment in his Target Bonus, such Participant's bonus
will be calculated on a pro-rata basis to reflect this change.
<PAGE>
Page 4
D. Retirement, Death or Disability.
A Participant who retires, dies, or becomes totally and
permanently disabled, as that term is defined in the GATX Pension Plan for
Salaried Employees, during the Plan Year will be entitled to a pro-rated
bonus in accordance with Paragraph E.
E. Payment of Bonus.
Bonuses will be paid as soon as possible after the completion
of the Company's year-end audit, normally no later than March 1. The
Participant does not have a contractual right to receive the Bonus.
Participants become entitled to receive Bonus payments only after the
payments have been approved and authorized by the Committee.
F. Employment as a Condition Precedent.
No bonus will be paid, except pursuant to the provisions of
Paragraph D above, unless the Participant is an employee of the Company at
the end of the Plan Year.
G. No Employment Contract.
Neither the establishment of the Plan nor the authorization
to be a Participant in the Plan will be construed as giving the Participant
the right to be retained in the service of the Company.
H. Modification of Goals.
The Committee may, from time to time during the Plan Year,
modify the Plan as appropriate including (i) Income Goals, (ii) Thresholds,
(iii) Payout Percentages, (iv) assigned weights established for one or more
subsidiaries and (v) weighting of the Components of the Bonus if, in the
sole discretion of the Committee, any part of the Plan ceases to be a
reasonable measure of desired performance. Notwithstanding anything to the
contrary contained herein, the Committee shall have the authority and
exclusive discretion to determine whether income or expenses of an unusual
or nonrecurring nature are to be included with other income of the Company
for purposes of determining whether the established Income Goals have been
achieved.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT I
WEIGHTING OF THE COMPONENTS OF THE BONUS
1995 MANAGEMENT INCENTIVE PLAN
<S> <C> <C>
CEO and COO 100% GATX
OTHER SENIOR CORPORATE OFFICERS 30% GATX
and SUBSIDIARY PRESIDENTS 70% subsidiary or
combined subsidiaries
------
100%
======
OTHER PARTICIPANTS 10% GATX
40% subsidiary or combined subsidiaries
50% Personal*
------
100%
======
</TABLE>
*30% if Threshold not met
<PAGE>
<TABLE>
EXHIBIT II
<CAPTION>
INCOME GOALS, WEIGHTING OF THE INCOME GOALS, THRESHOLDS
1995 MANAGEMENT INCENTIVE PLAN
1995 INCOME GOALS ($ IN OOO'S)
<S> <C> <C>
NET
INCOME CORP STAFF
GOALS WEIGHTING
------------ ----------------
GATC 65,001 45.12%
CAPITAL 30,205 20.97%
TERMINALS 34,458 23.92%
ASC 6,237 5.00%
LOGISTICS 100 5.00%
100.00%
GATX CORP 97,769
THRESHOLDS
The threshold will be 80% of the Income Goal for GATX and each participating
subsidiary with the exception of GATC, for which the Threshold will be 85%
of the Income Goal.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT III
PROFIT ATTAINMENT AND PAYOUT PERCENTAGES
1995 MANAGEMENT INCENTIVE PLAN
<CAPTION>
PAYOUT PERCENTAGE
PROFIT ATTAINMENT --------------------------------------------
PERCENTAGE GATX & ALL SUBS EXCEPT GATC GATC
- ---------------------- --------------------------- ------------
<S> <C> <C> <C>
THRESHOLD 80 30
81 35
82 40
83 45
84 50
GATC 85 55 55.0
86 60 60.0
87 65 65.0
88 70 70.0
89 75 75.0
90 80 80.0
91 83 83.0
92 86 86.0
93 89 89.0
94 92 92.0
95 95 95.0
96 96 96.0
97 97 97.0
98 98 98.0
99 99 99.0
100 100 100.0
101 101 101.3
102 102 102.7
103 103 104.0
104 104 106.0
105 105 110.0
106 108 114.0
107 111 118.0
108 114 122.0
109 117 126.0
110 120 130.0
111 123 134.0
112 126 138.0
113 129 142.0
114 132 146.0
115 135 150.0
116 138
117 141
118 144
119 147
120 150
Actual Payout Percentage will be interpolated, if necessary, and rounded to
the nearest hundredth.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT IV
PERFORMANCE EVALUATION PERCENTAGE DETERMINATION
1995 MANAGEMENT INCENTIVE PLAN
<CAPTION>
PERFORMANCE
EVALUATION
EVALUATION CRITERIA PERCENTAGE
------------------------------------------------- -------------
<S> <C>
Performance was truly outstanding; consistently 150%
exceeded job requirements and attained particularly
difficult and aggressive, high priority goals during
the performance period.
Performance was well above average; job 125%
requirements were often exceeded and difficult
goals were attained during the performance period.
Performance was fully satisfactory; met or at 100%
times exceeded job requirements and attained
important goals during the performance period.
Performance was less than satisfactory; some 50%
but not all job requirements were met and important
goals were not attained during the performance period.
Performance was not acceptable; few job 0%
requirements were met or goals attained during the
performance period.
</TABLE>
<PAGE>
<TABLE>
EXHIBIT V
1995 MANAGEMENT INCENTIVE PLAN
BONUS CALCULATION EXAMPLE
<CAPTION>
EMPLOYEE: (Corporate Participant) Base Salary $75,000
---------------------------- Target Percentage 20.0%
Target Bonus $15,000
A. TARGETS - EARNINGS AND PERSONAL PORTIONS
FACTOR WEIGHTING TARGET BONUS TARGET VALUE
- ------------------ ----------------------- ------------ -----------
<S> <C> <C> <C>
1. CORP INCOME 10% =10.000% $15,000.00 $1,500.00
2. GATC 45.12% x 40% = 18.05% $15,000.00 $2,707.00
Capital 20.97% x 40% = 8.39% $15,000.00 $1,258.00
Terminals 23.92% x 40% = 9.57% $15,000.00 $1,435.00
ASC 5.00% x 40% = 2.000% $15,000.00 $300.00
Logistics 5.00% x 40% = 2.000% $15,000.00 $300.00
3. PERSONAL 50% =50.000% $15,000.00 $7,500.00
-------------- ------------
TARGET AMOUNT 100.000% $15,000.00
============== ============
B. GATX AND SUBSIDIARY PERFORMANCE
FACTOR THRESHOLD INCOME GOAL ACTUAL PROFIT % PAYOUT %
- --------------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
1. CORP INCOME 72,000,000 90,000,000 81,000,000 90% 80%
2. GATC 52,000,000 65,000,000 64,350,000 99% 99%
Capital 24,000,000 30,000,000 31,500,000 105% 105%
Terminals 24,000,000 30,000,000 33,000,000 110% 120%
ASC 4,800,000 6,000,000 5,640,000 94% 92%
Logistics 400,000 500,000 425,000 85% 55%
C. INDIVIDUAL BONUS CALCULATION
FACTOR PAYOUT % TARGET VALUE AWARD
- --------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
1. CORP INCOME 80% x $1,500.00 = $1,200.00 $1,200.00
2. GATC 99% x $2,707.00 = $2,679.93
Capital 105% x $1,258.00 = $1,320.90
Terminals 120% x $1,435.00 = $1,722.00
ASC 92% x $300.00 = $276.00
Logistics 55% x $300.00 = $165.00 $6,163.83
--------- ---------
3. PERSONAL 125% x $7,500.00 = $9,375.00 $9,375.00
--------- ---------
TOTAL BONUS $16,738.83
==========
</TABLE>
<PAGE>
<TABLE>
EXHIBIT V
1995 MANAGEMENT INCENTIVE PLAN
BONUS CALCULATION EXAMPLE
<CAPTION>
EMPLOYEE: (Subsidiary Participant) Base Salary $75,000
----------------------------- Target Percentage 20.0%
Target Bonus $15,000
A. TARGETS - EARNINGS AND PERSONAL PORTIONS
FACTOR WEIGHTING TARGET BONUS TARGET VALUE
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C>
1. CORP INCOME 100% x 10% = 10% $15,000.00 $1,500.00
2. SUB INCOME 100% x 40% = 40% $15,000.00 $6,000.00
-----------
$7,500.00
3. PERSONAL 50% = 50.00% $15,000.00 $7,500.00
------- ----------
TARGET AMOUNT 100.00% $15,000.00
======= ==========
B. GATX AND SUBSIDIARY PERFORMANCE
FACTOR THRESHOLD INCOME GOAL ACTUAL PROFIT % PAYOUT %
- -------------- --------- ----------- ------ -------- ---------
<S> <C> <C> <C> <C>
1. CORP INCOME 72,000,000 90,000,000 81,000,000 90% 80%
2. SUB INCOME 52,000,000 65,000,000 64,350,000 99% 99%
C. INDIVIDUAL BONUS CALCULATION
FACTOR PAYOUT % TARGET VALUE AWARD
- --------------- -------- ------------- -------
<S> <C> <C> <C>
1. CORP INCOME 80% x $1,500.00 = $1,200.00
2. SUB INCOME 99% x $6,000.00 = $5,940.00
---------
$7,140.00
----------
3. PERSONAL 125% x $7,500.00 = $9,375.00
-----------
TOTAL BONUS $16,515.00
===========
</TABLE>
AGREEMENT FOR CONTINUED EMPLOYMENT FOLLOWING CHANGE
OF CONTROL OR DISPOSITION OF A SUBSIDIARY
This Agreement is made and entered into by and between GATX Corporation
("GATX") and James J. Glasser, (the "Executive") on the Execution Date shown
below, to be effective as of January 1, 1995.
