<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------
FORM 10-K
(Mark One)
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For the fiscal year ended DECEMBER 31, 1994
------------------
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
Commission file number 0-12640
--------
KAYDON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3186040
(State or other jurisdiction of incorporation (IRS Employer ID No.)
or organization)
ARBOR SHORELINE OFFICE PARK, 19345 US 19 NORTH, CLEARWATER, FL 34624
(Address of principal executive offices)
Registrant's telephone number, including area code (813) 531-1101
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Yes X No
----- -----
Based on the closing sales price of February 27, 1995, the aggregate market
value of the voting stock held by nonaffiliates of the registrant was
$450,202,293.
The number of shares outstanding of the registrant's common stock, $0.10 par
value was 16,674,159 as of February 27, 1995.
DOCUMENTS INCORPORATED BY REFERENCE AND THE PART(S) OF THIS FORM 10-K INTO
WHICH EACH DOCUMENT IS INCORPORATED:
KAYDON CORPORATION 1994 ANNUAL REPORT TO STOCKHOLDERS - PARTS I, II AND IV
--------------------------------------------------------------------------
KAYDON CORPORATION PROXY STATEMENT - PART III
---------------------------------------------
<PAGE> 2
KAYDON CORPORATION FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
INDEX
<TABLE>
<CAPTION>
Part I Page No.
- ------ --------------
<S> <C> <C>
Item 1. Business 1 - 9
Item 2. Properties 10 - 12
Item 3. Legal Proceedings 12 - 13
Item 4. Submission of Matters to Vote of Security Holders 13
Part II
- -------
Item 5. Market for the Registrant's Common Equity &
Related Stockholder Matters 14
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 15
Part III
- --------
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners
and Management 17
Item 13. Certain Relationships and Related Transactions 17
Part IV
- -------
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) 1. Financial Statements 18
2. Financial Statement Schedules 18
3. Reference to Exhibits 19
(b) Reports on Form 8-K 19
Signatures 20
(c) 1. Exhibit Index 21 - 25
2. Exhibits E1 - E412
</TABLE>
<PAGE> 3
PART I
Item 1. BUSINESS
a. General Development of Business
Kaydon Corporation (the "Company" or "Kaydon") was formed in October
1983, as a wholly owned subsidiary of Bairnco Corporation ("Bairnco" or "former
parent"), when it acquired all of the assets and assumed certain liabilities,
other than amounts due from affiliates, from a subsidiary of Keene Corporation,
another wholly owned subsidiary of Bairnco, which was then known as Kaydon
Corporation and is now inactive.
The Company was spun off from Bairnco in April 1984 and is no longer a
member of its consolidated group. This spinoff was effected in the form of a
100 percent stock dividend to stockholders of the former parent's common stock.
On June 30, 1986, Kaydon Ring and Seal, Inc., a wholly owned
subsidiary of Kaydon, acquired for $29,600,000 certain assets and liabilities
of the Piston Ring and Seal Division of Koppers Company, Inc., a manufacturer
of piston rings and shaft seals. This acquisition was consummated by Kaydon
Ring and Seal, Inc. with loaned funds from Kaydon.
On July 17, 1987, Kaydon acquired for $5,100,000 certain assets and
liabilities of the Spirolox operation of TRW, Inc., a manufacturer of specialty
retaining rings. This acquisition was consummated with funds acquired through
bank credit obtained in the normal course of business.
On June 23, 1989, Kaydon Corporation, through its newly formed, wholly
owned subsidiaries, Kaydon Acquisition Corp. III and Kaydon Acquisition Corp.
IV, acquired for $22,710,000 all of the stock of I.D.M. Electronics Ltd., a
United Kingdom corporation, and KDI Electro-Tec Corp., a Delaware corporation,
from KDI Corporation. I.D.M. Electronics Ltd. and Electro-Tec Corp.
manufacture high-performance, precision slip-rings, slip-ring capsules and
slip-ring assemblies. Slip-rings are complex, electromechanical devices used
to transmit electrical signals or electrical power between the rotating and
stationary members of an assembly, such as a gyro and its housing. The
purchase price was financed by credit obtained in the normal course of
business.
On December 16, 1991, Kaydon Corporation, through its wholly owned
subsidiaries, Kaydon Acquisition Corp. III and Kaydon Acquisition Corp. U.K.
Ltd., acquired for L.24,000,000 (approximately $43,440,000 when translated at
the exchange rate in effect at the time of
1
<PAGE> 4
purchase) all of the capital stock of Prizerandom Limited, a United Kingdom
corporation, from Clairmont PLC, a Scotland corporation. Prizerandom Limited
is a wholly owned subsidiary of Clairmont PLC and is the holding company for
Cooper Bearings Limited, a United Kingdom corporation, which was the primary
subject of the acquisition.
Cooper Bearings Ltd. is a holding company consisting of the following
operating subsidiaries, all of which are manufacturers or distributors of
complete bearings and related components parts:
<TABLE>
<CAPTION>
COUNTRY OF
SUBSIDIARY INCORPORATION
---------- -------------
<S> <C>
Cooper Roller Bearings Company Limited ("Cooper U.K.") United Kingdom
Cooper Split Roller Bearings Corporation ("Cooper U.S.") U.S.A.
Cooper Geteilte Rollenlager GmbH ("Cooper Germany") Germany
</TABLE>
Cooper U.K. is a manufacturing operation located in King's Lynn,
Norfolk - U.K. that produces a range of split roller bearings including both a
standard line and custom-designed product. Split bearings are designed
specifically to aid the customer in solving problems where the application of
full round bearings would be impractical. Cooper U.S. and Cooper Germany are
distribution operations located in Virginia Beach, VA - U.S. and Krefeld,
Germany, respectively. The purchase price was financed through Kaydon
Corporation cash plus bank loans from the National Bank of Detroit and
Continental Bank, U.K.
On December 4, 1993, Cooper U.K., a wholly owned subsidiary of Kaydon,
acquired the assets of Kenyon Power Transmission Ltd. ("Kenyon") of Manchester,
England. Kenyon manufactures pulleys and drive components which are
complementary to their product offering. Subsequent to the purchase, Cooper
U.K. moved the assets to their manufacturing facility.
On January 28, 1994, Kaydon Corporation, through its wholly owned
subsidiary, Kaydon Acquisition VI, Inc., acquired for $7,268,000 certain assets
and liabilities of Industrial Tectonics Inc, the ball division of Axel Johnson,
Inc. Industrial Tectonics Inc, located in Dexter, Michigan, manufactures
specialty balls used in measuring devices, floats, valves, ball point pens and
antifriction bearings. This acquisition was consummated by Kaydon Acquisition
VI, Inc. with loaned funds from Kaydon Corporation.
2
<PAGE> 5
b. and c. Financial Information About Industry Segments
and Narrative Description of Business
The Company designs, manufactures and sells custom-engineered products
for a broad and diverse customer base. The Company's principal products
include antifriction bearings, bearing systems, filters, filter housings,
high-performance rings, sealing rings, specialty retaining rings and balls,
shaft seals and slip-rings. These products are used by customers in a wide
variety of medical, instrumentation, material handling, machine tool
positioning, aerospace, defense, construction and other industrial
applications.
Products
Kaydon works closely with its customers to engineer the required
solutions to their design problems. Designed solutions are frequently unique
to a single customer or application. Depending upon the nature of the
application, the design may be used over a protracted time period and in large
numbers, or it may be for a single use.
The antifriction bearing products of Kaydon incorporate various types
of rolling elements. The ball, tapered roller, cylindrical roller and needle
roller bearings manufactured by Kaydon are made in sizes ranging from needle
bearings with a 1/2-inch outside diameter to heavy-duty ball bearings with an
outside diameter of 180 inches. These antifriction products are fabricated
from aluminum, bearing-quality steel, stainless steel or special tool steels.
They often incorporate a broad range of features such as gearing, special
sealing systems and mounting arrangements in combination with other mechanical
components.
As a custom manufacturer, many diverse applications are served.
Typical applications include large-diameter ball bearings for hydraulic cranes
and excavators; thin-section ball bearings for rotating joints of industrial
robots; lightweight airborne radar bearings; large-diameter aluminum roller
bearings for military vehicle turret systems; needle roller bearings for
passenger car transmissions; loose needle rollers for universal joints utilized
in light trucks, agricultural tractors and passenger cars; special coalescing
elements and filter housings for diesel fuel filtration on both commercial and
military vehicles; hydraulic filter elements for tractor-mounted farm implement
units; and ultra high-precision roller bearings for gear box applications.
3
<PAGE> 6
Kaydon's subsidiary, Kaydon Ring and Seal, Inc., manufactures metallic
medium and large bore-size rings for low and medium-speed internal combustion
engines, steam engines, pumps and reciprocating compressors. Sealing rings are
engineered with metallic and nonmetallic products used to limit the leakage of
fluids and gases within engines and a wide variety of other mechanical
products. Sealing rings are used in industrial applications, such as:
compressors, transmissions, hydraulic and pneumatic cylinders, and commercial
and military aircraft, jet engines and control apparatus applications. Shaft
seals are used to seal gases or liquids usually under extreme conditions of
speed, pressure or temperature. Shaft seals are fabricated from a variety of
materials depending on the application.
Electro-Tec Corp. and I.D.M. Electronics Ltd., wholly owned
subsidiaries of Kaydon Corporation, design and manufacture precision,
high-performance slip-rings, slip-ring assemblies, capsules and related
electromechanical devices to meet customers' exact needs and specifications.
Slip-rings are manufactured from injection and transfer-molded plastics,
aluminum and stainless steel castings, bearings and electronic components and
connectors, and are sometimes subjected to an electro-deposition process. They
are used to transmit electrical signals or power between the rotating and
stationary members of an assembly and can be found in combat vehicles, aircraft
inertial guidance systems, telecommunications satellites, aircraft targeting
systems and medical diagnostic equipment.
Cooper Bearings Ltd., a wholly owned subsidiary of Kaydon Corporation,
designs and manufactures a range of split roller bearings, which include both
standard and custom-designed lines. Split bearings are designed specifically
to aid the customer in solving problems where the application of full round
bearings would be less desirable. The product is used in a wide range of
applications but particularly those where space and ease of change are
important selection criteria. With the acquisition of the assets of Kenyon
Power Transmission, Cooper U.K. now manufactures pulleys and drive components,
which are complimentary products.
Industrial Tectonics Inc, a wholly owned subsidiary of Kaydon
Corporation, manufactures specialty balls from alloyed steel, plastic, tungsten
carbide, glass and an assortment of other materials. These balls are used in a
variety of applications including gauges, measuring devices, floats, valves,
ball point pens and antifriction bearings.
Approximately 70 percent of Kaydon's sales are to original equipment
manufacturers, which incorporate the Kaydon products in the products they sell.
Many of the applications for the
4
<PAGE> 7
Company's products also provide the opportunity for participation in the
replacement or spare parts markets.
New Product and Industry Segment Information
The Company has not made any public announcement of, or otherwise made
public information about, a new product or a new industry segment which would
require the investment of a material amount of the Company's assets or which
would otherwise result in a material cost.
Patents, Trademarks, Licenses, Etc.
The Company does not believe that any material part of its business is
dependent on the continued availability of any one or all of its patents or
trademarks.
Seasonal Nature of Business
The Company does not consider its business to be seasonal in nature.
Working Capital Practices
The Company does not believe that it or the industry in general has
any special practices or special conditions affecting working capital items
that are significant for an understanding of the Company's business.
Customers
Kaydon sells its products to over 1,000 companies throughout the
world. The principal customers are generally large manufacturing corporations.
During 1994, 1993 and 1992, sales to no single customer exceeded 10% of total
sales.
5
<PAGE> 8
Customers can generally be divided into four major market groups:
Aerospace and Military Equipment, Replacement Parts and Exports, Special
Industrial Machinery and Heavy Industrial Equipment. Sales to these customer
groups for 1994, 1993 and 1992 are set forth in the following table:
<TABLE>
<CAPTION>
Net Sales by Major Market Groups
--------------------------------
(in thousands)
1994 1993 1992
------------------------ ------------------------ ------------------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Aerospace and $ 39,625 19.4 $ 40,838 22.2 $ 47,972 26.1
Military Equipment
Replacement Parts 78,675 38.4 68,624 37.3 71,865 39.1
and Exports
Special Industrial 60,603 29.6 52,091 28.3 43,087 23.4
Machinery
Heavy Industrial 25,792 12.6 22,507 12.2 20,980 11.4
Equipment ------- ----- ------- ----- ------- -----
Total $204,695 100.0% $184,060 100.0% $183,904 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
Replacement parts are sold mainly through specialized distributors.
Kaydon had export sales of $17,184,000 in 1994, $10,979,000 in 1993, and
$9,102,000 in 1992, with most of such sales concentrated in Canada, Europe and
Japan.
Marketing
Kaydon's sales organization consists of salespersons and
representatives located throughout the United States, Canada, Europe and Asia.
Salespersons are trained to provide technical assistance to customers, as well
as to provide liaison with factory engineering staffs.
A nationwide network of specialized distributors and agents provides
local availability of Kaydon products to serve the requirements of the
replacement market and small original equipment manufacturers.
6
<PAGE> 9
Manufacturing
Kaydon manufactures virtually all of the products it sells and
utilizes subcontractors only for occasional specialized services. Kaydon's
products require sophisticated processes and equipment, and many of its
products incorporate unique Kaydon-developed production techniques. Certain
satellite and aircraft-type bearing products must meet extraordinary mechanical
tolerances (for example, within 20 millionths of an inch) and many bearings and
slip-rings are assembled in quality-controlled "white room" conditions. Nearly
all of Kaydon's products require high levels of incoming quality control and
process quality control. The manufacturing equipment required for Kaydon's
operations entails a very high level of capital investment for any given level
of sales.
Suppliers
Kaydon and its subsidiaries purchase large quantities of raw
materials, mainly bearing-quality steel, special alloy steel, high-grade carbon
and filter media, aluminum alloy and stainless steel castings, plastics, wire
and electrical connectors, from multiple sources. Kaydon purchases large
amounts of certain types of bearing-quality steel from a number of foreign
suppliers. No significant supply problems have been encountered in recent
years as relationships with suppliers have generally been good.
Environmental Matters
Reference is made to "Management's Discussion and Analysis" on pages
15 and 16 of Kaydon's 1994 Annual Report to Stockholders which is incorporated
herein by reference.
7
<PAGE> 10
Employees
On December 31, 1994, Kaydon employed 1,682 employees. Hourly
employees at the Muskegon facilities (including Norton Shores) are represented
by the International Association of Machinists and Aerospace Workers. The
current collective bargaining agreement is effective until December 3, 1997.
The Baltimore hourly employees are also represented by the International
Association of Machinists and Aerospace Workers. The current collective
bargaining agreement is effective until November 5, 1995. Greeneville hourly
employees are represented by the United Steelworkers of America, with the
current collective bargaining agreement effective until February 2, 1996.
Dexter hourly employees are represented by the International Union United
Automobile, Aerospace and Agricultural Implement Workers of America, UAW, with
the current collective bargaining agreement effective until November 1, 1996.
The remaining domestic factory employees, as well as all office employees, are
non-union.
Kaydon provides its employees with a full range of insurance, pension
and deferred compensation benefits. The Company believes its levels of total
compensation are equal to or better than comparable companies in communities
adjacent to each facility.
Backlog
Kaydon sells certain products on a build-to-order basis that requires
substantial order lead time. This results in a backlog of unshipped, scheduled
orders. Other products are manufactured on the basis of sales projections or
annual blanket purchase orders. Orders for such products are not entered into
backlog until explicit shipping releases are received. Kaydon's backlog was
$88,360,000 at December 31, 1994 and $84,385,000 at December 31, 1993. Based
on experience, management would expect to ship over the following twelve months
about 90 percent of the year-end backlog. Backlog has become less indicative
of future results as the Company has made efforts to shorten manufacturing lead
times, creating a faster response to customer orders.
8
<PAGE> 11
Competition
Kaydon competes with divisions of SKF Industries, Timken Corporation,
Torrington/Fafnir, Rotek, FAG, EG&G Inc., Litton Poly-Scientific and numerous
other smaller companies.
The markets served by Kaydon are large and extremely competitive. The
major domestic competitors generally produce a wide line of standard products
and do not specialize in custom products. The major domestic bearing
manufacturers nonetheless do offer special-engineered bearings. The markets
for Kaydon's special-machined components, fabricated products, filters, rings
and seals are very diverse. Consequently, management feels that the size of
the total market for such products cannot be meaningfully estimated.
In all of the markets served by Kaydon, the principal methods of
competition involve price, product performance, engineering support and timely
delivery.
Many of Kaydon's domestic competitors are part of large, worldwide
manufacturing concerns and have significantly greater financial resources.
While foreign competition is intense and growing for all industrial components,
the special nature of Kaydon's products and the close working relationship with
its customers have somewhat limited the impact of foreign competition on
domestic business.
Government Contracts and Renegotiation
Various provisions of federal law and regulations require, under
certain circumstances, the renegotiation of military procurement contracts or
the refund of profits determined to be excessive. Based on Kaydon's experience
under such provisions, management believes that no material renegotiation or
refunds (if any) will be required.
d. Information About International Operations
Information with respect to operations by geographic area appears in
Note 15, "Business Segment Information" of the Notes to Consolidated Financial
Statements set forth on page 28 of the Annual Report to Stockholders, which is
incorporated herein by reference. Fluctuating exchange rates and factors
beyond the control of the Company, such as tariffs and foreign economic
policies, may affect future results of foreign operations.
9
<PAGE> 12
Item 2. PROPERTIES
The following chart lists the principal locations, activity (use) and
square footage of Kaydon's most significant facilities as of December 31, 1994
and indicates whether the property is owned or leased:
<TABLE>
<CAPTION>
Location Activity Sq. Ft. Owned or Leased
-------- -------- ------- ---------------
<S> <C> <C> <C>
Clearwater, FL Corporate Headquarters 9,383 Leased
Muskegon, MI Engineering Laboratory 232,250 Owned
(Norton Shores) Manufacturing Facility
Muskegon, MI Manufacturing Facility 162,476 Owned
(Norton Shores)
Muskegon, MI Held For Sale 104,000 Owned
Newaygo, MI Assembly Facility 16,800 Owned
Dexter, MI Manufacturing Facility 56,627 Owned
Sumter, SC Manufacturing Facility 168,400 Leased
Sumter, SC Manufacturing Facility 115,200 Owned
Greeneville, TN Manufacturing Facility 80,700 Owned
LaGrange, GA Manufacturing Facility 87,000 Owned
Baltimore, MD Manufacturing Facility 725,000 Owned
St. Louis, MO Manufacturing Facility 18,500 Leased
Blacksburg, VA Manufacturing Facility 111,400 Owned
Virginia Beach, VA Warehouse 28,713 Owned
Offices 9,855 Owned
Krefeld, Germany Warehouse 10,032 Leased
King's Lynn, England Manufacturing Facility 153,000 Owned
Reading, England Manufacturing Facility 26,000 Leased
Monterrey, NL, Mexico Manufacturing Facility 32,000 Owned
</TABLE>
Kaydon owns the two manufacturing facilities located in Muskegon
(Norton Shores), the assembly facility located in Newaygo, the manufacturing
facilities located in Dexter, Sumter, Greeneville, LaGrange, Baltimore,
Blacksburg, Monterrey, Mexico, and King's Lynn, England and the
10
<PAGE> 13
warehouse facility in Virginia Beach. Due to the continuing shrinkage of the
military and aerospace markets, Kaydon consolidated its three Muskegon,
Michigan plants into two buildings and closed the plant which is located within
a modern industrial park. Management does not anticipate a material impact, if
any, on earnings relating to the sale of this facility and anticipates that the
desirable location will allow the plant facility to be sold for at least book
value. Kaydon operates at two sites in Sumter, one site is owned and the other
is leased (under a capitalized lease) in connection with a $4,000,000
Industrial Revenue Bond financing for a term expiring April 1, 1997, with an
option to purchase the property during the pendency of the lease and an
obligation to purchase the property for nominal consideration upon its
expiration. The St. Louis property is leased for a term expiring July 31,
1997. The property in Reading, England, is leased for a term expiring May 1,
2009. The Krefeld, Germany property is leased for a term expiring September
30, 1995. The Corporate office located in Clearwater, Florida is leased for a
term expiring January 31, 1999.
11
<PAGE> 14
Kaydon Corporation is the sole shareholder of the following operating
subsidiaries:
<TABLE>
<CAPTION>
Date
Subsidiary Formed/Acquired
---------- ---------------
<S> <C>
Kaydon Ring and Seal, Inc. June 17, 1986
(a Delaware corporation)
Kaydon S.A. de C.V. April 10, 1987
(a Mexico corporation)
Electro-Tec Corp. June 23, 1989
(a Delaware corporation)
I.D.M. Electronics Ltd. June 23, 1989
(a United Kingdom corporation)
Cooper Roller Bearings Company Limited December 16, 1991
(a United Kingdom corporation)
Cooper Split Roller Bearings Corporation December 16, 1991
(a Virginia corporation)
Cooper Geteilte Rollenlager GmbH December 16, 1991
(a Germany corporation)
Industrial Tectonics Inc January 28, 1994
(a Delaware corporation)
</TABLE>
Item 3. LEGAL PROCEEDINGS
The Company, together with other companies, certain former officers,
and certain current and former directors, has been named as a co-defendant in
lawsuits filed in the federal court of New York. The suits purport to be class
actions on behalf of all persons who have unsatisfied personal injury and
property damage claims against Keene Corporation. The premise of the suits is
that assets of Keene were transferred to Bairnco subsidiaries, of which Kaydon
was one in 1983, at less than fair value. The suits also allege that the
Company, among other named defendants, was a successor to and alter ego of
Keene. Earlier this year an examiner was appointed by a bankruptcy court to
examine the issues at stake. On September 23, 1994, the "Preliminary Report of
the Examiner" was made public. In the report, the examiner stated that the
alleged fraudulent conveyance claims against the Company appear to be
time-barred by the statute of limitations,
12
<PAGE> 15
subject to certain possible exceptions which the Company does not believe are
significant or factual. Although the examiner has made certain recommendations
regarding a mechanism to resolve the claims against the Company, the Court has
not taken any action related to the report. Nevertheless, in the Company's
opinion, the report reinforces management's original view that the claims will
ultimately not be sustained. Accordingly, no provision has been reflected in
the consolidated financial statements for any alleged damages. Management
believes that the outcome of this litigation will not have a material adverse
effect on the Company's financial position.
Various other claims, lawsuits and environmental matters arising in
the normal course of business are pending against the Company. Management
believes that the outcome of these matters will not have a material adverse
effect on the Company's financial position or results of operations.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1994.
13
<PAGE> 16
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY & RELATED STOCKHOLDER
MATTERS
a. and c. Market Information and Dividends
Information regarding the market price of Kaydon's common stock
appears in the "Quarterly Results of Operations" on page 16 of Kaydon's 1994
Annual Report to Stockholders, which is incorporated herein by reference.
During 1992, the Company effected a two-for-one stock split; accordingly, all
applicable financial data has been restated to reflect the split. Kaydon's
common stock is listed on the New York Stock Exchange ("NYSE") under the symbol
KDN. Kaydon declared cash dividends during 1994, 1993 and 1992 as follows (on
a per-share basis):
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
March $0.10 $0.09 $0.075
June 0.10 0.09 0.075
September 0.10 0.09 0.075
December 0.11 0.10 0.09
</TABLE>
Effective with the cash dividend declared in December 1994 and paid in January
1995, Kaydon adopted a plan which calls for quarterly cash dividends of $0.11
per share. This recent increase in the dividend amount reflects Kaydon
management's continuing confidence in the growing financial strength of the
Company and their expectation of continued earnings growth.
b. Holders
The number of common equity security holders is as follows:
Number of Holders
of Record
Title of Class As of December 31, 1994
- -------------- -----------------------
Common Stock, par value $0.10 per share 1,615
14
<PAGE> 17
Item 6. SELECTED FINANCIAL DATA
Reference is made to "Financial History" on page 14 and "Management's
Discussion and Analysis" on pages 15 and 16 of Kaydon's 1994 Annual Report to
Stockholders, which is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to "To Our Stockholders" on pages 2 and 3 and
"Management's Discussion and Analysis" on pages 15 and 16 of Kaydon's 1994
Annual Report to Stockholders, which is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the financial statements and related notes
included on pages 18 through 28 and "Quarterly Results of Operations" on page
16 of Kaydon's 1994 Annual Report to Stockholders, which is incorporated herein
by reference. Financial statement schedules are included in Part IV of this
filing.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
<PAGE> 18
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required with respect to directors of Kaydon is
included in the Proxy Statement for the 1995 Annual Meeting of Stockholders of
Kaydon, which has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The information required with respect to
executive officers of the Company is as follows:
<TABLE>
<CAPTION>
Name and Age of Data Pertaining to
Executive Officer Executive Officers
----------------- ------------------
<S> <C>
Lawrence J. Cawley (60) Chief Executive Officer, Chief
Financial Officer and Chairman of
the Board. Mr. Cawley was
appointed as President and Chief
Executive Officer of Kaydon
Corporation in 1987 and
relinquished the position of
President in September 1989, at
which time he was appointed
Chairman of the Board. Effective
January of 1992, Mr. Cawley was
appointed Chief Financial Officer.
He was President of the Bearings
Division of Kaydon Corporation
from 1985 to 1987.
Stephen K. Clough (41) President and Chief Operating
Officer. Mr. Clough was appointed
President and Chief Operating
Officer of Kaydon Corporation and
was elected to the Board of
Directors in September 1989. He
had been Vice President and
General Manager of Kaydon's
Bearings Division since 1987,
after having joined Kaydon as Vice
President of its Automotive
operation in April 1986.
John F. Brocci (52) Vice President of Administration
and Secretary. Mr. Brocci has
been Vice President of
Administration since joining
Kaydon in March, 1989. He was
appointed Secretary in April,
1992. Prior to joining Kaydon, he
was the Operations Manager for the
Sealed Power Division of SPX
Corporation.
</TABLE>
16
<PAGE> 19
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is included in the Proxy Statement
for the 1995 Annual Meeting of Stockholders of Kaydon, which has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is included in the Proxy Statement
for the 1995 Annual Meeting of Stockholders of Kaydon, which has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is included in the Proxy Statement
for the 1995 Annual Meeting of Stockholders of Kaydon, which has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference.
17
<PAGE> 20
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
a. 1. Financial Statements
The following consolidated financial statements of the Company
are included in the Annual Report of the registrant to its
stockholders for the year ended December 31, 1994 which is
incorporated herein by reference in Part II, Item 8 of this
report.
<TABLE>
<CAPTION>
Page Number in
Annual Report
to Stockholders
---------------
<S> <C>
Report of Independent Public Accountants 17
Consolidated Balance Sheets
as of December 31, 1994 and 1993 18
Consolidated Statements of Income
for the years ended December 31, 1994, 1993 and 1992 19
Consolidated Statements of Stockholders' Investment for the
years ended December 31, 1994, 1993 and 1992 20
Consolidated Statements of Cash Flows
for the years ended December 31, 1994, 1993 and 1992 21
Notes to Consolidated Financial Statements 22 - 28
</TABLE>
2. Financial Statement Schedules
All schedules required by Form 10-K Annual Report have been
omitted because they were inapplicable, the required
information is included in the notes to the consolidated
financial statements or otherwise is not required under
instructions contained in Regulation S-X.
Financial statements of the Company have been omitted since
the Company is primarily an operating company and all
subsidiaries included in the consolidated financial statements
filed are wholly owned subsidiaries.
18
<PAGE> 21
3. Reference to Exhibits
Reference is made to the Exhibit Index which is found on pages
21 through 25 of this Form 10-K.
b. Reports on Form 8-K
No reports on Form 8-K have been filed during the fourth
quarter of 1994.
19
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Kaydon has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C> <C>
KAYDON CORPORATION
-------------------------------------------------
Registrant
Date: March 28, 1995 By: /s/Lawrence J. Cawley
-------------------------------------------------
Chief Executive Officer & Chief Financial Officer
Date: March 28, 1995 By: /s/Stephen K. Clough
-------------------------------------------------
President and Chief Operating Officer
Date: March 28, 1995 By: /s/Thomas C. Sorrells III
-------------------------------------------------
Corporate Controller
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of Kaydon and in
the capacities and on the dates indicated.
<TABLE>
<S> <C>
/s/Glenn W. Bailey
----------------------------------------
Glenn W. Bailey - Director March 28, 1995
/s/Gerald J. Breen
----------------------------------------
Gerald J. Breen - Director March 28, 1995
/s/Lawrence J. Cawley
----------------------------------------
Lawrence J. Cawley - Chairman March 28, 1995
/s/Stephen K. Clough
----------------------------------------
Stephen K. Clough - Director March 28, 1995
/s/John H.F. Haskell, Jr.
----------------------------------------
John H.F. Haskell, Jr. - Director March 28, 1995
/s/Norton Stevens
----------------------------------------
Norton Stevens - Director March 28, 1995
</TABLE>
20
<PAGE> 23
c. 1. Exhibits Index
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO. INCORPORATED BY REFERENCE TO
- ------- ----------- -------- ----------------------------
<S> <C> <C> <C>
(2) Stock and Asset Purchase Agreement Exhibit 2 to Kaydon's Registration
between Kaydon Acquisition, Inc. Statement on Form 8-K filed on July 15,
(now Kaydon Ring and Seal, Inc.) 1986, as amended by the Registration
and Koppers Company, Inc., dated Statement filed on Form 8-K on September
June 26, 1986. 30, 1986 (SEC File No. 0-12640).
(2) Agreement of Purchase and Sale Exhibit 2 to Kaydon's Annual Report on
between Kaydon Corporation and Form 10-K for the year ended
TRW Automotive Products, Inc., December 31, 1987 (SEC File No. 0-12640).
dated as of June 29, 1987.
(2) Stock Purchase Agreement among Exhibit 2 to Kaydon's Registration
Kaydon Corporation, Kaydon Statement on Form 8-K filed on July 7,
Acquisition Corp. III, Kaydon 1989, as amended by the Registration
Acquisition Corp. IV, KDI Holdings Statement filed on Form 8-K on
Inc. and KDI Corporation November 3, 1989 and Registration
Statement filed on Form 8-K on
March 27, 1990 (SEC File No. 0-12640).
(2) Stock Purchase Agreement among Exhibit 2 to Kaydon's Registration
Kaydon Corporation, Kaydon Statement on Form 8-K filed on December
Acquisition Corp. U.K. Limited, 31, 1991, as amended by the Registration
Murray Ventures PLC and others and Statement filed on Form 8-K on February
William Terence Blaney and others. 28, 1992 (SEC File No. 0-12640).
(2) Asset Purchase Agreement among E-1 - E-136
Kaydon Corporation, Industrial
Tectonics Inc and Axel Johnson, Inc.
dated January 28, 1994.
(3) & (4) Certificate of Incorporation of the Exhibit 3 to Kaydon's Registration
Registrant, dated October 21, 1983 Statement on Form S-1 (No. 2-89399).
(3) & (4) Certificate of Amendment to the Exhibit 3 to Kaydon's Registration
Certificate of Incorporation of the Statement on From S-1 (No. 2-89399).
Registrant, dated November 23, 1983.
(3) & (4) Certificate of Amendment to the Exhibit 3 to Kaydon's Registration
Certificate of Incorporation of the Statement on Form S-1 (No. 2-89399).
Registrant, dated February 6, 1984.
(3) & (4) Certificate of Correction to the Exhibit 3 to Kaydon's Registration
Certificate of Amendment to the Statement on Form S-1 (No. 2-89399).
Certificate of Incorporation of the
Registrant, dated February 17, 1984.
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO. INCORPORATED BY REFERENCE TO
- ------- ----------- -------- ----------------------------
<S> <C> <C> <C>
(3) & (4) Form of Restated Certificate of Exhibit 3 to Kaydon's Registration
Incorporation of the Registrant, Statement on Form S-1 (No. 2-89399).
dated March 1984.
(3) Amendment to Certificate of Incorporation Exhibit 3 to Kaydon's Annual Report on
of the Registrant, dated February 24, 1987. Form 10-K for the year ended December 31, 1987
(SEC File No. 0-12640).
(3) Bylaws of the Registrant, as adopted on Exhibit 3 to Kaydon's Registration Statement
October 27, 1983. on Form S-1 (No. 2-89399).
(3) Amended Bylaws of the Registrant, as Exhibit 3 to Kaydon's Annual Report on
adopted on February 19, 1986. Form 10-K for the year ended December 31, 1985
(SEC File No. 0-12640).
(3) Amendment to the Bylaws of the Registrant, Exhibit 3 to Kaydon's Annual Report on
dated as of September 19, 1989. Form 10-K for the year ended December 31, 1989
(SEC File No. 0-12640).
(3) & (4) Certificate of Amendment to the Exhibit 3 to Kaydon's Quarterly Report on
Certificate of Incorporation of the Form 10-Q for the quarter ended March 28, 1992
Registrant, dated April 27, 1992. (SEC File No. 0-12640).
(4) Form of Stock Certificate for Kaydon Exhibit 3 to Kaydon's Registration Statement
Common Stock. on Form S-1 (No. 2-89399).
(4) & (10) Amended and Restated Revolving Credit and Exhibit 4 to Kaydon's Annual Report on
Term Loan Agreement, dated March 14, 1990. Form 10-K for the year ended December 31, 1990
(SEC File No. 0-12640).
(4) & (10) First Amendment to the Amended and Exhibit 4 to Kaydon's Annual Report on
Restated Revolving Credit and Term Loan Form 10-K for the year ended December 31, 1991
Agreement, dated February 22, 1991. (SEC File No. 0-12640).
(4.1) Second Amendment to the Amended and E-137 - E-158
Restated Revolving Credit and Term Loan
Agreement, dated February 28, 1994.
(4.2) Third Amendment to the Amended and E-159 - E-173
Restated Revolving Credit and Term Loan
Agreement, dated March 29, 1994.
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO. INCORPORATED BY REFERENCE TO
- ------- ----------- -------- ----------------------------
<S> <C> <C> <C>
(10) Loan Agreement by and between Kaydon Exhibit 10 to Kaydon's Annual Report on
Corporation and the Economic Development Form 10-K for the year ended December 31, 1989
Corporation of the City of Norton Shores, (SEC File No. 0-12640).
dated as of January 1, 1990.
(10) Reimbursement Agreement by and between Exhibit 10 to Kaydon's Annual Report on
Kaydon Corporation and NBD Bank, N.A., Form 10-K for the year ended December 31, 1991
dated as of August 1, 1991. (SEC File No. 0-12640).
(10) Indenture of Trust between the Economic Exhibit 10 to Kaydon's Annual Report on
Development Corporation of the City of Form 10-K for the year ended December 31, 1989
Norton Shores and Manufacturers (SEC File No. 0-12640).
and Traders Trust Company, dated as of
January 1, 1990.
(10) First Supplemental Indenture of Trust Exhibit 10 to Kaydon's Annual Report on
between the Economic Development Form 10-K for the year ended December 31, 1991
Corporation of the City of Norton Shores (SEC File No. 0-12640).
and Manufacturers and Traders Trust Company,
dated as of August 1, 1991.
(10) Placement and Remarketing Agreement Exhibit 10 to Kaydon's Annual Report on
between the Economic Development Form 10-K for the year ended December 31, 1989
Corporation of the City of Norton Shores (SEC File No. 0-12640).
and Continental Bank N.A., dated as of
January 11, 1990.
(10) First Amendment to the Placement and Exhibit 10 to Kaydon's Annual Report on
Remarketing Agreement between the Form 10-K for the year ended December 31, 1991
Economic Development Corporation of the (SEC File No. 0-12640).
City of Norton Shores and Continental Bank
N.A. and LaSalle National Bank, dated as
of April 15, 1991.
(10) Second Amendment to the Placement and Exhibit 10 to Kaydon's Annual Report on
Remarketing Agreement between the Economic Form 10-K for the year ended December 31, 1991
Development Corporation of the City of (SEC File No. 0-12640).
Norton Shores and First Commerce Capital,
dated as of August 14, 1991.
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO. INCORPORATED BY REFERENCE TO
- ------- ----------- -------- ----------------------------
<S> <C> <C> <C>
(10) Irrevocable Letter of Credit issued by NDB Exhibit 10 to Kaydon's Annual Report on
Bank, N.A., for the account of Kaydon Form 10-K for the year ended December 31, 1991
Corporation and for the benefit of (SEC File No. 0-12640).
Manufacturers and Traders Trust Company,
dated as of August 13, 1991.
(10) Loan Agreement by and between Kaydon Exhibit 10 to Kaydon's Annual Report on
Corporation and Sumter County, South Form 10-K for the year ended December 31, 1990
Carolina, dated as of March 1, 1990. (SEC File No. 0-12640).
(10) Reimbursement Agreement by and between Exhibit 10 to Kaydon's Annual Report on
Kaydon Corporation and NBD Bank, N.A., Form 10-K for the year ended December 31, 1991
dated as of August 1, 1991. (SEC File No. 0-12640).
(10) Indenture of Trust between Sumter County, Exhibit 10 to Kaydon's Annual Report on
South Carolina, and Manufacturers and Form 10-K for the year ended December 31, 1990
Traders Trust Company, dated as (SEC File No. 0-12640).
of March 1, 1990.
(10) First Supplemental Indenture of Trust Exhibit 10 to Kaydon's Annual Report on
between Sumter County, South Carolina, Form 10-K for the year ended December 31, 1991
and Manufacturers and Traders Trust (SEC File No. 0-12640).
Company, dated as of August 1, 1991.
(10) Placement and Remarketing Agreement Exhibit 10 to Kaydon's Annual Report on
between Sumter County, South Carolina, and Form 10-K for the year ended December 31, 1990
Continental Bank N.A., dated as of (SEC File No. 0-12640).
April 5, 1990.
(10) First Amendment to the Placement and Exhibit 10 to Kaydon's Annual Report on
Remarketing Agreement between Sumter Form 10-K for the year ended December 31, 1991
County, South Carolina, and Continental (SEC File No. 0-12640).
Bank N.A. and LaSalle National Bank, dated
as of April 15, 1991.
(10) Second Amendment to the Placement and Exhibit 10 to Kaydon's Annual Report on
Remarketing Agreement between Sumter Form 10-K for the year ended December 31, 1991
County, South Carolina, and First Commerce (SEC File No. 0-12640).
Capital, dated as of August 14, 1991.
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE NO. INCORPORATED BY REFERENCE TO
- ------- ----------- -------- ----------------------------
<S> <C> <C> <C>
(10) Irrevocable Letter of Credit issued by NDB Exhibit 10 to Kaydon's Annual Report on
Bank, N.A., for the account of Kaydon Form 10-K for the year ended December 31, 1991
Corporation and for the benefit of (SEC File No. 0-12640).
Manufacturers and Traders Trust Company,
dated as of August 13, 1991.
(10) Letter, dated March 22, 1984, whereby the Exhibit 4 to Kaydon's Registration Statement
Registrant undertakes to furnish to the on Form S-1 (No. 2-89399).
Securities and Exchange Commission, upon
request, a copy of certain instruments as
provided in Item 601(b)(4)(iii)(A) of
Regulation S-K.
(10.1) Kaydon Corporation Employee Stock E-174 - E-287
Ownership and Thrift Plan as amended and
restated December 14, 1994 effective
January 1, 1989.
(10) Management Incentive Compensation Plan. Exhibit 10 to Kaydon's Registration Statement
on Form S-1 (No. 2-89399).
(10.2) Electro-Tec Corporation Employee E-288 - E-394
Retirement Benefit Plan as amended and
restated December 14, 1994 effective
July 1, 1989.
(10) Kaydon Corporation 1993 Stock Option Plan. Exhibit A to Kaydon's Proxy Statement dated
March 10, 1993.
(10) Kaydon Corporation 1993 Non-Employee Exhibit B to Kaydon's Proxy Statement dated
Directors Stock Option Plan. March 10, 1993.
(11) Schedule of Computation of Net Income Per E-395
Share.
(13) Annual Report to Stockholders. E-396 - E-410
(21) Subsidiaries of Registrant. E-411
(23) Consent of Independent Public Accountants. E-412
(27) Financial Data Schedule (for SEC use only).
</TABLE>
25
<PAGE> 1
Exhibit (2)
I.T.I.
PURCHASE
AGREEMENT
E-1
<PAGE> 2
ASSET PURCHASE AGREEMENT
Between
KAYDON CORPORATION
And
INDUSTRIAL TECTONICS, INC.
And
AXEL JOHNSON, INC.
E-2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1. Sale and Purchase of Assets ........................... 1
1.1 Transfer of Assets ..................... 1
1.2 Assumed Liabilities .................... 4
1.3 Excluded Assets ........................ 6
2. Price ................................................. 6
2.1 Purchase Price ......................... 6
2.2 Allocation of Purchase Price ........... 7
2.3 Change in Financial Statements ......... 7
3. The Closing ........................................... 9
3.1 Time and Place ......................... 9
3.2 Transfer of Assets ..................... 9
3.3 Delivery of Purchase Price ............. 10
4. Representations and Warranties of Seller .............. 10
4.1 Organization, Standing, etc.
of Seller ............................ 10
4.2 Authorization; Binding Effect .......... 10
4.3 Consents; Defaults; Etc. ............... 10
4.4 Machinery and Equipment ............... 11
4.5 Intellectual Property and Processes..... 11
4.6 Employment Matters ..................... 12
4.7 Permits .............. ................. 12
4.8 Litigation ............................ 13
4.9 Certain Tax Matters .................... 13
4.10 Broker, etc. ........................... 13
4.11 Title to Assets ........................ 14
4.12 Compliance With Laws ................... 14
4.13 No Burdensome Restrictions, etc. ....... 15
4.14 Disclosure ............................. 15
4.15 Accuracy of Financial Statements ....... 16
4.16 Absence of Changes ..................... 16
4.17 Leases and Contracts ................... 17
4.18 Condition of Inventory ................. 18
4.19 Accounts Receivable .................... 18
4.20 Fixed Assets ........................... 19
4.21 Real Property .......................... 19
4.22 Insurance .............................. 20
4.23 Labor Matters .......................... 20
4.24 Employee Benefits ...................... 20
</TABLE>
-i-
E-3
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
5. Representations and Warranties of Buyer ............... 20
5.1 Organization, Standing and Authority
of Buyer ............................. 20
5.2 Authorization; Binding Effect .......... 21
5.3 Assumption of Assumed Liabilities ...... 21
5.4 Consents, Defaults, etc. ............... 21
5.5 Broker, etc. ........................... 22
5.6 Disclosure ............................. 22
5.7 Financial Capability to Consummate
Transactions ......................... 22
6. Covenants of Seller ................................... 23
6.1 Maintenance of Assets, etc. ............ 23
6.2 Access to Information .................. 23
6.3 Seller's Continuing Responsibility
for Environmental Matters ............ 24
6.4 Title Insurance ........................ 25
6.5 Environmental Report ................... 25
6.6 Surveys ................................ 26
6.7 Employment ............................. 26
6.8 Accounts Receivable .................... 26
7. Covenants of Buyer .................................... 27
7.1 Negative Actions ....................... 27
7.2 Employees .............................. 27
7.3 Assumption of Liabilities .............. 28
7.4 Accounts Receivable .................... 28
8. Conditions to Obligation of Buyer ..................... 28
8.1 Accuracy of Representations and
Warranties ........................... 28
8.2 Performance by Seller .................. 28
8.3 Seller's Certificate ................... 29
8.4 Opinion of Seller's Counsel ............ 29
8.5 Corporate Documents .................... 32
8.6 Instruments of Transfer ................ 32
8.7 Examination Period ... ................. 32
9. Conditions to Obligations of Seller ................... 33
9.1 Accuracy of Representations ............ 33
9.2 Performance by Buyer ................... 33
</TABLE>
-ii-
E-4
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
9.3 Officer's Certificate .................. 33
9.4 Opinion of Buyer's Counsel ............. 33
9.5 Corporate Documents .................... 35
9.6 Delivery of Purchase Price ............. 35
10. Covenant Not to Compete ...................... 35
10.1 Noncompetition ......................... 35
10.2 Enforcement ............................ 36
10.3 Injunctive Relief ...................... 36
11. Additional Covenants of Buyer and Seller .............. 36
11.1 WARN Act ............................... 36
11.2 Further Assurances ..................... 37
11.3 Bulk Sales Laws ........................ 37
11.4 Rights to Intellectual Property ........ 37
11.5 Use of Trade Names ..................... 38
11.6 General Manager ........................ 38
11.7 Access and Information.................. 38
12. Survival of Representations, Warranties
and Covenants; Indemnification; etc. ....... 40
12.1 Survival of Representations, etc........ 40
12.2 Indemnification by Seller............... 40
12.3 Indemnification by Buyer................ 42
12.4 Indemnification Notice, etc ............ 43
12.5 Limit on Indemnification ............... 44
12.6 Butenkoff Litigation ................... 45
13. Termination .................................. 45
14. Expenses ..................................... 45
15. Notices ...................................... 46
16. Amendments; Termination ...................... 46
17. Effect of this Agreement; Counterparts ....... 46
18. Governing Law and Jurisdiction ............... 47
19. Assignments; Successors and Assigns .......... 47
20. Press Releases and Announcements ............. 47
21. Construction ................................. 48
Signature Page ............................................. 48
</TABLE>
-iii-
E-5
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
1.1 ................................. Assumed Encumbrances
1.1(b) .............................. Machinery and Equipment
1.1(c) .............................. Intellectual Property
1.1(d) .............................. Patents
1.2 ................................. Financial Statements
dated June 30, 1993
1.2(a) .............................. Assumed Liabilities
1.3 ................................. Excluded Assets
4.3 ................................. Consents Required and
Defaults
4.4 ................................. Machinery and Equipment
Requiring Repairs
4.6 ................................. Employment Matters
4.7 ................................. Permits
4.8 ................................. Litigation
4.10 ................................ Brokers
4.11 ............................... Title to Assets
4.12 ............................... Non-Compliance with Laws
4.13 ............................... Restrictions
4.14 ............................... Material Facts
4.15 ............................... Additions to Financial
Statements
4.17 ............................... Leases and Contracts
4.19 ............................... Uncollectible Receivables
4.21 ............................... Real Property
</TABLE>
-iv-
E-6
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<S> <C>
4.22 ............................... Insurance
4.23 ............................... Labor Matters
4.24 ............................... Employee Benefit Plans
7.2 ............................... Employees
</TABLE>
-v-
E-7
<PAGE> 8
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and executed as of November 29,
1993, between KAYDON CORPORATION, a Delaware corporation (the "Buyer"),
INDUSTRIAL TECTONICS INC., a Delaware corporation (the "Seller"), and AXEL
JOHNSON INC., a Delaware corporation ("AJI"), with reference to the following
facts:
Seller is a wholly-owned subsidiary of AJI and wishes to sell to Buyer
and Buyer wishes to purchase from Seller all of the business and assets
relating to Seller's ball and precision machine parts manufacturing business
located in Dexter, Michigan (the "Business").
In consideration of the premises and the mutual covenants contained
herein, Seller, AJI and Buyer agree as follows:
1. SALE AND PURCHASE OF ASSETS
1.1 Transfer of Assets. In reliance on the representations and
warranties contained herein and subject to the terms and conditions hereof,
Seller shall on the Closing Date (as defined in Section 3 herein) sell, convey,
transfer, assign and deliver, free and clear of all liens, mortgages, security
interests, pledges, charges, agreements, restrictions, claims, defects in title
and encumbrances of any kind or description, except for those items listed on
the attached Exhibit 1.1 (collectively referred to herein as "Claims and
Encumbrances"), and Buyer shall purchase from Seller, all of Seller's right,
title and interest in and to the tangible and intangible assets (the "Assets")
of Seller, including:
- 1 -
E-8
<PAGE> 9
(a) Inventories. All inventory, including, without limitation,
all work in process, finished parts and products and raw materials
("Inventory");
(b) Machinery and Equipment. All machinery, equip- ment, tools,
vehicles, furniture, tooling, fixtures, molds, dies, and all other
tangible property used in the Business, including, without limitation,
the machinery and equipment described on Exhibit 1.1(b) hereto
("Machinery and Equipment");
(c) Intangible Personal Property. All intangible personal
property, including (i) all procedures, processes, products, formulae,
scientific, technical and other information, trade secrets, ideas,
licenses, franchises, customer lists, vendor lists, plans,
specifications, designs, drawings, catalogues, manuals, reports,
samples, prototypes, know-how, items in application, development or
other pending status and all similar items which are owned by Seller and
applicable to or used in the operation of the Business ("Intellectual
Property"), including, without limitation, the items of Intellectual
Property of Seller described on Exhibit 1.1(c) hereto, (ii) rights
pursuant to all contracts applicable to or used in the operation of the
Business, including, without limitation, the contracts listed on Exhibit
4.17 hereto, (iii) the leases of real and personal property applicable
to or used in the operation
- 2 -
E-9
<PAGE> 10
of the Business described on Exhibit 4.17 hereto, (iv) all computer and
automatic machinery software programs and source disks, program
documentation, tapes, manuals, forms, guides and other materials with
respect thereto applicable to or used in the Business, and (v) to the
extent the same are transferable, all federal, state or local
governmental or regulatory permits, licenses, approvals and franchises
which are owned or have been received by Seller in connection with the
operation of the Business or ownership of the Assets (collectively,
"Permits"), including, without limitation, the Permits which are listed
on Exhibit 4.7 hereto;
(d) Patents, Trademarks and Copyrights. All registered and
unregistered trademarks, trademark applications, trade names, service
marks and service names and the goodwill of the Business connected
therewith or symbolized thereby, and all copyrights, patents and patent
applications, including, without limitation, the items listed on the
attached Exhibit 1.1(d).
(e) Records. All accounting information pertaining to the
operations of the Business and all media in which all or any of the
information, knowledge, data or records relating to the Business may be
related or stored, all customer lists, customer files, personnel
records, credit information, advertising, promotional and sales
- 3 -
E-10
<PAGE> 11
materials, sales data, surveys, account histories, information relating
to sales or servicing of products applicable to, used in or manufactured
by the Business;
(f) Miscellaneous Assets. All goodwill of the Business and all
information, identification of supplies, gross data, recorded knowledge,
and all warranties inuring to the benefit of Seller in connection with
the Business;
(g) Cash. All cash on hand, accounts receivable and notes
receivable (except that Buyer shall not assume any negative cash
balance), and
(h) Real Property. The real property described in Exhibit 4.21
herein.
1.2 Assumed Liabilities. At the Closing, Buyer shall assume only
(i) the obligations or liabilities of Seller listed on the balance sheet of
Seller dated June 30, 1993 and attached as Exhibit 1.2 hereto in the amounts
listed therein, as such amounts may have increased or decreased since that date
in the ordinary course of business and (ii) those additional liabilities set
forth on the attached Exhibit 1.2(a). Except for the foregoing liabilities,
Buyer shall not assume any obligation, duty or liability of any nature
whatsoever, fixed or contingent, including, without limitation: (A) any
liability of Seller for generation, management, handling, transportation,
treatment, storage, disposal, delivery, discharge, release or emission of any
waste, pollutant or toxic, hazardous or other substance or
- 4 -
E-11
<PAGE> 12
other action, omission or condition affecting the environment arising from the
conduct of the Business or occurrences prior to the Closing Date, including,
without limitation, those conditions specified on Exhibit 4.12 as described
herein; (B) any tax liabilities or similar assessments arising from the conduct
of the Business or occurrences prior to the Closing Date or arising from the
transfer of the Assets and consummation of the transactions contemplated
hereby, including, without limitation, any liabilities for sales, bulk sales,
use, transfer, stamp or income taxes, and any filing, recording or similar fees
or charges; (C) any liabilities for breach or default by Seller under any
contract, lease or agreement assigned to Buyer hereunder, which accrued prior
to the Closing Date; (D) any liability with respect to any claim, suit, action
or judicial, administrative or arbitration proceeding (x) made or pending or
commenced against Seller at or prior to the Closing Date, or (y) made or
commenced after the Closing Date in respect of any action, omission or
condition occurring or existing prior to the Closing Date; (E) any undisclosed
liabilities, which accrued prior to the Closing Date and (F) any collective
bargaining agreement, labor or employment agreement liabilities, any pension
plan withdrawal or other liability, severance liability, funding deficiency,
workmen's compensation, employee life and health insurance or similar liability
to any employee or former employee of Seller, including, without limitation,
any such liability under any multi-employer or single-employer plan, contract
or
- 5 -
E-12
<PAGE> 13
arrangement, or any other liability in respect of any employee attributable to
or in respect of any period prior to the Closing Date. Seller shall discharge
and satisfy, when and if due and payable, all liabilities which are not
specifically assumed by Buyer under this Agreement and shall, upon request of
Buyer, give Buyer evidence of such payment.
In the event Buyer is assessed with a liability it did not
assume hereunder, Buyer shall notify Seller in writing of such assessment and
provide Seller ten (10) business days to either acknowledge the liability or
dispute it. If Seller acknowledges such assessment of liability, Seller may
either, at its sole option, (i) discharge and satisfy such liability directly,
(ii) dispute such liability and indemnify and hold Buyer harmless, or (iii) pay
Buyer the full amount of such assessed liability. Under no circumstances shall
Seller pay Buyer for any liability which Buyer satisfies and discharges on
Seller's behalf unless Buyer first provides Seller with the notice required
herein.
1.3 Excluded Assets. The Assets shall not include the assets of
Seller listed in Exhibit 1.3 attached hereto.
2. PRICE
2.1 Purchase Price. The purchase price for the Assets based on
Seller's balance sheet attached as Exhibit 1.2 hereto shall be the sum of Seven
Million Nine Hundred Fifty Thousand Dollars ($7,950,000) in cash (transferred
via wire transfer) at Closing.
- 6 -
E-13
<PAGE> 14
2.2 Allocation of Purchase Price. The Purchase Price paid for
the respective Assets will be as shown on an allocation exhibit to be provided
by Buyer to Seller prior to the Closing which shall be approved by Seller.
2.3 Change in Financial Statements. The Purchase Price has been
calculated based on the June 30, 1993 balance sheet of Seller which reflects a
net equity of $7,784,631, and a net equity after adjusting for cash, prepaid
assets, pension liabilities and other post-employment benefit obligations of
$7,735,406, calculated as follows:
<TABLE>
<S> <C>
June 30, 1993 equity $7,784,631
Adjustments:
Cash (81,183)
Prepaid Assets (216,431)
Pension Liability 140,626
FASB 106 Liability 107,763
----------
$7,735,406
</TABLE>
The Purchase Price shall be adjusted as follows:
(i) Net equity as of June 30, 1993 shall be subtracted from net
equity as of the Closing Date and the difference shall be the "Net
Equity Difference;" and
(ii) $3,188,060 shall be subtracted from Seller's working capital
as of the Closing Date (including only cash, accounts receivable and
inventory less accounts payable, and less accrued expenses, and
excluding prepaid assets, pension liabilities and other post employment
benefit obligations) and the difference shall be the "Working Capital
Difference."
- 7 -
E-14
<PAGE> 15
If both the Net Equity Difference and the Working Capital Difference are
positive, the Purchase Price shall be increased by the greater of the Net
Equity Difference and the Working Capital Difference. If both the Net Equity
Difference and the Working Capital Difference are negative, the Purchase Price
shall be decreased by the greater of the Net Equity Difference and the Working
Capital Difference. If the Net Equity Difference is positive and the Working
Capital Difference is negative, or if the Net Equity Difference is negative and
the Working Capital Difference is positive, the Purchase Price shall be
increased by the sum of the Working Capital Difference and the Net Equity
Difference (or decreased if the sum is negative).
In determining the Net Equity Difference and the Working Capital
Difference, the maximum value for property, plant and equipment shall be
$2,851,755 and the maximum value for goodwill shall be $1,695,971.
The adjustments to the Purchase Price set forth above shall be made
within sixty (60) days after the Closing Date. Within thirty (30) days
following the Closing Date Buyer shall prepare the balance sheet as of the
Closing Date and shall submit such balance sheet to Seller for review by
Seller's representatives. If Seller wishes to dispute the Closing Date balance
sheet submitted by Buyer it shall notify Buyer within thirty (30) days of
Seller's receipt of the Closing Date balance sheet of its dispute. If the
parties cannot resolve such dispute, the Closing Date balance sheet shall be
audited by an
- 8 -
E-15
<PAGE> 16
independent accounting firm agreed to by both parties and the results of such
audit shall be final and binding on both parties. The cost of such audit shall
be borne equally by both parties, unless the independent auditor's results
establish that one party was responsible for the dispute, in which event such
responsible party shall bear the total costs associated with the audit.
Any increase or reduction in the Purchase Price determined in accordance
with this Section shall immediately be paid to Seller or Buyer as the case may
be.
3. THE CLOSING
3.1 Time and Place. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at the offices of Seller's counsel in
Detroit, Michigan at 9:00 A.M., on January 31, 1994, or such earlier date as
Seller and Buyer may agree upon (the "Closing Date"). The delivery of all
documents by the parties and the performance of all acts at the Closing shall
be deemed to have occurred simultaneously.
3.2 Transfer of Assets. At the Closing, Seller shall deliver to
Buyer such bills of sale, warranty deeds, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer, in form and
substance reasonably satisfactory to Buyer and its counsel, as shall be
effective to convey and transfer to and vest in Buyer title to the Assets, free
and clear of any Claims and Encumbrances, except such Claims and Encumbrances
listed on Exhibit 1.1 attached hereto. Simultaneously with such delivery,
Seller shall take
- 9 -
E-16
<PAGE> 17
such action as may be necessary or reasonably requested by Buyer to place Buyer
in possession and control of the Assets.
3.3 Delivery of Purchase Price. Buyer shall pay to Seller via
wire transfer at the Closing, the full amount of the Purchase Price.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Organization, Standing, etc. of Seller. Seller is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite power to own or lease and to operate its
properties and to carry on the Business as conducted with the Assets.
4.2 Authorization; Binding Effect. This Agreement has been duly
executed and delivered by Seller and constitutes the legally binding obligation
of Seller in accordance with its terms.
4.3 Consents; Defaults; Etc. Except as set forth on the attached
Exhibit 4.3, neither the execution, delivery or performance by Seller of this
Agreement nor the consummation by Seller of the transactions contemplated
hereby (i) is prohibited by, or requires Seller to obtain or make any consent,
authorization, approval, filing or registration under, any law, rule or
regulation, judgment, order, writ, injunction or decree which is binding upon
Seller, or any of the Assets, or (ii) will violate any provision of, result in
any default or acceleration of any obligations under, result in the creation or
imposition of
- 10 -
E-17
<PAGE> 18
any lien on any of the Assets pursuant to, or require any consent under, any
indenture, lease, mortgage or other agreement to which Seller is a party or by
which Seller or any of the Assets is otherwise bound.
4.4 Machinery and Equipment. Except as listed in Exhibit 4.4
attached hereto, all Machinery and Equipment has been maintained so as to be,
and all of the Machinery and Equipment is, in good operating condition and
repair (ordinary wear and tear excepted), and to the best of Seller's
knowledge, after due inquiry, there are no repairs which are required to be
made to the Machinery and Equipment, except as listed in Exhibit 4.4.
4.5 Intellectual Property and Processes. Exhibit 1.1(c) includes
all of the material Intellectual Property, and all patents, trademarks and
copyrights owned by, used or necessary for use in the Business. The formulae,
manufacturing procedures, processes, know-how and trade secrets used or
necessary for use in the operation of the business are hereinafter referred to
as the "Processes". The United States trademark registrations listed on the
attached Exhibit 1.1(c) and, to the best of Seller's knowledge, after due
inquiry, the Intellectual Property and Processes which are owned by Seller are
owned free and clear of any license, sublicense, agreement, right,
understanding, judgment, order, decree or stipulation, and Seller, to the best
of its knowledge, after due inquiry, has not infringed on or misappropriated
any intellectual property of third parties. To the best of Seller's knowledge
no third party
- 11 -
E-18
<PAGE> 19
has infringed or misappropriated any Intellectual Property, patents, trademarks
and Copyrights or Processes.
4.6 Employment Matters. Except as listed on the attached Exhibit
4.6, there is no claim of any employee or any former employee of Seller for any
unpaid compensation or remuneration of any nature, including, without
limitation, contingent salaries, incentive payments, pension benefits (whether
or not vested), (excluding benefits to be paid in the future from pension
trusts established and administered for such purpose by Seller), medical
expense reimbursement, vacation pay, severance payments and other awards,
interests and payments.
4.7 Permits. Attached as Exhibit 4.7 hereto is a list of all
Permits Seller has obtained in connection with the operation and ownership of
the Assets, and, except Permits that Buyer designates as not to be transferred
in Exhibit 4.7, or which have been designated as non-transferable or
transferable only with consent from a third party or government or regulatory
body on Exhibit 4.7, each of the Permits is transferable by Seller without
notice to or consent from any third party or governmental or regulatory body.
Seller shall take all reasonable steps requested by Buyer to enable Buyer to
obtain in its own name any Permit that is not so transferable. The Permits
listed on Exhibit 4.7 constitute all of the Permits required to operate the
Business as previously conducted by Seller. Except as listed on attached
Exhibit 4.7, there are no proceedings pending or, to the best of Seller's
knowledge, threatened which
- 12 -
E-19
<PAGE> 20
may result in the revocation, cancellation or suspension, or any adverse
modification, of any Permit.
4.8 Litigation. Except as listed on the attached Exhibit 4.8,
there is no suit, action, proceeding, investigation or inquiry pending or, to
the best of Seller's knowledge, threatened (or any basis therefor), at law or
in equity or before any governmental department, commission, board, body,
agency or instrumentality, domestic or foreign, against Seller which materially
affects or could materially affect the Assets or involves or could involve the
validity or legality of this Agreement or any action taken or to be taken
pursuant hereto.
4.9 Certain Tax Matters. Seller has paid, accrued on its Latest
Financial Statement, or will pay when due all income, sales, use, business,
occupation, personal or real property or any similar taxes and all taxes of any
kind related to any period prior to the Closing Date, including without
limitation, any tax relating to the wages, benefits or income of any employee,
consultant or commission agent connected with the Assets, whether owed by
Seller or by any such employee, consultant or commission agent.
4.10 Broker, etc. Except as set forth on the attached Exhibit
4.10, Seller has employed no finder, broker, agent or other intermediary in
connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby.
- 13 -
E-20
<PAGE> 21
4.11 Title to Assets. Except as set forth on the attached Exhibit
4.11, Seller has undivided marketable title, legal and equitable, in and to all
of the Assets being sold under this Agreement. The Assets are owned by Seller
free and clear of any Claims and Encumbrances, except liens for current taxes
and assessments not yet due and payable and those liens, Claims and
Encumbrances described on the attached Exhibit 4.11. All of the Assets are
located in Dexter, Michigan or each other location listed in Exhibit 4.11. The
Assets, taken as a whole, constitute all of the operating properties and assets
which are reasonably necessary for the conduct of the Business as conducted by
Seller.
4.12 Compliance With Laws. Except as set forth on Exhibit 4.12
(which includes the Environmental Report described in Section 6.5 herein), the
Business and the Assets are and have been operated and maintained in
substantial compliance with all applicable governmental laws, rules,
regulations and ordinances, including, without limitation, laws, regulations
and other requirements (a) relating to pricing of products and antitrust, and
(b) imposed by action of, permits from, or agreements with any governmental
agency or authority relating to the generation, management, handling,
transportation, treatment, storage, disposal, delivery, discharge, release or
emission of any waste, pollutant or toxic, hazardous or other substance or
other action, omission or condition affecting the environment, air, soil and
water pollution, ground water contamination, the handling, storage or release
into the environment of hazardous materials or
- 14 -
E-21
<PAGE> 22
hazardous substances, or the transportation of hazardous materials
(collectively, "Environmental Laws and Regulations") and federal and state
occupational safety and health laws and regulations and the Consumer Products
Safety Commission laws and regulations; and Seller has no notice of any failure
to comply therewith, except as set forth on Exhibit 4.12. Exhibit 4.12 lists
each offsite disposal site used by Seller presently or used by Seller from
December 22, 1982 to the present. Except as set forth in Exhibit 4.12, to the
best of Seller's knowledge, after due inquiry and investigation by qualified
Seller representatives, all properties and equipment of Seller have been since
December 22, 1982 and now are free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzoforans and
"extremely hazardous substances" as that term is defined in the Toxic Substance
Control Act.
4.13 No Burdensome Restrictions, etc. There are no judgments,
orders, writs, injunctions, or decrees to which the Assets are subject and to
which Seller is a party, or which materially adversely affect the Assets,
except those set forth on the attached Exhibit 4.13.
4.14 Disclosure. The representations and warranties contained in
this Agreement and the information contained in the Exhibits hereto, written
documents, financial statements including the latest financial statements dated
June 30, 1993, provided by Seller to Buyer (the "Latest Financial Statements"),
and other certificates or instruments delivered by or on behalf
- 15 -
E-22
<PAGE> 23
of Seller in connection with the purchase and sale of the Assets are true and
correct in all material respects and do not contain any untrue statement of a
material fact or omit to state a fact necessary to make the statements
contained therein and herein not misleading. Except as set forth in the
attached Exhibit 4.14, there is no fact known to Seller which materially
adversely affects the Assets which has not been set forth in this Agreement or
in the other documents, certificates or instruments delivered by Seller or on
behalf of Seller, specifically for use in connection with the transactions
contemplated by this Agreement.
4.15 Accuracy of Financial Statements. The financial statements
of Seller provided to Buyer (including, without limitation, the Latest
Financial Statements, and Seller's annual financial statements dated December
31, 1992) fairly present the financial condition of Seller and the results of
its operations, as of the dates thereof and for the periods indicated therein,
in accordance with generally accepted accounting principles consistently
applied. As of the Closing Date, and except as set forth on the attached
Exhibit 4.15, Seller shall have no liabilities of any nature required to be
reflected in financial statements under generally accepted accounting
principles that were not shown or provided for in the aggregate on the
financial statements, and all reserves set forth on the financial statements
are adequate in all material respects.
