<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. __)
[X] Filed by the Registrant
[ ] Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section
240.14a-12
PAUL MUELLER COMPANY
- ---------------------------------------------------------------------
(name of registrant as specified in its charter)
Donald E. Golik, Senior Vice President and CFO
- ---------------------------------------------------------------------
(name of person(s) filing proxy statement)
Payment of filing fee (check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction ap-
plies: ______________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined): _________________________________________
(4) Proposed maximum aggregate value of transaction: ____________
(5) Total fee paid: _____________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the off-
setting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount previously paid: _____________________________________
(2) Form, Schedule or Registration Statement number: ____________
(3) Filing party: _______________________________________________
(4) Date filed: _________________________________________________
<PAGE> 2
MUELLER (Registered)
PAUL MUELLER COMPANY
P.O. BOX 828 / SPRINGFIELD, MISSOURI, U.S.A. 65801
- ---------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
(MAY 3, 1999)
- ---------------------------------------------------------------------
Notice is hereby given that the annual meeting of shareholders of Paul
Mueller Company, a Missouri corporation, will be held at the offices
of the Company, 1600 West Phelps Street, Springfield, Missouri 65802,
on Monday, May 3, 1999, commencing at 10:00 a.m. on that day, and
thereafter as it may from time to time be adjourned, to consider and
act upon the following:
1. To elect three (3) Class II directors for a term of three (3)
years expiring at the annual meeting to be held in 2002 and until
their respective successors are duly elected and qualified.
2. To act upon a proposal to approve the Company's 1999 Long-Term
Incentive Plan.
3. To transact such other business as may properly come before the
meeting or any postponement, adjournment or adjournments thereof.
The Board of Directors of the Company has fixed the close of business
on March 12, 1999, as the record date for the determination of share-
holders entitled to notice of and to vote at the annual meeting or any
postponement, adjournment or adjournments thereof.
Shareholders who are unable to attend the meeting but who wish their
shares to be voted may vote by proxy. A form of proxy, which has
been prepared by the Board of Directors of the Company, and a return
envelope are enclosed. Since it is important that your shares be
represented at the meeting, you are requested to sign, date and return
the proxy in the enclosed envelope as promptly as possible. Your
proxy may be revoked at any time before it is exercised and will not
be used if you attend the meeting and vote in person. If your shares
are held of record by a broker, bank, or other nominee ("Street
Name"), you will need to obtain from the record holder and bring to
the meeting a proxy, issued in your name, authorizing you to vote the
shares.
By order of the Board of Directors.
DONALD E. GOLIK
Secretary
Springfield, Missouri
March 26, 1999
<PAGE> 3
MUELLER (Registered)
PAUL MUELLER COMPANY
-------------------
PROXY STATEMENT
-------------------
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES. The enclosed proxy is being
solicited on behalf of the Board of Directors of Paul Mueller Company
(the Company) for use at the annual meeting of the shareholders to be
held on May 3, 1999, and at any postponement, adjournment, or adjourn-
ments thereof. Any proxy given does not affect the right to vote in
person at the meeting and may be revoked at any time before it is
exercised by notifying Donald E. Golik, Secretary, by mail, telegram,
facsimile or appearing at the meeting in person and requesting a
ballot. This Proxy Statement and the proxy were first mailed to
shareholders on or about March 26, 1999.
EXPENSE OF SOLICITATION. All expenses of solicitation will be borne
by the Company, including the preparation, assembly, printing, and
mailing of this Proxy Statement, the accompanying proxy, and any
additional information furnished to shareholders. In addition to
solicitations by mail, employees and directors of the Company may solicit
proxies in person or by telephone. The Company does not
expect to pay any compensation for the solicitation of proxies. The
Company will reimburse banks, brokers and other custodians, nominees
or fiduciaries for reasonable expenses incurred in forwarding proxy
material to beneficial owners.
VOTING OF PROXIES. Shares represented by a proxy given pursuant to
this solicitation will be voted at the meeting equally in favor of the
election, as directors of the Company, of the nominees hereinafter
named, and for the approval of the Company's Long-Term Incentive Plan,
unless directed to the contrary by the proxy; provided, however, that
if any other candidate for director is proposed at the annual meeting
by persons other than the Board of Directors, the shares represented
by the proxy may be voted cumulatively for fewer than all of the
nominees named herein, in the discretion of the proxy holder. If any
of the nominees should unexpectedly become unavailable for election
for any reason, the shares represented by the proxy will be voted for
such substituted nominee or nominees as the Board of Directors may
name. Each of the nominees hereinafter named has indicated his will-
ingness to serve if elected, and it is not anticipated that any of
them will become unavailable for election.
The proxy confers discretionary authority, with respect to the voting
of the shares represented thereby, on any other business that may
properly come before the meeting, including, among other things,
consideration of a motion to adjourn the meeting to another time or
place. At the date this Proxy Statement went to press, the Board of
Directors is not aware that any such other business is to be presented
for action at the meeting and does not itself intend to present any
such other business; however, if any such other business does come be-
fore the meeting, shares represented by proxies given pursuant to this
solicitation will be voted in accordance with the recommendation of
the Board of Directors or, in the absence of such a recommendation, in
accordance with the judgment of the proxy holder.
1
<PAGE> 4
PERSONS ENTITLED TO VOTE. Only holders of Common Stock of the Com-
pany of record as of the close of business on March 12, 1999, are
entitled to vote at the meeting. At the close of business on that
date, 1,168,021 shares of Common Stock were outstanding. Holders of
Common Stock are entitled to one (1) vote per share standing in their
names on the record date. In the election of directors, each share-
holder will have cumulative voting rights, which means he will have
the right to cast as many votes as equals the number of shares owned
by him multiplied by the number of directors to be elected, and this
total number of votes may be divided among one (1) or more candidates
for the office of director in such manner as the shareholder may
elect, if present to vote in person, or as the proxy holders elect, if
voting by proxy. In the event the votes for certain director nominees
are withheld, those votes will be distributed among the remaining
director nominees. Withholding authority to vote for all director
nominees has the effect of abstaining from voting for any director
nominees. Shares cannot be voted at the meeting unless the owner is
present in person or represented by proxy. The directors shall be
elected by an affirmative vote of the plurality of shares that are
entitled to vote on the election of directors and that are represented
at the meeting by shareholders who are present in person or repre-
sented by a proxy, assuming a quorum is present. Accordingly, the
three nominees for Class II directors receiving the greatest number
of votes at the meeting will be elected as Class II directors. With
respect to the proposal to approve the Company's 1999 Long-Term Incen-
tive Plan, the affirmative vote of a majority of shares present in
person or represented by proxy, and entitled to vote on the matter, is
necessary for approval.
In determining the number of shares that have been affirmatively voted
for a particular matter, shares not represented at the meeting, shares
represented by shareholders that abstain from voting on a matter, and
shares held by brokers or other nominees for which no voting instruc-
tions on the matter being voted upon have been given by the beneficial
owner and the nominee does not have discretionary authority to vote
are not considered to be votes affirmatively cast. Any of the fore-
going is equivalent to a vote against the proposal other than the
election of directors and will have no effect on the election of
directors. Abstentions will have the effect of a vote against any
of the proposals to which the abstention applies.
When a broker or other nominee holding shares for a customer votes on
one proposal but does not vote on another proposal because the broker
or nominee does not have discretionary voting power with respect to
such proposal and has not received instructions from the beneficial
owner, it is referred to as a "broker nonvote." Properly executed
proxies marked "abstain" or proxies required to be treated as "broker
nonvotes" will be treated as present for purposes of determining
whether there is a quorum at the meeting.
2
<PAGE> 5
PRINCIPAL SHAREHOLDERS. As of the close of business on February 26,
1999, the principal beneficial owners of the Company's Common Stock
were as follows:
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Name and Address Owned<F1> Class
------------------------------ ------------ -----
<S> <C> <C>
Paul Mueller 106,557<F2> 9.1%
1600 West Phelps Street
Springfield, Missouri 65802
Moore Sons Investments, L.P. 58,879<F3><F4> 5.0%
1020 West 59th Street
Kansas City, Missouri 64113
Royce & Associates, Inc.
and Charles M. Royce 129,950<F5> 11.1%
1414 Avenue of the Americas
New York, New York 10019
Dimensional Fund Advisors Inc. 71,200<F6> 6.1%
1299 Ocean Avenue
Santa Monica, California 90401
<FN>
<F1> Unless otherwise noted, each shareholder has sole voting
power and investment power over the number of shares set
forth beside his name.
<F2> The 106,557 shares include 20,420 shares owned solely
by Mrs. Paul Mueller and 15,000 shares owned by the
Mueller Family Foundation, and Paul Mueller disclaims
any beneficial ownership in those shares.
<F3> In his capacity as a general partner of Moore Sons
Investments, L.P., David L. Moore may be deemed to be
beneficial owner of 58,879 shares of Common Stock owned
by said limited partnership. In his capacity as general
partner of Moore Sons Investments, L.P., David L. Moore
may be deemed to have shared power to vote or direct the
vote of 58,879 shares of Common Stock and may be deemed
to have shared power to dispose or direct the disposi-
tion of 58,879 shares of Common Stock owned by said
limited partnership. David L. Moore disclaims benefi-
cial ownership of all such shares owned by said limited
partnership.
As husband of Mary Kathleen Moore, David L. Moore may
be deemed to be beneficial owner of an additional 9,674
shares of Common Stock, which are owned by Mary Kathleen
Moore. David L. Moore disclaims beneficial ownership of
all such shares exclusively owned by Mary Kathleen
Moore.