W I T N E S S E T H
WHEREAS, GATX and the Executive desire to enter into this Agreement in order
to provide GATX and its consolidated subsidiaries stability of management
following a Change of Control or Disposition (as those terms are defined herein)
of GATX or one of its consolidated subsidiaries, to provide for the continued
employment of the Executive for a period of two years following the occurrence
of either such event, and to set forth the terms and conditions of such
continued employment and the obligations of the parties in the event of
termination thereof.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Definitions.
a. "Cause" means a willful and material breach of this Agreement which has
resulted or is likely to result in a material detriment to the financial
condition, business or prospects of GATX.
b. "Change of Control" means the occurrence of any of the following events:
(1) Receipt by GATX of a Schedule 13D report confirming that a person
or group owns beneficially twenty percent (20%) or more of the
outstanding voting stock of GATX.
(2) Any purchase under a non-GATX tender or exchange offer for stock
of GATX following which the offering person or group owns
beneficially twenty percent (20%) or more of such stock.
(3) Shareholder approval of any merger in which GATX is not the
surviving corporation or survives only as a subsidiary of another
corporation, consolidation or sale of all, or substantially all, of
GATX's assets in one transaction or in a series of transactions.
(4) A change in the majority of the Board of Directors of GATX not
recommended by the incumbent directors.
(The words "person" and "group", as used in this paragraph 1.b, shall have
the meanings ascribed to them under Section 13(d) of the Securities
Exchange Act of 1934.)
-2-
<PAGE>
c. "Company" includes GATX, its consolidated subsidiaries, any former
subsidiary of GATX by which the Executive was primarily employed on the
day prior to the Triggering Event and any successor to GATX or such
subsidiary by purchase of assets or otherwise.
d. "Company Unit" means any corporation, included within the term
"Company."
e. "Constructive Termination" or "Constructively Terminates" means the
effecting of any of the following actions by the Company following which
the Executive terminates the Executive's employment by the Company:
(1) a significant reduction in the nature or scope of the Executive's
authority, duties, functions or responsibilities or a material
change in the location at which they are to be performed or the
imposition of unreasonable travel requirements;
(2) a reduction in the Executive's compensation from that provided to
the Executive immediately prior to the Triggering Event;
(3) a diminution in the Executive's eligibility to participate in bonus,
stock option, incentive award and other benefit plans from the level
at which the Executive was participating therein immediately prior to
the Triggering Event;
(4) a diminution in employee benefits (including, but not limited to
medical, dental, life insurance and disability plans) and other
Perquisites applicable to the Executive, from the level of benefits
and other Perquisites to which the Executive was entitled
immediately prior to the Triggering Event; and
(5) a reasonable determination by the Executive that, as a result of a
change in circumstances affecting the Company or its management,
the Executive is unable to exercise effectively the authorities,
duties, functions and responsibilities consistent with those
attributable to the Executive's position immediately prior to the
Triggering Event.
f. "Disposition" of a Company Unit means any transaction, including sale,
consolidation, merger or spin-off of any Company Unit, following which
GATX no longer owns fifty percent (50%) or more of the voting stock of
such Company Unit or the sale of all or substantially all of the assets of
such Company Unit.
g. "Employment Period" means the two (2) year period commencing on the
day of a Triggering Event and ending two years following such day.
-3-
<PAGE>
h. "Perquisites" includes not only those incidental emoluments of office
commonly included within the term, such as a company assigned car, club
membership and financial planning assistance, but also the benefits under
corporate employee benefit plans such as the GATX medical, life insurance
and Pension Plans (as defined herein) and other plans and agreements
relating thereto.
i. "Total Disability" means any disability that (1) entitles the Executive to
disability income benefits under the GATX Corporation Long Term Disability
Income Plan as in effect on the day prior to the Triggering Event and (2)
prevents the Executive, for the duration of the Employment Period, from
engaging in the same or comparable type of employment as that in which
the Executive was engaged on the day prior to the Triggering Event.
j. "Triggering Event" means the first to occur of a Change of Control or the
Disposition of the Company Unit by which the Executive was primarily
employed on the day prior to such Change of Control or Disposition.
2. Employment. This Agreement shall have no effect on, nor shall any of its
provisions apply to, the Executive's employment or termination thereof that
occurs prior to the occurrence of a Triggering Event. However, if the Executive
is employed by the Company on the day prior to a Triggering Event, the Company
shall continue to employ the Executive and the Executive shall remain in the
employ of the Company for the duration of the Employment Period. Provided,
however, subject only to the provisions of paragraphs five (5) and six (6)
below, the Company may, at any time, terminate the employment of the
Executive at will.
3. Performance of Duties. During the Executive's employment by the
Company, the Executive shall devote his or her best efforts and full business
time exclusively to the business affairs and interests of the Company and
shall faithfully and efficiently perform such duties, consistent with the
status of the Executive's position, as may be assigned to the Executive from
time to time by the Chief Executive Officer of the Company or the Chief
Executive Officer's delegate.
4. Compensation. During the Executive's employment by the Company, he or
she shall receive a salary in such amount as may be established from time to
time by the Company Unit by which the Executive is primarily employed and
shall be
-4-
<PAGE>
entitled to participate, in accordance with the Company's policy and consistent
with the Executive's position and salary, in all plans and all Perquisites
applicable generally to other executives of the Company Unit.
5. Termination Payments. If the Company terminates or Constructively
Terminates the Executive's employment at any time during the Employment Period
for any reason other than Cause or Total Disability, the Company shall promptly
pay or cause to be paid to the Executive in a lump sum an amount equal to:
a. Twice the Executive's annual salary before deductions and deferrals at the
level thereof as of the day prior to the Triggering Event, plus the bonus
that would have been payable to the Executive (for the year in which
such termination or Constructive Termination occurs) under the GATX
Management Incentive Plan (the "MIP") as in effect on the day prior to
the Triggering Event, equal in amount to the product of (i) the
Executive's annual salary as in effect immediately prior to the
Triggering Event and (ii) the Executive's Target Bonus (as that term
is defined in the MIP); minus
b. Any amounts paid to the Executive in accordance with the Company's
severance pay policies.
In addition to the amount set forth above, the Company shall:
(1) Permit the Executive to continue the Executive's participation (or
provide equivalent coverage) in the Company Unit's medical, dental,
disability and life insurance programs provided under GATX's benefit
plans as in effect on the day prior to the Triggering Event until the
earlier to occur of (a) the second anniversary of the date as of which
the Executive's employment is terminated or Constructively Terminated
or (b) the date on which the Executive becomes eligible for coverage
under any other employee benefit plans providing substantially
equivalent benefits at substantially equivalent levels;
(2) Reimburse the Executive (to a maximum of ten thousand dollars ($10,000)
per year) for financial and estate planning and tax return preparation
for the two (2) years immediately following the Executive's
termination or Constructive Termination of employment in accordance
with GATX's executive financial planning program in effect on the day
prior to a Triggering Event;
(3) Reimburse the Executive (to a maximum of thirty thousand dollars
($30,000)) for the cost of outplacement services plus up to one
thousand dollars ($1,000) of expenses incurred in seeking or obtaining
new employment.
-5-
<PAGE>
6. Retirement Benefits. In addition to the foregoing, if the Executive
survives for two (2) years following such termination or Constructive
Termination of employment:
a. The Company shall pay or cause to be paid to the Executive (or in the
event of the Executive's death following the expiration of such two (2)
year period to the Executive's surviving spouse) a Retirement Income
Benefit (as hereinafter defined) calculated and paid as follows:
(1) The Retirement Income Benefit shall be an amount equal to the
difference, if any, between (a) the monthly benefit the Executive (or,
in the event of the Executive's death, the Executive's surviving
spouse) would have received as a monthly pension benefit under the
GATX Corporation Non-Contributory Pension Plan for Salaried Employees,
(the "Salaried Pension Plan") the GATX Corporation Excess Benefit
Plan, the GATX Corporation Supplemental Benefit Plan and any other
written agreement between the Executive and the Company regarding the
Executive's retirement, all as in effect on the day prior to the
Triggering Event, (hereinafter collectively, the "Pension Plan")
assuming the Executive's employment had terminated two (2) years
after the date of the Executive's termination or Constructive
Termination of employment, and accordingly the Executive had
accumulated two additional years of service credit under the Pension
Plan at a level of compensation calculated in accordance with the
immediately following sentence and (b) the amount, if any, the Executive
(or, in the event of the Executive's death, the Executive's surviving
spouse) actually receives as a monthly benefit under the Pension Plan.
For purposes of subparagraph (a) of this paragraph, the Executive's
compensation for each of the two additional years of assumed service
credit shall be equal to the level of the Executive's compensation as in
effect immediately prior to the Triggering Event, plus an amount equal to
the average of the Covered Bonuses (as defined in Section 2.13 of the
Salaried Pension Plan) paid to the Executive during the five (5) calendar
year period immediately preceding the Triggering Event.
(2) Payment of the Retirement Income Benefit shall be made in the same
manner, simultaneously with and in the same form as payments are, or
would have been, made to the Executive (or in the event of the
Executive's death to the Executive's surviving spouse) under the
Pension Plan, but shall commence no sooner than two (2) years following
the Executives' termination or Constructive Termination of employment.
Any election available to and validly executed by the Executive under
the Pension Plan as to either an optional form of payment or as to the
date on which benefits are to commence, shall be
-6-
<PAGE>
applicable to the Retirement Income Benefit and shall be utilized in
calculating the amount of the Retirement Income Benefit.
b. The Company shall permit the Executive to participate in (or shall
provide equivalent coverage) on the same basis as other GATX employees
who have terminated their employment at approximately the same age and
after a substantially equivalent number of years of service in the
GATX Corporation Medical Plan and the GATX Corporation Life Insurance
Plan, both as in effect on the day prior to the Triggering Event. Such
benefits shall be paid at the same time, under the same conditions and
to the same extent as if the Executive's employment had continued for
two (2) years after the termination or Constructive Termination of the
Executive's employment.
Notwithstanding the foregoing, if the Executive would otherwise be entitled
to receive a Retirement Income Benefit hereunder but dies prior to the
expiration of a two (2) year period following termination or Constructive
Termination of the Executive's employment and leaves a surviving spouse,
such surviving spouse shall be entitled to receive such payments and
Perquisites as would be applicable to such surviving spouse under this
Agreement, the Pension Plan and all other GATX employee benefit plans and
policies in effect on the day prior to the Triggering Event, calculated and
payable in the same manner as if the Executive had been employed by the
Company on the Executive's date of death.