4.16 Absence of Changes. Since the date of the Latest Financial
Statements, Seller has, and until the Closing
- 16 -
E-23
<PAGE> 24
Date shall have, operated the Business in the ordinary and usual course,
maintained the Assets in good condition and repair, reasonable wear and use
excepted, and not sold, assigned, transferred, encumbered or otherwise disposed
of, or contracted, agreed or become bound to sell, assign, transfer, encumber
or otherwise dispose of any of the Assets, other than in the ordinary course of
business, and except as otherwise provided in this Agreement. Since such date,
there has been no material adverse change in the Business, Assets or condition,
financial or otherwise, of Seller (including specifically, but without
limitation, Seller's agreement with the Rochester Products division of General
Motors Corporation) nor, to the best of Sellers's knowledge, has any such
change threatened to occur, nor has there been any damage, destruction or loss,
other than that fully covered by insurance, of a material nature affecting the
Business, properties or financial condition of Seller.
4.17 Leases and Contracts. Exhibit 4.17 attached hereto includes
each lease of real or personal property and each agreement to which Seller is a
party that involves the sum of $10,000.00 or more, including employment
agreements and collective bargaining agreements. Each such lease and agreement
(a) is valid, binding and enforceable, and (b) to the best of Seller's
knowledge, no event has taken place which with notice or lapse of time would
constitute a breach or default, or permit termination or modification of such
lease or contract. Seller has not received notice of any default, and, to the
best of
- 17 -
E-24
<PAGE> 25
Seller's knowledge, Seller is not in default in respect of any such lease or
agreement to which it is a party or by which it is bound.
4.18 Condition of Inventory. All inventory, materials and
supplies of Seller are of at least the standard quality for such items in the
Business. The inventory reserves described in the Latest Financial Statements
are adequate in all material respects. The inventory shall be, as of the
Closing, within five percent (5%) of its recorded book valuation, which shall
be verified by Buyer at Buyer's option through a physical inventory to be taken
based on the December 31, 1993 balance sheet of Seller. Buyer shall provide
notice to Seller of its desire for a physical inventory on or before December
23, 1993. (The actual physical count, if necessary, would be taken during the
period of January 2, 1994 through January 5, 1994.) The physical inventory
will be priced and reconciled to the Seller's December 31, 1993 balance sheet
seven (7) or more days prior to Closing.
4.19 Accounts Receivable. Subject to the reserve referenced in
Section 6.8 herein, and except as set forth on the attached Exhibit 4.19, all
of Seller's accounts receivables of any nature are good and collectible at the
aggregate recorded amounts thereof in the usual and ordinary course of business
and without resort to legal proceedings. The Buyer hereby acknowledges and
agrees that Buyer's sole remedy for any breach
- 18 -
E-25
<PAGE> 26
of Seller's representation and warranty contained in this Section 4.19 shall be
that remedy described in Section 6.8 hereof.
4.20 Fixed Assets. The fixed assets valuation is within five
percent (5%) of its recorded book valuation as of the end of the month
immediately preceding the date on which the physical inventory is conducted.
Buyer may conduct a physical fixed assets inventory and appraisal within thirty
(30) days prior to the Closing to verify this representation.
4.21 Real Property. Exhibit 4.21 includes a legal description of
all real property owned by Seller. As to such real property:
(a) Except as set forth on Exhibit 4.21, there are no mortgages,
liens, easements, covenants or other restrictions, except restrictions
which do not impair its use, occupancy or value.
(b) there are no condemnation proceedings pending or, to the best
of Seller's knowledge, threatened, and no special assessments as to the
real property.
(c) to the best of Seller's knowledge, there are no encroachments
or violations of any zoning laws or ordinances.
(d) to the best of Sellers's knowledge, seller holds all licenses
and permits required for its ownership and operation.
(e) There are no leases, subleases, licenses or other agreements
granting any third parties any right of
- 19 -
E-26
<PAGE> 27
occupancy.
(f) There are no rights of first refusal or options relating
thereto.
(g) All facilities located thereon are serviced by all required
utility services and access to public roads.
(h) All real property taxes for which bills have been issued have
been paid.
4.22 Insurance. Exhibit 4.22 attached hereto sets forth all
insurance carriers and policy numbers by policy period as to policies to which
Seller has been a party or beneficiary within the past five (5) years,
including, without limitation, worker's compensation, liability, casualty and
property insurance, and, except as identified in Exhibit 4.22, all such
policies are in full force and effect.
4.23 Labor Matters. Except as set forth on the attached Exhibit
4.23, Seller is not subject to any labor grievances, claims of unfair labor
practices, or other material collective bargaining disputes.
4.24 Employee Benefits. Exhibit 4.24 lists all employee benefit
plans to which Seller is a party, including all such plans as defined or
described under ERISA.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants as follows:
5.1 Organization, Standing and Authority of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the
- 20 -
E-27
<PAGE> 28
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby.
5.2 Authorization; Binding Effect. The execution and delivery by
Buyer of this Agreement and the performance by Buyer of its obligations
hereunder and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Buyer. This
Agreement has been duly executed and delivered by a duly authorized officer of
Buyer and constitutes the valid and legally binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
5.3 Assumption of Assumed Liabilities. All of the contracts,
agreements or instruments to be assumed by Buyer pursuant to this Agreement and
the Assumption Agreement are valid and binding upon Buyer, and are enforceable
against and fully performable by Buyer in accordance with their terms; and
there are no existing facts or circumstances which would prevent the full and
complete performance thereof by Buyer.
5.4 Consents, Defaults, etc.. Neither the execution, delivery or
performance by Buyer of this Agreement, nor the consummation by Buyer of the
transactions contemplated hereby (i) is prohibited by, or requires Buyer to
obtain or make any consent, authorization, approval, filing or registration
under, any law, rule or regulation, judgment, order, writ, injunction or decree
which is binding upon Buyer, or (ii) will violate any provision of, result in
any default or acceleration
- 21 -
E-28
<PAGE> 29
of any obligations under, or require any consent under, any indenture, lease,
mortgage or other agreement to which Buyer is a party or by which Buyer is
bound.
5.5 Broker, etc.. Buyer has employed no broker, agent or other
intermediary in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby.
5.6 Disclosure. The representations and warranties contained in
this Agreement and the information contained in any written documents,
financial statements and other certificates or instruments delivered by or on
behalf of Buyer in connection with the purchase of the Assets are true and
correct in all material respects and do not contain any untrue statement of a
material fact. There is no fact known to Buyer which materially adversely
affects the ability of Buyer to consummate the transactions contemplated herein
which has not been set forth in this Agreement or in the other documents,
certificates or instruments delivered by Buyer or on behalf of Buyer,
specifically for use in connection with the transactions contemplated by this
Agreement.
5.7 Financial Capability to Consummate Transactions. Buyer has,
or will have on the Closing Date, sufficient financial resources readily
available to enable Buyer to consummate the transactions contemplated in this
Agreement on the terms and conditions contained herein. There is no fact known
to Buyer which materially adversely affects the ability of Buyer to consummate
the transactions contemplated herein which has not
- 22 -
E-29
<PAGE> 30
been set forth in this Agreement or in the other documents, certificates or
instruments delivered by Buyer or on behalf of Buyer, specifically for use in
connection with the transactions contemplated by this Agreement.
6. COVENANTS OF SELLER
Seller covenants and agrees with Buyer that:
6.1 Maintenance of Assets; etc. Seller will, through the Closing
Date, (a) maintain and keep the Machinery and Equipment and other Assets in as
good repair, working order and condition as at present (reasonable wear and
tear excepted), (b) keep in full force and effect insurance as necessary to
fully insure the Assets, (c) perform in all material respects all its
obligations under all of its leases, contracts, commitments and arrangements,
and not amend, alter or modify, other than in the ordinary course of business
of Seller, any provision of any lease, contract, obligation or commitment to be
assumed by Buyer, and (d) do all things reasonably necessary to avoid any
action that would render Seller's representations and warranties hereunder
inaccurate as of the Closing Date.
6.2 Access to Information. Seller will give to Buyer, Buyer's
accountants, counsel, employees and other representatives full access to all of
the properties, books, contracts, commitments, reports and records of Seller
relating to the Business and Assets and will furnish Buyer all such documents,
records and information with respect to the affairs of the Business and copies
of any working papers relating to that
- 23 -
E-30
<PAGE> 31
Business as Buyer shall from time to time reasonably request. Buyer will
endeavor not to disrupt the operations of Seller's Business during any such
investigations.
6.3 Seller's Continuing Responsibility for
Environmental Matters.
(a) Seller, through and after the Closing Date, at its sole cost
and expense, shall, prior to the Closing, provide to Buyer a list of all
hazardous materials or substances located at its facility as defined in
the OSHA Toxic and Hazardous Substances Hazard Communication Standard,
48 FR 53280, Nov. 25, 1983, as amended, and shall (except as to the
matters disclosed in the Environmental Report described in Section 6.5
herein) take all actions necessary to investigate, remove or clean up
any hazardous substance or other materials released into the environment
prior to the Closing Date at, on or near the facility at which the
Business is located for which an investigative, removal or cleanup
activity is required pursuant to law, rule, regulation, order, agreement
or government action, provided that (i) no such actions shall be taken
except after reasonable advance notice to Buyer; and (ii) any such
action shall be taken in a manner so as to minimize interference with
any business conducted at the facility. Nothing herein shall in any way
obligate Seller to pay for or take any action to remove or clean up any
hazardous substance or other materials released into the environment at
or near
- 24 -
E-31
<PAGE> 32
the facility of which the Business is located, which occurred after the
Closing Date and which was not released into the environment by Seller
or its agents.
(b) Seller shall at all times retain any and all liabilities
arising from the handling, treatment, storage, transportation, disposal,
release or emission of any hazardous or toxic substance, materials,
pollutants, contaminates or wastes by Seller or by Seller's agents or
contractors.
6.4. Title Insurance. As to each parcel of real property owned by
Seller, Seller shall, at Seller's cost, deliver to Buyer prior to the Closing a
commitment for an owner's policy of title insurance without standard exceptions
in an amount equal to its fair market value (including improvements) insuring
good and marketable title to the real property, subject only to mortgages
included in the Latest Financial Statements and easements and restrictions
which do not materially impair its use, occupancy or value. Seller shall pay
the real estate transfer tax relating to the conveyance of the real property.
6.5 Environmental Report. Seller has arranged and paid for the
preparation and delivery to Buyer of a Phase II environmental report (the
"Environmental Report") prepared by an environmental consultant with respect to
its real estate in form and substance adequate to assess the environmental
condition of this real estate. Seller shall certify to Buyer that, to the best
of Seller's knowledge, after due inquiry, Seller is not
- 25 -
E-32
<PAGE> 33
aware of any events, facts or circumstances that would lead it to conclusions
different from those reflected in the Environmental Report. Seller's
obligations under Section 6.3 above shall include only any matters and
conditions not disclosed in the Environmental Report.
6.6 Surveys. With respect to each parcel of real property that
Seller owns, Seller will provide to Buyer a copy of a survey of the real
property certified to Buyer, prepared by a licensed surveyor and conforming to
current ALTA Minimum Detail Requirements for Land Title Surveys, disclosing the
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters shown customarily on such surveys, and showing
access affirmatively to public streets and roads, dated as of January 31, 1985
(the "Survey") and recertified as of a date within sixty (60) days of the
Closing. The Survey shall not disclose any survey defect or encroachment from
or onto the real property which has not been cured or insured over prior to the
Closing.
6.7 Employment. Seller shall terminate the employment of each of
its employees immediately prior to the Closing. Between the date of the
execution of this Agreement and the date of Closing, Buyer is not the employer
of the employees of Seller and this Agreement shall not be construed to make
Buyer the employer of Seller's employees.
6.8 Accounts Receivable. For all accounts receivable on the
Seller's balance sheet at the Closing (the
- 26 -
E-33
<PAGE> 34
"Closing Accounts Receivable"), Buyer shall provide to Seller a detailed
accounts receivable aging, showing payment history for each account on a 30,
60, 90 and 120 day basis, no later than the 15th day of each month following
the Closing. AJI shall reimburse Buyer, on a dollar for dollar basis, the
amount by which the total of all the Closing Accounts Receivable, in the
aggregate, which are greater than 120 days past due, exceed $100,000, 120 days
following the Closing Date (the "Reimbursed Accounts Receivable"). Should any
of the Closing Accounts Receivable subsequently be collected, Buyer shall
immediately return to AJI the full amount of all collected Closing Accounts
Receivable which reduce the total Closing Accounts Receivable, which are
greater than 120 days past due, below $100,000.
7. COVENANTS OF BUYER
Buyer covenants and agrees with Seller that:
7.1 Negative Actions. Between the date hereof and the Closing Date,
Buyer will refrain from taking any action that would render Buyer's
representations and warranties hereunder inaccurate as of the date hereof or
the Closing Date.
7.2 Employees. Buyer will offer employment to all of Seller's hourly
and salaried employees (except as listed on Exhibit 7.2 attached hereto) as of
the Closing, who are on active employment status (i.e., on roll and working) on
the day of the Closing at their respective present wage rates (assuming these
wage rates have not changed prior to the Closing, except as required under
Seller's labor agreement with these employees),
- 27 -
E-34
<PAGE> 35
subject to Buyer's terms and conditions of employment.
7.3 Assumption of Liabilities. Buyer shall execute and deliver to
Seller an instrument of assumption of liabilities in form reasonably
satisfactory to Seller and its counsel pursuant to which Buyer shall agree to
assume and pay the assumed liabilities described in Section 1.2 above.
7.4 Accounts Receivable. Buyer shall use best efforts to collect the
accounts receivable Buyer purchases from Seller hereunder. This obligation
shall be limited to the mailing of invoices and notices and shall not include
any obligation to file suit.
8. CONDITIONS TO OBLIGATION OF BUYER
The obligation of Buyer to consummate the transactions contemplated
hereby is subject to the satisfaction, or waiver, by Buyer, at or prior to the
Closing, of the following conditions, in the absence of the satisfaction of
which Buyer may terminate this Agreement without liability:
8.1 Accuracy of Representations and Warranties. The representations
and warranties contained herein or otherwise made by or on behalf of Seller in
connection with this Agreement and the transactions contemplated hereby shall
have been true and correct in all material respects on the Closing Date to the
same extent as if made on the Closing Date, except to the extent non- material
changes occur in the ordinary course of Seller's business.
8.2 Performance by Seller. Seller shall have duly
- 28 -
E-35
<PAGE> 36
performed and complied in all material respects with all terms, agreements, and
conditions required by this Agreement to be performed or complied with by
Seller prior to or at the Closing.
8.3 Seller's Certificate. Seller shall have delivered to Buyer a
certificate, dated as of the Closing Date, and executed by Seller's president,
to the effect that Seller has duly performed and complied with the covenants
and conditions set forth in Sections 8.1 and 8.2.
8.4 Opinion of Seller's Counsel. (a) Buyer shall have received from
William T. Reynolds, Esq., general counsel of AJI, a favorable opinion, dated
as of the Closing Date, and satisfactory in substance and form to Buyer and its
counsel, to the following effect:
(i) Standing, etc. of the Seller. Seller has all requisite power
and authority to own the Assets and to perform Seller's obligations
hereunder and to consummate the transactions contemplated hereby.
(ii) Litigation. Except as set forth on counsel's opinion, there
is no suit, action, proceeding, investigation or inquiry pending or, to
the best of such counsel's knowledge, threatened at law or in equity or
before any governmental department, commission, board, body, agency or
instrumentality, domestic or foreign, which materially affects or could
materially affect the Business or Assets or involves or could involve
the validity or legality of this
- 29 -
E-36
<PAGE> 37
Agreement or any action taken or to be taken pursuant hereto, nor has
any such suit, action, proceeding, investigation or inquiry been pending
within the three years preceding the date of this Agreement.
(iii) Execution and Delivery. This Agreement has been duly
executed and delivered by Seller and AJI, and constitutes the legal,
valid and binding obligation of Seller and AJI enforceable against
Seller and AJI in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and other similar laws relating to or affecting the
rights of creditors generally, and is subject to general principles of
equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity.
(iv) Consents; Defaults, Etc. To the best of counsel's
knowledge, after due inquiry, neither the execution, delivery or
performance by Seller and AJI of this Agreement, nor the consummation by
Seller and AJI of the transactions contemplated hereby (i) is prohibited
by, or requires Seller or AJI to obtain or make any consent,
authorization, approval, filing or registration under, any law, rule or
regulation, or, under any judgment, order, writ, injunction or decree
which is binding upon Seller or AJI, or (ii) will violate any provision
of, result in any default or acceleration of any obligations under,
result in
- 30 -
E-37
<PAGE> 38
the creation or imposition of any lien on any of the Assets pursuant to,
or require any consent (other than consents identified in such opinion
and duly obtained prior to the Closing) under, any indenture, lease,
mortgage or other agreement to which Seller or AJI is a party or is
otherwise bound.
(v) Conveyance of Assets. The instruments of conveyance,
transfer and assignment executed and delivered to Buyer have been duly
executed by Seller and are valid and effective to vest in Buyer all of
the right, title and interest of Seller in and to the Assets as
contemplated by the Agreement.
(b) Buyer shall have received from Clark, Klein & Beaumont, special
counsel to Seller, a favorable opinion, dated as of the Closing Date, and
satisfactory in substance and form to Buyer and its counsel, to the following
effect:
(i) Standing, etc. of Seller. Based solely on a Certificate of
Good Standing issued by the State of Delaware, the Seller has been
validly incorporated as a Delaware corporation and is validly in
existence as a corporation in good standing under the laws of the State
of Delaware. Based solely on a Good Standing Certificate issued by the
State of Michigan, the Seller has qualified to do business within the
State of Michigan and is currently in good standing upon the records of
the State of Michigan; and
(ii) Conveyance of Assets. Assuming due
- 31 -
E-38
<PAGE> 39
authorization, execution and delivery by Seller, the instruments of
conveyance, transfer and assignment are valid and effective under the
laws of the State of Michigan as currently in force to vest in Buyer all
of the right, title and interest of Seller in and to the Assets as
contemplated by the Agreement.
8.5 Corporate Documents. Seller shall deliver to Buyer (a) a
certificate of good standing from its state of incorporation; and (b) certified
resolutions of the Board of Directors of Seller and AJI authorizing this
transaction.
8.6 Instruments of Transfer. Seller shall execute and deliver to
Buyer the instruments of transfer described in Section 3.2 above.
8.7 Examination Period. Buyer shall have completed a purchase
investigation and review of the financial statements and operations of Seller
that shall have confirmed that all such statements and operations materially
conform to the representations and warranties contained herein. Materiality
(or material) shall be defined as an occurrence, financial or otherwise, which
adversely impacts the value of the business to the extent that a reasonably
prudent purchaser could determine that the negative impact on current or future
value was significant enough to make the purchase transaction sufficiently
different from the bargained for consideration and, therefore, warrant a
refusal to close the transaction. Any dispute that would arise concerning this
definition of materiality shall be
- 32 -
E-39
<PAGE> 40
resolved by submission to arbitration pursuant to rules of the American
Arbitration Association and shall be binding on the parties hereto, and
judgment may be entered upon such an award.
9. CONDITIONS TO OBLIGATION OF SELLER
The obligation of Seller to consummate the transactions contemplated
hereby is subject to the satisfaction, or waiver, by Seller, at or prior to the
Closing, of the following conditions in the absence of the satisfaction of
which Seller may terminate this Agreement without liability:
9.1 Accuracy of Representations. The representations and warranties
contained in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects on
the Closing Date to the same extent as if made on the Closing Date.
9.2 Performance by Buyer. Buyer shall have duly performed and
complied with all terms, agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
9.3 Officer's Certificate. Buyer shall have delivered to Seller a
certificate, dated as of the Closing Date and executed by an officer of Buyer,
to the effect that Buyer has duly performed and complied with the covenants and
conditions set forth in Sections 9.1 and 9.2.
9.4 Opinion of Buyer's Counsel. Seller shall have received from
counsel to Buyer, a favorable opinion, dated as of the Closing Date, and
satisfactory in substance and form to
- 33 -
E-40
<PAGE> 41
Seller and its counsel, to the following effect:
(a) Standing etc. of the Buyer. Buyer has all requisite power
and authority to consummate the transactions contemplated in the
Agreement and to perform Buyer's obligations contemplated therein;
(b) Consents, Defaults, etc. Neither the execution, delivery or
performance by Buyer of this Agreement, nor the consummation by Buyer of
the transactions contemplated hereby (i) is prohibited by, or requires
Buyer to obtain or make any consent, authorization, approval, filing or
registration under, any law, rule or regulation, or, to the best of
counsel's knowledge after due inquiry, under any judgment, order, writ,
injunction or decree which is binding upon Buyer, or (ii) will violate
any provision of, result in any default or acceleration of any
obligations under, result or require any consent (other than consents
identified in such opinion and duly obtained prior to the Closing)
under, any indenture, lease, mortgage or other agreement to which Buyer
is a party or is otherwise bound;
(c) Execution and Delivery. This Agreement has been duly
executed and delivered by Buyer, and constitutes the legal, valid and
binding obligation of Buyer enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by
- 34 -
E-41
<PAGE> 42
applicable bankruptcy, insolvency, reorganization and other similar laws
relating to or affecting the rights of creditors generally, and is
subject to general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
9.5 Corporate Documents. Buyer shall deliver to Seller (a) a
certificate of good standing from its state of incorporation; and (b)
certified resolutions of the Board of Directors of Buyer authorizing this
transaction.
9.6 Delivery of Purchase Price. Buyer shall deliver to Seller the
Purchase Price via wire transfer directly into an account of Seller.
10. COVENANT NOT TO COMPETE
10.1 Non-competition. In furtherance of the sale of the Assets to
Buyer, for a period of four (4) years following the Closing, Seller and AJI
shall not, nor permit any person or entity then controlled by Seller or AJI to,
directly or indirectly, engage, participate in (as a partner, shareholder,
officer, or director, employee, consultant, agent or otherwise) any business
activity which is the same as, or similar to, or competitive with, the business
conducted by Buyer utilizing the Assets anywhere in the world, nor shall Seller
or AJI directly or indirectly tamper with or induce any employee, agent,
salesperson, contractor, customer, supplier, manufacturer or dealer of Buyer to
leave, to stop selling to or stop buying from
- 35 -
E-42
<PAGE> 43
Buyer or otherwise to cease dealing with Buyer. Nothing herein shall prohibit
any person or entity from owning 2% or less of a publicly traded Company which
conducts a business which could be deemed competitive with Buyer's business.
10.2 Enforcement. The provisions of the covenant contained in this
Section 10 are severable and independent and shall be interpreted and applied
consistently with requirements of reasonableness and equity. If any provision
of the covenant contained in this Section 10 shall be held to be invalid or
otherwise unenforceable, in whole or in part, the remainder of the provisions,
or the enforceable parts thereof, shall not be affected thereby.
10.3 Injunctive Relief. Buyer, AJI and Seller acknowledge that
compliance by Seller and AJI with the covenant contained in this Section 10 is
necessary to protect the interests of Buyer and that a breach of the covenant
contained in this Section 10 will result in irreparable and continuing damage
to Buyer for which there will be no adequate remedy at law. Seller and AJI
hereby agree, without intending to limit the remedies available to Buyer, that
Buyer and its successors and assigns shall be entitled to injunctive relief
with respect to the covenant contained in this Section 10 in addition to such
other and further relief as may be appropriate.
11. ADDITIONAL COVENANTS OF BUYER AND SELLER
11.1 WARN Act. Seller shall, upon execution of this Agreement and
subject to the prior written approval of Buyer,
- 36 -
E-43
<PAGE> 44
provide to its employees the sixty (60) day prior notice under the Worker
Adjustment and Retraining Notification Act ("WARN"), 29 USC Sec. 2101 et seq.
(1988).
11.2 Further Assurances. After the Closing, and for no further
consideration, Seller shall perform all other action reasonably requested by
Buyer (including without limitation the use of Seller's best efforts) to enable
Buyer to accomplish transfer of registrations, permits, approvals and the like
as contemplated by this Agreement and shall execute, acknowledge and deliver
such assignments, transfers, consents and other documents as Buyer or its
counsel may reasonably request to vest in Buyer, and protect Buyer's right,
title and interest in, and enjoyment of, the Assets intended to be assigned and
transferred to Buyer pursuant to this Agreement.
11.3 Bulk Sales Laws. Buyer waives compliance by Seller and Seller
waives compliance by Buyer with the provisions of any applicable bulk sales,
fraudulent conveyance or other law for the protection of creditors, and Seller
shall indemnify and hold Buyer harmless and reimburse Buyer for, any and all
claims, liabilities or obligations (other than those assumed by Buyer
hereunder) which Buyer may suffer or incur by virtue of noncompliance by Buyer
with such applicable laws under the indemnity provisions of Section 12 herein.
11.4 Rights to Intellectual Property. Seller shall not, at any time
after the Closing Date, use or disclose to any third party any Intellectual
Property or Processes which at such time
- 37 -
E-44
<PAGE> 45
is not generally known to the public or recognized as standard practice, or any
formulae, scientific and technical information, manufacturing procedure,
know-how, processes, trade secrets or other confidential information
transferred to Buyer pursuant to this Agreement, without the express prior
written consent of Buyer.
11.5 Use of Trade Names. Seller agrees that Buyer may, at its
discretion, use Seller's name and any trade names used by Seller, or a phrase
similar thereto in connection with marketing products after the Closing Date.
Seller further agrees that Buyer may use containers, forms and other supplies
which have Seller's name printed thereon after the Closing Date. Seller shall
change its name to a dissimilar name as of the Closing and shall file a
certificate of amendment to its articles of incorporation as of the Closing to
effect this change.
11.6 General Manager. Seller shall terminate the employment of its
general manager effective the Closing Date and Seller shall be responsible for
any severance payments resulting therefrom. For the period beginning
immediately after the Closing Date and ending twelve (12) months thereafter,
Buyer shall notify AJI in writing on or about the first day of each month (i)
whether Buyer has entered into any consulting or employment relationship with
Seller's general manager or entered into any agreement to do so and, if so, the
date thereof; and (ii) whether such relationship has been terminated and, if
so, the date thereof.
11.7 Access and Information. For a period of ten
- 38 -
E-45
<PAGE> 46
(10) years following the Closing Date (or the period of Buyer's ownership of
the Business, if shorter), Buyer shall use reasonable efforts to retain all
books, records and other documents pertaining to the Business that are included
in the Purchased Assets and Assumed Liabilities and shall make the same
available after the Closing Date for inspection and copying by Seller, at
Seller's expense, during normal business hours, upon reasonable request and
upon reasonable prior notice. During such ten (10) year period, Buyer shall
advise Seller of any planned substantial destruction of books, records and
documents in writing and give Seller a reasonable opportunity to obtain
possession thereof. Upon reasonable request and reasonable notice, Buyer will
cooperate fully with Seller, and will permit Seller access to and the services
of all employees of Buyer (in a manner which will not impair the operation of
the Business) reasonably necessary (i) for preparing tax returns for periods
prior to the Closing; (ii) in connection with the action Axel Johnson, Inc. v.
Arthur Anderson & Co., No. 89 (Civ. 4960 (S.D.N.Y.) and for defending against
any claim relating to the subject matter thereof; or (iii) for any matters
stemming from the settlement of United States ex rel Butenkoff v. Industrial
Tectonics, Inc., et al. Seller will pay Buyer an amount equal to the salaries
or wages earned by such employees while so assisting Seller and all
out-of-pocket expenses incurred by Buyer in allowing Seller to use such
employees. Notwithstanding the foregoing, Buyer shall not be liable to Seller
for any claim by Seller that Buyer has breached this Section 11.7 for losing
any books, records or other documents.
- 39 -
E-46
<PAGE> 47
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION; ETC.
12.1 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants herein and in any Exhibit,
certificate, instrument or document delivered pursuant to this Agreement shall
survive both the Closing and any investigation at any time made for or on
behalf of any party hereto (i) for a period of five (5) years after the Closing
as to Seller's representations, warranties and covenants relating to
environmental matters; provided, however, that the parties' relative liability
for a breach of any such representation, warranty or covenant shall be as set
forth in Section 12.2, and (ii) for a period of three (3) years as to all other
representations, warranties and covenants of either party.
12.2 Indemnification by Seller. Subject to the conditions contained in
Section 12.4 hereof and to the limitation set forth in Section 12.5 hereof,
Seller and AJI shall, jointly and severally, indemnify and hold Buyer (and its
shareholders, directors, officers, employees and affiliates) harmless from and
against any and all claims, liabilities (including any strict liabilities with
respect to any Loss specified under clause (iv) below), fines, penalties,
losses, damages, (excluding incidental or consequential damages such as lost
profits resulting from any disruption of operation of the Assets), costs and
expenses (including reasonable counsel fees) incurred by Buyer (i) within five
(5) years from the date of Closing with respect to environmental matters, and
(ii) within three (3) years from the date of Closing with respect to all other
matters, from or
- 40 -
E-47
<PAGE> 48
related to any of the following (hereinafter called a "Loss" or "Losses"):
(i) any breach by Seller of any representation,
warranty, covenant, obligation or undertaking made by Seller in or
pursuant to this Agreement;
(ii) any claim or liability not arising out of an obligation
assumed by Buyer hereunder and asserted for failure to comply with any
applicable bulk sales, fraudulent conveyance or other laws for the
protection of creditors;
(iii) any product liability claim or other claim for the breach
of any express or implied warranty, and any other claim of whatever
nature, and from all damages resulting therefrom, which may be made in
connection with the sale of products manufactured by Seller prior to the
Closing Date;
(iv) any claim or liability relating to the generation,
management, handling, transportation, treatment, storage, disposal,
delivery, discharge, release or emission of any waste, pollutant, or
toxic, hazardous or other substance, or other action, omission or
condition affecting the environment prior to the Closing Date, or after
the Closing Date if resulting from the negligence of Seller or its
agents, except those conditions specified in the Environmental Report;
and
(v) any claim or liability relating to the operation of the
Business prior to the Closing Date not assumed by Buyer, including,
without limitation, liability under labor,
- 41 -
E-48
<PAGE> 49
collective bargaining, or employment agreements and liability relating
to pension, retirement or other employee benefit plans.
With respect to any Losses arising from or related to matters described
in Sections 12.2 (iv), 4.12 (b) and 6.3 hereof, Seller's obligation to
indemnify Buyer shall be limited to a percentage of costs actually
incurred by Buyer which shall decrease annually in accordance with the
following table:
<TABLE>
<CAPTION>
Date of Seller's Buyer's
Claim Notice Liability Liability
------------ --------- ---------
<S> <C> <C>
From Closing to One Year
Following Closing 100% 0%
One Year to Two Years 100% 0%
Two Years to Three Years 75% 25%
Three Years to Four Years 55% 45%
Four Years to Five Years 25% 75%
After Five Years from Closing 0% 100%
</TABLE>
The party responsible for the majority of costs in accordance with the
above schedule shall manage and control the work to be performed in
connection with defending the Loss. All such work will be conducted
with the intent of minimizing total costs and minimizing any disruption
to the operation of the Facility.
12.3 Indemnification by Buyer. Subject to the conditions
contained in Section 12.4 hereof, Buyer shall indemnify and hold Seller
harmless from and against any and
- 42 -
E-49
<PAGE> 50
all claims, liabilities, losses, damages, costs and expenses (including
reasonable counsel fees) from or related to (a) any breach by Buyer of any
representation, warranty, covenant, obligation or undertaking made by Buyer in
or pursuant to this Agreement, (b) matters arising solely from the operation of
the Business after the Closing Date, other than liabilities retained by Seller
hereunder, and (c) any product liability claim for injury to persons or
property which may be made in connection with the sale of products manufactured
by Buyer after the Closing Date.
12.4 Indemnification Notice, etc.
(a) If any action, suit or proceeding shall be commenced,
or any claim or demand shall be asserted, in respect of which a party
entitled to indemnification pursuant to this Agreement (the
"Indemnitee") demands indemnification under this Section 12, the party
from which such indemnification is demanded under this Section 12 (the
"Indemnitor") shall be notified to that effect with reasonable
promptness and shall have the right to assume entire control of its
defense (including the selection of counsel), subject to the right of
the Indemnitee to participate (with counsel of its choice) in, the
defense, compromise or settlement thereof.
(b) The fees and expenses of any counsel chosen by Indemnitee
following acceptance by Indemnitor of its indemnity obligations shall be
at the expense of the
- 43 -
E-50
<PAGE> 51
Indemnitee unless (i) the employment of such counsel by the Indemnitee
has been specifically authorized by the Indemnitor, or (ii) the named
parties to any such action (including any impleaded parties) include
both the Indemnitor and the Indemnitee shall have been advised by its
counsel that there may be one or more good faith legal defenses
available to it which are different from or additional to those
available to the Indemnitor.
(c) The Indemnitee shall cooperate fully in all respects with the
Indemnitor in any such defense, compromise or settlement, including,
without limitation, by making available all pertinent information under
its control to the Indemnitor. The Indemnitor will not compromise or
settle any such action, suit, proceeding, claim or demand without the
prior written consent of the Indemnitee; provided, however, that in the
event such consent is withheld, then the liabilities of the Indemnitor
shall be limited to the total sum representing the amount of the
proposed compromise or settlement and the amount of counsel fees
accumulated at the time such consent is withheld. The Indemnitor shall
not be liable for any settlement by Indemnitee of any action, suit,
proceeding, claim or demand, unless the Indemnitee obtains the prior
written consent of the Indemnitor.
12.5 Limit on Indemnification. Notwithstanding anything herein to
the contrary, Seller's liability for matters covered by the indemnification
provided pursuant to this Section 12 shall be
- 44 -
E-51
<PAGE> 52
limited to the Purchase Price as set forth in Section 2.1 above in the
aggregate as to environmental matters as described in this Agreement and the
amount of $5 million as to all other indemnification matters; provided that the
total liability of Seller for environmental matters and all other matters
hereunder combined in the aggregate shall not exceed the Purchase Price.
12.6 Butenkoff Litigation. AJI and Seller specifically, but
without limitation, acknowledge and agree that their indemnity obligation under
Section 12.2 above shall include any and all Losses as defined therein relating
to defective pricing claims made by the United States government, Pratt and
Whitney Aviation Group, their respective agents, successors or assigns, or any
other individual or entity, including, without limitation, claims relating to
the Butenkoff matter identified in Section 11.7, and that the limitations as to
the time for making indenmnity claims and the amount limitations included in
this Section 12 shall not be applicable to any such claims.
13. TERMINATION
Either party may terminate this Agreement upon material breach by the
other party and following fifteen (15) days prior written notice and
opportunity to cure.
14. EXPENSES
Each party hereto shall bear its own expenses, including the fees of any
attorneys, accountants or other engaged by such party, incurred in connection
with this Agreement and the transactions contemplated hereby, it being
understood that
- 45 -
E-52
<PAGE> 53
Seller's expenses shall not be paid from the Assets.
15. NOTICES
All notices, requests, demands and other communications made hereunder
shall be in writing and shall be deemed duly given if and when delivered by
hand, with receipt duly acknowledged, or sent by registered or certified mail,
postage prepaid, as follows, or to such other address or person as any party
may designate by notice to the other party or parties hereunder:
If to Seller or AJI:
Industrial Tectonics Inc.
c/o Axel Johnson Inc.
300 Atlantic Street
Stamford, CT 06901-3530
ATTENTION: William T. Reynolds
If to Buyer:
Kaydon Corporation
Arbor Shoreline Office Park
Suite 101
19329 US 19 North
Clearwater, FL 34624
ATTENTION: Stephen K. Clough
16. AMENDMENTS; TERMINATION
This Agreement cannot be changed or terminated orally and no waiver of
compliance with any provision or condition hereof and no consent provided for
herein shall be effective unless evidenced by an instrument in writing duly
executed by the proper party.
17. EFFECT OF THIS AGREEMENT; COUNTERPARTS
This Agreement (including the Exhibits hereto) sets forth the entire
understanding of the parties and supersedes any and all prior agreements,
arrangements and understandings relating to
- 46 -
E-53
<PAGE> 54
the subject matter hereof. The section headings of this Agreement are for
convenience of reference only and do not form a part hereof and do not in any
way modify, interpret or construe the intentions of the parties. This
Agreement may be executed in two or more counterparts, and all such
counterparts shall constitute one and the same instrument.
18. GOVERNING LAW AND JURISDICTION
This Agreement shall be construed and enforced in accordance with the
laws of the State of Michigan. Each party shall submit to the exclusive
jurisdiction of any state or federal court sitting in Grand Rapids, Michigan in
any action arising out of or relating to this Agreement, and shall not bring
any action or proceeding relating to this Agreement in any other court.
19. ASSIGNMENTS; SUCCESSORS AND ASSIGNS
This Agreement may not be assigned without the written consent of the
other party, except that Buyer may assign this Agreement to a wholly-owned
subsidiary in which event Buyer shall remain liable for the obligations
incurred hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, legal representatives
and assigns.
20. PRESS RELEASES AND ANNOUNCEMENTS
No party shall issue any press release or announcement relating to the
subject matter of this Agreement (prior to the Closing) without the prior
written approval of the other party; provided, however, that any party may make
any public disclosure
- 47 -
E-54
<PAGE> 55
it believes in good faith is required by law or regulation (in which case the
disclosing Party will advise the other party prior to making the disclosure).
21. CONSTRUCTION
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.
IN WITNESS WHEREOF, each party hereto has executed this Agreement by its
respective duly authorized officer as of the day and year first above written.
KAYDON CORPORATION
By /s/ Stephen K. Clough
-----------------------------------------
Stephen K. Clough
Its President and Chief Operating Officer
-----------------------------------------
- Buyer
INDUSTRIAL TECTONICS INC.
By /s/ Paul E. Graf
-----------------------------------------
Paul E. Graf
Its Vice President
------------------------------------
- Seller
- 48 -
E-55
<PAGE> 56
AXEL JOHNSON INC.
By /s/ Joseph F. Smorada
---------------------------------------
Joseph F. Smorada
Its Senior Vice President and Chief
-------------------------------------
Financial Officer
- 49 -
E-56
<PAGE> 57
EXHIBIT 1.1
Any and all restrictions, exceptions and encumbrances which may be
listed on the title insurance policy to be provided to Buyer, which shall be
subject to Buyer's approval which shall not be unreasonably withheld.
Any leased assets described in Exhibit 4.17.
Seller disclaims exclusive ownership of Intellectual Property - See
Exhibit 4.11.
E-57
<PAGE> 58
EXHIBIT 1.1(b)
See attached machinery and equipment list with net book values as of
December 31, 1992 reconciled to the December 31, 1992 general ledger.
In addition, the following items are stored at Miller Truck &
Storage: 1 parts washer, 1 Cyntron Bell elevator, 1 Hercules low level
hydraulic dumper. The following items are stored at Floyd's Rigging &
Machinery Movers, Inc.: 1 grinder, 1 surface table with fixture, 4 tables with
motors and 1 table with fixture. In addition, an ITI 400 Ball Lapper is at
Oklahoma State University.
E-58
<PAGE> 59
INDUSTRIAL TECTONICS, INC.
INSPECTION EQUIPMENT ANALYSIS
11/23/93
<TABLE>
<CAPTION>
FAIR MARKET NET BOOK
VALUE VALUE 12/31/92
----------- --------------
<S> <C> <C>
INSPECTION EQUIPMENT
- --------------------
Per Norman Levy Appraisal:
Test Equipment (#502) $18,000 $ 15,336
TEST EQUIPMENT NOT APPRAISED:
- -----------------------------
Gaging for Gold Balls $ 25,859
Roundness Equipment $ 29,842
Aviko Ball Sorter $ 54,000
Alloy Integrity Sorter $ 11,764
Eddy Current Fixture $ 11,744
Other (see attached) $ 25,978
----------
Total Inspection Equipment per ITI Ledger 12/31/92 $ 174,523
==========
SUMMARY:
- --------
Total Plant Equipment (preceding page) $1,497,510
Total Inspection Equipment $ 174,523
----------
Total Machinery and Equipment $1,672,033
==========
Book value reported in 1992
Year-end audit package -- Schedule 7 $1,672,033
</TABLE>
11/23/93
E-59
<PAGE> 60
INDUSTRIAL TECTONICS, INC.
PLANT EQUIPMENT ANALYSIS
11/23/93
<TABLE>
<CAPTION>
FAIR MARKET NET BOOK
VALUE VALUE 12/31/92
----------- --------------
<S> <C> <C>
Per Norman Levy Appraisal $1,733,500 $1,260,036
ADJUSTMENTS: ($ 18,000) ($ 15,336)
- ------------
Test Equipment (#502)
(Classified as Inspection
Equipment on ITI Ledger)
Computer (#527) ($ 55,000) ($ 72,155)
(Classified as Computer
Hardware on ITI Ledger)
---------- ----------
$1,660,500 $1,172,545
EQUIPMENT NOT APPRAISED:
- ------------------------
Rough Grind Machine $ 16,505
Form Diamond Dresser $ 19,347
Air Compressor $ 14,915
Plant Air Quality $ 18,943
Other (see attached list of low $ plant and $ 169,414
inspection equipment) ----------
Total $1,411,669
----------
Total book value per ITI Ledger 12/31/92 $1,497,510
Less: Multec - sold 3/93 ($ 85,841)
----------
Adjusted Total Plant Equipment 12/31/92 $1,411,669
==========
</TABLE>
11/23/93
E-60
<PAGE> 61
INDUSTRIAL TECTONICS, INC.
FIXED ASSET SYSTEM
PLANT EQUIPMENT
Net Value - Internal
By Class / FAS Asset No.
For Fixed Assets 00001 Through 00533 FY = 12
<TABLE>
<CAPTION>
C ASSET DATE LAST EST. REM. ACQUISITION SECTION DEPRECIABLE TOTAL
L NO. Co. Asset # G/L Code LOCATN ACQUIRED DEPR LIFE LIFE VALUE 179 EXP BASIS DEPRECIATION
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
M 00324 15220268 152600 PMP 12/31/83 12/92 10 0 1 0 20946.63 0.00 20946.63 19899.27
M 00325 15220270 152600 BALL 12/31/83 12/92 10 0 1 0 2584.66 0.00 2584.66 2455.46
M 00326 15220271 152600 BALL 12/31/84 12/92 10 0 2 0 12449.80 0.00 12449.80 10582.33
M 00327 15220262 152600 BALL 12/31/83 12/92 10 0 1 0 112643.77 0.00 112643.77 107011.61
M 00328 15220263 152600 PMP 12/31/83 12/92 10 0 1 0 138036.27 0.00 138036.27 131134.48
M 00329 15220265 152600 SHOP 12/31/83 12/92 10 0 1 0 3250.00 0.00 3250.00 3087.50
M 00330 15220266 152600 PMP 12/31/83 12/92 10 0 1 0 17750.00 0.00 17750.00 16862.50
M 00331 15220267 152600 PMP 12/31/83 12/92 10 0 1 0 14940.42 0.00 14940.42 14193.38
M 00332 15220269 152600 PMP 12/31/83 12/92 10 0 1 0 13135.00 0.00 13135.00 12478.25
M 00333 15220272 152600 SHOP 01/31/84 12/92 10 0 1 1 1286.97 0.00 1286.97 1093.95
M 00334 15220273 152600 BALL 12/31/84 12/92 10 0 2 0 34661.54 0.00 34661.54 29462.28
M 00335 15220274 152600 SHOP 03/31/84 12/92 10 0 1 3 4600.00 0.00 4600.00 3910.00
M 00336 15220275 152600 SHOP 02/28/84 12/92 10 0 1 2 2865.00 0.00 2865.00 2435.25
M 00337 15220276 152600 BALL 11/30/84 12/92 10 0 1 11 11845.49 0.00 11845.49 10068.67
M 00338 15220277 152600 SHOP 03/31/84 12/92 10 0 1 3 25690.72 0.00 25690.72 21837.10
M 00339 15220278 152600 BALL 12/31/84 12/92 10 0 2 0 6960.00 0.00 6960.00 5916.00
M 00340 15220279 152600 PMP 07/31/84 12/92 10 0 1 7 9999.35 0.00 9999.35 8499.49
M 00341 15220280 152600 PMP 08/31/84 12/92 10 0 1 8 13093.00 0.00 13093.00 11129.05
M 00342 15220281 152600 PMP 12/31/84 12/92 10 0 2 0 4809.00 0.00 4809.00 4087.65
M 00343 15220282 15220282 PMP 08/31/85 12/92 8 0 0 8 2301.93 0.00 2301.93 2153.05
M 00344 15220283 152600 PMP 08/31/85 12/92 8 0 0 8 13450.00 0.00 13450.00 12609.38
M 00345 15220285 152600 SHOP 04/30/85 12/92 8 0 0 4 1666.89 0.00 1666.89 1562.70
M 00346 15220286 152600 PMP 03/31/85 12/92 8 0 0 3 8770.00 0.00 8770.00 8221.99
M 00349 15220288 152600 BALL 07/31/85 12/92 8 0 0 7 12568.01 0.00 12568.01 11782.50
M 00350 15220289 152600 PMP 01/31/85 12/92 8 0 0 1 25163.06 0.00 25163.06 23590.35
M 00351 15220291 152600 BALL 07/31/86 12/92 8 0 1 7 6155.16 0.00 6155.16 5001.10
M 00352 15220294 152600 PMP 05/31/86 12/92 8 0 1 5 13450.00 0.00 13450.00 10928.13
M 00353 15220295 152600 SHOP 06/30/86 12/92 8 0 1 6 26373.46 0.00 26373.46 21426.42
M 00354 15220296 152600 BALL 11/30/86 12/92 8 0 1 11 19760.35 0.00 19760.35 16055.26
M 00355 15220297 152600 SHOP 09/30/86 12/92 8 0 1 9 3844.77 0.00 3844.77 3123.90
M 00356 15220298 152600 BALL 10/31/86 12/92 8 0 1 10 21995.37 0.00 21995.37 17871.23
M 00357 15220299 152600 SHOP 10/31/86 12/92 8 0 1 10 6141.75 0.00 6141.75 4990.18
M 00415 15220301 152600 PMP 01/31/87 06/93 8 0 1 7 206510.14 0.00 206510.14 154682.61
M 00416 15220302 152600 BALL 11/30/87 12/92 8 0 2 11 52816.82 0.00 52816.82 36311.55
M 00417 15220303 152600 PMP 01/31/87 12/92 8 0 2 1 5240.60 0.00 5240.60 3602.94
M 00418 15220305 152600 PMP 04/30/87 12/92 8 0 2 4 135552.00 0.00 135552.00 93192.00
M 00419 15220307 152600 SHOP 02/28/87 12/92 8 0 2 2 3456.00 0.00 3456.00 2376.00
M 00420 15220308 152600 BALL 07/31/87 12/92 8 0 2 7 19831.15 0.00 19831.15 13633.90
M 00421 15220310 152600 BALL 10/31/87 12/92 8 0 2 10 11800.00 0.00 11800.00 8112.50
M 00422 15220312 152600 BALL 01/31/88 12/92 8 0 3 1 30437.54 0.00 30437.54 17121.11
M 00423 15220314 152600 PMP 01/31/88 12/92 8 0 3 1 44221.25 0.00 44221.25 24874.47
M 00424 15220315 152600 PMP 06/30/88 12/92 8 0 3 6 20236.20 0.00 20236.20 11382.88
<CAPTION>
C ASSET %
L NO. NET VALUE EXP
<S><C> <C> <C>
M 00324 1047.36 95
M 00325 129.20 95
M 00326 1867.47 85
M 00327 5632.16 95
M 00328 6901.79 95
M 00329 162.50 95
M 00330 887.50 95
M 00331 747.04 95
M 00332 656.75 95
M 00333 193.02 85
M 00334 5199.26 85
M 00335 690.00 85
M 00336 429.75 85
M 00337 1776.82 85
M 00338 3853.62 85
M 00339 1044.00 85
M 00340 1499.86 85
M 00341 1963.95 85
M 00342 721.35 85
M 00343 143.88 94
M 00344 840.62 94
M 00345 104.19 94
M 00346 548.12 94
M 00349 785.51 94
M 00350 1572.71 94
M 00351 1154.06 81
M 00352 2521.87 81
M 00353 4945.03 81
M 00354 3705.09 81
M 00355 720.87 81
M 00356 4124.14 81
M 00357 1151.57 81
M 00415 51627.53 75
M 00416 16505.27 69
M 00417 1637.66 69
M 00418 42360.00 69(1)
M 00419 1080.00 69
M 00420 6197.25 69
M 00421 3687.50 69(1)
M 00422 13316.43 56(1)
M 00423 19346.78 56
M 00424 8853.32 56(1)
</TABLE>
E-61
<PAGE> 62
INDUSTRIAL TECTONICS, INC.
F I X E D A S S E T S Y S T E M Page 2
PLANT EQUIPMENT
Net Value - INTERNAL
By Class / FAS Asset No.
For Fixed Assets 00001 Through 00533 FY=12
<TABLE>
<CAPTION>
C ASSET DATE LAST EST. REM. ACQUISITION SECTION DEPRECIABLE TOTAL
L NO. Co Asset # G/L Code LOCATN ACQUIRED DEPR LIFE LIFE VALUE 179 EXP BASIS DEPRECIATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
M 00425 15220315 152600 PMP 06/30/88 12/92 8 0 3 6 57682.36 0.00 57682.36 32446.35
M 00426 15220317 152600 SHOP 04/30/88 12/92 8 0 3 4 34091.06 0.00 34091.06 19176.21
M 00427 15220318 152600 BALL 01/31/88 12/92 8 0 3 1 6365.00 0.00 6365.00 3580.33
M 00428 15220319 152600 PMP 08/31/88 12/92 8 0 3 8 113896.99 0.00 113896.99 64067.04
M 00429 15220321 152600 PMP 01/31/89 12/92 8 0 4 1 6578.18 0.00 6578.18 2877.95
M 00430 15220322 152600 PMP 06/30/89 12/92 8 0 4 6 25198.22 0.00 25198.22 11024.23
M 00431 15220323 152600 PMP 01/31/89 12/92 8 0 4 1 159909.48 0.00 159909.48 69960.41
M 00432 15220324 152600 BALL 08/31/89 12/92 8 0 4 8 390364.46 0.00 390364.46 170784.46
M 00433 15220324 152600 BALL 08/31/89 12/92 8 0 4 8 -141831.00 0.00 -141831.00 -62051.06
M 00434 15220325 152600 BALL 08/31/89 12/92 8 0 4 8 12570.00 0.00 12570.00 5499.38
M 00435 15220327 152600 BALL 11/30/89 12/92 8 0 4 11 61549.91 0.00 61549.91 26928.09
M 00436 15220328 152600 SHOP 10/31/89 12/92 8 0 4 10 4500.00 0.00 4500.00 1968.75
M 00437 15229301 152600 SHOP 01/31/87 12/92 8 0 2 1 -18750.00 0.00 -18750.00 -12890.63
M 00438 15220329 152600 PMP 12/31/90 12/92 8 0 6 0 28418.00 0.00 28418.00 8880.63
M 00439 15220330 152600 BALL 01/31/90 12/92 8 0 5 1 6922.00 0.00 6922.00 2163.13
M 00440 15220331 152600 BALL 03/31/90 12/92 8 0 5 3 87831.00 0.00 87831.00 27447.20
M 00441 15220332 152600 SHOP 12/31/90 12/92 8 0 6 0 27553.02 0.00 27553.02 8610.32
M 00442 15220333 152600 PMP 08/31/90 12/92 8 0 5 8 156701.81 0.00 156701.81 48969.32
M 00443 15220334 162600 BALL 06/30/90 12/92 8 0 5 6 94891.32 0.00 94891.32 29653.55
M 00444 15220335 152500 BALL 03/31/90 12/92 8 0 5 3 7000.00 0.00 7000.00 2187.50
M 00445 15220336 152600 PMP 12/31/90 12/92 8 0 6 0 3200.00 0.00 3200.00 1000.00
M 00507 15220337 152600 PMP 03/31/91 12/92 8 0 6 2 105730.27 0.00 105730.27 19824.42
M 00508 15220338 152600 PMP 11/30/91 12/92 8 0 6 11 22069.91 0.00 22069.91 4138.11
M 00509 15220339 152600 PMP 01/31/91 12/92 8 0 6 1 53395.00 0.00 53395.00 10011.57
M 00513 15220342 152600 SHOP 09/30/91 12/92 8 0 6 9 2396.00 0.00 2396.00 449.25
M 00514 15220343 152600 SHOP 12/31/91 12/92 8 0 7 0 3128.64 0.00 3128.64 586.62
M 00515 15220340 152600 BALL 10/31/91 12/92 8 0 6 10 45359.72 0.00 45359.72 8504.96
M 00517 15220344 152600 SHOP 06/30/91 12/92 8 0 6 6 4687.00 0.00 4687.00 878.82
M 00521 15220345 152600 BALL 05/12/92 12/92 8 0 7 5 9685.87 0.00 9685.87 605.37
M 00523 15220346 152600 SHOP 04/01/92 12/92 8 0 7 4 197416.51 0.00 197416.51 12338.53
M 00524 15220347 152600 SHOP 03/20/92 12/92 8 0 7 3 10877.00 0.00 10877.00 679.81
M 00525 15220348 152600 BALL 04/01/92 12/92 8 0 7 4 176242.84 0.00 176242.84 11015.18
M 00528 15220350 152600 SHOP 08/12/92 12/92 8 0 7 8 9387.10 0.00 9387.10 586.69
M 00533 15220349 152600 SHOP 12/17/92 12/92 8 0 8 0 1803.00 0.00 1803.00 112.69
Class - 75 2910110.73 0.00 2910110.73 1452972.41
<CAPTION>
C ASSET %
L NO. NET VALUE EXP
<S> <C> <C>
M 00425 25236.01 56 (1)
M 00426 14914.85 56
M 00427 2784.67 56
M 00428 49829.95 56 (1)
M 00429 3700.23 44
M 00430 14173.99 44 (1)
M 00431 89949.07 44 (1)
M 00432 219580.00 44 (1)
M 00433 -79779.92 44 (1)
M 00434 7070.62 44
M 00435 34621.82 44 (1)
M 00436 2531.25 44
M 00437 -5859.37 69
M 00438 19537.37 31 (1)
M 00439 4758.87 31
M 00440 60383.80 31 (1)
M 00441 18942.70 31
M 00442 107732.49 31 (1)
M 00443 65237.77 31 (1)
M 00444 4812.50 31
M 00445 2200.00 31
M 00507 85905.85 19 (1)
M 00508 17931.80 19 (1)
M 00509 43383.43 19 (1)
M 00513 1946.75 19
M 00514 2542.02 19
M 00515 36854.77 19
M 00517 3805.18 19
M 00521 9080.50 6
M 00523 185077.98 6 (1)
M 00524 10197.19 6
M 00525 165227.66 6 (1)
M 00528 8800.41 6
M 00533 1690.31 6
1457138.32 50
(45,769)
---------------
1,411,369
E-62
</TABLE>
<PAGE> 63
INDUSTRIAL TECTONICS, INC.
F I X E D A S S E T S Y S T E M Page 3
INSPECTION
Net Value - INTERNAL
By Class / FAS Asset No.
For Fixed Assets 00001 Through 00533 FY=12
<TABLE>
<CAPTION>
ASSET DATE LAST EST. REM. ACQUISITION SECTION DEPRECIABLE TOTAL
NO. Co Asset # G/L Code LOCATN ACQUIRED DEPR LIFE LIFE VALUE 179 EXP BASIS DEPRECIATION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
00494 15310049 152700 INSP 01/31/87 12/92 6 0 0 1 4490.46 0.00 4490.46 4116.26
00495 15310050 152700 INSP 10/31/87 12/92 6 0 0 10 65718.15 0.00 65718.15 60241.66
00496 15310051 152700 INSP 04/30/87 12/92 6 0 0 4 4197.90 0.00 4197.90 3848.08
00497 15310052 152700 INSP 12/31/87 12/92 6 0 1 0 6482.27 0.00 6482.27 5942.09
00499 15310054 152700 INSP 08/31/89 12/92 6 0 2 8 62061.71 0.00 62061.71 36202.67
00500 15310055 152700 INSP 04/30/89 12/92 6 0 2 4 11350.00 0.00 11350.00 6620.84
00501 15310056 152700 INSP 04/30/89 12/92 6 0 2 4 71620.00 0.00 71620.00 41778.34
00502 15310057 152700 INSP 01/31/90 12/92 6 0 3 1 26290.08 0.00 26290.08 10954.20
00503 15310058 152700 INSP 08/31/90 12/92 6 0 3 8 5025.00 0.00 5025.00 2093.75
00511 15310060 152700 INSP 05/31/91 12/92 6 0 4 5 72000.00 0.00 72000.00 18000.00
00515 15310059 152700 INSP 09/30/91 12/92 6 0 4 9 15685.57 0.00 15685.57 3921.39
00522 15310061 152700 INSP 01/01/92 12/92 6 0 5 1 12811.40 0.00 12811.40 1067.62
00528 15310062 152700 INSP 06/16/92 12/92 6 0 5 6 8004.60 0.00 8004.60 667.05
00532 15310063 152700 INSP 10/27/92 12/92 6 0 5 10 4625.00 0.00 4625.00 385.42
Class - 14 370362.14 0.00 370362.14 195839.37
***************************************************************************************************************
***************************************************************************************************************
GRAND 90 3280472.87 0.00 3280472.87 1648811.78
<CAPTION>
ASSET %
NO. NET VALUE EXP
<S> <C> <C>
00494 374.20 92
00495 5476.49 92
00496 349.82 92
00497 540.18 92
00499 25859.04 58
00500 4729.16 58
00501 29841.66 58
00502 15335.88 42 (1)
00503 2931.25 42
00511 54000.00 25
00515 11764.18 25
00522 11743.79 8
00528 7337.55 8
00532 4239.58 8
174522.77 53
**************************
**************************
1631661.09 50
</TABLE>
(1) on attached appraisal list
E-63
<PAGE> 64
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
08/23/93
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
216 Sebastian Messerschmid
Type SLM40 16" Precision
Ball Lapping Machine, S/N
255 (1992), 20 to 120 RPM
Working Disc, Vibratory
Feed Hopper, Digital
Pendant Controls, Coolant
Filtration System 523 $ 75,000 $ 185,078
217 Sebastian Messerschmid
Type SLM40 16" Precision
Ball Lapping Machine, S/N
256 (1992), 20 to 120 RPM
Working Disc, Vibratory
Feed Hopper, Digital
Pendant Controls, Coolant
Filtration System 523 $ 75,000
153 JGS Geis GMBH Type
JGS-400-N 16" Precision
Finish Ball Lapping
Machine, S/N 2097 (1982),
Digital Timers 375 $ 18,000 $ 0
152 JGS Geis GMBH Type
JGS-400-N 16" Precision
Finish Ball Lapping
Machine, S/N 2098 (1982),
Digital Timers 374 $ 18,000 $ 0
151 JGS Geis GMBH Type
JGS-400-N 16" Precision
Finish Ball Lapping
Machine, S/N 2096 (1982),
Digital Timers 373 $ 18,000 $ 0
149 JGS Geis GMBH Type
JGS-400-N 16" Precision
Finish Ball Lapping
Machine, S/N 2094 (1982),
Digital Timers 372 $ 18,000 $ 0
148 JGS Geis GMBH Type
JGS-400-N 16" Precision
Finish Ball Lapping
Machine, S/N 2095 (1982),
Digital Timers 371 $ 18,000 $ 0
</TABLE>
E-64
<PAGE> 65
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
288 JGS Geis GMBH Type
JGS720A 20" Precision
Finish Ball Lapping
Machine, S/N 2401 (1990),
Digital Timer, Pressure
Gages 440 $ 42,500 $ 60,683
289 JGS Geis GMBH Type
JGS20A 20" Precision
Finish Ball Lapping
Machine, S/N 2402 (1990),
Digital Timer, Pressure
Gages 440 $ 42,500
145 JGS Geis GMBH Type
JGS720A 20" Precision
Finish Ball Lapping
Machine, S./N 2091 (1982),
Digital Timer, Pressure
Gages 239 $ 35,000 $ 0
144 JGS Geis GMBH Type
JGS720A 20" Precision
Finish Ball Lapping
Machine, S/N 2092 (1982),
Digital Timer, Pressure
Gages 376 $ 35,000 $ 0
143 JGS Geis GMBH Type
JGS720A 20" Precision
Finish Ball Lapping
Machine, S/N 2093 (1982),
Digital Timer, Pressure
Gages 378 $ 35,000 $ 0
154 JGS GEis GMBH Type
JGS720A 20" Precision
Finish Ball Lapping
Machine, S/N 2090 (1982),
Digital Timer, Pressure
Gages 377 $ 35,000 $ 0
130 JGS Johann Geis Type
JGS-400 14" Precision
Finish Ball Lapping
Machine, S/N 618 (1957),
Digital Timer, Coolant 274 $ 12,500 $ 0
</TABLE>
E-65
<PAGE> 66
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
132 JGS Johann Geis Type
JGS-400 14" Precision
Finish Ball Lapping
Machine, S/N 530 (1957),
Digital Timer, Coolant 366 $ 12,500 $ 0
123 JGS Johann Geis Type
JGS-400 14" Precision
Finish Ball Lapping
Machine, S/N 623 (1957),
Digital Timer, Coolant 367 $ 12,500 $ 0
147 JGS Geiss GMBH Type
JGS-400-N 14" Precision
Finish Ball Lapping
Machine, S/N 2099 (1982),
Digital Timer, Coolant 370 $ 35,000 $ 0
136 JGS Johann Geis Type
JGS-400 14" Precision
Finish Ball Lapping
Machine, S/N 626 (1957) 369 $ 12,500 $ 0
131 JGS Johann Geis Type
JGS400 14" Precision
Finish Ball Lapping
Machine, S/N 631 (1957) 238 $ 12,500 $ 0
265 JGS Johann Geis Type
JGS400 14" Precision
Finish Ball Lapping
Machine, S/N 549 (1955) 401 $ 12,500 $ 0
268 JGS Johann Geis Type
JGS400 14" Precision
Finish Ball Lapping
Machine, S/N 624 (1957) 399 $ 12,500 $ 0
433 Fabricated Computer
Controlled Production
Precision Finish Grinder
(1990), Steco Precision
Grinding Spindle, Auto
Load and Unload 507 $ 12,500 $ 85,906
</TABLE>
E-66
<PAGE> 67
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
134 JGS Johann Geis Type
JGS400 14" Precision
Finish Ball Lapping
Machine, S/N 550 (1955) 368 $ 12,500 $ 0
135 JGS Johann Geis Type
JGS400 14" Precision
Finish Ball Lapping
Machine, S/N 622 (1957) 397 $ 12,500 $ 0
534 Sebastian Messerschmidt
Type SLM72-PKS 28" Precision
Finish Ball Lapping Machine,
S/N 414 (1974), 94/47 RPM,
0.2 to 1.5 RPM Feed Hopper,
Coolant Filtration System 421* $ 60,000 $ 3,688
214 Sebastian Messerschmidt
Type SLM72-S 28" Precision
Finish Ball Lapping Machine,
S/N 177 (1992), 57, 76 and
113 RPM, 0.01 to 0.4 Hopper
RPM, Coolant Filtration
System 525 $ 140,000 $ 165,228
Koehler #3 36" Vertical Ball
Grinder, S/N K-36-334, Koehler
48" Rotary Ball Feed Conveyor,
Motorized Wheel Pressure
Adjustment 297 $ 10,000 $ 0
Koehler #3 36" Vertical Heavy
Duty Ball Grinder, S/N
K30/36HP-298, Koehler 48"
Rotary Ball Feed Conveyor,
Motorized Wheel Pressure
Adjustment, V.S. Main Drive 298 $ 10,500 $ 0
307 Koehler #3 36" Vertical
Ball Grinder, S/N K-36-333,
Motorized Wheel Pressure
Adjustment, V.S. Drive,
Koehler 48" Rotary Ball
Feed Conveyor 300 $ 10,000 $ 0
315 Koehler #3 36" Vertical
Ball Grinder, S/N N.A.,
48" Rotary Ball Feed 301 $ 10,000 $ 0
</TABLE>
E-67
<PAGE> 68
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
265 Moehler Type MK-81-4
16" Lapping Machine, S/N
568 400 $ 10,000 $ 0
Z78 Moehler Type MK-81-4
16" Lapping Machine, S/N
570 207 $ 10,000 $ 0
266 Moehler Type MK-81-4
16" Lapping Machine, S/N
569 275 $ 10,000 $ 0
275 Moehler Type MK-81-4
16" Lapping Machine, S/N
571 199 $ 10,000 $ 0
267 JGS Johann Geis Type
JGS-400 16" Precision
Lapping Machine, S/N 625
(1957) 398 $ 12,500 $ 0
430 Wadell Model CNC-112SE
2-Axis CNC Turning Center,
S/N 550-2, 6-Position Turret,
Allen Bradley 8400LP Color
CNC Controls 443* $ 20,000 $ 65,238
008 Sansei-Wasino Model
SS-500 14" Horizontal
Rotary Surface Grinder,
S/N 21-0008 (1980), 8860
FPM, 20" Chuck, Wheel
Dresser 138 $ 12,500 $ 0
246 Precision Arc Company
Production Tig Welding
Center, Precision Arc
Model 2400 Programmable
Weld Controller, Model 251
CC-DC Inverter Welding
Power Source, Thermal Arc
Model WC-100B 100-Amp
Plasma Welder, Miller
Radiator-1 Cooling System,
Mid-West Vibratory Feeder,
Welding Jig, Triad Safety
Curtain, Console Controls 435 $ 40,000 $ 34,622
</TABLE>
E-68
<PAGE> 69
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
173 National Maxipres 500-Ton
Straight Side Forging Press,
S/N 5051, 6" Stroke, Bed
12" Lr x 16" FB, Air Clutch,
Triad Safety Curtain 422 $ 12,000 $ 13,316
207 Harper Harperizer Model
4HA-12 4-Compartment Turret
Type Tumble Finisher, S/N
90H1899 (1990) 509 $ 27,500 $ 43,383
010 Cincinnati #2 Centerless
Grinder, S/N 2M2H14-86
(1951), Wheel Dressing and
Truing 141 $ 12,000 $ 0
017 Hardinge Model DSM-A
Super Precision Bar Turning
Lathe, S/N DSM-A-5C-1052,
4200 RPM, 6-Position Turret,
(3) Cross Slides 156 $ 12,500 $ 0
542 Miyano Model BNC-20S
Sub Spindle 2-Axis CNC
Bar Turning Machine,
S/N BN203345, Dual Sided
6-Station Tool Turret,
Discharge Conveyor Chip
Conveyor, Fanuc OT CNC
Control, LNS Hydrobar Bar
Feed 386/33 Personal
Computer, Printer 428 $ 52,500 $ 49,830
J & L Metrology Epic Model
114:14* Optical Comparator,
S/N 80596 (1990), Reflection
and Projection Lighting,
Quadra-Chek III 2-Axis
Digital Readout, Telecentric
Stop, (2) Lenses 502 $ 18,000 $ 15,336
</TABLE>
E-69
<PAGE> 70
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
029 Cincinnati Milacron
Cinturn Model 10CC 2-Axis
CNC Bar Turning Machine,
S/N 5311C10-80-059 (1980),
7-Station Tool Turret,
Cincinnati Acramatic 900
Model TC CNC Controls,
Parta Catcher, Chip
Conveyor, Cincinnati
Hydraulic Bar Feed 188 $ 12,500 $ 0
543 Mattison Model 24A2
2-Spindle Vertical Rotary
Surface Grinder, S/N
24A2-228 (1979), (2) 40 H.P.