<F4> In her capacity as a general partner of Moore Sons
Investments, L.P., Mary Kathleen Moore may be deemed to
have shared power to vote or direct the vote of 58,879
shares of Common Stock and may be deemed to have the
shared power to dispose or direct the disposition of
58,879 shares of Common Stock owned by said limited
partnership. Mary Kathleen Moore disclaims beneficial
ownership of all such shares owned by said limited
partnership. Mary Kathleen Moore is the direct owner
of 9,674 shares of stock over which she has sole voting
and dispositive power.
<F5> Royce & Associates, Inc., ("Royce") is the beneficial
owner of 129,950 shares of the Company's Common Stock
as of December 31, 1998 (the most recent date for which
information is available). Charles M. Royce may be
deemed to be a controlling person of Royce, and as such
may be deemed to beneficially own the shares of Common
Stock of the Company beneficially owned by Royce. Mr.
Royce does not own any shares outside of Royce and
disclaims beneficial ownership of the shares held by
Royce.
<F6> Dimensional Fund Advisors Inc. ("Dimensional"), an
investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, is deemed to have
beneficial ownership of 71,200 shares of the Company's
Common Stock as of December 31, 1998 (the most recent
date for which information is available). Dimensional
furnishes investment advice to four investment com-
panies, registered under the Investment Company Act of
1940, and serves as investment manager to certain other
investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are
the "Portfolios.") In its role as investment advisor
and investment manager, Dimensional possesses both
voting and investment power over the 71,200 shares of
Common Stock of the Company that are owned by the
Portfolios, and Dimensional disclaims beneficial
ownership of those shares.
</FN>
</TABLE>
All of the information set forth in the above table and footnotes is
based solely on information furnished by the persons listed in the
table. The Company does not know of any other person (as that term
is defined by the Securities and Exchange Commission) who owns of
record or beneficially more than five percent (5%) of the Company's
outstanding shares.
SHAREHOLDER PROPOSALS. Shareholder proposals to be considered for
inclusion in the Proxy Statement and considered at the 2000 annual
shareholders' meeting must be received by the Company no later than
November 29, 1999. Any such proposals should be directed to the
Secretary of the Company at 1600 West Phelps Street, P.O. Box 828,
Springfield, Missouri 65802.
3
<PAGE> 6
ELECTION OF DIRECTORS
(Proposal No. 1)
DIRECTORS. The Board of Directors consists of seven (7) members,
divided into three (3) classes, of whom approximately one-third (1U3)
are elected each year at the annual meeting of shareholders to serve
for a term of three (3) years and until their successors are duly
elected and qualified, or until such director's death, resignation or
removal.
The following schedule sets forth the names of the three (3) persons
who have been nominated by the Board of Directors for election as
directors of the Company, the names of the remaining four (4) direc-
tors whose terms expire in subsequent years, and certain related
information:
<TABLE>
<CAPTION>
Shares of
Common Stock
of the Company
Beneficially
Owned on
Feb. 26, 1999<F1>
---------------
Name and Occupation First Number Percent
Present Position During Past Became a of of
with Company Age Five Years Director Shares Class
- ---------------------- --- ----------------------- -------- ------ -----
<F2>
NOMINEES FOR CLASS II DIRECTORS - TERM EXPIRING IN 2002
- -------------------------------
<S> <C> <C> <C> <C> <C>
Gerald A. Cook 56 Chairman of the Board,
President & Treasurer-- - - -
Loren Cook Company,
a manufacturer of air-
moving equipment
William B. Johnson 66 International Business 1993 1,150 -
Director Consultant
William R. Patterson<F3> 57 Member--Stonecreek 1997 1,000 -
Director Management, LLC
Previous positions held:
Exec. Vice President--
Premium Standard
Farms, Inc.;
Business Consultant;
Partner--Arthur
Andersen, LLP, in
the Commercial Audit
Division
<CAPTION>
CONTINUING CLASS III DIRECTORS - TERM EXPIRING IN 2000
- ------------------------------
<S> <C> <C> <C> <C> <C>
Daniel C. Manna<F3> 52 Position with Company 1977 30,698 3%
President and Director
David T. Moore 27 Vice President - Product 1997 3,431<F4> -
Director Development--Corporate
Document Systems, LLC
Previous positions held:
Director of Technical
Services--Access Cor-
poration, a computer
software company;
Student--Kansas State
University--Depart-
ment of Physics;
Technician--Access
Corporation;
Paul Mueller<F3> 83 Position with Company 1946 106,557<F5> 9%
Chairman of the
Board and Director
<CAPTION>
CONTINUING CLASS I DIRECTOR - TERM EXPIRING IN 2001
- ---------------------------
<S> <C> <C> <C> <C> <C>
Donald E. Golik 55 Position with Company 1982 609 -
Sr. Vice President
and Chief Financial
Officer, Secretary
and Director
<S> <C> <C>
All officers and directors as a group (7 persons). 143,445 12%
4
<PAGE> 7
<FN>
<F1> Unless otherwise noted, the nominees and each director have sole
voting power and investment power over the number of shares set
forth beside his name.
<F2> The percentage is less than one percent (1%), except as otherwise
indicated.
<F3> Member of Executive Committee.
<F4> Does not include 58,879 shares owned by Moore Sons Investments,
L.P., of which David T. Moore owns a 49.5% limited partnership
interest.
<F5> The 106,557 shares include 20,420 shares owned solely by Mrs.
Paul Mueller and 15,000 shares owned by the Mueller Family
Foundation, and Paul Mueller disclaims any beneficial ownership
in those shares.
</FN>
</TABLE>
The Board of Directors of the Company does not have a permanent nomi-
nating committee.
The Board of Directors of the Company held four (4) meetings during
the year ended December 31, 1998. No director attended less than
seventy-five percent (75%) of the meetings of the Board of Directors
and Committee(s) on which he served.
The Company pays each director who is not an employee of the Company
an annual fee of $6,000, plus a fee of $1,000 for each regular or
special meeting of the Board attended, $500 for each Board committee
meeting attended, and $1,000 per day for special assignments.
The Company has a Compensation and Benefits Committee, and the members
are William B. Johnson - Chairman, William R. Patterson, and Charles
M. Ruprecht. The Committee met twice in 1998. The function of the
Committee is to develop, review, and make recommendations to the Board
of Directors as to the compensation policies for officers of the Com-
pany and to administer salary and incentive plans for officers.
Mr. Patterson was acting Chief Financial Officer in a consulting
arrangement with Premium Standard Farms, Inc., during the time it
filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code
in July 1996 and emerged from bankruptcy in September 1996.
Mr. Patterson is a director of American Italian Pasta Company and
Collins Industries, Inc.
Charles M. Ruprecht, a current director, will not stand for reelec-
tion at the May 3, 1999, annual meeting of shareholders.
There remains one vacancy on the Board of Directors.
Mr. Moore is the grandson of Paul Mueller.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table summarizes for the last three (3) years the com-
pensation of the Chief Executive Officer and the other most highly
compensated executive officer of the Company whose total annual salary
and bonus exceeded $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation All Other
Name and --------------------- Compen-
Principal Position Year Salary Bonus<F1> sation<F2>
- -------------------- ---- -------- -------- --------
<S> <C> <C> <C> <C>
Daniel C. Manna 1998 $231,200 $ 23,500 $ 2,880
President and CEO 1997 220,000 - 2,375
1996 203,300 52,000 4,500
Donald E. Golik 1998 $164,900 $ 16,000 $ 2,880
Sr. Vice President 1997 158,700 - 2,375
and CFO 1996 152,800 35,000 4,500
<FN>
<F1> Bonus amounts were earned and accrued during each year indicated.
<F2> Company contributions paid or accrued during each year under the
Profit Sharing and Retirement Savings Plan [401(k) Plan].
</FN>
</TABLE>
PENSION PLAN TABLE. Officers and directors who are employees of the
Company participate in the Paul Mueller Company Noncontract Employees
Retirement Plan (Plan).
The Plan is a defined benefit plan and the compensation covered by
the Plan includes only base salary, and effective January 1, 1997,
compensation covered by the Plan is limited to $160,000 annually by
the Internal Revenue Code. Daniel C. Manna and Donald E. Golik are
also covered under the Paul Mueller Company Supplemental Executive
Retirement Plan (Supplemental Plan) effective January 1, 1996, which
provides for an additional retirement benefit based on the provisions
of the Plan for compensation in excess of the Internal Revenue Code
limitation of $160,000.
The combined annual retirement benefit under the Plan and Supplemen-
tal Plan is not subject to deductions for social security benefits or
other offset amounts. The maximum number of years of credited service
is thirty-five (35) years. The retirement benefit is based on the
years of credited service and the final average monthly compensation
based on the sixty (60) consecutive months of highest compensation
during the most recent one-hundred twenty (120) complete months of
compensation. The monthly benefit is calculated as follows: [$5.85 +
(0.015 x final average monthly compensation over $650)] x years of
credited service.