7. Payment in Lieu. Except with respect to (a) compensation applicable
to the Executive's employment prior to the termination or Constructive
Termination thereof, (b) amounts payable under the severance pay policies
described in paragraph 5(b) above, and (c) such compensation as may be
payable or rights as may be exercisable on termination of employment under
the GATX Salaried Employees Retirement Savings Plan, the Executive Deferred
Income Plans, the Management Incentive Plan, the GATX Corporation 1985 Long
Term Incentive Compensation Plan or other similar programs, all as in effect
on the day prior to the Triggering Event, the amounts payable to the
Executive under this Agreement shall be in lieu of any other amount payable
to the Executive by the Company by reason of the Executive's termination or
Constructive Termination of employment.
8. Confidentiality. During and after the Executive's employment, the
Executive will not divulge or appropriate to the Executive's own use or to
the use of others any secret or confidential information or knowledge
pertaining to the business of the Company or any of its subsidiaries or
affiliates obtained by the Executive during such employment.
-7-
<PAGE>
9. Nonalienation. The interests of the Executive under the Agreement are
not subject to the claims of the Executive's creditors and may not otherwise
be voluntarily or involuntarily assigned, alienated or encumbered.
10. Tax Penalties. The Company will provide complete tax and compensation
data on a timely basis to the Executive and to an accounting firm
designated by the Executive to enable the Executive to determine the
extent, if any, to which the Executive's compensation under this
Agreement and all other compensation agreements, plans and programs of
the Company may be considered to be a parachute payment or excess
parachute payment under section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). In the event that any such compensation
is deemed to constitute an excess parachute payment that is subject to tax
under Section 4999 of the Code or any successor provision thereto (the
"Excise Tax"), the Company shall pay to the Executive an additional amount
(the "Gross-Up Amount") that, after payment of all Federal and state income
taxes thereof (assuming the Executive is at the highest marginal federal
and applicable state income tax rate in effect on the date of payment of
the Gross-Up Amount) and payment of the Excise Tax on the Gross-Up Amount,
is equal to the Excise Tax payable by the Executive on such excess parachute
payment. The Gross-Up Amount payable with respect to each excess parachute
payment shall be paid by the Company coincident with payment of such excess
parachute payment.
11. No Cumulation or Duplication of Benefits. The obligations of the Company
to make payments or provide benefits hereunder are the joint and several
obligations of the Company and the Company Units. Accordingly, if following the
termination or Constructive Termination of the Executive's employment the
Executive receives any form of compensation payments or benefits from the
Company or any Company Unit or from a successor thereto or affiliate thereof,
the amount of any such compensation or payment together with the fair market
value of any such benefits shall be deducted from any obligation of the Company
or applicable Company Unit to make payments or provide benefits to the
Executive under or by reason of this Agreement.
12. Reduction of Payments. Notwithstanding anything contained herein to the
contrary, any amounts payable hereunder shall be reduced by such amount as
may be necessary to make this agreement not unlawful under federal law.
13. Amendment. This Agreement may be amended by written agreement of
the parties without the consent of any other person and no person, other than
the parties hereto, shall have any rights under or interest in this Agreement
or the subject matter hereof.
14. Extension. The Board of Directors of GATX may, at any time prior to the
expiration or termination of this Agreement, extend the term of this Agreement
for
-8-
<PAGE>
a period of up to two (2) years from the date on which the extension is
approved, without any further action on the part of the Executive.
15. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the heirs, executors and legal representatives of the Executive
and the successors and assigns of the Company and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the assets and business of any Company Unit. The Company
agrees that it will not effect the sale or other disposition of all or
substantially all of its assets unless either (a) the person or entity
acquiring the assets or a substantial portion of the assets shall expressly
assume by an instrument in writing all duties and obligations of the Company
under this Agreement or (b) the Company shall provide through the establishment
of a separate reserve for the payment in full of all amounts that are or may
be reasonably expected to become payable to the Executive under this Agreement.
16. Nonwaiver. The waiver by either party of a breach of this Agreement shall
not be construed as a waiver of any subsequent breach.
17. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the alleged breach thereof, shall be settled
by arbitration in the City of Chicago, Illinois in accordance with the laws
of the State of Illinois b arbitrators, one of whom shall be appointed by
the Company or any successor thereto, one by the Executive and the third by
the other two. If the other two arbitrators cannot agree on the appointment
of a third arbitrator, or if either party fails within thirty (30) days after
receipt of written demand to appoint an arbitrator, then such arbitrator shall
be appointed by the Dean of the Business School of the University of Chicago
or his delegate. The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators, which shall be as provided in this paragraph 17.
Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other
costs and expenses in connection with the enforcement of any and all of his
rights under this Agreement, the Executive shall be entitled to recover from
the Company reasonable attorney's fees and costs and expenses incurred by
the Executive in connection with the enforcement of said rights. Payments
shall be made to the Executive by the Company at the time these attorney's
fees and costs and expenses are incurred by the Executive. If, however, the
arbitrators should later determine that under the circumstances it was
unjust for the Company to have made any of these payments of attorney's fees
and costs and expenses to the Executive, the Executive shall repay any such
payments to the Company in accordance with the order of the arbitrators.
Any award of the arbitrators shall include interest at a rate or rates
considered just under the circumstances by the arbitrators.
-9-
<PAGE>
18. Termination of Agreement. This agreement shall terminate on December
31, 1997, provided, however, if prior to such date, but after January 1, 1996,
there shall occur either (a) a Change of Control or (b) a Disposition of a
Company Unit by which the Executive is primarily employed on the day prior
to such Disposition, this agreement shall remain in effect until two years
following the date of the first to occur of such Change of Control or
Disposition.
Termination of this Agreement shall not affect any rights that shall have
accrued to the Executive under this Agreement prior to the termination date.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and GATX
hascaused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary.
/s/ James J. Glasser
----------------------------------------
Executive
GATX CORPORATION
/s/ Ronald H. Zech
By -------------------------------------
Its President
March 24, 1995
----------------------------------------
(Execution Date)
ATTEST:
/s/ Janice M. Alonso
- --------------------------------
Its Assistant Secretary
AGREEMENT FOR CONTINUED EMPLOYMENT FOLLOWING CHANGE
OF CONTROL OR DISPOSITION OF A SUBSIDIARY
This Agreement is made and entered into by and between GATX Corporation
("GATX") and Ronald H. Zech, (the "Executive") on the Execution Date shown
below, to be effective as of January 1, 1995.
W I T N E S S E T H
WHEREAS, GATX and the Executive desire to enter into this Agreement in order
to provide GATX and its consolidated subsidiaries stability of management
following a Change of Control or Disposition (as those terms are defined herein)
of GATX or one of its consolidated subsidiaries, to provide for the continued
employment of the Executive for a period of two years following the occurrence
of either such event, and to set forth the terms and conditions of such
continued employment and the obligations of the parties in the event of
termination thereof.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Definitions.
a. "Cause" means a willful and material breach of this Agreement which has
resulted or is likely to result in a material detriment to the financial
condition, business or prospects of GATX.
b. "Change of Control" means the occurrence of any of the following events:
(1) Receipt by GATX of a Schedule 13D report confirming that a person
or group owns beneficially twenty percent (20%) or more of the
outstanding voting stock of GATX.
(2) Any purchase under a non-GATX tender or exchange offer for stock
of GATX following which the offering person or group owns
beneficially twenty percent (20%) or more of such stock.
(3) Shareholder approval of any merger in which GATX is not the
surviving corporation or survives only as a subsidiary of another
corporation, consolidation or sale of all, or substantially all, of
GATX's assets in one transaction or in a series of transactions.
(4) A change in the majority of the Board of Directors of GATX not
recommended by the incumbent directors.
(The words "person" and "group", as used in this paragraph 1.b, shall have
the meanings ascribed to them under Section 13(d) of the Securities
Exchange Act of 1934.)
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<PAGE>
c. "Company" includes GATX, its consolidated subsidiaries, any former
subsidiary of GATX by which the Executive was primarily employed on the
day prior to the Triggering Event and any successor to GATX or such
subsidiary by purchase of assets or otherwise.
d. "Company Unit" means any corporation, included within the term
"Company."
e. "Constructive Termination" or "Constructively Terminates" means the
effecting of any of the following actions by the Company following which
the Executive terminates the Executive's employment by the Company:
(1) a significant reduction in the nature or scope of the Executive's
authority, duties, functions or responsibilities or a material
change in the location at which they are to be performed or the
imposition of unreasonable travel requirements;
(2) a reduction in the Executive's compensation from that provided to
the Executive immediately prior to the Triggering Event;
(3) a diminution in the Executive's eligibility to participate in bonus,
stock option, incentive award and other benefit plans from the level
at which the Executive was participating therein immediately prior to
the Triggering Event;
(4) a diminution in employee benefits (including, but not limited to
medical, dental, life insurance and disability plans) and other
Perquisites applicable to the Executive, from the level of benefits
and other Perquisites to which the Executive was entitled
immediately prior to the Triggering Event; and
(5) a reasonable determination by the Executive that, as a result of a
change in circumstances affecting the Company or its management,
the Executive is unable to exercise effectively the authorities,
duties, functions and responsibilities consistent with those
attributable to the Executive's position immediately prior to the
Triggering Event.
f. "Disposition" of a Company Unit means any transaction, including sale,
consolidation, merger or spin-off of any Company Unit, following which
GATX no longer owns fifty percent (50%) or more of the voting stock of
such Company Unit or the sale of all or substantially all of the assets of
such Company Unit.
g. "Employment Period" means the two (2) year period commencing on the
day of a Triggering Event and ending two years following such day.