Spindles, 48" Table, Barnes
Drill Model MPE-25 Coolant
Filtration System, S/N
TCSP-6052 425* $ 40,000 $ 25,236
402 Mitsubishi Model RA23 9"
x 15" CNC 2-Axis Cylindrical
Grinder, S/N GK072 (1988),
Tepco Air Cleaner, Kalcon
Monolan Filtration System 431 $ 60,000 $ 89,949
011 H. Tachudin Type HTG-
402 8" x 20" Angle Grinder,
S/N 7065 142 $ 20,000 $ 0
179 Royal Master Precise-
O-Matic Precision Centerless
Grinder, S/N 1680,
Computomotor Control Console,
Feed Thru, Automatic Dressing 418 $ 35,000 $ 42,360
404 Heald Model 261 Horizontal
Rotary Surface Grinder, S/N
36949 (1957), 16" Chuck, 14"
Wheel, Wheel Dresser, Barnes
Drill Magnetic and Fabric
Filter 438 $ 13,500 $ 19,537
</TABLE>
E-70
<PAGE> 71
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
Heald Model 261 Horizontal
Rotary Surface Grinder,
S/N 31115 (1951), 16" Chuck,
14" Wheel, Wheel Dresser,
Barnes Drill Magnetic
and Fabric Filter 145 $ 10,000 $ 0
061 Heald Model 261 Horizontal
Rotary Surface Grinder, S/N
30784 (1951), 16" Chuck, 14"
Wheel, Wheel Dresser, Barnes
Drill Magnetic and Fabric
Filter, Angle Table 430 $ 10,000 $ 14,174
252 Heald Model 261 Horizontal
Rotary Surface Grinder, S/N
36623 (1957), 16" Chuck, 14"
Wheel, Wheel Dresser, Barnes
Drill Magnetic and Fabric
Filter, Angle Table, Allen
Bradley TCAT Digital Controls 424 $ 16,000 $ 8,853
546 Kadia Model 2VPH60-200
2-Spindle Vertical Precision
Hone, S/N 76272, 8-Station
Dial Index Table, Hydraulic
and Filtration Unit 508 $ 14,000 $ 17,932
431 Thimelbau Model PM40A
Production Super Finish
Machine 442* $ 20,000 $ 107,732
170 Taylor Hobson Talyrond
73 Precision Ball Inspection
Gage, S/N 112/1341-189,
Terminal, Filter Unit,
Chart Recorder, Epson
HX-20 Computer, Printer $ 12,500 $ 0
079 Jones & Lamson Model
FC-30 30" Optical Comparator,
S/N E36130, Projection and
Reflection, Electronic
Elevator Unit, Quadrachek
2000 2-Axis Digital Readout 455 $ 20,000 $ 0
</TABLE>
E-71
<PAGE> 72
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
<TABLE>
<CAPTION>
FAIR MARKET BOOK VALUE
DESCRIPTION ASSET # VALUE 12/31/92
- ----------- ------- ----- --------
<S> <C> <C> <C>
016 Cincinnati 12" x 36" C.C.
Universal Cylindrical
Grinder, S/N N.A., Flip
Down ID Spindle $ 20,000 $ 0
412 Sebastian Messerschmidt
Type SLM72VL 28" Precision
Lapper, S/N 549 (1988),
Circulating Feed Conveyor,
Magnetic Chip Separator
Coolant System, 45 and 61
RPM Working Disc, 0.06-
1.05 RPM Feed Hopper,
Pendant Control 433 $ 125,000 $ 139,800
411 Sebastian Messerschmidt
Type SLM72EL 28" Precision
Lapper, S/N 550 (1988),
Circulating Feed Conveyor,
Magnetic Chip Separator
Coolant System, 14.5/20/32
RPM Working Disc, 0.06-
1.05 RPM Feed Hopper,
Pendant Control 432 $ 125,000
Digital Vax 4000-200 Mini
Computer System, TK-70
Tape Drive, 400 MB Hard
Drive, (2) IGD RF72 Hard
Drives, TTI-CT8-8 Cartridge
Tape Drive, (30) VT-220
and (2) VT-320 Terminals,
Letterwriter 100 Printer,
LP-126 Printers, LP-25
Printer, LA-50 Printer,
(5) LA-210 Printers, Dec
Server 250 Communications
Link, Powerware UPS $ 55,000 $ 72,155
---------- ----------
TOTAL $1,733,500 $1,260,036
</TABLE>
E-72
<PAGE> 73
INDUSTRIAL TECTONICS, INC.
EQUIPMENT ANALYSIS
11/23/93
Net book values shown on schedules are as of 12/31/92. Normal procedure is to
update our fixed asset files for capital purchases, sales, and disposals on an
annual basis.
E-73
<PAGE> 74
EXHIBIT 1.1(c)
Intellectual Property includes all of the items specified in Section
1.1(c) to the extent that Seller has any interest therein. Computer printouts
of Seller's vendor list and customer list, to the extent same may constitute
Intellectual Property, are available for inspection and review by Buyer.
E-74
<PAGE> 75
EXHIBT 1.1(d)
Trademarks - see attachments.
U.S. TM Reg. No. 583,392 will expire December 8, 1993 and may not be
renewed.
No trademark applications, trade names (other than Industrial Tectonics,
Inc.) service marks, service names, copyrights, patents or patent applications.
E-75
<PAGE> 76
770,731
UNITED STATES PATENT OFFICE
Registered June 2, 1964
- --------------------------------------------------------------------------------
PRINCIPAL REGISTER
TRADEMARK
Ser. No. 178,806, filed Oct. 11, 1963
(Logo)
Industrial Tectonics, Inc. For: PRECISION MACHINED BALLS FOR USE AS
(Michigan corporation) BEARINGS AND OTHER MACHINE PURPOSES, BEARINGS,
3686 Jackson Road INCLUDING SPHERICAL PLAIN AND ROD END BEARINGS,
Ann Arbor, Mich. FLUID FILM BEARINGS, ANTI-FRICTION BEARINGS
AND BALL BEARINGS AND BALL PLUG GAGES, in CLASS
23.
First use 1960; in commerce 1960.
Owner of Reg. No. 583,392
E-76
<PAGE> 77
Registered Dec. 8, 1953 Registration No. 583,392
PRINCIPAL REGISTER
Trade-Mark
UNITED STATES PATENT OFFICE
Industrial Tectonics, Inc., Ann Arbor, Mich.
---------
Act of 1946
---------
Application October 30, 1952 Serial No. 637,378
(Logo)
STATEMENT
Industrial Tectonics, Inc., a corporation duly organized under the laws of
the State of Michigan, located at Ann Arbor, Michigan, and doing business at
3684 Jackson Road, Ann Arbor, Michigan, has adopted and is using the trademark
shown in the accompanying drawing, for PRECISION MACHINED BALLS FOR USE AS
BEARINGS AND OTHER MACHINE PURPOSES, in Class 23, Cutlery, machinery, and
tools, and parts thereof, and presents herewith five specimens showing the
trade-mark as actually used in connection with such goods,the trade-mark being
applied to the goods, and requests that the same be registered in the United
States Patent Office on the Principal Register in accordance with the act of
July 5, 1946.
The trade-mark was first used on the goods specified in September 1946, and
first used in commerce among the several States which may lawfully be regulated
by Congress on August 1, 1952.
INDUSTRIAL TECTONICS, INC.
H. E. STERN
President
AFFIDAVIT SEC. 8
ACCEPTED AFFIDAVIT SEC. 15
RECEIVED JAN. 9, 1959
E-77
<PAGE> 78
EXHIBIT 1.2
See attachment.
E-78
<PAGE> 79
08/05/93
INDUSTRIAL TECTONICS INC.
BALANCE SHEET
JUNE 1993
($000)
<TABLE>
ASSETS
------
<S> <C>
Cash 81
Net Accounts Receivable 2,131
Net Inventory 1,882
Prepaid Expense & Other Current Assets 216
-----
TOTAL CURRENT ASSETS 4,310
-----
P,P and E, Less Accum. Dep. & Amort. 2,852
Goodwill 1,696
-----
TOTAL ASSETS 8,858
-----
LIABILITIES
-----------
Accounts Payable and Accrued Liabilities 965
Retiree Health Care Liability 108
---
TOTAL LIABILITIES 1,073
-----
STOCKHOLDER'S EQUITY
--------------------
Common Stock and Surplus 9,680
Recapitilization (10,786)
Retained Earnings 8,891
-----
TOTAL STOCKHOLDER'S EQUITY 7,785
-----
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY 8,858
-----
</TABLE>
E-79
<PAGE> 80
EXHIBIT 1.2(a)
All purchase orders and all sales orders in the ordinary course including,
without limitation, for materials, supplies and products.
Agreements on attached list.
All leases and contracts referred to in Section 4.17.
E-80
<PAGE> 81
COMPANY TYPE OF AGREEMENT DATE
- ------- ----------------- ----
Hyatt Ball Confidentiality Agreement 06/30/93
Corning Glass Confidentiality Agreement 07/14/86
Toray Exclusivity Agreement 11/05/92
Jay Wang Trading Company, Ltd. Distribution Agreement 07/12/89
Mercury Supply Systems Corp. Distributorship Agreement 06/01/92
Won lk Corporation Distributorship Agreement 07/29/91
Hyatt Ball Company Confidentiality Agreement 08/01/93
Logitech Ireland Confidentiality Agreement 06/30/93
STOCKING AGREEMENTS
-------------------
COMPANY DATE
------- ----
A.J. Rod Company, Inc. 05/26/89
Elisha Penniman 05/12/89
French Enterprises, Inc. 05/11/89
Superior Detroit Sales, Inc. 05/17/89
Howell MacDuff Company, Inc. 05/12/89
Three Star Machine & Tool, Inc. 05/17/89
Tridan Tool & Machine, Inc. 05/17/89
Century Tools & Machinery Ltd. 07/19/89
E-81
<PAGE> 82
EXHIBIT 1.3
Any of Seller's employees' personal property located at Seller's
Dexter, Michigan plant are not Assets.
Any leased assets (but including lease rights).
Those assets listed on Exhibit 4.11.
E-82
<PAGE> 83
EXHIBIT 4.3
Certain agreements listed in Exhibit 1.2(a) and leases and agreements
listed in Exhibit 4.17 may require consent prior to assignment, including:
(1) July 12, 1989 agreement with Jay Wang Trading Company, Ltd.
(2) August 1, 1993 agreement with Hyatt Ball Company, Ltd.
(3) June 30, 1993 agreement with Logitech Ireland.
E-83
<PAGE> 84
EXHIBIT 4.4
See attached list and attached memo dated November 23, 1993 from
Richard Coppock to Bill Reynolds.
E-84
<PAGE> 85
1- 305 Koehler 30: Vertical
Ball Grinder, Rotary End
Wheel Feed
1- 304 Koehler 30" Vertical
Ball Grinder, Rotary End
Wheel Feed
1- 303 Koehler 30" Vertical
Ball Grinder, Rotary End
Wheel Feed
1- 300 Koehler 30: Vertical
Ball Grinder, Rotary End
Wheel Feed
E-85
<PAGE> 86
[logo INDUSTRIAL TECTONICS, INC.]
MEMORANDUM
DATE: November 23, 1993
FROM: Richard Coppock
TO: Bill Reynolds
SUBJECT: 4 Precision Ball Grinders
- --------------------------------------------------------------------------------
The following is a brief summary of the condition of 4 precision ball
grinders.
BALL CONVEYOR SYSTEM - The main castings are considerably worn causing balls
to wedge in various places and lock up the system. These castings need to be
replaced (if possible) or welded up and re-machined.
MAIN DRIVE - All bearings need to be replaced. They tend to wear faster than
normal because the machine seal design is somewhat obsolete compared to today's
equipment.
DRESSING SYSTEM - The original system was not rigid enough and had to be
re-enforced. The dressing bars continue to wear and need to be replaced.
GUARDS AND SHIELDS - Need to be replaced.
These machines are on the books at "$0.00" cost
I hope you find this satisfactory.
E-86
<PAGE> 87
EXHIBIT 4.6
1. Bonus Plan - Incentive payments, if any, are due based on 1993 ITI
performance in accordance with Annual Bonus Plan, to be paid March 15,
1994.
2. Vacation Pay Due - The Company is obligated to pay employees for certain
unused vacation.
3. Sick time (Sick Bank) - The Company is obligated to pay employees for
certain unused sick pay.
4. Hourly Attendance Bond Program - Bonds given to hourly employees for every
2 months of perfect attendance and 1 extra bond for every 6 months of
perfect attendance. Assuming all employees have perfect attendance through
January, 1994, the estimated cost would be $2,300.00.
5. Tuition Reimbursements - Upon submission of satisfactory grades, the
Company will reimburse employees for tuition paid for successfully
completed classes.
* Employees are to be reimbursed for Fall 1993 Classes in early
January of 1994. Approximate Balance Due January 10, 1994 is
$325.00.
* Winter 1994 classes will begin prior to termination of employees.
Approximate Balance Due for Winter, 1994 classes will be
$1,650.00.
6. Short Term Disability Claims - Currently the Company has 2 hourly employees
on STD. One of them is not expected to return to work. He is currently
receiving $300/week and is expected to do so until July 31, 1994.
The second employee on STD is expected to return to work before the end of
the 1993 calendar year. He is currently receiving $200/week.
7. Workers' Compensation - One hourly employee is currently receiving workers'
compensation in the amount of $420/week. The claim is being investigated
by Zurich-American. Possible back surgery is being discussed.
8. COBRA - The Company has certain obligations under COBRA. The following is
a general description of the individuals currently receiving COBRA
coverage:
2 - Laid Off employees - through January, 1995
1 - Retired employee - through February 1, 1995
1 - Retired employee - through March, 1995
1 - Laid Off employee - through March, 1995
1 - Dependent - through December, 1995
E-87
<PAGE> 88
9. Retiree Medical costs - Expected costs as of February 1, 1994:
Hourly Retiree Medical Costs: $3,000/month
Salaried Retiree Medical Costs: $2,700/month
10. Flexible Spending Account - 1 employee is enrolled effective 1-1-94.
Amount available to employee under the flexible spending account is
$180.00.
11. Commissions - The Company has an obligation to pay previously earned
commissions to one salesman on a monthly basis. Approximate commissions
owed to the salesman equal $500.
12. Any claims created pursuant to the 1992 Collective Bargaining Agreement
attached at Exhibit 4.17.
13. Any claims created pursuant to the benefits listed at Exhibit 4.24.
E-88
<PAGE> 89
EXHIBIT 4.7
EPA Hazardous Waste Generator Registration #MIDUS2046513.*
Application for a national pollutant discharge elimination system permit
for storm water runoff.*
Dexter Village Sanitary Waste Testing.
Wastenaw County Right To Know Report.
EPA Hazardous Waste Report.
State of Michigan Boiler Inspections.
State of Michigan OSHA Safety Inspections.
- -----------------
*May not be transferrable or may be transferrable only with consent of
government or regulatory body.
E-89
<PAGE> 90
EXHIBIT 4.8
OSHA investigation conducted 10/21/93 will likely result in a fine which
Seller believes will be less than $10,000 and which will be paid by Seller. At
Seller's option, Buyer will cooperate with Seller if Seller decides to defend
against such claim.
United States ex rel Butenkoff v. Industrial Tectonics, Inc., et al. - See
Section 11.7.
Pending Worker's Compensation claim. - See Exhibit 4.6.
E-90
<PAGE> 91
EXHIBIT 4.10
Gunnar T. Palm, Dillon, Read & Co., Inc.
E-91
<PAGE> 92
EXHIBIT 4.11
Ford compressor shoe classifier on Seller's premises is owned by Ford
Motor Company and therefore is not being sold hereunder.
Certain materials on Seller's premises are work in process owned by
customers and therefore are not being sold hereunder. A list of Seller's
workorders for Seller to finish material furnished by Seller's customers is
attached hereto. The attachment does not include any material which Seller may
have received from customers, but for which Seller has not entered a purchase
order.
Additional equipment on Seller's premises not owned by Seller and
therefore not being sold hereunder are:
1 Sunnen Honing Gage
27 (approx.) Storage tanks for Nitrogen, Acetylene, Argon, Oxygen
1 Geodynamics roll-out box (used for disposal of large
materials)
5 Safety Kleen tanks used for mineral solvents
Except for the trademarks attached to Exhibit 1.1(d), all other items of
Intellectual Property referred to in Exhibit 1.1(c) are subject to being in the
public domain.
E-92
<PAGE> 93
<TABLE>
<CAPTION>
<S> <C> <C>
11/22/93 IT1 MANUFACTURING BACKLOG BY DUE DATE PAGE 24
MFC ORJ. *** LAST *** ***QUANTITIES*** PART QUANTITY ****** DATES ****** AN
NUMBER PC ST W/C OPER ORDERED UM ISSUED UM NUMBER DESCRIPTION OPEN PAZ ISSUED COMPLETED CD
93.164 13 1 210 200 155,000 BA 153,000 BA 1765004 SHOE-13.223 53,706 9 09/22/93 13/24/93 C3
SUB TOTAL FOR 155,000 53,706
TOTAL FOR PRODUCT CODE 155,000 53,706
</TABLE>
E-93
<PAGE> 94
<TABLE>
10/22/93 ITI MANUFACTURING BACKLOG BY DUE DATE PAGE 23
<CAPTION>
MFG ORD. *** LAST *** ***** QUANTITIES ***** PART QUANTITY *****DATES***** AN
NUMBER PC ST M/C OPER ORDERED UN ISSUED UM NUMBER DESCRIPTION OPEN PRI ISSUED COMPLETED CD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
936748 73 I 263 500 1,836 EA 1,308 EA 1752064 GLASS - 0.2788 -LEAD BALL 1,642 2 10/14/93 11/29/93 01
937238 75 I 0 1 EA 1 EA 1750083 TC-MASTER 810 -SET BALL 1 0 11/13/93 11/30/93 01
937265 75 I 458 500 5 EA 5 EA 1161036 CAGE-13625 5 0 11/13/93 11/30/93 03
SUB-TOTAL FOR MONTH 1,842 1,648
936921 75 I 016 500 102 EA 102 EA 1751085 BRONZE 3.1250 - BALL 102 0 10/27/93 12/08/93 01
936922 75 I 016 500 26 EA 26 EA 1751086 BRONZE 4.1250 - BALL 26 0 10/27/93 12/08/93 01
937015 75 I 136 100 1,632 EA 1,632 EA 1752064 GLASS 0.2738 LEAD-BALL 1,632 1 11/01/93 12/09/93 01
937135 75 I 136 915 2,640 EA 2,640 EA 1752064 GLASS 0.2788 LEAD-BALL 2,640 0 11/05/93 12/21/93 01
937031 75 I 0 293 EA 293 EA 1750230 CAGE-078125 293 0 11/04/93 12/23/93 01
937225 73 I 136 315 5,997 EA 5,997 EA 1752080 GLASS 0.1087 LEAD-BALL 5,997 0 11/11/93 12/23/93 01
SUB-TOTAL FOR MONTH 10,690 10,690
TOTAL FOR PRODUCT CODE 12,532 12,338
</TABLE>
E-94
<PAGE> 95
11/11/93 ITI MANUFACTURING BACKLOG BY DUE DATE PAGE 21
<TABLE>
MFG ORG. ***LAST*** *****QUANTITIES***** PART QUANTITY ***** DATES ***** #
NUMBER PC ST W.C OPER ORDERED UN ISSUED UN NUMBER DESCRIPTION OPEN PRI ISSUED COMPLETE CD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C. <C> <C> <C> <C> <C> <C>
936474 73 I 240 600 2,579 EA 2,579 EA 1731005 STAR J PM -1.1250" - -BALL 2,579 2 10/05/93 11/13/93 02
936362 73 I 240 500 4,374 EA 4,374 EA 1733001 STELL ZN -1.375C" -API-BALL 4,374 3 09/22/93 11/14/93 02
936476 73 I 240 800 2,738 EA 2,738 EA 1737003 STAR J PM -0.7500" -API-BALL 2,738 1 10/03/93 11/24/93 02
SUB-TOTAL FOR MONTH 9,691 9,691
936932 73 I 137 400 186 EA 186 EA 1736003 STEEL ZN -1.6873" -API-BALL 186 2 10/29/93 12/03/93 03
936929 73 I 124 400 1,106 EA 1,106 EA 1736013 STAR J PM -0.6875" -API-BALL 1,106 1 10/28/93 12/06/93 03
936931 73 I 124 400 990 EA 990 EA 1733007 STAR J PN -1,3750" -API-BALL 990 1 10/30/93 12/09/93 03
936930 73 I 124 300 2,452 EA 2,452 EA 1731001 STELL ZN -1.1250" -API-BALL 2,452 2 10/30/93 12/10/93 03
936995 73 I 124 300 2,808 EA 2,806 EA 1709009 STAR J -0.9175" -API-BALL 2,808 1 10/30/93 12/17/93 03
936994 73 I 045 200 2,881 EA 2,881 EA 1731006 STAR J PM -1.1250" BALL 2,881 2 11/08/93 12/13/93 03
SUB-TOTAL FOR MONTH 10,423 10,423
937236 73 I 053 100 1,141 EA 1,141 EA 1738008 STOODY ZN -0,7650" - -BALL 1,141 2 11/16/93 01/07/94 03
936993 73 I 045 200 859 EA 859 EA 1706002 REX 05 -1.6075" -API-BALL 859 2 11/16/93 01/10/94 03
936996 73 I 0 2,761 EA 2,761 EA 1701006 STAR J PM -1.1250" BALL 2,761 2 11/22/93 01/14/94 03
937237 73 I 0 145 EA 145 EA 1732003 STELL ZN -2.2500" -API-BALL 145 2 11/22/93 01/14/94 01
SUB-TOTAL FOR MONTH 4,906 4,906
TOTAL FOR PRODUCT CODE 25,020 25,020
</TABLE>
E-95
<PAGE> 96
EXHIBIT 4.12
Offsite Disposal Sites - see attachment "A"; for periods prior to 1987,
see voluminous manifests per each shipment available at Seller's facility in
Dexter, Michigan.
E-96
<PAGE> 97
ATTACHMENT A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BEFORE COPYING FORM, ATTACH SITE IDENTIFICATION LABEL U.S. ENVIRONMENTAL
OR ENTER: [LOGO] PROTECTION AGENCY
SITE NAME INDUSTRIAL TECTONICS, INC. /FORM/ 1991 Hazardous Waste Report
DEXTER, MICHIGAN 48130 /OI/
OFF-SITE IDENTIFICATION
EPA ID NO. MID 052 046 513
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS: Read the detailed instructions on the back of this page before completing this form.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 016 985 814 Usher Oil Co.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 900 Roselawn
[ ] Transporter Zip
[X] TSOR City Detroit State MI Code 48232
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 010 871 234 Michigan Pumping Service
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street N/A
[X] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 049 267 727 Power Vacuum Services, Inc.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street N/A
[X] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 069 818 698 DownRiver Maintenance Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street N/A
[X] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 5 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 054 683 479 City Enviromental, Inc.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 1550 Harper St.
[ ] Transporter Zip
[X] TSOR City Detroit State MI Code 48211
- ----------------------------------------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-97
<PAGE> 98
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BEFORE COPYING FORM, ATTACH SITE IDENTIFICATION LABEL U.S. ENVIRONMENTAL
OR ENTER: [LOGO] PROTECTION AGENCY
SITE NAME INDUSTRIAL TECTONICS, INC. /FORM/ 1991 Hazardous Waste Report
DEXTER, MICHIGAN 48130 /OI/
OFF-SITE IDENTIFICATION
EPA ID NO. MID 052 046 513
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS: Read the detailed instructions on the back of this page before completing this form.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 006 523 385 City Enviromental, Inc.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 29163 Calahan
[ ] Transporter Zip
[X] TSOR City Roseville State MI Code 48006
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 093 826 733 American Tank Service
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 707 E. Lewiston
[ ] Transporter Zip
[X] TSOR City Ferndale State MI Code 48220
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 981 000 359 Safety-Kleen Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 700 Zimmerman Road
[ ] Transporter Zip
[X] TSOR City Mason State MI Code 48854
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 981 000 607 Safety-Kleen Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 3899 Wolf Road
[ ] Transporter Zip
[X] TSOR City Saginaw State MI Code 48901
- ----------------------------------------------------------------------------------------------------------------------------------
Site 5 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
ILD 051 060 408 Safety-Kleen Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street N/A
[ ] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-98
<PAGE> 99
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL TECTONICS, INC. U.S. ENVIRONMENTAL
7222 W. HURON RIVER DR [LOGO] PROTECTION AGENCY
DEXTER, MI 48130
/FORM/ 1989 Hazardous Waste Report
MID 052 046 513 250936 /OI/
OFF-SITE IDENTIFICATION
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS: Read the detailed instructions on the back of this page before completing this form.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 982 606 287 Inland Waters Pollution Control
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street
[X] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 010 871 234 Michigan Pumping Service
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 2619 Superior St. P.O. Box 111
[X] Transporter Zip
[X] TSOR City Trenton State MI Code 48123
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 060 975 844 Michigan Recovery
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 36345 Van Born Road
[ ] Transporter Zip
[X] TSOR City Romulus State MI Code 48174
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 016 985 814 Usher Oil Co.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 9000 Roselawn
[ ] Transporter Zip
[X] TSOR City Detroit State MI Code 48223
- ----------------------------------------------------------------------------------------------------------------------------------
Site 5 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
ILD 051 060 408 Safety-Kleen Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 700 Zimmerman Road
[X] Transporter Zip
[ ] TSOR City Mason State MI Code 48854
- ----------------------------------------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-99
<PAGE> 100
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL TECTONICS, INC. U.S. ENVIRONMENTAL
7222 W. HURON RIVER DR [LOGO] PROTECTION AGENCY
DEXTER, MI 48130
/FORM/ 1989 Hazardous Waste Report
MID 052 046 513 250936 /OI/
OFF-SITE IDENTIFICATION
- ----------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS: Read the detailed instructions on the back of this page before completing this form.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 981 000 359 Safety-Kleen Corp.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 700 Zimmerman
[ ] Transporter Zip
[X] TSOR City Mason State MI Code 48854
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 000 724 831 Michigan Disposal
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 49350 N. Service Drive
[ ] Transporter Zip
[X] TSOR City Belleville State MI Code 48111
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
MID 000 000 051 C. I. W. Inc.
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street 39209 Ecorse Road
[ ] Transporter Zip
[X] TSOR City Romulus State MI Code 48174
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street
[ ] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 5 A. EPA ID No. of off-site installation of transporter B. Name of off-site installation of transporter
C. Handler type D. Address of off-site installation
(CHECK ALL THAT APPLY)
[ ] Generator Street
[ ] Transporter Zip
[ ] TSOR City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-100
<PAGE> 101
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. ENVIRONMENTAL
MID 052 046 513 G [LOGO] PROTECTION AGENCY
INDUSTRIAL TECTONICS, INC.
COMSTOCK J ENGR MGR /FORM/ 1987 Hazardous Waste Report
7222 W. HURON RIVER DR. /0I/
DEXTER MI 48130
OFF-SITE IDENTIFICATION
- ----------------------------------------------------------------------------------------------------------------------------------
WHO MUST COMPLETE THIS FORM? FORM OI must be completed by every site that shipped hazardous waste off site and every site that
received hazardous waste from off site during 1987.
[ ] Mark [X] if you are not required to complete Form OI.
INSTRUCTIONS: Please read the detailed instructions beginning on page 23 of the 1987 Hazardous Waste Generation
and Shipment Report Instructions booklet before completing this form.
Complete A through E for each off-site installation to which you shipped waste or from which you
received waste during 1987.
Complete A through D for every transporter you used during the reporting year.
Thoughout this form enter "OK" if the information requested is not known or is not available:
enter "NA" if the information requested is not applicable. Make and complete addition copies of
this form if you need to identify more than four off-site installations or transporters.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 010 871 234 Michigan Pumping Service
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 2619 Superior St.
Zip
[K] [D] City Trenton State MI Code 48183
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 096 963 194 Chem-Met Services
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 18550 Allen Rd.
Zip
[K] [D] City Wyandotte State MI Code 48195
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 981 000 359 Safety-Kleen Corp.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street
Zip
[K] [D] City Mason State MI Code 48854
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
N/A Rubtron Metal Co.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 110 N. Fourth Ave.
Zip
[K] [D] City Ann Arbor State MI Code 48103
- ----------------------------------------------------------------------------------------------------------------------------------
Comments: Michigan Pumping Services (site 1) functioned as transporter only, on most manifests.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-101
<PAGE> 102
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. ENVIRONMENTAL
MID 052 046 513 G [LOGO] PROTECTION AGENCY
INDUSTRIAL TECTONICS, INC.
COMSTOCK J ENGR MGR /FORM/ 1987 Hazardous Waste Report
7222 W. HURON RIVER DR. /0I/
DEXTER MI 48130
OFF-SITE IDENTIFICATION
- ----------------------------------------------------------------------------------------------------------------------------------
WHO MUST COMPLETE THIS FORM? FORM OI must be completed by every site that shipped hazardous waste off site and every site that
received hazardous waste from off site during 1987.
[ ] Mark [X] if you are not required to complete Form OI.
INSTRUCTIONS: Please read the detailed instructions beginning on page 23 of the 1987 Hazardous Waste Generation
and Shipment Report Instructions booklet before completing this form.
Complete A through E for each off-site installation to which you shipped waste or from which you
received waste during 1987.
Complete A through D for every transporter you used during the reporting year.
Thoughout this form enter "OK" if the information requested is not known or is not available:
enter "NA" if the information requested is not applicable. Make and complete addition copies of
this form if you need to identify more than four off-site installations or transporters.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 000 820 365 Inland Waters Pollution Control
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street NA
Zip
[T] [D] City State Code
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 980 684 088 Solvent Distillers
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 421 Lycaste Dr.
Zip
[T] [D] City Detroit State MI Code 48214
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23 Detrex Chemical Industries Inc.
MID 091 605 972 Gold Shield Solvents Div.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 12886 Eaton Ave.
Zip
[F] [D] City Detroit State MI Code 48227
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 088 754 668 Edwards Oil Service
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 530 S. Rouge St.
Zip
[F] [D] City Detroit State MI Code 48217
- ----------------------------------------------------------------------------------------------------------------------------------
Comments: Site 2: Solvent Distillers is listed on 3 manifesters as "2(d) transporter".
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-102
<PAGE> 103
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. ENVIRONMENTAL
MID 052 046 513 G [LOGO] PROTECTION AGENCY
INDUSTRIAL TECTONICS, INC.
COMSTOCK J ENGR MGR /FORM/ 1987 Hazardous Waste Report
7222 W. HURON RIVER DR. /0I/
DEXTER MI 48130
OFF-SITE IDENTIFICATION
- ----------------------------------------------------------------------------------------------------------------------------------
WHO MUST COMPLETE THIS FORM? FORM OI must be completed by every site that shipped hazardous waste off site and every site that
received hazardous waste from off site during 1987.
[ ] Mark [X] if you are not required to complete Form OI.
INSTRUCTIONS: Please read the detailed instructions beginning on page 23 of the 1987 Hazardous Waste Generation
and Shipment Report Instructions booklet before completing this form.
Complete A through E for each off-site installation to which you shipped waste or from which you
received waste during 1987.
Complete A through D for every transporter you used during the reporting year.
Thoughout this form enter "OK" if the information requested is not known or is not available:
enter "NA" if the information requested is not applicable. Make and complete addition copies of
this form if you need to identify more than four off-site installations or transporters.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Site 1 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 000 724 831 Michigan Disposal, Inc.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 49350 N. Service Dr.
Zip
[F] [D] City Belleville State MI Code 48111
- ----------------------------------------------------------------------------------------------------------------------------------
Site 2 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 980 615 298 Petrochem Processing, Inc.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 421 Lycaste Dr.
Zip
[F] [D] City Detroit State MI Code 48214
- ----------------------------------------------------------------------------------------------------------------------------------
Site 3 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MIP 000 000 051 CIW, Inc.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 39209 Ecorse Rd.
Zip
[F] [D] City Romulus State MI Code 48174
- ----------------------------------------------------------------------------------------------------------------------------------
Site 4 A. EPA ID No. of off-site installations or transporter B. Name of off-site installation or transporter
Instruction page 23 Page 23
MID 005 356 704 Environmental Waste Conrol, Inc.
C. SRO type code D. Site relationship code E. Address of off-site transporter
Page 24 Page 24 Page 24
Street 27140 Princeton
Zip
[F] [D] City Inkster State MI Code 48141
- ----------------------------------------------------------------------------------------------------------------------------------
Comments:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E-103
<PAGE> 104
INDUSTRIAL TECTONICS, INC. [LOGO]
LIST OF ADDITIONAL DISPOSAL SITES USED FROM 1991 TO
THE PRESENT AND NOT SHOWN ON PREVIOUS REPORTS.
Kelly Distributing MID054774534
BIF MI687931223
E-104
<PAGE> 105
ATTACHMENT B
ASBESTOS Piping insulation removal performed on March 2, 1988.
METHYLENE CHLORIDE 2 gallons used for density measures of glass balls
for R&D only. Used one time.
NITRIC ACID 7697-37-2 8 gallons typically on hand used for aqua regia
cleaning of ceramic and nital etching bearing balls.
SELENIOUS ACID 7783-00-8 5 gallons used for black oxide treatment of steel
balls and shanks in 1987-89.
HYDROQUINONE 123-31-9 8 gallons on hand used in X-ray room for film
development.
Excerpts from Washtenow Counts 1992 Community Right-to-Know Report attached
as Schedule 1 hereto.
Pilko June 1992 Report.
Excerpts from the Emergency Response Plan (update of Pilko June 1992
Report) attached as Schedule 2 hereto.
Excerpts from the Village of Dexter Industrial Pre-treatment Compliance
Report (update of June 1992 Pilko Report) attached as Schedule 3 hereto.
E-105
<PAGE> 106
WASHTENAW COUNTY
ENVIRONMENTAL SERVICES BUREAU
[Logo]
COMMUNITY RIGHT-TO-KNOW
1991
TOXIC/HAZARDOUS MATERIALS STATUS SHEET
FACILITY IDENTIFICATION
- -----------------------
1. Legal Business Name: INDUSTRIAL TECTONICS, INC.
2. Site Address: 7222 West Huron River Drive
3. TOWNSHIP/CITY/VILLAGE LOCATION: Scio Twp., Dexter Village ZIP: 48130
(circle one)
CONTACT INFORMATION
- -------------------
1. Name: Bob Bennett Title: Safety Director
2. Mailing Address: 59715 Ten Mile Road
City: South Lyon State: MI Zip: 48178
EMERGENCY COORDINATOR INFORMATION
- ---------------------------------
1. Name: Bob Bennett Phone: (Day) 313/426-4681
Title: Safety Director (Eve) 313/437-2967
2. Name: Jeff Comstock (Day) 313/426-4681
Title: Manager of Engineering (Eve) 313/760-7261
ASSOCIATED BUSINESS LICENSES AND PERMITS (Check applicable categories)
- ----------------------------------------
No hazardous waste generated
---
Conditionally exempt small quantity hazardous
waste generator
---
Small quantity hazardous waste generator
---
Fully regulated hazardous waste generator X
---
Groundwater Discharge Permit
---
Pollution Incident Prevention Plan X
---
Hazardous Materials Management Plan X
---
National Pollutant Discharge Elimination System
(NPDES) Permit
---
Number of underground storage tanks on-site O
---
-5-
E-106
<PAGE> 107
Business Name: INDUSTRIAL TECTONICS, INC.
EMERGENCY PLAN
Attach a statement of your plan to notify emergency personnel in an emergency
involving toxic or hazardous materials. This statement should include name(s),
address(es), and telephone number(s) of emergency personnel to be notified. The
contents of the emergency message should be listed if known.
FLOOR PLAN
Attach a floor plan drawing of your facility in a suitable scale. This plan
should show the location of your toxic and hazardous materials. (Refer to
attached example.)
In addition, indicate the location relative to roads, streets, alleys, bodies
of water, and adjoining occupancies. Show all entrances and exits to the
facility. Also, indicate the location of sewer inlets, fire hydrants, utility
shut-offs, water wells, and septic fields if applicable.
If this plan view is not complete or clear to the appropriate authorities, it
will be returned for improvement and resubmittal.
SIGNATURE
All applicable parts of this form have been accurately completed.
The aggregate maximum storage inventory at any one time of all materials
listed IS: 233,000 pounds.
-------
The fee schedule will probably change during the amendments process. We will
notify your company of the required fee at a later date.
This form must be updated and filed by March 1st of each year.
I declare that the above information stated on this status sheet is to the
best of my knowledge true and correct.
Jeffrey C. Comstock Jeffrey C. Comstock
- ------------------------------ -------------------------------
Signature Printed
Engineering Manager 3/11/92
- ------------------------------ -----------------
Title Date
Please return to:
Community Right-To-Know Coordinator
Environmental Health Services
2355 W. Stadium
P.O. Box 8645
Ann Arbor, MI 48107-8645
-9-
E-107
<PAGE> 108
Page 1 of 1 Business Name Industrial Tectonics, Inc.
----------------------------
WASTE MATERIALS INVENTORY
<TABLE>
<CAPTION>
I II III IV V VI
a) DOT Shipping Name
b) Waste Hauler Waste Chemical Names Max % Max amt Max amt Volts
c) Storage Location (Ingredients Names) any time annually
<S> <C> <C> <C> <C> <C>
1.a) Waste Flammable Liquid D001 1) Isopropyl Alcohol 95 1000 3470 GA
b) American Tank Service 2) Oil and Grease 5
c) Drums, NE Pad 3)
2.a) Waste Solvent F002 1) 1,1,1-Trichloroethane 95 20 20 GA
b) American Tank Service 2) Oil and Grease 5
c) NE Pad 3)
3.a) Waste Petroleum Naphtha D001 1) Naphtha 95 220 3083 GA
b) Saftey-Kleen 2) Oil and Grease 5
c) Manufacturing Areas 3) Metal Fines
4.a) Waste Leaded Glass D008 1) Glass 10 125 125 LB
b) American Tank Service 2) Lead Oxide 3
c) Lapping Department 3) Lithium Oxide 1
5.a) Swarf from Leaded Brass D008 1) Copper less than 70 20 20 LB
b) American Tank Service 2) Zinc less than 30
c) NE Pad 3) Lead less than 1
6.a) Waste Penetrant Liquid 1) Hydrocarbons 95 5 5 GA
b) American Tank Service 2)
c) NE Pad 3)
EXAMPLE:
a) Waste Motor Oil 1) Motor oil 100% 110 660 GA
b) XYZ Hauling Company
</TABLE>
E-108
<PAGE> 109
SCHEDULE 2
Village of Dexter
Industrial Pre-Treatment Compliance Report
------------------------------------------
A. Facility Name Industrial Tectonics Incorporated
Address 7222 West Huron River Drive
Dexter, Michigan 48130
B. S.I. C. Code 3562
C. Process Grinding metal, ceramic, and plastic
Description balls; precision machining of small
parts.
D. Total Plant
Flow 7000 GPD
(gallons/day)
E. Type of Discharge Batch Continuous X
-------------- --------------
F. Individual Flows Name of Process Line Average Flow
Wet polishing and rinsing 4500 GPD
Sanitary 2500 GPD
E-109
<PAGE> 110
G. Please note any changes in either your process lines or pretreatment
practices which have occurred since your last compliance report.
None
H. If precipitates or sludges are removed from your facility by a Waste Hauler
please provide the name and registration number.
Name Wolverine Disposal Number MID086148203
-------------------- --------------
I certify under penalty of law that I have personally examined and am familiar
with the information in this report and all attachments therein. I believe the
information is true, accurate, and complete. I am aware that there are
significant penalties for submitting false information including the
possibility of fine and imprisonment. I further certify that the samples
reported are representative of normal work cycles and expected pollutant
discharges.
Name Richard P. Coppock
----------------------
Richard P. Coppock
Title President
----------------------
Date 6/29/95
----------------------
E-110
<PAGE> 111
INDUSTRIAL TECTONICS INC.
ANALYTICAL RESULTS - COMPLIANCE MONITORING
MAY 25, 1993
<TABLE>
<CAPTION>
Parameter Corporate M/G Admin.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BOD 81 Mg/L
COD 300 Mg/L
Total Suspended Solids 50 Mg/L
COD or Filtrate
Grease & Oil 18 Mg/L
Total Phosphorus 4.6 Mg/L
Chromium 0.02 Mg/L
Copper 0.31 Mg/L
Nickel less than 0.02 Mg/L
Zinc 0.76 Mg/L
pH 8.06 8.26 8.99
Temperature, C 16.9 18.0 15.7
</TABLE>
E-111
<PAGE> 112
INDUSTRIAL TECTONICS, INC., 7222 W. HURON DR., DEXTER, MICHIGAN
EMERGENCY RESPONSE PLAN
TABLE A-J EVALUATION(1) OF INDUSTRIAL WASTES
<TABLE>
<CAPTION>
Dumpster Dry Grinding Oily Oil Tanks Regulated
Parameter Waste(2) Swarf(3) Grinding Sludge(4) Sludge(5) Limits(6)
- ---------------------- -------- ------------ ------------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Cyanide, mg/Kg 0.97 less than 0.087 0.26 0.50 250
Sulfide, mg/Kg less than 0.5 less than 185 210 90 500
Reactivity NO NO NO NO (ANY)
Flash Point, deg. F greater than 200 greater than 176 162 97 140
pH, S.U. 6.0 8.1 7.3 9.4 2.0-12.5
Arsenic, mg/L less than 0.01 less than 0.002 0.0001 0.001 5.0
Barium, mg/L 0.3 0.08 0.32 0.36 100.0
Cadmium, mg/L 0.05 less than 0.02 less than 0.01 less than 0.01 1.0
Chromium, mg/L less than 0.04 0.06 0.02 0.03 5.0
Cobalt, mg/L 0.02 (7) 21 34 --
Copper, mg/L 0.04 0.04 less than 0.02 0.24 100.0
Mercury, mg/L less than 0.003 less than 0.0002 less than 0.0002 less than 0.0002 0.2
Nickel, mg/L -- (7) 0.76 3.2 --
Lead, mg/L less than 0.10 0.28 0.05 0.08 5.0
Selenium, mg/L less than 0.005 less than 0.002 less than 0.001 less than 0.001 1.0
Silver, mg/L less than 0.02 less than 0.01 less than 0.02 less than 0.02 5.0
Zinc, mg/L 0.12 0.57 0.63 3.3 500
</TABLE>
- ---------------------
(1) Evaluated for corrosivity, flammability, reactivity, sulfide and cyanide
content, and "EP toxicity" of leachate.
(2) Sampled 2/10/87 by Michigan Pumping Service, Inc.; analysis by Canton
Analytical Lab.
(3) Cobalt-rich solid waste composited from 7 drums on 6/7/88.
(4) Oily sludge from precision grinding and lapping, composited from 10 drums on
6/7/88.
(5) Composited sample from bottoms of 3 waste oil tanks, 3/11/87, after pumping
off liquid layer; flammable because naphtha and mineral spirits were present
(hazardous waste no. D001 if not reclaimed)
(6) 40 CFR Part 261 and MDNR Rule 217.
(7) Co content was 7.4 mg/L and NI content 5.2 mg/L in 3/11/87 sample.
(8) Co content was 2 mg/L and NI content 0.76 mg/L in 3/11/87 sample.
E-112
<PAGE> 113
EXHIBIT 4.13
United States ex rel Butenkoff v. Industrial Tectonics, Inc., et al. -
See Section 11.7.
E-113
<PAGE> 114
EXHIBIT 4.14
None
E-114
<PAGE> 115
EXHIBIT 4.15
None.
E-115
<PAGE> 116
EXHIBIT 4.17
Purchaser orders as set forth in Seller's "Purchase Order Status
Report".
Customer orders as set forth in Seller's "Customer Order Status
Summary", including without limitation, a 12/16/92 purchase order with General
Motors Corporation AC Rochester Division, a copy of which is attached and which
is referred to in Section 4.16 as "Seller's agreement with Rochester Products
division of General Motors Corporation".
Telephone lease.
3 automobile leases.
Agreements referred to in Section 1.2 (a).
Computer hardware and software support agreements.
UAW collective bargaining agreement (not to be assumed by Buyer).
E-116
<PAGE> 117
(Logo) AC Rochester Division D-U-N-S 01-707-9825
THIS ORDER NUMBER MUST APPEAR ON
GENERAL MOTORS CORPORATION ALL INVOICES, PACKAGES, PACKING
999 RANDALL RD. SLIPS AND BILLS OF LADING.
COOPERSVILLE, MICHIGAN 49404
(616) 837-7493 FAX (616)837-7592 PURCHASE ORDER NO.
DATE P.O. NO.
V INDUSTRIAL TECTONICS INC. 12/16/92 5 OM930453
E F.O.B. VIA
N 7222 HURON RIVER DR. DEXTER, MI AS INSTR
D TERMS
O DEXTER MI 48130 NET 25TH PROX
R
ITEM OR SYMBOL NO. MUST APPEAR ON ALL PACKAGES & PACKING SLIPS.
MICHIGAN STATE SALES/USE TAX REGISTRATION NO. MS 180 0440
CONFIRMING
================================================================================
DELIVERY DELIVER TO RCDN NO.
REQUIRED SEE BELOW
================================================================================
ITEM OR SYMBOL NO. DESCRIPTION PRICE QUANTITY
================================================================================
THIS BLANKET PURCHASE ORDER IS ISSUED TO COVER BUYER'S REQUIREMENTS FOR THE
MATERIAL ON THE ATTACHED SUPPLEMENTAL PAGES FROM JANUARY 1, 1993 THRU DECEMBER
31, 1993.
SHIPMENTS ARE TO BE MADE IN ACCORDANCE WITH THE SHIPPING SCHEDULE AND RELEASE.
THE TOTAL QUANTITY COVERED BY THIS PURCHASE ORDER WILL BE THE AMOUNT SHOWN ON
THE RELEASE/REVISION FORM. BILLING INFORMATION IS ALSO SHOWN ON THE
RELEASE/REVISION FORM. SELLER IS REQUIRED TO FURNISH 100% OF BUYER'S
REQUIREMENTS ON ALL ITEMS, EXCEPT THOSE MARKED WITH AN ASTERISK (*). ON ITEMS
SO MARKED, BUYER HAS EITHER INDICATED THE APPROXIMATE PERCENTAGE REQUIRED OR
HAS ADVISED UNDER SEPARATE COVER THE EXTENT OF YOUR PARTICIPATION.
AC ROCHESTER'S QUALITY STANDARDS AND REQUIREMENTS, AS IDENTIFIED IN GM'S
TARGETS FOR EXCELLENCE MANUAL, APPLY TO ALL ITEMS COVERED BY THIS BLANKET
PURCHASE ORDER. OTHER DOCUMENTS MAY ALSO APPLY TO ITEMS COVERED BY THIS BLANKET
PURCHASE ORDER, AND IF SO HAVE BEEN ATTACHED.
ALL ATTACHMENTS TO THIS ORDER ARE INTENDED TO BECOME PART OF THIS ORDER.
SELLER'S SIGNED ACKNOWLEDGEMENT OF THIS ORDER INCLUDES ACKNOWLEDGEMENT OF ANY
AND ALL ATTACHMENTS. SELLER'S ACKNOWLEDGEMENT ALSO INDICATES THE SELLER'S
AGREEMENT THAT NO MODIFICATION TO THE DOCUMENTED PROCESS OR CONTROL PROCEDURE
WILL BE MADE WITHOUT THE PRIOR NOTIFICATION AND APPROVAL OF AC ROCHESTER.
(Seal)
VIA: AS INSTRUCTED
SHIPMENTS PRIOR TO DATE SPECIFIED MAY BE RETURNED AT BUYER'S DISCRETION
NOTE: ACCEPTANCE COPY NOT REQUIRED UNLESS THIS BOX IS CHECKED.> / /
OR IF A VARIANCE OR CORRECTION IS NOTED.
AC Rochester Division
THIS ORDER, INCLUDING THE TERMS AND CONDITIONS GENERAL MOTORS CORPORATION
ON THE FACE AND REVERSE SIDE HEREOF, CONTAINS DONALD GOBER
THE COMPLETE AND FINAL AGREEMENT BETWEEN BUYER
AND SELLER AND NO OTHER AGREEMENT IN ANY WAY
MODIFYING ANY OF SAID TERMS AND CONDITIONS WILL
BE BINDING UPON BUYER UNLESS MADE IN WRITING BY Richard Kobes
AND SIGNED BY BUYER'S AUTHORIZED REPRESENTATIVE. -------------------------
RICHARD KOBES
SUPV. OF PURCHAS
SUPPLIER
E-117
<PAGE> 118
SUPPLEMENTAL PAGE TO PURCHASE ORDER DM93045300 - INDUSTRIAL TECTONICS IN
AC ROCHESTER DIVISION OF GENERAL MOTORS BUYER 5 DATE 12/17/92 PAGE
ITEM NUMBER DESCRIPTION PRICE U/MEA
@5233781 $0.49000 E PC
TBI BALL PER PRINT DATED 04 FE 80 REVI- ACCT - 8010
SION (S) DATED 21JN83 , FINISHED
INCLUDING HARPERIZING,ITI#5503141
PULL SYSTEM- SHIP VIA BURLINGTON SECOND
DAY
E-118
<PAGE> 119
EXHIBIT 4.19
All accounts receivable more than 90 days past due per attached
schedule dated 10/31/93.
E-119
<PAGE> 120
INDUSTRIAL TECTONICS INC.
ACCOUNTS RECEIVABLE ANALYSIS
ACCOUNTS GREATER THAN 90 DAYS PAST DUE
AS OF 10/31/93
<TABLE>
<CAPTION>
CUSTOMER 90 DAYS
- -------------------------------- ----------
<S> <C>
Mercury Supply $6,714
Nan Kwang $5,400
Renishaw Metrology Ltd. $3,225
Holley Automotive Division $2,390
A C Rochester $2,103
Van Sanford Tool $1,800
Pennoyer Dodge Company $1,746
Black & Decker $1,295
RGP International $1,176
Garrett Fluid Power $1,104
U.S. Gov't DFAS $ 990
Fisher Space Pen Company $ 990
Allied Signal Inc. $ 946
Jencors Ltd. $ 885
Wallace & Tiernan Div $ 786
Sterer Engineering & Mfg $ 784
C E S A $ 640
Seko S P A $ 594
Caterpillar, Inc. $ 585
Aztec Bolt & Nut $ 584
Diverse Termination Inc. $ 584
Wellington Supply Inc. $ 574
Novellus Systems $ 557
Lucas Western $ 554
Lockheed Missile Space $ 548
Ultra-Centrifuge $ 496
S T D Manufacturing $ 439
I T T Teves $ 431
Figgie Packaging $ 395
Aubert & Duval $ 385
National Aerospace $ 301
Santa Barbara App. Optics $ 295
Suncoast Tool & Gage $ 289
Jay Wang Trading $ 284
General Tool & Abrasive $ 257
Bearings Incorporated $ 225
Cherry Textron $ 211
Vermont American Corporation $ 200
New York Air Brake Company $ 185
Seagate Technology $ 179
</TABLE>
E-120
<PAGE> 121
INDUSTRIAL TECTONICS INC.
ACCOUNTS RECEIVABLE ANALYSIS
ACCOUNTS GREATER THAN 90 DAYS PAST DUE
AS OF 10/31/93
<TABLE>
<CAPTION>
CUSTOMER 90 DAYS
- -------------------------------- ----------
<S> <C>
AB I-O Konsult $172
Precision Scientific $151
Prof. Dr. H. Bosker/Afdeling $150
Chamonix $142
Premium Oil Field $134
Bryant Grinder $132
RJB Industries $130
Henko Industries $122
Ford Motor Company $118
Carbide Probes Inc. $117
Bran & Luebbe Inc. $117
R & R Gear $116
John Deere Waterloo Works $116
Lonero Engineering $115
Federal Products Corporation $110
Chevron Research $105
Custom Machine & Tool $105
Parker Hannifin Corporation $100
Competitor Corporation $100
United Parcel Service $99
B & B Precision Tools $97
Star Gauge Company $74
Wallace & Tiernan - England $65
K & K Manufacturing Inc. $41
Brooks Instruments $38
Detroit Ball Bearing $37
Timken Co. $28
Coherent Medical $16
Genus Inc. $12
</TABLE>
E-121
<PAGE> 122
EXHIBIT 4.21
See attachment for description. Any and all restrictions, exceptions and
encumbrances which may be listed in the title insurance policy to be provided
to Buyer, which shall be subject to Buyer's approval which shall not be
unreasonably withheld.
E-122
<PAGE> 123
ALTA LENDERS FORM LEGAL DESCRIPTION-Schedule A(1) SCHEDULE CONTINUED
- --------------------------------------------------------------------------------
Policy Number Agent's Reference No. 4475C
- --------------------------------------
Lenders
Policy Number OD 122850
- --------------------------------------
Owners
PARCEL I:
Commencing at the South 1/4 corner of Section 32, T1S, R5E, Webster Township,
Washtenaw County, Michigan; thence North 46 deg. 26' West 27.54 feet along the
centerline of Joy Road for a PLACE OF BEGINNING; thence South 53 deg. 55' West
674.33 feet; thence North 36 deg. 05' West 190.62 feet along the centerline of
Huron River Drive; thence continuing along said centerline 43.61 feet along the
arc of a circular curve concave to the Southwest, radius 11,459.20 feet, chord
North 36 deg. 11' 40" West 43.61 feet; thence North 53 deg. 55' East 245.32
thence North 36 deg. 05' West 264.05 feet; thence North 49 deg. 29' 30" East
334.38 feet; thence South 46 deg. 26' East 532.75 feet along the centerline of
Joy Road to the Place or Beginning, being a part of the Southwest 1/4 of said
Section 32, T1S, R5E, Webster Township, and part of the Northwest 1/4 of
Section 5, T2S, R5E, Scio Township, Washtenaw County, Michigan, subject to the
rights of the public over the Southwesterly 33.0 feet thereof as occupied by
Huron River Drive, also subject to the rights of the public over the
Northeasterly 33.0 feet thereof as occupied by Joy Road.
PARCEL II:
Commencing at the South 1/4 corner of Section 32, T1S, R5E, Webster Township,
Washtenaw County, Michigan; thence North 46 deg. 26' West 560.29 feet along the
centerline of Joy Road; thence South 49 deg. 29' 30" West 334.38 feet for a
PLACE OF BEGINNING; thence South 36 deg. 05" East 264.05 feet; thence South 53
deg. 55' West 245.32 feet; thence Northwesterly along the arc of a circular
curve concave to the Southwest, radius 11,459.2 feet, subtended by a chord
which bears North 36 deg. 54' 45" West 244.82 feet along the centerline of
Huron River Drive; thence North 49 deg. 29' 30" East 249.61 to the Place of
Beginning, being a part of the Southwest 1/4 of said Section 32, Webster
Township, and part of the Northwest 1/4 of Section 5, T2S, R5E, Scio Township,
being subject to the rights of the public over the Southwesterly 33.0 feet
thereof as occupied by Huron River Drive.
E-123
<PAGE> 124
EXHIBIT 4.22
See attachment.
E-124
<PAGE> 125
PRIMARY CASUALTY PROGRAM
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER COVERAGE POLICY NO. DATE DATE
- ------- -------- ---------- ---- ----
<S> <C> <C> <C> <C>
Zurich Ins. General GLO 65-297-02 4/1/93 4/1/94
Liability Canadian 89-06-920-02
Zurich Ins. BAP 65-16-296-02 (all states) 4/1/93 4/1/94
TAP 65-16-311-02 (Texas)
MA 65-16-312-02 (Mass.)
Zurich Ins. WC 65-16-131-02 4/1/93 4/1/94
DED FL,MS,NH,AL WC 67-56-068-01
CA WC 68-63-575-00
Titanium Hearth WC 6838076-02
Hanover Ins. WKP 4006002-02 10/1/2 10/1/93
CIGNA C39827724 4/1/93 4/1/94
Zurich GLO 65-16-297-01 4/1/92 4/1/93
Canadian 89-08-920-01
Zurich BAP 65-16-296-01 (all states) 4/1/92 4/1/93
TAP 65-16-311-01 (Texas)
MA 65-16-312-01 (Mass.)
Zurich WC 65-16-131-01 -- --
DED FL, MS, WC 67-56-088-00
Travelers 510V5784 4/1/92 4/1/93
Zurich GLO 65-16-297-00 4/1/91 4/1/92
Canadian 89-08-920
Zurich BAP 65-16-296-00 (all states) 4/1/91 4/1/92
TAP 65-16-311-00 (Texas)
MA 65-16-312-00 (Mass.)
</TABLE>
E-125
<PAGE> 126
PRIMARY CASUALTY PROGRAM
PAGE 2
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER COVERAGE POLICY NO. DATE DATE
- ------- -------- ---------- ---- ----
<S> <C> <C> <C> <C>
Zurich General WC 65-16-131-00 4/1/91 4/1/92
Liability
Hanover WC 00-00-01A 10/1/91 10/1/92
Travelers TRLJ-NSS-192T428-1-89 4/1/89 4/1/90
Guardian Royal Canadian 1412002
Exchange of Canada
The Travelers TRJ-CAP-192T429-1-89 4/1/89 4/1/90
TRLJ-NSS-192T428-1-89
The Travelers TDRS-UB-192T424-4-89 4/1/89 4/1/90
TDSJ-UB-192T425-6-89
American Fidelity TBD 10/1/89 10/1/90
The Travelers TDRJ-UB-192T424-4-90 4/1/90 4/1/91
The Travelers TDSJ-UB-192T425-6-90 4/1/90 4/1/91
The Travelers TDRJ-UB-192T426-8-90 4/1/90 4/1/91
The Travelers TRLJ-NSS-192T428-1-90 4/1/90 4/1/91
The Travelers TRJ-CAP-192T429-3-90 4/1/90 4/1/91
Guardian Royal 1412002 4/1/90 4/1/91
American Fidelity WCA5462477-01 10/1/89 10/1/90
</TABLE>
E-126
<PAGE> 127
UMBRELLA/EXCESS LIABILITY PLACEMENT
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
Zurich CC 6516298-02 4/1/93 4/1/94
Lexington Ins. Co. 8667139 4/1/93 4/1/94
National Union Ins. 4263682 4/1/93 4/1/94
Gulf Insurance GA5555029 4/1/93 4/1/94
International Ins. 531-2064114 4/1/93 4/1/94
Insurance Co. of XCPG1658352-2 4/1/93 4/1/94
North America
Zurich CC6516298-01 4/1/92 4/1/93
Lexington Ins. 8654676 4/1/92 4/1/93
National Union Ins. 4266303 4/1/92 4/1/93
Gulf Insurance GA5537146 4/1/92 4/1/93
International Ins. 531-205388-1 4/1/92 4/1/93
Insurance Co. of XCPG1-402749-A 4/1/92 4/1/93
North America
Reliance Ins. Co. NEA 0102820 4/1/92 4/1/93
Zurich CC6516298-00 4/1/91 4/1/92
Lexington Ins. 8653446 4/1/91 4/1/92
National Union 426-44-48 4/1/91 4/1/92
New England EN 0000222 4/1/91 4/1/92
International Ins. Co. 531-204301-8 4/1/91 4/1/92
</TABLE>
E-127
<PAGE> 128
UMBRELLA/EXCESS LIABILITY PLACEMENT
PAGE 2
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
Lexington Ins. Co. 510 7440 4/1/90 4/1/91
AIU 75105094 4/1/90 4/1/91
National Union 426-4385
New England EN0000222 4/1/90 4/1/91
AIU 75105095 4/1/90 4/1/91
The Travelers TFFEX-202T820-2-90 4/1/90 4/1/91
North River Ins. 524-203862-4 4/1/89 4/1/90
Royal Indemnity RHA 000536 4/1/89 4/1/90
Lexington Ins. 5568104 4/1/89 4/1/90
New England EN 00000020 4/1/89 4/1/90
AIU 75-104895
Harbor HI 239137 4/1/89 4/1/90
</TABLE>
E-128
<PAGE> 129
BOILER/MACHINERY INSURANCE
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
Hartford Steam Boiler NY 85-70115-09 7/1/89 7/1/90
Inspection & Ins. Co.
Hartford Steam NY 85-70115-10 7/1/90 7/1/91
Hartford Steam NY 85-70115-11 7/1/91 7/1/92
Hartford Steam NY 85-70115-12 7/1/92 7/1/93
Hartford Steam NY 85-70115-14 7/1/93 7/1/94
----------------------------------------
</TABLE>
PROPERTY INSURANCE
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
Lloyd's & British Cos. HZ023989 7/1/89 7/1/92
Lloyd's & British Cos. HZ171292 7/1/92 7/1/93
Home Ins. Co. PCA-F728020 7/1/93 7/1/94
Allianz Int'l HZ227893
----------------------------------------
</TABLE>
CARGO INSURANCE
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
American Home 81629 1/1/79 continuing
Assurance
NY Marine & General 90718 1/1/79 continuing
Insurance Co.
NY Marine & General CN1731/01 1/1/79 continuing
Insurance Co.
</TABLE>
E-129
<PAGE> 130
CRIME INSURANCE
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
CRIME INSURANCE (PRIMARY)
Chubb (Federal 81098916 1/26/87 1/26/88
Insurance Co.)
Chubb 81098916 1/26/88 1/26/89
Chubb 81098916 1/26/89 1/26/90
Chubb 81098916A 1/26/90 1/26/91
Chubb 81098916A 1/26/91 1/26/92
Chubb 81098916A 1/26/92 7/1/92
COMPUTER THEFT
Chubb (Federal 81035305 12/15/87 12/15/88
Insurance Co.)
Chubb 81035305 12/15/88 12/15/89
Chubb 81035305 12/15/89 12/15/90
Chubb 81035305 12/15/90 12/15/91
Chubb 81035305 12/15/91 7/1/92
</TABLE>
E-130
<PAGE> 131
CRIME INSURANCE
PAGE 2
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
EXCESS CRIME INSURANCE
National Union 133-4042 10/1/87 7/1/88
National Union 621-7588 7/1/88 7/1/89
National Union 621-8540 7/1/89 7/1/90
National Union 621-9403 7/1/90 7/1/91
National Union 437-6565 7/1/91 7/1/92
COMPREHENSIVE CRIME INSURANCE
Aetna Casualty 001BY10075695BCA 7/1/92 7/1/93
& Surety
Aetna Casualty 001BY10075695BCA 7/1/93 7/1/94
& Surety
</TABLE>
E-131
<PAGE> 132
AVIATION AND TRAVEL ACCIDENT
AIRCRAFT NON-OWNERSHIP LIABILITY
<TABLE>
<CAPTION>
EFFECTIVE EXPIRATION
CARRIER POLICY NO. DATE DATE
- ------- ---------- ---- ----
<S> <C> <C> <C>
CIGNA AVG069609 10/27/87 10/27/88
CIGNA S00014928 10/27/88 10/27/89
CIGNA S00071474 10/27/89 10/27/90
CIGNA S000127814 10/27/90 10/27/91
CIGNA S000182284 10/27/91 10/27/92
AIRCRAFT PRODUCTS LIABILITY INSURANCE
Lloyds & British Cos. AY64105 12/19/87 12/19/88
Lloyds & British Cos. A166537 12/19/88 12/19/89
Lloyds & British Cos. A2A0486 12/19/89 12/19/90
CIGNA AVK008040 12/19/90 12/19/91
CIGNA AVK009355 12/19/91 12/19/92
GROUP TRAVEL ACCIDENT INSURANCE
The Home Ins. Co. GT25140 2/19/87 2/19/90
AIG Life GTP8038204 2/19/90 2/19/93
Commercial Litz Co. GTA15169 2/19/93 2/19/96
FIDUCIARY LIABILITY INSURANCE
Aetna Casualty & 001 FF 100813952 BCA 6/14/93 6/14/94
Surety Company
Chubb Group 81025961-C 6/14/92 6/14/93
Chubb Group 81025961-C 6/14/91 6/14/92
Chubb Group 81025961-B 6/14/90 6/14/91
Chubb Group 81025961-B 6/14/89 6/14/90
</TABLE>
E-132
<PAGE> 133
EXHIBIT 4.23
Seller is not subject to any labor grievances, claims of unfair labor
practices, or other material collective bargaining disputes, except as follows:
Unsigned pension agreement with UAW.
Any matter which may arise out of the transactions referred to in this
Asset Purchase Agreement.
E-133
<PAGE> 134
EXHIBIT 4.24
1. The Industrial Tectonics, Inc. Blue Preferred Medical Plan for Salaried
Employees (through Blue Cross/Blue Shield of Michigan, Group Number 04084,
Suffix Number 660).
2. The Industrial Tectonics, Inc. Blue Preferred Medical Plan for Hourly
Employees (through Blue Cross/Blue Shield of Michigan, Group Number 04084,
Suffix Number 661).
3. The Industrial Tectonics, Inc. Care Choices HMO for Salaried and Hourly
Employees and Salaried and Hourly Retirees (through Mercy Health Services,
plan number 230, Salaried Group Number 26001, Hourly Group Number 26002,
Salaried and Hourly Retirees Group Number 26003).
4. The Industrial Tectonics, Inc. Blue Cross/Blue Shield Traditional Medical
Plan for Hourly Active Employees and Hourly Retirees (through Blue
Cross/Blue Shield of Michigan, Hourly Active Employees Group Number 04084.
Suffix Number 002, Hourly Retiree Employees Group Number 04084, Suffix
Number 901).
5. The Industrial Tectonics, Inc. Blue Cross/Blue Shield Traditional Medical
Plan for Salaried Retirees (through Blue Cross/Blue Shield of Michigan,
Salaried Retirees Group Number 01081, Suffix Numbers 900 and 902).