The following table presents the combined annual retirement benefit
due under the Plans at age sixty-five (65) based on various amounts
of final average annual compensation and years of service:
<TABLE>
<CAPTION>
Final Years of Service
Avg. Annual ----------------------------------------------------
Compensation 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$140,000 $ 30,800 $ 41,100 $ 51,300 $ 61,600 $ 71,900
160,000 35,300 47,100 58,800 70,600 82,400
180,000 39,800 53,100 66,300 79,600 92,900
200,000 44,300 59,100 73,800 88,600 103,400
220,000 48,800 65,100 81,300 97,600 113,900
240,000 53,300 71,100 88,800 106,600 124,400
</TABLE>
6
<PAGE> 9
The following table indicates, for the current executive officers
named in the Summary Compensation Table, the compensation for 1998
covered by the Plans and the years of credited service:
<TABLE>
<CAPTION>
Compensation Years of
Covered Credited
Name by Plans Service
--------------- -------- --------
<S> <C> <C>
Daniel C. Manna $235,000 22
Donald E. Golik 160,000 19
</TABLE>
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE. The Compensation
and Benefits Committee (Committee) is charged with the responsibility
of developing, reviewing, and recommending to the Board of Directors
of the Company policies relating to compensation and remuneration of
executive officers, with a view to ensuring that such policies are
fair and equitable in view of market conditions and that they contri-
bute to the success of the Company. The Committee also is charged
with the responsibility of administering the salary plan for execu-
tive officers and the Executive Short-Term Incentive Plan, and the
Committee will also administer the 1999 Long-Term Incentive Plan if
approved by the shareholders at the annual meeting. The Committee is
composed entirely of nonemployee directors of the Board. Given the
Company's current level of executive compensation, the Committee has
not yet adopted a policy with respect to Section 162(m) of the Inter-
nal Revenue Code pertaining to the deduction of compensation in excess
of $1,000,000.
The Committee believes that executive compensation should be aligned
with Company financial performance. With this in mind, the Committee
has established a program to (1) attract and retain key executives
critical to the long-term success of the Company, (2) reward execu-
tives for enhanced shareholder value, and (3) support a performance-
oriented environment that rewards performance consistent with Company
financial goals.
The total compensation program for executive officers currently con-
sists of a base salary, an annual incentive award under the Executive
Short-Term Incentive Plan, and contributions paid or accrued under the
Profit Sharing and Retirement Savings Plan [401(k) Plan].
Salary ranges for executive officer positions, including the Chief
Executive Officer (CEO), are established periodically based on compe-
titive salary data developed by an independent compensation consul-
tant. The CEO's salary is established by considering salaries of
CEO's of comparably sized capital-goods manufacturing companies. The
Committee believes the CEO's compensation, and that of all executive
officers, should be heavily influenced by the Company's performance.
Therefore, the Executive Short-Term Incentive Plan provides the oppor-
tunity for a cash incentive, which is a percentage of base salary and
is based on (a) profitability of the Company and (b) an individual's
level of performance. The Committee establishes a target level of
profitability at the beginning of each year against which actual pro-
fitability will be measured. Additionally, the Committee may consider
other factors in arriving at the determination of corporate perfor-
mance for incentive calculation purposes. Such other factors may
include market conditions; extraordinary adjustments due to taxation,
nonoperating income, collective bargaining issues, or Acts of God;
and other achievements which position the Company for future growth
or enhance the market value of the corporation. Under the Plan, pro-
fitability must reach at least 70% of the annual target and the return
on equity must reach a specified target. The maximum bonus payable is
55% of the base salary.
The CEO is responsible for assessing the performance and level of con-
tribution toward corporate goals made by each member of his executive
staff. The CEO's evaluation and recommendations are submitted to the
Committee for their review and final determination of the level of
individual performance for incentive calculation purposes.
The Company also has a 401(k) Plan in which executive officers and
substantially all other employees are eligible to participate. The
Plan provides for a match of each employee's contributions up to a
7
<PAGE> 10
specified limit. The Plan also provides a profit sharing feature
whereby an additional match is made by the Company if the Company's
net income reaches predetermined levels established annually by the
Board of Directors.
The main factors upon which the Committee evaluates the CEO's perfor-
mance are: (1) the Company's actual profitability for the year, and
(2) those activities undertaken by the CEO which will position the
Company for future growth and enhance the market value of the Company.
Significant items considered are additions to and expansion of the
product lines, progress in margin improvement, and the implementations
of systems and procedures to improve efficiency, enhance the Company's
competitiveness, and position the Company for long-term growth.
For 1998, no incentive was payable under the Executive Short-Term
Incentive Plan, as profitability was sufficient, but the return on
equity was below the specified target. However, the Committee con-
sidered other performance contributions and other activities of both
the CEO and Chief Financial Officer (CFO) for 1998. Based on the
Committee's evaluation of the performance and the salary level of the
CEO and the CFO, bonuses of $23,500 and $16,000, respectively, were
awarded for 1998.
COMPENSATION AND BENEFITS COMMITTEE:
William B. Johnson, Chairman
William R. Patterson, Member
Charles M. Ruprecht, Member
COMPANY PERFORMANCE. The following graph shows a five (5) year
comparison of the cumulative total returns for the Company, the S&P
500 Index, and the Media General Financial Services, Inc. - Metals
Fabrication Index (MG-Metals Fabrication Index).
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<CAPTION>
MG-Metals
Paul Mueller Fabrication
Company S&P 500 Index
------------ ------- -----------
<S> <C> <C> <C>
1993 100 100 100
1994 96 101 89
1995 111 139 103
1996 129 171 137
1997 143 229 186
1998 157 294 156
<FN>
NOTE: <F1> Assumes $100 invested on December 31,
1993, in each of Paul Mueller Company
Common Stock, the S&P 500 Index, and
the Media General Financial Services,
Inc. - Metals Fabrication Index.
<F2> Total return includes reinvestment of
dividends.
</FN>
</TABLE>
8
<PAGE> 11
APPROVAL OF 1999 LONG-TERM INCENTIVE PLAN
(Proposal No. 2)
GENERAL. The Paul Mueller Company 1999 Long-Term Incentive Plan
(the "Plan") was adopted by the Board of Directors (the "Board") on
January 26, 1999. If the Plan is approved by the shareholders, it
shall remain in effect, subject to certain termination rights of the
Board, until all shares subject to it are purchased or acquired, or
until January 25, 2009, whichever occurs later. In general, the Plan
provides for the grant of awards of stock options, restricted stock,
stock appreciation rights, performance units, performance shares,
and other incentive awards (the "Awards") to officers and other key
employees of the Company and its subsidiaries (the "Company"). Nonem-
ployee directors are not eligible to participate in the Plan. It is
estimated that approximately 10 employees and 2 officers will parti-
cipate in the Plan (the "Participants"). The Plan is designed to
attract and retain outstanding individuals in key positions and to
furnish incentives linked to the performance of the Company and its
stock. The Company has not previously had a stock-based incentive
plan.
VOTE REQUIRED FOR APPROVAL. If approved by a majority of the shares
of the Company present, or represented by proxy and entitled to vote
at the meeting, the Plan will be effective as of January 26, 1999. If
not approved, the Plan will not be adopted.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE PLAN.
The following summary of provisions of the Plan is qualified by refer-
ence to the text of the Plan attached as Exhibit A.
PLAN ADMINISTRATION. The Plan will be administered by the Compensa-
tion Committee of the Board (the "Committee") which is comprised
of nonemployee directors who meet the applicable requirements of a
"nonemployee director" under Rule 16b-3 of the General Rules and
Regulations of the Securities Exchange Act of 1934 and of an "outside
director" under Section 162(m) of the Internal Revenue Code of 1986
(the "Code").
The Committee will have the discretion, subject to the provisions of
the Plan, to determine to whom among the eligible persons an Award is
granted and the terms and conditions of the Award. In making such
determinations, the Committee may consider the position and responsi-
bilities of the Participant, the nature and value to the Company of
his or her services and accomplishments, his or her present and poten-
tial contribution to the Company, and such other factors as may be
deemed relevant.
SHARES RESERVED FOR ISSUANCE. The total number of shares of Paul
Mueller Company Common Stock ("Common Stock") which may be subject to
Awards or be issued under the Plan will not exceed 180,000 shares, of
which no more than 55,000 shares may be issued as restricted stock.
The Plan provides for adjustments to the number of available shares
for certain corporate events, including: a corporate capitalization
such as a stock split; a corporate transaction such as a merger, con-
solidation, spin-off, or other distribution of stock or property;
any reorganization; or a liquidation of the Company. The Plan also
permits Common Stock not acquired due to cancellation, expiration, or
termination of an Award to become available for reissuance. No Awards
may be granted under the Plan on or after January 26, 2009. Awards
granted prior thereto may extend beyond such date, and the provisions
of the Plan will continue to apply to such Awards.
STOCK OPTIONS. The Plan permits the Committee to grant Awards of
stock options to Participants and to determine the timing and amount
of such Awards, provided that no individual can receive options for
more than 12,000 shares of Common Stock in any fiscal year, subject
to equitable adjustment as set forth above. The Committee may grant
either nonqualified stock options or incentive stock options (as that
term is defined in Section 422 of the Code). The Committee will
set the exercise price for an option, provided, however, that an
9
<PAGE> 12
incentive stock option exercise price cannot be less than the fair
market value of a share of Common Stock on the date such option is
granted. Options shall be exercisable at such times as the Committee
may determine, provided, however, that incentive stock options shall
not be exercisable later than the tenth anniversary date of their
grant. Additional restrictions shall apply to any incentive stock
options that are granted to an employee who possesses more than 10%
of the total combined voting power of all classes of shares of the
Company within the meaning of Section 422(b)(6) of the Code. Nonqua-
lified stock options can be transferred other than by will or the
laws of descent and distribution to immediate family members of the
Participant or to trusts or partnerships for the benefit of such
family members, except as otherwise limited by the Committee. Pay-
ment of the exercise price shall be in cash, in Common Stock, or a
combination of both.