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<PAGE>
h. "Perquisites" includes not only those incidental emoluments of office
commonly included within the term, such as a company assigned car, club
membership and financial planning assistance, but also the benefits under
corporate employee benefit plans such as the GATX medical, life insurance
and Pension Plans (as defined herein) and other plans and agreements
relating thereto.
i. "Total Disability" means any disability that (1) entitles the Executive to
disability income benefits under the GATX Corporation Long Term Disability
Income Plan as in effect on the day prior to the Triggering Event and (2)
prevents the Executive, for the duration of the Employment Period, from
engaging in the same or comparable type of employment as that in which
the Executive was engaged on the day prior to the Triggering Event.
j. "Triggering Event" means the first to occur of a Change of Control or the
Disposition of the Company Unit by which the Executive was primarily
employed on the day prior to such Change of Control or Disposition.
2. Employment. This Agreement shall have no effect on, nor shall any of its
provisions apply to, the Executive's employment or termination thereof that
occurs prior to the occurrence of a Triggering Event. However, if the Executive
is employed by the Company on the day prior to a Triggering Event, the Company
shall continue to employ the Executive and the Executive shall remain in the
employ of the Company for the duration of the Employment Period. Provided,
however, subject only to the provisions of paragraphs five (5) and six (6)
below, the Company may, at any time, terminate the employment of the
Executive at will.
3. Performance of Duties. During the Executive's employment by the
Company, the Executive shall devote his or her best efforts and full business
time exclusively to the business affairs and interests of the Company and
shall faithfully and efficiently perform such duties, consistent with the
status of the Executive's position, as may be assigned to the Executive from
time to time by the Chief Executive Officer of the Company or the Chief
Executive Officer's delegate.
4. Compensation. During the Executive's employment by the Company, he or
she shall receive a salary in such amount as may be established from time to
time by the Company Unit by which the Executive is primarily employed and
shall be
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<PAGE>
entitled to participate, in accordance with the Company's policy and consistent
with the Executive's position and salary, in all plans and all Perquisites
applicable generally to other executives of the Company Unit.
5. Termination Payments. If the Company terminates or Constructively
Terminates the Executive's employment at any time during the Employment Period
for any reason other than Cause or Total Disability, the Company shall promptly
pay or cause to be paid to the Executive in a lump sum an amount equal to:
a. Twice the Executive's annual salary before deductions and deferrals at the
level thereof as of the day prior to the Triggering Event, plus the bonus
that would have been payable to the Executive (for the year in which
such termination or Constructive Termination occurs) under the GATX
Management Incentive Plan (the "MIP") as in effect on the day prior to
the Triggering Event, equal in amount to the product of (i) the
Executive's annual salary as in effect immediately prior to the
Triggering Event and (ii) the Executive's Target Bonus (as that term
is defined in the MIP); minus
b. Any amounts paid to the Executive in accordance with the Company's
severance pay policies.
In addition to the amount set forth above, the Company shall:
(1) Permit the Executive to continue the Executive's participation (or
provide equivalent coverage) in the Company Unit's medical, dental,
disability and life insurance programs provided under GATX's benefit
plans as in effect on the day prior to the Triggering Event until the
earlier to occur of (a) the second anniversary of the date as of which
the Executive's employment is terminated or Constructively Terminated
or (b) the date on which the Executive becomes eligible for coverage
under any other employee benefit plans providing substantially
equivalent benefits at substantially equivalent levels;
(2) Reimburse the Executive (to a maximum of five thousand dollars ($5,000)
per year) for financial and estate planning and tax return preparation
for the two (2) years immediately following the Executive's
termination or Constructive Termination of employment in accordance
with GATX's executive financial planning program in effect on the day
prior to a Triggering Event;
(3) Reimburse the Executive (to a maximum of thirty thousand dollars
($30,000)) for the cost of outplacement services plus up to one
thousand dollars ($1,000) of expenses incurred in seeking or obtaining
new employment.
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<PAGE>
6. Retirement Benefits. In addition to the foregoing, if the Executive
survives for two (2) years following such termination or Constructive
Termination of employment:
a. The Company shall pay or cause to be paid to the Executive (or in the
event of the Executive's death following the expiration of such two (2)
year period to the Executive's surviving spouse) a Retirement Income
Benefit (as hereinafter defined) calculated and paid as follows:
(1) The Retirement Income Benefit shall be an amount equal to the
difference, if any, between (a) the monthly benefit the Executive (or,
in the event of the Executive's death, the Executive's surviving
spouse) would have received as a monthly pension benefit under the
GATX Corporation Non-Contributory Pension Plan for Salaried Employees,
(the "Salaried Pension Plan") the GATX Corporation Excess Benefit
Plan, the GATX Corporation Supplemental Benefit Plan and any other
written agreement between the Executive and the Company regarding the
Executive's retirement, all as in effect on the day prior to the
Triggering Event, (hereinafter collectively, the "Pension Plan")
assuming the Executive's employment had terminated two (2) years
after the date of the Executive's termination or Constructive
Termination of employment, and accordingly the Executive had
accumulated two additional years of service credit under the Pension
Plan at a level of compensation calculated in accordance with the
immediately following sentence and (b) the amount, if any, the Executive
(or, in the event of the Executive's death, the Executive's surviving
spouse) actually receives as a monthly benefit under the Pension Plan.
For purposes of subparagraph (a) of this paragraph, the Executive's
compensation for each of the two additional years of assumed service
credit shall be equal to the level of the Executive's compensation as in
effect immediately prior to the Triggering Event, plus an amount equal to
the average of the Covered Bonuses (as defined in Section 2.13 of the
Salaried Pension Plan) paid to the Executive during the five (5) calendar
year period immediately preceding the Triggering Event.
(2) Payment of the Retirement Income Benefit shall be made in the same
manner, simultaneously with and in the same form as payments are, or
would have been, made to the Executive (or in the event of the
Executive's death to the Executive's surviving spouse) under the
Pension Plan, but shall commence no sooner than two (2) years following
the Executives' termination or Constructive Termination of employment.
Any election available to and validly executed by the Executive under
the Pension Plan as to either an optional form of payment or as to the
date on which benefits are to commence, shall be
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<PAGE>
applicable to the Retirement Income Benefit and shall be utilized in
calculating the amount of the Retirement Income Benefit.
b. The Company shall permit the Executive to participate in (or shall
provide equivalent coverage) on the same basis as other GATX employees
who have terminated their employment at approximately the same age and
after a substantially equivalent number of years of service in the
GATX Corporation Medical Plan and the GATX Corporation Life Insurance
Plan, both as in effect on the day prior to the Triggering Event. Such
benefits shall be paid at the same time, under the same conditions and
to the same extent as if the Executive's employment had continued for
two (2) years after the termination or Constructive Termination of the
Executive's employment.
Notwithstanding the foregoing, if the Executive would otherwise be entitled
to receive a Retirement Income Benefit hereunder but dies prior to the
expiration of a two (2) year period following termination or Constructive
Termination of the Executive's employment and leaves a surviving spouse,
such surviving spouse shall be entitled to receive such payments and
Perquisites as would be applicable to such surviving spouse under this
Agreement, the Pension Plan and all other GATX employee benefit plans and
policies in effect on the day prior to the Triggering Event, calculated and
payable in the same manner as if the Executive had been employed by the
Company on the Executive's date of death.
7. Payment in Lieu. Except with respect to (a) compensation applicable
to the Executive's employment prior to the termination or Constructive
Termination thereof, (b) amounts payable under the severance pay policies
described in paragraph 5(b) above, and (c) such compensation as may be
payable or rights as may be exercisable on termination of employment under
the GATX Salaried Employees Retirement Savings Plan, the Executive Deferred
Income Plans, the Management Incentive Plan, the GATX Corporation 1985 Long
Term Incentive Compensation Plan or other similar programs, all as in effect
on the day prior to the Triggering Event, the amounts payable to the
Executive under this Agreement shall be in lieu of any other amount payable
to the Executive by the Company by reason of the Executive's termination or
Constructive Termination of employment.
8. Confidentiality. During and after the Executive's employment, the
Executive will not divulge or appropriate to the Executive's own use or to
the use of others any secret or confidential information or knowledge
pertaining to the business of the Company or any of its subsidiaries or
affiliates obtained by the Executive during such employment.
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<PAGE>
9. Nonalienation. The interests of the Executive under the Agreement are
not subject to the claims of the Executive's creditors and may not otherwise
be voluntarily or involuntarily assigned, alienated or encumbered.
10. Tax Penalties. The Company will provide complete tax and compensation
data on a timely basis to the Executive and to an accounting firm
designated by the Executive to enable the Executive to determine the
extent, if any, to which the Executive's compensation under this
Agreement and all other compensation agreements, plans and programs of
the Company may be considered to be a parachute payment or excess
parachute payment under section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). In the event that any such compensation
is deemed to constitute an excess parachute payment that is subject to tax
under Section 4999 of the Code or any successor provision thereto (the
"Excise Tax"), the Company shall pay to the Executive an additional amount
(the "Gross-Up Amount") that, after payment of all Federal and state income
taxes thereof (assuming the Executive is at the highest marginal federal
and applicable state income tax rate in effect on the date of payment of
the Gross-Up Amount) and payment of the Excise Tax on the Gross-Up Amount,
is equal to the Excise Tax payable by the Executive on such excess parachute
payment. The Gross-Up Amount payable with respect to each excess parachute
payment shall be paid by the Company coincident with payment of such excess
parachute payment.
11. No Cumulation or Duplication of Benefits. The obligations of the Company
to make payments or provide benefits hereunder are the joint and several
obligations of the Company and the Company Units. Accordingly, if following the
termination or Constructive Termination of the Executive's employment the
Executive receives any form of compensation payments or benefits from the
Company or any Company Unit or from a successor thereto or affiliate thereof,
the amount of any such compensation or payment together with the fair market
value of any such benefits shall be deducted from any obligation of the Company
or applicable Company Unit to make payments or provide benefits to the
Executive under or by reason of this Agreement.
12. Reduction of Payments. Notwithstanding anything contained herein to the
contrary, any amounts payable hereunder shall be reduced by such amount as
may be necessary to make this agreement not unlawful under federal law.