6. The Industrial Tectonics, Inc. Delta Traditional Dental Plan for Salaried
Employees (through Delta Dental Plan of Michigan, Group Number 3840,
Suffix Number 001).
7. The Industrial Tectonics, Inc. Delta Traditional Dental Plan for Hourly
Employees (through Delta Dental Plan of Michigan, Group Number 3840, Suffix
Number 002).
8. The Industrial Tectonics, Inc. Set Fee Vision Plan for Salaried and Hourly
Employees (through Metropolitan Life Insurance Company* Group Number
27167).
9. The Industrial Tectonics, Inc. Life and Accidental Death and Dismemberment
Plan for Salaried Employees (through Metropolitan Life Insurance Company*
Group Number 27167).
10. The Industrial Tectonics, Inc. Life and Accidental Death and Dismemberment
Plan for Hourly Employees (through Metropolitan Life Insurance Company*
Group Number 27167).
11. The Industrial Tectonics, Inc. Short-Term Disability Plan for Salaried
Employees (self-funded).
12. The Industrial Tectonics, Inc. Accident and Sickness Plan for Hourly
Employees (through Metropolitan Life Insurance Company* Group Number
27167).
E-134
<PAGE> 135
13. The Axel Johnson, Inc. Long Term Disability Income Plan (covers salaried
employees of ITI through UNUM Life Insurance Company, Policy Number
0454307, Division Number 003).
14. Axel Johnson, Inc. Retirement Plan (a defined benefit pension plan in
which eligible ITI salaried employees participate).
15. The Ball Division of Industrial Tectonics, Inc. - UAW Retirement Plan (a
defined benefit pension plan in which eligible ITI hourly employees
participate).
16. The Industrial Tectonics, Inc. Retiree Life Insurance Plan for Hourly
Retirees (through Metropolitan Life Insurance Company* Group Number
27167).
17. The Industrial Tectonics, Inc. 401(k) Savings Plan (for eligible salaried
and hourly employees).
18. The Axel Johnson, Inc. Flexible Spending Account Plan (providing dependent
care and medical reimbursement for eligible salaried employees).
19. The Industrial Tectonics, Inc. Educational Assistance Program (for
eligible salaried and hourly employees).
20. Vacations (for salaried and hourly employees).
21. Sick Days (for salaried and hourly employees).
22. Attendance Bond Program (for hourly employees).
23. The Industrial Tectonics, Inc. Service Award Program (for salaried and
hourly employees).
24. Christmas Turkeys and Christmas Party (for salaried and hourly employees).
25. Safety Eye Glasses (for salaried and hourly employees).
26. Uniforms (for hourly employees).
27. The Supplemental Unemployment Benefit Plan (for hourly employees).
28. The Industrial Tectonics, Inc. Severance Payment Program (for salaried
employees).
29. Any additional benefits provided pursuant to the 1992 Collective
Bargaining Agreement.
30. Group Travel Accident Insurance.
*All insurance contracts currently with Metropolitan Life Insurance Company
will be replaced by similar contracts through Aetna Insurance Company.
E-135
<PAGE> 136
EXHIBIT 7.2
Richard P. Coppock
E-136
<PAGE> 1
EXHIBIT (4.1)
SECOND AMENDMENT
THIS SECOND AMENDMENT, dated as of March 1, 1994 is to the Amended and
Restated Revolving Credit and Term Loan Agreement (as previously amended, the
"Credit Agreement"), dated as of March 14, 1990, among KAYDON CORPORATION (the
"Company"), various Banks and CONTINENTAL BANK N.A., as Agent (in such
capacity, the "Agent"). Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as defined therein.
WHEREAS, the parties hereto have entered into the Credit Agreement
which provides for the Banks to make Revolving Credit Loans to the Company from
time to time and to make Term Loans to the Company; and
WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:
SECTION 1 AMENDMENT. Effective on (and subject to the occurrence of)
the Second Amendment Effective Date (as defined below), the Credit Agreement
shall be amended in accordance with Sections 1.1 through 1.20 below.
SECTION 1.1 Change of Banks. The Credit Agreement is hereby
amended as of the date hereof to (i) include Wachovia Bank of Georgia, National
Association as a party to the Credit Agreement, as amended hereby (herein, as
so amended, called the "Amended Credit Agreement"), and such entity shall have
all rights and obligations of a Bank under the Amended Credit Agreement and
(ii) delete Chemical Bank as a party to the Amended Credit Agreement.
SECTION 1.2 Section 1(A)(1). Section 1(A)(1) of the Credit
Agreement is hereby amended by deleting the date "March 1, 1994" therein and
substituting the date "March 1, 1997" therefor.
SECTION 1.3 Section 1(B). Section 1(B) of the Credit
Agreement is hereby amended by deleting the date "March 1, 1994" therein and
substituting the date "March 1, 1997" therefor.
SECTION 1.4 Section 1(D). Section 1(D) is hereby amended by
deleting the words "two (2) Business Days" therein and substituting the words
"three (3) Business Days" therefor.
E-137
<PAGE> 2
SECTION 1.5 Section 2(A)(1). Section 2(A)(1) of the Credit
Agreement is hereby amended by deleting the date "March 1, 1994" therein and
substituting the date "March 1, 1997" therefor.
SECTION 1.6 Section 2(B)(1). Section 2(B)(1) of the Credit
Agreement is hereby amended (i) by deleting the percentage "6.25%" therein and
substituting the percentage "8 1/3%" therefor and (ii) by deleting the date
"June 1, 1994" therein and substituting the date "June 1, 1997" therefor.
SECTION 1.7 Section 2(C)(1)(a). Section (2)(C)(1)(a) of the
Credit Agreement is hereby amended by adding the following sentence at the end
thereof:
Each borrowing herewith shall be in an aggregate
amount of at least $500,000 and an integral multiple of
$100,000.
SECTION 1.8 Section (2)(C)(2). Section (2)(C)(2) of the
Credit Agreement is hereby amended in its entirety to read as follows:
(2) For purposes of this Agreement, "Reference Rate"
means (i) with respect to all Revolving Credit Loans, the rate
per annum then most recently announced by the Agent from time
to time at Chicago, Illinois as its "reference rate" and (ii)
with respect to all Term Loans, such "reference rate" plus
0.25% per annum. Interest shall be computed on the actual
number of days elapsed over a year comprised of 360 days.
Each change in the interest rate as a consequence of a change
in the "Reference Rate" shall take effect as of the opening of
business on the date announced for the effectiveness of such
change.
SECTION 1.9 Section (2)(C)(3). Section (2)(C)(3) of the
Credit Agreement is hereby amended in its entirety to read as follows:
(3) For purposes of this Agreement, "Eurodollar
Rate" shall mean an interest rate per annum (rounded upward,
if necessary, to the nearest 1/16 of 1%) equal to the sum of
(a) the interest rate per annum at which deposits in United
States dollars in an amount approximately equal to the Agent's
portion of the principal amount of the Loan for which the
determination is being made and with a maturity equal to the
applicable Interest Period are offered to the Agent in
immediately available funds in the interbank eurodollar market
at approximately 10:00 a.m., Chicago time, two (2) Business
Days prior to the commencement
-2-
E-138
<PAGE> 3
of such Interest Period, plus (b) with respect to all
Revolving Credit Loans, 0.50%, and with respect to all Term
Loans, 0.875%. Interest at the Eurodollar Rate shall be
computed on the basis of the actual number of days elapsed
over a year comprised of 360 days. The Eurodollar Rate shall
be determined by the Agent which determination shall be
conclusive absent manifest error.
SECTION 1.10 CD Rate. The Company and the Bank hereby agree
that from and after the Second Amendment Effective Date the Bank shall not be
obligated to make any Loans at the CD Rate or to permit the Borrower to elect
the CD Rate with respect to any Loan and each Loan currently outstanding which
bears interest at the CD Rate shall automatically become a Loan bearing
interest at the Reference Rate at the end of such Loan's current Interest
Period.
SECTION 1.11 Section (2)(E)(1). Section (2)(E)(1) of the
Credit Agreement is hereby amended by (a) deleting the percentage "1/2 of 1%"
in clause (a) thereof and substituting the percentage "0.375%" therefor and (b)
deleting the percentage "1/4 of 1%" in clause (b) thereof and substituting the
percentage "0.200%" therefor.
SECTION 1.12 New Section (2)(N). Section 2 of the Credit
Agreement is hereby amended by adding a new Section (2)(N) immediately
following Section (2)(M) thereof which reads as follows:
(N) Agent's Fee. The Borrower agrees to pay to the
Agent an agent's fee at such times and in such amounts as are
agreed upon in writing from time to time by the Borrower and
the Agent.
SECTION 1.13 New Section 2(O). Section 2 of the Credit
Agreement is hereby amended by adding a new Section 2(O) immediately following
Section 2(N) thereof which reads as follows:
(O) Proration of Payments. If any Bank shall obtain
any payment or other recovery (whether voluntary, involuntary,
by application of offset or otherwise) on account of principal
of or interest on any Note in excess of its pro rata share of
payments and other recoveries obtained by all Banks on account
of principal of and interest on Notes then held by them, such
Bank shall purchase from the other Banks such participations
in the Notes held by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery
ratably with each of
-3-
E-139
<PAGE> 4
them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from
such purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery.
SECTION 1.14 Section 5(H). Section 5(H) of the Credit
Agreement is hereby amended in its entirety to read as follows:
(H) Maintenance of Ratios. Anything herein
contained to the contrary notwithstanding, the Borrower will:
(1) maintain at the end of each fiscal
quarter of the Borrower, a ratio of Current Assets to
Current Liabilities at a minimum of 1.6:1;
(2) maintain at the end of each fiscal
quarter of the Borrower Stockholders' Equity at least
equal to the sum of (a) $100,000,000, plus (b) 40% of
Net Income for each fiscal year of the Borrower ending
after December 31, 1992 and prior to such fiscal
quarter (calculated without offset for any net loss
in any such fiscal year), plus (c) 50% of the net
cash proceeds from the issuance or sale of any shares
of capital stock of the Borrower after date hereof;
and
(3) maintain at the end of each Computation
Period, a ratio of (i) the net income of the Borrower
before interest expense and taxes for such
Computation Period (excluding non-recurring gains and
changes or charges resulting from any changes made in
accounting methods) to (ii) interest expense of the
Borrower for such Computation Period at a minimum of
2.0 to 1.
SECTION 1.15 Section 6(A)(9). Section 6(A)(9) of the Credit
Agreement is hereby amended by deleting the percentages "250%" and "300%"
therein and substituting therefor the percentages "175%" and "225%",
respectively.
SECTION 1.16 Section 6(A)(10). Section 6(A)(10) of the
Credit Agreement is hereby amended by deleting the percentage "200%" therein
and substituting therefor the percentage "125%".
SECTION 1.17 Section 9. Section 9 of the Credit Agreement
is hereby amended by adding the following definition in appropriate
alphabetical order:
-4-
E-140
<PAGE> 5
Computation Period means any period of four
consecutive fiscal quarters of the Borrower ending on the last
day of a fiscal quarter of the Borrower.
SECTION 1.18 New Section 12(G). Section 12 of the Credit
Agreement is hereby amended by adding a new Section 12(G) immediately following
Section 12(F) thereof which reads as follows:
(G) Assignments; Participations.
(1) Assignments. Any Bank may, with the prior
written consent of the Borrower and the Agent (which consent
(i) shall not be unreasonably delayed or withheld and (ii)
shall not be required in the case of an assignment by a Bank
to an affiliate of such Bank), at any time assign and delegate
to one or more commercial banks or other Persons (any Person
to whom such an assignment and delegation is to be made being
herein called an "Assignee"), all or any fraction of such
Bank's Loans and Commitments (which assignment and delegation
shall be of a constant, and not a varying, percentage of all
the assigning Bank's Loans and Commitments) in a minimum
aggregate amount equal to the lesser of (i) the assigning
Bank's remaining aggregate Commitments and (ii) $5,000,000;
provided, however, that (a) no assignment and delegation may
be made to any Person if, at the time of such assignment and
delegation, the Borrower would be obligated to pay any greater
amount under Sections 2(G) through (M) to the Assignee than
the Borrower is then obligated to pay to the assigning Bank
under such Sections and (b) the Borrower and the Agent shall
be entitled to continue to deal solely and directly with such
Bank in connection with the interests so assigned and
delegated to an Assignee until the date when all of the
following conditions shall have been met:
(x) five Business Days (or such lesser period of
time as the Agent and the assigning Bank shall agree) shall
have passed after written notice of such assignment and
delegation, together with payment instructions, addresses and
related information with respect to such Assignee, shall have
been given to the Borrower and the Agent by such assigning
Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have
executed and delivered to the Borrower and the Agent an
assignment agreement substantially in the form of Exhibit I
(an "Assignment Agreement"), together with
-5-
E-141
<PAGE> 6
any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent,
and
(z) the assigning Bank or the Assignee shall have
paid the Agent a processing fee of $2,500.
From and after the date on which the conditions described
above have been met, (A) such Assignee shall be deemed
automatically to have become a party hereto and, to the extent
that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment
Agreement, shall have the rights and obligations of a Bank
hereunder, and (B) the assigning Bank, to the extent that
rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall
be released from its obligations hereunder. Within five
Business Days after effectiveness of any assignment and
delegation, the Borrower shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as
applicable) a new Revolving Credit Note in the principal
amount of the Assignee's Revolving Credit Commitment (or
following the making of the Term Loans, a Term Note in the
principal amount of the Assignee's Term Loan) and, if the
assigning Bank has retained a Commitment hereunder, a
replacement Revolving Credit Note in the principal amount of
the Revolving Credit Commitment retained by the assigning Bank
(or, following the making of the Term Loans, if the assigning
Bank has retained a Term Loan, a replacement Term Note in the
principal amount of the Term Loan retained by the assigning
Bank) (such Notes to be in exchange for, but not in payment
of, each predecessor Notes held by such assigning Bank). Each
such Note shall be dated the effective date of such
assignment. The assigning Bank shall mark each predecessor
Note "exchanged" and deliver it to the Borrower. Accrued
interest on that part of each predecessor Note being assigned
shall be paid as provided in the Assignment Agreement.
Accrued interest and fees on that part of each predecessor
Note not being assigned shall be paid to the assigning Bank.
Accrued interest and accrued fees shall be paid at the same
time or times provided in each predecessor Note and in this
Agreement. Any attempted assignment and delegation not made
in accordance with this Section 12(G) shall be null and void.
Notwithstanding the foregoing provisions of this
Section 12(G)(1) or any other provision of this
-6-
E-142
<PAGE> 7
Agreement, any Bank may at any time assign all or any portion
of its Loans and its Note to a Federal Reserve Bank (but no
such assignment shall release any Bank from any of its
obligations hereunder).
(2) Participations. Any Bank may at any time sell
to one or more commercial banks or other Persons participating
interests in any Loan owing to such Bank, the Note held by
such Bank, the Commitments of such Bank, or any other interest
of such Bank hereunder (any Person purchasing any such
participating interest being herein called a "Participant").
In the event of a sale by a Bank of a participating interest
to a Participant, (x) such Bank shall remain the holder of its
Note for all purposes of this Agreement, (y) the Company and
the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations
hereunder and (z) all amounts payable by the Company shall be
determined as if such Bank had not sold such participation and
shall be paid directly to such Bank. No Participant shall
have any direct or indirect voting rights hereunder except
with respect to any of the events described in the proviso to
Section 10(A). Each Bank agrees to incorporate the
requirements of the preceding sentence into each participation
agreement which such Bank enters into with any Participant.
The Borrower agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed
to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Note to
the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement or
such Note; provided that such right of setoff shall be subject
to the obligation of each Participant to share with the Banks,
and the Banks agree to share with each Participant, as
provided in Section 2(O). The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections
(2)(G) through (M) as if it were a Bank (provided that no
Participant shall receive any greater compensation pursuant to
Sections (2)(G) through (M) than would have been paid to the
participating Bank if no participation had been sold).
SECTION 1.19 Exhibits A, A-1, and F. The Credit Agreement is
amended by deleting Exhibits A, A-1, and F to the Credit Agreement and by
substituting Exhibits A, A-1, and F, respectively, to this Second Amendment
therefor.
-7-
E-143
<PAGE> 8
SECTION 1.20 New Exhibit I. The Credit Agreement is hereby
amended by adding new Exhibit I in the form of Exhibit I attached to this
Second Amendment.
SECTION 2 AGREEMENT. The Company and the Bank hereby agree that the
Company shall not be required to deliver the information required to be
delivered pursuant to Sections 5(D)(4) and 5(D)(7) of the Credit Agreement.
SECTION 3 REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Agent and the Banks that (a) each warranty set
forth in Section 3 of the Credit Agreement is, or upon the effectiveness hereof
will be, true and correct as if made on the date hereof, (b) the execution and
delivery by the Company of this Second Amendment and the New Notes (as
hereinafter defined) and the performance by the Company of its obligations
under the Credit Agreement as amended by this Second Amendment (herein, as so
amended, called the "Amended Credit Agreement") and the New Notes (i) are
within the corporate powers of the Company, (ii) have been duly authorized by
all necessary corporate action, (iii) have received all necessary governmental
approval and (iv) do not and will not contravene or conflict with any provision
of law or of the charter or by-laws of the Company or of any indenture, loan
agreement or other contract, order or decree which is binding upon the Company
and (c) the Amended Credit Agreement and the New Notes are legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
SECTION 4 EFFECTIVENESS. The amendments set forth in Section 1 above
shall become effective, as of the day and year first above written, on such
date (herein called the "Second Amendment Effective Date") when the Agent shall
have received (a) counterparts of this Second Amendment executed by the parties
hereto, and (b) each of the following documents in form and substance
satisfactory to the Agent:
SECTION 4.1 New Notes. The promissory notes of the Company
(each herein called a "New Note" and collectively called the "New Note"),
substantially in the form of Exhibit B to the Credit Agreement, payable to the
order of each Bank in the aggregate principal amount of such Bank's Revolving
Credit 0Commitment.
SECTION 4.2 Resolutions. Certified copies of resolutions of
the Board of Directors of the Company authorizing the execution and delivery of
this Second Amendment and the New Notes and the performance by the Company of
its obligations under the Amended Credit Agreement and the New Notes.
-8-
E-144
<PAGE> 9
SECTION 4.3 Opinion. The opinion of Culver, Lague, Newman &
Irish, counsel to the Company, in the form of Exhibit D hereto.
SECTION 5 MISCELLANEOUS.
SECTION 5.1 Continuing Effectiveness, etc. As herein
amended, the Credit Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.
SECTION 5.2 Counterparts. This Second Amendment may be
executed in any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original but
all such counterparts shall together constitute one and the same Second
Amendment.
SECTION 5.3 Governing Law. This Second Amendment shall be a contract
made under and governed by the internal laws of the State of Illinois.
SECTION 5.4 Successors and Assigns. This Second Amendment shall be
binding upon the Company, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Banks and the Agent and the successors and assigns of the Banks and the Agent.
SECTION 5.5 New Bank. Wachovia Bank of Georgia, National Association
hereby agrees to become a party to the Amended Credit Agreement as fully as if
it were named as a "Bank" thereunder, to assume all of the rights and
obligations of a Bank under the Amended Credit Agreement, and to be governed by
the terms and provisions of the Amended Credit Agreement.
SECTION 5.6 Return of Old Notes. Upon the occurrence of the Second
Amendment Effective Date each Bank shall return to the Company as promptly as
practicable the notes previously issued to such Bank under the Credit Agreement
marked to show that such notes have been superseded.
-9-
E-145
<PAGE> 10
Delivered at Chicago, Illinois, as of the day and year first above
written.
THIS SECOND AMENDMENT HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND
SHALL DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS.
KAYDON CORPORATION
By: /s/ John F. Brocci
---------------------------
Title: Secretary
CONTINENTAL BANK N.A.,
in its individual corporate
capacity and as Agent
By: /s/ Ruth E. Gross
---------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
succcessor by merger to Security
Pacific National Bank
By: /s/ Wayne H. Riess
---------------------------
Title: Vice President
SUN BANK OF TAMPA BAY
By: /s/ Brigitta A. Lawton
---------------------------
Title: Vice President
NBD BANK, N.A.
By: /s/ D. Andrew Bateman
---------------------------
Title: First Vice President
-10-
E-146
<PAGE> 11
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ F. Winfred Trice
----------------------------
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By: /s/ Ian M. Fowler
----------------------------
Title: Associate Vice President
WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By: /s/ Tammy F. Hughes
----------------------------
Title: Vice President
Solely for purposes of Section 1.1 of this Second Amendment:
CHEMICAL BANK
By: /s/ John J. Huber, III
----------------------------
Title: Managing Director
-11-
E-147
<PAGE> 12
EXHIBIT A
List of Banks
<TABLE>
<CAPTION>
Revolving
Credit Term Loan
Name of Bank % Commitment Commitment
- ------------ ----------- ------------ ------------
<S> <C> <C> <C>
Continental Bank N.A. 20% $15,000,000 $15,000,000
Bank of America
National Trust and
Savings Association 13-1/3% $10,000,000 $10,000,000
Sun Bank of Tampa Bay 13-1/3% $10,000,000 $10,000,000
NBD Bank, N.A. 13-1/3% $10,000,000 $10,000,000
The First National
Bank of Maryland 13-1/3% $10,000,000 $10,000,000
The Boatmen's National
Bank of St. Louis 13-1/3% $10,000,000 $10,000,000
Wachovia Bank of
Georgia, National
Association 13-1/3% $10,000,000 $10,000,000
------- ----------- -----------
Total 100.0% $75,000,000 $75,000,000
</TABLE>
Any reductions in the aggregate amounts of the Revolving Credit or
Term Loan Commitment shall be made as among the Banks in proportion to the
percentage set forth above.
E-148
<PAGE> 13
EXHIBIT A-1
Revolving Credit Commitments
<TABLE>
<CAPTION>
Unavailable Available
Commitment at Commitment at
Name of Bank % March 1, 1994 March 1, 1994
- ------------ ----------- ------------- -------------
<S> <C> <C> <C>
Continental Bank N.A. 20% $15,000,000 $0
Bank of America
National Trust and
Savings Association 13-1/3% $10,000,000 $0
Sun Bank of Tampa Bay 13-1/3% $10,000,000 $0
NBD Bank, N.A. 13-1/3% $10,000,000 $0
The First National
Bank of Maryland 13-1/3% $10,000,000 $0
The Boatmen's National
Bank of St. Louis 13-1/3% $10,000,000 $0
Wachovia Bank of
Georgia, National
Association 13-1/3% $10,000,000 $0
------- ----------- --
Total 100.0% $75,000,000 $0
</TABLE>
Any reductions in the aggregate amounts of the Available Commitment or
the Unavailable Commitment shall be made as among the Banks in proportion to
the percentages set forth above.
E-149
<PAGE> 14
EXHIBIT B
FORM OF REVOLVING CREDIT NOTE
[$______________] March 1, 1994
KAYDON CORPORATION, a Delaware corporation (the "Borrower"), for value
received, hereby promises to pay to the order of ______ _______________________
(the "Bank") at the office of CONTINENTAL BANK N.A., 231 South LaSalle Street,
Chicago, Illinois 60697, as Agent (the "Agent"), the lesser of the principal
sum of [$_________________] or the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Bank to the Borrower pursuant to the Amended
and Restated Revolving Credit and Term Loan Agreement, dated as of March 14,
1990 (herein, as amended or otherwise modified from time to time, the
"Agreement"), among the Borrower, the Banks named therein and the Agent, such
amount to be evidenced by endorsement thereof by the holder on the Schedule of
Loans and Payments of Principal on the reverse side of this Note subject to the
proviso set forth below, in immediately available funds on March 1, 1997; and
the Borrower hereby promises to pay interest on the unpaid principal amount of
all Revolving Credit Loans from time to time outstanding from the date hereof
until stated maturity or earlier payment, in like funds, at such office, at a
rate or rates per annum and at such times as are provided by the Agreement.
Each Revolving Credit Loan and each prepayment or payment made on
account of the principal hereof shall be endorsed by the holder on the Schedule
of Loans and Payments of Principal on the reverse side of this Revolving Credit
Note, provided, however, that the failure of the Bank or the Agent to set forth
such principal payments, prepayments and other payments on such schedule shall
not in any manner affect the obligation of the Borrower to repay the Revolving
Credit Loans made by the Bank in accordance with the terms of this Revolving
Credit Note. This Revolving Credit Note may be prepaid in whole or in part at
the option of the Borrower and is subject to mandatory prepayment in accordance
with the provisions of the Agreement. This Revolving Credit Note is one of the
Revolving Credit Notes referred to in, and the holder hereof and the Borrower
are entitled to the benefits of the Agreement. Upon occurrence of an event of
default specified in the Agreement, the principal hereof and accrued interest
hereon may be declared to be or may become forthwith due and payable as
provided in the Agreement.
E-150
<PAGE> 15
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
KAYDON CORPORATION
By________________________________
Title___________________________
B-2
E-151
<PAGE> 16
SCHEDULE OF
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of
Principal Unpaid
Amount of Paid or Principal
Date Loan Prepaid Balance Certified By
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1
-----------------------------------------------------------------------------------------------------
2
-----------------------------------------------------------------------------------------------------
3
-----------------------------------------------------------------------------------------------------
4
-----------------------------------------------------------------------------------------------------
5
-----------------------------------------------------------------------------------------------------
6
-----------------------------------------------------------------------------------------------------
7
-----------------------------------------------------------------------------------------------------
8
-----------------------------------------------------------------------------------------------------
9
-----------------------------------------------------------------------------------------------------
10
- ------------------------------------------------------------------------------------------------------
11
- ------------------------------------------------------------------------------------------------------
12
- ------------------------------------------------------------------------------------------------------
13
- ------------------------------------------------------------------------------------------------------
14
- ------------------------------------------------------------------------------------------------------
15
- ------------------------------------------------------------------------------------------------------
16
- ------------------------------------------------------------------------------------------------------
17
- ------------------------------------------------------------------------------------------------------
18
- ------------------------------------------------------------------------------------------------------
19
- ------------------------------------------------------------------------------------------------------
20
- ------------------------------------------------------------------------------------------------------
21
- ------------------------------------------------------------------------------------------------------
22
- ------------------------------------------------------------------------------------------------------
23
- ------------------------------------------------------------------------------------------------------
24
- ------------------------------------------------------------------------------------------------------
25
- ------------------------------------------------------------------------------------------------------
26
- ------------------------------------------------------------------------------------------------------
27
- ------------------------------------------------------------------------------------------------------
28
- ------------------------------------------------------------------------------------------------------
29
- ------------------------------------------------------------------------------------------------------
30
- -------------------------------------------------------------------------------------------------------
</TABLE>
B-3
E-152
<PAGE> 17
EXHIBIT C
FORM OF TERM NOTE
No. T-
[$______________] March 1, 1997
KAYDON CORPORATION, a Delaware corporation (the "Borrower"), for value
received, hereby promises to pay to the order of
[_____________________________] (the "Bank") at the office of CONTINENTAL BANK
N.A., 231 South LaSalle Street, Chicago, Illinois 60697, as Agent (the
"Agent"), the principal sum of [$_________________], payable in accordance with
subparagraph 2(B) of the Agreement referred to below in immediately available
funds; and the Borrower hereby promises to pay interest on such principal sum
or the unpaid balance thereof from the date hereof until stated maturity or
earlier payment, in like funds, at such office, at a rate or rates per annum
and at such times as are provided by the Agreement.
This Term Note is one of the Term Notes referred to in, and the holder
hereof and the Borrower are entitled to the benefits of, the Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of March 14, 1990,
among the Borrower, the Banks named therein and the Agent (herein, as amended
or otherwise modified from time to time, the "Agreement"). This Term Note is
subject to mandatory prepayments at the times and in the amounts specified in
the Agreement. This Term Note may be prepaid in whole or in part at the option
of the Borrower in accordance with the provisions of the Agreement. Upon
occurrence of an event of default specified in the Agreement, the principal
hereof and accrued interest hereon may be declared to be or may become
forthwith due and payable as provided in the Agreement.
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
KAYDON CORPORATION
By__________________________
Title_____________________
E-153
<PAGE> 18
EXHIBIT D
FORM OF OPINION
E-154
<PAGE> 19
EXHIBIT F
DEBT AS OF DECEMBER 31, 1993
<TABLE>
<S> <C>
SENIOR $ 7,000,000.00
- ------
SECURED 8,000,000.00
- -------
TOTAL SENIOR AND SECURED $15,000,000.00
- ------------------------
</TABLE>
E-155
<PAGE> 20
EXHIBIT I
FORM OF
ASSIGNMENT AGREEMENT
To: Kaydon Corporation
Arbor Shoreline Office Park
19329 US 19 North
Clearwater, Florida 34624
and
Continental Bank N.A., as Agent
231 South LaSalle Street
Chicago, Illinois 60697
Re: Assignment under the Credit Agreement referred to below
Gentlemen and Ladies:
We refer to Section 12(G) of the Credit Agreement dated as of March
14, 1990 (as amended or otherwise modified, the "Credit Agreement"), among
Kaydon Corporation, various financial institutions and Continental Bank N.A.,
as agent (the "Agent"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Credit
Agreement.
This agreement constitutes notice to each of you of the proposed
assignment and delegation to _______________ (the "Assignee") of ___% of the
[Revolving Credit Loans/Term Loans], and of the Commitments of ___________ (the
"Assignor"). After giving effect to such assignment and delegation, the
Assignor's and Assignee's percentages for the purposes of the Credit Agreement
will be as set forth opposite each such Person's name on the signature pages
hereof.
The Assignor hereby instructs the Agent to make all payments after the
effective date hereof in respect of the interest assigned hereby directly to
the Assignee. The Assignor and the Assignee agree that all interest and fees
accrued up to, but not including, the effective date of the assignment and
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees,
the Assignee will promptly remit the same to the Assignor.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits related thereto, together
E-156
<PAGE> 21
with copies of the documents which were required to be delivered under the
Credit Agreement as a condition to the making of the Loans thereunder. The
Assignee acknowledges and agrees that it (i) has made and will continue to make
such inquiries and has taken and will take such care on its own behalf as would
have been the case had its Commitments been granted and its Loans been made
directly by such Assignee to the Borrower without the intervention of the
Agent, the Assignor or any other Bank and (ii) has made and will continue to
make, independently and without reliance upon the Agent, the Assignor or any
other Bank and based on such documents and information as it has deemed
appropriate, its own credit analysis and decisions relating to the Credit
Agreement. The Assignee further acknowledges and agrees that the Agent makes
no representations or warranties about the creditworthiness of the Borrower or
any other party to the Credit Agreement or any other document executed in
connection with the Credit Agreement or with respect to the legality, validity,
sufficiency or enforceability of the Credit Agreement or any other document
executed in connection with the Credit Agreement or the value of any security
therefor.
The Assignee represents and warrants to the Agent that, as of the date
hereof, the Company will not be obligated to pay any greater amount under
Sections 2(G) through (M) of the Credit Agreement than the Borrower is
obligated to pay to the Assignor under such Sections.
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent
(a) the Assignee (i) shall be deemed automatically to have become
a party to the Credit Agreement and have all the rights and
obligations of a "Bank" under the Credit Agreement as if it
were an original signatory thereto to the extent specified in
the second paragraph hereof; and (ii) agrees to be bound by
the terms and conditions set forth in the Credit Agreement as
if it were an original signatory thereto; and
(b) the Assignor shall be released from its obligations under the
Credit Agreement to the extent specified in the second
paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor]
[Assignee] will pay to the Agent the processing fee referred to in Section
12(G)(1) of the Credit Agreement.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and Commitments:
-2-
E-157
<PAGE> 22
(A) Address for Notices:
Institution Name:
Address:
Attention:
Telephone:
Facsimile:
(B) Payment Instructions:
Please evidence your consent to and acceptance of the proposed
assignment and delegation set forth herein by signing and returning
counterparts hereof to the Assignor and the Assignee.
<TABLE>
<S> <C> <C> <C>
Adjusted Percentage = % [ASSIGNOR]
- ------------------- ---
By:
---------------------
Title:
Percentage = % [ASSIGNEE]
- ---------- ---
By:
--------------------
Title:
</TABLE>
ACCEPTED AND CONSENTED TO
this ____ day of ________, 199_
CONTINENTAL BANK N.A.,
as Agent
By:__________________________________
Title:____________________________
CONSENTED TO
this ___ day of _____________, 199__
KAYDON CORPORATION
By:__________________________________
Title:____________________________
-3-
E-158
<PAGE> 1
EXHIBIT (4.2)
THIRD AMENDMENT
THIS THIRD AMENDMENT, dated as of March 29, 1994, is to the Amended
and Restated Revolving Credit and Term Loan Agreement (as previously amended,
the "Credit Agreement"), dated as of March 14, 1990, among KAYDON CORPORATION
(the "Company"), various Banks and CONTINENTAL BANK N.A., as Agent (in such
capacity, the "Agent"). Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as defined therein.
WHEREAS, the parties hereto have entered into the Credit Agreement
which provides for the Banks to make Revolving Credit Loans to the Company from
time to time and to make Term Loans to the Company; and
WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:
SECTION 1 AMENDMENT. Effective on (and subject to the occurrence of)
the Third Amendment Effective Date (as defined below), the Credit Agreement
shall be amended in accordance with Sections 1.1 and 1.2 below.
SECTION 1.1 Addition of Bank. The Credit Agreement is hereby
amended as of the date hereof to include National City Bank as a party to the
Credit Agreement, as amended hereby (herein, as so amended, called the "Amended
Credit Agreement"), and such entity shall have all rights and obligations of a
Bank under the Amended Credit Agreement.
SECTION 1.2 Exhibits A and A-1. The Credit Agreement is
amended by deleting Exhibits A and A-1 to the Credit Agreement and by
substituting Exhibits A and A-1, respectively, to this Third Amendment
therefor.
SECTION 2 REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Agent and the Banks that (a) each warranty set
forth in Section 3 of the Credit Agreement is, or upon the effectiveness hereof
will be, true and correct as if made on the date hereof, (b) the execution and
delivery by the Company of this Third Amendment and the New Note (as
hereinafter defined) and the performance by the Company of its obligations
under the Credit Agreement as amended by this Third Amendment
E-159
<PAGE> 2
(herein, as so amended, called the "Amended Credit Agreement") and the New Note
(i) are within the corporate powers of the Company, (ii) have been duly
authorized by all necessary corporate action, (iii) have received all necessary
governmental approval and (iv) do not and will not contravene or conflict with
any provision of law or of the charter or by-laws of the Company or of any
indenture, loan agreement or other contract, order or decree which is binding
upon the Company and (c) the Amended Credit Agreement and the New Note are
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
SECTION 3 EFFECTIVENESS. The amendments set forth in Section 1 above
shall become effective, as of the day and year first above written, on such
date (herein called the "Third Amendment Effective Date") when the Agent shall
have received (a) counterparts of this Third Amendment executed by the parties
hereto, and (b) each of the following documents in form and substance
satisfactory to the Agent:
SECTION 3.1 New Note. The promissory note of the Company
(the "New Note"), substantially in the form of Exhibit B to the Credit
Agreement, payable to the order of National City Bank in the aggregate
principal amount of National City Bank's Revolving Credit Commitment.
SECTION 3.2 Resolutions. Certified copies of resolutions of
the Board of Directors of the Company authorizing the execution and delivery of
this Third Amendment and the New Note and the performance by the Company of its
obligations under the Amended Credit Agreement and the New Note.
SECTION 3.3 Opinion. The opinion of Culver, Lague, Newman &
Irish, counsel to the Company, in the form of Exhibit C hereto.
SECTION 4 MISCELLANEOUS.
SECTION 4.1 Continuing Effectiveness, etc. As herein
amended, the Credit Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.
SECTION 4.2 Counterparts. This Third Amendment may be
executed in any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original but
all such counterparts shall together constitute one and the same Third
Amendment.
SECTION 4.3 Governing Law. This Third Amendment shall be a
contract made under and governed by the internal laws of the State of Illinois.
-2-
E-160
<PAGE> 3
SECTION 4.4 Successors and Assigns. This Third Amendment
shall be binding upon the Company, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Banks and the Agent and the successors and assigns of the Banks and the Agent.
SECTION 4.5 New Bank. National City Bank hereby agrees to
become a party to the Amended Credit Agreement as fully as if it were named as
a "Bank" thereunder, to assume all of the rights and obligations of a Bank
under the Amended Credit Agreement, and to be governed by the terms and
provisions of the Amended Credit Agreement.
Delivered at Chicago, Illinois, as of the day and year first above
written.
THIS THIRD AMENDMENT HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.
KAYDON CORPORATION
By: /s/ Lawrence J. Cawley
---------------------------
Title: Chairman
CONTINENTAL BANK N.A.,
in its individual corporate
capacity and as Agent
By: /s/ Ruth E. Gross
---------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
succcessor by merger to Security
Pacific National Bank
By: /s/ Wayne H. Riess
---------------------------
Title: Vice President
SUN BANK OF TAMPA BAY
By: /s/ Brigitta A. Lawton
---------------------------
Title: Vice President
-3-
E-161
<PAGE> 4
NBD BANK, N.A.
By: /s/ L. E. Schuster
---------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Shannon W. Perry
----------------------------
Title: Corporate Banking Rep.
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By: /s/ Ian M. Fowler
-----------------------------
Title: Associate Vice President
WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By: /s/ Tammy F. Hughes
-----------------------------
Title: Vice President
NATIONAL CITY BANK
By: /s/ Paul E. Richardson
-----------------------------
Title: Vice President
-4-
E-162
<PAGE> 5
EXHIBIT A
List of Banks
<TABLE>
<CAPTION>
Revolving
Credit Term Loan
Name of Bank % Commitment Commitment
- ------------ ----------- ------------ ------------
<S> <C> <C> <C>
Continental Bank N.A. 17.64705882% $15,000,000 $15,000,000
Bank of America
National Trust and
Savings Association 11.76470588% $10,000,000 $10,000,000
Sun Bank of Tampa Bay 11.76470588% $10,000,000 $10,000,000
NBD Bank, N.A. 11.76470588% $10,000,000 $10,000,000
The First National
Bank of Maryland 11.76470588% $10,000,000 $10,000,000
The Boatmen's National
Bank of St. Louis 11.76470588% $10,000,000 $10,000,000
Wachovia Bank of
Georgia, National
Association 11.76470588% $10,000,000 $10,000,000
National City Bank 11.76470588% $10,000,000 $10,000,000
----------- ----------- -----------
Total 100.0% $85,000,000 $85,000,000
</TABLE>
Any reductions in the aggregate amounts of the Revolving Credit or
Term Loan Commitment shall be made as among the Banks in proportion to the
percentage set forth above.
E-163
<PAGE> 6
EXHIBIT A-1
Revolving Credit Commitments
<TABLE>
<CAPTION>
Unavailable Available
Commitment at Commitment at
Name of Bank % March , 1994 March , 1994
------------ ----------- ------------- -------------
<S> <C> <C> <C>
Continental Bank N.A. 17.64705882% $15,000,000 $0
Bank of America
National Trust and
Savings Association 11.76470588% $10,000,000 $0
Sun Bank of Tampa Bay 11.76470588% $10,000,000 $0
NBD Bank, N.A. 11.76470588% $10,000,000 $0
The First National
Bank of Maryland 11.76470588% $10,000,000 $0
The Boatmen's National
Bank of St. Louis 11.76470588% $10,000,000 $0
Wachovia Bank of
Georgia, National
Association 11.76470588% $10,000,000 $0
National City Bank 11.76470588% $10,000,000 $0
------------ ----------- --
Total 100.0% $85,000,000 $0
</TABLE>
Any reductions in the aggregate amounts of the Available Commitment or
the Unavailable Commitment shall be made as among the Banks in proportion to
the percentages set forth above.
E-164
<PAGE> 7
EXHIBIT B
FORM OF REVOLVING CREDIT NOTE
-----------------------------
$_________________ March 29, 1994
KAYDON CORPORATION, a Delaware corporation (the "Borrower"), for value
received, hereby promises to pay to the order of ___________________________
(the "Bank") at the office of CONTINENTAL BANK N.A., 231 South LaSalle Street,
Chicago, Illinois 60697, as Agent (the "Agent"), the lesser of the principal
sum of ____________________________ ($__________) or the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Bank to the Borrower
pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of March 14, 1990 (herein, as amended or otherwise modified from time
to time, the "Agreement"), among the Borrower, the Banks named therein and the
Agent, such amount to be evidenced by endorsement thereof by the holder on the
Schedule of Loans and Payments of Principal on the reverse side of this Note
subject to the proviso set forth below, in immediately available funds on March
1, 1997; and the Borrower hereby promises to pay interest on the unpaid
principal amount of all Revolving Credit Loans from time to time outstanding
from the date hereof until stated maturity or earlier payment, in like funds,
at such office, at a rate or rates per annum and at such times as are provided
by the Agreement.
Each Revolving Credit Loan and each prepayment or payment made on account
of the principal hereof shall be endorsed by the holder on the Schedule of
Loans and Payments of Principal on the reverse side of this Revolving Credit
Note, provided, however, that the failure of the Bank or the Agent to set forth
such principal payments, prepayments and other payments on such schedule shall
not in any manner affect the obligation of the Borrower to repay the Revolving
Credit Loans made by the Bank in accordance with the terms of this Revolving
Credit Note. This Revolving Credit Note may be prepaid in whole or in part at
the option of the Borrower and is subject to mandatory prepayment in accordance
with the provisions of the Agreement. This Revolving Credit Note is one of
the Revolving Credit Notes referred to in, and the holder hereof and the
Borrower are entitled to the benefits of the Agreement. Upon occurrence of an
event of default specified in the Agreement, the principal hereof and accrued
interest hereon may be declared to be or may become forthwith due and payable
as provided in the Agreement.
E-165
<PAGE> 8
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
KAYDON CORPORATION
By
--------------------------
Title
--------------------
E-166
<PAGE> 9
SCHEDULE OF
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of
Principal Unpaid
Amount of Paid or Principal
Date Loan Prepaid Balance Certified By
________________________________________________________________________________
<S> <C> <C> <C> <C>
1______________________________________________________________________________
2______________________________________________________________________________
3______________________________________________________________________________
4______________________________________________________________________________
5______________________________________________________________________________
6______________________________________________________________________________
7______________________________________________________________________________
8______________________________________________________________________________
9______________________________________________________________________________
10______________________________________________________________________________
11______________________________________________________________________________
12______________________________________________________________________________
13______________________________________________________________________________
14______________________________________________________________________________
15______________________________________________________________________________
16______________________________________________________________________________
17______________________________________________________________________________
18______________________________________________________________________________
19______________________________________________________________________________
20______________________________________________________________________________
21______________________________________________________________________________
22______________________________________________________________________________
23______________________________________________________________________________
24______________________________________________________________________________
25______________________________________________________________________________
26______________________________________________________________________________
27______________________________________________________________________________
28______________________________________________________________________________
29______________________________________________________________________________
30______________________________________________________________________________
</TABLE>
E-167
<PAGE> 10
EXHIBIT C
FORM OF OPINION
E-168
<PAGE> 11
- --------------------------------------------------------------------------------
CULVER, LAGUE, NEWMAN & IRISH
A Professional Corporation
Attorneys at Law
600 Terrace Plaza P.O. Box 389 Muskegon, Michigan 49443
616-725-8148 Fax 616-726-3404
Fred C. Culver, Jr. Richard C. Lague
Kevin B. Even Chris Ann McGuigan
Eugene A. Franks David R. Munroe
Eric R. Gielow William M. Newman
Michael W. Irish Chris D. Slater
Karen L. Kayes April 25, 1994 J. Scott Timmer
Anthony J. Kolenic, Jr. Alvin D. Treado
Continental Bank N.A.
Bank of America National Trust
& Savings Association
Sun Bank of Tampa Bay
NBD Bank, N.A.
The First National Bank of Maryland
The Boatmen's National Bank of St. Louis
Wachovia Bank of Georgia
National City Bank
c/o Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
KAYDON CORPORATION
THIRD AMENDMENT TO THE
AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
Ladies and Gentlemen:
We have acted as counsel for Kaydon Corporation, a Delaware corporation (the
"Borrower"), in connection with the Third Amendment, dated as of March 29, 1994
(the "Third Amendment") to the Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of March 14, 1990 (the "Credit Agreement") among the
Borrower, the Banks named therein (the "Banks") and Continental Bank N.A., as
Agent. The Credit Agreement provides for: (a) revolving credit loans (the
"Revolving Credit Loans") to the Borrower at any time and from time to time on
or after March 1, 1994 and prior to March 1, 1997 in an aggregate principal
amount at any one time outstanding of not more than $85,000,000 and (b) term
loans on March 1, 1997 in an aggregate principal amount of not more than
$85,000,000. The Revolving Credit Loan is to be evidenced by a promissory note
(the "New Note").
- --------------------------------------------------------------------------------
E-169
<PAGE> 12
- --------------------------------------------------------------------------------
Continental Bank N.A.
April 25, 1994
Page 2
All capitalized terms used herein without definition have the meanings
specified in the Amended Credit Agreement.
In so acting, we have participated in the preparation of the Third Amendment.
We have also examined and relied upon the representations and warranties as to
factual matters contained in and made pursuant to the Third Amendment and the
Credit Agreement as amended by the Third Amendment (hereinafter as so amended,
called the "Amended Credit Agreement") and have examined and relied upon the
originals, or copies certified or otherwise identified to our satisfaction, of
such records, documents, certificates and other instruments as in our judgment
are necessary or appropriate to enable us to render the opinion expressed
below.
We are of the following opinion:
1. Organization and Good Standing. Each of the Borrower and its
Restricted Subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its
incorporation and has the corporate power to own its properties and to
carry on its business as now being conducted.
2. Corporate Authority. The Borrower has full corporate power and
authority to enter into the Third Amendment and to perform its
obligations under the Third Amendment and the Amended Credit
Agreement, to execute and deliver the Third Amendment and the New Note
being issued today to the Bank, to make the borrowings under the
Amended Credit Agreement and to incur the obligations provided for
therein, all of which have been duly authorized by all proper and
necessary corporate action. No consent or approval of shareholders of
the Borrower is required as a condition to the validity of the Third
Amendment, the Amended Credit Agreement or the New Note being issued
today to the Bank.
3. Binding Agreement. The Amended Credit Agreement constitutes, and the
New Note being issued today to the Bank, when issued and delivered
pursuant to the Amended Credit Agreement for value received will
constitute, the valid and legally binding obligations of the Borrower,
enforceable in accordance with their respective terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
4. No Conflicting Agreements. The execution and delivery of the Third
Amendment and the New Note and the performance of the Amended Credit
Agreement and the New Note being issued today to the Bank and the
borrowings thereunder will not violate,
CULVER, LAGUE, NEWMAN & IRISH
- --------------------------------------------------------------------------------
E-170
<PAGE> 13
- --------------------------------------------------------------------------------
Continental Bank N.A.
April 25, 1994
Page 3
conflict with or constitute a default under, or result in the creation
of any lien or security interest on any property or assets of the
Borrower or any Restricted Subsidiary pursuant to, the provisions of
any charter, by-law or preference stock provision of the Borrower or
any of its Restricted Subsidiaries or, to the best of our knowledge,
after due investigation, any provision of any existing mortgage,
indenture, contract or agreement binding on the Borrower or any of its
Restricted Subsidiaries, or affecting their respective properties.
5. Litigation. To the best of our knowledge, after due investigation,
there are no suits or administrative or other proceedings or
investigations pending or threatened against or affecting the Borrower
or its Restricted Subsidiaries which could reasonably be expected to
have a material adverse effect on the financial condition of the
Borrower and its Restricted Subsidiaries taken as a whole. Further
detail with respect to pending litigation is set forth on Exhibit A
attached hereto.
6. Compliance with Governmental Regulations. No action of, or filing
with, any Federal or Michigan governmental or public body is required
on the part of the Borrower as a condition to the valid execution and
delivery of the Third Amendment or the New Note or the performance by
the Borrower of the Amended Credit Agreement or the New Note being
issued today to the Bank or the borrowings thereunder. The execution
and delivery of the Third Amendment and the New Note and the
performance of the Amended Credit Agreement and the New Note being
issued today to the Bank do not violate any provision of any Federal
or Michigan law, rule, or regulation (including, without limitation,
Regulation U or X of the Board of Governors of the Federal Reserve
System), or to the best of our knowledge, after due investigation, any
judgment, order or decree binding on the Borrower.
We are members of the Bar of the State of Michigan, and we express no opinion
with respect to any matter which may be governed by the laws of any
jurisdiction other than the General Corporation Law of the State of Delaware,
the laws of the State of Michigan and applicable laws of the United States of
America. Accordingly, our opinion set forth in Paragraph 3 is limited to an
opinion that if the Amended Credit Agreement and the New Note being issued
today to the Bank were governed by the laws of the State of Michigan they would
constitute valid and
CULVER, LAGUE, NEWMAN & IRISH
- --------------------------------------------------------------------------------
E-171
<PAGE> 14
- --------------------------------------------------------------------------------
Continental Bank N.A.
April 25, 1994
Page 4
legally binding obligations of the Borrower, enforceable in accordance with
their respective terms, except as limited as set forth in such Paragraph.
Very truly yours,
/s/ Richard C. Lague
- --------------------
Richard C. Lague
CULVER, LAGUE, NEWMAN & IRISH
- --------------------------------------------------------------------------------
E-172
<PAGE> 15
- --------------------------------------------------------------------------------
EXHIBIT A
The Company, together with other companies, certain former officers,
and certain current and former directors, has been named as a co-defendant in
lawsuits filed in the federal court of New York. The suits purport to be class
actions on behalf of all persons who have unsatisfied personal injury and
property damage claims against Keene Corporation. The premise of the suits is
that assets of Keene were transferred to Bairnco subsidiaries, of which Kaydon
was one in 1983, at less than fair value. The suits also allege that the
Company, among other named defendants, were successors to and alter egos of
Keene. While the ultimate outcome of this litigation is unknown at the present
time, management believes that it has meritorious defenses to the asserted
claims. Accordingly, no provision has been reflected in the consolidated
financial statements for any alleged damages. Management believes that the
outcome of this litigation will not have a materially adverse effect on the
Company's financial position.
Various other claims, lawsuits and environmental matters arising in
the normal course of business are pending against the Company. Management
believes that the outcome of these matters will not have a materially adverse
effect on the Company's financial position or results of operations.
CULVER, LAGUE, NEWMAN & IRISH
- --------------------------------------------------------------------------------
E-173
<PAGE> 1
EXHIBIT 10.1
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
(AS AMENDED AND RESTATED DECEMBER 14, 1994 EFFECTIVE JANUARY 1, 1989)
E-174
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
I Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Qualification Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Incorporation of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 No Prior Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Plan History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Qualifying Employer Securities and Special Rule . . . . . . . . . . . . . . . . . . . 3
II Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Account Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Active Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Allocation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Break in Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Qualified Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Qualifying Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.16 Top Heavy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.17 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
III Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Eligibility Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Re-Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.4 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
IV Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Maximum Deductible Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3 Maximum Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
-i-
E-175
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
4.4 Excess Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.5 Erroneous Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.6 Investment of Contributions in Stock . . . . . . . . . . . . . . . . . . . . . . . . . 32
V Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.1 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Matching and Voluntary Contribution Limits . . . . . . . . . . . . . . . . . . . . . . 35
5.4 Actual Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.5 Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.6 Salary Deferred Contribution Limit . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.7 Actual Deferral Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.8 Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.9 Elective Deferral Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.10 Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.11 Multiple Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
VI Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.2 Allocation of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.3 Allocation of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.4 Allocation of Expenses, Earnings, Losses and Adjustments in Value . . . . . . . . . . 52
6.5 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 Vested Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.7 Investment of Employer and Participant Contributions . . . . . . . . . . . . . . . . . 55
6.8 ERISA Section 404(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.9 Special Investment Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
VII Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.1 Distributive Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.2 Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.3 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.4 Information Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.5 Application for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.6 Timing of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.7 Duration of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.8 Amount of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.9 Special Participant Account Distribution Rules . . . . . . . . . . . . . . . . . . . . 72
7.10 Additional Distribution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
-ii-
E-176
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
7.11 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.12 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.13 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.14 Qualified Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.15 Direct Rollover Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
VIII Insurance or Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.1 Types of Policies and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.2 Premiums - Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8.3 Active Participant Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 82
IX Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.1 Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.2 Kaydon Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.3 Employer Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.4 Investment Manager Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.5 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
9.6 Fiduciary Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.7 Inter-Relationship of Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.9 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9.10 Limitation of Liability and Legal Action . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
-iii-
E-177
<PAGE> 5
<TABLE>
<S> <C>
X Amendment and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.2 Vesting Schedule Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.4 Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.5 Full Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.6 Merger or Consolidation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
XI Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11.1 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11.2 Employment Rights Not Enlarged . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11.3 Participants' Rights Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11.4 Interpretation and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
</TABLE>
-iv-
E-178
<PAGE> 6
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
Appendix of Participating Employers
Appendix A - Section 1.1(a) - Special Effective Dates
Appendix B - Section 2.6 - Explanation of Definition of Compensation
Appendix C - Section 2.16(d)(ii) - Top Heavy Actuarial Assumptions
Appendix D - Section 6.1(a)(vi) - Special Rules Applicable to Amounts Transferred from the Cooper
Bearing Company Employees' 401(k) Deferred Compensation Plan and Trust
Appendix E - Section 6.7(a)(i) - List of Investment Funds Available Under the Plan
Appendix F - Section 6.8 - Information Provided to Comply With Section 404(c) of ERISA
Appendix G - Section 6.8 - Policies and Procedures Re: Compliance with Section 404(c) of ERISA
Appendix H - Section 7.2(a)(v) - Additional Rules Regarding Hardship Withdrawals
Appendix I - Section 9.1 - Parties Responsible for Certain Plan Functions
</TABLE>
-v-
E-179
<PAGE> 7
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
On this 14th day of December, 1994, Kaydon Corporation and the
Affiliated Employers approved by the Board of Directors of Kaydon Corporation
as Participating Employers identified in the Appendix of Participating
Employers (the Employer), adopt and amend and restate the Kaydon Corporation
Employee Stock Ownership and Thrift Plan (the Plan).
ARTICLE I
ESTABLISHMENT
1.1 EFFECTIVE DATE. This amendment and restatement is generally
effective on the first day of the 1989 Plan Year, January 1, 1989. Whether or
not explicitly stated, certain provisions are effective on the first day of the
1987 or 1988 Plan Years, and in limited cases earlier Plan Years, as required
by the Tax Reform Act of 1986 and other legislation and the Final Regulations
and Technical Corrections under the Retirement Equity Act of 1984.
(a) SPECIAL EFFECTIVE DATES. Certain provisions are effective as
specified in Appendix A.
(b) ORIGINAL EFFECTIVE DATE. The Plan was originally effective
January 1, 1983.
(c) SPIROLOX. The Plan was adopted by __________________________
effective January 1, 1988.
(d) RING & SEAL. The Plan was adopted by Kaydon Ring & Seal, Inc.
effective January 1, 1987.
(e) COOPER BEARING. The Plan was adopted by The Cooper Split
Roller Bearing Corp. effective July 1, 1992.
(f) ITI. The Plan was adopted by Industrial Tectonics Inc
effective April 1, 1994.
1.2 QUALIFICATION INTENT. The Plan is intended to qualify as a
401(k) profit sharing and stock bonus plan and, with respect to certain of the
accounts, as a PAYSOP or TRASOP under
-1-
E-180
<PAGE> 8
Sections 401(a), 401(k), 409 and 501(a) of the Internal Revenue Code of 1986,
as amended (the Code), and as an employee pension benefit plan under the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
1.3 INCORPORATION OF TRUST. The Employer has adopted a Trust
which is incorporated in this Plan by reference.
1.4 NO PRIOR APPLICATION. The Plan and each amendment to the Plan
do not apply to any participant who is not an Active Participant on or after
the effective date of the Plan or the respective amendment, as the case may be,
except that:
(a) EXPLICIT APPLICATION. The Plan, an amendment, or portions of
the Plan or an amendment applies to the extent explicitly designated as
applicable to other participants; and
(b) ARTICLE VII. The provisions of Article VII through XI and the
Appendices, as amended from time to time, apply to all participants.
1.5 PLAN HISTORY. Kaydon Corporation established the Employee
Stock Ownership and Thrift Plan effective January 1, 1983: to make
contributions pursuant to certain tax credit provisions of the Code and have
those contributions invested in the common stock of Kaydon Corporation; to
which the account balances of its employees who previously participated in the
Bairnco Corporation Employee Stock Ownership Plan were transferred and, to the
extent that the transfer was not in common stock of Kaydon Corporation, to
convert the assets into such stock; and to permit elective contributions to the
Plan pursuant to Section 401(k) of the Code effective September 1, 1984 and to
have the employees elect to have such contributions invested in the common
stock of Kaydon Corporation or in other permitted investments.
(a) ORIGINAL STRUCTURE. The Plan initially incorporated a
profit-sharing employee stock ownership plan intended to meet the requirements
of Section 409A of the Code and a profit-sharing
-2-
E-181
<PAGE> 9
plan for purposes of the elective contributions intended to meet all of the
requirements of the Code required for the plan to be considered a
profit-sharing plan.
(b) SUBSEQUENT CHANGES. Effective January 1, 1987, Kaydon
Corporation ceased making tax-credit contributions to the Plan due to the
expiration of the tax credit provisions of the Code. Effective November 30,
1991, Kaydon Corporation recognized the cessation of accruals and allocations
under the profit sharing employee stock ownership plan which was intended to
meet the requirements of Section 409A of the Code and expanded the available
investments and the scope of participant investment direction with respect to
the 401(k) profit sharing and stock bonus portion of the Plan.
1.6 QUALIFYING EMPLOYER SECURITIES AND SPECIAL RULE. The Plan is
intended to allow up to 100% of the Plan assets to be invested in qualifying
employer securities within the meaning of Section 407 of ERISA. The maximum
number of shares which may be allocated to Participants under this Plan is
determined by the Form S-8 Registration Statement for the Plan, as amended from
time to time.
-3-
E-182
<PAGE> 10
ARTICLE II
DEFINITIONS
2.1 ACCOUNT BALANCE. The Account Balance is the sum of:
(a) SINGLE PARTICIPANT INVESTMENT. The value of a participant's
Single Participant Investment from time to time; and
(b) OTHER. The value of a participant's accounts other than a
Single Participant Investment from time to time, including all allocations as
of the coincident or immediately preceding Allocation Date and the appropriate
portion of the earnings, losses and adjustments in value from that Allocation
Date to the date of any distribution.
2.2 ACTIVE PARTICIPANT. An Active Participant is an Employee who
has met the Eligibility Requirements of Section 3.1 who begins to participate
in the Plan under Section 3.2. An Employee who becomes an Active Participant
remains an Active Participant until the Employee is no longer employed as an
Employee and remains a participant until death or the participant's entire
vested Account Balance is distributed.
2.3 AFFILIATED EMPLOYER. An Affiliated Employer is an employer
included within a controlled group of corporations, a group of trades or
businesses under common control, or an affiliated service group (as defined in
Code Sections 414(b), (c), (m), or (o)) with the Employer.
2.4 ALLOCATION DATE. Effective January 1, 1992, each business day
is an Allocation Date for Participant Contributions, earnings, losses and other
adjustments in value. Prior to that, the Allocation Dates were March 31, June
30, September 30 and December 31, although earnings, losses and other
adjustments in value were credited to participants' Accounts to the date Stock
in the Account was sold or another investment liquidated for purposes of
distribution. Effective
-4-
E-183
<PAGE> 11
November 30, 1989 through November 30, 1991, November 30 was also an Allocation
Date. The Allocation Date for Employer Contributions and forfeitures is
December 31. The Committee may designate one or more interim Allocation Dates.
2.5 BREAK IN SERVICE. A Break in Service is a Plan Year in which
an individual has not completed more than five hundred (500) Hours of Service.
(a) DATE OF BREAK. A Break in Service occurs on the first day of
the applicable Plan Year.
(b) M/PATERNITY LEAVE. To determine whether an individual has
incurred a Break in Service, the individual is credited with up to five hundred
one (501) Hours of Service during a M/Paternity Leave.
(i) DEFINED. M/Paternity Leave is an absence from
employment due to the individual's pregnancy, the birth of the
individual's child, the individual's adoption of a child or the
individual's care of a new born or recently adopted child. The
individual must certify that the absence is due to M/Paternity Leave,
specify the exact period of the absence, and provide either medical
certification of the birth or legal certification of the adoption.
(ii) CREDITING. An individual shall, during the
M/Paternity Leave, be credited with the individual's regularly
scheduled work hours. If the individual is not regularly scheduled,
the individual shall be credited with eight (8) Hours of Service for
each normally scheduled work day during the Leave. The Hours shall be
credited to the Plan Year in which the absence occurs, or to the next
Plan Year, as necessary, to prevent a Break in Service.
(c) OTHER SPECIAL RULES. To determine whether an individual has
incurred a Break in Service, the individual is credited with Hours of Service
for any period of time during which the individual is:
(i) LAY-OFF. Laid off if the individual re-enters the
employ of an Employer within twelve (12) months following the date of
layoff;
(ii) ILLNESS. Absent for a period of illness not in
excess of twelve (12) months;
-5-
E-184
<PAGE> 12
(iii) LEAVE OF ABSENCE. On leave of absence authorized by
an Employer for a period not in excess of two (2) years. A leave of
absence may be granted for pregnancy, disability, sickness, death, or
any other family obligation or status; for personal or family hardship
or special business circumstances; for educational purposes; or for
civic, charitable or governmental services. All Employees under
similar circumstances shall be treated in a similar manner; or
(iv) TRANSFER. Employed by a business entity other than
an Employer to which the individual transferred at the request of an
Employer.
Hours of Service for these periods are credited based on the Hours of
Service which would have accumulated had the individual worked during the
regularly scheduled work weeks during the absence.
(d) FIRST SHORT PLAN YEAR. An individual will not incur a Break
in Service for the First Short Plan Year (January 1, 1989 - November 30, 1989)
unless the individual failed to both:
(i) PRO RATA ALLOCATION. Complete 458.33 or more Hours
of Service for the Short Plan Year; and
(ii) PERIOD. Complete 500 or more Hours of Service for
the period beginning January 1, 1989 and ending December 31, 1989.
(e) SECOND SHORT PLAN YEAR. An individual will not incur a Break
in Service for the Second Short Plan Year (December 1, 1991 - December 31,
1991) unless the individual failed to both:
(i) PRO RATA ALLOCATION. Complete 41.67 or more Hours
of Service for the Short Plan Year; and
(ii) PERIOD. Complete 500 or more Hours of Service for
the period beginning December 1, 1991 and ending November 30, 1992.
2.6 COMPENSATION. Except as otherwise provided, Compensation is
wages, salaries, fees
-6-
E-185
<PAGE> 13
for professional services, and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer (or Affiliated Employer)
to the extent that the amounts are includible in gross income (including, but
not limited to, overtime and shift premiums, commissions paid salesman,
compensation for services on the basis of a percentage of profits, bonuses
(except as excluded below) and salary continuation payments (reduced simplified
general Section 415 Compensation as provided in Reg. Sections 1.415-2(d)(10)
and 1.414(s)-1(c)(3)), plus any salary reduction contribution made by the
Employer and excluded from gross income as a cafeteria plan contribution under
Code Section 125, a 401(k) profit sharing or simplified employee pension (SEP)
plan contribution, or a Code Section 403(b) tax deferred annuity contribution,
any compensation deferred under an eligible Code Section 457(b) deferred
compensation plan and any Code Section 414(h)(2) pick-up contributions. A
listing of the types of remuneration not included in this definition of
Compensation is provided in Appendix B.
(a) CODE SECTION 415 LIMIT. For purposes of the Code Section 415
Limit and the Maximum Annual Contribution limit of Article IV, Compensation is
determined without the additions described above.
(b) EMPLOYER RELATED. Compensation includes only those items
relating to the participant's employment with the Employer (or Affiliated
Employer).
(c) EXCLUSION. For purposes of determining and allocating
Employer Contributions under Article VI (other than Minimum Top Heavy
Contributions) and ACP and ADP testing, Compensation excludes compensation
earned before becoming and after ceasing to be an Active Participant.
(d) DOLLAR LIMIT. Effective on the first day of the 1989 Plan
Year, January 1, 1989, Compensation is limited to $200,000 per year, as
adjusted by the Secretary of the Treasury in the same manner as under Code
Section 415(d). In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each employee taken into
-7-
E-186
<PAGE> 14
account under the Plan may not exceed the OBRA '93 Annual Compensation Limit.
(i) DEFINED. The OBRA '93 Annual Compensation Limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal
Revenue Code.
(A) COST OF LIVING. The cost-of-living
adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (Determination Period) beginning in that calendar
year.
(B) SHORT PERIOD. If a Determination Period
consists of fewer than 12 months, the OBRA '93 Annual
Compensation Limit is multiplied by a fraction the numerator
of which is the number of months in the Determination Period
and the denominator of which is 12.
(ii) OVERRIDE. For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the limitation under
Section 401(a)(17) of the Code means the OBRA '93 Annual Compensation
Limit set forth in this provision.
(iii) PRIOR PERIOD. If Compensation for any prior
Determination Period is taken into account in determining benefits
accruing in the current Plan Year, the Compensation for that prior
Determination Period is subject to the OBRA '93 Annual Compensation
Limit in effect for that prior Determination Period. For this
purpose, for Determination Periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA
'93 Annual Compensation Limit is $150,000.
(e) FAMILY AGGREGATION. The Compensation of a Five Percent (5%)
owner and the ten most highly compensated Highly Compensated Employees for the
year includes the Compensation of the individual's spouse and lineal
descendants who have not attained age 19 before the close of the year. In that
case, the family member is not considered a separate employee. If the Dollar
Limit is exceeded as a result of the Family Aggregation rule, the limitation is
prorated among the affected individuals in proportion to each individual's
Compensation as determined prior to the
-8-
E-187
<PAGE> 15
application of the rule.
2.7 EMPLOYEE. An Employee is any person employed by an Employer
who receives compensation for personal services rendered to the Employer which
is subject to withholding for federal income tax purposes, except nonresident
aliens who do not receive any earned income (as defined in Code Section
911(d)(2)) from an Employer which constitutes United States source income (as
defined in Code Section 861(a)(3)) and Leased Employees. A Leased Employee is
an individual other than an employee who has performed services historically
performed by employees for the Employer (or Related Person under Code Section
414(n)(6)) on a full-time basis for at least one (1) year who must otherwise be
counted for certain testing purposes as an employee of the Employer.