RESTRICTED STOCK. The Plan permits the Committee to grant awards of
restricted Common Stock ("Restricted Common Stock") to Participants
and to determine the timing, amount, and conditions of such Awards,
provided that no individual can receive more than 5,000 shares of
Restricted Common Stock in any fiscal year, subject to equitable
adjustment as set forth above. Shares awarded as Restricted Common
Stock would be issued subject to such restrictions as the Committee
may impose, including, without limitation, restrictions: that require
the Participant's payment of a stipulated purchase price; that are
based upon the achievement of specific performance goals; and that
are based on time-based vesting and/or restrictions under applicable
federal or state securities laws. During the restriction period,
the Participant is not entitled to delivery of the Common Stock, re-
strictions are placed on the Common Stock's transferability, and the
Common Stock may be forfeited in the event of termination of employ-
ment or service. Unless otherwise designated by the Committee at the
time of grant and provided in the Participant's Award Agreement, a
holder of Restricted Common Stock will generally have the rights and
privileges of a stockholder, including the right to vote the Common
Stock. The Committee has discretion to remove or reduce restrictions.
STOCK APPRECIATION RIGHTS. The Plan permits the Committee to award
stock appreciation rights ("SARs") to Participants and to determine
the timing and amount of such Awards, provided that no individual can
receive more than 12,000 SARs in any fiscal year, subject to equitable
adjustment as set forth above. The Committee may grant freestanding
SARs or SARs in tandem with a related stock option ("Tandem SAR") or a
combination of both. Unless otherwise designated by the Committee at
the time of grant, the grant price of a freestanding SAR is the fair
market value of a share of Common Stock on the date of grant. The
grant price of Tandem SARs shall equal the exercise price of the
related stock option. Unless otherwise designated by the Committee,
no SAR will be exercisable after ten years from the date of grant.
Upon exercise of each SAR, the holder is entitled to receive the
excess of the fair market value of the Common Stock on the date of
exercise over the grant price. At the discretion of the Committee,
the payment upon exercise of an SAR by the Company may be in cash, in
Common Stock, or a combination of both. The Plan also provides that
the Committee shall determine at the time of grant, and set forth in
the Award Agreement, the holder's right to exercise SARs following
termination of employment or service. Except as otherwise determined
by the Committee and provided in the Participant's Award Agreement,
SARs cannot be transferred other than by will or the laws of descent
and distribution.
PERFORMANCE UNITS/SHARES. The Plan permits the Committee to grant
awards of performance units and/or performance shares ("Performance
Units and/or Performance Shares") to Participants based upon Company
performance over a period of time (a "Performance Period") determined
by the Committee. At the time the Committee establishes a Performance
Period for a particular Award, it will also establish Company perfor-
mance measures ("Performance Measures") applicable to the Award and
targets that must be attained relative to those measures. Performance
Measures may be based on any of the following, in any combination, as
the Committee deems appropriate for the Company, its subsidiaries, its
affiliates, and/or any business units thereof: (i) return on assets;
(ii) cash flow return on investment; (iii) earnings before interest
and taxes; (iv) net income; (v) total shareholder return; (vi) return
on sales; (vii) return on equity; (viii) economic value added; (ix)
business unit operating income; (x) return on net assets; or (xi) net
10
<PAGE> 13
operating profit. Awards may be paid by the Company in cash, Common
Stock, or a combination of both following the end of the Performance
Period. The aggregate maximum amount that can be paid with respect
to Performance Units/Performance Shares to any Participant in respect
of any Performance Period under the Plan may not have a value in ex-
cess of the value of 5,000 shares of Common Stock, subject to equit-
able adjustment as set forth above. In the event the employment of
a Participant is terminated by reason of death, disability, or re-
tirement, the Participant shall receive a prorated payment of the
Performance Units/Performance Shares as determined by the Committee,
based upon the length of time the Participant held the Performance
Units/Performance Shares during the Performance Period and on the
achievement of the preestablished performance goals. In the event
a Participant's employment terminates for any other reason, all
Performance Units/Performance Shares shall be forfeited by the
Participant unless determined otherwise by the Committee in its
discretion and set forth in the Award Agreement.
OTHER INCENTIVE AWARDS. Subject to the terms and provisions of
the Plan, other incentive awards ("Other Incentive Awards") may be
granted to Participants in such amount, upon such terms, and at any
time and from time-to-time as shall be determined by the Committee.
Except as otherwise provided by the Committee and provided in the
Award Agreement, Other Incentive Awards cannot be transferred other
than by will or the laws of descent and distribution. Payment of
Other Incentive Awards shall be made at such times and in such form,
either in cash or in Common Stock (or a combination thereof) as
established by the Committee subject to the terms of the Plan. Such
Common Stock may be granted subject to any restrictions deemed appro-
priate by the Committee. Without limiting the generality of the
foregoing, annual incentive awards may be paid in the form of Other
Incentive Awards (which may or may not be subject to restrictions,
at the discretion of the Committee).
CHANGE IN CONTROL. In the event of a change in control of the Company
(as defined in the Plan): (i) all options and SARs then outstanding
under the Plan will become immediately exercisable and remain so
throughout their term; (ii) all restriction periods and restrictions
imposed on Restricted Common Stock then outstanding will lapse; and
(iii) the target payout opportunities attainable under all outstanding
awards of Performance Units/Performance Shares shall be deemed to have
been fully earned for the entire Performance Period(s) as of the
effective date of the change in control. The vesting of all awards
denominated in Common Stock shall be accelerated as of the Effective
Date of the change in control and there shall be paid out to Parti-
cipants within 30 days following the effective date of the change in
control a pro rata number of shares of Common Stock based upon an
assumed achievement of all relevant target performance goals and on
upon the length of time within the Performance Period which has
elapsed prior to the change in control. Awards denominated in cash
shall be paid pro rata to Participants in cash within 30 days fol-
lowing the effective date of the change in control, with the pro-
ration determined as a function of the length of time within the
Performance Period which has elapsed prior to the change in control,
and based on an assumed achievement of all relevant targeted perfor-
mance goals.
PLAN AMENDMENT OR TERMINATION. The Board may terminate or suspend
the Plan in whole or in part, at any time, with respect to all future
grants and Awards.
CURRENT FEDERAL TAX CONSEQUENCES. A Participant will not realize tax-
able income at the time of grant of an option that does not qualify as
an incentive stock option, and the Company will not be entitled to a
deduction at that time. Upon exercise, however, of that nonqualified
option, the optionee will realize ordinary income in an amount mea-
sured by the excess, if any, of the fair market value of the Common
Stock on the date of exercise over the option price, and the Company
will be entitled to a corresponding deduction. Upon a subsequent
disposition of the Common Stock, the optionee will realize short-term
or long-term capital gain or loss with the basis for computing such
gain or loss equal to the option price plus the amount of ordinary
income realized upon exercise.
A Participant who has been granted an incentive stock option will
not realize taxable income and the Company will not be entitled to a
deduction at the time of the grant or exercise of that option. If the
11
<PAGE> 14
Participant does not dispose of the Common Stock acquired pursuant to
an incentive stock option within two years from the date of grant, and
within one year of transfer of the Common Stock to the Participant,
any gain or loss realized on a subsequent disposition will be treated
as long-term capital gain or loss. Under these circumstances, the
Company will not be entitled to a deduction for federal income tax
purposes. If these holding periods are not satisfied, the Participant
will generally realize ordinary income at the time of disposition in
an amount equal to the lesser of (i) the excess of the fair market
value of the Common Stock on the date of exercise over the option
price or (ii) the excess of the amount realized upon disposition of
the Common Stock, if any, over the option price, and the Company will
be entitled to a corresponding deduction.
A Participant granted an Award of Restricted Common Stock will not
realize taxable income at the time of grant, and the Company will
not be entitled to a deduction at that time, assuming that the re-
strictions constitute a substantial risk of forfeiture for federal
income tax purposes. Upon the vesting of the Restricted Common Stock,
the Participant will realize ordinary income in an amount equal to the
fair market value of the Common Stock at that time, less any amount
paid for the Restricted Common Stock, and the Company will be entitled
to a corresponding deduction. Dividends paid to the Participant dur-
ing the restriction period will also be income to the Participant and
the Company will be entitled to a corresponding deduction.
A Participant granted Performance Units/Performance Shares will not
realize income at the time a Performance Period is established, and
the Company will not be entitled to a deduction at that time. The
Participant will have income at the time the Performance Unit/Perfor-
mance Share is paid out if that payment is in cash, and the Company
will be entitled to a corresponding deduction. If an Award of Perfor-
mance Units/Performance Shares is paid out in Restricted Common Stock,
the tax impact will be that discussed above with respect to Awards of
Restricted Common Stock.
With respect to any income tax withholding requirements imposed upon
the occurrence of a taxable event to a Participant, the Company can
require the payment of such tax liability in cash, or subject to the
Committee's discretion, in Common Stock.
Under Section 162(m) of the Code, the Company may be precluded from
claiming an income tax deduction for remuneration in excess of
$1,000,000 paid in any one year to the highly compensated officers
named in its proxy statement. An exemption exists, however, for
"performance-based compensation," including amounts received on the
exercise of stock options that meet certain requirements granted pur-
suant to a plan approved by shareholders. The Plan is designed so
that the grant of certain Awards will meet the requirements of
"performance-based compensation."
OTHER INFORMATION. No determination has been made as to the number
or amount of Awards that may be allocated to the individuals named in
the Summary Compensation Table, current executive officers as a group,
or all employees (including all current officers who are not executive
officers) as a group, if the Plan, as described in this proxy state-
ment, is approved.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Board of Directors annually selects the Company's inde-
pendent auditing firm. Arthur Andersen LLP has been the Company's
independent auditing firm since 1969. It is not expected that Arthur
Andersen LLP will have a representative present at the May 3, 1999,
meeting of shareholders.
The Company has an Audit Committee, and the members are Charles M.