13. Amendment. This Agreement may be amended by written agreement of
the parties without the consent of any other person and no person, other than
the parties hereto, shall have any rights under or interest in this Agreement
or the subject matter hereof.
14. Extension. The Board of Directors of GATX may, at any time prior to the
expiration or termination of this Agreement, extend the term of this Agreement
for
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<PAGE>
a period of up to two (2) years from the date on which the extension is
approved, without any further action on the part of the Executive.
15. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the heirs, executors and legal representatives of the Executive
and the successors and assigns of the Company and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the assets and business of any Company Unit. The Company
agrees that it will not effect the sale or other disposition of all or
substantially all of its assets unless either (a) the person or entity
acquiring the assets or a substantial portion of the assets shall expressly
assume by an instrument in writing all duties and obligations of the Company
under this Agreement or (b) the Company shall provide through the establishment
of a separate reserve for the payment in full of all amounts that are or may
be reasonably expected to become payable to the Executive under this Agreement.
16. Nonwaiver. The waiver by either party of a breach of this Agreement shall
not be construed as a waiver of any subsequent breach.
17. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the alleged breach thereof, shall be settled
by arbitration in the City of Chicago, Illinois in accordance with the laws
of the State of Illinois b arbitrators, one of whom shall be appointed by
the Company or any successor thereto, one by the Executive and the third by
the other two. If the other two arbitrators cannot agree on the appointment
of a third arbitrator, or if either party fails within thirty (30) days after
receipt of written demand to appoint an arbitrator, then such arbitrator shall
be appointed by the Dean of the Business School of the University of Chicago
or his delegate. The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators, which shall be as provided in this paragraph 17.
Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other
costs and expenses in connection with the enforcement of any and all of his
rights under this Agreement, the Executive shall be entitled to recover from
the Company reasonable attorney's fees and costs and expenses incurred by
the Executive in connection with the enforcement of said rights. Payments
shall be made to the Executive by the Company at the time these attorney's
fees and costs and expenses are incurred by the Executive. If, however, the
arbitrators should later determine that under the circumstances it was
unjust for the Company to have made any of these payments of attorney's fees
and costs and expenses to the Executive, the Executive shall repay any such
payments to the Company in accordance with the order of the arbitrators.
Any award of the arbitrators shall include interest at a rate or rates
considered just under the circumstances by the arbitrators.
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18. Termination of Agreement. This agreement shall terminate on December
31, 1997, provided, however, if prior to such date, but after January 1, 1996,
there shall occur either (a) a Change of Control or (b) a Disposition of a
Company Unit by which the Executive is primarily employed on the day prior
to such Disposition, this agreement shall remain in effect until two years
following the date of the first to occur of such Change of Control or
Disposition.
Termination of this Agreement shall not affect any rights that shall have
accrued to the Executive under this Agreement prior to the termination date.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and GATX
hascaused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary.
/s/ Ronald H. Zech
----------------------------------------
Executive
GATX CORPORATION
/s/ James J. Glasser
By -------------------------------------
Its Chairman of the Board
March 23, 1995
----------------------------------------
(Execution Date)
ATTEST:
/s/ Janice M. Alonso
- --------------------------------
Its Assistant Secretary
AGREEMENT FOR CONTINUED EMPLOYMENT FOLLOWING CHANGE
OF CONTROL OR DISPOSITION OF A SUBSIDIARY
This Agreement is made and entered into by and between GATX Corporation
("GATX") and David M. Edwards, (the "Executive") on the Execution Date
shown below, to be effective as of January 1, 1995.
W I T N E S S E T H
WHEREAS, GATX and the Executive desire to enter into this Agreement in order
to provide GATX and its consolidated subsidiaries stability of management
following a Change of Control or Disposition (as those terms are defined herein)
of GATX or one of its consolidated subsidiaries, to provide for the continued
employment of the Executive for a period of two years following the occurrence
of either such event, and to set forth the terms and conditions of such
continued employment and the obligations of the parties in the event of
termination thereof.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Definitions.
a. "Cause" means a willful and material breach of this Agreement which has
resulted or is likely to result in a material detriment to the financial
condition, business or prospects of GATX.
b. "Change of Control" means the occurrence of any of the following events:
(1) Receipt by GATX of a Schedule 13D report confirming that a person
or group owns beneficially twenty percent (20%) or more of the
outstanding voting stock of GATX.
(2) Any purchase under a non-GATX tender or exchange offer for stock
of GATX following which the offering person or group owns
beneficially twenty percent (20%) or more of such stock.
(3) Shareholder approval of any merger in which GATX is not the
surviving corporation or survives only as a subsidiary of another
corporation, consolidation or sale of all, or substantially all, of
GATX's assets in one transaction or in a series of transactions.
(4) A change in the majority of the Board of Directors of GATX not
recommended by the incumbent directors.
(The words "person" and "group", as used in this paragraph 1.b, shall have
the meanings ascribed to them under Section 13(d) of the Securities
Exchange Act of 1934.)
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<PAGE>
c. "Company" includes GATX, its consolidated subsidiaries, any former
subsidiary of GATX by which the Executive was primarily employed on the
day prior to the Triggering Event and any successor to GATX or such
subsidiary by purchase of assets or otherwise.
d. "Company Unit" means any corporation, included within the term
"Company."
e. "Constructive Termination" or "Constructively Terminates" means the
effecting of any of the following actions by the Company following which
the Executive terminates the Executive's employment by the Company:
(1) a significant reduction in the nature or scope of the Executive's
authority, duties, functions or responsibilities or a material
change in the location at which they are to be performed or the
imposition of unreasonable travel requirements;
(2) a reduction in the Executive's compensation from that provided to
the Executive immediately prior to the Triggering Event;
(3) a diminution in the Executive's eligibility to participate in bonus,
stock option, incentive award and other benefit plans from the level
at which the Executive was participating therein immediately prior to
the Triggering Event;
(4) a diminution in employee benefits (including, but not limited to
medical, dental, life insurance and disability plans) and other
Perquisites applicable to the Executive, from the level of benefits
and other Perquisites to which the Executive was entitled
immediately prior to the Triggering Event; and
(5) a reasonable determination by the Executive that, as a result of a
change in circumstances affecting the Company or its management,
the Executive is unable to exercise effectively the authorities,
duties, functions and responsibilities consistent with those
attributable to the Executive's position immediately prior to the
Triggering Event.
f. "Disposition" of a Company Unit means any transaction, including sale,
consolidation, merger or spin-off of any Company Unit, following which
GATX no longer owns fifty percent (50%) or more of the voting stock of
such Company Unit or the sale of all or substantially all of the assets of
such Company Unit.
g. "Employment Period" means the two (2) year period commencing on the
day of a Triggering Event and ending two years following such day.
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h. "Perquisites" includes not only those incidental emoluments of office
commonly included within the term, such as a company assigned car, club
membership and financial planning assistance, but also the benefits under
corporate employee benefit plans such as the GATX medical, life insurance
and Pension Plans (as defined herein) and other plans and agreements
relating thereto.
i. "Total Disability" means any disability that (1) entitles the Executive to
disability income benefits under the GATX Corporation Long Term Disability
Income Plan as in effect on the day prior to the Triggering Event and (2)
prevents the Executive, for the duration of the Employment Period, from
engaging in the same or comparable type of employment as that in which
the Executive was engaged on the day prior to the Triggering Event.
j. "Triggering Event" means the first to occur of a Change of Control or the
Disposition of the Company Unit by which the Executive was primarily
employed on the day prior to such Change of Control or Disposition.
2. Employment. This Agreement shall have no effect on, nor shall any of its
provisions apply to, the Executive's employment or termination thereof that
occurs prior to the occurrence of a Triggering Event. However, if the Executive
is employed by the Company on the day prior to a Triggering Event, the Company
shall continue to employ the Executive and the Executive shall remain in the
employ of the Company for the duration of the Employment Period. Provided,
however, subject only to the provisions of paragraphs five (5) and six (6)
below, the Company may, at any time, terminate the employment of the
Executive at will.
3. Performance of Duties. During the Executive's employment by the
Company, the Executive shall devote his or her best efforts and full business
time exclusively to the business affairs and interests of the Company and
shall faithfully and efficiently perform such duties, consistent with the
status of the Executive's position, as may be assigned to the Executive from
time to time by the Chief Executive Officer of the Company or the Chief
Executive Officer's delegate.
4. Compensation. During the Executive's employment by the Company, he or
she shall receive a salary in such amount as may be established from time to
time by the Company Unit by which the Executive is primarily employed and
shall be
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entitled to participate, in accordance with the Company's policy and consistent
with the Executive's position and salary, in all plans and all Perquisites
applicable generally to other executives of the Company Unit.
5. Termination Payments. If the Company terminates or Constructively
Terminates the Executive's employment at any time during the Employment Period
for any reason other than Cause or Total Disability, the Company shall promptly
pay or cause to be paid to the Executive in a lump sum an amount equal to:
a. Twice the Executive's annual salary before deductions and deferrals at the
level thereof as of the day prior to the Triggering Event, plus the bonus
that would have been payable to the Executive (for the year in which
such termination or Constructive Termination occurs) under the GATX
Management Incentive Plan (the "MIP") as in effect on the day prior to
the Triggering Event, equal in amount to the product of (i) the
Executive's annual salary as in effect immediately prior to the
Triggering Event and (ii) the Executive's Target Bonus (as that term
is defined in the MIP); minus
b. Any amounts paid to the Executive in accordance with the Company's
severance pay policies.