2.8 HIGHLY COMPENSATED EMPLOYEES. Effective for purposes of the
Voluntary Contribution Limit, the Elective Contribution Limit and the Multiple
Use Limit of Article V on the first day of the 1987 Plan Year, January 1, 1987,
a Highly Compensated Employee is:
(a) GENERAL RULE. An Employee who has an Hour of Service for the
performance of duties during the Plan Year who, with respect to the Employer
(or Affiliated Employer), during the Plan Year or the Look-Back Year:
(i) FIVE PERCENT OWNER. Is at any time a more than five
percent (5%) owner of stock or voting power;
(ii) $75,000. Receives Compensation in excess of
$75,000, as adjusted by the Secretary of the Treasury;
(iii) TOP PAID GROUP. Receives Compensation in excess of
$50,000, as adjusted by the Secretary of the Treasury, and is in the
group consisting of the top 20 percent of the employees of the
Employer (and Affiliated Employers) when ranked on the basis of
Compensation received during the year (calculated by including Leased
Employees required to be treated as Employees but excluding employees
who: have not completed six months of
-9-
E-188
<PAGE> 16
service by the end of the year; normally work less than 17 1/2 hours
per week or during less than six months during any year; or have not
attained age 21 by the end of the year); or
(iv) OFFICER. Is at any time an officer who receives
Compensation greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for the year.
(A) MAXIMUM. The number of officers shall not
exceed the greater of three or ten percent of the total
employees performing services for the Employer (or Affiliated
Employer) during the Plan Year or the Look-Back Year, without
exclusion, with a maximum of 50. If this limitation operates,
the officers are those receiving the greatest compensation
during the Plan Year or the Look-Back Year.
(B) MINIMUM. If no officer satisfies the
compensation rule for the Plan Year or the Look-Back Year, the
highest paid officer for the Plan Year or the Look-Back Year
is a Highly Compensated Employee.
(C) SEPARATE. These rules apply separately to
the Plan Year and the Look-Back Year. For each Plan Year, an Employee
who was not a Highly Compensated Employee under (ii), (iii), or (iv),
above, for the Look-Back Year is not a Highly Compensated Employee
unless the Employee is also one of the 100 highest paid employees of
the Employer (and Affiliated Employers) for the Plan Year, including
Leased Employees required to be treated as employees. The applicable
dollar amount for a year is the dollar amount, as adjusted by the
Secretary of the Treasury, for the calendar year in which the Plan
Year or the Look-Back Year begins.
(b) FORMER EMPLOYEE RULE. A former Employee who:
(i) SEPARATED. Performs no services for the Employer
(or Affiliated Employer) during the Plan Year or is treated as having
separated under Code Section 414(q); and
(ii) HIGHLY COMPENSATED. Was a Highly Compensated
Employee when the employee separated from service or at any time after
attaining age 55.
-10-
E-189
<PAGE> 17
Former employees are not included in the Top-Paid Group, the group of the top
100 employees, or the group of includable officers for purposes of determining
the Employees who are Highly Compensated and are not used to determine the
number of employees in the Top Paid Group.
(c) FAMILY MEMBER RULE. Any individual who is a member of the
family of a Five Percent (5%) Owner or of one of the ten most Highly
Compensated Employees for the Plan Year or the Look-Back Year is not considered
a separate employee. Any Compensation paid to the individual (and any
applicable contribution or benefit on behalf of the individual) is treated as
paid to (or on behalf of) the Five Percent (5%) Owner or Highly Compensated
Employee. Family means the employee's spouse and lineal ascendants or
descendants and the spouses of the lineal ascendants or descendants on any day
within the year.
(d) DETERMINATION AND LOOK-BACK YEARS. The Determination Year is
the Plan Year.
(i) LOOK-BACK YEAR. The Look-Back Year is the calendar
year ending with or within the applicable Plan Year or, in the case of
a Plan Year of less than twelve months, the calendar year ending with
or within the twelve month period ending with the end of the Plan
Year.
(ii) SPECIAL RULE FOR PLAN YEAR. The calculation for the
Plan Year is based only on the period, if any, by which the applicable
Plan Year extends beyond the Look-Back Year. In that case:
(A) NO LAG PERIOD. If there is no lag period, a
separate Plan Year calculation is not required.
(B) ADJUSTMENT. The $75,000.00 and Top Paid
Group dollar amounts must be adjusted for each lag period by
multiplying the dollar amount by a fraction, of which the
numerator is the number of calendar months included in the lag
period and the denominator is twelve.
(C) NO SERVICES. An employee who performs
services during the Plan Year is not a Former Employee merely
because the employee does not perform services
-11-
E-190
<PAGE> 18
during the lag period.
2.9 HOUR OF SERVICE. An Hour of Service is an hour for which an
employee is paid or entitled to be paid by the Employer (or Affiliated
Employer, except for hours before the affected Employers become affiliated):
for the performance of duties for the Employer (or Affiliated Employer) during
the applicable period; for a period of time during which no duties are
performed (whether or not employment has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, Military Service
or leave of absence related to the Employer (or Affiliated Employer); or for
back pay, irrespective of mitigation of damages, based on a settlement or award
involving the Employer (or Affiliated Employer).
(a) EXCLUDED HOURS. Hours of Service are not credited for periods
for which payments are received under applicable worker's compensation,
unemployment compensation or disability laws or for payments which reimburse an
Employee for medical or medically related expenses.
(b) MAXIMUM CREDIT. For periods during which no duties are
performed or back pay is awarded, an employee is not credited with greater than
five hundred one (501) Hours of Service during any single, continuous period
during which no services are performed for the Employer (or Affiliated
Employer). An employee is not credited with Hours of Service under this
subsection in excess of regularly scheduled hours for the performance of duties
during the period. Credit is not given twice for any Hour of Service. This
rules does not limit the crediting of Hours of Service for paid non-duty
vacation, holiday, bereavement, jury duty, or short-term military service time.
(c) UNIT OF TIME PAYMENT. If non-duty or back-pay payments are
determined by units of time, an employee is credited with the number of
regularly scheduled working hours included in the units of time upon which the
payment is calculated. If the employee does not have a regularly scheduled
workweek, hours are calculated on a reasonable basis which reflects the average
hours worked by the employee.
(d) OTHER METHOD OF PAYMENT. If non-duty or back-pay payments
are not determined on
-12-
E-191
<PAGE> 19
the basis of time, an employee is credited with Hours of Service determined by
dividing the amount of the payment by the employee's most recent rate of hourly
compensation. If an employee is not paid on an hourly basis, the hourly rate
is determined by dividing the most recent compensation for the period of
payment by the number of hours regularly scheduled for the period, or if not
regularly scheduled, by the average number of hours worked during the period.
If an employee's compensation is not determined on the basis of a fixed rate
for specified periods, the employee's hourly rate is the lowest hourly rate
paid to employees in the same job classification. If no employees in the same
job classification have an hourly rate, the rate is the minimum wage under
Section 7(a)(1) of the Fair Labor Standards Act of 1938, as amended.
(e) CREDITING. Hours of Service for which duties are performed
are credited to the Plan Year in which the duties are performed. Hours of
Service for which no duties are performed or for back pay are credited to the
Plan Year to which the payment relates. Hours, other than back pay, not
calculated on units of time, shall not extend beyond the first two (2) Plan
Years.
(f) MILITARY SERVICE. An Active Participant who is on an unpaid
military leave of absence and is on active duty in the Armed Forces of the
United States shall receive credit for Hours of Service equal to the Active
Participant's regularly scheduled work hours for each month of leave. The
Active Participant must apply for and be able to resume employment with the
Employer (or Affiliated Employer) within the time for protection of
reemployment rights.
(g) SPECIAL RULE FOR PRIOR SERVICE. An employee is also credited
with an Hour of Service with respect to each hour of employment with any
predecessor business entity of an Employer or with a business entity the
business or assets of which were acquired by an Employer prior to the date the
Employer adopted the Plan.
(h) SPECIAL RULE FOR DUTY HOURS. If an Employer does not maintain
hourly records with respect to any employee, the employee is credited with
forty-five (45) Hours of Service for each week in which the employee is
entitled to be credited with a duty Hour of Service.
-13-
E-192
<PAGE> 20
2.10 LIMITATION YEAR. The Limitation Year is the Plan Year.
2.11 NORMAL RETIREMENT AGE. Normal Retirement Age is 65.
2.12 PLAN YEAR. The Plan Year is an annual accounting period
ending each December 31.
(a) FIRST CHANGE. Effective December 1, 1989 through November 30,
1991, the Plan Year was a period of twelve months beginning December 1 and
ending November 30. A First Short Plan Year began January 1, 1989 and ended
November 30, 1989.
(b) SECOND CHANGE. Effective January 1, 1992, the Plan year
returned to a period of twelve months beginning January 1 and ending December
31. A Second Short Plan Year began December 1, 1991 and ended December 31,
1991.
2.13 QUALIFIED ORDER. A Qualified Order is an order issued by a
competent State Court with jurisdiction under its domestic relations law which
meets the following conditions.
(a) REQUIREMENTS. The order must:
(i) RECIPIENT. Identify the recipient who must be the
then or former spouse, child or dependent of the participant;
(ii) SUBJECT. Provide for payment in connection with
alimony, child support or a division of marital property; and
(iii) CONTENTS. Contain the name and address of the
participant and the recipient, the amount or percentage of the payment
and the duration of the payment.
(b) RESTRICTIONS. The order must not require:
(i) INCREASE. The Plan to pay more to the participant
and all recipients than the participant's Vested Account Balance;
(ii) METHOD, DURATION. A method or duration of payment
not permitted under the Plan;
-14-
E-193
<PAGE> 21
(iii) PAYMENT. Payment to begin before the earliest of:
a Distributive Event or the later of the date the participant attains
age 50 or could begin receiving benefits upon separation from service;
(iv) CANCEL. Cancellation of the prior right of another
recipient; or
(v) BENEFICIARY. A greater right to designate a
beneficiary for a recipient's benefit amount than the participant's
right, or application of the Joint and Spousal Survivor benefit or the
Spousal Survivor Annuity to the spouse of the recipient.
2.14 QUALIFYING SPOUSE. A Qualifying Spouse is an individual to
whom the participant has been legally married for at least one (1) year before
the earlier of the first day of the first period for which benefits are paid or
the date of the participant's death and to whom the participant remains married
at that time.
(a) SPECIAL RULES. A Qualifying Spouse includes: to the extent
of the interest provided under a Qualified Order, an individual who is a former
spouse who was married to the participant for at least one year who is required
to be treated as a Qualifying Spouse under the Order and, for provisions
relating to the Joint and Spousal Survivor form, an individual whom a
participant legally married within one (1) year before the first day of the
first period for which benefits were paid and to whom the participant has been
legally married for at least one (1) year before the date of the participant's
death and to whom the participant remains married at that time.
(b) QDRO SPOUSE. A Qualifying Spouse does not include a spouse or
former spouse to the extent benefits are payable to or with respect to a prior
spouse who is treated as a Qualifying Spouse under a Qualified Order.
2.15 STOCK. Stock is common stock of Kaydon Corporation.
2.16 TOP HEAVY. The Plan is Top Heavy for any Plan Year in which
the present value of
-15-
E-194
<PAGE> 22
Accrued Benefits for Key Employees is more than sixty percent (60%) of the
present value of Accrued Benefits for all Participants excluding former Key
Employees. The Plan is Super Top Heavy for any Plan Year in which the present
value of Accrued Benefits for Key Employees is more than ninety percent (90%)
of the present value of Accrued Benefits for all Participants excluding former
Key Employees.
(a) REQUIRED AGGREGATION. A Required Group includes each plan of
the Employer (or Affiliated Employer) in which a Key Employee participates or
participated at any time during the five year period ending on the
Determination Date (whether or not terminated) or which enables any such plan
to meet the nondiscrimination and participation requirements of Code Sections
401(a)(4) or 410. If the Group is Top Heavy, all plans in the Group are Top
Heavy. If the Group is not Top Heavy, all plans in the Group are not Top
Heavy.
(b) PERMISSIVE AGGREGATION. A Permissive Group may include any
other plan of the Employer (or Affiliated Employer) or to which the Employer
contributes which, when considered with any Required Group, satisfies the
nondiscrimination and participation requirements of Code Sections 401(a)(4) and
410 and provides comparable contributions or benefits. If the Permissive Group
is Top Heavy, only the plans in the Required Group are Top Heavy. If the
Permissive Group is not Top Heavy, all plans in the Permissive Group are not
Top Heavy.
(c) KEY EMPLOYEES. A Key Employee is a Participant who, under
Code Section 416(i), is with respect to the Employer:
(i) OFFICER. A corporate officer whose Compensation is
more than one-half the limitation under Code Section 415(b)(1)(A);
(ii) TEN LARGEST OWNERS. One (1) of ten (10) employees
owning the largest interests, excluding those whose pay is not more
than the limitation under Code Section 415(c)(1)(A), who have
Compensation less than the tenth largest owner, and who owns less than
a one-half percent (.5%) interest;
(iii) FIVE PERCENT OWNER. A Five Percent (5%) Owner; or
-16-
E-195
<PAGE> 23
(iv) ONE PERCENT OWNER, $150,000. A more than one
percent (1%) owner of stock or voting power with Compensation of more
than $150,000.00.
(d) DETERMINATION. Top Heavy status and Account Balances are
determined under Code Section 416(g) on the last day of the preceding Plan
Year, or, for the initial Plan Year, the last day of that Plan Year
(Determination Date).
(i) PERSONS INCLUDED. Key Employees include individuals
who had that status during the Plan Year or any of the four (4)
preceding Plan Years or who are their beneficiaries. For purposes of
this section, Participants include individuals who were Employees
during the Plan Year or any of the four (4) preceding Plan Years,
without regard to whether the individual actually receives
compensation for the personal services rendered to the Employer.
(ii) ACTUARIAL ASSUMPTIONS. The actuarial assumptions
for this determination, if any, are set forth in Appendix C.
(iii) ACCRUED BENEFITS. The Accrued Benefit under the
Plan and any other defined contribution plan is the Participant's
Account Balance. The Accrued Benefit under a defined benefit plan is
the Participant's annualized normal retirement benefit under the basic
form determined under that plan's accrual method. Effective on the
first day of the 1987 Plan Year, January 1, 1987, for Participants
other than Key Employees, if there is no specified uniform accrual
method, the Accrued Benefit is determined as if the benefit accrued
not more rapidly than the slowest accrual rate permitted under Code
Section 411(b)(1)(C). Accrued Benefits include distributions made
during the Plan Year and the four (4) preceding Plan Years, other than
benefits already included, and contributions due and unpaid in the
first year of the Plan or to a money purchase, target benefit or
defined benefit pension plan.
(iv) OWNERSHIP. Ownership is determined under Code
Section 318 modified by Code Section 416(i)(1)(B)(iii) without regard
to the aggregation rules under Code Sections 414(b), (c), (m) and (o).
-17-
E-196
<PAGE> 24
(v) OTHER PLANS. For other plans of an Employer, values
shall be determined on the Determination Date ending on or within the
same calendar year.
2.17 YEAR OF SERVICE. A Year of Service is:
(a) GENERAL RULE. A Plan Year in which at least one thousand
(1,000) Hours of Service are completed.
(b) PRE-AMENDMENT AND RESTATEMENT. All Years of Service credited
under the Plan before amendment and restatement in accordance with the prior
plan document.
(c) PREDECESSOR EMPLOYER. Years of Service credited prior to July
1, 1992 with The Cooper Split Roller Bearing Corp. and, for purposes of
eligibility to participate only, a Year of Service as otherwise defined by this
Plan but including Hours of Service credit for the individual's period of
employment prior to April 1, 1994 with Industrial Tectonics, Inc.
(d) FIRST SHORT PLAN YEAR. For the First Short Plan Year,
completion of:
(i) PRO RATA ALLOCATION. 916.66 or more Hours of
Service for the Short Plan Year; or
(ii) PERIOD. 1,000 or more Hours of Service for the
period beginning January 1, 1989 and ending December 31, 1989.
(e) SECOND SHORT PLAN YEAR. For the Second Short Plan Year,
completion of:
(i) PRO RATA ALLOCATION. 83.33 or more Hours of Service
for the Short Plan Year; or
(ii) PERIOD. 1,000 or more Hours of Service for the
period beginning December 1, 1991 and ending November 30, 1992.
Years of Service credited prior to a Break in Service are disregarded for all
purposes under the Plan upon a return to employment until the Employee again
completes one-thousand (1,000) Hours of Service for the performance of duties
during the twelve (12) month period following the date on which the Employee
completes an Hour of Service after the Break in Service or during any calendar
-18-
E-197
<PAGE> 25
year beginning on or following that date. Years of Service credited prior to a
distribution of a participant's entire vested Account Balance after termination
of employment are disregarded (with respect to previous allocations) upon a
return to employment unless the individual repays the distribution in
accordance with the limits of Article VI.
-19-
E-198
<PAGE> 26
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY REQUIREMENTS. An Employee is eligible to become
an Active Participant when the Employee:
(a) GENERAL. Effective January 1, 1992:
(i) AGE. Attains age 21;
(ii) EMPLOYMENT. Completes six months of employment with
an Employer or Affiliated Employer; and
(iii) SERVICE. Completes five-hundred (500) or more Hours
of Service prior to the end of the six (6) month period immediately
subsequent to the date on which the Employee completes the Employee's
first Hour of Service.
If the Employee does not complete five-hundred (500) or more
Hours of Service within that period, Hours of Service are calculated
over a rolling six month period.
(b) PRIOR RULE. Effective January 1, 1989 through December 31,
1991, an Employee was eligible to become an Active Participant when the
Employee completed twelve (12) months of employment with an Employer.
(c) SPECIAL RULE. Notwithstanding the General and Prior
eligibility rules, the 500 Hour of Service requirement shall not operate to
delay the participation of an individual who completes 1000 Hours of Service
during the one year period beginning with the individual's first Hour of
Service or a Plan Year beginning during that period or thereafter. An
individual who completes 1000 Hours of Service during that period or a Plan
Year who is not already an Active Participant under the 500 Hour of Service
rule is, upon attaining 21, eligible to become an Active Participant on the
next entry date (or that date, if it is an entry date).
3.2 PARTICIPATION. Every Active Participant in the Plan on the
Effective Date remains an
-20-
E-199
<PAGE> 27
Active Participant. Each Employee who satisfies the Eligibility Requirements
on the Effective Date is an Active Participant on the Effective Date.
Effective January 1, 1992, except as provided by the Special Rules, each other
Employee is an Active Participant on the first January 1, April 1, July 1, or
October 1 coincident with or after the Employee satisfies the Eligibility
Requirements.
(a) PRIOR RULES. Effective January 1, 1989, except as provided by
the Special Rules, each other Employee was an Active Participant on the first
January 1 or July 1 coincident with or after the Employee satisfied the
Eligibility Requirements. Effective December 1, 1989 through December 1, 1991,
except as provided by the Special Rules, each other Employee was an Active
Participant on the first December 1 or June 1 coincident with or after the
Employee satisfied the Eligibility Requirements.
(b) SPECIAL RULES. Notwithstanding the current and prior
Participation rules,
(i) KOPPERS. Each Employee who was a participant in the
Retirement Plan of Koppers Company, Inc. and Subsidiaries for Salaried
Employees or the Koppers Company, Inc. Retirement Benefit Plan For
Hourly Paid Employees on June 30, 1986 who was employed by an Employer
on January 1, 1987 became an Active Participant in this Plan on
January 1, 1987;
(ii) TRW/RAMSEY. Each Employee who was a participant in
the TRW Salaried Pension Plan or the Ramsey Corporation Hourly
Retirement Income Plan on July 14, 1987 who was employed by an
Employer on January 1, 1988 became a Participant in this Plan on
January 1, 1988;
(iii) COOPER BEARING. Each Employee who was a participant
in the Cooper Bearing Company Employees' 401(k) Deferred Compensation
Plan on June 30, 1992 who was employed by an Employer on July 1, 1992
became an Active Participant in this Plan on July 1, 1992; and
(iv) ITI. Each Employee who was a participant in the
Industrial Tectonics, Inc. 401(k) Plan on January 30, 1994 who was
employed by an Employer or Industrial Tectonics
-21-
E-200
<PAGE> 28
Inc on January 31 1994 shall be a Participant in this Plan on April 1,
1994.
(c) CHANGE OF PLAN YEAR. No change of Plan Year may postpone the
date of Participation of any Employee who would have become a Participant on
January 1, 1990, July 1, 1990, June 1, 1992, or December 1, 1992 in the absence
of the change of Plan Year.
3.3 RE-PARTICIPATION. An Employee who is reemployed by the
Employer following a Break in Service becomes an Active Participant:
(a) PRIOR ACTIVE PARTICIPANT. On the first day on which the
Employee again completes an Hour of Service for the performance of duties as an
Employee if the Employee was an Active Participant at the beginning of the
Break in Service or if the Participant returns to the employ of an Employer
within thirty (30) days after cessation of Disability.
(b) OTHER. As a new Employee if the Employee was not an Active
Participant at the beginning of the Break in Service.
3.4 TRANSFERRED EMPLOYEES. Plan benefits of employees who
transfer employment among Employers, among classifications within the
Employers, or among an Employer and an Affiliated Employer which has not
adopted the Plan are coordinated as follows.
(a) IN GENERAL. A Transfer is a change in job responsibilities in
which the employee is employed by an Employer or an Affiliated Employer both
before and after the change, the employee is an eligible Active Participant in
this Plan either before or after the change, and the employee first performs an
Hour of Service in the new job (the End of Transfer) before the fifth
anniversary of the date on which the employee last performed an Hour of Service
in the old responsibilities (the Beginning of the Transfer).
(i) DIRECTION. The coordination depends upon whether
the employee is Transferring into or out of this Plan and upon whether
the other plan involved in the Transfer is a defined benefit plan or a
defined contribution plan.
-22-
E-201
<PAGE> 29
(ii) VESTING AND PARTICIPATION. In all transfers, the
employee's employment year service and Years of Service for vesting
and participation purposes with an Employer and an Affiliated Employer
credited for vesting and participation purposes under this Plan and
all plans to which, or from which, the employee transfers. An
employee is entitled to a benefit from a plan only if the employee's
aggregate service for vesting purposes entitles the employee to a
benefit under that plan's vesting schedule.
(b) TRANSFERS OUT. An employee who Transfers from employment
covered by this Plan to employment with an Employer or an Affiliated Employer
not covered by this Plan receives an amount under this Plan based on accruals
under this Plan for the portion of the plan year of Transfer prior to the
Beginning of the Transfer to the extent the employee is eligible under the
terms of this Plan. The employee's Accounts in this Plan will continue to
share in investment gains or losses under the terms of this Plan, and will
continue to be subject to participant investment direction under this Plan from
and after the Beginning of the Transfer.
(i) TRANSFER TO A DEFINED BENEFIT PLAN. If the employee
participates in a defined benefit plan maintained by an Employer or an
Affiliated Employer, to the extent provided in that plan, the employee
will receive a benefit from the defined benefit plan to which the
employee Transferred based only upon the employee's service and
compensation with the Employer or Affiliated Employer (except as
limited by that plan) subsequent to the End of the Transfer.
(ii) TRANSFER TO A DEFINED CONTRIBUTION PLAN. If the
employee participates in a defined contribution plan maintained by an
Employer or an Affiliated Employer, the employee will receive an
amount under the defined contribution plan to which the employee
Transferred based on accruals under that plan for the portion of the
plan year of Transfer and later plan years subsequent to the End of
the Transfer to the extent the employee is eligible under the terms of
that plan. In addition, to the extent the employee is fully vested,
the plans so provide, the employee requests, the plans' qualified
status is unaffected and no plan
-23-
E-202
<PAGE> 30
amendments or plan operational changes are necessary to carry out the
transfer, the employee's account balance in this Plan will be
transferred in a trustee to trustee transfer to the other defined
contribution plan as soon as administratively practicable after the
End of the Transfer.
(c) TRANSFERS IN. An employee who Transfers from employment with
an Employer or an Affiliated Employer not covered by this Plan to employment
covered by this Plan receives an amount under this Plan based on accruals under
this Plan for the portion of the plan year of Transfer and later plan years
subsequent to the End of the Transfer to the extent the employee is eligible
under the terms of this Plan.
(i) TRANSFER FROM A DEFINED BENEFIT PLAN. If the
employee participated in a defined benefit plan maintained by an
Employer or an Affiliated Employer, the employee will receive no
additional service for benefit accrual purposes under that defined
benefit plan from and after the Beginning of the Transfer. The
employee's Average Monthly Compensation under that plan is fixed as of
the Beginning of the Transfer and the employee's benefit at or after
ultimate termination of employment with the Employer and Affiliated
Employers is determined under that plan's benefit formula or benefit
multiplier in effect at the Beginning of the Transfer.
(ii) TRANSFER FROM A DEFINED CONTRIBUTION PLAN. If the
employee participated in another defined contribution plan maintained
by an Employer or an Affiliated Employer, the employee will receive an
amount under the defined contribution plan from which the employee
Transferred based on accruals under that plan for the portion of the
plan year of Transfer prior to the Beginning of the Transfer to the
extent the employee is eligible under the terms of that plan. The
employee's account in that plan will continue to share in investment
gains or losses under the terms of that plan as long as the account
remains part of that plan. In addition, to the extent the employee is
fully vested, the plans so provide, employee requests, the plans'
qualified status is unaffected and no plan amendments or plan
-24-
E-203
<PAGE> 31
operational changes are necessary to carry out the transfer, the
employee's account balance in that plan will be transferred in a
trustee to trustee transfer to this Plan as soon as administratively
practicable after the End of the Transfer.
(d) SPECIAL RULE. All Transfers are subject to the following
special rules.
(i) NON-RESIDENT ALIENS. These Transfer rules do not
apply to transfers in which the employee was or becomes a non-resident
alien or in which a plan not subject to ERISA is involved.
(ii) DETERMINATION OF SERVICE. Unless otherwise
provided, Years of Service are determined under the plan under which
the service was earned.
-25-
E-204
<PAGE> 32
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS. For each Plan Year, the Employer:
(a) SALARY DEFERRED. Must contribute the sum of Active
Participant Salary Deferred Contributions.
(b) REGULAR PROFIT SHARING. May contribute a Regular Profit
Sharing Contribution. The amount of the contribution, if any, is determined by
the Committee or the Board of Directors of Kaydon Corporation in its
discretion, subject to the maximum limitations of this Plan. A Regular Profit
Sharing Contribution is allocated under Article VI and is subject to the
applicable Vesting Schedule.
(c) QUALIFYING. May contribute a Qualifying Contribution which
is, effective on the first day of the 1987 Plan Year, January 1, 1987:
(i) NON-DISCRIMINATORY. Part or all of an Employer
Contribution which is non-discriminatory under Code Section 401(a)(4)
determined with and without the Qualifying Contribution;
(ii) NOT USED. Not taken into account in determining
whether any other contributions or benefits are non-discriminatory
under Code Sections 401(a)(4); or under Code Sections 401(k)(3) or
401(m) except to the extent designated by the Employer for that
purpose under this Plan;
(iii) ALLOCATED. Allocated to the Active Participant as
of a date within the Plan Year; and
(iv) INCREASE. Not effective to increase the difference
between the Actual Contribution Percentages (ACP) or Actual Deferral
Percentages (ADP) for the Highly Compensated and Non-Highly
Compensated groups.
The amount of the contribution, if any, is determined by the Board of
Directors of Kaydon
-26-
E-205
<PAGE> 33
Corporation in its discretion, subject to the maximum limitations of this Plan.
(d) TOP HEAVY MINIMUM. Must, if applicable, with respect to the
non-collectively bargained employees, contribute the Minimum Top Heavy
Contribution. The Minimum Top Heavy Contribution for each Plan Year in which
the Plan is Top Heavy is:
(i) SINGLE PLAN. If the Employer does not maintain
another qualified retirement plan, or for Active Participants in just
this Plan, the lesser of three percent (3%) of the Compensation of
each non-collectively bargained Non-Key Employee Active Participant
employed by the Employer (or Affiliated Employer) on the last day of
the Plan Year or the highest percentage of Compensation allocated to a
Key Employee multiplied by the Compensation of those Participants (the
Regular Minimum). For this purpose, Salary Deferred Contributions
allocated to Key Employees are treated as an Employer Contribution
allocated to a Key Employee. The Amount is determined without regard
to the integration of contributions with Social Security or an Active
Participant's failure to make a Mandatory Contribution.
(ii) ANOTHER DEFINED CONTRIBUTION PLAN. If the Employer
maintains another qualified defined contribution plan in which an
Active Participant also participates, the Regular Minimum contribution
of the Plan which comes first in the following priority order: a
target benefit plan, a money purchase pension plan, a leveraged
employee stock ownership plan, a stock bonus plan, or a tax credit
employee stock ownership plan.
(iii) ANOTHER DEFINED BENEFIT PLAN. If the Employer
maintains a defined benefit plan in which an Active Participant also
participates, a contribution to the defined benefit plan which will
fund the Minimum Benefit under the defined benefit plan, offset by the
benefits provided under this and any other defined contribution plan
of the Employer. If the Employer maintains a defined benefit plan,
the Plan is not Super Top Heavy and the Employer elects to utilize the
greater multiplier for dollar limitations in the denominator of the
defined benefit and defined contribution fractions, the Minimum
Benefit Multiplier is
-27-
E-206
<PAGE> 34
three percent (3%) rather than two percent (2%).
The Minimum Contribution may be satisfied by Regular Profit Sharing or
Qualifying Contributions.
(e) FORFEITURE RESTORATION. Shall contribute for a reemployed
Active Participant the amount of the forfeited Nonvested Account required to be
restored under Article VI, unadjusted for earnings, losses or adjustments in
value, less the allocable portion of forfeitures under Article VI.
4.2 MAXIMUM DEDUCTIBLE AMOUNT. All contributions to this Plan are
conditioned on the deductibility of the contribution under Code Section 404.
Employer Contributions must be determined and made within the time required to
qualify the contributions for a deduction under Code Section 404. An Employer
Contribution which exceeds the amount which is deductible by the Employer is
subject to a non-deductible contribution excise tax in the year contributed and
subsequent years until deducted or returned to the Employer within the period
provided in Code Section 4972(c). A nondeductible contribution shall, if
requested by the Employer, be returned to the Employer within one (1) year of
disallowance of the deduction.
4.3 MAXIMUM ANNUAL ADDITIONS. Effective on the first day of the
1987 Plan Year,
January 1, 1987, the maximum Annual Additions to a Participant's Accounts under
the Plan shall not exceed the Maximum Amount established by this section and
Code Section 415, which is incorporated here by reference.
(a) MAXIMUM AMOUNT. The Maximum Amount is the lesser of:
(i) PERCENTAGE. Twenty-five percent (25%) of the Active
Participant's Compensation for the year; or
(ii) DOLLAR LIMIT. $30,000 (or, if greater, one quarter
of the dollar limitation in effect under Code Section 415(b)(1)(A)).
For the First Short Plan Year, the Dollar Limit is 11/12 of $30,000 or
$27,500, and for the Second Short Plan Year, the Dollar Limit is 1/12
of $30,000 or $2,500.
-28-
E-207
<PAGE> 35
(b) ANNUAL ADDITIONS. Annual Additions are the sum of the
following amounts for the applicable Plan Year:
(i) EMPLOYER CONTRIBUTIONS. Employer Contributions
allocated to the Participant's Accounts (including amounts which
constitute excess deferrals, excess contributions, or excess aggregate
contributions whether or not recharacterized or distributed under
Article V);
(ii) FORFEITURES. Forfeitures allocated to the
Participant's Accounts;
(iii) VOLUNTARY CONTRIBUTIONS. For Limitation Years
beginning on or after January 1, 1987, a participant's Voluntary
Contributions for the year and, for Limitation Years beginning prior
to that date, the lesser of a participant's Voluntary Contributions in
excess of six percent (6%) of the participant's Compensation for the
year or one-half (1/2) of the contributions; and
(iv) MEDICAL ACCOUNTS. Certain amounts allocated after
March 31, 1984 to a participant's individual medical account within
Code Section 415(l) under the Employer's pension or annuity plan or
after December 31, 1985 to a Key Employee Participant's
post-retirement medical account under the Employer's welfare benefit
plan, although the Percentage limit in Subsection (a)(i) shall not
apply to this amount.
(c) DEFINED CONTRIBUTION AGGREGATION. If a participant is also a
participant in any other qualified defined contribution plan maintained by the
Employer, the Annual Additions to the participant's accounts shall not exceed
the limitations above and shall be reduced in the plans in the following order
of priority: a tax credit employee stock ownership plan; a stock bonus plan; a
profit sharing plan; this plan; a money purchase pension plan; a target benefit
plan; or a defined benefit pension plan.
(d) DEFINED BENEFIT PLAN. If a participant is also a participant
in any qualified defined benefit plan maintained by the Employer, the Annual
Additions to the participant's accounts shall be reduced in the order of
priority for Defined Contribution Aggregation so that the sum of the Defined
-29-
E-208
<PAGE> 36
Benefit Fraction and the Defined Contribution Fraction does not exceed 1.0 for
any year.
(i) DEFINED BENEFIT FRACTION. The numerator of the
Defined Benefit Fraction is the sum of the projected annual benefit of
the participant under all defined benefit plans maintained by the
Employer (or Affiliated Employer), whether or not terminated,
determined as of the close of the Limitation Year. The denominator is
the lesser of the following, adjusted under Code Section 415.
(A) 1.25. 1.25 multiplied by the defined
benefit dollar limitation or, if greater for a participant who
entered the Plan before January 1, 1983, the participant's
accrued benefit at the end of the last Limitation Year ending
before December 31, 1983; or
(B) 1.4. 1.4 multiplied by the highest average
compensation, including any adjustments, under Code Section
415(b).
(ii) DEFINED CONTRIBUTION FRACTION. The numerator of the
Defined Contribution Fraction is the sum of annual additions to the
participant's account under all defined contribution plans maintained
by the Employer (or Affiliated Employer), whether or not terminated,
as of the end of the Plan Year. The denominator is the lesser of the
following, adjusted under Code Section 415.
(A) 1.25. 1.25 multiplied by $30,000.00 (as
adjusted by the Secretary of the Treasury); or
(B) 35%. 35% of the participant's Compensation
determined for each Limitation Year.
(e) TOP HEAVY ADJUSTMENT. If the Plan is Top Heavy and the
Employer has not elected to provide the Additional Minimum Contribution or if
the Plan is Super Top Heavy:
(i) MULTIPLIER REDUCTION. The multiplier of the defined
benefit dollar limitation, the defined benefit denominator adjustment
and the defined contribution dollar amount is reduced to 1.0; and
-30-
E-209
<PAGE> 37
(ii) TRANSITION FRACTION. The pre-TEFRA transition
fraction numerator amount is reduced to $41,500.00.
(f) AFFILIATED EMPLOYER. For purposes of applying the limitations
contained in this section, plans maintained by the Employer include all plans
maintained by an Affiliated Employer as modified by Code Section 415(h).
4.4 EXCESS ADDITION. If, despite the restrictions contained in
this Article and Code Section 415, an excess Annual Addition occurs, to the
extent the excess cannot be cured by the distribution of Elective Deferrals or
other Participant Contributions, the excess:
(a) REDUCED VOLUNTARY CONTRIBUTION. First reduces the
participant's Voluntary Contribution to the maximum annual addition permitted.
(b) REDUCED CONTRIBUTION. If the Active Participant has made no
Voluntary Contribution or an excess remains despite the reduction of a
Voluntary Contribution and the excess is due to a reasonable error in
estimating compensation, allocation of forfeitures or other facts and
circumstances as determined by the Commissioner justifying the excess, shall be
retained by the Trustee in an Unallocated Suspense Account. The excess reduces
the Employer's contribution for the next succeeding Plan Year and is allocated
to the applicable Participant's Account on the next Allocation Date before any
additional contributions may be made to the Plan. If the participant's
participation is terminated before the next Allocation Date, the excess is
allocated and reallocated among the Active Participants on that date.
(c) UNALLOCATED SUSPENSE ACCOUNT. Held in an Unallocated Suspense
Account shall not share in the earnings, losses and adjustments in value of the
Fund.
To the extent the excess can be cured by the distribution of Salary
Deferred Contributions or other Participant Contributions, such Contributions
and the gains on these amounts shall be distributed, to the extent that the
distribution reduces the excess amounts in the participant's Account. Amounts
distributed in that manner are disregarded for purposes of Code Section 402(g),
-31-
E-210
<PAGE> 38
the Actual Deferral Percentage test and the Actual Contribution Percentage
test.
4.5 ERRONEOUS CONTRIBUTION. An erroneous contribution resulting
from a mistake of fact shall, if requested by the Employer, be returned to the
Employer within one (1) year of payment. Contributions made prior to an
initial determination of nonqualified status shall, if requested by the
Employer, be returned to the Employer within one year of the denial of
qualified status, if the request for initial determination of qualified status
was made in a timely manner. In all other circumstances, the corpus or income
of the Trust may not be diverted to or used for other than the exclusive
benefit of the participants or their beneficiaries.
4.6 INVESTMENT OF CONTRIBUTIONS IN STOCK. To the extent
Participants have elected to invest contributions in Stock, the Trustee shall
purchase the number of whole shares of Stock which may be purchased with each
contribution. Purchases shall be made as soon as practicable, as determined in
the Trustee's discretion. If any balance of a contribution which a Participant
has elected to be invested in Stock or cash dividends remain after the Trustee
has purchased the number of shares of Stock which may be purchased, the
additional amounts shall be maintained in the Trust, aggregated with the next
contribution to be invested in Stock or cash dividends on Stock paid to the
Plan and applied to purchase the number of shares of Stock which may then be
purchased.
-32-
E-211
<PAGE> 39
ARTICLE V
PARTICIPANT CONTRIBUTIONS
5.1 PARTICIPANT CONTRIBUTIONS. For each Plan Year, an Active
Participant may make:
(a) SALARY DEFERRED. Salary Deferred Contributions of
Compensation which the Active Participant may elect to defer or receive in cash
which, except for the Multiple Use Limit, effective on the first day of the
1987 Plan Year, January 1, 1987:
(i) NOT AVAILABLE. Are not made out of Compensation
which is currently available to the Active Participant at the date of
the election, the date of adoption of the Plan and the Effective Date;
(ii) TIMING. Are reflected in an election made within
thirty (30) days after the close of the Plan Year;
(iii) IMPERMISSIBLE USE. Are not taken into account in
determining whether any other contributions under any plan satisfy
Code Section 401(a) other than Code Section 410(b)(2)(A)(ii),
including but not limited to Code Section 416; and
(iv) LIMITS. Do not exceed the Elective Contribution
Limit, the Elective Deferral Limit, the Multiple Use Limit, or 15% of
Compensation.
(b) TRANSFER OR ROLLOVER. Contributions which consist of amounts
transferred:
(i) TRANSFER. Directly from the Trustee, Custodian, or
Insurer of a plan or related trust qualified under Code Section 401(a)
if this Plan is not obligated to provide Code Section 411(d)(6)
protected benefits not already provided by this Plan as a result of
the transfer.
(ii) ROLLOVER. In a rollover qualified under Code
Sections 402(a) or 408(d). An Active Participant may not contribute
amounts from an inherited Individual Retirement Account or Annuity.
A participant may not make a deductible employee contribution for any taxable
year beginning after December 31, 1986.
-33-
E-212
<PAGE> 40
5.2 METHOD. Participant Contributions may be made by payroll
deduction or by any methods and at any intervals under rules established by the
Employer. All Participant Contributions must be made to the Trust through the
Employer. The Trustee is not required to receive contributions directly from
Participants.
(a) ELECTIONS. Elections to make, discontinue or resume
Participant Contributions must be in writing and signed by the Participant.
(i) TIMING. Effective July 1, 1993, an Election is
effective not later than the first day of the first payroll period
beginning after the Election is filed with the Committee, the Trustee,
or the Plan Administrator, unless a later date is specified by the
Participant or additional time is required for administrative
processing.
(ii) DISCONTINUANCE. A discontinuance remains in effect
until at least the first day of the first payroll period beginning
after the end of the calendar quarter in which an Election to again
make contributions is made.
(iii) AUTOMATIC. A Participant's Election is
automatically suspended for twelve (12) months after receipt of a
hardship distribution from a plan of the Employer (or Affiliated
Employer) if the hardship distribution is based on a deemed financial
need or if the hardship distribution is made from this Plan, and until
the first day of the calendar quarter coincident with or next
following thirty (30) days from an Age 59 1/2 distribution.
(b) TIME LIMIT. Participant Contributions must be transmitted to
the Trustee on the earliest date the contributions can reasonably be segregated
from the Employer's general assets, but not later than ninety (90) days from
the date the amounts are received by the Employer or would otherwise have been
payable to the Active Participant.
(c) PRIOR RULES. Prior to July 1, 1993, each Election was
effective on:
(i) For Plan Years ending before January 1, 1989, a
January 1 following the date on which the Employee became a
Participant;
(ii) For the Short Plan Year ending November 30, 1989, on
a January 1 or July 1
-34-
E-213
<PAGE> 41
following the date on which the Employee became a Participant;
(iii) For Plan Years ending after November 30, 1989 and on
or before December 31, 1991, on a December 1 or June 1 following the
date on which the Employee became a Participant;
(iv) For Plan Years ending after December 31, 1991 and
before January 1, 1993, on a January 1, April 1, July 1 or October 1
on or next following the date on which the Employee became a
Participant; and
(v) For the period from January 1, 1993 through June 30,
1993, on the first day of the first payroll period beginning at least
thirty (30) days after it was made.
In addition, a Participant could suspend a contribution
Election as of the first day of any month, by filing the appropriate
form with the Committee at least fifteen (15) days prior. That
Participant could resume Contributions as a new Participant.
(d) SPECIAL RULE. Any Participant Contribution Election otherwise
permitted by this Article may, at the Participant's election, also be made
pursuant to an irrevocable election made by the Participant six months or more
in advance of the effective date of the election.
5.3 MATCHING AND VOLUNTARY CONTRIBUTION LIMITS. Matching and
Voluntary Contributions (excluding Qualifying Contributions used to meet the
Code Section 401(k) tests and including, to the extent designated by the
Employer, other Qualifying or Salary Deferred Contributions) to this Plan, and
any plan aggregated with this Plan for purposes of Code Sections 401(a)(4) and
410(b), must:
(a) MATCHING AND VOLUNTARY CONTRIBUTION LIMIT. Effective on the
first day of the 1987 Plan Year, January 1, 1987, satisfy the Actual
Contribution Percentage test. The Actual Contribution Percentage for all
eligible Highly Compensated Employees may not be greater than either:
(i) ONE AND TWENTY-FIVE HUNDREDTHS. One and twenty-five
hundredths times (1.25x) the Actual Contribution Percentage for all
eligible Active Participants other than
-35-
E-214
<PAGE> 42
Highly Compensated Employees; or
(ii) TWO PERCENT AND TWO TIMES. The lesser of two
percent (2%) above or two times (2x) the Actual Contribution
Percentage for all eligible Active Participants other than Highly
Compensated Employees; and
(b) MULTIPLE USE. Satisfy the additional Multiple Use limitations
of Code Section 401(m).
Effective January 1, 1993, the collectively bargained portions of
this Plan must be separately tested.
5.4 ACTUAL CONTRIBUTION PERCENTAGE. Effective on the first day of
the 1987 Plan Year, January 1, 1987, the Actual Contribution Percentage (ACP)
for Active Participants other than Highly Compensated Employees or Highly
Compensated Employees is the average of the percentages of Compensation
represented by the sum of the non-forfeited matching, Voluntary and, to the
extent designated by the Employer, other Qualifying or Salary Deferred
Contributions deferred under the Plan for each Active Participant eligible for
any part of the Plan Year (or ineligible because of suspension) included within
the respective classification.
(a) AGGREGATION. The average is calculated by treating all of the
matching and Voluntary Contributions to any plan made on behalf of a Highly
Compensated Active Participant as made to one plan.
(b) TAKEN INTO ACCOUNT - VOLUNTARY. A Voluntary Contribution is
taken into account for the Plan Year in which the amount is contributed to the
Plan or paid to a Plan agent for transmittal to the Plan within a reasonable
time.
(c) TAKEN INTO ACCOUNT - MATCHING. A matching contribution is
taken into account for a Plan Year only if the contribution is allocated as of
a date within the Plan Year and is actually paid within twelve months after the
Plan Year.
(d) TAKEN INTO ACCOUNT - SALARY DEFERRED. Salary Deferred
contributions are taken into account only if the contributions:
-36-
E-215
<PAGE> 43
(i) NON-DISCRIMINATORY. Satisfy the requirements of
Code Section 401(k)(3), determined with and without any Salary
Deferred contributions treated as matching contributions;
(ii) NOT USED. Are not taken into account in determining
whether any other contributions or benefits are non-discriminatory
under Code Sections 401(a)(4) or 401(k)(3);
(iii) ALLOCATED AND PAID. Are actually paid within twelve
months after the Plan Year and the allocation of the contribution is
not contingent on continued participation or performance of services
after allocation; and
(iv) RECEIPT. Relate to compensation that would have
been received in the Plan Year or within two and one-half months after
the Plan Year but for the deferral.
(e) TAKEN INTO ACCOUNT - QUALIFYING. Qualifying Contributions are
taken into account only if the contributions:
(i) NONFORFEITABLE. Are nonforfeitable when made; and
(ii) DISTRIBUTION RESTRICTIONS. Are subject to the
distribution restrictions of Section 7.1.
(f) AGGREGATION OF FAMILY MEMBERS. The combined Actual
Contribution Percentage for a family group treated as one Highly Compensated
Employee under the Family Aggregation rule is determined by combining the
Voluntary and matching Contributions, Compensation, and amounts treated as
matching contributions of all the eligible family members.
If it is necessary, for purposes of correcting Excess Aggregate
Contributions of family members, to calculate an Actual Contribution Percentage
for the group of eligible family members who are not Highly Compensated without
regard to family aggregation, that Actual Contribution Percentage is determined
by combining the Voluntary and matching Contributions, Compensation, and
amounts treated as matching contributions of these employees. The Voluntary
and matching Contributions, Compensation, and amounts treated as matching
contributions of all family members are disregarded for purposes of determining
the Actual Contribution Percentage for the group of
-37-
E-216
<PAGE> 44
Highly Compensated Employees and the group of Non-Highly Compensated Employees,
except to the extent required by this section.
(g) DISAGGREGATION. Effective January 1, 1993, the Actual
Contribution Percentages are determined separately for each disaggregated
collectively bargained portion of the Plan.
5.5 EXCESS. Effective on the first day of the 1987 Plan Year,
January 1, 1987, if a Highly Compensated Employee's matching and Voluntary
Contributions (and, to the extent designated by the Employer, other Qualifying
or Salary Deferred Contributions) exceed the Matching and Voluntary
Contribution Limit for any Plan Year, after the close of the Plan Year and
within twelve months after the close of the Plan Year or date of plan
termination, the Excess Aggregate Contributions for the Plan Year and Allocable
Income must be designated by the Employer and distributed without notice or
consent; or, if forfeitable, forfeited.
(a) ALLOCABLE INCOME. The income allocable to excess aggregate
contributions is equal to the sum of the allocable gain or loss for the Plan
Year and the allocable gain or loss from the end of the Plan Year to the date
of distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) PLAN YEAR. For the Plan Year, the income allocable
to Voluntary, matching and designated Qualifying Contributions is
multiplied by a fraction the numerator of which is the Excess
Aggregate Contributions made on behalf of the Participant for the Plan
Year and the denominator of which is the total Account Balance of the
Participant attributable to Voluntary, matching and designated
Qualifying Contributions as of the beginning of the Plan Year plus the
Voluntary, matching and designated Qualifying Contributions
attributable to the Participant for the Plan Year.
(ii) POST-PLAN YEAR. For the period between the end of
the Plan Year and the date of a correction, the same method may be
used or the allocable income or loss for the period may be deemed to
be equal to 10 percent of the income or loss allocable to Excess
Aggre-
-38-
E-217
<PAGE> 45
gate Contributions for the Plan Year (as calculated above) multiplied
by the number of calendar months since the end of the Plan Year. For
that purpose, a distribution occurring after the fifteenth day of a
month will be treated as made on the first day of the next month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of excess aggregate contributions (and income) is
treated as a pro rata distribution of excess aggregate contributions
and income.
(b) TIME LIMITS. Amounts not distributed or forfeited within two
and one-half (2 1/2) months after the close of the preceding Plan Year are
subject to a ten percent (10%) excise tax and within twelve months will cause
the disqualification of the Plan.
(c) METHOD. Distribution (or forfeiture, to the extent available)
occurs by first distributing unmatched Voluntary Contributions (and Allocable
Income) and then distributing (or forfeiting, if available) Voluntary and
matching Contributions (and Allocable Income) on a pro rata basis.
(d) NOTICES TO PARTICIPANTS. The Plan Committee must advise
affected participants at the time of distribution of the year in which the
distribution is includible in income and that the receipt of amounts includible
in income in a prior year will require the participant to file an amended
income tax return if a return has already been filed for the year.
(e) ORDERING. A Highly Compensated Active Participant's matching
and Voluntary Contributions which exceed the Matching and Voluntary
Contribution Limit are determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the Actual Contribution Percentages as
necessary, beginning with the highest percentage, until the Limit is satisfied
or the Participant's Percentage equals the next lowest Percentage and by
repeating the process until the Limit is satisfied. Each distribution or
forfeiture of the Excess Aggregate Contributions must be made to Highly
Compensated Employees on the basis of the respective portions of the excess
aggregate contributions attributable to each as determined by this process. If
a Highly Compensated Employee's Actual Contribution Percentage is determined by
combining the Contributions and Compensation of all the eligible family
members, the excess aggregate
-39-
E-218
<PAGE> 46
contributions for the family unit are allocated among the family members in
proportion to the Voluntary and matching Contributions of each family member
that have been combined.
(f) FORFEITURE LIMITATION. Forfeitures of Excess Aggregate
Contributions may not be allocated to Participants whose contributions are
reduced under this section.
(g) COORDINATION. Excess Aggregate Contributions shall be
determined after:
(i) EXCESS DEFERRALS. The Excess Deferrals; and
(ii) EXCESS CONTRIBUTIONS. The Excess Contributions.
5.6 SALARY DEFERRED CONTRIBUTION LIMIT. Salary Deferred
Contributions (excluding Salary Deferred and Qualifying Contributions used to
meet the Code Section 401(m) tests and including, to the extent designated by
the Employer, other Qualifying Contributions) to this Plan, and any plan
aggregated with this Plan for purposes of Code Sections 401(a)(4) and 410(b),
must satisfy:
(a) ELECTIVE CONTRIBUTION LIMIT. The Actual Deferral Percentage
test. The Actual Deferral Percentage for all eligible Highly Compensated
Employees may not be greater than either:
(i) ONE AND TWENTY-FIVE HUNDREDTHS. One and twenty-five
hundredths times (1.25x) the actual deferral percentage for all
eligible Active Participants other than Highly Compensated Employees;
or
(ii) TWO PERCENT AND TWO TIMES. The lesser of two
percent (2%) above or two times (2x) the actual deferral percentage
for all eligible Active Participants other than Highly Compensated
Employees; and
(b) MULTIPLE USE. The additional Multiple Use limitations of Code
Section 401(m).
Effective January 1, 1993, the collectively bargained portions of the
Plan must be separately tested. In applying the Salary Deferred Contribution
Limit, the restructuring rules of the regulations under Code Section 401(a)(4)
may be used for Plan Years beginning before January 1, 1992.
5.7 ACTUAL DEFERRAL PERCENTAGE. Effective on the first day of the
1987 Plan Year, January
-40-
E-219
<PAGE> 47
1, 1987, the Actual Deferral Percentage for Active Participants other than
Highly Compensated Employees or Highly Compensated Employees is the average of
the percentages of Active Participant's Compensation deferred by each Active
Participant eligible for any part of the Plan Year (or ineligible because of a
suspension) included within the respective classification as an Salary Deferred
Contribution (and, to the extent designated by the Employer, Qualifying
Contributions).
(a) AGGREGATION. The average is calculated by treating all cash
or deferred arrangements in which an Active Participant is eligible to
participate as one arrangement. If a Highly Compensated Employee participants
in two or more cash or deferred arrangements with different plan years, the
average is calculated by treating all arrangements ending with or within the
same calendar year as one arrangement.
(b) DISTRIBUTED AMOUNTS. Distributed Excess Deferrals (excluding
amounts deferred by nonhighly compensated employees to plans of the Employer)
and Qualifying Contributions designated by the Employer are included in the
calculation.
(c) TAKEN INTO ACCOUNT. A Salary Deferred or Qualifying
Contribution is taken into account for a Plan Year only if:
(i) ALLOCATED AND PAID. The contribution is actually
paid within twelve months after the Plan Year and the allocation of
the contribution is not contingent on continued participation or
performance of services after allocation;
(ii) RECEIPT. The contribution relates to compensation
that would have been received in the Plan Year or within two and
one-half months after the Plan Year but for the deferral; and
(iii) QUALIFYING. In the case of a Qualifying
Contribution, the Contribution is nonforfeitable when made and subject
to the distribution restrictions of Section 7.1.
(d) AGGREGATION OF FAMILY MEMBERS. The combined Actual Deferral
Percentage for family group treated as one Highly Compensated Employee under
the family aggregation rule is determined by combining the Salary Deferred
Contributions, Compensation, and amounts treated as
-41-
E-220
<PAGE> 48
Salary Deferred Contributions of all the eligible family members.
If it is necessary, for purposes of correcting Excess Contributions of
family members, to calculate an Actual Deferral Percentage for the eligible
family members who are not Highly Compensated Employees without regard to
family aggregation, that Actual Deferral Percentage is determined by combining
the Salary Deferred Contributions, Compensation, and amounts treated as Salary
Deferred Contributions of these employees. The Salary Deferred Contributions,
Compensation, and amounts treated as Salary Deferred Contributions of all
family members are disregarded for purpose of determining the Actual Deferral
Percentage for the group of Non Highly Compensated Employees, except to the
extent required by this section.
(e) DISAGGREGATION. Effective January 1, 1993, the Actual
Deferral Percentages are determined separately for each disaggregated
collectively bargained portion of the Plan.
5.8 EXCESS CONTRIBUTIONS. Effective on the first day of the 1987
Plan Year, January 1, 1987, if a Highly Compensated Active Participant's Salary
Deferred Contributions (and, to the extent designated by the Employer,
Qualifying Contributions) exceed the Salary Deferred Contribution Limit for any
Plan Year:
(a) DISTRIBUTED. After the close of the Plan Year and within
twelve months after the close of the Plan Year or date of plan termination, the
excess Salary Deferred Contributions for the Plan Year and Allocable Income
must be designated by the Employer and distributed without notice or consent;
or
(b) RECHARACTERIZED. Within two and one-half months after the
close of the preceding Plan Year, the excess Salary Deferred and Qualifying
Contributions, if elected by the Participant, must be treated as includible in
the Participant's gross income as if the earliest Salary Deferred Contribution
made on behalf of the Active Participant for the Plan Year and, for income
taxation purposes affecting the Participant, must be treated as a Voluntary
Contribution. For all other purposes, including the applicable distribution
limitations, recharacterized Excess Contributions
-42-
E-221
<PAGE> 49
continue to be treated as Salary Deferred Contributions. Recharacterization
may not occur if recharacterization results in a violation of the Multiple Use
limits or Code Section 401(m).
(c) ALLOCABLE INCOME. The income allocable to Excess
Contributions is equal to the sum of the allocable gain or loss for the Plan
Year and the allocable gain or loss from the end of the Plan Year to the date
of distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) PLAN YEAR. For the Plan Year, the income allocable
to Salary Deferred and designated Qualifying Contributions is
multiplied by a fraction the numerator of which is the Excess
Contributions made on behalf of the Participant for the Plan Year and
the denominator of which is the total Account Balance of the
Participant attributable to Salary Deferred and designated Qualifying
Contributions as of the beginning of the Plan Year plus the Salary
Deferred and designated Qualifying Contributions attributable to the
Participant for the Plan Year.
(ii) POST-PLAN YEAR. For the period between the end of
the Plan Year and the date of a correction, the same method may be
used or the allocable income or loss for the period may be deemed to
be equal to 10 percent of the income or loss allocable to Excess
Contributions for the Plan Year (as calculated above) multiplied by
the number of calendar months since the end of the Plan Year. For
that purpose, a distribution occurring after the fifteenth day of a
month will be treated as made on the first day of the next month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of Excess Contributions (and income) is treated as a
pro rata distribution of Excess Contributions and income.
(d) TIME LIMITS. Amounts not distributed or recharacterized
within two and one-half (2 1/2) months after the close of the preceding Plan
Year are subject to a ten percent (10%) excise tax and within twelve months may
cause the disqualification of the Plan.
(e) NOTICES TO ACTIVE PARTICIPANTS. The Plan Committee must
advise affected Participants:
-43-
E-222
<PAGE> 50
(i) DISTRIBUTION. At the time of distribution of the
year in which the distribution is includible in income and that the
receipt of amounts includible in income in a prior year will require
the Participant to file an amended income tax return if a return has
already been filed for the year; and
(ii) RECHARACTERIZATION. And the Employer at the time of
recharacterization that excess amounts are being recharacterized and
of the tax consequences of the recharacterization.
(f) ORDERING. A Highly Compensated Employee's Salary Deferred
Contributions which exceed the Salary Deferred Contribution Limit are
determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the Actual Deferral Percentages as necessary, beginning
with the highest percentage, until the Limit is satisfied or the Participant's
Percentage equals the next lowest Percentage and by repeating the process until
the Limit is satisfied. Each distribution or recharacterization of the Excess
Contributions is made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable to each as
determined by this process. If a Highly Compensated Employee's Actual Deferral
Percentage is determined by combining the Contributions and Compensation of all
the eligible family members, the Excess Contributions for the family unit are
allocated among the family members in proportion to the Salary Deferred
Contributions of each family member that have been combined.
(g) CO-ORDINATION. Excess Contributions are reduced by any Excess
Deferrals previously distributed with respect to the affected participant for
the taxable year ending with or within the Plan Year.
5.9 ELECTIVE DEFERRAL LIMIT. Effective on the first day of the
1987 Plan Year, January 1, 1987, Elective Deferrals under this Plan and all
other plans, contracts, or arrangements of the Employer (and any Affiliated
Employer) may not exceed the limitation in effect under Code Section 402(g)(1)
for the taxable year beginning in the calendar year. Elective Deferrals which
exceed the
-44-
E-223
<PAGE> 51
limit are included in the individual's gross income.
(a) GENERAL RULE. Except for Elective Deferrals of amounts
attributable to service performed in 1986 described in Section 1105(c)(5) of
the Tax Reform Act of 1986, the limitation is $7,000.00, as adjusted by the
Secretary of the Treasury.
(b) INCREASE. The limitation is increased (but not to an amount
in excess of $9,500) by the amount of any employer contributions to purchase a
403(b) annuity contract under a salary reduction agreement.
(c) DECREASE. The limitation is decreased in the taxable year
following the taxable year the participant receives a hardship distribution
which is based on a deemed financial need by the amount of the Elective
Deferral in the taxable year of the hardship distribution.
(d) ELECTIVE DEFERRALS. Elective Deferrals are, for any taxable
year, the sum of employer 401(k) contributions within Code Section 402(a)(8),
other employer SEP contributions within Code Section 402(h)(1)(B), employer
contributions to a 403(b) annuity contract under a salary reduction agreement
and deductible employee contributions to a plan described in Code Section
501(c)(18).
5.10 EXCESS DEFERRALS. Effective on the first day of the 1987 Plan
Year, January 1, 1987, the Excess Deferrals included in the gross income of a
participant may be distributed without notice or consent, with the Allocable
Income, not later than the April 15 following the close of the taxable year.
(a) ALLOCABLE INCOME. The income allocable to Excess Deferrals is
equal to the sum of the allocable gain or loss for the taxable year and the
allocable gain or loss from the end of the taxable year to the date of
distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) TAXABLE YEAR. For the taxable year, the income
allocable to Salary Deferred Contributions is multiplied by a fraction
the numerator of which is the Excess Deferrals made on behalf of the
Participant for the taxable year and the denominator of which is the
total
-45-
E-224
<PAGE> 52
Account Balance of the Participant attributable to Salary Deferred
Contributions as of the beginning of the taxable year plus the Salary
Deferred Contributions attributable to the Participant for the taxable
year.
(ii) POST-TAXABLE YEAR. For the period between the end
of the taxable year and the date of a correction, the same method may
be used or the allocable income or loss for the period may be deemed
to be equal to 10 percent of the income or loss allocable to Excess
Deferrals for the taxable year (as calculated above) multiplied by the
number of calendar months since the end of the taxable year. For that
purpose, a distribution occurring after the fifteenth day of a month
will be treated as made on the first day of the next month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of Excess Deferrals (and income) is treated as a pro
rata distribution of Excess Deferrals and income.
(b) LIMITATION. Distribution may occur only to the extent the
individual has allocated the Excess Deferral to this Plan by certifying it to
the Plan Committee in writing not later than the March 1 following the close of
the taxable year and to the extent the Plan designates the distribution as a
distribution of Excess Deferrals.
(c) COORDINATION. Excess Deferrals that may be distributed are
reduced by any Excess Contributions previously distributed or recharacterized
with respect to the affected participant for the Plan Year beginning with or
within the taxable year. In the event of a reduction, however, the amount
treated as a distribution of Excess Contributions is reduced by the amount of
the reduction. Certification is deemed to have occurred to the extent the
individual has Excess Deferrals for the taxable year calculated by taking into
account only this Plan and other plans of the Employer (of Affiliated
Employer).
(d) PRO RATA. If only a portion of any Excess Deferral and
allocable gains and losses is distributed, the Excess Deferral and the gains
and losses are treated as distributed ratably.
5.11 MULTIPLE USE. Multiple Use occurs if: one or more Highly
Compensated Employees
-46-
E-225
<PAGE> 53
of the Employer (or Affiliated Employer) are eligible in a Plan Year with
respect to Salary Deferred and Voluntary or matching Contributions to a plan or
plans maintained by the Employer (or Affiliated Employer); the sum of the
Actual Deferral Percentage and the Actual Contribution Percentage (determined
after any corrective distribution of Excess Deferrals, Excess Contributions, or
Excess Aggregate Contributions and after any recharacterization of Excess
Contributions otherwise required) of the entire group of eligible Highly
Compensated Employees exceeds the Aggregate Limit; the Actual Deferral
Percentage of the entire group of eligible Highly Compensated Employees fails
the 1.25x test; and the Actual Contribution Percentage of the entire group of
eligible Highly Compensated Employees also fails the 1.25x test. The Aggregate
Limit is the greater of the amount determined under (a) and (b):
(a) AGGREGATE LIMIT. The sum of:
(i) 125 PERCENT. 125 percent (125%) of the greater of:
(A) ADP. The ADP of the group of Non-Highly
Compensated Employees eligible to make Salary Deferred
Contributions for the Plan Year; or
(B) ACP. The ACP of the group of Non-Highly
Compensated Employees eligible with respect to matching or
Voluntary Contributions for the Plan Year beginning with or
within the Plan Year of the arrangement subject to Code
Section 401(k); plus
(ii) TWO PERCENT AND TWO TIMES. The lesser of:
(A) TWO PERCENT PLUS. Two percent (2%) plus the
lesser of (A) or (B), above; or
(B) TWO TIMES. Two times (2x) the lesser of (A)
or (B), above.
(b) ALTERNATIVE AGGREGATE LIMIT. The sum of:
(i) 125 PERCENT. 125 percent (125%) of the lesser of:
(A) ADP. The ADP of the group of Non-Highly
Compensated Employees eligible to make Salary Deferred
Contributions for the Plan Year; or
-47-
E-226
<PAGE> 54
(B) ACP. The ACP of the group of Non-Highly
Compensated Employees eligible with respect to matching or
Voluntary Contributions for the Plan Year beginning with or
within the Plan Year of the arrangement subject to section
401(k); plus
(ii) TWO PERCENT AND TWO TIMES. The lesser of:
(A) TWO PERCENT PLUS. Two percent (2%) plus the
greater of (A) or (B), above; or
(B) TWO TIMES. Two times (2x) the greater of
(A) or (B), above.
(c) CORRECTION OF MULTIPLE USE. If a Multiple Use occurs, the
Multiple Use must be corrected by reducing the Actual Deferral Percentage or
Actual Contribution Percentage of Highly Compensated Employees. The required
reduction is treated as an Excess Contribution or an Excess Aggregate
Contribution.
(i) TREATMENT. If an Excess Contribution is
recharacterized, the recharacterized amount is treated as an Excess
Aggregate Contribution.
(ii) REQUIRED REDUCTION. The amount of the reduction is
first applied to the Excess Aggregate Contributions and is allocated
to those Highly Compensated Employees who had allocated both Salary
Deferred and Voluntary or matching Contributions for the year.
-48-
E-227
<PAGE> 55
ARTICLE VI
ACCOUNTS
6.1 ACCOUNTS. The Committee shall establish for each participant
a separate Employer Account for each type of Employer Contribution and a
separate Participant Account for each type of Participant Contribution.
(a) IDENTIFICATION. The specific accounts created are, as
necessary:
(i) EMPLOYER REGULAR PROFIT SHARING ACCOUNT. The
Accounts to which any Employer Regular Profit Sharing Contributions
are credited;
(ii) EMPLOYER PAYSOP/TRASOP CONTRIBUTIONS ACCOUNT. The
Accounts to which amounts allocated under the PAYSOP or TRASOP rules
were credited;
(iii) SALARY DEFERRED CONTRIBUTIONS ACCOUNT. The Accounts
to which Active Participant Salary Deferred Contributions are
credited;
(iv) EMPLOYER PRIOR CONTRIBUTIONS ACCOUNT. The Accounts
to which Employer contributions made in accordance with the Keene
Corporation Tax Credit Employee Stock Ownership Plans and the Bairnco
Employee Stock Ownership Plan and transferred to this Plan at its
original effective date were credited;
(v) PARTICIPANT CONTRIBUTIONS ACCOUNT. The Accounts to
which contributions of Participants made in accordance with the Keene
Corporation Tax Credit Employee Stock Ownership Plans and the Bairnco
Employee Stock Ownership Plan and transferred to this Plan at its
original effective date were credited;
(vi) COOPER BEARING TRANSFER ACCOUNT. The Accounts to
which amounts transferred in the transfer of plan assets and
liabilities from the Cooper Bearing Company Employees' 401(k) Deferred
Compensation Plan and Trust were credited;
(vii) TRANSFER OR ROLLOVER ACCOUNT. The Accounts to which
amounts transferred or rolled-over to this Plan (other than Cooper
Bearing Transfer Account amounts) are credited.