Ruprecht - Chairman, William B. Johnson, and David T. Moore. The
Audit Committee met once in 1998. The functions of the Audit Com-
mittee are to nominate the independent auditors of the Company for
appointment by the Board of Directors, arrange for and review the
results of the Company's annual audit, ratify annual audit fees,
and provide for independent review of the adequacy of the Company's
system of internal controls.
12
<PAGE> 15
PROXY MUELLER (Registered)
PAUL MUELLER COMPANY
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, MAY 3, 1998
The undersigned hereby constitutes and appoints Donald E. Golik and
Ronald W. Gielow, and each of them, as proxies, with full power of
substitution, to vote all of the shares of the Common Stock which
the undersigned is entitled to vote at the annual meeting of the
shareholders of the Company to be held at the offices of the Company,
1600 West Phelps Street, Springfield, Missouri, on Monday, May 3,
1999, commencing at 10:00 a.m. on that day, and at any postponement,
postponement, adjournment or adjournments thereof, as fully and with
the same effect as the undersigned might or could do if personally
present, with respect to the following:
(1) The election of three (3) Class II directors for a term of three
(3) years expiring at the annual meeting to be held in 2002:
Gerald A. Cook, William B. Johnson, and William R. Patterson.
[ ] FOR all nominees listed.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed.
[ ] FOR all nominees EXCEPT the following: _______________________
_______________________
(2) The proposal to approve the Company's 1999 Long-Term Incentive
Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The transaction, IN THEIR DISCRETION, of such other business as
may properly come before the meeting or any postponement, adjourn-
ment, or adjournments thereof.
(continued, and to be signed, on the other side)
<PAGE> 16
(Proxy - continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES IN PROPOSAL (1) AND FOR
PROPOSAL (2).
Either of said proxies present and acting at said meeting or any
postponement, adjournment, or adjournments thereof shall have and may
exercise all of the powers of all of said proxies. The undersigned
hereby ratifies and confirms all that said proxies, or either of them
or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof, and acknowledges receipt of the notice of said
meeting and the Proxy Statement accompanying it.
Date _________________________, 1999
____________________________________
____________________________________
Please insert date of signing. Sign
exactly as name appears at left.
Where stock is issued in two or more
names, all should sign. If signing
as attorney, administrator, execu-
tor, trustee or guardian, give full
title as such.
<PAGE> 17
EXHIBIT A
PAUL MUELLER COMPANY
1999 LONG-TERM INCENTIVE PLAN
(Effective January 26, 1999)
<PAGE> 18
CONTENTS
Article 1. Establishment, Objectives, and Duration........... A-1
Article 2. Definitions....................................... A-1
Article 3. Administration.................................... A-4
Article 4. Shares Subject to the Plan and Maximum Awards..... A-5
Article 5. Eligibility and Participation..................... A-5
Article 6. Stock Options..................................... A-6
Article 7. Stock Appreciation Rights......................... A-7
Article 8. Restricted Stock.................................. A-9
Article 9. Performance Units and Performance Shares.......... A-10
Article 10. Other Incentive Awards............................ A-11
Article 11. Performance Measures.............................. A-12
Article 12. Beneficiary Designation........................... A-12
Article 13. Deferrals......................................... A-13
Article 14. Rights of Employees............................... A-13
Article 15. Change in Control................................. A-13
Article 16. Amendment, Modification, and Termination.......... A-14
Article 17. Withholding....................................... A-14
Article 18. Indemnification................................... A-14
Article 19. Successors........................................ A-15
Article 20. Legal Construction................................ A-15
i
<PAGE> 19
PAUL MUELLER COMPANY
1999 LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Paul Mueller Company, a Missouri
corporation (hereinafter referred to as the "Company"), hereby
establishes an incentive compensation plan to be known as the
"Paul Mueller Company 1999 Long-Term Incentive Plan" (herein-
after referred to as the "Plan"), as set forth in this document.
The Plan permits the grant of Nonqualified Stock Options, Incen-
tive Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Shares and Performance Units, and Other Incentive
Awards.
Subject to approval by the Company's stockholders, the Plan
shall be effective as of January 26, 1999 (the "Effective Date")
and shall remain in effect as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to
optimize the profitability and growth of the Company through
incentives which are consistent with the Company's goals and
which link and align the personal interests of Participants to
those of the Company's stockholders; to provide Participants
with an incentive for excellence in individual performance; and
to promote teamwork among Participants.
The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the
services of Participants who make significant contributions to
the Company's success and to allow Participants to share in the
success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective
Date, as described in Section 1.1 hereof, and shall remain in
effect, subject to the right of the Board of Directors to amend
or terminate the Plan at any time pursuant to Article 16 hereof,
until all Shares subject to it shall have been purchased or ac-
quired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after January 26,
2009. Awards granted prior thereto, however, may extend beyond
such date and the provisions of the Plan shall continue to apply
thereto.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below, and when the meaning is intended, the initial letter
of the word shall be capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this
Plan of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares
or Performance Units, or Other Incentive Awards.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company
and a Participant evidencing and setting forth the terms and
provisions applicable to an Award granted under this Plan, in
such form as the Committee may, from time to time, approve.
2.3 "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules
and Regulations under the Exchange Act.
2.4 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of
the Company.
A-1
<PAGE> 20
2.5 "CHANGE IN CONTROL" of the Company means, and shall be deemed to
have occurred upon, any of the following events:
(a) Any Person (other than the Company or any Subsidiary, or
other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsi-
diary, or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company)
becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company's then
outstanding securities; or
(b) During any period of two (2) consecutive years (not includ-
ing any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board
(and any new Director, whose election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors at the beginning of the period or whose election
or nomination for election was so approved), cease for any
reason to constitute a majority thereof; or
(c) The stockholders of the Company approve: (i) a plan of
complete liquidation of the Company; or (ii) an agreement
for the sale or disposition of all or substantially all
the Company's assets; or (iii) a merger, consolidation, or
reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or reor-
ganization that would result in the voting securities of
the Company outstanding immediately prior thereto con-
tinuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving
entity) at least fifty percent (50%) of the combined voting
power of the voting securities of the Company (or such sur-
viving entity) outstanding immediately after such merger,
consolidation, or reorganization.
However, in no event shall a "Change in Control" be deemed to
have occurred, with respect to a Participant, if the Participant
is part of a purchasing group which consummates the Change-in-
Control transaction. A Participant shall be deemed "part of a
purchasing group" for purposes of the preceding sentence if the
Participant is an equity participant in the purchasing company
or group (except for (i) passive ownership of less than one
percent (1%) of the stock of the purchasing company; or (ii)
ownership of equity participation in the purchasing company or
group which is otherwise not significant, as determined prior
to the Change in Control by a majority of the nonemployee con-
tinuing Directors).
Notwithstanding the foregoing, no change in control shall be
deemed to have occurred as the result of an acquisition of
Shares by the Company which, by reducing the number of Shares
outstanding, increases the proportionate number of Shares
beneficially owned by any Person to 20% or more of the Shares
then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 20% or more of the Shares then
outstanding by reason of Share purchases by the Company and
shall, after such Share purchases by the Company, become the
Beneficial Owner of any additional Shares, then a Change in
Control shall be deemed to have occurred.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
2.7 "COMMITTEE" means the Compensation Committee of the Board, or
such other committee appointed by the Board to administer the
Plan, as described in Article 3 herein.
2.8 "COMPANY" means Paul Mueller Company, a Missouri corporation, as
well as any successor to the Company as provided in Article 19
herein.
2.9 "DIRECTOR" means any individual who is a member of the Board of
Directors of the Company.
A-2
<PAGE> 21
2.10 "DISABILITY" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.11 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.12 "EMPLOYEE" means any employee of the Company or its Subsidi-
aries. Directors who are employed by the Company shall be con-
sidered Employees under this Plan and Nonemployee Directors
shall not be considered Employees under this Plan.
2.13 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor Act thereto.
2.14 "FAIR MARKET VALUE" means the closing sale price of the Shares
as reported on the NASDAQ interdealer quotation system or,
if applicable, the exchange on which the Shares are traded,
or if there is no such sale on such system or exchange on the
relevant date, then on the last previous day on which a sale
was reported.
2.15 "FREESTANDING SAR" means an SAR that is granted independently
of any Options, as described in Article 7 herein.
2.16 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase
Shares granted under Article 6 herein and which is designated
as an Incentive Stock Option and which is intended to meet the
requirements of Code Section 422.
2.17 "INSIDER" shall mean an individual who is, on the relevant date,
an officer, director, or ten percent (10%) beneficial owner of
any class of the Company's equity securities that is registered
pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
2.18 "NAMED EXECUTIVE OFFICER" means a Participant who, as of the
date of vesting and/or payout of an Award, as applicable, is
one of the group of "covered employees," as defined in the
regulations promulgated under Code Section 162(m), or any suc-
cessor statute.
2.19 "NONEMPLOYEE DIRECTOR" means a Director who is not also an
Employee.
2.20 "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to pur-
chase Shares granted under Article 6 herein and which is not
intended to meet the requirements of Code Section 422.
2.21 "OPTION" means an Incentive Stock Option or a Nonqualified
Stock Option, as described in Article 6 herein.
2.22 "OPTION PRICE" means the price at which a Share may be purchased
by a Participant pursuant to an Option.
2.23 "OTHER INCENTIVE AWARD" means an award granted pursuant to
Article 10 hereof.
2.24 "PARTICIPANT" means an Employee selected to receive an Award by
the Committee in accordance with Article 5 and who has an out-
standing Award granted under the Plan.
2.25 "PERFORMANCE-BASED EXCEPTION" means the performance-based
exception from the tax deductibility limitations of Code Sec-
tion 162(m).
2.26 "PERFORMANCE PERIOD" means the time period during which
performance goals must be achieved with respect to an Award,
as determined by the Committee.