In addition to the amount set forth above, the Company shall:
(1) Permit the Executive to continue the Executive's participation (or
provide equivalent coverage) in the Company Unit's medical, dental,
disability and life insurance programs provided under GATX's benefit
plans as in effect on the day prior to the Triggering Event until the
earlier to occur of (a) the second anniversary of the date as of which
the Executive's employment is terminated or Constructively Terminated
or (b) the date on which the Executive becomes eligible for coverage
under any other employee benefit plans providing substantially
equivalent benefits at substantially equivalent levels;
(2) Reimburse the Executive (to a maximum of five thousand dollars ($5,000)
per year) for financial and estate planning and tax return preparation
for the two (2) years immediately following the Executive's
termination or Constructive Termination of employment in accordance
with GATX's executive financial planning program in effect on the day
prior to a Triggering Event;
(3) Reimburse the Executive (to a maximum of thirty thousand dollars
($30,000)) for the cost of outplacement services plus up to one
thousand dollars ($1,000) of expenses incurred in seeking or obtaining
new employment.
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6. Retirement Benefits. In addition to the foregoing, if the Executive
survives for two (2) years following such termination or Constructive
Termination of employment:
a. The Company shall pay or cause to be paid to the Executive (or in the
event of the Executive's death following the expiration of such two (2)
year period to the Executive's surviving spouse) a Retirement Income
Benefit (as hereinafter defined) calculated and paid as follows:
(1) The Retirement Income Benefit shall be an amount equal to the
difference, if any, between (a) the monthly benefit the Executive (or,
in the event of the Executive's death, the Executive's surviving
spouse) would have received as a monthly pension benefit under the
GATX Corporation Non-Contributory Pension Plan for Salaried Employees,
(the "Salaried Pension Plan") the GATX Corporation Excess Benefit
Plan, the GATX Corporation Supplemental Benefit Plan and any other
written agreement between the Executive and the Company regarding the
Executive's retirement, all as in effect on the day prior to the
Triggering Event, (hereinafter collectively, the "Pension Plan")
assuming the Executive's employment had terminated two (2) years
after the date of the Executive's termination or Constructive
Termination of employment, and accordingly the Executive had
accumulated two additional years of service credit under the Pension
Plan at a level of compensation calculated in accordance with the
immediately following sentence and (b) the amount, if any, the Executive
(or, in the event of the Executive's death, the Executive's surviving
spouse) actually receives as a monthly benefit under the Pension Plan.
For purposes of subparagraph (a) of this paragraph, the Executive's
compensation for each of the two additional years of assumed service
credit shall be equal to the level of the Executive's compensation as in
effect immediately prior to the Triggering Event, plus an amount equal to
the average of the Covered Bonuses (as defined in Section 2.13 of the
Salaried Pension Plan) paid to the Executive during the five (5) calendar
year period immediately preceding the Triggering Event.
(2) Payment of the Retirement Income Benefit shall be made in the same
manner, simultaneously with and in the same form as payments are, or
would have been, made to the Executive (or in the event of the
Executive's death to the Executive's surviving spouse) under the
Pension Plan, but shall commence no sooner than two (2) years following
the Executives' termination or Constructive Termination of employment.
Any election available to and validly executed by the Executive under
the Pension Plan as to either an optional form of payment or as to the
date on which benefits are to commence, shall be
-6-
<PAGE>
applicable to the Retirement Income Benefit and shall be utilized in
calculating the amount of the Retirement Income Benefit.
b. The Company shall permit the Executive to participate in (or shall
provide equivalent coverage) on the same basis as other GATX employees
who have terminated their employment at approximately the same age and
after a substantially equivalent number of years of service in the
GATX Corporation Medical Plan and the GATX Corporation Life Insurance
Plan, both as in effect on the day prior to the Triggering Event. Such
benefits shall be paid at the same time, under the same conditions and
to the same extent as if the Executive's employment had continued for
two (2) years after the termination or Constructive Termination of the
Executive's employment.
Notwithstanding the foregoing, if the Executive would otherwise be entitled
to receive a Retirement Income Benefit hereunder but dies prior to the
expiration of a two (2) year period following termination or Constructive
Termination of the Executive's employment and leaves a surviving spouse,
such surviving spouse shall be entitled to receive such payments and
Perquisites as would be applicable to such surviving spouse under this
Agreement, the Pension Plan and all other GATX employee benefit plans and
policies in effect on the day prior to the Triggering Event, calculated and
payable in the same manner as if the Executive had been employed by the
Company on the Executive's date of death.
7. Payment in Lieu. Except with respect to (a) compensation applicable
to the Executive's employment prior to the termination or Constructive
Termination thereof, (b) amounts payable under the severance pay policies
described in paragraph 5(b) above, and (c) such compensation as may be
payable or rights as may be exercisable on termination of employment under
the GATX Salaried Employees Retirement Savings Plan, the Executive Deferred
Income Plans, the Management Incentive Plan, the GATX Corporation 1985 Long
Term Incentive Compensation Plan or other similar programs, all as in effect
on the day prior to the Triggering Event, the amounts payable to the
Executive under this Agreement shall be in lieu of any other amount payable
to the Executive by the Company by reason of the Executive's termination or
Constructive Termination of employment.
8. Confidentiality. During and after the Executive's employment, the
Executive will not divulge or appropriate to the Executive's own use or to
the use of others any secret or confidential information or knowledge
pertaining to the business of the Company or any of its subsidiaries or
affiliates obtained by the Executive during such employment.
-7-
<PAGE>
9. Nonalienation. The interests of the Executive under the Agreement are
not subject to the claims of the Executive's creditors and may not otherwise
be voluntarily or involuntarily assigned, alienated or encumbered.
10. Tax Penalties. The Company will provide complete tax and compensation
data on a timely basis to the Executive and to an accounting firm
designated by the Executive to enable the Executive to determine the
extent, if any, to which the Executive's compensation under this
Agreement and all other compensation agreements, plans and programs of
the Company may be considered to be a parachute payment or excess
parachute payment under section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). In the event that any such compensation
is deemed to constitute an excess parachute payment that is subject to tax
under Section 4999 of the Code or any successor provision thereto (the
"Excise Tax"), the Company shall pay to the Executive an additional amount
(the "Gross-Up Amount") that, after payment of all Federal and state income
taxes thereof (assuming the Executive is at the highest marginal federal
and applicable state income tax rate in effect on the date of payment of
the Gross-Up Amount) and payment of the Excise Tax on the Gross-Up Amount,
is equal to the Excise Tax payable by the Executive on such excess parachute
payment. The Gross-Up Amount payable with respect to each excess parachute
payment shall be paid by the Company coincident with payment of such excess
parachute payment.
11. No Cumulation or Duplication of Benefits. The obligations of the Company
to make payments or provide benefits hereunder are the joint and several
obligations of the Company and the Company Units. Accordingly, if following the
termination or Constructive Termination of the Executive's employment the
Executive receives any form of compensation payments or benefits from the
Company or any Company Unit or from a successor thereto or affiliate thereof,
the amount of any such compensation or payment together with the fair market
value of any such benefits shall be deducted from any obligation of the Company
or applicable Company Unit to make payments or provide benefits to the
Executive under or by reason of this Agreement.
12. Reduction of Payments. Notwithstanding anything contained herein to the
contrary, any amounts payable hereunder shall be reduced by such amount as
may be necessary to make this agreement not unlawful under federal law.
13. Amendment. This Agreement may be amended by written agreement of
the parties without the consent of any other person and no person, other than
the parties hereto, shall have any rights under or interest in this Agreement
or the subject matter hereof.
14. Extension. The Board of Directors of GATX may, at any time prior to the
expiration or termination of this Agreement, extend the term of this Agreement
for
-8-
<PAGE>
a period of up to two (2) years from the date on which the extension is
approved, without any further action on the part of the Executive.
15. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the heirs, executors and legal representatives of the Executive
and the successors and assigns of the Company and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the assets and business of any Company Unit. The Company
agrees that it will not effect the sale or other disposition of all or
substantially all of its assets unless either (a) the person or entity
acquiring the assets or a substantial portion of the assets shall expressly
assume by an instrument in writing all duties and obligations of the Company
under this Agreement or (b) the Company shall provide through the establishment
of a separate reserve for the payment in full of all amounts that are or may
be reasonably expected to become payable to the Executive under this Agreement.
16. Nonwaiver. The waiver by either party of a breach of this Agreement shall
not be construed as a waiver of any subsequent breach.
17. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the alleged breach thereof, shall be settled
by arbitration in the City of Chicago, Illinois in accordance with the laws
of the State of Illinois b arbitrators, one of whom shall be appointed by
the Company or any successor thereto, one by the Executive and the third by
the other two. If the other two arbitrators cannot agree on the appointment
of a third arbitrator, or if either party fails within thirty (30) days after
receipt of written demand to appoint an arbitrator, then such arbitrator shall
be appointed by the Dean of the Business School of the University of Chicago
or his delegate. The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators, which shall be as provided in this paragraph 17.
Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other
costs and expenses in connection with the enforcement of any and all of his
rights under this Agreement, the Executive shall be entitled to recover from
the Company reasonable attorney's fees and costs and expenses incurred by
the Executive in connection with the enforcement of said rights. Payments
shall be made to the Executive by the Company at the time these attorney's
fees and costs and expenses are incurred by the Executive. If, however, the
arbitrators should later determine that under the circumstances it was
unjust for the Company to have made any of these payments of attorney's fees
and costs and expenses to the Executive, the Executive shall repay any such
payments to the Company in accordance with the order of the arbitrators.
Any award of the arbitrators shall include interest at a rate or rates
considered just under the circumstances by the arbitrators.
-9-
<PAGE>
18. Termination of Agreement. This agreement shall terminate on December
31, 1997, provided, however, if prior to such date, but after January 1, 1996,
there shall occur either (a) a Change of Control or (b) a Disposition of a
Company Unit by which the Executive is primarily employed on the day prior
to such Disposition, this agreement shall remain in effect until two years
following the date of the first to occur of such Change of Control or
Disposition.
Termination of this Agreement shall not affect any rights that shall have
accrued to the Executive under this Agreement prior to the termination date.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and GATX
hascaused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary.