-49-
E-228
<PAGE> 56
Each Account consists of a number of sub-Accounts. One sub-Account
includes the portion of the Account which is invested in Stock of Kaydon
Corporation. The other sub-Accounts include the portions of the Accounts which
are otherwise invested pursuant to each option provided under the Plan or
pursuant to the Trustee's control.
(b) CREDITING. On each Allocation Date:
(i) EMPLOYER ACCOUNTS. Each Employer Account is
credited with the designated Employer Contributions, forfeitures and a
share of the expenses, earnings, losses and adjustments in value of
the applicable portion or portions of the Trust; and
(ii) PARTICIPANT ACCOUNTS. Each Participant Account is
credited with the Active Participant's Contributions to that Account
and a share of the expenses, earnings, losses and adjustments in value
of the applicable portion or portions of the Trust.
6.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS. Employer Regular Profit
Sharing Contributions for the Plan Year are allocated to the Employer Regular
Profit Sharing Accounts of Active Participants who are Employees on the last
day of that Plan Year in the proportion which each Active Participant's
Compensation for the Plan Year bears to the aggregate of Active Participants'
Compensation for the Plan Year, subject to the Testing Adjustment.
(a) SALARY DEFERRED. Salary Deferred Contributions are allocated
to the account of the electing Active Participant.
(b) QUALIFYING. Employer Qualifying Contributions are allocated
as directed by the Employer. That direction may include allocation in the same
manner as Employer Regular Profit Sharing Contributions, in any other
non-discriminatory manner, or a combination, and may be limited to Non-Highly
Compensated Employees or one or more classifications of Non-Highly Compensated
Employees. The method of allocation must be specified by the Employer within
thirty (30) days of the end of the Plan Year to avoid discrimination under Code
Sections 401(k) and 401(m).
-50-
E-229
<PAGE> 57
(c) SPECIAL CONTRIBUTIONS. Forfeiture Restoration Contributions
are allocated to the account of the affected Active Participant. Minimum Top
Heavy Contributions are allocated to the account of the affected Non-Key
Employee Active Participants who are employed by the Employer (or Affiliated
Employer) on the last day of the Plan Year.
(d) STOCK CONTRIBUTIONS. Employer Contributions may be made in
Stock or in cash, or in any combination of Stock and cash (as determined by
each Employer) except that Elective Contributions may be made in Stock only to
the extent Participants have elected to have those contributions invested in
Stock. Stock contributed by an Employer is valued at the average of its
closing prices as reported on any national securities exchange or as quoted on
any system sponsored by a national securities association for the twenty (20)
consecutive trading days immediately prior to the date on which the Stock is
contributed to the Plan.
(e) TESTING ADJUSTMENT. All allocations for Highly Compensated
Employees are subject to limitation based on, and may be reduced as necessary
to comply with, the participation, coverage and non-discrimination tests
applicable to the Plan under Code Sections 401(a)(26), 410(b) and 401(a)(4).
All allocations to Highly Compensated Employees are provisional until the
earlier of the date the Employer certifies the allocations as non-provisional
and the due date of the Employer's tax return for the year including the
Allocation Date.
The method of allocation cannot be changed more frequently than once
every six months, other than to comport with changes in the Code, ERISA, or the
applicable rules or regulations.
6.3 ALLOCATION OF FORFEITURES. Forfeitures from the Non-Vested
Accounts of participants who have incurred five (5) consecutive Breaks in
Service, received a distribution of their entire Vested Account Balance, or
died after terminating employment during the Plan Year are first allocated to
reduce any Forfeiture Restoration Contribution. Any remaining forfeitures are
allocated in the same manner as Employer Regular Profit Sharing Contributions.
-51-
E-230
<PAGE> 58
6.4 ALLOCATION OF EXPENSES, EARNINGS, LOSSES AND ADJUSTMENTS IN
VALUE. The assets of the Trust will be valued at fair market value as of each
Allocation Date. Participants share in the earnings, losses and adjustments
in value of the fund and in the expenses not paid by an Employer in the
following manner:
(a) COMMON FUND. If invested in a qualified common or pooled
fund, each participant has a proportionate undivided interest in the assets of
the fund and, except as otherwise provided, has allocated to the account the
expenses, earnings, losses and adjustments in value of the fund under the rules
of the fund.
(b) MULTIPLE PARTICIPANT INVESTMENTS. If an amount from an
account of a participant is invested in assets other than a Common Fund and the
investment is commingled in another investment with amounts from the accounts
of other participants, each participant has a proportionate interest in the
asset and, except as otherwise provided, has allocated to the participant's
account expenses, earnings, losses and adjustments in value of the asset in the
ratio that the stated value in the asset bears to the total stated value of all
participants in the assets. The stated value of a participant's account is the
value of the participant's interest as of the beginning of each Allocation
Period less any distribution, forfeiture, or other debit to the account plus
any Participant Contributions during the period.
(c) SINGLE ACTIVE PARTICIPANT INVESTMENTS. If an amount from the
account of a participant is invested in assets other than the Common Fund and
the account is not commingled in another investment with the amounts from
accounts of other participants, each participant is entitled to the entire
interest in the asset and, except as otherwise provided, the expenses,
earnings, losses and adjustments in value of the asset are allocated to the
participant's account.
(d) EXPENSES. In general, expenses paid by the Trustee and
charged against the Trust Fund are allocated to participants' Accounts as
earnings, losses and other adjustments in value. Fees for recordkeeping
services are allocated as a flat fee per participant and are spread across all
of each participants' Accounts. Any investment management fee applicable to
Stock is allocated only
-52-
E-231
<PAGE> 59
to Accounts invested in Stock in the ratio of the Stock holdings. Distribution
fees are allocated to the Account being distributed prior to distribution.
6.5 VESTING. The Account Balance in each Account other than the
Employer Regular Profit Sharing Account, if any, is fully vested and
nonforfeitable at all times. The Account Balance in each Employer Regular
Profit Sharing Account is fully vested and nonforfeitable upon the
Participant's attainment of Normal Retirement Age, Death, or Disability while
an employee of the Employer (or Affiliated Employer) and under one or a
combination of the following Vesting Schedules:
(a) NON-TOP HEAVY. The Non-Top Heavy Schedule applies if the Plan
never becomes Top Heavy or for Plan Years after it has ceased to be Top Heavy
(subject to the restrictions on Vesting Schedule amendments in Article X).
This schedule also applies to a participant who does not complete an Hour of
Service in a Plan Year in which the Plan is Top Heavy. The Non-Top Heavy
schedule is:
<TABLE>
<CAPTION>
Years of Service for Vesting Purposes Percentage
To Date Employment Terminated Vested
--------------------------------- ----------
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 10%
2 years but less than 3 years 20%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
</TABLE>
(b) TOP HEAVY. Unless the Non-Top Heavy Schedule is more
favorable, the Top Heavy Schedule applies for Plan Years in which the Plan is
Top Heavy and for amounts allocated in Plan Years before the Plan became Top
Heavy. The Top Heavy Schedule is:
-53-
E-232
<PAGE> 60
<TABLE>
<CAPTION>
Years of Service for Vesting Purposes Percentage
To Date Employment Terminated Vested
--------------------------------- ----------
<S> <C>
Less than 2 years None
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
(c) EFFECT OF RE-PARTICIPATION. Years of Service prior to a Break
in Service are Years of Service for purposes of determining the vested interest
in the Employer Accounts of an Employee who is reemployed by the Employer
following a Break in Service and for all purposes under the Plan on the first
day on which the Employee becomes an Active Participant unless the Employee
re-participates as a new Employee.
(d) CHANGE. A change in the applicable Vesting Schedule is a
vesting amendment under Article X.
6.6 VESTED ACCOUNTS. The vested portion of the Accounts of a
participant is a Vested Account and the nonvested portion is a Nonvested
Account. Vested and Nonvested Accounts are solely for accounting purposes, and
do not require segregation of the assets of the Trust. Distribution of
benefits may be made to a participant or a beneficiary only from the Vested
Accounts.
(a) RE-PARTICIPATION. Separate Vested Accounts are maintained for
participants whose prior service is disregarded following reemployment.
(b) PARTIAL DISTRIBUTION. In the event of a distribution of less
than the entire Vested Account Balance of a participant whose Employer Account
is not fully vested and nonforfeitable at the time of the distribution, a
Separate Account is established at the time of distribution. The vested
portion of the participant's Separate Account equals P(AB + (R x D)) - (R x D)
where P is the vested percentage, AB is the Account Balance from time to time,
D is the amount of the distribution and R
-54-
E-233
<PAGE> 61
is the ratio of the Account Balance from time to time to the Separate Account
Balance after distribution.
(c) FORFEITURE. All Nonvested Accounts are forfeited as of the
end of the Plan Year during which a participant incurs five (5) consecutive
Breaks in Service, receives a distribution of the entire Vested Account
Balance, or dies after terminating employment. A participant who is not vested
in any portion of an Employer Account is deemed to receive a distribution of
the participant's entire vested Account Balance in that Account on the date the
participant terminates employment with the Employer. For participants affected
by the retroactive effective date of this subsection who were not previously
treated as having received a deemed distribution, the deemed distribution shall
occur on the last day of the Plan Year in which this amendment and restatement
is actually adopted.
(d) EMPLOYER ACCOUNT RESTORED. If a terminated participant is
reemployed by the Employer before incurring five (5) consecutive Breaks in
Service, the forfeited Nonvested Account must be restored to the Employer
Account if:
(i) NO DISTRIBUTION. No distribution was received from
the Vested Account; or
(ii) REPAYMENT. The entire distribution received from
the Vested Account is repaid not later than the date the participant
incurs five (5) consecutive Breaks in Service. A participant who is
deemed to have received a distribution of the entire Vested Account
Balance is deemed to have repaid that amount on the first day on which
the Employee again completes an Hour of Service for the performance of
duties.
The participant must be reinstated in all optional forms of benefits
and subsidies relating to the benefits applicable to the restored amount prior
to the distribution.
6.7 INVESTMENT OF EMPLOYER AND PARTICIPANT CONTRIBUTIONS. Except
as otherwise provided, each participant's Employer Contributions Account,
Employer Prior Contributions Account, Participant Contributions Account, Salary
Deferred Contributions Account and Employer Regular Profit Sharing Account
shall be invested in accordance with the options provided for, and
-55-
E-234
<PAGE> 62
properly elected by, participants from time to time. A participant's Cooper
Bearing Transfer Account and Transfer or Rollover Account shall be similarly
invested but may not be invested in Stock.
(a) OPTIONS. The options available are:
(i) INVESTMENT FUNDS. The Investment Funds available
from time to time identified in an Appendix E to this Plan.
(ii) STOCK. Stock of Kaydon Corporation.
(b) PROCEDURE. A participant may designate the investment of the
participant's Accounts in the available options in increments of 1%, subject to
a minimum allocation to any option, prior to January 1, 1994, of 10%. A
participant may change the designated investment options as frequently as
allowed by the administrative processing abilities of the Contract
Administrator and the Trustee, but no less frequently than once within each
three month period. All investment directions must be communicated to the
Contract Administrator in writing on the Appropriate Form or in accordance with
an alternative administrative procedure approved in advance the by Committee
and the Contract Administrator. Any such alternative procedure which is not in
writing must provide the participant with an opportunity to obtain written
confirmation of the instructions.
(c) EFFECTIVE DATE. Except as provided, the Contract
Administrator or Trustee must effect any appropriate direction within a
reasonable period of time and as soon as practicable after the direction is
properly communicated (or, in the case of a sale of Stock, after the end of the
stated month), unless circumstances beyond the control of the Contract
Administrator or Trustee preclude reasonable completion of the direction.
Participant investment directions to change the investment of all or a portion
of an existing Account from Stock to another investment are effective on the
last day of the month in which the investment direction was filed if the
election was filed by the 20th of that month or, in other cases, on the last
day of the following month.
(d) NO DIRECTION. Amounts which a participant may direct but
which are not directed by the participant will be invested by the Trustee in
its discretion. Unless required, such amounts will
-56-
E-235
<PAGE> 63
not be invested in Stock.
(e) MULTIPLE. If a number of purchases or sales are to be made at
any one time, the net purchase or sales price of all shares of Stock purchased
or sold at that time will be averaged to determine the amount to be allocated
to each participant.
6.8 ERISA SECTION 404(C). Except with respect to the portion of
the Plan required to be invested in Kaydon Stock, the Plan is intended to
comply with ERISA Section 404(c). The Committee or other party designated by
Plan policy, rule, or contract shall provide each participant eligible to
direct investments the information identified in Appendix F or provided under
DOL Reg. 2550.404c-1 for that purpose.
(a) CONFIDENTIALITY. Information relating to the purchase,
holding and sale of stock and to the exercise of voting, tender and similar
rights with respect to Stock shall be subject to procedures established to
provide for and safeguard the confidentiality of that information (except to
the extent necessary to comply with Federal laws or state laws not pre-empted
by ERISA. The Committee is responsible for ensuring that the procedures are
sufficient to safeguard the confidentiality of the information, the procedures
are being followed and that an independent fiduciary is appointed to carry out
activities relating to any situations which the Committee determines involve a
potential for undue employer influence on participants with regard to the
direct or indirect exercise of shareholder rights.
(b) STOCK RIGHTS. With respect to Stock:
(i) INFORMATION. Information provided to shareholders
of such securities shall be provided to participants or beneficiaries with
Accounts holding Stock; and
(ii) VOTING. Voting, tender and similar rights with
respect to such securities shall be passed through to participants and
beneficiaries with Accounts holding Stock.
If a participant or beneficiary does not direct the Trustee to vote
the Stock in a particular manner, the Trustee may not vote the Stock.
-57-
E-236
<PAGE> 64
(c) EXPENSES. The Plan may charge participants' accounts for the
reasonable expenses of carrying out the participant's instructions pursuant to
a procedure established under the Plan to periodically inform participants of
the actual expenses incurred with respect to their respective individual
Accounts.
(d) SECTION 16B RULE. Any available participant election may, at
the participant's election, also be made pursuant to:
(i) SIX MONTH ADVANCE. An irrevocable election made by
the participant six months or more in advance of the effective date of
the election; or
(ii) QUARTERLY DATE. An election made by the participant
on a Quarterly Date at least six months after the date of the previous
intraplan transfer election relating to the Stock Fund. The Quarterly
Date begins on the third business day following the release of Kaydon
Corporation's quarterly financial data and ends on the twelfth
business day following that date.
(e) GENERAL. Participant instructions will not be implemented if
the instructions:
(i) PLAN. Are not in accordance with the documents and
instruments governing the Plan insofar as such documents and
instruments are consistent with the provisions of Title I of ERISA;
(ii) UNITED STATES. Would cause a fiduciary to maintain
the indicia of ownership of any assets of the plan outside the
jurisdiction of the district courts of the United States other than as
permitted by section 404(b) of ERISA;
(iii) QUALIFICATION. Would jeopardize the Plan's tax
qualified status under the Internal Revenue Code;
(iv) PROHIBITED TRANSACTION. Would result in a
prohibited transaction described in ERISA section 406 or section 4975
of the Internal Revenue Code;
(v) LOSS. Could result in a loss in excess of that
participant's account balance; or
(vi) INCOME. Would generate income that would be taxable
to the Plan.
-58-
E-237
<PAGE> 65
(f) PAYSOP AND TRASOP LIMITATIONS. Notwithstanding the general
rule of this Section, a participant may not direct the investment of any
portion of the participant's Employer Prior Contributions Account, Participant
Contributions Account and Employer Contributions Account:
(i) DISTRIBUTABILITY. To the extent the portion of the
Account would not be distributable under the Code because the portion
of the Account remains subject to the limitation requiring that
distributions not occur prior to the end of the eighty-fourth (84th)
month beginning with the month following the allocation of Stock to
the participant's Account; and
(ii) IRS APPROVAL. Until the date which is as soon as
practicable after approval of the Fifth Amendment to this Plan by the
Internal Revenue Service.
Those Accounts shall remain invested in Stock until no longer subject to these
limitations.
6.9 SPECIAL INVESTMENT DIRECTION. Notwithstanding any other
provision of this Plan, within 90 days after the end of each Plan Year within
the Election Period, a participant who has completed at least 10 years of
participation in the Plan and has attained age 55 may direct the Contract
Administrator and the Trustee as to the diversification of the investment of
25% (50% with respect to the Plan Year for which the participant may make the
last such election) of the total number of shares of Stock or other employer
securities acquired by or contributed to the portion of the Plan consisting of
the participant's Employer Contribution Account, Employer Prior Contributions
Account and Participant Contribution Account after December 31, 1986 and on or
before the most recent Plan Allocation Date (to the extent that number of
shares exceeds the number of shares to which a prior election under this
Section applies).
(a) ELECTION PERIOD. The Election Period is the period of five
Plan Years commencing with the Plan Year after the Plan Year in which the
participant has both attained age 55 and completed 10 years of participation in
the Plan.
(b) DIVERSIFICATION. A participant may elect to diversify
investment of the applicable
-59-
E-238
<PAGE> 66
amount from among the Investment Funds established under the Plan. Any
diversification election by a participant must be implemented no later than
ninety (90) days after the last day of the period during which the election may
be made.
(c) DETERMINATION. The maximum percentage of a participant's
Accounts that is subject to diversification is applied to the value of the
participant's Accounts as of the last day of the preceding Plan Year.
(d) LIMITATION. This special investment direction shall not
apply, however, to the extent the fair market value (determined at the Plan
Allocation Date immediately preceding the first day on which a qualified
participant is eligible to make a diversification election) of the employer
securities acquired by or contributed to the Plan after December 31, 1986 and
allocated to the Employer Contribution Account, Employer Prior Contributions
Account or the Participant Contribution Account in total is $500.00 or less.
-60-
E-239
<PAGE> 67
ARTICLE VII
DISTRIBUTION
7.1 DISTRIBUTIVE EVENT. A participant's Account is distributable
upon the occurrence of a Distributive Event. A Distributive Event is:
(a) NORMAL RETIREMENT AGE. A participant's attainment of Normal
Retirement Age;
(b) DEATH. A participant's Death;
(c) DISABILITY. A participant's Total and Permanent Disability
which is any physical or mental condition that may reasonably be expected to be
permanent and which renders the participant incapable of continuing as an
Employee.
(d) EMPLOYMENT TERMINATION. A participant's Termination of
Employment with the Employer (and all Affiliated Employers);
(e) PLAN TERMINATION. For other than a Qualifying Account or a
Salary Deferred Contributions Account, the termination of the Plan;
(f) SALARY DEFERRED AND QUALIFYING. From a Salary Deferred
Contributions Account or a Qualifying Account:
(i) PLAN TERMINATION. The termination of the Plan
without establishment or maintenance of another defined contribution
plan (other than a plan defined in Code Section 4975(e)(7)), to the
extent the participant receives a lump sum distribution within Code
Section 401(k)(10) by reason of the termination; or
(ii) DISPOSITION. To the extent the participant receives
a lump sum distribution within Code Section 401(k)(10) by reason of
the disposition, and if the Employer continues to maintain this Plan
after the disposition, the disposition by the Employer to an unrelated
employer of:
(A) ASSETS. Substantially all of the assets
used by the Employer in a trade or business with respect to an
employee who continues employment with the acquiring
-61-
E-240
<PAGE> 68
corporation; and
(B) STOCK. The Employer's interest in a
subsidiary with respect to an employee who continues
employment with the subsidiary.
(g) HARDSHIP. For Salary Deferred Contributions and earnings of
the Salary Deferred Contributions Account through December 31, 1988 only,
Hardship as provided in this Article.
(h) AGE 59 1/2. From a Salary Deferred Contributions Account once
each Plan Year, a participant's attainment of 59 1/2.
(i) MINIMUM REQUIRED. A participant's attainment of age 70 1/2.
(j) ALTERNATE PAYEE. For an Alternate Payee under a Qualified
Domestic Relations Order, the request of the Alternate Payee at the time set
forth in or allowed under the Order even if that time is prior to the date the
participant attains the earliest retirement age as defined in Section 414(p)(4)
of the Code, to the extent authorized under Section 414(p)(10) of the Code.
Notwithstanding the prior provisions, in no event may any distribution
from an Employer Prior Contributions Account, a Participant Contributions
Account or an Employer Contributions Account be made prior to the end of the
eighty-fourth (84th) month beginning with the month following the allocation of
the Stock to the Account, unless the distribution is on account of the
Participant's retirement, death, disability, or other termination of
employment, termination of this Plan in its entirety, or the minimum
distribution requirements of Code Section 401(a)(9).
7.2 HARDSHIP. Hardship requires an immediate and heavy financial
need. A Hardship distribution is limited to the amount necessary to satisfy
the financial need.
(a) IMMEDIATE AND HEAVY FINANCIAL NEED. An immediate and heavy
financial need includes only:
(i) MEDICAL EXPENSES. Expenses for medical care
described in Code Section 213(d) previously incurred by the
participant, or the spouse or dependents of the participant, or
necessary for those individuals to obtain such medical care;
-62-
E-241
<PAGE> 69
(ii) RESIDENCE. Costs directly related to the purchase
of a principal residence for the participant (excluding mortgage
payments);
(iii) TUITION. Payment of tuition and related educational
fees for the next twelve months of post-secondary education for the
participant, or the spouse, children, or dependents of the
participant;
(iv) EVICTION. Payments necessary to prevent the
eviction of the participant from the participant's principal residence
or foreclosure on the mortgage on that residence; and
(v) OTHER. Other similar matters approved by the
Committee in a uniform and non-discriminatory manner and memorialized
in rules and regulations of Plan administration in Appendix H to this
Plan.
(b) FINANCIAL NEED. An immediate and heavy financial need does
not exist to the extent the amount of the distribution exceeds the amount
required to relieve the financial need or to the extent the need may be
satisfied from other resources reasonably available to the participant.
(i) PARTICIPANT REPRESENTATION. In determining the
availability of other resources, the Committee may reasonably rely on
the representation of the participant that the need cannot be
relieved:
(A) INSURANCE. Through reimbursement or
compensation by insurance or otherwise;
(B) LIQUIDATION. By reasonable liquidation of
the participant's assets, to the extent liquidation would not
itself cause an immediate and heavy financial need;
(C) CONTRIBUTIONS. By cessation of Salary
Deferred or Voluntary Contributions under the Plan; or
(D) LOANS. By other distributions or loans from
plans, or by borrowing from commercial sources on reasonable
commercial terms.
(ii) DEEMED FINANCIAL NEED. If the representation is not
made or the Committee cannot reasonably rely upon it, a distribution
is deemed necessary to satisfy an immediate
-63-
E-242
<PAGE> 70
and heavy financial need only if:
(A) AMOUNT. The distribution does not exceed
the immediate and heavy financial need of the participant
(including amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably expected to result
from the distribution);
(B) DISTRIBUTION AND LOANS. The participant has
obtained all distributions (other than for hardship) and all
nontaxable loans currently available under all plans
maintained by the Employer (or Affiliated Employer);
(C) SUSPENSION. The participant's Participant
Contributions to this Plan and all other qualified and
nonqualified plans of deferred compensation (other than health
or welfare benefit plans) maintained by the Employer (or
Affiliated Employer) are required to be suspended for twelve
(12) months after receipt of the Hardship distribution; and
(D) REDUCED ELECTIVE. Under all plans
maintained by the Employer (or Affiliated Employer), the
participant may not make Salary Deferred Contributions for the
taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under
Code Section 402(g) for that next taxable year less the amount
of the participant's Salary Deferred Contributions for the
taxable year of the hardship distribution.
7.3 METHOD OF PAYMENT. Effective on the first day of the 1987
Plan Year, January 1, 1987, except as provided, payments from a participant's
Accounts at or after a Distributive Event shall be made by a single payment
within one (1) taxable year of the recipient.
(a) CASH-OUT. If a participant's Vested Account Balance
(Including any Participant Account) is, and at the time of any prior
distribution was, less than $3,500.00, the Committee must distribute the
balance in an immediate, lump sum payment (in cash and not in Stock) as soon as
-64-
E-243
<PAGE> 71
administratively practicable following a Distributive Event, subject to any
required participant notification and election under the Direct Rollover rules.
(b) TERMINATION. On recognition by the Employer of termination of
the Plan, Salary Deferred Contributions and Qualifying Accounts must be
transferred to any other defined contribution plan maintained by the Employer
or a member of a controlled group including the Employer (other than a Code
Section 4975(e)(7) employee stock ownership plan).
(c) STOCK. Except as otherwise provided, all distributions shall
be in whole shares of Stock if and to the extent the distribution is from an
Account invested in whole or in part in Stock. All other distributions shall
be in cash. Any fractional share of Stock otherwise distributable shall also
be distributed in cash.
(i) ELECTION AGAINST STOCK. Any participant or other
payee may elect on the appropriate form to receive in cash all or part
of the portion of a distribution which would otherwise be made in
Stock.
(ii) ELECTION OF STOCK. In addition, any participant or
other payee may elect on the appropriate form to receive in Stock all
or any portion of a distribution which would otherwise be made in
cash or assets other than Stock to the extent that the distribution
includes cash or assets which were previously invested in Stock as
part of the participant's Employer Contributions Account, Employer
Prior Contributions Account and Participant Contributions Account,
other than amounts diversified under Section 6.9. The participant or
other payee shall be advised in writing of the right to demand Stock
prior to any distribution in cash or other assets.
(iii) PROCEDURE. The Trustee shall, to the extent
necessary, purchase or sell the number of shares of Stock to be
distributed, and the participant or other payee shall receive in cash
or Stock, as the case may be, the net amount (after adjustments for
any expenses directly related to the purchase, such as brokerage fees
or commissions) of that purchase or sale.
-65-
E-244
<PAGE> 72
(A) MULTIPLE. If a number of purchases or sales
are to be made by the Trustee at any one time, the net
purchase or sales price of all shares of Stock purchased or
sold at that time shall be averaged to determine the amount to
be distributed to each participant or other payee.
(B) VALUATION. Fractional shares of Stock shall
be valued on the basis of the closing price of the Stock as
reported on any national securities exchange or as quoted on
any system sponsored by a national securities association on
the trading day on which the Stock is sold.
7.4 INFORMATION PROVIDED. The Committee must provide to each
participant, with the Application for Distribution:
(a) WITHHOLDING. Where applicable, a form permitting rejection of
federal income tax withholding from the distribution; and
(b) FAVORABLE TAX TREATMENT. A form providing notification of the
requirements for and the effects of lump sum five (5) and ten (10) year
averaging, a Direct Rollover and a qualifying rollover under the Code.
7.5 APPLICATION FOR DISTRIBUTION. To begin distribution after a
Distributive Event, the participant or other payee must file a written, valid
Application for Distribution after receiving the information described in this
Article executed within 90 days before the first day of the first period for
which benefits are paid.
(a) NO APPLICATION. An Application is not required if the
distribution: is a Cash Out; is required to satisfy Code Sections 401(a)(9),
411(b), or 415; or is made after the date the participant has (or would have,
if not dead) attained the later of Normal Retirement Age or age 62.
(b) GENERAL REQUIREMENTS. To be a valid Application, the
participant or other payee must consent to or request the distribution and
designate the desired type of benefit, the form of
-66-
E-245
<PAGE> 73
payment, the beginning date for payment, whether federal income tax will be
withheld (where not mandatory), and whether the participant is married.
(c) LATER ACCRUAL. The provisions of this Section apply
separately to additional accruals after a benefit start date that occurs before
the participant attains Normal Retirement Age.
(d) ELECTIONS. Any election otherwise permitted by this Article
may, at the participant's election, also be made pursuant to an irrevocable
election made by the participant six months or more in advance of the effective
date of the election.
7.6 TIMING OF PAYMENT. Except for Age 59 1/2 or Hardship
Distributions, payments from a participant's Accounts may begin on the first
day of a month following a Distributive Event and, except where unnecessary,
filing of an appropriate Application.
(a) REQUIRED BEGINNING DATE - PARTICIPANT. Payments to a
participant of the appropriate Minimum Amount must begin not later than April 1
following the calendar year in which the participant attains age 70 1/2 unless
the participant:
(i) ELECTION. Made an election under Section 242(b) of
the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA Election);
(ii) SPECIAL RULE. Attained age 70 1/2 in 1988, was not
a Five Percent Owner at any time during the Plan Year ending with or
within the calendar year in which the participant attained age 66 1/2
or any later Plan Year, and had not retired by January 1, 1989. In
that case the participant is treated as having retired on January 1,
1989; or
(iii) AGE 70 1/2. Attained age 70 1/2 before January 1,
1988 and has not yet retired. In that case:
(A) NON-FIVE PERCENT (5%) OWNER. If the
participant was not a Five Percent Owner at any time during
the Plan Year ending with or within the calendar year in which
the participant attained age 66 1/2 or any later Plan Year,
payments must begin not later than April 1 following the later
of the calendar year in which the
-67-
E-246
<PAGE> 74
participant retires or attains age 70 1/2.
(B) FIVE PERCENT (5%) OWNER. If the participant
was a Five Percent Owner during any Plan Year beginning after
December 31, 1979, payments must begin not later than April 1
following the earlier of the calendar year in which the
participant retires or with or within which ends the Plan Year
in which the participant becomes a Five Percent Owner.
(b) REQUIRED BEGINNING DATE - BENEFICIARY. Payments to a
beneficiary or other recipient must begin by the earliest applicable date in
this subsection.
(i) NO PAYMENTS. If a participant dies before the
participant's Required Beginning Date (and if irrevocable annuity
distributions have not begun with respect to Restricted Transfer
amounts):
(A) LUMP SUM. Payment must be made by December
31 of the fifth calendar year after the calendar year of the
death of the participant (or the participant's spouse, if the
spouse was the Designated Beneficiary at the participant's
death and dies before the spouse's required beginning date);
or
(B) LIFE OR LIFE EXPECTANCY. If elected by a
Designated Beneficiary (determined as of the date of death),
payments must begin by December 31 of the year after the year
of the participant's (or spouse's) death in a method which
will result in the Account Balance being payable during the
Beneficiary's life or life expectancy or, if elected by the
participant's spouse, payments must begin in the same manner
by the December 31 after the later of the end of the calendar
year in which the participant died and the date on which the
participant would have attained age 70 1/2.
(ii) PAYMENTS. If the participant dies on or after the
participant's Required Beginning Date (or irrevocable annuity
distributions have begun with respect to Restricted Transfer Amounts),
the Account Balance must be payable at least as rapidly as under the
-68-
E-247
<PAGE> 75
method of payment elected by the participant. Any Designated
Beneficiary whose life or life expectancy was used to determine the
period for that method of payment must be the beneficiary of the
remaining portion.
(c) CONTINUING PAYMENT DATES. The Minimum Distribution for all
distribution calendar years other than the distribution due by the Required
Beginning Date, including the Minimum Distribution for the distribution
calendar year in which the Required Beginning Date occurs, must be made on or
before December 31 of that distribution calendar year.
(d) GENERAL LIMITATION. Payments to all participants must begin,
unless postponed, not later than sixty (60) days after the end of the latest
Plan Year in which the participant: attains the earlier of age 65 or Normal
Retirement Age; reaches the tenth anniversary of participation; or terminates
employment. Payments to the surviving spouse of a deceased participant must be
available within a reasonable time after the participant's death. Unless
special circumstances require an extension of time, the reasonable time may not
exceed 90 days after the participant's death.
(e) OVERRIDE. Payments for each distribution calendar year must
be made in accordance with the regulations under Code Section 401(a)(9), which
override any distribution options in the Plan or elections inconsistent with
Code Section 401(a)(9). Notwithstanding any other provision of the Plan, the
Plan must begin distribution in a manner that satisfies: Code Section 401(a)(9)
even though the participant (or spouse, where applicable) fails to consent to
the distribution if the plan has made reasonable efforts to obtain consent and
if the distribution otherwise meets the applicable requirements of Code Section
417; Code Section 411(b) and Code Section 415.
(f) EXCISE TAX. Payments before a participant attains age 59 1/2
are subject to an excise tax under the Code unless the payments are made:
(i) DEATH OR DISABILITY. On account of death or
disability within the meaning of Code Section 72(m)(7);
(ii) ANNUITY. As part of a series of substantially equal
periodic payments, not less
-69-
E-248
<PAGE> 76
frequently than annually, made for the life or life expectancy of the
participant or the joint lives or joint life expectancies of the
participant and the Designated Beneficiary; or
(iii) SEPARATION. To a participant after separation from
service after attainment of age 55.
(g) AGE 59 1/2 OR HARDSHIP. Age 59 1/2 or Hardship distributions
shall be made not later than thirty (30) days following the valuation of the
Participant's Account as of the end of the calendar quarter with respect to
which the withdrawal is to be made.
7.7 DURATION OF PAYMENT. A participant or a Designated
Beneficiary may not elect a method of payment which extends beyond the later of
the life or life expectancy of the participant or the lives or joint life
expectancy of the participant and the participant's Designated Beneficiary (the
Maximum Period). For this purpose, the life expectancy of the Designated
Beneficiary (excluding beneficiaries contingent on the death of a prior
beneficiary, but including the spouse, as recomputed) with the shortest life
expectancy must be used.
(a) RECALCULATION. The life expectancies of the participant and
spouse shall be recalculated annually unless the participant or spouse
irrevocably elects against recalculation prior to the applicable Required
Beginning Date.
(b) NO LIFE EXPECTANCY. The Plan must distribute the
participant's entire remaining interest prior to the last day of the calendar
year in which the last applicable life expectancy is reduced to zero.
7.8 AMOUNT OF PAYMENT. The amount each payment must satisfy
these Minimum Distribution requirements. The time and method of payment of
benefits selected by a participant must be adjusted as necessary to comply with
Section 401(a)(9) and the Minimum Distribution rules.
(a) NON-ANNUITY PAYMENTS. For other than annuity distributions of
Restricted Transfer
-70-
E-249
<PAGE> 77
amounts, the Plan must distribute for each distribution calendar year,
beginning with the first calendar year for which distributions are required, an
amount at least equal to the participant's Account Balance divided by the
lesser of the Applicable Life Expectancy or, if the participant's spouse is not
the Designated Beneficiary, the applicable divisor.
(i) ACCOUNT BALANCE. The Account Balance used in
determining the Minimum Distribution for a distribution calendar year
is the Account Balance as of the last valuation date in the calendar
year immediately preceding the distribution calendar year (Valuation
Calendar Year) as adjusted. The Account Balance is increased by any
contributions or forfeitures allocated as of dates in the Valuation
Calendar Year after the valuation date and decreased by distributions
made in the Valuation Calendar Year after the valuation date and
transfers made in prior years. The Plan may not, however, distribute
amounts which are not vested.
(ii) APPLICABLE LIFE EXPECTANCY. The Applicable Life
Expectancy is the life (or joint life) expectancy of the participant
and the participant's spouse or Designated Beneficiary (first
determined as of the participant's (or spouse's) Required Beginning
Date or as of any date within ninety days before annuity payments
begin), reduced by one for each calendar year which has elapsed since
the date on which the life (or joint life) expectancy was calculated,
subject to recalculation.
(b) ANNUITY PAYMENTS. For annuity distributions of Restricted
Transfer amounts, the Plan must distribute an annuity contract from an
insurance company providing payments which satisfy Code Section 401(a)(9) and
the regulations issued thereunder. Annuity distributions of Restricted
Transfer amounts must be payable as:
(i) ANNUITY FOR ACTIVE PARTICIPANT. A life annuity for
the life of the participant;
(ii) ANNUITY, NONSPOUSE BENEFICIARY. A joint and
survivor annuity for the joint lives of the participant and a
beneficiary other than the spouse under which the periodic annuity
payment payable to the survivor must not at any time on and after the
Required
-71-
E-250
<PAGE> 78
Beginning Date exceed the applicable percentage of the annuity payment
for the participant.
(iii) PERIOD CERTAIN. A period certain annuity in which
the annuity payments payable to the participant satisfy the preceding;
(iv) ANNUITY, SPOUSE BENEFICIARY. A joint and survivor
annuity for the joint lives of the participant and spouse which
otherwise satisfies Code Section 401(a)(9); or
(v) TEFRA ELECTION. Provided in a TEFRA 242(b) Election
to the extent the method of distribution satisfies the incidental
benefit rules in effect on July 27, 1987.
The applicable divisor and the applicable percentages are determined under
Regulation Section 1.401(a)(9)-2.
7.9 SPECIAL PARTICIPANT ACCOUNT DISTRIBUTION RULES. A
participant's Participant Accounts are also subject to the following special
rules:
(a) ROLLOVER. A participant's Rollover Account established by a
rollover qualified under Code Sections 402(a) or 408(d) is distributable upon
notice from the participant of a desire to begin distribution of all or part of
the Rollover Account balance. Payments must be made over a period not
exceeding the applicable life expectancies used by the distributing plan to
determine the minimum distribution with respect to the amount rolled over.
(b) TRANSFER. A participant's Rollover Account established by a
transfer directly from the trustee, custodian or insurer of a plan or related
trust qualified under Code Section 401(a) (Transferor Plan):
(i) RESTRICTED - SURVIVING SPOUSE REQUIREMENTS. Is
subject to the Additional Distribution Provisions of this Article if
the Transferor Plan was subject to the surviving spouse annuity
requirements of Code Sections 401(a)(11) and 417 at the time of the
transfer (Restricted Account);
(ii) RESTRICTED - CODE SECTION 401(K). Is subject to the
distribution restrictions of Code Sections 401(k)(2) and (10) to the
extent the amount transferred consists of elective
-72-
E-251
<PAGE> 79
contributions (or amounts treated as elective contributions) under a
plan with a Code Section 401(k) arrangement; and
(iii) DISTRIBUTION TIMING. Which is transferred after the
Required Beginning Date under Both the Transferor Plan and this Plan
must begin to be distributed in the calendar year following the
calendar year in which the amount was transferred if the Designated
Beneficiary under this Plan has a life expectancy that is longer than
the life expectancy of the designated beneficiary under the Transferor
Plan. This distribution must be made over a period not exceeding the
applicable life expectancies used by the Transferor Plan to determine
the participant's minimum distribution with respect to the amount
transferred.
7.10 ADDITIONAL DISTRIBUTION PROVISIONS. These additional
distribution provisions apply to a Restricted Transfer Account.
(a) METHOD OF PAYMENT. Payment from a participant's Restricted
Account may also be made by:
(i) JOINT AND SPOUSAL SURVIVOR. The purchase of an
immediate, nontransferable annuity from an insurance company, with an
amount payable for the participant's life and, if the participant is
survived by a Qualifying Spouse to whom the participant is married at
the date of death or who is treated as a Qualifying Spouse under a
Qualified Order, at least fifty percent (50%) of the amount continued
for that spouse's life;
(ii) SPOUSAL SURVIVOR. In the case of the death of the
participant, the purchase for the Qualifying Spouse of a fully
subsidized nontransferable annuity from an insurance company with a
benefit having a value which is actuarially equivalent to fifty
percent (50%) of the participant's Vested Restricted Transfer Account
Balance as of the date of the participant's death; and
(iii) ANNUITY. The purchase of a nontransferable annuity
from an insurance company for the life of the participant.
-73-
E-252
<PAGE> 80
The normal form of payment to a married participant with a Qualifying
Spouse is the Joint and Spousal Survivor form and to other participants is the
Annuity form. The normal form of payment after the death of a participant with
a Qualifying Spouse is the Spousal Survivor Annuity.
(b) INFORMATION PROVIDED. The Committee must also provide to each
participant who has a Restricted Account:
(i) JOINT AND SPOUSAL SURVIVOR NOTICE. With respect to
the Joint and Spousal Survivor form, no less than 30 days and no more
than 90 days before the first day of the first period for which
benefits are paid, a written explanation of: the Joint and Spousal
Survivor Annuity; the participant's right to make, and the effect of,
an election not to receive payments in that form; the requirement that
the Qualifying Spouse consent; the participant's right to revoke an
election and the effect of revocation; the material features and the
relative values of the optional forms of benefit available under the
Plan; and the right to defer receipt of the distribution; and
(ii) SPOUSAL SURVIVOR ANNUITY NOTICE. With respect to
the Spousal Survivor Annuity, a written explanation of: the Spousal
Survivor Annuity; the participant's right to make, and effect of, an
election to waive the benefit; the requirement that the Qualifying
Spouse consent; and the participant's right to revoke an election and
the effect of revocation. The explanation shall provide within the
last to end of:
(A) THREE YEAR PERIOD. The three (3) year
period beginning with the first day of the Plan Year in which
the participant attains age 32; or
(B) TWO YEAR PERIOD. The two year period
beginning one year before: the individual becomes an Active
Participant, a benefit subsidy (as defined in Section 417 of
the Code) ceases, the survivor benefit requirements first
apply to the participant, or the separation from service of a
participant who has not attained age 35.
The explanation must be provided to a participant who separates from
service before age 32 within one year after termination of employment; and
-74-
E-253
<PAGE> 81
(c) APPLICATION FOR DISTRIBUTION. In addition to the other
applicable requirements for a valid Application, to be a valid Application with
respect to a Restricted Account:
(i) ELECTION AGAINST JOINT AND SPOUSAL SURVIVOR. If the
participant elects during the applicable period or receives after the
date the participant has attained the later of Normal Retirement Age
or age 62, with respect to the Restricted Account, a form of payment
other than the Joint and Spousal Survivor (or the Annuity form if the
participant is not married to a Qualifying Spouse), the participant
must specify the particular optional form of benefit and, if
applicable, the Application must be executed by the participant's
Qualifying Spouse and witnessed by a Plan representative or a notary
public.
(A) SPOUSAL CONSENT. Spousal Consent must
specify the particular optional form of benefit; except as
provided in a Qualified Order, is necessary within ninety (90)
days before the first day of the first period for which
benefits are paid; and is irrevocable.
(B) NO SPOUSE. Spousal consent is not required
if it is established to the satisfaction of a Plan
Representative that there is no Qualifying Spouse or that the
Qualifying Spouse cannot be located; if the spouse is legally
incompetent and the spouse's legal guardian gives consent; or
if the participant is legally separated or has been abandoned
as determined by court order (unless a Qualified Order
provides otherwise).
(ii) MODIFICATION. A participant's election may be
modified or revoked after the spouse's death or divorce, except as
provided in a Qualified Order, and at any time during the ninety (90)
days immediately before the first day of the first period for which
benefits are paid to return to the Joint and Spousal Survivor form or,
with appropriate Spousal consent, to another optional form of benefit.
(d) SPECIAL SPOUSAL SURVIVOR ANNUITY RULES. A participant, with
the consent of any Qualifying Spouse, may elect to waive the Spousal Survivor
Annuity with respect to the Restricted
-75-
E-254
<PAGE> 82
Account during the period beginning on the expiration of the time for provision
of the Spousal Survivor Annuity Notice and ending at the participant's death.
A Qualifying Spouse may elect to waive the Spousal Survivor Annuity with
respect to the Restricted Account after the death of the participant.
(i) NO SPOUSE. Spousal consent is not required if it is
established to the satisfaction of a Plan Representative that there is
no Qualifying Spouse or that the Qualifying Spouse cannot be located;
if the spouse is legally incompetent and the spouse's legal guardian
gives consent; or if the participant is legally separated or been
abandoned as determined by court order (unless a Qualified Order
provides otherwise).
(ii) NOT NECESSARY. Spousal consent is not necessary for
a distribution of the Spousal Survivor Annuity after the date the
participant attains (or would have attained if not dead) the later of
Normal Retirement Age or age 62.
(iii) IRREVOCABLE. Spousal consent is irrevocable.
7.11 DESIGNATION OF BENEFICIARY. A participant or a Designated
Beneficiary may designate the beneficiary or contingent beneficiary to receive
amounts payable under the Plan (other than the Spousal Survivor Annuity) in the
event of the participant's or Designated Beneficiary's death. The Designated
Beneficiary may not change a designation by the participant.
(a) MARRIED ACTIVE PARTICIPANT. Except as provided in a Qualified
Order, a married participant's beneficiary is the participant's legal spouse
unless the spouse consents otherwise.
(i) SPOUSAL CONSENT REQUIRED. Except as provided in a
Qualified Order, spousal consent is necessary for a beneficiary
designation of another and a change of beneficiary designation.
(ii) SPOUSAL CONSENT NOT REQUIRED. Spousal Consent is
not required to the extent a prior Qualified Order provides for
payment of any portion of a Participant's Account Balance to an
alternate payee under the Qualified Order or if it is established to
the
-76-
E-255
<PAGE> 83
satisfaction of a Plan Representative that there is no spouse or that
the spouse cannot be located; if the spouse is legally incompetent and
the spouse's legal guardian gives consent; or if the participant is
legally separated or has been abandoned as determined by court order
(unless a Qualified Order provides otherwise).
(iii) IRREVOCABLE. Spousal consent is irrevocable.
(b) METHOD. The designation, revocation, or alteration must be
made in writing on forms provided by the Committee. Any designation by a
participant and any spousal consent must state the specific nonspouse
beneficiary (including any class of beneficiaries or any contingent
beneficiaries) who will receive the benefit. If the Designated Beneficiary is
a trust, the spouse need only consent to the designation of the trust and need
not consent to the designation of trust beneficiaries or any changes of trust
beneficiaries. A designation may be altered or revoked at any time before the
participant's entire Account Balance has been distributed, with appropriate
spousal consent if another beneficiary is designated.
(c) DESIGNATED BENEFICIARY. A beneficiary other than an
individual or eligible trust will be recognized as a beneficiary but may not be
a Designated Beneficiary for purposes of this Article and Code Section
401(a)(9). All identifiable beneficiaries of an eligible trust are treated as
Designated Beneficiaries for those purposes with respect to the trust's
interest in the Plan. An eligible trust is a trust which, as of the later of
the date on which the trust in named as beneficiary or the participant's
Required Beginning Date (and for all subsequent periods during which the trust
is a beneficiary) is valid and irrevocable and which is provided to the Plan.
(d) FAILURE TO DESIGNATE. In the absence of an effective
designation, any benefit payable upon death is paid in the following priority
order: (1) the participant's surviving spouse, (2) the participant's surviving
issue, per stirpes, or (3) to those who would receive the personal property of
the participant under Michigan law of intestate succession.
7.12 CLAIMS PROCEDURE. A participant or beneficiary and the
Committee must observe the
-77-
E-256
<PAGE> 84
following procedures for claims to benefits:
(a) INITIAL CLAIM. A participant, beneficiary or legal
representative must file an Application for Distribution with the Committee.
The Committee must grant or deny the request within ninety (90) days after
receipt unless special circumstances require an extension of time. The
extension must not exceed an additional ninety (90) days. The Committee must
notify the applicant in writing of the extension and the reasons for the
extension.
(b) DENIAL OF CLAIM. If a claim is denied, the Committee must
provide to the applicant a written notice containing the reason for the denial,
reference to Plan provisions upon which the denial is based, a description of
additional information necessary to permit granting the claim and an
explanation of the Plan's claim review procedure. If notice of a denial of
claim or an extension of time has not been received by the applicant within
ninety (90) days, the claim is deemed denied.
(c) EMPLOYER REVIEW. Within sixty (60) days after a denial is
received, the applicant may request a full and fair review upon written
application to the Committee. The applicant may review pertinent documents and
submit issues and comments in writing to the Committee. The Committee must
make a decision on review and notify the applicant of the decision within sixty
(60) days of receipt of the application unless special circumstances require an
extension of time. The extension may not exceed an additional sixty (60) days.
The Committee must notify the applicant in writing of the extension and the
reasons for the extension. The decision upon review must meet the requirements
for denial of a claim.
7.13 FACILITY OF PAYMENT. A payment made under this section fully
discharges the Employer, the Committee and the Trustee from all future
liability with respect to the payment.
(a) INCAPACITY. If a person entitled to payment is legally,
physically or mentally incapable of receiving or acknowledging payment, the
Committee may direct payment: directly to the person; to the person's legal
representative; to the spouse, child or relative by blood or marriage of the
person; to the person with whom the person resides; or by expending the payment
directly for the
-78-
E-257
<PAGE> 85
benefit of the person. A payment made other than to the person is intended to
be used for the person's exclusive benefit.
(b) LEGAL REPRESENTATIVE. The Committee shall not be required to
commence probate proceedings or to secure the appointment of a legal
representative.
(c) DETERMINATIONS. The Committee may act upon affidavits in
making any determination. The Committee, in relying upon affidavits or having
made a reasonable effort to locate any person entitled to payment, is
authorized to direct payment to a successor beneficiary or another person. A
person omitted from payment has no rights on account of payments so made.
(d) ANTI-ESCHEAT. If the Committee cannot locate a person
entitled to payment, the amount is a forfeiture. The forfeiture is reinstated
if a claim is made within the applicable limitations period by a person
entitled to payment.
7.14 QUALIFIED ORDER. Distribution to the recipient under a
Qualified Order must be made in accordance with Code Section 401(a)(9) and this
Article applied by substituting the recipient for the participant, except that
the distribution to the recipient need not satisfy the minimum distribution
incidental benefit rule.
(a) DESIGNATION OF BENEFICIARY. A recipient may designate a
beneficiary under the Plan but may not elect any form of payment which requires
distribution over the joint lives or life expectancy of the recipient and the
designated beneficiary.
(b) LIMITATION. Where, because of a Qualified Order, more than
one individual is treated as a Qualifying Spouse or Designated Beneficiary with
respect to a participant, the total amount payable as a Spousal Survivor
Annuity, as the survivor portion of the Joint and Spousal Survivor benefit or
otherwise may not exceed the amount payable if there were only one Qualifying
Spouse or Designated Beneficiary. Where a Qualified Order allocates a portion
of the participant's accrued benefit to or with respect to a former spouse or
alternate payee, the Joint and Spousal Survivor benefit, the Spousal Survivor
Annuity and any other amounts payable to a Qualifying Spouse or
-79-
E-258
<PAGE> 86
Designated Beneficiary are based on the vested accrued benefit less the amount
payable to or with respect to the former spouse or alternate payee.
7.15 DIRECT ROLLOVER RULES. This Section applies to distributions
made on or after January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee's election under this
Article, a Distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(a) ELIGIBLE ROLLOVER DISTRIBUTION. An Eligible Rollover
Distribution is an distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(b) ELIGIBLE RETIREMENT PLAN. An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributee's
eligible rollover distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(c) DISTRIBUTEE. A Distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in section 414(p) of the Code, are Distributees
-80-
E-259
<PAGE> 87
with regard to the interest of the spouse or former spouse.
(d) DIRECT ROLLOVER. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
-81-
E-260
<PAGE> 88
ARTICLE VIII
INSURANCE OR ANNUITIES
8.1 TYPES OF POLICIES AND CONTRACTS. The Committee may direct the
purchase of an annuity contract or permanent or term life insurance policy
(Policy) which satisfies the requirements of this Article.
(a) ADDITIONAL RIGHTS. A Policy must be convertible to cash or
periodic income. A Policy may provide for disability waiver of premium or for
conversion to a larger policy.
(b) OWNERSHIP. A Policy must be owned by the Trustee.
8.2 PREMIUMS - DIVIDENDS. Premiums on each Policy must be paid on
the premium due dates. Dividends may be applied to: reduce premiums; increase
the value of the Policy subject to the limits in this Article; or increase the
allocation to the participant's account.
8.3 ACTIVE PARTICIPANT LIFE INSURANCE. An Active Participant may
elect to invest a portion of any account in a Policy covering the Participant.
(a) INCIDENTAL PREMIUM LIMITATION. The aggregate premiums paid
from a participant's Employer Account(s) must not equal or exceed the greater
of:
(i) PERMANENT LIFE. If for a permanent life Policy
(with a level death benefit and premium), fifty percent (50%) of the
contributions and forfeitures allocated to the Participant's
Account(s);
(ii) TERM LIFE. If for other than a permanent life
Policy (or a combination of permanent and other life policies),
twenty-five percent (25%) of the contributions and forfeitures
allocated to the Participant's Account(s);
(iii) ONE HUNDRED TIMES. More than the amount necessary
to provide a Policy with a face value of one hundred times (100x) the
actuarially determined anticipated monthly
-82-
E-261
<PAGE> 89
benefit; or
(iv) TWO YEAR ACCUMULATION. If paid only from funds
accumulated for at least two (2) years, more than the amount of the
accumulation.
(b) INABILITY TO PAY PREMIUM. If payment of a premium would
exceed the Incidental Premium Limitations, the premium may be:
(i) BORROW. Paid by borrowing against the cash value of
the Policy. Borrowing against the account of more than one
Participant must occur in the ratio that the cash value of the
Policies in the account bears to the total cash values of Policies in
all accounts;
(ii) REDUCE. Reduced by partial conversion of the Policy
to paid up insurance or by partial conversion to cash; or
(iii) DIVIDENDS. Paid by using accumulated Policy
dividends.
(c) DISTRIBUTION. Upon beginning distribution, no further
premiums may be paid. The Policy must be: converted into cash; converted to a
nontransferable paid up annuity allowing distribution only under methods
permitted under Section 7.3; sold to the participant; or distributed as a part
of the Vested Account.
(d) VESTING. The value of each Policy or annuity contract is
vested under the vesting provisions applicable to the account in which it is
held.
(e) NONDISCRIMINATION. All participants must be treated equally
to the extent possible in view of their desire for life insurance protection,
their insurability and the ratings and regulations of the insurance company.
(f) ACCOUNTING. An accounting record of the premiums paid on, and
the cash value of, each Policy must be made on each Allocation Date. The cash
value of a Policy is not a part of the balance of any account for purposes of
allocating the earnings, losses and adjustments in value of the Trust.
-83-
E-262
<PAGE> 90
ARTICLE IX
ADMINISTRATION
9.1 FIDUCIARY RESPONSIBILITIES. The responsibilities of Kaydon
Corporation and the Committee are set forth in the Plan. The responsibilities
of the Trustee and Investment Manager are set forth in the Trust. This
division of responsibility is an allocation of fiduciary responsibility under
Section 405(c)(1) of ERISA.
9.2 KAYDON CORPORATION. Kaydon Corporation has sole
responsibility for:
(a) FIDUCIARY APPOINTMENT. Appointing and removing the Trustee,
the Investment Manager and the Committee; and
(b) AMENDMENT, TERMINATION. Amending or terminating the Plan and
the Trust.
9.3 EMPLOYER ACTION. Action by Kaydon Corporation must be taken
by resolution of its Board of Directors or by a written instrument executed by
three or more officers.
9.4 INVESTMENT MANAGER APPOINTMENT. Any Investment Manager must
be an investment advisor registered under the Investment Advisors Act of 1940
or an insurance company qualified to perform investment management services
under the laws of the State of Delaware. An Investment Manager must file its
written acceptance with Kaydon Corporation acknowledging status as a named
fiduciary. Upon acceptance, Kaydon Corporation must notify the Trustee of the
appointment.
9.5 COMMITTEE. The Committee has responsibility for general
administration of the Plan.
(a) APPOINTMENT. The Committee may consist of one or more
persons. In the absence of a Committee, Kaydon Corporation has the
responsibilities of the Committee designated by the Plan. Any members of the
Committee who are employees must not receive compensation for their
-84-
E-263
<PAGE> 91
services to the Committee.
(b) AUTHORITY. The Committee has the duty and power to:
(i) CONSTRUCTION. Exercise discretionary authority to
construe and interpret the Plan and decide all questions of eligibility for
participation and benefits;
(ii) PROCEDURES. Prescribe procedures and forms for
applications for benefits, benefit elections, loans, if provided, and
designation of beneficiaries;
(iii) DISCLOSE. Disclose to participants, as required by
law, a summary of the Plan, a summary of annual reports to the government,
benefit accruals, entitlement to the benefits and notices of application for
determination;
(iv) REPORTING. Make governmental reports required by
law including annual and periodic reports to the United States Internal Revenue
Service and the Department of Labor;
(v) INFORMATION. Receive from and transmit to the
Employer, the Trustee, the Investment Manager and the participants such
information as shall be necessary for the proper administration of the Plan;
(vi) FINANCIAL REPORTS. Receive and retain reports of
the financial condition of the Trust Fund from the Trustee and the Investment
Manager;
(vii) BENEFIT AUTHORIZATION. Effective on the first day
of the 1987 Plan Year, January 1, 1987, determine entitlement to, and the
amount of, benefits and loans and authorize benefit payments and loans, if
provided;
(viii) AGENTS. Appoint or employ individuals to assist in
the administration of the Plan and other agents it deems advisable, including
legal counsel;
(ix) RULES. Promulgate rules and decisions to be
uniformly and consistently applied under similar circumstances;
(x) BONDING. Assure that all fiduciaries are bonded as
required by ERISA; and
(xi) RECOVER. Recover Plan benefits improperly paid,
through offset and reduction of subsequent benefit payments or otherwise.
-85-
E-264
<PAGE> 92
(c) PROCEDURE. The Committee may elect one of its members as
chairperson and may designate a secretary. The Committee must keep a record of
all meetings and forward all necessary communications to the Trustee. Any
delegation of duties by the Committee must state the scope of the delegation
with reasonable specificity. The Committee acts by a majority of its members,
either by vote at a meeting or by signature to a writing. Action by the
Committee must be evidenced by a written and duly executed instrument.
9.6 FIDUCIARY STANDARDS. Each fiduciary must act solely in the
interest of participants and beneficiaries:
(a) PRUDENTLY. With the care, skill and diligence of a prudent
person;
(b) EXCLUSIVE PURPOSE. For the exclusive purpose of providing
benefits and paying expenses of administration; and
(c) PROHIBITED TRANSACTION. To avoid engaging in a prohibited
transaction under the Code or ERISA unless an exemption is obtained.
9.7 INTER-RELATIONSHIP OF FIDUCIARIES. Each fiduciary warrants
that any of its actions are in accordance with the Plan and Trust. Each
fiduciary may rely upon the action of another fiduciary and is not required to
inquire into the propriety of any action. Each fiduciary is responsible for
the proper exercise of its responsibilities.
9.8 INDEMNIFICATION. Except to the extent required by ERISA, as
amended, no member of the Committee or any sub- committee shall be liable for
any act, omission, determination, construction or communication made by the
member, the Committee or any other member. Each Employer hereby agrees to
indemnify and save harmless each person now or hereafter acting as a member of
the Committee from all loss or damage that may or might result from acts as a
member, except to the extent that any liability is imposed as a result of the
member's gross negligence or
-86-
E-265
<PAGE> 93
willful misconduct. The Employers may purchase insurance to indemnify a member
for that liability.
9.9 PAYMENT OF EXPENSES. Kaydon Corporation may elect to pay all
or a portion of the administrative expenses of the Plan. If Kaydon Corporation
does not elect to pay all of the administrative expenses of the Plan which may
be paid out of Plan assets, the Trustee shall pay those expenses (to the extent
not precluded by ERISA) or the remaining portion of those expenses and charge
the payment against the Plan assets. Notwithstanding that general rule, with
respect to the expenses relating to the portion of the Plan assets attributable
to amounts contributed pursuant to the PAYSOP or TRASOP provisions of the Code
under this or a predecessor plan, only the lesser of one-hundred thousand
dollars ($100,000.00) or ten percent (10%) of dividends not in excess of
one-hundred thousand dollars ($100,000.00) received on Stock during the Plan
Year plus five percent (5%) of dividends in excess of one-hundred thousand
dollars ($100,000.00) received during the Plan Year may be paid by the Trustee
out of Plan assets.
9.10 LIMITATION OF LIABILITY AND LEGAL ACTION. Except as otherwise
provided in ERISA, as amended, as a condition of participation in the Plan, each
participant agrees that each Employer, the Committee, the Contract Administrator
and the Trustee shall not in any way be subject to suit, litigation, or any
legal liability in connection with the Plan and Trust or their operation, except
for its or their own negligence or willful misconduct. Except as otherwise
provided in ERISA, as amended, each participant hereby releases each Employer,
its officers and agents, the Committee, the Contract Administrator and the
Trustee from any and all such liability or obligation.
(a) PARTIES. Except as otherwise provided in ERISA, as amended,
in any action or proceeding involving all or any portion of the Plan, the
Trust, or its administration, each Employer, the Committee and the Trustee
shall be the only necessary parties. No person in the employ of (or formerly
employed by) an Employer, or any beneficiary or other person having or claiming
to have
-87-
E-266 and E-267
<PAGE> 94
an interest in the Trust Fund or under the Plan, shall be entitled to any
notice of process; nor shall such persons be entitled to participate in any
such action or proceedings.
(b) BINDING RESULT. Any final judgment entered in any such action
or proceeding which is not appealed or appealable shall be binding and
conclusive on the parties and all persons having or claiming to have an
interest in the Trust Fund or under the Plan.
-88-
E-268
<PAGE> 95
ARTICLE X
AMENDMENT AND TERMINATION OF PLAN
10.1 AMENDMENT. The Board of Directors of Kaydon Corporation or
any three officers of Kaydon Corporation may amend the Plan. An amendment must
not:
(a) DECREASE BENEFITS. Retroactively decrease a participant's
account balance or eliminate an optional form of distribution unless required
or permitted by law;
(b) DIVERSION. Divert or use the Trust other than for the
exclusive benefit of participants and their beneficiaries; or
(c) COMPANY INTEREST. Give an Employer any interest in the Trust
until all liabilities are satisfied.
(d) PROTECTED BENEFITS. Reduce or eliminate Code Section
411(d)(6) protected benefits, to the extent accrued, unless required or
permitted by law.
10.2 VESTING SCHEDULE AMENDMENT. A participant's current vested
status may not be decreased by amendment at any time. A participant with at
least three (3) years of service (five (5) years of service if the participant
does not have one or more Hours of Service in any Plan Year beginning after
December 31, 1988) whose vested interest would be decreased by an amendment may
irrevocably elect to remain under the former vesting rule.
(a) ELECTION PERIOD. The period for election begins no later than
the date the amendment is adopted and ends sixty (60) days after the latest of
the date that: the amendment is adopted; the amendment is effective; or the
participant is notified of the amendment.
(b) FAILURE. A participant who does not make an election is
subject to the amended vesting schedule for allocations made after the later of
the date the amendment is adopted or effective.
-89-
E-269
<PAGE> 96
10.3 TERMINATION. The Board of Directors of Kaydon Corporation or
any three officers of Kaydon Corporation may terminate the Plan. If a
favorable determination cannot be received from the Internal Revenue Service
upon initial qualification or an amendment to the Plan, Kaydon Corporation may
terminate the Plan as of the applicable effective date. The Plan automatically
terminates upon:
(a) LIQUIDATION, BANKRUPTCY. The liquidation or discontinuance of
the business of all of the Employers; the adjudication of all of the Employers
as a bankrupt; or a general assignment by all of the Employers to or for the
benefit of their creditors.
(b) MERGER, CONSOLIDATION. Unless continued, the merger or
consolidation of the Employers into another entity which is the survivor, the
consolidation or other reorganization of the Employers, or the sale of
substantially all of each of the Employers' assets.
10.4 PARTIAL TERMINATION. If the Plan terminates with respect to
less than all participants the proportionate interest of the affected
participants shall be determined. The Committee must declare an interim
Allocation Date on the date of partial termination.
10.5 FULL VESTING. The Account Balance of each affected Active
Participant becomes fully vested and nonforfeitable upon termination (or
partial termination) of the Plan or upon a complete discontinuance of
contributions within Code Section 411(d)(3). For this purpose, the Account
Balance is the Account Balance which is funded as of the date of termination
(or partial termination).
10.6 MERGER OR CONSOLIDATION OF PLAN. A merger, consolidation, or
transfer of Plan assets or liabilities may occur if:
(a) AUTHORIZATION. The other plan is qualified and authorizes
the merger, consolidation or transfer;
-90-
E-270
<PAGE> 97
(b) EQUAL BENEFIT. Each participant's benefit will be at least
equal to the participant's benefit if the Plan was terminated immediately
before the merger, consolidation or transfer; and
(c) PROTECTED BENEFITS. Code Section 411(d)(6) protected
benefits, to the extent accrued, are not reduced or eliminated unless required
or permitted by law.
-91-
E-271
<PAGE> 98
ARTICLE XI
MISCELLANEOUS
11.1 NONASSIGNABILITY. Except for a Qualified Order, benefits are
not subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy (Assignment), before
actual receipt. Any Assignment which violates this section is void. The right
to receive a benefit is not an asset for insolvency or bankruptcy.
11.2 EMPLOYMENT RIGHTS NOT ENLARGED. The Plan does not create any
employment rights or restrict the Employer's right to discharge an employee.
11.3 PARTICIPANTS' RIGHTS LIMITED. The Plan does not give any
participant: any interest in the Employer's assets, business or affairs; the
right to question any Employer action or policy; or the right to examine
Employer books and records. The rights of all participants are limited to the
right to receive payment of benefits when due.
11.4 INTERPRETATION AND CONSTRUCTION. The use of the singular
includes the plural where applicable, and vice versa. The headings in the Plan
do not limit or extend the provisions of the Plan. Capitalized terms, except
where capitalized solely for grammar, have the meanings as provided in the
Plan.
(a) QUALIFICATION. Provisions must be interpreted and construed
to maintain the qualification of the Plan.
(b) SEVERABILITY. If a provision is unenforceable in a legal
proceeding, the provision is severed only for that proceeding.
11.5 COUNTERPARTS. The Plan may be executed in any number of
counterparts, each of
-92-
E-272
<PAGE> 99
which is considered an original.
11.6 GOVERNING LAW. The Plan is governed by the applicable laws of
the United States of America (including the Code, ERISA, securities law, labor
law, age discrimination law, and civil rights law) and, to the extent not
preempted, by the laws of Florida.
KAYDON CORPORATION
By /s/ Lawrence J. Cawley
---------------------------------------------
Lawrence J. Cawley
Its Chairman and Chief Executive Officer
/s/ Stephen K. Clough
---------------------------------------------
Stephen K. Clough
Its President and Chief Operating Officer
And /s/ John F. Brocci
---------------------------------------------
John F. Brocci
Its Vice President and Secretary
Dated this 14 day of December, 1994
-93-
E-273
<PAGE> 100
APPENDIX OF PARTICIPATING EMPLOYERS
Kaydon Ring & Seal, Inc.