A-3
<PAGE> 22
2.27 "PERFORMANCE SHARE" means an Award granted to a Participant,
as described in Article 9 herein.
2.28 "PERFORMANCE UNIT" means an Award granted to a Participant,
as described in Article 9 herein.
2.29 "PERIOD OF RESTRICTION" means the period during which the
transfer of Shares of Restricted Stock is limited in some way
(based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by
the Committee, at its discretion), and the Shares are subject
to a substantial risk of forfeiture, as provided in Article 8
herein.
2.30 "PERSON" shall have the meaning ascribed to such term in Sec-
tion 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section
13(d) thereof.
2.31 "RESTRICTED STOCK" means an Award granted to a Participant
pursuant to Article 8 herein.
2.32 "RETIREMENT" means the normal retirement date on which a Par-
ticipant qualifies for full retirement benefits under the
Company's qualified retirement plan, as identified by the
Committee.
2.33 "SHARES" means the shares of Common Stock of the Company.
2.34 "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted
alone or in connection with a related Option, designated as an
SAR, pursuant to the terms of Article 7 herein.
2.35 "SUBSIDIARY" means any corporation, limited liability company,
partnership, joint venture, affiliate, or other entity in
which the Company directly or indirectly has a majority voting
interest.
2.36 "TANDEM SAR" means an SAR that is granted in connection with a
related Option pursuant to Article 7 herein, the exercise of
which shall require forfeiture of the right to purchase a Share
under the related Option (and when a Share is purchased under
the Option, the Tandem SAR shall similarly be canceled).
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
Any such Committee shall be comprised entirely of Nonemployee
Directors who meet the applicable requirements of a "nonemployee
director" under Rule 16b-3 of the General Rules and Regulations
under the Exchange Act and of an "outside director" under Sec-
tion 162(m) of the Code. The Committee shall have the authority
to delegate administrative duties to officers or Directors of
the Company.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by
the Certificate of Incorporation or Bylaws of the Company, and
subject to the provisions herein, the Committee shall have full
power to select Employees who shall participate in the Plan;
determine the sizes and types of Awards; determine the terms
and conditions of Awards in a manner consistent with the Plan;
construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend, or waive rules
and regulations for the Plan's administration; and (subject to
the provisions of Article 16 herein) amend the terms and condi-
tions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as pro-
vided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law (and subject
to Section 3.1 herein), the Committee may delegate its authority
as specified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related
orders and resolutions of the Committee shall be final, conclu-
sive, and binding on all persons, including the Company, its
stockholders, Directors, Employees, Participants, and their
estates and beneficiaries.
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ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.3 herein, the number of Shares hereby re-
served for issuance under the Plan shall be one hundred eighty
thousand (180,000). However, the aggregate maximum number of
Shares of Restricted Stock which may be granted pursuant to
Article 8 shall be fifty-five thousand (55,000). Shares issued
pursuant to the Plan may be either authorized and unissued
Shares or issued Shares which have been reacquired by the Com-
pany, or any combination thereof.
Unless and until the Committee determines that an Award to a
Named Executive Officer shall not be designed to comply with the
Performance-Based Exception, the following rules shall apply to
grants of such Awards under the Plan:
(a) STOCK OPTIONS. The maximum aggregate number of Shares that
may be granted in the form of Stock Options, pursuant to
Awards granted in any one fiscal year to any one Participant
shall be twelve thousand (12,000).
(b) SARs. The maximum aggregate number of Shares that may be
granted in the form of Stock Appreciation Rights, pursuant
to Awards granted in any one fiscal year to any one Partici-
pant shall be twelve thousand (12,000).
(c) RESTRICTED STOCK. The maximum aggregate number of Shares
that may be granted in the form of Restricted Stock, pur-
suant to Awards granted in any one fiscal year to any one
Participant shall be five thousand (5,000).
(d) PERFORMANCE SHARES/PERFORMANCE UNITS/OTHER INCENTIVE AWARDS.
The maximum aggregate payout (determined as of the end of
the applicable Performance Period) with respect to Awards of
Performance Shares, Performance Units, or Other Incentive
Awards granted in any one fiscal year to any one Participant
shall not exceed the value of five thousand (5,000) Shares.
4.2 LAPSED AWARDS. If any Award granted under this Plan expires or
lapses or is canceled, surrendered, forfeited, or terminated for
any reason, any Shares subject to such Award again shall be
available for the grant of an Award under the Plan.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate
transaction, such as any merger, consolidation, separation, in-
cluding a spin-off, or other distribution of stock or property
of the Company, any reorganization (whether or not such reorgan-
ization comes within the definition of such term in Code Section
368) or any partial or complete liquidation of the Company, such
adjustment shall be made in the number and class of Shares which
may be delivered under Section 4.1 herein, in the number and
class of and/or price of Shares subject to outstanding Awards
granted under the Plan, and in the Award Limits set forth in
subsections 4.1(a) through (d) herein, as may be determined to
be appropriate and equitable by the Committee, in its sole dis-
cretion, to prevent dilution or enlargement of rights; provided,
however, that the number of Shares subject to any Award shall
always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Persons eligible to participate in this Plan
include all Employees of the Company or its Subsidiaries,
including Employees who reside in countries other than the
United States of America.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee from time to time, shall, in its discretion,
select from all Employees those to whom Awards shall be granted
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<PAGE> 24
and shall determine the nature and amount and other terms and
conditions of each Award. In making such determinations, the
Committee may consider the position and responsibilities of the
Participant, the nature and value to the Company of his or her
services and accomplishments, his or her present and potential
contribution to the Company, and such other factors as the
Committee may deem relevant.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the
Plan, Options may be granted to Participants in such number,
and upon such terms and conditions, and at any time and from
time to time, as shall be determined by the Committee in its
discretion. No Employee may be granted ISOs under the Plan
which would result in Shares with an aggregate Fair Market
Value (measured on the date of grant) of more than $100,000
first becoming exercisable in any one calendar year.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the dura-
tion of the Option, the number of Shares to which the Option
pertains, and such other provisions as the Committee shall
determine. The Option Agreement also shall specify whether
the Option is intended to be an ISO within the meaning of Code
Section 422, or an NQSO whose grant is intended not to fall
under the provisions of Code Section 422.
6.3 OPTION PRICE. Unless otherwise designated by the Committee at
the time of grant, the Option Price for each grant of an NQSO
under this Plan shall be at least equal to one hundred percent
(100%) of the Fair Market Value of a Share on the date the NQSO
is granted. The Option Price for each grant of an ISO under
this Plan shall be at least equal to one hundred percent of the
Fair Market Value of a Share on the date the ISO is granted,
provided, however, in the event that an ISO is granted to an
Employee who possesses more than 10% of the total combined
voting power of all classes of stock of the Company, taking into
account the attribution rules of Code Section 422(d), the Option
price for each grant of such an ISO shall be determined by the
Committee on the date of grant and shall not be less than 110%
of the Fair Market Value of a Share on the date of grant.
6.4 DURATION OF OPTIONS. Each Option granted to a Participant shall
expire at such time as the Committee shall determine at the time
of grant; provided, however, that: (a) no ISO shall be exercis-
able later than the tenth anniversary date of its grant, (b) no
ISO granted to an Employee who possesses more than 10% of the
total combined voting power of all classes of stock of the
Company, taking into account the attribution rules of Code
Section 422(d), shall be exercisable later than the fifth anni-
versary date of its grant, and (c) unless otherwise designated
by the Committee at the time of grant, no NQSO shall be exercis-
able later than the tenth anniversary date of its grant. Any
Option not exercised within these time periods shall automatic-
ally terminate at the expiration of such period.
6.5 EXERCISE OF OPTIONS. Subject to the other provisions of this
Article 6, options granted under this Article 6 shall be exer-
cisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve,
which need not be the same for each grant or for each Parti-
cipant.
6.6 NOTICE OF EXERCISE AND PAYMENT. Options granted under this
Article 6 shall be exercised by the delivery of a written notice
of exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to
the Company in full either: (a) in cash or its equivalent, or
(b) by tendering previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the total
Option Price (provided that the Shares which are tendered must
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<PAGE> 25
have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price), or (c) by a
combination of (a) and (b).
The Committee also may allow cashless exercise as permitted
under Federal Reserve Board's Regulation T, subject to appli-
cable securities law restrictions, or by any other means which
the Committee determines to be consistent with the Plan's pur-
pose and applicable law.
As soon as practicable after receipt of a written notification
of exercise and full payment, the Company shall deliver to the
Participant, in the Participant's name, Share certificates in
an appropriate amount based upon the number of Shares purchased
under the Option(s).
6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose
such restrictions on any Shares acquired pursuant to the exer-
cise of an Option granted under this Article 6 as it may deem
advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities
laws applicable to such Shares.
6.8 TERMINATION OF EMPLOYMENT. Each Participant's Option Award
Agreement shall set forth the extent to which the Participant
shall have the right to exercise the Option following termina-
tion of the Participant's employment with the Company and/or
its Subsidiaries, provided, however, that an ISO shall not be
exercisable later than three months following the termination
of the Employee's employment with the Company and/or its Subsi-
diaries, or later than one year if the termination is due to
disability. Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award
Agreement entered into with each Participant, need not be
uniform among all Options issued pursuant to this Article 6,
and may reflect distinctions based on the reasons for termina-
tion of employment.
6.9 NONTRANSFERABILITY OF OPTIONS.
(a) INCENTIVE STOCK OPTIONS. No ISO granted under the Plan or
any rights with respect thereto shall be subject to any debts
or liabilities of a Participant, nor be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribu-
tion. Further, all ISOs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by
such Participant.