/s/ David M. Edwards
----------------------------------------
Executive
GATX CORPORATION
/s/ James J. Glasser
By -------------------------------------
Its Chairman of the Board
March 23, 1995
----------------------------------------
(Execution Date)
ATTEST:
/s/ Janice Alonso
- --------------------------------
Its Assistant Secretary
AGREEMENT FOR CONTINUED EMPLOYMENT FOLLOWING CHANGE
OF CONTROL OR DISPOSITION OF A SUBSIDIARY
This Agreement is made and entered into by and between GATX Corporation
("GATX") and William L. Chambers, (the "Executive") on the Execution Date
shown below, to be effective as of January 1, 1995.
W I T N E S S E T H
WHEREAS, GATX and the Executive desire to enter into this Agreement in order
to provide GATX and its consolidated subsidiaries stability of management
following a Change of Control or Disposition (as those terms are defined herein)
of GATX or one of its consolidated subsidiaries, to provide for the continued
employment of the Executive for a period of two years following the occurrence
of either such event, and to set forth the terms and conditions of such
continued employment and the obligations of the parties in the event of
termination thereof.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Definitions.
a. "Cause" means a willful and material breach of this Agreement which has
resulted or is likely to result in a material detriment to the financial
condition, business or prospects of GATX.
b. "Change of Control" means the occurrence of any of the following events:
(1) Receipt by GATX of a Schedule 13D report confirming that a person
or group owns beneficially twenty percent (20%) or more of the
outstanding voting stock of GATX.
(2) Any purchase under a non-GATX tender or exchange offer for stock
of GATX following which the offering person or group owns
beneficially twenty percent (20%) or more of such stock.
(3) Shareholder approval of any merger in which GATX is not the
surviving corporation or survives only as a subsidiary of another
corporation, consolidation or sale of all, or substantially all, of
GATX's assets in one transaction or in a series of transactions.
(4) A change in the majority of the Board of Directors of GATX not
recommended by the incumbent directors.
(The words "person" and "group", as used in this paragraph 1.b, shall have
the meanings ascribed to them under Section 13(d) of the Securities
Exchange Act of 1934.)
-2-
<PAGE>
c. "Company" includes GATX, its consolidated subsidiaries, any former
subsidiary of GATX by which the Executive was primarily employed on the
day prior to the Triggering Event and any successor to GATX or such
subsidiary by purchase of assets or otherwise.
d. "Company Unit" means any corporation, included within the term
"Company."
e. "Constructive Termination" or "Constructively Terminates" means the
effecting of any of the following actions by the Company following which
the Executive terminates the Executive's employment by the Company:
(1) a significant reduction in the nature or scope of the Executive's
authority, duties, functions or responsibilities or a material
change in the location at which they are to be performed or the
imposition of unreasonable travel requirements;
(2) a reduction in the Executive's compensation from that provided to
the Executive immediately prior to the Triggering Event;
(3) a diminution in the Executive's eligibility to participate in bonus,
stock option, incentive award and other benefit plans from the level
at which the Executive was participating therein immediately prior to
the Triggering Event;
(4) a diminution in employee benefits (including, but not limited to
medical, dental, life insurance and disability plans) and other
Perquisites applicable to the Executive, from the level of benefits
and other Perquisites to which the Executive was entitled
immediately prior to the Triggering Event; and
(5) a reasonable determination by the Executive that, as a result of a
change in circumstances affecting the Company or its management,
the Executive is unable to exercise effectively the authorities,
duties, functions and responsibilities consistent with those
attributable to the Executive's position immediately prior to the
Triggering Event.
f. "Disposition" of a Company Unit means any transaction, including sale,
consolidation, merger or spin-off of any Company Unit, following which
GATX no longer owns fifty percent (50%) or more of the voting stock of
such Company Unit or the sale of all or substantially all of the assets of
such Company Unit.
g. "Employment Period" means the two (2) year period commencing on the
day of a Triggering Event and ending two years following such day.
-3-
<PAGE>
h. "Perquisites" includes not only those incidental emoluments of office
commonly included within the term, such as a company assigned car, club
membership and financial planning assistance, but also the benefits under
corporate employee benefit plans such as the GATX medical, life insurance
and Pension Plans (as defined herein) and other plans and agreements
relating thereto.
i. "Total Disability" means any disability that (1) entitles the Executive to
disability income benefits under the GATX Corporation Long Term Disability
Income Plan as in effect on the day prior to the Triggering Event and (2)
prevents the Executive, for the duration of the Employment Period, from
engaging in the same or comparable type of employment as that in which
the Executive was engaged on the day prior to the Triggering Event.
j. "Triggering Event" means the first to occur of a Change of Control or the
Disposition of the Company Unit by which the Executive was primarily
employed on the day prior to such Change of Control or Disposition.
2. Employment. This Agreement shall have no effect on, nor shall any of its
provisions apply to, the Executive's employment or termination thereof that
occurs prior to the occurrence of a Triggering Event. However, if the Executive
is employed by the Company on the day prior to a Triggering Event, the Company
shall continue to employ the Executive and the Executive shall remain in the
employ of the Company for the duration of the Employment Period. Provided,
however, subject only to the provisions of paragraphs five (5) and six (6)
below, the Company may, at any time, terminate the employment of the
Executive at will.
3. Performance of Duties. During the Executive's employment by the
Company, the Executive shall devote his or her best efforts and full business
time exclusively to the business affairs and interests of the Company and
shall faithfully and efficiently perform such duties, consistent with the
status of the Executive's position, as may be assigned to the Executive from
time to time by the Chief Executive Officer of the Company or the Chief
Executive Officer's delegate.
4. Compensation. During the Executive's employment by the Company, he or
she shall receive a salary in such amount as may be established from time to
time by the Company Unit by which the Executive is primarily employed and
shall be
-4-
<PAGE>
entitled to participate, in accordance with the Company's policy and consistent
with the Executive's position and salary, in all plans and all Perquisites
applicable generally to other executives of the Company Unit.
5. Termination Payments. If the Company terminates or Constructively
Terminates the Executive's employment at any time during the Employment Period
for any reason other than Cause or Total Disability, the Company shall promptly
pay or cause to be paid to the Executive in a lump sum an amount equal to:
a. Twice the Executive's annual salary before deductions and deferrals at the
level thereof as of the day prior to the Triggering Event, plus the bonus
that would have been payable to the Executive (for the year in which
such termination or Constructive Termination occurs) under the GATX
Management Incentive Plan (the "MIP") as in effect on the day prior to
the Triggering Event, equal in amount to the product of (i) the
Executive's annual salary as in effect immediately prior to the
Triggering Event and (ii) the Executive's Target Bonus (as that term
is defined in the MIP); minus
b. Any amounts paid to the Executive in accordance with the Company's
severance pay policies.
In addition to the amount set forth above, the Company shall:
(1) Permit the Executive to continue the Executive's participation (or
provide equivalent coverage) in the Company Unit's medical, dental,
disability and life insurance programs provided under GATX's benefit
plans as in effect on the day prior to the Triggering Event until the
earlier to occur of (a) the second anniversary of the date as of which
the Executive's employment is terminated or Constructively Terminated
or (b) the date on which the Executive becomes eligible for coverage
under any other employee benefit plans providing substantially
equivalent benefits at substantially equivalent levels;
(2) Reimburse the Executive (to a maximum of five thousand dollars ($5,000)
per year) for financial and estate planning and tax return preparation
for the two (2) years immediately following the Executive's
termination or Constructive Termination of employment in accordance
with GATX's executive financial planning program in effect on the day
prior to a Triggering Event;
(3) Reimburse the Executive (to a maximum of thirty thousand dollars
($30,000)) for the cost of outplacement services plus up to one
thousand dollars ($1,000) of expenses incurred in seeking or obtaining
new employment.
-5-
<PAGE>
6. Retirement Benefits. In addition to the foregoing, if the Executive
survives for two (2) years following such termination or Constructive
Termination of employment:
a. The Company shall pay or cause to be paid to the Executive (or in the
event of the Executive's death following the expiration of such two (2)
year period to the Executive's surviving spouse) a Retirement Income
Benefit (as hereinafter defined) calculated and paid as follows:
(1) The Retirement Income Benefit shall be an amount equal to the
difference, if any, between (a) the monthly benefit the Executive (or,
in the event of the Executive's death, the Executive's surviving
spouse) would have received as a monthly pension benefit under the
GATX Corporation Non-Contributory Pension Plan for Salaried Employees,
(the "Salaried Pension Plan") the GATX Corporation Excess Benefit
Plan, the GATX Corporation Supplemental Benefit Plan and any other
written agreement between the Executive and the Company regarding the
Executive's retirement, all as in effect on the day prior to the
Triggering Event, (hereinafter collectively, the "Pension Plan")
assuming the Executive's employment had terminated two (2) years
after the date of the Executive's termination or Constructive
Termination of employment, and accordingly the Executive had
accumulated two additional years of service credit under the Pension
Plan at a level of compensation calculated in accordance with the
immediately following sentence and (b) the amount, if any, the Executive
(or, in the event of the Executive's death, the Executive's surviving
spouse) actually receives as a monthly benefit under the Pension Plan.
For purposes of subparagraph (a) of this paragraph, the Executive's
compensation for each of the two additional years of assumed service
credit shall be equal to the level of the Executive's compensation as in
effect immediately prior to the Triggering Event, plus an amount equal to
the average of the Covered Bonuses (as defined in Section 2.13 of the
Salaried Pension Plan) paid to the Executive during the five (5) calendar
year period immediately preceding the Triggering Event.
(2) Payment of the Retirement Income Benefit shall be made in the same
manner, simultaneously with and in the same form as payments are, or
would have been, made to the Executive (or in the event of the
Executive's death to the Executive's surviving spouse) under the
Pension Plan, but shall commence no sooner than two (2) years following
the Executives' termination or Constructive Termination of employment.