The Cooper Split Roller Bearing Corp.
Industrial Tectonics Inc
E-274
<PAGE> 101
APPENDIX A
SECTION 1.1(A) - SPECIAL EFFECTIVE DATES
<TABLE>
<CAPTION>
Section Rule Effective Date
- ------- ---- --------------
<S> <C> <C>
2.16(c) Hours of Service credit for ITI employees. April 1, 1994
3.2(c)(iii) Participation by Cooper Bearing employees. July 1, 1992
3.2(c)(iv) Participation by ITI employees. April 1, 1994
4.1(b), 6.1(a)(i) Reference to Employer Regular Profit Sharing January 1, 1992
Contributions/Account.
5.2(d), 7.5(d) Irrevocable six-month elections. September 1, 1992
6.1(a)(vi) Cooper Bearing Transfer Account. January 1, 1993
6.5(a), (b) Vesting Schedule for Employer Regular Profit January 1, 1992
Sharing Contributions.
6.7 Identification of Investment Options. January 1, 1992, except as to prior
Bairnco, PAYSOP and TRASOP funds
held in the Employer Contributions
Accounts, Employer Prior
Contributions Accounts and
Participant Contributions Accounts.
Section 6.7(a)(i) is effective with
respect to that portion of those
Accounts as soon as
administratively practicable after
approval by the Internal Revenue
Service of the Fifth Amendment to
the Plan.
6.7 Investment direction authority by non-Active January 1, 1994
Participants.
6.8, App. E and F ERISA Section 404(c) rules. January 1, 1994
6.9 Investment diversification. January 1, 1992
7.1(j) Early commencement of payment to Alternate January 1, 1994
Payees.
7.15 Direct Rollovers. January 1, 1993
</TABLE>
E-275
<PAGE> 102
APPENDIX B
SECTION 2.6 - EXPLANATION OF DEFINITION OF COMPENSATION
Compensation as provided in Section 2.6 of this Plan excludes all other forms
of remuneration, such as but not limited to:
- EXPENSE PAYMENTS. Reimbursements or other expense allowances
whether under an accountable or a nonaccountable plan;
- WELFARE PLANS. Employer contributions to or benefits paid
from any statutory or non-statutory unemployment or other
welfare plan (other than elective salary deferral
contributions to the Kaydon Corporation Flexible Benefits Plan
treated as Employer Contributions) whether or not such plan is
funded with insurance; and long term disability payments
(amounts described in Code Sections 104(a)(3), 105(a), and
105(h), whether or not includible in the gross income of the
Employee);
- MOVING EXPENSES. Amounts paid or reimbursed by the Employer
(or Affiliated Employer) for moving expenses incurred by the
Employee,
- STOCK OPTION PLANS. The value of a non-qualified stock option
granted to the Employee by the Employer (or Affiliated
Employer) and amounts realized from the exercise of a
non-qualifiedstock option, amounts realized from the sale,
exchange or other disposition of stock acquired under a
qualified stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture;
- SECTION 83(B). The amount includible in the gross income of
the Employee as a result of a Code Section 83(b) election,
- DEFERRED COMPENSATION CONTRIBUTIONS. Contributions made by
the Employer (or Affiliated Employer) to a plan of deferred
compensation or to a simplified employee pension described in
Code Section 408(k) (other than elective salary deferral
contributions to the Employer's (or Affiliated Employer's)
401(k) plans treated as Employer Contributions);
- DEFERRED COMPENSATION DISTRIBUTIONS. Any distributions from a
plan of deferred compensation;
- MEALS AND LODGING. Meals and lodging (whether or not
includible in the gross income of the employee),
- EDUCATIONAL ASSISTANCE. Educational assistance benefits;
- DEPENDENT CARE. Dependent Care benefits;
E-276
<PAGE> 103
Appendix B 2
- SEVERANCE PAY. Severance pay; and
- OTHER. Aall other fringe benefits (cash and non-cash) and all
other amounts which receive special tax benefits.
E-277
<PAGE> 104
APPENDIX C
SECTION 2.16(D)(II) - TOP HEAVY ACTUARIAL ASSUMPTIONS
C.1 TOP HEAVY DETERMINATION.
(a) INTEREST RATE. 5%.
(b) MORTALITY. 1971 Group Annuity Table.
E-278
<PAGE> 105
APPENDIX D
SECTION 6.1(A)(VI) - SPECIAL RULES APPLICABLE TO AMOUNTS TRANSFERRED FROM THE
COOPER BEARING COMPANY EMPLOYEES' 401(K) DEFERRED COMPENSATION PLAN AND TRUST
Notwithstanding any other provision of the Plan, the following special rules
shall apply to amounts transferred in the transfer of plan assets and
liabilities from the Cooper Bearing Company Employees' 401(k) Deferred
Compensation Plan and Trust to this Plan.
D.1 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal
Retirement Age (60th birthday). A Participant shall become
fully Vested in his Account upon attaining his Normal
Retirement Age.
D.2 Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result
in the distribution had the Terminated Participant remained in
the employ of the Employer (upon the Participant's death,
Total and Permanent Disability or Normal Retirement).
However, at the election of the Participant, the Administrator
shall direct the Trustee to cause the entire Vested portion of
the Terminated Participant's Elective Account to be payable to
such Terminated Participant. If the value of a Terminated
Participant's Vested benefit derived from Employer and
Employee contributions does not exceed $3,500 and has never
exceeded $3,500 at the time of any prior distribution, the
Administrator shall direct the Trustee to cause the entire
Vested benefit to be paid to such Participant in a single lump
sum.
D.3 Except as provided in the following paragraph, payments of
those amounts may be made:
(1) Over a period certain in monthly, quarterly,
semi-annual, or annual cash installments. In order to
provide such installment payments, the Administrator
may (A) segregate the aggregate amount thereof in a
separate, federally insured savings account,
certificate of deposit in a bank or savings and loan
association,
E-279
<PAGE> 106
Appendix D 2
money market certificate or other liquid short-term
security or (B) purchase a nontransferable annuity
contract for a term certain (with no life
contingencies) providing for such payment. The period
over which such payment is to be made shall not extend
beyond the Participant's life expectancy (or the life
expectancy of the Participant and his designated
Beneficiary); or
(2) By transfer directly to the Trustee of another
qualified plan. This shall be the only method
available with respect to a Participant's Elective
Contribution and Qualified Non-Elective Contribution
Accounts if the Plan is terminated under circumstances
precluding distribution of such amounts to
Participants due to the establishment or maintenance
of another defined contribution plan by an Affiliated
Employer. In that case, the transfer shall occur to
the Trustee of that plan.
E-280
<PAGE> 107
APPENDIX E
SECTION 6.7(A)(I) - LIST OF INVESTMENT FUNDS AVAILABLE UNDER THE PLAN
E.1 The following Investment Funds are presently available under the Plan
with respect to the Accounts noted.
Deferrals, the Cooper Bearing Transfer Accounts, any Transfer or
Rollover Accounts, the portion of the Employer Contributions, Employer
Prior Contributions, and Participant Contributions Accounts eligible
for the "age 55" rule and, when approved, all other Accounts (or the
full amount of the other Accounts) may be invested in the following
(except that any Transfer or Rollover Accounts and Cooper Bearing
Transfer Accounts may not presently be invested in Kaydon stock):
1. The Parkstone Prime Obligations Fund (the "Money Market Fund");
2. The Parkstone Bond Fund (the "Bond Fund");
3. The Parkstone High Income Equity Fund (the "Income Equity
Fund");
4. The Parkstone Small Capitalization Fund (the "Small
Capitalization Fund");
5. The Parkstone Balanced Fund (the "Balanced Fund");
6. The First of America Income Advantage Fund (the "Income
Advantage Fund"); and
7. Kaydon Stock (the "Stock Account").
E.2 The Parkstone Intermediate Government Obligations Fund (the "Government
Obligations Fund") was previously available, but is not available for
additional allocations after December 31, 1993. That Investment Fund
is available for additional allocations until December 31, 1993 and
will continue to be available for existing allocations to the Option on
December 31, 1993 until March 31, 1994.
E-281
<PAGE> 108
APPENDIX F
SECTION 6.8 - INFORMATION PROVIDED TO COMPLY WITH SECTION 404(C) OF ERISA
Individuals eligible to direct investments under the Plan shall receive:
F.1 Automatically:
- An explanation to participants that the Plan is intended to constitute
a plan described in Section 404(c) of ERISA and that the fiduciaries of
the Plan may be relieved of liability for any losses which are the
direct and necessary result of investment instructions given by such
participant;
- A description of the investment alternatives available under the Plan
and, with respect to each designated investment alternative, a general
description of the investment objectives and risk and return
characteristics of each such alternative, including information
relating to the type and diversification of assets comprising the
portfolio of the designated investment alternative;
- Information identifying any designated investment manager;
- An explanation of the circumstances under which participants may give
investment instructions and an explanation of any specified limitations
on those instructions under the terms of the Plan, including any
restrictions on transfers to or from a designated investment
alternative, and any restrictions on the exercise of voting, tender and
similar rights appurtenant to a participant's investment in an
investment alternative;
- A description of any transaction fees and expenses which affect the
participant's account balance in connection with purchases or sales of
interests in investment alternatives (for example, commissions, sales
loads, deferred sales charges, redemption, or exchange fees) and
periodic information regarding the actual expenses charged against
participants' accounts for the expenses of carrying out investment
instructions and in general.
- Information regarding the name, address and phone number of the plan
fiduciary (and, if applicable, the person or persons designated by the
plan fiduciary to act on its behalf) responsible for providing the
information described below upon request of a participant and a
description of the information described below which may be obtained on
request;
E-282
<PAGE> 109
Appendix F 2
- A description of the procedures established to provide for the
confidentiality of information relating to the purchase, holding and
sale of Kaydon stock, and the exercise of voting, tender and similar
rights, by participants, and the name, address and phone number of the
plan fiduciary responsible for monitoring compliance with those
procedures; and
- In the case of each investment alternative which is subject to the
Securities Act of 1933, and in which the participant has no assets
invested, immediately following the participant's initial investment, a
copy of the most recent prospectus provided to the Plan (or a copy of
such most recent prospectus immediately prior to the participant's
initial investment in that alternative); subsequent to an investment in
an investment alternative, any materials provided to the Plan relating
to the exercise of voting, tender or similar rights which are
incidental to the holding in the account of the participant of an
ownership interest in that alternative to the extent that the rights
are passed through to participants under the Plan, as well as a
description of or reference to plan provisions relating to the exercise
of voting, tender or similar rights.
F.2 On Request:
- A description of the annual operating expenses of each designated
investment alternative (for example, investment management fees,
administrative fees, transaction costs) which reduce the rate of return
to participants, and the aggregate amount of those expenses expressed
as a percentage of average net assets of the designated investment
alternative;
- Copies of any prospectuses, financial statements and reports, and of
any other materials relating to the investment alternatives available
under the Plan, to the extent that information is provided to the Plan;
- A list of the assets comprising the portfolio of each designated
investment alternative which constitutes plan assets, the value of each
such asset (or the proportion of the investment alternative which it
comprises), and, with respect to each asset which is a fixed rate
investment contract issued by a bank, savings and loan association or
insurance company, the name of the issuer of the contract, the term of
the contract and the rate of return on the contract;
- Information concerning the value of shares or units in designated
investment alternatives available to participants under the Plan, as
well as the past and current investment performance of the alternatives
determined, net of expenses, on a reasonable and consistent basis; and
- Information concerning the value of shares or units in designated
investment alternatives held in the account of the participant.
E-283
<PAGE> 110
APPENDIX G
SECTION 6.8 - POLICIES AND PROCEDURES RE: COMPLIANCE WITH SECTION 404(C) OF
ERISA
G.1 Policy and Procedure To Inform Participants of Actual Expenses Charged
Against Accounts. Participants will be periodically informed of the
actual expenses incurred with respect to their respective individual
accounts, including but not limited to a description of any transaction
fees and expenses which affect the participant's account balance in
connection with purchases or sales of interests in investment
alternatives (for example, commissions, sales loads, deferred sales
charges, redemption, or exchange fees) and periodic information
regarding the actual expenses charged against participants' accounts
for the expenses of carrying out investment instructions and in
general. Kaydon Corporation will contract with a contract
administrator who will be obligated to provide information at least
quarterly to participants regarding those actual expenses. The
contract administrator will also respond to participants' reasonable
requests for information about actual expenses on a basis more
frequently than quarterly, and will also make available a procedure for
participants to obtain advance information regarding expenses to be
charged in certain circumstances.
G.2 Policy and Procedure to Provide For Confidentiality of Information
Regarding Stock. Kaydon Corporation intends that information relating
to the purchase, holding and sale of Kaydon stock and the exercise of
voting, tender and similar rights by participants be maintained on a
confidential basis. Kaydon Corporation will follow the following
procedure to maintain that confidentiality, except to the extent
necessary to comply with Federal laws or state laws not pre-empted by
ERISA.
A. Participant directions to purchase or sell Kaydon stock are
communicated to the local Human Resources representative who then
communicates the direction to the Contract Administrator or the
Trustee. Alternatively, the participant may use the Contract
Administrator's telephone response system to bypass the local Human
Resources representative. In either case, the information regarding
purchases, sales or holding of Kaydon stock acquired by the Human
E-284
<PAGE> 111
Appendix G 2
Resources department of the Plan Sponsor, the Contractor Administrator,
or the Trustee (or any other involved party) shall not be provided to
any individual employed by the Plan Sponsor or to any department of the
Plan Sponsor except as provided above or as necessary to allow the Plan
Sponsor to provide infirmation about Kaydon stock to participants.
B. Participants are provided information for the exercise of, and actually
exercise, voting, tender and similar rights relating to Kaydon stock
through the Contract Administrator, the Trustee and the third-party
proxy voting service. Information regarding the exercise of voting,
tender and similar rights relating to Kaydon stock shall not be
provided to any individual employed by the Plan Sponsor or to any
department of the Plan Sponsor except as provided above.
C. The Benefits Committee is responsible for determining from time to time
that the procedures to provide for the confidentiality of information
regarding the purchase, holding and sale of Kaydon stock and the
exercise of voting, tender and similar rights with respect to such
stock are sufficient to safeguard the confidentiality of the
information in the circumstances described in this Policy, that such
procedures are being followed, and that an independent fiduciary is
appointed to carry out activities relating to Kaydon stock in those
situations which the Benefits Committee determines involve a potential
for undue employer influence upon participants with regard to the
direct or indirect exercise of shareholder rights.
D. The Committee is also responsible for determining when there are
circumstances involving a potential for undue employer influence upon
participants with regard to the direct or indirect exercise of
shareholder rights and making referral to the independent fiduciary in
those circumstances.
E. First of America Bank-West Michigan is the independent fiduciary
responsible for carrying out activities relating to Kaydon stock in any
situations in which the Committee determines involve a potential for
undue employer influence upon participants with regard to the direct or
indirect exercise of shareholder rights.
E-285
<PAGE> 112
APPENDIX H
SECTION 7.2(A)(V) - ADDITIONAL RULES REGARDING HARDSHIP WITHDRAWALS
An immediate and heavy financial need also includes:
- Living Expenses. Living expenses for the basic necessities of food,
shelter, clothing and similar items where the participant establishes
that the life or health of the participant or a family member dependent
on the participant is or will be threatened if the assistance is not
provided.
- Debts. Accumulated debts of the participant which the participant
establishes were incurred for items which would otherwise constitute an
immediate and heavy financial need under the terms of the Plan.
- Automobile. The reasonable cost of an automobile which the participant
establishes is necessary for the participant to remain gainfully
employed.
- Adoption. The reasonable costs of adoption of a child by the participant.
E-286
<PAGE> 113
APPENDIX I
SECTION 9.1 - PARTIES RESPONSIBLE FOR CERTAIN PLAN FUNCTIONS
I.1 Contract Administrator. Retirement Plan Services, Inc.
I.2 Trustee. First of America Bank-West Michigan.
I.3 Administrative Committee or Committee.
John F. Brocci
Lawrence J. Cawley
Stephen K. Clough
Shelley A. Schwemley
Thomas C. Sorrells, III
E-287
<PAGE> 1
EXHIBIT 10.2
ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
(As Amended and Restated December 14, 1994 Effective July 1, 1989)
E-288
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
I Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Qualification Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Incorporation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 No Prior Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Qualifying Employer Securities and Special Rule . . . . . . . . . . . . . . . . . . . . . . 2
II Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Account Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Active Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Allocation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.13 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.14 Qualified Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.15 Qualifying Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.16 Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.17 Top Heavy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
III Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Eligibility Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Re-Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4 Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
IV Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
-i-
E-289
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
4.2 Maximum Deductible Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.3 Maximum Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.4 Excess Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.5 Erroneous Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.6 Investment of Contributions in Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
V Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Matching and Voluntary Contribution Limits . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.4 Actual Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.5 Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.6 Salary Deferred Contribution Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.7 Actual Deferral Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.8 Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.9 Elective Deferral Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.10 Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.11 Multiple Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
VI Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.1 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.2 Allocation of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.3 Allocation of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.4 Allocation of Expenses, Earnings, Losses and Adjustments in Value . . . . . . . . . . . . . 49
6.5 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.6 Vested Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.7 Investment of Employer and Participant Contributions . . . . . . . . . . . . . . . . . . . . 53
6.8 ERISA Section 404(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
VII Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.1 Distributive Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 General Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.4 Special Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.5 Information Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.6 Application for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.7 Timing of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.8 Duration of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
-ii-
E-290
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
7.9 Amount of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.10 Special Spousal Survivor Annuity Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.11 Special Participant Account Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . 71
7.12 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.13 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.14 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.15 Qualified Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.16 Direct Rollover Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
VIII Insurance or Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.1 Types of Policies and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.2 Premiums - Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.3 Active Participant Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
IX Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.1 Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.2 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.3 Employer Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.4 Investment Manager Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.5 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.6 Fiduciary Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
9.7 Inter-Relationship of Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
9.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
9.9 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
9.10 Limitation of Liability and Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . 82
X Amendment and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.2 Vesting Schedule Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.4 Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.5 Full Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.6 Merger or Consolidation of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
XI Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.1 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.2 Employment Rights Not Enlarged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.3 Participants' Rights Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.4 Interpretation and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
-iii-
E-291
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C> <C>
11.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
Appendix A - Section 1.1 - Special Effective Dates
Appendix B - Section 2.6 - Explanation of Definition of Compensation
Appendix C - Section 2.7(d)(ii) - Top Heavy Actuarial Assumptions
Appendix D - Section 6.7(a)(i) - List of Investment funds Available Under the
Plan
Appendix E - Section 6.8 - Information Provided to Comply With Section 404(c)
of ERISA
Appendix F - Section 6.8 - Policies and Procedures Re: Compliance With Section
404(c) of ERISA
Appendix G - Section 7.2(a)(v) - Additional Rules Regarding Hardship
Withdrawals
Appendix H - Section 9.1 - Parties Responsible for Certain Plan Functions
-iv-
E-292
<PAGE> 6
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
On this 14th day of December, 1994, Electro-Tec Corporation (the
Employer) amends and restates the Electro-Tec Corporation Employee Retirement
Benefit Plan (the Plan).
ARTICLE I
ESTABLISHMENT
1.1 EFFECTIVE DATE. This amendment and restatement is generally
effective on the Plan's original effective date, July 1, 1989. Certain
provisions are effective as specified in Appendix A.
1.2 QUALIFICATION INTENT. The Plan is intended to qualify as a
401(k) profit sharing and stock bonus plan under Sections 401(a), 401(k) and
501(a) of the Internal Revenue Code of 1986, as amended (the Code), and as an
employee pension benefit plan under the Employee Retirement Income Security Act
of 1974, as amended (ERISA).
1.3 INCORPORATION OF TRUST. The Employer has adopted a Trust
which is incorporated in this Plan by reference.
1.4 NO PRIOR APPLICATION. The Plan and each amendment to the Plan
do not apply to any participant who is not an Active Participant on or after
the effective date of the Plan or the respective amendment, as the case may be,
except that:
(a) EXPLICIT APPLICATION. The Plan, an amendment, or portions of
the Plan or an amendment applies to the extent explicitly designated as
applicable to other participants; and
(b) ARTICLE VII. The provisions of Article VII through XI and the
Appendices, as amended
-1-
E-293
<PAGE> 7
from time to time, apply to all participants.
1.5 QUALIFYING EMPLOYER SECURITIES AND SPECIAL RULE. Effective
July 1, 1992, the Plan is intended to allow up to 100% of the Plan assets to be
invested in qualifying employer securities within the meaning of Section 407 of
ERISA. The maximum number of shares which may be allocated to Participants
under this Plan is determined by the Form S-8 Registration Statement for the
Plan, as amended from time to time.
-2-
E-294
<PAGE> 8
ARTICLE II
DEFINITIONS
2.1 ACCOUNT BALANCE. The Account Balance is the sum of:
(a) SINGLE PARTICIPANT INVESTMENT. The value of a participant's
Single Participant Investment from time to time; and
(b) OTHER. The value of a participant's accounts other than a
Single Participant Investment from time to time, including all allocations as of
the coincident or immediately preceding Allocation Date and the appropriate
portion of the earnings, losses and adjustments in value from that Allocation
Date to the date of any distribution.
2.2 ACTIVE PARTICIPANT. An Active Participant is an Employee who
has met the Eligibility Requirements of Section 3.1 who begins to participant
in the Plan under Section 3.2. An Employee who becomes an Active Participant
remains an Active Participant until the Employee is no longer employed as an
Employee and remains a participant until death or the participant's entire
vested Account Balance is distributed.
2.3 AFFILIATED EMPLOYER. An Affiliated Employer is an employer
included within a controlled group of corporations, a group of trades or
businesses under common control, or an affiliated service group (as defined in
Code Sections 414(b), (c), (m), or (o)) with the Employer.
2.4 ALLOCATION DATE. Effective January 1, 1994, each business day
is an Allocation Date for Participant Contributions, earnings, losses and other
adjustments in value. Prior to that, the Allocation Date was December 31,
except that the Allocation Date for Salary Deferred Contributions was the last
day of each month. At all times, earnings, losses and other adjustments in
value were credited to participants' Accounts to the date Stock in the Account
was sold or
-3-
E-295
<PAGE> 9
another investment liquidated for purposes of distribution. The Allocation
Date for Employer Contributions and forfeitures is December 31. The Committee
may designate one or more interim Allocation Dates.
2.5 BREAK IN SERVICE. A Break in Service is a Plan Year in which
an individual has not completed more than five hundred (500) Hours of Service
due to a termination of employment.
(a) DATE OF BREAK. A Break in Service occurs on the first day of
the applicable Plan Year.
(b) M/PATERNITY LEAVE. To determine whether an individual has
incurred a Break in Service, the individual is credited with up to
five hundred one (501) Hours of Service during a M/Paternity Leave.
(i) DEFINED. M/Paternity Leave is an absence from
employment due to the individual's pregnancy, the birth of the
individual's child, the individual's adoption of a child or the
individual's care of a new born or recently adopted child. The
individual must certify that the absence is due to M/Paternity Leave,
specify the exact period of the absence, and provide either medical
certification of the birth or legal certification of the adoption.
(ii) CREDITING. An individual shall, during the
M/Paternity Leave, be credited with the individual's regularly
scheduled work hours. If the individual is not regularly scheduled,
the individual shall be credited with eight (8) Hours of Service for
each normally scheduled work day during the Leave. The Hours shall be
credited to the Plan Year in which the absence occurs, or to the next
Plan Year, as necessary, to prevent a Break in Service.
2.6 COMPENSATION. Except as otherwise provided, Compensation is
wages, salaries, fees for professional services, and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer (or
Affiliated Employer) to the extent that the amounts are includible in gross
income (including, but not limited to, overtime and shift premiums, commissions
paid salesman,
-4-
E-296
<PAGE> 10
compensation for services on the basis of a percentage of profits, bonuses
(except as excluded below) and salary continuation payments (reduced simplified
general Section 415 Compensation as provided in Reg. Sections 1.415-2(d)(10)
and 1.414(s)-1(c)(3)), plus any salary reduction contribution made by the
Employer and excluded from gross income as a cafeteria plan contribution under
Code Section 125, a 401(k) profit sharing or simplified employee pension (SEP)
plan contribution, or a Code Section 403(b) tax deferred annuity contribution,
any compensation deferred under an eligible Code Section 457(b) deferred
compensation plan and any Code Section 414(h)(2) pick-up contributions. A
listing of the types of remuneration not included in this definition of
Compensation is provided in Appendix B.
(a) CODE SECTION 415 LIMIT. For purposes of the Code Section 415
Limit and the Maximum Annual Contribution limit of Article IV, Compensation is
determined without the additions described above.
(b) EMPLOYER RELATED. Compensation includes only those items
relating to the participant's employment with the Employer (or Affiliated
Employer).
(c) EXCLUSION. For purposes of determining and allocating
Employer Contributions under Article VI (other than Minimum Top Heavy
Contributions) and ACP and ADP testing, Compensation excludes compensation
earned before becoming and after ceasing to be an Active Participant. For the
Plan Year ending December 31, 1989 only, Compensation excludes non-base
compensation.
(d) DOLLAR LIMIT. Effective on the first day of the 1989 Plan
Year, January 1, 1989, Compensation is limited to $200,000 per year, as
adjusted by the Secretary of the Treasury in the same manner as under Code
Section 415(d). In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each employee taken into account under the Plan may not exceed the OBRA '93
Annual Compensation Limit.
(i) DEFINED. The OBRA '93 Annual Compensation Limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section
-5-
E-297
<PAGE> 11
401(a)(17)(B) of the Internal Revenue Code.
(A) COST OF LIVING. The cost-of-living
adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (Determination Period) beginning in that calendar
year.
(B) SHORT PERIOD. If a Determination Period
consists of fewer than 12 months, the OBRA '93 Annual
Compensation Limit is multiplied by a fraction the numerator
of which is the number of months in the Determination Period
and the denominator of which is 12.
(ii) OVERRIDE. For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the limitation under
Section 401(a)(17) of the Code means the OBRA '93 Annual Compensation
Limit set forth in this provision.
(iii) PRIOR PERIOD. If Compensation for any prior
Determination Period is taken into account in determining benefits
accruing in the current Plan Year, the Compensation for that prior
Determination Period is subject to the OBRA '93 Annual Compensation
Limit in effect for that prior Determination Period. For this
purpose, for Determination Periods beginning before the first day of
the first Plan Year beginning on or after January 1, 1994, the OBRA
'93 Annual Compensation Limit is $150,000.
(e) FAMILY AGGREGATION. The Compensation of a Five Percent (5%)
owner and the ten most highly compensated Highly Compensated Employees for the
year includes the Compensation of the individual's spouse and lineal descendants
who have not attained age 19 before the close of the year. In that case, the
family member is not considered a separate employee. If the Dollar Limit is
exceeded as a result of the Family Aggregation rule, the limitation is prorated
among the affected individuals in proportion to each individual's Compensation
as determined prior to the application of the rule.
2.7 EMPLOYEE. An Employee is any person employed by the Employer
who receives
-6-
E-298
<PAGE> 12
compensation for personal services rendered to the Employer which is subject to
withholding for federal income tax purposes, except nonresident aliens who do
not receive any earned income (as defined in Code Section 911(d)(2)) from the
Employer which constitutes United States source income (as defined in Code
Section 861(a)(3)) and persons included in a collective bargaining unit which
has not adopted the Plan.
(a) LEASED EMPLOYEE. Employee includes a Leased Employee. A
Leased Employee is an individual other than an employee who has performed
services historically performed by employees for the Employer (or Related
Person under Code Section 414(n)(6)) on a full-time basis for at least one (1)
year.
(b) LEASED EXCLUSION. A Leased Employee is excluded if:
(i) OTHER PLAN. The leasing organization certifies that
the Leased Employee is covered by a money purchase pension plan which
provides for: immediate participation (except as otherwise provided
in Code Section 414(n)); non-integrated contributions of at least ten
percent (10%) of Compensation and full and immediate vesting; and
(ii) WORK FORCE. Leased Employees do not constitute more
than twenty percent (20%) of the aggregate number of Non-Highly
Compensated Employees who:
(A) FULL-TIME. Have performed services for the
Employer and any Related Person on a substantially full-time
basis for a period of at least 1 year; or
(B) OTHER LEASED. Are leased employees of the
Employer (determined without regard to this paragraph).
2.8 HIGHLY COMPENSATED EMPLOYEES. A Highly Compensated Employee is:
(a) GENERAL RULE. An Employee who has an Hour of Service for the
performance of duties during the Plan Year who, with respect to the Employer
(or Affiliated Employer), during the Plan Year or the Look-Back Year:
(i) FIVE PERCENT OWNER. Is at any time a more than five
percent (5%) owner of
-7-
E-299
<PAGE> 13
stock or voting power;
(ii) $75,000. Receives Compensation in excess of
$75,000, as adjusted by the Secretary of the Treasury;
(iii) TOP PAID GROUP. Receives Compensation in excess of
$50,000, as adjusted by the Secretary of the Treasury, and is in the
group consisting of the top 20 percent of the employees of the
Employer (and Affiliated Employers) when ranked on the basis of
Compensation received during the year (calculated by including Leased
Employees required to be treated as Employees but excluding employees
who: have not completed six months of service by the end of the year;
normally work less than 17 1/2 hours per week or during less than six
months during any year; or have not attained age 21 by the end of the
year); or
(iv) OFFICER. Is at any time an officer who receives
Compensation greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for the year.
(A) MAXIMUM. The number of officers shall not
exceed the greater of three or ten percent of the total
employees performing services for the Employer (or Affiliated
Employer) during the Plan Year or the Look-Back Year, without
exclusion, with a maximum of 50. If this limitation operates,
the officers are those receiving the greatest compensation
during the Plan Year or the Look-Back Year.
(B) MINIMUM. If no officer satisfies the
compensation rule for the Plan Year or the Look-Back Year, the
highest paid officer for the Plan Year or the Look-Back Year
is a Highly Compensated Employee.
(C) SEPARATE. These rules apply separately to
the Plan Year and the Look-Back Year.
For each Plan Year, an Employee who was not a Highly Compensated Employee under
(ii), (iii), or (iv), above, for the Look-Back Year is not a Highly Compensated
Employee unless the Employee is also one of the 100 highest paid employees of
the Employer (and Affiliated Employers) for the Plan Year, including Leased
Employees required to be treated as
-8-
E-300
<PAGE> 14
employees. The applicable dollar amount for a year is the dollar
amount, as adjusted by the Secretary of the Treasury, for the
calendar year in which the Plan Year or the Look-Back Year begins.
(b) FORMER EMPLOYEE RULE. A former Employee who:
(i) SEPARATED. Performs no services for the Employer
(or Affiliated Employer) during the Plan Year or is treated as having
separated under Code Section 414(q); and
(ii) HIGHLY COMPENSATED. Was a Highly Compensated
Employee when the employee separated from service or at any time after
attaining age 55.
Former employees are not included in the Top-Paid Group, the group of the top
100 employees, or the group of includable officers for purposes of determining
the Employees who are Highly Compensated and are not used to determine the
number of employees in the Top Paid Group.
(c) FAMILY MEMBER RULE. Any individual who is a member of the
family of a Five Percent (5%) Owner or of one of the ten most Highly
Compensated Employees for the Plan Year or the Look-Back Year is not considered
a separate employee. Any Compensation paid to the individual (and any
applicable contribution or benefit on behalf of the individual) is treated as
paid to (or on behalf of) the Five Percent (5%) Owner or Highly Compensated
Employee. Family means the employee's spouse and lineal ascendants or
descendants and the spouses of the lineal ascendants or descendants on any day
within the year.
(d) DETERMINATION AND LOOK-BACK YEARS. The Determination Year is
the Plan Year.
(i) LOOK-BACK YEAR. The Look-Back Year is the calendar
year ending with or within the applicable Plan Year or, in the case of
a Plan Year of less than twelve months, the calendar year ending with
or within the twelve month period ending with the end of the Plan
Year.
(ii) SPECIAL RULE FOR PLAN YEAR. The calculation for the
Plan Year is based only on the period, if any, by which the applicable
Plan Year extends beyond the Look-Back Year. In that case:
-9-
E-301
<PAGE> 15
(A) NO LAG PERIOD. If there is no lag period, a
separate Plan Year calculation is not required.
(B) ADJUSTMENT. The $75,000.00 and Top Paid
Group dollar amounts must be adjusted for each lag period by
multiplying the dollar amount by a fraction, of which the
numerator is the number of calendar months included in the lag
period and the denominator is twelve.
(C) NO SERVICES. An employee who performs
services during the Plan Year is not a Former Employee merely
because the employee does not perform services during the lag
period.
2.9 HOUR OF SERVICE. An Hour of Service is an hour for which an
employee is paid or entitled to be paid by the Employer (or Affiliated
Employer, except for hours before the affected Employers become affiliated):
for the performance of duties for the Employer (or Affiliated Employer) during
the applicable period; for a period of time during which no duties are
performed (whether or not employment has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, Military Service
or leave of absence related to the Employer (or Affiliated Employer); or for
back pay, irrespective of mitigation of damages, based on a settlement or award
involving the Employer (or Affiliated Employer).
(a) EXCLUDED HOURS. Hours of Service are not credited for periods
for which payments are received under applicable worker's compensation,
unemployment compensation or disability laws or for payments which reimburse an
Employee for medical or medically related expenses.
(b) MAXIMUM CREDIT. For periods during which no duties are
performed or back pay is awarded, an employee is not credited with greater than
five hundred one (501) Hours of Service during any single, continuous period
during which no services are performed for the Employer (or Affiliated
Employer). An employee is not credited with Hours of Service under this
subsection in excess of regularly scheduled hours for the performance of duties
during the period. Credit is not
-10-
E-302
<PAGE> 16
given twice for any Hour of Service. This rule does not limit the crediting of
Hours of Service for paid non-duty vacation, holiday, bereavement, jury duty,
or short-term military service time.
(c) UNIT OF TIME PAYMENT. If non-duty or back-pay payments are
determined by units of time, an employee is credited with the number of
regularly scheduled working hours included in the units of time upon which the
payment is calculated. If the employee does not have a regularly scheduled
workweek, hours are calculated on a reasonable basis which reflects the average
hours worked by the Employee.
(d) OTHER METHOD OF PAYMENT. If non-duty or back-pay payments are
not determined on the basis of time, an employee is credited with Hours of
Service determined by dividing the amount of the payment by the employee's most
recent rate of hourly compensation. If an employee is not paid on an hourly
basis, the hourly rate is determined by dividing the most recent compensation
for the period of payment by the number of hours regularly scheduled for the
period, or if not regularly scheduled, by the average number of hours worked
during the period. If an employee's compensation is not determined on the
basis of a fixed rate for specified periods, the employee's hourly rate is the
lowest hourly rate paid to employees in the same job classification. If no
employees in the same job classification have an hourly rate, the rate is the
minimum wage under Section 7(a)(1) of the Fair Labor Standards Act of 1938, as
amended.
(e) CREDITING. Hours of Service for which duties are performed
are credited to the Plan Year in which the duties are performed. Hours of
Service for which no duties are performed or for back pay are credited to the
Plan Year to which the payment relates. Hours, other than back pay, not
calculated on units of time, shall not extend beyond the first two (2) Plan
Years.
(f) MILITARY SERVICE. An Active Participant who is on an unpaid
military leave of absence and is on active duty in the Armed Forces of the
United States shall receive credit for Hours of Service equal to the Active
Participant's regularly scheduled work hours for each month of leave. The
Active Participant must apply for and be able to resume employment with the
Employer (or Affiliated Employer) within the time for protection of
reemployment rights.
-11-
E-303
<PAGE> 17
(g) SPECIAL RULE FOR PRIOR SERVICE. An employee is also credited
with an Hour of Service with respect to each hour of employment with any
predecessor business entity of an Employer or with a business entity the
business or assets of which were acquired by an Employer prior to the date the
Employer adopted the Plan.
(h) SPECIAL RULE FOR DUTY HOURS. If an Employer does not maintain
hourly records with respect to any employee, the employee is credited with
forty-five (45) Hours of Service for each week in which the employee is
entitled to be credited with a duty Hour of Service.
2.10 LIMITATION YEAR. The Limitation Year is the Plan Year.
2.11 MATCHING CONTRIBUTION. A Matching Contribution is any
Employer Contribution made to the Plan on behalf of an Active Participant on
account of a Voluntary or Elective Contribution made by the Active Participant
for the Plan Year or any forfeiture allocated on the basis of Voluntary,
Matching, or Elective Contributions, excluding any contribution or allocation
used to meet the top heavy minimum contribution or benefit requirement of Code
Section 416 and any Matching Contribution to the extent considered for purposes
of Code Section 401(k) testing.
2.12 NORMAL RETIREMENT AGE. Normal Retirement Age is 65.
2.13 PLAN YEAR. The Plan Year is an annual accounting period
ending each December 31.
2.14 QUALIFIED ORDER. A Qualified Order is an order issued by a
competent State Court with jurisdiction under its domestic relations law which
meets the following conditions.
(a) REQUIREMENTS. The order must:
(i) RECIPIENT. Identify the recipient who must be the
then or former spouse, child or dependent of the participant;
-12-
E-304
<PAGE> 18
(ii) SUBJECT. Provide for payment in connection with
alimony, child support or a division of marital property; and
(iii) CONTENTS. Contain the name and address of the
participant and the recipient, the amount or percentage of the payment
and the duration of the payment.
(b) RESTRICTIONS. The order must not require:
(i) INCREASE. The Plan to pay more to the participant
and all recipients than the participant's Vested Account Balance;
(ii) METHOD, DURATION. A method or duration of payment
not permitted under the Plan;
(iii) PAYMENT. Payment to begin before the earliest of:
a Distributive Event or the later of the date the participant attains
age 50 or could begin receiving benefits upon separation from service;
(iv) CANCEL. Cancellation of the prior right of another
recipient; or
(v) BENEFICIARY. A greater right to designate a
beneficiary for a recipient's benefit amount than the participant's
right, or application of the Joint and Spousal Survivor benefit or the
Spousal Survivor Annuity to the spouse of the recipient.
2.15 QUALIFYING SPOUSE. A Qualifying Spouse is an individual to
whom the participant has been legally married for at least one (1) year before
the earlier of the first day of the first period for which benefits are paid or
the date of the participant's death and to whom the participant remains married
at that time.
(a) SPECIAL RULES. A Qualifying Spouse includes: to the extent
of the interest provided under a Qualified Order, an individual who is a former
spouse who was married to the participant for at least one year who is required
to be treated as a Qualifying Spouse under the Order and, for provisions
relating to the Joint and Spousal Survivor form, an individual whom a
participant legally married within one (1) year before the first day of the
first period for which benefits were paid and
-13-
E-305
<PAGE> 19
to whom the participant has been legally married for at least one (1) year
before the date of the participant's death and to whom the participant remains
married at that time.
(b) QDRO SPOUSE. A Qualifying Spouse does not include a spouse or
former spouse to the extent benefits are payable to or with respect to a prior
spouse who is treated as a Qualifying Spouse under a Qualified Order.
2.16 STOCK. Stock is common stock of Kaydon Corporation.
2.17 TOP HEAVY. The Plan is Top Heavy for any Plan Year in which
the present value of Accrued Benefits for Key Employees is more than sixty
percent (60%) of the present value of Accrued Benefits for all Participants
excluding former Key Employees. The Plan is Super Top Heavy for any Plan Year
in which the present value of Accrued Benefits for Key Employees is more than
ninety percent (90%) of the present value of Accrued Benefits for all
Participants excluding former Key Employees.
(a) REQUIRED AGGREGATION. A Required Group includes each plan of
the Employer (or Affiliated Employer) in which a Key Employee participates or
participated at any time during the five year period ending on the
Determination Date (whether or not terminated) or which enables any such plan
to meet the nondiscrimination and participation requirements of Code Sections
401(a)(4) or 410. If the Group is Top Heavy, all plans in the Group are Top
Heavy. If the Group is not Top Heavy, all plans in the Group are not Top
Heavy.
(b) PERMISSIVE AGGREGATION. A Permissive Group may include any
other plan of the Employer (or Affiliated Employer) or to which the Employer
contributes which, when considered with any Required Group, satisfies the
nondiscrimination and participation requirements of Code Sections 401(a)(4) and
410 and provides comparable contributions or benefits. If the Permissive Group
is Top Heavy, only the plans in the Required Group are Top Heavy. If the
Permissive Group is not Top Heavy, all plans in the Permissive Group are not
Top Heavy.
-14-
E-306
<PAGE> 20
(c) KEY EMPLOYEES. A Key Employee is a Participant who, under
Code Section 416(i), is with respect to the Employer:
(i) OFFICER. A corporate officer whose Compensation is
more than one-half the limitation under Code Section 415(b)(1)(A);
(ii) TEN LARGEST OWNERS. One (1) of ten (10) employees
owning the largest interests, excluding those whose pay is not more
than the limitation under Code Section 415(c)(1)(A), who have
Compensation less than the tenth largest owner, and who owns less than
a one-half percent (.5%) interest;
(iii) FIVE PERCENT OWNER. A Five Percent (5%) Owner; or
(iv) ONE PERCENT OWNER, $150,000. A more than one
percent (1%) owner of stock or voting power with Compensation of more
than $150,000.00.
(d) DETERMINATION. Top Heavy status and Account Balances are
determined under Code Section 416(g) on the last day of the preceding Plan
Year, or, for the initial Plan Year, the last day of that Plan Year
(Determination Date).
(i) PERSONS INCLUDED. Key Employees include individuals
who had that status during the Plan Year or any of the four (4)
preceding Plan Years or who are their beneficiaries. For purposes of
this section, Participants include individuals who were Employees
during the Plan Year or any of the four (4) preceding Plan Years,
without regard to whether the individual actually receives compensation
for the personal services rendered to the Employer.
(ii) ACTUARIAL ASSUMPTIONS. The actuarial assumptions
for this determination, if any, are set forth in Appendix C.
(iii) ACCRUED BENEFITS. The Accrued Benefit under the
Plan and any other defined contribution plan is the Participant's
Account Balance. The Accrued Benefit under a defined benefit plan is
the Participant's annualized normal retirement benefit under the basic
form determined under that plan's accrual method. For Participants
other than Key Employees, if
-15-
E-307
<PAGE> 21
there is no specified uniform accrual method, the Accrued Benefit is
determined as if the benefit accrued not more rapidly than the slowest
accrual rate permitted under Code Section 411(b)(1)(C). Accrued
Benefits include distributions made during the Plan Year and the four
(4) preceding Plan Years, other than benefits already included, and
contributions due and unpaid in the first year of the Plan or to a
money purchase, target benefit or defined benefit pension plan.
(iv) OWNERSHIP. Ownership is determined under Code
Section 318 modified by Code Section 416(i)(1)(B)(iii) without regard
to the aggregation rules under Code Sections 414(b), (c), (m) and (o).
(v) OTHER PLANS. For other plans of an Employer, values
shall be determined on the Determination Date ending on or within the
same calendar year.
2.18 YEAR OF SERVICE. A Year of Service is:
(a) GENERAL RULE. A Period in which at least one thousand (1,000)
Hours of Service are completed. The Period is:
(i) ELIGIBILITY. For eligibility purposes, the 12
consecutive month period beginning on the date on which an Employee
first performs an Hour of Service for the Employer on or after the
Effective Date, and Plan Years beginning on or after that date; and
(ii) VESTING AND BREAK IN SERVICE. For vesting and Break
in Service purposes, each Plan Year beginning on or after the
Effective Date.
(b) PRE-AMENDMENT AND RESTATEMENT. All Years of Service credited
under the Plan before amendment and restatement in accordance with the prior
plan document.
(c) PREDECESSOR EMPLOYER. All Years of Participating Service
credited prior to August 1, 1989 under the KDI Corporation Employee Retirement
Benefit Plan.
Years of Service credited prior to a Break in Service are disregarded for all
purposes under the Plan upon a return to employment until the Employee again
completes one-thousand (1,000) Hours of
-16-
E-308
<PAGE> 22
Service for the performance of duties during the twelve (12) month period
following the date on which the Employee completes an Hour of Service after the
Break in Service or during any calendar year beginning on or following that
date. Years of Service credited prior to a distribution of a participant's
entire vested Account Balance after termination of employment are disregarded
(with respect to previous allocations) upon a return to employment unless the
individual repays the distribution in accordance with the limits of Article VI.
-17-
E-309
<PAGE> 23
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY REQUIREMENTS. An Employee is eligible to become
an Active Participant when the Employee:
(a) GENERAL. Effective January 1, 1992:
(i) AGE. Attains age 21;
(ii) EMPLOYMENT. Completes six months of employment with
the Employer or an Affiliated Employer; and
(iii) SERVICE.
Completes five-hundred (500) or more Hours of Service prior to
the end of the six (6) month period immediately subsequent to the date
on which the Employee completes the Employee's first Hour of Service.
If the Employee does not complete five-hundred (500) or more
Hours of Service within that period, Hours of Service are calculated
over a rolling six month period.
(b) PRIOR RULE. Effective through December 31, 1991, an Employee
was eligible to become an Active Participant when the Employee attained age 21
and completed one Year of Service.
(c) SPECIAL RULE. Notwithstanding the General and Prior
eligibility rules, the 500 Hour of Service requirement shall not operate to
delay the participation of an individual who completes 1000 Hours of Service
during the one year period beginning with the individual's first Hour of
Service or a Plan Year beginning during that period or thereafter. An
individual who completes 1000 Hours of Service during that period or a Plan
Year who is not already an Active Participant under the 500 Hour of Service
rule is, upon attaining 21, eligible to become an Active Participant on the
next entry date (or that date, if it is an entry date).
3.2 PARTICIPATION. Every Active Participant in the Plan on the
Effective Date remains an
-18-
E-310
<PAGE> 24
Active Participant. Each Employee who satisfies the Eligibility Requirements
on the Effective Date is an Active Participant on the Effective Date.
Effective January 1, 1992, except as provided by the Special Rule, each other
Employee is an Active Participant on the first January 1, April 1, July 1, or
October 1 coincident with or after the Employee satisfies the Eligibility
Requirements.
(a) PRIOR RULES. Prior to January 1, 1992, except as provided by
the Special Rule, each Employee was an Active Participant on the first January
1 or July 1 coincident with or after the Employee satisfied the Eligibility
Requirements.
(b) SPECIAL RULE. Notwithstanding the current and prior
Participation rules, every Employee who was a participant in the KDI
Corporation Employee Retirement Benefit Plan on July 1, 1989 became an Active
Participant in this Plan on that date.
3.3 RE-PARTICIPATION. An Employee who is reemployed by the
Employer following a Break in Service becomes an Active Participant:
(a) FORMER VESTED ACTIVE PARTICIPANT. An Employee who had a
vested interest in an Employer Account at the beginning of a Break in Service
is an Active Participant on the first day on which the Employee again completes
an Hour of Service for the performance of duties as an Employee if the Employee
completes one (1) Year of Service.
(b) FORMER NONVESTED ACTIVE PARTICIPANT. An Employee who was
previously an Active Participant in the Plan but did not have a vested interest
in an Employer Account at the beginning of a Break in Service is an Active
Participant on the first day on which the Employee again completes an Hour of
Service for the performance of duties as an Employee if the Employee completes
one (1) Year of Service and the Employee's consecutive Breaks in Service do not
exceed the greater of five (5) or the pre-Break Years of Service.
3.4 TRANSFERRED EMPLOYEES. Plan benefits of employees who
transfer employment among Employers, among classifications within the
Employers, or among the Employer and an Affiliated
-19-
E-311
<PAGE> 25
Employer which has not adopted the Plan are coordinated as follows.
(a) IN GENERAL. A Transfer is a change in job responsibilities in
which the employee is employed by an Employer or an Affiliated Employer both
before and after the change, the employee is an eligible Active Participant in
this Plan either before or after the change, and the employee first performs an
Hour of Service in the new job (the End of Transfer) before the fifth
anniversary of the date on which the employee last performed an Hour of Service
in the old responsibilities (the Beginning of the Transfer).
(i) DIRECTION. The coordination depends upon whether
the employee is Transferring into or out of this Plan and upon whether
the other plan involved in the Transfer is a defined benefit plan or a
defined contribution plan.
(ii) VESTING AND PARTICIPATION. In all transfers, the
employee's employment year service and Years of Service for vesting
and participation purposes with the Employer and An Affiliated
Employer are credited for vesting and participation purposes under
this Plan and all plans to which, or from which, the employee
transfers. An employee is entitled to a benefit from a plan only if
the employee's aggregate service for vesting purposes entitles the
employee to a benefit under that plan's vesting schedule.
(b) TRANSFERS OUT. An employee who Transfers from employment
covered by this Plan to employment with the Employer or an Affiliated Employer
not covered by this Plan receives an amount under this Plan based on accruals
under this Plan for the portion of the plan year of Transfer prior to the
Beginning of the Transfer to the extent the employee is eligible under the terms
of this Plan. The employee's Accounts in this Plan will continue to share in
investment gains or losses under the terms of this Plan, and will continue to be
subject to participant investment direction under this Plan from and after the
Beginning of the Transfer.
(i) TRANSFER TO A DEFINED BENEFIT PLAN. If the employee
participates in a defined benefit plan maintained by the Employer or
an Affiliated Employer, to the extent provided in that plan, the
employee will receive a benefit from the defined benefit plan to which
the
-20-
E-312
<PAGE> 26
employee Transferred based only upon the employee's service and
compensation with the Employer or Affiliated Employer (except as
limited by that plan) subsequent to the End of the Transfer.
(ii) TRANSFER TO A DEFINED CONTRIBUTION PLAN. If the
employee participates in a defined contribution plan maintained by the
Employer or an Affiliated Employer, the employee will receive an
amount under the defined contribution plan to which the employee
Transferred based on accruals under that plan for the portion of the
plan year of Transfer and later plan years subsequent to the End of
the Transfer to the extent the employee is eligible under the terms of
that plan. In addition, to the extent the employee is fully vested,
the plans so provide, the employee requests, the plans' qualified
status is unaffected and no plan amendments or plan operational
changes are necessary to carry out the transfer, the employee's
account balance in this Plan will be transferred in a trustee to
trustee transfer to the other defined contribution plan as soon as
administratively practicable after the End of the Transfer.
(c) TRANSFERS IN. An employee who Transfers from employment with
the Employer or an Affiliated Employer not covered by this Plan to employment
covered by this Plan receives an amount under this Plan based on accruals under
this Plan for the portion of the plan year of Transfer and later plan years
subsequent to the End of the Transfer to the extent the employee is eligible
under the terms of this Plan.
(i) TRANSFER FROM A DEFINED BENEFIT PLAN. If the
employee participated in a defined benefit plan maintained by the
Employer or an Affiliated Employer, the employee will receive no
additional service for benefit accrual purposes under that defined
benefit plan from and after the Beginning of the Transfer. The
employee's Average Monthly Compensation under that plan is fixed as of
the Beginning of the Transfer and the employee's benefit at or after
ultimate termination of employment with the Employer and Affiliated
Employer is determined under that plan's benefit formula or benefit
multiplier in effect at the
-21-
E-313
<PAGE> 27
Beginning of the Transfer.
(ii) TRANSFER FROM A DEFINED CONTRIBUTION PLAN. If the
employee participated in another defined contribution plan maintained
by the Employer or an Affiliated Employer, the employee will receive
an amount under the defined contribution plan from which the employee
Transferred based on accruals under that plan for the portion of the
plan year of Transfer prior to the Beginning of the Transfer to the
extent the employee is eligible under the terms of that plan. The
employee's account in that plan will continue to share in investment
gains or losses under the terms of that plan as long as the account
remains part of that plan. In addition, to the extent the employee is
fully vested, the plans so provide, employee requests, the plans'
qualified status is unaffected and no plan amendments or plan
operational changes are necessary to carry out the transfer, the
employee's account balance in that plan will be transferred in a
trustee to trustee transfer to this Plan as soon as administratively
practicable after the End of the Transfer.
(d) SPECIAL RULE. All Transfers are subject to the following
special rules.
(i) NON-RESIDENT ALIENS. These Transfer rules do not
apply to transfers in which the employee was or becomes a non-resident
alien or in which a plan not subject to ERISA is involved.
(ii) DETERMINATION OF SERVICE. Unless otherwise
provided, Years of Service are determined under the plan under which
the service was earned.
-22-
E-314
<PAGE> 28
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS. For each Plan Year, the Employer:
(a) SALARY DEFERRED. Must contribute the sum of Active
Participant Salary Deferred Contributions.
(b) REGULAR PROFIT SHARING. May contribute a Regular Profit
Sharing Contribution. The amount of the contribution, if any, is determined by
the Committee or the Board of Directors of Electro-Tec Corporation in its
discretion, subject to the maximum limitations of this Plan. A Regular Profit
Sharing Contribution is allocated under Article VI and is subject to the
applicable Vesting Schedule.
(c) QUALIFYING. May contribute a Qualifying Contribution which is:
(i) NON-DISCRIMINATORY. Part or all of an Employer
Contribution which is non-discriminatory under Code Section 401(a)(4)
determined with and without the Qualifying Contribution;
(ii) NOT USED. Not taken into account in determining
whether any other contributions or benefits are non-discriminatory
under Code Sections 401(a)(4); or under Code Sections 401(k)(3) or
401(m) except to the extent designated by the Employer for that
purpose under this Plan;
(iii) ALLOCATED. Allocated to the Active Participant as
of a date within the Plan Year; and
(iv) INCREASE. Not effective to increase the difference
between the Actual Contribution Percentages (ACP) or Actual Deferral
Percentages (ADP) for the Highly Compensated and Non-Highly
Compensated groups. The amount of the contribution, if any, is
determined by the Board of Directors of Electro-Tec Corporation in its
discretion, subject to the maximum limitations of this Plan.
-23-
E-315
<PAGE> 29
(d) MATCHING. Will contribute a Matching Contribution which is
the sum of:
(i) 100%. 100% of each eligible Participant's Salary
Deferred Contributions, not to exceed 3% of the Participant's Compensation; and
(ii) 75%. 75% of each eligible Participant's Salary
Deferred Contributions in excess of the Salary Deferred Contributions matched
under subparagraph (i) above, not to exceed an additional 4% of the
Participant's Compensation.
Effective January 1, 1994, the tentative Contribution is reduced by
the amount of forfeitures to be reallocated to Employer Accounts on the
Allocation Date as a Matching Contribution. The Matching Contribution is
allocated under Article VI and is subject to the applicable Vesting Schedule.
Notwithstanding these general rules, the Matching Contribution for the Plan
Year ending December 31, 1994 is the amount determined above less the
forfeitures allocated to the Participant's Accounts for 1993, but not less than
the amount actually matched through June 30, 1994. Further, the Matching
Contribution for 1994 for Highly Compensated Employees is capped at the amount
actually matched through June 30, 1994.
(e) TOP HEAVY MINIMUM. Must, if applicable, contribute the
Minimum Top Heavy Contribution. The Minimum Top Heavy Contribution for each
Plan Year in which the Plan is Top Heavy is:
(i) SINGLE PLAN. If the Employer does not maintain
another qualified retirement plan, or for Active Participants in just
this Plan, the lesser of three percent (3%) of the Compensation of
each Non-Key Employee Active Participant employed by the Employer (or
Affiliated Employer) on the last day of the Plan Year or the highest
percentage of Compensation allocated to a Key Employee multiplied by
the Compensation of those Participants (the Regular Minimum). For
this purpose, Salary Deferred Contributions allocated to Key Employees
are treated as an Employer Contribution allocated to a Key Employee.
The Amount is determined without regard to the integration of
contributions with Social Security or an Active Participant's failure
to make a Mandatory Contribution.
-24-
E-316
<PAGE> 30
(ii) ANOTHER DEFINED CONTRIBUTION PLAN. If the Employer
maintains another qualified defined contribution plan in which an
Active Participant also participates, the Regular Minimum contribution
of the Plan which comes first in the following priority order: a
target benefit plan, a money purchase pension plan, a leveraged
employee stock ownership plan, a stock bonus plan, or a tax credit
employee stock ownership plan.
(iii) ANOTHER DEFINED BENEFIT PLAN. If the Employer
maintains a defined benefit plan in which an Active Participant also
participates, a contribution to the defined benefit plan which will
fund the Minimum Benefit under the defined benefit plan, offset by the
benefits provided under this and any other defined contribution plan
of the Employer. If the Employer maintains a defined benefit plan,
the Plan is not Super Top Heavy and the Employer elects to utilize the
greater multiplier for dollar limitations in the denominator of the
defined benefit and defined contribution fractions, the Minimum
Benefit Multiplier is three percent (3%) rather than two percent (2%).
The Minimum Contribution may be satisfied by Regular Profit Sharing or
Qualifying Contributions.
(f) FORFEITURE RESTORATION. Shall contribute for a reemployed
Active Participant the amount of the forfeited Nonvested Account required to be
restored under Article VI, unadjusted for earnings, losses or adjustments in
value, less the allocable portion of forfeitures under Article VI.
The Employer Contribution for a Leased Employee Participant is reduced
by any contributions made by the leasing organization for the Employee to, and
the actuarial equivalent of benefits earned by the Employee under, a qualified
retirement plan maintained by the leasing organization which are attributable
to services performed for the Employer (or Affiliated Employer).
4.2 MAXIMUM DEDUCTIBLE AMOUNT. All contributions to this Plan are
conditioned on the deductibility of the contribution under Code Section 404.
Employer Contributions must be determined and made within the time required to
qualify the contributions for a deduction under Code Section 404. An Employer
Contribution which exceeds the amount which is deductible by
-25-
E-317
<PAGE> 31
the Employer is subject to a non-deductible contribution excise tax in the year
contributed and subsequent years until deducted or returned to the Employer
within the period provided in Code Section 4972(c). A nondeductible
contribution shall, if requested by the Employer, be returned to the Employer
within one (1) year of disallowance of the deduction.
4.3 MAXIMUM ANNUAL ADDITIONS. The maximum Annual Additions to a
Participant's Accounts under the Plan shall not exceed the Maximum Amount
established by this section and Code Section 415, which is incorporated here by
reference.
(a) MAXIMUM AMOUNT. The Maximum Amount is the lesser of:
(i) PERCENTAGE. Twenty-five percent (25%) of the Active
Participant's Compensation for the year; or
(ii) DOLLAR LIMIT. $30,000 (or, if greater, one quarter
of the dollar limitation in effect under Code Section 415(b)(1)(A)).
For the First Short Plan Year, the Dollar Limit is 11/12 of $30,000
or $27,500, and for the Second Short Plan Year, the Dollar Limit is
1/12 of $30,000 or $2,500.
(b) ANNUAL ADDITIONS. Annual Additions are the sum of the
following amounts for the applicable Plan Year:
(i) EMPLOYER CONTRIBUTIONS. Employer Contributions
allocated to the Participant's Accounts (including amounts which
constitute excess deferrals, excess contributions, or excess aggregate
contributions whether or not recharacterized or distributed under
Article V);
(ii) FORFEITURES. Forfeitures allocated to the
Participant's Accounts;
(iii) VOLUNTARY CONTRIBUTIONS. For Limitation Years
beginning on or after January 1, 1987, a participant's Voluntary
Contributions for the year and, for Limitation Years beginning prior
to that date, the lesser of a participant's Voluntary Contributions in
excess of six percent (6%) of the participant's Compensation for the
year or one-half (1/2) of the
-26-
E-318
<PAGE> 32
contributions; and
(iv) MEDICAL ACCOUNTS. Certain amounts allocated after
March 31, 1984 to a participant's individual medical account within
Code Section 415(l) under the Employer's pension or annuity plan or
after December 31, 1985 to a Key Employee Participant's post-retirement
medical account under the Employer's welfare benefit plan, although the
Percentage limit in Subsection (a)(i) shall not apply to this amount.
(c) DEFINED CONTRIBUTION AGGREGATION. If a participant is also a
participant in any other qualified defined contribution plan maintained by the
Employer, the Annual Additions to the participant's accounts shall not exceed
the limitations above and shall be reduced in the plans in the following order
of priority: a tax credit employee stock ownership plan; a stock bonus plan; a
profit sharing plan; this plan; a money purchase pension plan; a target benefit
plan; or a defined benefit pension plan.
(d) DEFINED BENEFIT PLAN. If a participant is also a participant
in any qualified defined benefit plan maintained by the Employer, the Annual
Additions to the participant's accounts shall be reduced in the order of
priority for Defined Contribution Aggregation so that the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction does not exceed 1.0 for
any year.
(i) DEFINED BENEFIT FRACTION. The numerator of the
Defined Benefit Fraction is the sum of the projected annual benefit of
the participant under all defined benefit plans maintained by the
Employer (or Affiliated Employer), whether or not terminated,
determined as of the close of the Limitation Year. The denominator is
the lesser of the following, adjusted under Code Section 415.
(A) 1.25. 1.25 multiplied by the defined
benefit dollar limitation or, if greater for a participant who
entered the Plan before January 1, 1983, the participant's
accrued benefit at the end of the last Limitation Year ending
before December 31, 1983; or
(B) 1.4. 1.4 multiplied by the highest average
compensation, including any
-27-
E-319
<PAGE> 33
adjustments, under Code Section 415(b).
(ii) DEFINED CONTRIBUTION FRACTION. The numerator of the
Defined Contribution Fraction is the sum of annual additions to the
participant's account under all defined contribution plans maintained
by the Employer (or Affiliated Employer), whether or not terminated,
as of the end of the Plan Year. The denominator is the lesser of the
following, adjusted under Code Section 415.
(A) 1.25. 1.25 multiplied by $30,000.00 (as
adjusted by the Secretary of the Treasury); or
(B) 35%. 35% of the participant's Compensation
determined for each Limitation Year.
(e) TOP HEAVY ADJUSTMENT. If the Plan is Top Heavy and the
Employer has not elected to provide the Additional Minimum Contribution or if
the Plan is Super Top Heavy:
(i) MULTIPLIER REDUCTION. The multiplier of the defined
benefit dollar limitation, the defined benefit denominator adjustment
and the defined contribution dollar amount is reduced to 1.0; and
(ii) TRANSITION FRACTION. The pre-TEFRA transition
fraction numerator amount is reduced to $41,500.00.
(f) AFFILIATED EMPLOYER. For purposes of applying the limitations
contained in this section, plans maintained by the Employer include all plans
maintained by an Affiliated Employer as modified by Code Section 415(h).
4.4 EXCESS ADDITION. If, despite the restrictions contained in
this Article and Code Section 415, an excess Annual Addition occurs, to the
extent the excess cannot be cured by the distribution of Elective Deferrals or
other Participant Contributions, the excess:
(a) REDUCED VOLUNTARY CONTRIBUTION. First reduces the
participant's Voluntary Contribution to the maximum annual addition permitted.
-28-
E-320
<PAGE> 34
(b) REDUCED CONTRIBUTION. If the Active Participant has made no
Voluntary Contribution or an excess remains despite the reduction of a
Voluntary Contribution and the excess is due to a reasonable error in
estimating compensation, allocation of forfeitures or other facts and
circumstances as determined by the Commissioner justifying the excess, shall be
retained by the Trustee in an Unallocated Suspense Account. The excess reduces
the Employer's contribution for the next succeeding Plan Year and is allocated
to the applicable Participant's Account on the next Allocation Date before any
additional contributions may be made to the Plan. If the participant's
participation is terminated before the next Allocation Date, the excess is
allocated and reallocated among the Active Participants on that date.
(c) UNALLOCATED SUSPENSE ACCOUNT. Held in an Unallocated Suspense
Account shall not share in the earnings, losses and adjustments in value of the
Fund.
To the extent the excess can be cured by the distribution of Salary
Deferred Contributions or other Participant Contributions, such Contributions
and the gains on these amounts shall be distributed, to the extent that the
distribution reduces the excess amounts in the participant's Account. Amounts
distributed in that manner are disregarded for purposes of Code Section 402(g),
the Actual Deferral Percentage test and the Actual Contribution Percentage
test.
4.5 ERRONEOUS CONTRIBUTION. An erroneous contribution resulting
from a mistake of fact shall, if requested by the Employer, be returned to the
Employer within one (1) year of payment. Contributions made prior to an
initial determination of nonqualified status shall, if requested by the
Employer, be returned to the Employer within one year of the denial of
qualified status, if the request for initial determination of qualified status
was made in a timely manner. In all other circumstances, the corpus or income
of the Trust may not be diverted to or used for other than the exclusive
benefit of the participants or their beneficiaries.
4.6 INVESTMENT OF CONTRIBUTIONS IN STOCK. To the extent
Participants have elected to
-29-
E-321
<PAGE> 35
invest contributions in Stock, the Trustee shall purchase the number of whole
shares of Stock which may be purchased with each contribution. Purchases shall
be made as soon as practicable, as determined in the Trustee's discretion. If
any balance of a contribution which a Participant has elected to be invested in
Stock or cash dividends remain after the Trustee has purchased the number of
shares of Stock which may be purchased, the additional amounts shall be
maintained in the Trust, aggregated with the next contribution to be invested in
Stock or cash dividends on Stock paid to the Plan and applied to purchase the
number of shares of Stock which may then be purchased.
-30-
E-322
<PAGE> 36
401(k) V
VA
ARTICLE V
PARTICIPANT CONTRIBUTIONS
5.1 PARTICIPANT CONTRIBUTIONS. For each Plan Year, an Active
Participant may make:
(a) SALARY DEFERRED. Salary Deferred Contributions of
Compensation which the Active Participant may elect to defer or receive in cash
which:
(i) NOT AVAILABLE. Are not made out of Compensation
which is currently available to the Active Participant at the date of
the election, the date of adoption of the Plan and the Effective Date;
(ii) TIMING. Are reflected in an election made within
thirty (30) days after the close of the Plan Year;
(iii) IMPERMISSIBLE USE. Are not taken into account in
determining whether any other contributions under any plan satisfy
Code Section 401(a) other than Code Section 410(b)(2)(A)(ii),
including but not limited to Code Section 416; and
(iv) LIMITS. Do not exceed the Elective Contribution
Limit, the Elective Deferral Limit, the Multiple Use Limit, or 15% of
Compensation.
(b) VOLUNTARY. Voluntary Contributions which do not exceed the
lesser of:
(i) TEN PERCENT. When added to all previous Voluntary
Contributions under the Plan and any other qualified plan of the
Employer, ten percent (10%) of the Compensation received from the
Employer during the entire period of participation; and
(ii) CONTRIBUTION PERCENTAGE LIMIT. The Voluntary
Contribution Limit.