(b) NONQUALIFIED STOCK OPTIONS. Except as otherwise determined
by the Committee and provided in a Participant's Award
Agreement, no NQSO granted under this Article 6 or any
rights with respect thereto shall be subject to any debts
or liabilities of a Participant, nor be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution
and all NQSOs granted under this Article 6 shall be exercis-
able during a Participant's lifetime only by such Partici-
pant. Notwithstanding the foregoing, except as otherwise
determined by the Committee and provided in a Participant's
Award Agreement, any NQSO granted under this Article 6 may be
transferable, without payment of consideration, to immediate
family members of the Participant or to trusts or partner-
ships for the benefit of such family members.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARs. Subject to the terms and conditions of the Plan,
SARs may be granted to Participants at any time and from time to
time in such amounts and upon such terms and conditions as shall
be determined by the Committee in its discretion. The Committee
may grant Freestanding SARs, Tandem SARs, or any combination of
these forms of SAR.
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<PAGE> 26
Unless otherwise designated by the Committee at the time of
grant, the grant price of a Freestanding SAR shall be at least
equal to one hundred percent (100%) of the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of
Tandem SARs shall equal the Option Price of the related Option.
7.2 EXERCISE OF TANDEM SARs. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the
surrender of the right to exercise the equivalent portion of the
related Option. A Tandem SAR may be exercised only with respect
to the Shares for which its related Option is then exercisable.
Notwithstanding any other provision of this Plan to the con-
trary, with respect to a Tandem SAR granted in connection with
an ISO: (i) the Tandem SAR will expire no later than the expira-
tion of the underlying ISO; (ii) the value of the payout with
respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the
underlying ISO and the Fair Market Value of the Shares subject
to the underlying ISO at the time the Tandem SAR is exercised;
and (iii) the Tandem SAR may be exercised only when the Fair
Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
7.3 EXERCISE OF FREESTANDING SARs. Freestanding SARs may be exer-
cised upon whatever terms and conditions the Committee, in its
discretion, imposes upon them.
7.4 SAR AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the
SAR, and such other provisions as the Committee shall determine,
subject to the terms and provisions of the Plan.
7.5 TERM OF SARs. The term of an SAR granted under the Plan shall
be determined by the Committee, in its discretion; provided,
however, that unless otherwise designated by the Committee, such
term shall not exceed ten (10) years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an
amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on
the date of exercise less the grant price; by
(b) The number of Shares with respect to which the SAR is
exercised.
At the discretion of the Committee, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or in
some combination thereof.
7.7 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set
forth the extent to which the Participant shall have the right
to exercise the SAR following termination of the Participant's
employment with the Company and/or its Subsidiaries. Such
provisions shall be determined in the discretion of the Com-
mittee, shall be included in the Award Agreement entered into
with the Participant, need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of employment.
7.8 NONTRANSFERABILITY OF SARs. Except as otherwise determined by
the Committee and provided in a Participant's Award Agreement,
no SAR granted under the Plan or any rights with respect thereto
shall be subject to any debts or liabilities of a Participant,
nor be sold, transferred, pledged, assigned, or otherwise alien-
ated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise deter-
mined by the Committee and provided in a Participant's Award
Agreement, all SARs granted to a Participant under the Plan
shall be exercisable during a Participant's lifetime only by
such Participant.
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<PAGE> 27
ARTICLE 8. RESTRICTED STOCK
8.1 GRANT OF RESTRICTED STOCK. Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock to Participants in such
amounts and upon such terms as the Committee shall determine in
its discretion.
8.2 RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall
be evidenced by an Award Agreement that shall specify the
Period(s) of Restriction, the number of Shares of Restricted
Stock granted, and such other provisions as the Committee shall
determine, subject to the terms and provisions of the Plan.
8.3 TRANSFERABILITY. Except as provided in this Article 8 or deter-
mined by the Committee and provided in a Participant's Award
Agreement, no Shares of Restricted Stock granted under the Plan
or any rights with respect thereto shall be subject to any debts
or liabilities of a Participant, nor be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, until
the end of the applicable Period of Restriction and the satis-
faction of any other terms and conditions, all as specified by
the Committee in its discretion and set forth in the Partici-
pant's Award Agreement, nor shall any rights with respect to
the Restricted Stock granted to a Participant under the Plan be
available during a Participant's lifetime other than to him or
her.
8.4 OTHER RESTRICTIONS. Subject to Article 11 of this Plan, the
Committee may impose such other conditions and/or restrictions
on any Shares of Restricted Stock granted pursuant to the Plan
as it may deem advisable including, without limitation, a re-
quirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divi-
sional, and/or individual), time-based restrictions on vesting
following the attainment of the performance goals, and/or re-
strictions under applicable federal or state securities laws.
The Committee may in its absolute discretion at any time, or
from time to time, terminate, shorten, or accelerate any period
of restriction or waive any terms or conditions applicable to
all or any portion of a Restricted Stock Award.
As soon as practicable following the grant of Shares of Re-
stricted Stock, either (i) a stock certificate or certificates
representing such Shares of Restricted Stock shall be registered
in the Participant's name and be retained in the custody of the
Company or its designee for the account of the Participant until
such time as all conditions and/or restrictions applicable to
such Shares have been satisfied and such certificates shall bear
an appropriate legend referring to the restrictions applicable
thereto, or (ii) the Company's stock transfer agent or its
designee shall credit such Shares of Restricted Stock to the
Participant's Restricted Stock Account, which Shares of Re-
stricted Stock shall be subject to the restrictions applicable
thereto until such time as all conditions and or restrictions
applicable to such Shares have been satisfied.
If and to the extent that the restrictions and other terms and
conditions applicable to Shares of Restricted Stock are not
satisfied, such Shares and any dividends or other rights appli-
cable thereto shall be forfeited and reacquired by the Company,
and all rights of the Participant shall terminate to the extent
of the forfeiture without further obligation on the part of the
Company.
Except as otherwise provided in this Article 8, Shares of Re-
stricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Participant
after the last day of the applicable Period of Restriction.
8.5 VOTING RIGHTS. Unless otherwise designated by the Committee
at the time of grant and provided in the Participant's Award
Agreement, Participants holding Shares of Restricted Stock
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<PAGE> 28
granted under this Article 8 may exercise full voting rights
with respect to those Shares during the Period of Restriction.
8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. Unless otherwise designated
by the Committee at the time of grant and provided in the Parti-
cipant's Award Agreement, dividends declared with respect to
Shares underlying Restricted Stock during the Period of Restric-
tion may either, in the discretion of the Committee, be paid to
the Participant or withheld by the Company for the Participant's
account, and interest may be paid on any dividends withheld at a
rate determined by the Committee. The Committee may apply any
restrictions to the dividends that the Committee deems appro-
priate.
8.7 TERMINATION OF EMPLOYMENT. Each Restricted Stock Award Agree-
ment shall set forth the extent to which the Participant shall
have the right to receive unvested Restricted Shares following
termination of the Participant's employment with the Company
and/or its Subsidiaries. Such provisions shall be determined
in the discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be
uniform among all Shares of Restricted Stock issued pursuant to
the Plan, and may reflect distinctions based on the reasons for
termination of employment; provided, however, that the vesting
of Shares of Restricted Stock held by Named Executive Officers
that qualify for the Performance-Based Exception shall not be
affected by termination of the Named Executive Officers except
for terminations connected with a Change in Control or death or
Disability.
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms of
the Plan, Performance Units and/or Performance Shares may be
granted to Participants in such amounts and upon such terms,
and at any time and from time to time, as shall be determined
by the Committee in its discretion. The Committee shall
establish at the time of grant the Performance Period and the
performance measures, as described in Article 11, for each
Award.
9.2 VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall
have an initial value that is established by the Committee at
the time of grant. Each Performance Share shall have an initial
value equal to the Fair Market Value of a Share on the date of
grant. The Committee shall set performance goals in its discre-
tion which, depending on the extent to which they are met, will
determine the number and/or value of Performance Units/Shares
that will be paid out to the Participant.
9.3 EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of
this Plan and the Award Agreement, after the applicable Perfor-
mance Period has ended, the holder of Performance Units/Shares
shall be entitled to receive payout on the number and value of
Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent
to which the corresponding performance goals have been achieved.
9.4 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/ SHARES. Pay-
ment of earned Performance Units/Shares shall be made in a
single lump sum within seventy-five (75) calendar days follow-
ing the close of the applicable Performance Period. Subject to
the terms of this Plan, the Committee, in its discretion, may
pay earned Performance Units/Shares in the form of cash or in
Shares (or in a combination thereof) which have an aggregate
Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period.
Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee.
Prior to the beginning of each Performance Period, Participants
may elect to defer the receipt of Performance Unit/Share payout
upon such terms as the Committee deems appropriate.
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<PAGE> 29
At the discretion of the Committee, Participants may be entitled
to receive any dividends declared with respect to Shares which
have been earned in connection with grants of Performance Units
and/or Performance Shares which have been earned, but not yet
distributed to Participants. In addition, Participants may, at
the discretion of the Committee, be entitled to exercise their
voting rights with respect to such Shares.
9.5 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIRE-
MENT. In the event the employment of a Participant is termi-
nated by reason of death, Disability, or Retirement during a
Performance Period, the Participant shall receive a prorated
payout of the Performance Units/Shares. The prorated payout
shall be determined by the Committee, in its absolute discre-
tion, shall be based upon the length of time that the Partici-
pant held the Performance Units/Shares during the Performance
Period, and shall further be adjusted based on the achievement
of the preestablished performance goals.