Any election available to and validly executed by the Executive under
the Pension Plan as to either an optional form of payment or as to the
date on which benefits are to commence, shall be
-6-
<PAGE>
applicable to the Retirement Income Benefit and shall be utilized in
calculating the amount of the Retirement Income Benefit.
b. The Company shall permit the Executive to participate in (or shall
provide equivalent coverage) on the same basis as other GATX employees
who have terminated their employment at approximately the same age and
after a substantially equivalent number of years of service in the
GATX Corporation Medical Plan and the GATX Corporation Life Insurance
Plan, both as in effect on the day prior to the Triggering Event. Such
benefits shall be paid at the same time, under the same conditions and
to the same extent as if the Executive's employment had continued for
two (2) years after the termination or Constructive Termination of the
Executive's employment.
Notwithstanding the foregoing, if the Executive would otherwise be entitled
to receive a Retirement Income Benefit hereunder but dies prior to the
expiration of a two (2) year period following termination or Constructive
Termination of the Executive's employment and leaves a surviving spouse,
such surviving spouse shall be entitled to receive such payments and
Perquisites as would be applicable to such surviving spouse under this
Agreement, the Pension Plan and all other GATX employee benefit plans and
policies in effect on the day prior to the Triggering Event, calculated and
payable in the same manner as if the Executive had been employed by the
Company on the Executive's date of death.
7. Payment in Lieu. Except with respect to (a) compensation applicable
to the Executive's employment prior to the termination or Constructive
Termination thereof, (b) amounts payable under the severance pay policies
described in paragraph 5(b) above, and (c) such compensation as may be
payable or rights as may be exercisable on termination of employment under
the GATX Salaried Employees Retirement Savings Plan, the Executive Deferred
Income Plans, the Management Incentive Plan, the GATX Corporation 1985 Long
Term Incentive Compensation Plan or other similar programs, all as in effect
on the day prior to the Triggering Event, the amounts payable to the
Executive under this Agreement shall be in lieu of any other amount payable
to the Executive by the Company by reason of the Executive's termination or
Constructive Termination of employment.
8. Confidentiality. During and after the Executive's employment, the
Executive will not divulge or appropriate to the Executive's own use or to
the use of others any secret or confidential information or knowledge
pertaining to the business of the Company or any of its subsidiaries or
affiliates obtained by the Executive during such employment.
-7-
<PAGE>
9. Nonalienation. The interests of the Executive under the Agreement are
not subject to the claims of the Executive's creditors and may not otherwise
be voluntarily or involuntarily assigned, alienated or encumbered.
10. Tax Penalties. The Company will provide complete tax and compensation
data on a timely basis to the Executive and to an accounting firm
designated by the Executive to enable the Executive to determine the
extent, if any, to which the Executive's compensation under this
Agreement and all other compensation agreements, plans and programs of
the Company may be considered to be a parachute payment or excess
parachute payment under section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). In the event that any such compensation
is deemed to constitute an excess parachute payment that is subject to tax
under Section 4999 of the Code or any successor provision thereto (the
"Excise Tax"), the Company shall pay to the Executive an additional amount
(the "Gross-Up Amount") that, after payment of all Federal and state income
taxes thereof (assuming the Executive is at the highest marginal federal
and applicable state income tax rate in effect on the date of payment of
the Gross-Up Amount) and payment of the Excise Tax on the Gross-Up Amount,
is equal to the Excise Tax payable by the Executive on such excess parachute
payment. The Gross-Up Amount payable with respect to each excess parachute
payment shall be paid by the Company coincident with payment of such excess
parachute payment.
11. No Cumulation or Duplication of Benefits. The obligations of the Company
to make payments or provide benefits hereunder are the joint and several
obligations of the Company and the Company Units. Accordingly, if following the
termination or Constructive Termination of the Executive's employment the
Executive receives any form of compensation payments or benefits from the
Company or any Company Unit or from a successor thereto or affiliate thereof,
the amount of any such compensation or payment together with the fair market
value of any such benefits shall be deducted from any obligation of the Company
or applicable Company Unit to make payments or provide benefits to the
Executive under or by reason of this Agreement.
12. Reduction of Payments. Notwithstanding anything contained herein to the
contrary, any amounts payable hereunder shall be reduced by such amount as
may be necessary to make this agreement not unlawful under federal law.
13. Amendment. This Agreement may be amended by written agreement of
the parties without the consent of any other person and no person, other than
the parties hereto, shall have any rights under or interest in this Agreement
or the subject matter hereof.
14. Extension. The Board of Directors of GATX may, at any time prior to the
expiration or termination of this Agreement, extend the term of this Agreement
for
-8-
<PAGE>
a period of up to two (2) years from the date on which the extension is
approved, without any further action on the part of the Executive.
15. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the heirs, executors and legal representatives of the Executive
and the successors and assigns of the Company and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the assets and business of any Company Unit. The Company
agrees that it will not effect the sale or other disposition of all or
substantially all of its assets unless either (a) the person or entity
acquiring the assets or a substantial portion of the assets shall expressly
assume by an instrument in writing all duties and obligations of the Company
under this Agreement or (b) the Company shall provide through the establishment
of a separate reserve for the payment in full of all amounts that are or may
be reasonably expected to become payable to the Executive under this Agreement.
16. Nonwaiver. The waiver by either party of a breach of this Agreement shall
not be construed as a waiver of any subsequent breach.
17. Resolution of Disputes. Any controversy or claim arising out of or
relating to this Agreement or the alleged breach thereof, shall be settled
by arbitration in the City of Chicago, Illinois in accordance with the laws
of the State of Illinois b arbitrators, one of whom shall be appointed by
the Company or any successor thereto, one by the Executive and the third by
the other two. If the other two arbitrators cannot agree on the appointment
of a third arbitrator, or if either party fails within thirty (30) days after
receipt of written demand to appoint an arbitrator, then such arbitrator shall
be appointed by the Dean of the Business School of the University of Chicago
or his delegate. The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except with respect to the
selection of arbitrators, which shall be as provided in this paragraph 17.
Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or incur other
costs and expenses in connection with the enforcement of any and all of his
rights under this Agreement, the Executive shall be entitled to recover from
the Company reasonable attorney's fees and costs and expenses incurred by
the Executive in connection with the enforcement of said rights. Payments
shall be made to the Executive by the Company at the time these attorney's
fees and costs and expenses are incurred by the Executive. If, however, the
arbitrators should later determine that under the circumstances it was
unjust for the Company to have made any of these payments of attorney's fees
and costs and expenses to the Executive, the Executive shall repay any such
payments to the Company in accordance with the order of the arbitrators.
Any award of the arbitrators shall include interest at a rate or rates
considered just under the circumstances by the arbitrators.
-9-
<PAGE>
18. Termination of Agreement. This agreement shall terminate on December
31, 1997, provided, however, if prior to such date, but after January 1, 1996,
there shall occur either (a) a Change of Control or (b) a Disposition of a
Company Unit by which the Executive is primarily employed on the day prior
to such Disposition, this agreement shall remain in effect until two years
following the date of the first to occur of such Change of Control or
Disposition.
Termination of this Agreement shall not affect any rights that shall have
accrued to the Executive under this Agreement prior to the termination date.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and GATX
hascaused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary.
/s/ William L. Chambers
----------------------------------------
Executive
GATX CORPORATION
/s/ James J. Glasser
By -------------------------------------
Its Chairman of the Board
March 23, 1995
----------------------------------------
(Execution Date)
ATTEST:
/s/ Janice M. Alonso
- --------------------------------
Its Assistant Secretary
Exhibit 11A
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
In Millions, Except Per Share Amounts
Three Months Ended
March 31
-------------------
1995 1994
------- ------
<S> <C> <C>
Average number of shares of Common
Stock outstanding........................ 19.9 19.8
Shares issuable upon assumed exercise of stock
options, reduced by the number of shares which
could have been purchased with the proceeds
from exercise of such
options.................................... .4 .3
----- -----
Total...................................... 20.3 20.1
===== =====
Net income................................. $ 25.7 $ 20.2
Deduct - Dividends paid and accrued on
Preferred Stock.......................... 3.3 3.3
Net income, as adjusted.................... $ 22.4 $ 16.9
------- -------
Net income per share....................... $ 1.11 $ .84
</TABLE>
-11-
<PAGE>
Exhibit 11B
<TABLE>
<CAPTION>
GATX CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS
ASSUMING FULL DILUTION
In Millions, Except Per Share Amounts
Three Months Ended
March 31
------------------
1995 1994
------- ------
<S> <C> <C>
Average number of shares used to
compute primary earnings per share........ 20.3 20.1
Common Stock issuable upon assumed
conversion of Preferred Stock............. 4.0 4.0
------ -----
Total..................................... 24.3 24.1
====== =====
Net income, as adjusted per primary
computation............................... $ 22.4 $ 16.9
Add - Dividends paid and accrued on Preferred
Stock..................................... 3.3 3.3
------- ------
Net income, as adjusted................... $ 25.7 $ 20.2
======= =======
Net income per share, assuming full
dilution.................................. $ 1.06 $ .84
======= =======
</TABLE>
-12-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Income Statement of GATX and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 799<F1>
<ALLOWANCES> 95
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 3720
<DEPRECIATION> 1469
<TOTAL-ASSETS> 3644
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 1792<F3>
<COMMON> 14
0
3
<OTHER-SE> 665
<TOTAL-LIABILITY-AND-EQUITY> 3644
<SALES> 0
<TOTAL-REVENUES> 288
<CGS> 0
<TOTAL-COSTS> 137<F4>
<OTHER-EXPENSES> 41<F5>
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 34<F6>
<INCOME-TAX> 15
<INCOME-CONTINUING> 26
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.06
<FN>
<F1>Receivables consists of three components: Trade Accounts of 83 million,
Finance Leases of 498 million and Secured Loans of 218 million.
<F2>Not applicable because GATX has an unclassified balance sheet.
<F3>Bonds consists of two components: Long-term Debt of 1,543 million and
Capital Lease Obligations of 249 million. Short-term Debt is not included in
this value.
<F4>Total Costs represents Operating Expenses on the Consolidated Income
Statement.
<F5>This value represents Provision for Depreciation and Amortization on the
Consolidated Income Statement.
<F6>This value represents Income Before Income Taxes and Equity in Net
Earnings of Affiliated Companies.
</FN>
</TABLE>