Payment of earned Performance Units/Shares shall be made at
the time specified by the Committee in its discretion as set
forth in the Participant's Award Agreement. Notwithstanding
the foregoing, with respect to Employees who retire during the
Performance Period, payments shall be made at the same time as
payments are made to Participants who did not terminate employ-
ment during the applicable Performance Period.
9.6 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that
a Participant's employment terminates for any reason other than
those reasons set forth in Section 9.5 herein, all Performance
Units/Shares shall be forfeited by the Participant to the
Company unless determined otherwise by the Committee in its
discretion as set forth in the Participant's Award Agreement.
9.7 NONTRANSFERABILITY. Except as otherwise determined by the
Committee and provided in a Participant's Award Agreement,
Performance Units/Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. Further,
except as otherwise determined by the Committee and provided in
a Participant's Award Agreement, a Participant's rights under
the Plan shall be exercisable during the Participant's lifetime
only by the Participant or the Participant's legal representa-
tive.
ARTICLE 10. OTHER INCENTIVE AWARDS
10.1 GRANT OF OTHER INCENTIVE AWARDS. Subject to the terms and
provisions of the Plan, Other Incentive Awards may be granted
to Participants in such amounts, upon such terms, and at any
time and from time to time as shall be determined by the Commit-
tee in its discretion.
10.2 OTHER INCENTIVE AWARD AGREEMENT. Each Other Incentive Award
grant shall be evidenced by an Award Agreement that shall spe-
cify the amount of the Other Incentive Award granted, the terms
and conditions applicable to such Other Incentive Award, the
applicable Performance Period and performance goals, and such
other provisions as the Committee shall determine, subject to
the terms and provisions of the Plan.
10.3 NONTRANSFERABILITY. Except as otherwise determined by the
Committee and provided in a Participant's Award Agreement,
Other Incentive Awards may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution.
10.4 FORM AND TIMING OF PAYMENT OF OTHER INCENTIVE AWARDS. Payment
of Other Incentive Awards shall be made at such times and in
such form, either in cash or in Shares (or a combination there-
of) as established by the Committee subject to the terms of the
Plan. Such Shares may be granted subject to any restrictions
deemed appropriate by the Committee. Without limiting the
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<PAGE> 30
generality of the foregoing, annual incentive awards may be paid
in the form of Other Incentive Awards (which may or may not be
subject to restrictions, at the discretion of the Committee).
ARTICLE 11. PERFORMANCE MEASURES
Unless and until the Committee proposes for stockholder vote and
stockholders approve a change in the general performance measures
set forth in this Article 11, the attainment of which may determine
the degree of payout and/or vesting with respect to Awards to Named
Executive Officers which are designed to qualify for the Performance-
Based Exception, the performance measure(s) to be used for purposes
of granting performance-based Awards shall be chosen from among the
following alternatives:
(a) Return on Assets ("ROA");
(b) Cash Flow Return on Investment ("CFROI");
(c) Earnings Before Interest and Taxes ("EBIT");
(d) Net Income
(e) Total Shareholder Return;
(f) Return on Sales ("ROS");
(g) Return on Equity ("ROE);
(h) Economic Value Added;
(i) Business Unit Operating Income;
(j) Return on Net Assets; or
(k) Net Operating Profit.
The Committee shall have the discretion to adjust the determinations
of the degree of attainment of the preestablished performance goals;
provided, however, that Awards which are designed to qualify for the
Performance-Based Exception, and which are held by Named Executive
Officers, may not be adjusted upward (the Committee shall retain the
discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing performance mea-
sures without obtaining stockholder approval of such changes, the
Committee shall have sole discretion to make such changes without
obtaining stockholder approval. In addition, in the event that the
Committee determines that it is advisable to grant Awards which shall
not qualify for the Performance-Based Exception, the Committee may
make such grants without satisfying the requirements of Code Section 162(m).
ARTICLE 12. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or suc-
cessively) to whom any benefit under the Plan is to be paid in case
of his or her death before he or she receives any or all of such bene-
fit. Each such designation shall revoke all prior designations by the
same Participant, shall be in a form prescribed by the Company, and
will be effective only when filed by the Participant in writing with
the Company during the Participant's lifetime. In the absence of any
such designation, benefits remaining unpaid at the Participant's death
shall be paid to the Participant's estate.
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<PAGE> 31
ARTICLE 13. DEFERRALS
The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would
otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals
with respect to Performance Units/Shares, or Other Incentive Awards.
If any such deferral election is required or permitted, the Committee
shall, in its discretion, establish rules and procedures for such
payment deferrals.
ARTICLE 14. RIGHTS OF EMPLOYEES
14.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate any Partici-
pant's employment at any time, nor confer upon any Participant
any right to continue in the employ of the Company.
For purposes of this Plan, a transfer of a Participant's employ-
ment between the Company and a Subsidiary, or between Subsidi-
aries, shall not be deemed to be a termination of employment.
Upon such a transfer, the Committee may make such adjustments
to outstanding Awards as it deems appropriate to reflect the
changed reporting relationships.
14.2 PARTICIPATION. No Employee of the Company or its Subsidiaries
shall have the right to be selected to receive an Award under
this Plan, or, having been so selected, to be selected to re-
ceive a future Award.
ARTICLE 15. CHANGE IN CONTROL
15.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a
Change in Control, unless otherwise specifically prohibited
under applicable laws, or by the rules and regulations of
any governing governmental agencies or national securities
exchanges:
(a) Any and all Options and SARs granted under the Plan shall
become immediately exercisable, and shall remain exercis-
able throughout their entire term.
(b) Any restriction periods and restrictions imposed on
Restricted Shares shall lapse.
(c) The target payout opportunities attainable under all
outstanding Awards of Performance Units and Performance
Shares and Other Incentive Awards shall be deemed to have
been fully earned for the entire Performance Period(s)
as of the effective date of the Change in Control. The
vesting of all Awards denominated in Shares shall be
accelerated as of the effective date of the Change in
Control, and there shall be paid out to Participants within
thirty (30) days following the effective date of the Change
in Control a pro rata number of shares based upon an assumed
achievement of all relevant targeted performance goals and
upon the length of time within the Performance Period which
has elapsed prior to the Change in Control. Awards denomi-
nated in cash shall be paid pro rata to Participants in cash
within thirty (30) days following the effective date of the
Change in Control, with the proration determined as a func-
tion of the length of time within the Performance Period
which has elapsed prior to the Change in Control, and based
on an assumed achievement of all relevant targeted perfor-
mance goals.
(d) Subject to Article 16 herein, the Committee shall have
the authority to make any modifications to the Awards as
determined by the Committee to be appropriate before the
effective date of the Change in Control.
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15.2 TERMINATION, AMENDMENT, AND MODIFICATION OF CHANGE-IN-CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan
or any Award Agreement provision, the provisions of this Article
15 may not be terminated, amended, or modified on or after the
date of an event which is likely to give rise to a Change in
Control to affect adversely any Award theretofore granted under
the Plan without the prior written consent of the Participant
with respect to said Participant's outstanding Awards; provided,
however, that the Board, upon recommendation of the Committee,
may terminate, amend, or modify this Article 15 at any time and
from time to time prior to the date of a Change in Control to
affect Awards not yet granted under the Plan.
ARTICLE 16. AMENDMENT, MODIFICATION, AND TERMINATION
16.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any
time and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part; provided, however, that unless the
Board specifically provides otherwise, any revision or amendment
that would cause the Plan to fail to comply with any requirement
of applicable law, regulation, or rule if such amendment were
not approved by shareholders shall not be effective unless and
until such approval of shareholders of the Company is obtained.
16.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modi-
fication of the Plan shall adversely affect in any material way
any Award previously granted under the Plan, without the written
consent of the Participant holding such Award.
16.3 COMPLIANCE WITH CODE SECTION 162(m). At all times when Code
Section 162(m) is applicable, all Awards granted under this
Plan shall comply with the requirements of Code Section 162(m);
provided, however, that in the event the Committee determines
that such compliance is not desired with respect to any Award or
Awards available for grant under the Plan, then compliance with
Code Section 162(m) will not be required. In addition, in the
event that changes are made to Code Section 162(m) to permit
greater flexibility with respect to any Award or Awards avail-
able under the Plan, the Committee may, subject to this Article
16, make any adjustments it deems appropriate.
ARTICLE 17. WITHHOLDING
17.1 TAX WITHHOLDING. The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and
local taxes, domestic or foreign, required by law or regulation
to be withheld with respect to any taxable event arising as a
result of this Plan.
17.2 SHARE WITHHOLDING. With respect to withholding required upon
the exercise of Options or SARs, upon the lapse of restrictions
on Restricted Stock, or upon any other taxable event arising as
a result of Awards granted hereunder, Participants may elect,
subject to the approval of the Committee in its discretion, to
satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value
on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction.
All such elections shall be irrevocable, made in writing, signed
by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its discretion, deems appro-
priate.
ARTICLE 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or
of the Board, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit, or proceeding to which he
or she may be a party or in which he or she may be involved by reason
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of any action taken or failure to act under the Plan and against and
from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction
of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity,
at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law,
or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
ARTICLE 19. SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or sub-
stantially all of the business and/or assets of the Company.
ARTICLE 20. LEGAL CONSTRUCTION
20.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include
the feminine, the plural shall include the singular, and the
singular shall include the plural.
20.2 SEVERABILITY. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal
or invalid provision had not been included.
20.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may
be required.
20.4 SECURITIES LAW AND TAX LAW COMPLIANCE. With respect to In-
siders, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors
under the 1934 Act. To the extent any provision of the plan or
action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advis-
able by the Committee.
20.5 GOVERNING LAW. To the extent not preempted by federal law,
the Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the state of
Missouri without reference to principles of conflict of laws.
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