(c) TRANSFER OR ROLLOVER. Contributions which consist of amounts
transferred:
(i) TRANSFER. Directly from the Trustee, Custodian, or
Insurer of a plan or related trust qualified under Code Section 401(a)
if this Plan is not obligated to provide Code Section 411(d)(6)
protected benefits not already provided by this Plan as a result of
the transfer.
-31-
E-323
<PAGE> 37
(ii) ROLLOVER. In a rollover qualified under Code
Sections 402(a) or 408(d). An Active Participant may not contribute
amounts from an inherited Individual Retirement Account or Annuity.
A participant may not make a deductible employee contribution for any taxable
year beginning after December 31, 1986.
5.2 METHOD. Participant Contributions may be made by payroll
deduction or by any methods and at any intervals under rules established by the
Employer. All Participant Contributions must be made to the Trust through the
Employer. The Trustee is not required to receive contributions directly from
Participants.
(a) ELECTIONS. Elections to make, discontinue or resume
Participant Contributions must be in writing and signed by the Participant.
(i) TIMING. Effective July 1, 1993, an Election is
effective not later than the first day of the first payroll period
beginning after the Election is filed with the Committee, the Trustee,
or the Plan Administrator, unless a later date is specified by the
Participant or additional time is required for administrative
processing.
(ii) DISCONTINUANCE. A discontinuance remains in effect
until at least the first day of the first payroll period beginning
after the end of the calendar quarter in which an Election to again
make contributions is made.
(iii) AUTOMATIC. A Participant's Election is
automatically suspended for twelve (12) months after receipt of a
hardship distribution from a plan of the Employer (or Affiliated
Employer) if the hardship distribution is based on a deemed financial
need or if the hardship distribution is made from this Plan, and until
the first day of the calendar quarter coincident with or next
following thirty (30) days from an Age 59 1/2 distribution.
(b) TIME LIMIT. Participant Contributions must be transmitted
to the Trustee on the earliest date the contributions can reasonably be
segregated from the Employer's general assets, but
-32-
E-324
<PAGE> 38
not later than ninety (90) days from the date the amounts are received by the
Employer or would otherwise have been payable to the Active Participant.
(c) PRIOR RULES. Prior to July 1, 1993, each Election was
effective on the January 1, April 1, July 1 or October 1 on or next following
the date on which the Employee became a Participant.
In addition, a Participant could suspend a contribution Election as of
the first day of any month, by filing the appropriate form with the Committee
at least fifteen (15) days prior. That Participant could resume Contributions
as a new Participant.
(d) SPECIAL RULE. Any Participant Contribution Election otherwise
permitted by this Article may, at the Participant's election, also be made
pursuant to an irrevocable election made by the Participant six months or more
in advance of the effective date of the election.
5.3 MATCHING AND VOLUNTARY CONTRIBUTION LIMITS. Matching and
Voluntary Contributions (excluding Qualifying Contributions used to meet the
Code Section 401(k) tests and including, to the extent designated by the
Employer, other Qualifying or Salary Deferred Contributions) to this Plan, and
any plan aggregated with this Plan for purposes of Code Sections 401(a)(4) and
410(b), must:
(a) MATCHING AND VOLUNTARY CONTRIBUTION LIMIT. Satisfy the Actual
Contribution Percentage test. The Actual Contribution Percentage for all
eligible Highly Compensated Employees may not be greater than either:
(i) ONE AND TWENTY-FIVE HUNDREDTHS. One and twenty-five
hundredths times (1.25x) the Actual Contribution Percentage for all
eligible Active Participants other than Highly Compensated Employees;
or
(ii) TWO PERCENT AND TWO TIMES. The lesser of two
percent (2%) above or two times (2x) the Actual Contribution
Percentage for all eligible Active Participants other than Highly
Compensated Employees; and
(b) MULTIPLE USE. Satisfy the additional Multiple Use limitations
of Code Section 401(m).
-33-
E-325
<PAGE> 39
5.4 ACTUAL CONTRIBUTION PERCENTAGE. The Actual Contribution
Percentage (ACP) for Active Participants other than Highly Compensated
Employees or Highly Compensated Employees is the average of the percentages of
Compensation represented by the sum of the non-forfeited matching, Voluntary
and, to the extent designated by the Employer, other Qualifying or Salary
Deferred Contributions deferred under the Plan for each Active Participant
eligible for any part of the Plan Year (or ineligible because of suspension)
included within the respective classification.
(a) AGGREGATION. The average is calculated by treating all of the
matching and Voluntary Contributions to any plan made on behalf of a Highly
Compensated Active Participant as made to one plan.
(b) TAKEN INTO ACCOUNT - VOLUNTARY. A Voluntary Contribution is
taken into account for the Plan Year in which the amount is contributed to the
Plan or paid to a Plan agent for transmittal to the Plan within a reasonable
time.
(c) TAKEN INTO ACCOUNT - MATCHING. A matching contribution is
taken into account for a Plan Year only if the contribution is allocated as of
a date within the Plan Year and is actually paid within twelve months after the
Plan Year.
(d) TAKEN INTO ACCOUNT - SALARY DEFERRED. Salary Deferred
contributions are taken into account only if the contributions:
(i) NON-DISCRIMINATORY. Satisfy the requirements of
Code Section 401(k)(3), determined with and without any Salary
Deferred contributions treated as matching contributions;
(ii) NOT USED. Are not taken into account in determining
whether any other contributions or benefits are non-discriminatory
under Code Sections 401(a)(4) or 401(k)(3);
(iii) ALLOCATED AND PAID. Are actually paid within twelve
months after the Plan Year and the allocation of the contribution is
not contingent on continued participation or performance of services
after allocation; and
(iv) RECEIPT. Relate to compensation that would have
been received in the Plan
-34-
E-326
<PAGE> 40
Year or within two and one-half months after the Plan Year but for the
deferral.
(e) TAKEN INTO ACCOUNT - QUALIFYING. Qualifying Contributions are
taken into account only if the contributions:
(i) NONFORFEITABLE. Are nonforfeitable when made; and
(ii) DISTRIBUTION RESTRICTIONS. Are subject to the
distribution restrictions of Section 7.1.
(f) AGGREGATION OF FAMILY MEMBERS. The combined Actual
Contribution Percentage for a family group treated as one Highly Compensated
Employee under the Family Aggregation rule is determined by combining the
Voluntary and matching Contributions, Compensation, and amounts treated as
matching contributions of all the eligible family members.
If it is necessary, for purposes of correcting Excess Aggregate
Contributions of family members, to calculate an Actual Contribution Percentage
for the group of eligible family members who are not Highly Compensated without
regard to family aggregation, that Actual Contribution Percentage is determined
by combining the Voluntary and matching Contributions, Compensation, and
amounts treated as matching contributions of these employees. The Voluntary
and matching Contributions, Compensation, and amounts treated as matching
contributions of all family members are disregarded for purposes of determining
the Actual Contribution Percentage for the group of Highly Compensated
Employees and the group of Non-Highly Compensated Employees, except to the
extent required by this section.
5.5 EXCESS. If a Highly Compensated Employee's matching and
Voluntary Contributions (and, to the extent designated by the Employer, other
Qualifying or Salary Deferred Contributions) exceed the Matching and Voluntary
Contribution Limit for any Plan Year, after the close of the Plan Year and
within twelve months after the close of the Plan Year or date of plan
termination, the Excess Aggregate Contributions for the Plan Year and Allocable
Income must be designated by the Employer and distributed without notice or
consent; or, if forfeitable, forfeited.
-35-
E-327
<PAGE> 41
(a) ALLOCABLE INCOME. The income allocable to excess aggregate
contributions is equal to the sum of the allocable gain or loss for the Plan
Year and the allocable gain or loss from the end of the Plan Year to the date
of distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) PLAN YEAR. For the Plan Year, the income allocable
to Voluntary, matching and designated Qualifying Contributions is
multiplied by a fraction the numerator of which is the Excess
Aggregate Contributions made on behalf of the Participant for the Plan
Year and the denominator of which is the total Account Balance of the
Participant attributable to Voluntary, matching and designated
Qualifying Contributions as of the beginning of the Plan Year plus the
Voluntary, matching and designated Qualifying Contributions
attributable to the Participant for the Plan Year.
(ii) POST-PLAN YEAR. For the period between the end of
the Plan Year and the date of a correction, the same method may be
used or the allocable income or loss for the period may be deemed to
be equal to 10 percent of the income or loss allocable to Excess
Aggregate Contributions for the Plan Year (as calculated above)
multiplied by the number of calendar months since the end of the Plan
Year. For that purpose, a distribution occurring after the fifteenth
day of a month will be treated as made on the first day of the next
month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of excess aggregate contributions (and income) is
treated as a pro rata distribution of excess aggregate contributions
and income.
(b) TIME LIMITS. Amounts not distributed or forfeited within two
and one-half (2 1/2) months after the close of the preceding Plan Year are
subject to a ten percent (10%) excise tax and within twelve months will cause
the disqualification of the Plan.
(c) METHOD. Distribution (or forfeiture, to the extent available)
occurs by first distributing unmatched Voluntary Contributions (and Allocable
Income) and then distributing (or forfeiting, if available) Voluntary and
matching Contributions (and Allocable Income) on a pro rata basis.
-36-
E-328
<PAGE> 42
(d) NOTICES TO PARTICIPANTS. The Plan Committee must advise
affected participants at the time of distribution of the year in which the
distribution is includible in income and that the receipt of amounts includible
in income in a prior year will require the participant to file an amended
income tax return if a return has already been filed for the year.
(e) ORDERING. A Highly Compensated Active Participant's matching
and Voluntary Contributions which exceed the Matching and Voluntary
Contribution Limit are determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the Actual Contribution Percentages as
necessary, beginning with the highest percentage, until the Limit is satisfied
or the Participant's Percentage equals the next lowest Percentage and by
repeating the process until the Limit is satisfied. Each distribution or
forfeiture of the Excess Aggregate Contributions must be made to Highly
Compensated Employees on the basis of the respective portions of the excess
aggregate contributions attributable to each as determined by this process. If
a Highly Compensated Employee's Actual Contribution Percentage is determined by
combining the Contributions and Compensation of all the eligible family
members, the excess aggregate contributions for the family unit are allocated
among the family members in proportion to the Voluntary and matching
Contributions of each family member that have been combined.
(f) FORFEITURE LIMITATION. Forfeitures of Excess Aggregate
Contributions may not be allocated to Participants whose contributions are
reduced under this section.
(g) COORDINATION. Excess Aggregate Contributions shall be
determined after:
(i) EXCESS DEFERRALS. The Excess Deferrals; and
(ii) EXCESS CONTRIBUTIONS. The Excess Contributions.
5.6 SALARY DEFERRED CONTRIBUTION LIMIT. Salary Deferred
Contributions (excluding Salary Deferred and Qualifying Contributions used to
meet the Code Section 401(m) tests and including, to the extent designated by
the Employer, other Qualifying Contributions) to this Plan, and any plan
aggregated with this Plan for purposes of Code Sections 401(a)(4) and 410(b),
must satisfy:
-37-
E-329
<PAGE> 43
(a) ELECTIVE CONTRIBUTION LIMIT. The Actual Deferral Percentage
test. The Actual Deferral Percentage for all eligible Highly Compensated
Employees may not be greater than either:
(i) ONE AND TWENTY-FIVE HUNDREDTHS. One and twenty-five
hundredths times (1.25x) the actual deferral percentage for all
eligible Active Participants other than Highly Compensated Employees;
or
(ii) TWO PERCENT AND TWO TIMES. The lesser of two
percent (2%) above or two times (2x) the actual deferral percentage
for all eligible Active Participants other than Highly Compensated
Employees; and
(b) MULTIPLE USE. The additional Multiple Use limitations of Code
Section 401(m).
Effective January 1, 1993, the collectively bargained portions of the
Plan must be separately tested. In applying the Salary Deferred Contribution
Limit, the restructuring rules of the regulations under Code Section 401(a)(4)
may be used for Plan Years beginning before January 1, 1992.
5.7 ACTUAL DEFERRAL PERCENTAGE. The Actual Deferral Percentage
for Active Participants other than Highly Compensated Employees or Highly
Compensated Employees is the average of the percentages of Active Participant's
Compensation deferred by each Active Participant eligible for any part of the
Plan Year (or ineligible because of a suspension) included within the
respective classification as an Salary Deferred Contribution (and, to the
extent designated by the Employer, Qualifying Contributions).
(a) AGGREGATION. The average is calculated by treating all cash
or deferred arrangements in which an Active Participant is eligible to
participate as one arrangement. If a Highly Compensated Employee participants
in two or more cash or deferred arrangements with different plan years, the
average is calculated by treating all arrangements ending with or within the
same calendar year as one arrangement.
(b) DISTRIBUTED AMOUNTS. Distributed Excess Deferrals (excluding
amounts deferred by nonhighly compensated employees to plans of the Employer)
and Qualifying Contributions
-38-
E-330
<PAGE> 44
designated by the Employer are included in the calculation.
(c) TAKEN INTO ACCOUNT. A Salary Deferred or Qualifying
Contribution is taken into account for a Plan Year only if:
(i) ALLOCATED AND PAID. The contribution is actually
paid within twelve months after the Plan Year and the allocation of
the contribution is not contingent on continued participation or
performance of services after allocation;
(ii) RECEIPT. The contribution relates to compensation
that would have been received in the Plan Year or
within two and one-half months after the Plan Year but for the
deferral; and
(iii) QUALIFYING. In the case of a Qualifying
Contribution, the Contribution is nonforfeitable when made and subject
to the distribution restrictions of Section 7.1.
(d) AGGREGATION OF FAMILY MEMBERS. The combined Actual Deferral
Percentage for family group treated as one Highly Compensated Employee under
the family aggregation rule is determined by combining the Salary Deferred
Contributions, Compensation, and amounts treated as Salary Deferred
Contributions of all the eligible family members.
If it is necessary, for purposes of correcting Excess Contributions of
family members, to calculate an Actual Deferral Percentage for the eligible
family members who are not Highly Compensated Employees without regard to
family aggregation, that Actual Deferral Percentage is determined by combining
the Salary Deferred Contributions, Compensation, and amounts treated as Salary
Deferred Contributions of these employees. The Salary Deferred Contributions,
Compensation, and amounts treated as Salary Deferred Contributions of all
family members are disregarded for purpose of determining the Actual Deferral
Percentage for the group of Non Highly Compensated Employees, except to the
extent required by this section.
5.8 EXCESS CONTRIBUTIONS. If a Highly Compensated Active
Participant's Salary Deferred Contributions (and, to the extent designated by
the Employer, Qualifying Contributions) exceed the
-39-
E-331
<PAGE> 45
Salary Deferred Contribution Limit for any Plan Year:
(a) DISTRIBUTED. After the close of the Plan Year and within
twelve months after the close of the Plan Year or date of plan termination, the
excess Salary Deferred Contributions for the Plan Year and Allocable Income
must be designated by the Employer and distributed without notice or consent;
or
(b) RECHARACTERIZED. Within two and one-half months after the
close of the preceding Plan Year, the excess Salary Deferred and Qualifying
Contributions, if elected by the Participant, must be treated as includible in
the Participant's gross income as if the earliest Salary Deferred Contribution
made on behalf of the Active Participant for the Plan Year and, for income
taxation purposes affecting the Participant, must be treated as a Voluntary
Contribution. For all other purposes, including the applicable distribution
limitations, recharacterized Excess Contributions continue to be treated as
Salary Deferred Contributions. Recharacterization may not occur if
recharacterization results in a violation of the Multiple Use limits or Code
Section 401(m).
(c) ALLOCABLE INCOME. The income allocable to Excess
Contributions is equal to the sum of the allocable gain or loss for the Plan
Year and the allocable gain or loss from the end of the Plan Year to the date
of distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) PLAN YEAR. For the Plan Year, the income allocable
to Salary Deferred and designated Qualifying Contributions is
multiplied by a fraction the numerator of which is the Excess
Contributions made on behalf of the Participant for the Plan Year and
the denominator of which is the total Account Balance of the
Participant attributable to Salary Deferred and designated Qualifying
Contributions as of the beginning of the Plan Year plus the Salary
Deferred and designated Qualifying Contributions attributable to the
Participant for the Plan Year.
(ii) POST-PLAN YEAR. For the period between the end of
the Plan Year and the date of a correction, the same method may be
used or the allocable income or loss for the period
-40-
E-332
<PAGE> 46
may be deemed to be equal to 10 percent of the income or loss
allocable to Excess Contributions for the Plan Year (as calculated
above) multiplied by the number of calendar months since the end of
the Plan Year. For that purpose, a distribution occurring after the
fifteenth day of a month will be treated as made on the first day of
the next month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of Excess Contributions (and income) is treated as a
pro rata distribution of Excess Contributions and income.
(d) TIME LIMITS. Amounts not distributed or recharacterized
within two and one-half (2 1/2) months after the close of the preceding Plan
Year are subject to a ten percent (10%) excise tax and within twelve months may
cause the disqualification of the Plan.
(e) NOTICES TO ACTIVE PARTICIPANTS. The Plan Committee must
advise affected Participants:
(i) DISTRIBUTION. At the time of distribution of the year
in which the distribution is includible in income and that the
receipt of amounts includible in income in a prior year will require
the Participant to file an amended income tax return if a return has
already been filed for the year; and
(ii) RECHARACTERIZATION. And the Employer at the time of
recharacterization that excess amounts are being recharacterized and
of the tax consequences of the recharacterization.
(f) ORDERING. A Highly Compensated Employee's Salary Deferred
Contributions which exceed the Salary Deferred Contribution Limit are determined
by reducing contributions made on behalf of Highly Compensated Employees in
order of the Actual Deferral Percentages as necessary, beginning with the
highest percentage, until the Limit is satisfied or the Participant's Percentage
equals the next lowest Percentage and by repeating the process until the Limit
is satisfied. Each distribution or recharacterization of the Excess
Contributions is made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable to each as
determined by this process. If a Highly Compensated Employee's Actual Deferral
Percentage is
-41-
E-333
<PAGE> 47
determined by combining the Contributions and Compensation of all the eligible
family members, the Excess Contributions for the family unit are allocated
among the family members in proportion to the Salary Deferred Contributions of
each family member that have been combined.
(g) CO-ORDINATION. Excess Contributions are reduced by any Excess
Deferrals previously distributed with respect to the affected participant for
the taxable year ending with or within the Plan Year.
5.9 ELECTIVE DEFERRAL LIMIT. Elective Deferrals under this Plan
and all other plans, contracts, or arrangements of the Employer (and any
Affiliated Employer) may not exceed the limitation in effect under Code Section
402(g)(1) for the taxable year beginning in the calendar year. Elective
Deferrals which exceed the limit are included in the individual's gross income.
(a) GENERAL RULE. Except for Elective Deferrals of amounts
attributable to service performed in 1986 described in Section 1105(c)(5) of
the Tax Reform Act of 1986, the limitation is $7,000.00, as adjusted by the
Secretary of the Treasury.
(b) INCREASE. The limitation is increased (but not to an amount
in excess of $9,500) by the amount of any employer contributions to purchase a
403(b) annuity contract under a salary reduction agreement.
(c) DECREASE. The limitation is decreased in the taxable year
following the taxable year the participant receives a hardship distribution
which is based on a deemed financial need by the amount of the Elective
Deferral in the taxable year of the hardship distribution.
(d) ELECTIVE DEFERRALS. Elective Deferrals are, for any taxable
year, the sum of employer 401(k) contributions within Code Section 402(a)(8),
other employer SEP contributions within Code Section 402(h)(1)(B), employer
contributions to a 403(b) annuity contract under a salary reduction agreement
and deductible employee contributions to a plan described in Code Section
501(c)(18).
5.10 EXCESS DEFERRALS. The Excess Deferrals included in the gross
income of a participant
-42-
E-334
<PAGE> 48
may be distributed without notice or consent, with the Allocable Income, not
later than the April 15 following the close of the taxable year.
(a) ALLOCABLE INCOME. The income allocable to Excess Deferrals is
equal to the sum of the allocable gain or loss for the taxable year and the
allocable gain or loss from the end of the taxable year to the date of
distribution (or forfeiture). Income includes all earnings and appreciation
whether realized or not.
(i) TAXABLE YEAR. For the taxable year, the income
allocable to Salary Deferred Contributions is multiplied by a fraction
the numerator of which is the Excess Deferrals made on behalf of the
Participant for the taxable year and the denominator of which is the
total Account Balance of the Participant attributable to Salary
Deferred Contributions as of the beginning of the taxable year plus
the Salary Deferred Contributions attributable to the Participant for
the taxable year.
(ii) POST-TAXABLE YEAR. For the period between the end
of the taxable year and the date of a correction, the same method may
be used or the allocable income or loss for the period may be deemed
to be equal to 10 percent of the income or loss allocable to Excess
Deferrals for the taxable year (as calculated above) multiplied by the
number of calendar months since the end of the taxable year. For that
purpose, a distribution occurring after the fifteenth day of a month
will be treated as made on the first day of the next month.
(iii) PARTIAL CORRECTION. Any distribution of less than
the entire amount of Excess Deferrals (and income) is treated as a pro
rata distribution of Excess Deferrals and income.
(b) LIMITATION. Distribution may occur only to the extent the
individual has allocated the Excess Deferral to this Plan by certifying it to
the Plan Committee in writing not later than the March 1 following the close of
the taxable year and to the extent the Plan designates the distribution as a
distribution of Excess Deferrals.
(c) COORDINATION. Excess Deferrals that may be distributed are
reduced by any Excess Contributions previously distributed or recharacterized
with respect to the affected participant for
-43-
E-335
<PAGE> 49
the Plan Year beginning with or within the taxable year. In the event of a
reduction, however, the amount treated as a distribution of Excess
Contributions is reduced by the amount of the reduction. Certification is
deemed to have occurred to the extent the individual has Excess Deferrals for
the taxable year calculated by taking into account only this Plan and other
plans of the Employer (of Affiliated Employer).
(d) PRO RATA. If only a portion of any Excess Deferral and
allocable gains and losses is distributed, the Excess Deferral and the gains
and losses are treated as distributed ratably.
5.11 MULTIPLE USE. Multiple Use occurs if: one or more Highly
Compensated Employees of the Employer (or Affiliated Employer) are eligible in
a Plan Year with respect to Salary Deferred and Voluntary or matching
Contributions to a plan or plans maintained by the Employer (or Affiliated
Employer); the sum of the Actual Deferral Percentage and the Actual
Contribution Percentage (determined after any corrective distribution of Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions and after
any recharacterization of Excess Contributions otherwise required) of the
entire group of eligible Highly Compensated Employees exceeds the Aggregate
Limit; the Actual Deferral Percentage of the entire group of eligible Highly
Compensated Employees fails the 1.25x test; and the Actual Contribution
Percentage of the entire group of eligible Highly Compensated Employees also
fails the 1.25x test. The Aggregate Limit is the greater of the amount
determined under (a) and (b):
(a) AGGREGATE LIMIT. The sum of:
(i) 125 PERCENT. 125 percent (125%) of the greater of:
(A) ADP. The ADP of the group of Non-Highly
Compensated Employees eligible to make Salary Deferred
Contributions for the Plan Year; or
(B) ACP. The ACP of the group of Non-Highly
Compensated Employees eligible with respect to matching or
Voluntary Contributions for the Plan Year beginning with or
within the Plan Year of the arrangement subject to Code
Section 401(k); plus
-44-
E-336
<PAGE> 50
(ii) TWO PERCENT AND TWO TIMES. The lesser of:
(A) TWO PERCENT PLUS. Two percent (2%) plus the
lesser of (A) or (B), above; or
(B) TWO TIMES. Two times (2x) the lesser of (A)
or (B), above.
(b) ALTERNATIVE AGGREGATE LIMIT. The sum of:
(i) 125 PERCENT. 125 percent (125%) of the lesser of:
(A) ADP. The ADP of the group of Non-Highly
Compensated Employees eligible to make Salary Deferred
Contributions for the Plan Year; or
(B) ACP. The ACP of the group of Non-Highly
Compensated Employees eligible with respect to matching or
Voluntary Contributions for the Plan Year beginning with or
within the Plan Year of the arrangement subject to section
401(k); plus
(ii) TWO PERCENT AND TWO TIMES. The lesser of:
(A) TWO PERCENT PLUS. Two percent (2%) plus the
greater of (A) or (B), above; or (B) TWO TIMES.
Two times (2x) the greater of (A) or (B), above.
(c) CORRECTION OF MULTIPLE USE. If a Multiple Use occurs, the
Multiple Use must be corrected by reducing the Actual Deferral Percentage or
Actual Contribution Percentage of Highly Compensated Employees. The required
reduction is treated as an Excess Contribution or an Excess Aggregate
Contribution.
(i) TREATMENT. If an Excess Contribution is
recharacterized, the recharacterized amount is treated as an Excess
Aggregate Contribution.
(ii) REQUIRED REDUCTION. The amount of the reduction is
first applied to the Excess Aggregate Contributions and is allocated
to those Highly Compensated Employees who had allocated both Salary
Deferred and Voluntary or matching Contributions for the year.
-45-
E-337
<PAGE> 51
ARTICLE VI
ACCOUNTS
6.1 ACCOUNTS. The Committee shall establish for each participant
a separate Employer Account for each type of Employer Contribution and a
separate Participant Account for each type of Participant Contribution.
(a) IDENTIFICATION. The specific accounts created are, as
necessary:
(i) EMPLOYER REGULAR PROFIT SHARING ACCOUNT. The
Accounts to which any Employer Regular Profit Sharing Contributions
are credited;
(ii) EMPLOYER MATCHING CONTRIBUTIONS ACCOUNT. The
Accounts to which any Employer Matching Contributions are credited;
(iii) SALARY DEFERRED CONTRIBUTIONS ACCOUNT. The Accounts
to which amounts from the KDI Plan Employee Pre-Tax Account were, and
Active Participant Salary Deferred Contributions to this Plan are,
credited;
(iv) EMPLOYER QUALIFYING CONTRIBUTIONS ACCOUNT. The
Accounts to which any Employer Qualifying Contributions are credited;
(v) PARTICIPANT CONTRIBUTIONS ACCOUNT. The Accounts to
which amounts from the KDI Plan Employee Post-Tax Matched and Employee
Post-Tax Voluntary Accounts were, and Participant Voluntary
Contributions to this Plan are, credited;
(vi) KDI TRANSFER ACCOUNT. The Accounts to which amounts
from the KDI Plan Employer Pre-Tax Matching and Employer Post-Tax
Matching Accounts were credited;
(vii) TRANSFER OR ROLLOVER ACCOUNT. The Accounts to which
amounts transferred or rolled-over to this Plan (other than Cooper Bearing
Transfer Account amounts) are credited.
Each Account consists of a number of sub-Accounts. One sub-Account
includes the portion of the Account which is invested in Stock of Kaydon
Corporation. The other sub-Accounts include the portions of the Accounts which
are otherwise invested pursuant to each option provided under
-46-
E-338
<PAGE> 52
the Plan or pursuant to the Trustee's control.
(b) CREDITING. On each Allocation Date:
(i) EMPLOYER ACCOUNTS. Each Employer Account is
credited with the designated Employer Contributions, forfeitures and a
share of the expenses, earnings, losses and adjustments in value of
the applicable portion or portions of the Trust; and
(ii) PARTICIPANT ACCOUNTS. Each Participant Account is
credited with the Active Participant's Contributions to that Account
and a share of the expenses, earnings, losses and adjustments in value
of the applicable portion or portions of the Trust.
6.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS. Employer Regular Profit
Sharing Contributions for the Plan Year are allocated to the Employer Regular
Profit Sharing Accounts of Active Participants who complete one thousand
(1,000) Hours of Service during the Plan Year and are Employees on the last day
of that Plan Year in the proportion which each Active Participant's
Compensation for the Plan Year bears to the aggregate of Active Participants'
Compensation for the Plan Year, subject to the Testing Adjustment.
(a) SALARY DEFERRED. Salary Deferred Contributions are allocated
to the account of the electing Active Participant.
(b) QUALIFYING. Employer Qualifying Contributions are allocated as
directed by the Employer. That direction may include allocation in the same
manner as Employer Regular Profit Sharing Contributions, in any other
non-discriminatory manner, or a combination, and may be limited to Non-Highly
Compensated Employees or one or more classifications of Non-Highly Compensated
Employees. The method of allocation must be specified by the Employer within
thirty (30) days of the end of the Plan Year to avoid discrimination under Code
Sections 401(k) and 401(m).
(c) MATCHING. Matching Contributions are allocated to the
Matching Account of each Active Participant based on each Active Participant's
Salary Deferred Contributions for the month
-47-
E-339
<PAGE> 53
which are eligible for a Matching Contribution as provided under Article IV.
(i) PROVISIONAL ALLOCATION. Each allocation of Matching
Contributions to a Highly Compensated Participant is provisional until
the Actual Contribution Percentage, the Actual Deferral Percentage,
the Multiple Use and the Elective Deferral Limitations for the
applicable year have been satisfied.
(ii) EFFECT. Matching Contributions provisionally
allocated based on Salary Deferred Contributions which are forfeited,
recharacterized, or distributed to the Participant are forfeited and
must be removed from the allocation and reallocated to other
Participants, if appropriate, for the Plan Year, or held in an Excess
Contribution Account under Article IV.
(d) SPECIAL CONTRIBUTIONS. Forfeiture Restoration Contributions
are allocated to the account of the affected Active Participant. Minimum Top
Heavy Contributions are allocated to the account of the affected Non-Key
Employee Active Participants who are employed by the Employer (or Affiliated
Employer) on the last day of the Plan Year.
(e) STOCK CONTRIBUTIONS. Employer Contributions may be made in
Stock or in cash, or in any combination of Stock and cash (as determined by
each Employer) except that Elective Contributions may be made in Stock only to
the extent Participants have elected to have those contributions invested in
Stock. Stock contributed by an Employer is valued at the average of its
closing prices as reported on any national securities exchange or as quoted on
any system sponsored by a national securities association for the twenty (20)
consecutive trading days immediately prior to the date on which the Stock is
contributed to the Plan.
(f) LEASED EMPLOYEE OFFSET. Contributions are not allocated to a
Leased Employee to the extent the Leased Employee accrues contributions or
benefits under a plan maintained by the leasing organization which are
attributable to services performed for the Employer (or Affiliated Employer).
(g) TESTING ADJUSTMENT. All allocations for Highly Compensated
Employees are subject to limitation based on, and may be reduced as necessary
to comply with, the participation, coverage
-48-
E-340
<PAGE> 54
and non-discrimination tests applicable to the Plan under Code Sections
401(a)(26), 410(b) and 401(a)(4). All allocations to Highly Compensated
Employees are provisional until the earlier of the date the Employer certifies
the allocations as non-provisional and the due date of the Employer's tax
return for the year including the Allocation Date.
The method of allocation cannot be changed more frequently than once
every six months, other than to comport with changes in the Code, ERISA, or the
applicable rules or regulations.
6.3 ALLOCATION OF FORFEITURES. Forfeitures from the Non-Vested
Accounts of participants who have incurred five (5) consecutive Breaks in
Service, received a distribution of their entire Vested Account Balance, or
died after terminating employment during the Plan Year are first allocated to
reduce any Forfeiture Restoration Contribution. Any remaining forfeitures of
Regular Profit Sharing Contributions are allocated in the same manner as
Employer Regular Profit Sharing Contributions. Matching Contributions are
allocated:
(a) PRE-JANUARY 1, 1994. In the same manner as Employer Regular
Profit Sharing Contributions; and
(b) POST-DECEMBER 31, 1993. Effective January 1, 1994, in the
same manner as Matching Contributions.
6.4 ALLOCATION OF EXPENSES, EARNINGS, LOSSES AND ADJUSTMENTS IN
VALUE. The assets of the Trust will be valued at fair market value as of each
Allocation Date. Participants share in the earnings, losses and adjustments
in value of the fund and in the expenses not paid by the Employer in the
following manner:
(a) COMMON FUND. If invested in a qualified common or pooled
fund, each participant has a proportionate undivided interest in the assets of
the fund and, except as otherwise provided, has allocated to the account the
expenses, earnings, losses and adjustments in value of the fund under the rules
of the fund.
-49-
E-341
<PAGE> 55
(b) MULTIPLE PARTICIPANT INVESTMENTS. If an amount from an
account of a participant is invested in assets other than a Common Fund and the
investment is commingled in another investment with amounts from the accounts
of other participants, each participant has a proportionate interest in the
asset and, except as otherwise provided, has allocated to the participant's
account expenses, earnings, losses and adjustments in value of the asset in the
ratio that the stated value in the asset bears to the total stated value of all
participants in the assets. The stated value of a participant's account is the
value of the participant's interest as of the beginning of each Allocation
Period less any distribution, forfeiture, or other debit to the account plus
any Participant Contributions during the period.
(c) SINGLE ACTIVE PARTICIPANT INVESTMENTS. If an amount from the
account of a participant is invested in assets other than the Common Fund and
the account is not commingled in another investment with the amounts from
accounts of other participants, each participant is entitled to the entire
interest in the asset and, except as otherwise provided, the expenses,
earnings, losses and adjustments in value of the asset are allocated to the
participant's account.
(d) EXPENSES. In general, expenses paid by the Trustee and
charged against the Trust Fund are allocated to participants' Accounts as
earnings, losses and other adjustments in value. Fees for recordkeeping
services are allocated as a flat fee per participant and are spread across all
of each participants' Accounts. Any investment management fee applicable to
Stock is allocated only to Accounts invested in Stock in the ratio of the Stock
holdings. Distribution fees are allocated to the Account being distributed
prior to distribution.
6.5 VESTING. The Account Balance in each Account other than the
Employer Regular Profit Sharing and Matching Accounts, if any, is fully vested
and nonforfeitable at all times. The Account Balance in each Employer Regular
Profit Sharing and Matching Account is fully vested and nonforfeitable upon the
Participant's attainment of Normal Retirement Age, attainment of age 55 and
completion of ten (10) years of employment with the Employer, Death, or
Disability while an
-50-
E-342
<PAGE> 56
employee of the Employer (or Affiliated Employer) and under one or a
combination of the following Vesting Schedules:
(a) NON-TOP HEAVY. The Non-Top Heavy Schedule applies if the
Plan never becomes Top Heavy or for Plan Years after it has ceased to be Top
Heavy (subject to the restrictions on Vesting Schedule amendments in Article
X). This schedule also applies to a participant who does not complete an Hour
of Service in a Plan Year in which the Plan is Top Heavy. The Non-Top Heavy
schedule is:
<TABLE>
<CAPTION>
Years of Service for Vesting Purposes Percentage
To Date Employment Terminated Vested
--------------------------------- ----------
<S> <C>
Less than 1 year 0%
1 year but less than 2 years 10%
2 years but less than 3 years 20%
3 years but less than 4 years 30%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
</TABLE>
(b) TOP HEAVY. Unless the Non-Top Heavy Schedule is more
favorable, the Top Heavy Schedule applies for Plan Years in which the Plan is
Top Heavy and for amounts allocated in Plan Years before the Plan became Top
Heavy. The Top Heavy Schedule is:
<TABLE>
<CAPTION>
Years of Service for Vesting Purposes Percentage
To Date Employment Terminated Vested
--------------------------------- ----------
<S> <C>
Less than 1 year None
1 year but less than 2 years 10%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>
(c) EFFECT OF RE-PARTICIPATION. Years of Srvice prior to a Break
in Service are Years of Service for purposes of determining the vested interest
in the Employer Accounts of an Employee
-51-
E-343
<PAGE> 57
who is reemployed by the Employer following a Break in Service and for all
purposes under the Plan on the first day on which the Employee becomes an
Active Participant unless the Employee re-participates as a new Employee.
(d) CHANGE. A change in the applicable Vesting Schedule is a
vesting amendment under Article X.
6.6 VESTED ACCOUNTS. The vested portion of the Accounts of a
participant is a Vested Account and the nonvested portion is a Nonvested
Account. Vested and Nonvested Accounts are solely for accounting purposes, and
do not require segregation of the assets of the Trust. Distribution of
benefits may be made to a participant or a beneficiary only from the Vested
Accounts.
(a) RE-PARTICIPATION. Separate Vested Accounts are maintained for
participants whose prior service is disregarded following reemployment.
(b) PARTIAL DISTRIBUTION. In the event of a distribution of less
than the entire Vested Account Balance of a participant whose Employer Account
is not fully vested and nonforfeitable at the time of the distribution, a
Separate Account is established at the time of distribution. The vested
portion of the participant's Separate Account equals P(AB + (R x D)) - (R x D)
where P is the vested percentage, AB is the Account Balance from time to time,
D is the amount of the distribution and R is the ratio of the Account Balance
from time to time to the Separate Account Balance after distribution.
(c) FORFEITURE. All Nonvested Accounts are forfeited as of the
end of the Plan Year during which a participant incurs five (5) consecutive
Breaks in Service, receives a distribution of the entire Vested Account
Balance, or dies after terminating employment. A participant who is not vested
in any portion of an Employer Account is deemed to receive a distribution of
the participant's entire vested Account Balance in that Account on the date the
participant terminates employment with the Employer. For participants affected
by the retroactive effective date of this subsection who were not
-52-
E-344
<PAGE> 58
previously treated as having received a deemed distribution, the deemed
distribution shall occur on the last day of the Plan Year in which this
amendment and restatement is actually adopted.
(d) EMPLOYER ACCOUNT RESTORED. If a terminated participant is
reemployed by the Employer before incurring five (5) consecutive Breaks in
Service, the forfeited Nonvested Account must be restored to the Employer
Account if:
(i) NO DISTRIBUTION. No distribution was received from
the Vested Account; or
(ii) REPAYMENT. The entire distribution received from
the Vested Account is repaid not later than the date the participant
incurs five (5) consecutive Breaks in Service. A participant who is
deemed to have received a distribution of the entire Vested Account
Balance is deemed to have repaid that amount on the first day on which
the Employee again completes an Hour of Service for the performance of
duties. The participant must be reinstated in all optional forms of
benefits and subsidies relating to the benefits applicable to the
restored amount prior to the distribution.
6.7 INVESTMENT OF EMPLOYER AND PARTICIPANT CONTRIBUTIONS. Except
as otherwise provided, each participant's Account, shall be invested in
accordance with the options provided for, and properly elected by, participants
from time to time. Prior to January 1, 1994, Deferred Vested, retiree, and
other non-Active Participants and Alternate Payees could not direct
investments.
(a) OPTIONS. The options available are:
(i) INVESTMENT FUNDS. The Investment Funds available
from time to time identified in an Appendix D to this Plan.
(ii) STOCK. Effective July 1, 1992, stock of Kaydon
Corporation.
(b) PROCEDURE. A participant may designate the investment of the
participant's Accounts in the available options in increments of 1%, subject to
a minimum allocation to any option, prior to January 1, 1995, of 10%. A
participant may change the designated investment options as frequently as
allowed by the administrative processing abilities of the Contract
Administrator and the
-53-
E-345
<PAGE> 59
Trustee, but no less frequently than once within each three month period. All
investment directions must be communicated to the Contract Administrator in
writing on the Appropriate Form or in accordance with an alternative
administrative procedure approved in advance the by Committee and the Contract
Administrator. Any such alternative procedure which is not in writing must
provide the participant with an opportunity to obtain written confirmation of
the instructions.
(c) EFFECTIVE DATE. Except as provided, the Contract
Administrator or Trustee must effect any appropriate direction within a
reasonable period of time and as soon as practicable after the direction is
properly communicated (or, in the case of a sale of Stock, after the end of the
stated month), unless circumstances beyond the control of the Contract
Administrator or Trustee preclude reasonable completion of the direction.
Participant investment directions to change the investment of all or a portion
of an existing Account from Stock to another investment are effective on the
last day of the month in which the investment direction was filed if the
election was filed by the 20th of that month or, in other cases, on the last
day of the following month.
(d) NO DIRECTION. Amounts which a participant may direct but
which are not directed by the participant will be invested by the Trustee in
its discretion. Unless required, such amounts will not be invested in Stock.
(e) MULTIPLE. If a number of purchases or sales are to be made at
any one time, the net purchase or sales price of all shares of Stock purchased
or sold at that time will be averaged to determine the amount to be allocated
to each participant.
6.8 ERISA SECTION 404(C). Except with respect to the portion of
the Plan required to be invested in Kaydon Stock, the Plan is intended to
comply with ERISA Section 404(c). The Committee or other party designated by
Plan policy, rule, or contract shall provide each participant eligible to
direct investments the information identified in Appendix E or provided under
DOL Reg. 2550.404c-1 for that purpose.
(a) CONFIDENTIALITY. Information relating to the purchase,
holding and sale of stock and to
-54-
E-346
<PAGE> 60
the exercise of voting, tender and similar rights with respect to Stock shall
be subject to procedures established to provide for and safeguard the
confidentiality of that information (except to the extent necessary to comply
with Federal laws or state laws not pre-empted by ERISA. The Committee is
responsible for ensuring that the procedures are sufficient to safeguard the
confidentiality of the information, the procedures are being followed and that
an independent fiduciary is appointed to carry out activities relating to any
situations which the Committee determines involve a potential for undue
employer influence on participants with regard to the direct or indirect
exercise of shareholder rights.
(b) STOCK RIGHTS. With respect to Stock:
(i) INFORMATION. Information provided to shareholders
of such securities shall be provided to participants or beneficiaries with
Accounts holding Stock; and
(ii) VOTING. Voting, tender and similar rights with
respect to such securities shall be passed through to participants and
beneficiaries with Accounts holding Stock.
If a participant or beneficiary does not direct the Trustee to vote
the Stock in a particular manner, the Trustee may not vote the Stock.
(c) EXPENSES. The Plan may charge participants' accounts for the
reasonable expenses of carrying out the participant's instructions pursuant to
a procedure established under the Plan to periodically inform participants of
the actual expenses incurred with respect to their respective individual
Accounts.
(d) SECTION 16B RULE. Any available participant election may, at
the participant's election, also be made pursuant to:
(i) SIX MONTH ADVANCE. An irrevocable election made by
the participant six months or more in advance of the effective date of
the election; or
(ii) QUARTERLY DATE. An election made by the participant
on a Quarterly Date at least six months after the date of the previous
intraplan transfer election relating to the Stock Fund. The Quarterly
Date begins on the third business day following the release of Kaydon
-55-
E-347
<PAGE> 61
Corporation's quarterly financial data and ends on the twelfth
business day following that date.
(e) GENERAL. Participant instructions will not be implemented if
the instructions:
(i) PLAN. Are not in accordance with the documents and
instruments governing the Plan insofar as such documents and
instruments are consistent with the provisions of Title I of ERISA;
(ii) UNITED STATES. Would cause a fiduciary to maintain
the indicia of ownership of any assets of the plan outside the
jurisdiction of the district courts of the United States other than as
permitted by section 404(b) of ERISA;
(iii) QUALIFICATION. Would jeopardize the Plan's tax
qualified status under the Internal Revenue Code;
(iv) PROHIBITED TRANSACTION. Would result in a prohibited
transaction described in ERISA section 406 or section 4975 of the
Internal Revenue Code;
(v) LOSS. Could result in a loss in excess of that
participant's account balance; or
(vi) INCOME. Would generate income that would be taxable
to the Plan.
-56-
E-348
<PAGE> 62
ARTICLE VII
DISTRIBUTION
7.1 DISTRIBUTIVE EVENT. A participant's Account is distributable
upon the occurrence of a Distributive Event. A Distributive Event is:
(a) NORMAL RETIREMENT. A participant's attainment of Normal
Retirement Age and termination of employment with the Employer;
(b) EARLY RETIREMENT. A participant's attainment of age 55,
completion of ten (10) years of employment with the Employer and termination of
employment with the Employer (and Affiliated Employers);
(c) DEATH. A participant's Death;
(d) DISABILITY. A participant's Total and Permanent Disability
which is the Participant's inability to perform the individual's usual duties
for the Employer due to injury, disease, or mental disorder determined by a
physician or other evidence selected by the Committee.
(e) EMPLOYMENT TERMINATION. A participant's Termination of
Employment with the Employer (and all Affiliated Employers);
(f) PLAN TERMINATION. For other than a Qualifying Account or a
Salary Deferred Contributions Account, the termination of the Plan;
(g) SALARY DEFERRED AND QUALIFYING. From a Salary Deferred
Contributions Account or a Qualifying Account:
(i) PLAN TERMINATION. The termination of the Plan
without establishment or maintenance of another defined contribution
plan (other than a plan defined in Code Section 4975(e)(7)), to the
extent the participant receives a lump sum distribution within Code
Section 401(k)(10) by reason of the termination; or
(ii) DISPOSITION. To the extent the participant receives
a lump sum distribution within Code Section 401(k)(10) by reason of
the disposition, and if the Employer continues to
-57-
E-349
<PAGE> 63
maintain this Plan after the disposition, the disposition by the
Employer to an unrelated employer of:
(A) ASSETS. Substantially all of the assets
used by the Employer in a trade or business with respect
to an employee who continues employment with the acquiring
corporation; and
(B) STOCK. The Employer's interest in a
subsidiary with respect to an employee who continues
employment with the subsidiary.
(h) HARDSHIP. For Salary Deferred Contributions and earnings of
the Salary Deferred Contributions Account through December 31, 1988 only,
Hardship as provided in this Article.
(i) AGE 59 1/2. From a Salary Deferred and Qualifying
Contributions Accounts after the participant has exhausted all withdrawals from
the Voluntary Contributions Account, and from the KDI Transfer Account, a
participant's attainment of 59 1/2.
(j) MINIMUM REQUIRED. A participant's attainment of age 70 1/2.
(k) ALTERNATE PAYEE. For an Alternate Payee under a Qualified
Domestic Relations Order, the request of the Alternate Payee at the time set
forth in or allowed under the Order even if that time is prior to the date the
participant attains the earliest retirement age as defined in Section 414(p)(4)
of the Code, to the extent authorized under Section 414(p)(10) of the Code.
7.2 HARDSHIP. Hardship requires an immediate and heavy financial
need. A Hardship distribution is limited to the amount necessary to satisfy
the financial need.
(a) IMMEDIATE AND HEAVY FINANCIAL NEED. An immediate and heavy
financial need includes only:
(i) MEDICAL EXPENSES. Expenses for medical care
described in Code Section 213(d) previously incurred by the
participant, or the spouse or dependents of the participant, or
necessary for those individuals to obtain such medical care;
(ii) RESIDENCE. Costs directly related to the purchase
of a principal residence for
-58-
E-350
<PAGE> 64
the participant (excluding mortgage payments);
(iii) TUITION. Payment of tuition and related educational
fees for the next twelve months of post-secondary education for the
participant, or the spouse, children, or dependents of the
participant;
(iv) EVICTION. Payments necessary to prevent the
eviction of the participant from the participant's principal residence
or foreclosure on the mortgage on that residence; and
(v) OTHER. Other similar matters approved by the
Committee in a uniform and non-discriminatory manner and memorialized
in rules and regulations of Plan administration in Appendix G to this
Plan.
(b) FINANCIAL NEED. An immediate and heavy financial need does
not exist to the extent the amount of the distribution exceeds the amount
required to relieve the financial need or to the extent the need may be
satisfied from other resources reasonably available to the participant.
(i) PARTICIPANT REPRESENTATION. In determining the
availability of other resources, the Committee may reasonably rely on
the representation of the participant that the need cannot be
relieved:
(A) INSURANCE. Through reimbursement or
compensation by insurance or otherwise;
(B) LIQUIDATION. By reasonable liquidation of the
participant's assets, to the extent liquidation would not
itself cause an immediate and heavy financial need;
(C) CONTRIBUTIONS. By cessation of Salary
Deferred or Voluntary Contributions under the Plan; or
(D) LOANS. By other distributions or loans
from plans, or by borrowing from commercial sources on
reasonable commercial terms.
(ii) DEEMED FINANCIAL NEED. If the representation is
not made or the Committee cannot reasonably rely upon it, a
distribution is deemed necessary to satisfy an immediate and heavy
financial need only if:
-59-
E-351
<PAGE> 65
(A) AMOUNT. The distribution does not exceed
the immediate and heavy financial need of the participant
(including amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably expected to result
from the distribution);
(B) DISTRIBUTION AND LOANS. The participant has
obtained all distributions (other than for hardship) and all
nontaxable loans currently available under all plans
maintained by the Employer (or Affiliated Employer);
(C) SUSPENSION. The participant's Participant
Contributions to this Plan and all other qualified and
nonqualified plans of deferred compensation (other than health
or welfare benefit plans) maintained by the Employer (or
Affiliated Employer) are required to be suspended for twelve
(12) months after receipt of the Hardship distribution; and
(D) REDUCED ELECTIVE. Under all plans
maintained by the Employer (or Affiliated Employer), the
participant may not make Salary Deferred Contributions for the
taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under
Code Section 402(g) for that next taxable year less the amount
of the participant's Salary Deferred Contributions for the
taxable year of the hardship distribution.
7.3 GENERAL METHOD OF PAYMENT. Payments from a participant's
Accounts at or after a Distributive Event may be made by:
(a) LUMP SUM. A single payment within one (1) taxable year of
the recipient;
(b) INSTALLMENTS. Monthly, quarterly, semiannual or annual
installments at least equal to the minimum amount determined by dividing the
Account Balance by the applicable life expectancy. The amount of each
Installment may be recomputed not more than annually based upon the
participant's then life expectancy or the then joint life expectancy of the
participant and
-60-
E-352
<PAGE> 66
the participant's spouse. A recipient other than the participant or spouse may
have life expectancy determined only once at the time distributions begin;
(c) JOINT AND SPOUSAL SURVIVOR. The purchase of an immediate,
nontransferable annuity from an insurance company, with an amount payable for
the participant's life and, if the participant is survived by a Qualifying
Spouse, at least fifty percent (50%) of the amount continued for that spouse's
life;
(d) SPOUSAL SURVIVOR. In the case of the death of the
participant, the purchase for a Qualifying Spouse of a fully subsidized
nontransferable annuity from an insurance company with a benefit having a value
which is actuarially equivalent to the participant's Vested Account Balance
(including for this purpose Participant Accounts as of the date of the
participant's death);
(e) JOINT AND SURVIVOR. The purchase of an immediate,
nontransferable annuity from an insurance company, with an amount payable for
the participant's life and, if the participant is survived by a spouse or
Beneficiary, at least fifty percent (50%) but not more than one hundred percent
(100%) of that amount continued for that spouse's or Beneficiary's life;
(f) ANNUITY. The purchase of a nontransferable annuity from an
insurance company for the life of the participant;
(g) OTHER ANNUITY. The purchase of any other purchasable,
nontransferable annuity from an insurance company;
(h) TRANSFER. Transfer of the balance directly to the Trustee of
another qualified plan or an Individual Retirement Account; or
(i) COMBINATION. Except at Plan termination, by any combination
of the above methods. The normal form of payment to a married participant with
a Qualifying Spouse is the Joint and Spousal Survivor form and to other
participants is the Annuity form. The normal form of payment after the death of
a participant with a Qualifying Spouse is the Spousal Survivor Annuity. Each
optional form and time of payment of benefits is available only to the extent
its existence and exercise by a participant does not cause disqualification of
the Plan. If a participant's Vested
-61-
E-353 and E-354 and E-355
<PAGE> 67
Account Balance (including any Participant Account) is, and at the time of any
prior distribution was, less than $3,500.00, the Committee must distribute the
balance in an immediate, lump sum payment (in cash and not in Stock) as soon as
administratively practicable following a Distributive Event, subject to any
required participant notification and election under the Direct Rollover rules.
7.4 SPECIAL METHOD OF PAYMENT. The following special rules apply
to payments from a participant's Accounts.
(a) TERMINATION. On recognition by the Employer of termination of
the Plan, Salary Deferred Contributions and Qualifying Accounts must be
transferred to any other defined contribution plan maintained by the Employer
or a member of a controlled group including the Employer (other than a Code
Section 4975(e)(7) employee stock ownership plan).
(b) STOCK. Except as otherwise provided, effective July 1, 1992,
all distributions shall be in whole shares of Stock if and to the extent the
distribution is from an Account invested in whole or in part in Stock. All
other distributions shall be in cash or an annuity contract, as required by the
form of distribution. Any fractional share of Stock otherwise distributable
shall also be distributed in cash.
(i) ELECTION AGAINST STOCK. Any participant or other
payee may elect on the appropriate form to receive in cash all or part
of the portion of a distribution which would otherwise be made in
Stock.
(ii) PROCEDURE. The Trustee shall, to the extent
necessary, purchase or sell the number of shares of Stock to be
distributed, and the participant or other payee shall receive in cash
or Stock, as the case may be, the net amount (after adjustments for
any expenses directly related to the purchase, such as brokerage fees
or commissions) of that purchase or sale.
(A) MULTIPLE. If a number of purchases or sales
are to be made by the Trustee at any one time, the net
purchase or sales price of all shares of Stock
-62-
E-356
<PAGE> 68
purchased or sold at that time shall be averaged to determine
the amount to be distributed to each participant or other
payee.
(B) VALUATION. Fractional shares of Stock
shall be valued on the basis of the closing price of the
Stock as reported on any national securities exchange or as
quoted on any system sponsored by a national securities
association on the trading day on which the stock is sold.
7.5 INFORMATION PROVIDED. The Committee must provide to each
participant:
(a) JOINT AND SPOUSAL SURVIVOR NOTICE. With respect to the Joint
and Spousal Survivor form, no less than 30 days and no more than 90 days before
the first day of the first period for which benefits are paid, a written
explanation of: the Joint and Spousal Survivor Annuity; the participant's
right to make, and the effect of, an election not to receive payments in that
form; the requirement that the Qualifying Spouse consent; the participant's
right to revoke an election and the effect of revocation; the material features
and the relative values of the optional forms of benefit available under the
Plan; and the right to defer receipt of the distribution;
(b) SPOUSAL SURVIVOR ANNUITY NOTICE. With respect to the Spousal
Survivor Annuity, a written explanation of: the Spousal Survivor Annuity; the
participant's right to make, and effect of, an election to waive the benefit;
the requirement that the Qualifying Spouse consent; and the participant's right
to revoke an election and the effect of revocation. The explanation must be
provided within the last to end of:
(i) THREE YEAR PERIOD. The three (3) year period
beginning with the first day of the Plan Year in which the participant
attains age 32; or
(ii) TWO YEAR PERIOD. The two year period beginning one
year before: the individual becomes an Active Participant, a benefit
subsidy (as defined in Section 417 of the Code) ceases, the survivor
benefit requirements first apply to the participant, or the separation
from service of a participant who has not attained age 35.
-63-
E-357
<PAGE> 69
The explanation must be provided to a participant who separates from
service before age 32 within one year after termination of employment; and
(c) WITHHOLDING, DISTRIBUTION INFORMATION. With the Application
for Distribution:
(i) WITHHOLDING. Where applicable, a form permitting
rejection of federal income tax withholding from the distribution; and
(ii) FAVORABLE TAX TREATMENT. A form providing
notification of the requirements for and the effects of lump sum five
(5) and ten (10) year averaging, a Direct Rollover and of a qualifying
rollover under the Code.
7.6 APPLICATION FOR DISTRIBUTION. To begin distribution after a
Distributive Event, the participant (or a Designated Beneficiary) must file a
written, valid Application for Distribution after receiving the information
described in this Article executed within 90 days before the first day of the
first period for which benefits are paid.
(a) NO APPLICATION. An Application is not required if the
distribution: is a Cash Out; is required to satisfy Code Section 401(a)(9),
411(b), or 415; is a distribution of the Joint and Spousal Survivor benefit (or
the Annuity Form if the participant is not married to a Qualifying Spouse) or
the Spousal Survivor Annuity or is made after the date the participant has (or
would have, if not dead) attained the later of Normal Retirement Age or age 62.
(b) GENERAL REQUIREMENTS. To be a valid Application, the
participant or other payee must consent to or request the distribution and
designate the desired type of benefit, the form of payment, the beginning date
for payment, whether federal income tax will be withheld (where not mandatory),
and whether the participant is married.
(c) ELECTION AGAINST JOINT AND SPOUSAL SURVIVOR. If the
participant elects during the applicable period, or receives after the date the
participant has attained the later of Normal Retirement Age or age 62, a form
of payment other than the Joint and Spousal Survivor (or the Annuity form if
the participant is not married to a Qualifying Spouse), the participant must
specify
-64-
E-358
<PAGE> 70
the particular optional form of benefit and, if applicable, the Application
must be executed by the participant's Qualifying Spouse and witnessed by a Plan
representative or a notary public.
(i) SPOUSAL CONSENT. Spousal consent must specify the
particular optional form of benefit; except as provided in a Qualified
Order, is necessary within ninety (90) days before the first day of
the first period for which benefits are paid; and is irrevocable.
(ii) NO SPOUSE. Spousal consent is not required if it is
established to the satisfaction of a Plan Representative that there is
no Qualifying Spouse or that the Qualifying Spouse cannot be located;
if the spouse is legally incompetent and the spouse's legal guardian
gives consent; or if the participant is legally separated or has been
abandoned as determined by court order (unless a Qualified Order
provides otherwise).
(d) MODIFICATION. A participant's election may be made, modified,
or revoked at any time during the ninety (90) days immediately before the
first day of the first period for which benefits are paid to return to the
Joint and Spousal Survivor form or, with appropriate Spousal consent, to
another optional form of benefit.
(e) LATER ACCRUAL. The provisions of this Section apply
separately to additional accruals after a benefit start date that occurs before
the participant attains Normal Retirement Age.
(f) ELECTIONS. Any election otherwise permitted by this Article
may, at the participant's election, also be made pursuant to an irrevocable
election made by the participant six months or more in advance of the effective
date of the election.
7.7 TIMING OF PAYMENT. Except for Age 59 1/2 or Hardship
Distributions, payments from a participant's Accounts may begin on the first
day of a Period following a Distributive Event and, except where unnecessary,
filing of an appropriate Application.
(a) REQUIRED BEGINNING DATE - PARTICIPANT. Payments to a
participant of the appropriate Minimum Amount must begin not later than April 1
following the calendar year in which the participant attains age 70 1/2 unless
the participant:
-65-
E-359
<PAGE> 71
(i) ELECTION. Made an election under Section 242(b) of
the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA Election);
(ii) SPECIAL RULE. Attained age 70 1/2 in 1988, was not
a Five Percent Owner at any time during the Plan Year ending with or
within the calendar year in which the participant attained age 66 1/2
or any later Plan Year, and had not retired by January 1, 1989. In
that case the participant is treated as having retired on January 1,
1989; or
(iii) AGE 70 1/2. Attained age 70 1/2 before January 1,
1988 and has not yet retired. In that case:
(A) NON-FIVE PERCENT (5%) OWNER. If the
participant was not a Five Percent Owner at any time during
the Plan Year ending with or within the calendar year in which
the participant attained age 66 1/2 or any later Plan Year,
payments must begin not later than April 1 following the later
of the calendar year in which the participant retires or
attains age 70 1/2.
(B) FIVE PERCENT (5%) OWNER. If the participant
was a Five Percent Owner during any Plan Year beginning after
December 31, 1979, payments must begin not later than April 1
following the earlier of the calendar year in which the
Participant retires or with or within which ends the Plan Year
in which the participant becomes a Five Percent Owner.
(b) REQUIRED BEGINNING DATE - BENEFICIARY. Payments to a
beneficiary or other recipient must begin by the earliest applicable date in
this subsection.
(i) NO PAYMENTS. If a participant dies before the
participant's Required Beginning Date and irrevocable annuity
distributions have not begun:
(A) LUMP SUM. Payment must be made by December
31 of the fifth calendar year after the calendar year of the
death of the participant (or the participant's spouse, if the
spouse was the Designated Beneficiary at the participant's
death and dies before the spouse's required beginning date);
or
-66-
E-360
<PAGE> 72
(B) LIFE OR LIFE EXPECTANCY. If elected by a
Designated Beneficiary (determined as of the date of death),
payments must begin by December 31 of the year after the year
of the participant's (or spouse's) death in a method which
will result in the Account Balance being payable during the
Beneficiary's life or life expectancy or, if elected by the
participant's spouse, payments must begin in the same manner
by the December 31 after the later of the end of the calendar
year in which the participant died and the date on which the
participant would have attained age 70 1/2.
(ii) PAYMENTS. If the participant dies on or after the
participant's Required Beginning Date or irrevocable annuity
distributions have begun, the Account Balance must be payable at least
as rapidly as under the method of payment elected by the participant.
Any Designated Beneficiary whose life or life expectancy was used to
determine the period for that method of payment must be the
beneficiary of the remaining portion.
(c) CONTINUING PAYMENT DATES. The Minimum Distribution for all
distribution calendar years other than the distribution due by the Required
Beginning Date, including the Minimum Distribution for the distribution
calendar year in which the Required Beginning Date occurs, must be made on or
before December 31 of that distribution calendar year.
(d) GENERAL LIMITATION. Payments to all participants must begin,
unless postponed, not later than sixty (60) days after the end of the latest
Plan Year in which the participant: attains the earlier of age 65 or Normal
Retirement Age; reaches the tenth anniversary of participation; or terminates
employment. Payments to the surviving spouse of a deceased participant must be
available within a reasonable time after the participant's death. Unless
special circumstances require an extension of time, the reasonable time may not
exceed 90 days after the participant's death.
(e) OVERRIDE. Payments for each distribution calendar year must
be made in accordance with the regulations under Code Section 401(a)(9), which
override any distribution options in the
-67-
E-361
<PAGE> 73
Plan or elections inconsistent with Code Section 401(a)(9). Notwithstanding
any other provision of the Plan, the Plan must begin distribution in a manner
that satisfies: Code Section 401(a)(9) even though the participant (or spouse,
where applicable) fails to consent to the distribution if the Plan has made
reasonable efforts to obtain consent and if the distribution otherwise meets
the applicable requirements of Code Section 417; Code Section 411(b) and Code
Section 415.
(f) EXCISE TAX. Payments before a participant attains age 59 are
subject to an excise tax under the Code unless the payments are made:
(i) DEATH OR DISABILITY. On account of death or
disability within the meaning of Code Section 72(m)(7);
(ii) ANNUITY. As part of a series of substantially
equal periodic payments, not less frequently than annually, made for
the life or life expectancy of the participant or the joint lives or
joint life expectancies of the participant and the Designated
Beneficiary; or
(iii) SEPARATION. To a participant after separation from
service after attainment of age 55.
(g) AGE 59 1/2 OR HARDSHIP. Age 59 1/2 or Hardship distributions
shall be made not later than thirty (30) days following the valuation of the
Participant's Account as of the end of the calendar quarter with respect to
which the withdrawal is to be made.
7.8 DURATION OF PAYMENT. A participant or a Designated
Beneficiary may not elect a method of payment which extends beyond the later of
the life or life expectancy of the participant or the lives or joint life
expectancy of the participant and the participant's Designated Beneficiary (the
Maximum Period). For this purpose, the life expectancy of the Designated
Beneficiary (excluding beneficiaries contingent on the death of a prior
beneficiary, but including the spouse, as recomputed) with the shortest life
expectancy must be used.
(a) RECALCULATION. The life expectancies of the participant and
spouse must be recalculated annually unless the participant or spouse
irrevocably elects against recalculation prior
-68-
E-362
<PAGE> 74
to the applicable Required Beginning Date.
(b) NO LIFE EXPECTANCY. The Plan must distribute the
participant's entire remaining interest prior to the last day of the calendar
year in which the last applicable life expectancy is reduced to zero.
7.9 AMOUNT OF PAYMENT. The amount of each payment must satisfy
these Minimum Distribution requirements. The time and method of payment of
benefits selected by a participant must be adjusted as necessary to comply with
Section 401(a)(9) and the Minimum Distribution rules.
(a) NON-ANNUITY PAYMENTS. For other than annuity distributions,
the Plan must distribute for each distribution calendar year, beginning with
the first calendar year for which distributions are required, an amount at
least equal to the participant's Account Balance divided by the lesser of the
Applicable Life Expectancy or, if the participant's spouse is not the
Designated Beneficiary, the applicable divisor.
(i) ACCOUNT BALANCE. The Account Balance used in
determining the Minimum Distribution for a distribution calendar year
is the Account Balance as of the last valuation date in the calendar
year immediately preceding the distribution calendar year (Valuation
Calendar Year) as adjusted. The Account Balance is increased by any
contributions or forfeitures allocated as of dates in the Valuation
Calendar Year after the valuation date and decreased by distributions
made in the Valuation Calendar Year after the valuation date and
transfers made in prior years. The Plan may not, however, distribute
amounts which are not vested.
(ii) APPLICABLE LIFE EXPECTANCY. The Applicable Life
Expectancy is the life (or joint life) expectancy of the participant
and the participant's spouse or Designated Beneficiary (first
determined as of the participant's (or spouse's) Required Beginning
Date or as of any date within ninety days before annuity payments
begin), reduced by one for each calendar
-69-
E-363
<PAGE> 75
year which has elapsed since the date on which the life (or joint
life) expectancy was calculated, subject to recalculation.
(b) ANNUITY PAYMENTS. For annuity distributions, the Plan must
distribute an annuity contract from an insurance company providing payments
which satisfy Code Section 401(a)(9) and the regulations issued thereunder.
Annuity distributions must be payable as:
(i) ANNUITY FOR ACTIVE PARTICIPANT. A life annuity for
the life of the participant;
(ii) ANNUITY, NONSPOUSE BENEFICIARY. A joint and
survivor annuity for the joint lives of the participant and a
beneficiary other than the spouse under which the periodic annuity
payment payable to the survivor must not at any time on and after the
Required Beginning Date exceed the applicable percentage of the
annuity payment for the participant.
(iii) PERIOD CERTAIN. A period certain annuity in which
the annuity payments payable to the participant satisfy the preceding;
(iv) ANNUITY, SPOUSE BENEFICIARY. A joint and survivor
annuity for the joint lives of the participant and spouse which
otherwise satisfies Code Section 401(a)(9); or
(v) TEFRA ELECTION. Provided in a TEFRA 242(b) Election
to the extent the method of distribution satisfies the incidental
benefit rules in effect on July 27, 1987.
The applicable divisor and the applicable percentages are determined under
Regulation Section 1.401(a)(9)-2.
7.10 SPECIAL SPOUSAL SURVIVOR ANNUITY RULES. A participant, with
the consent of any Qualifying Spouse, may elect to waive the Spousal Survivor
Annuity during the period beginning on the expiration of the time for provision
of the Spousal Survivor Annuity Notice and ending at the participant's death.
A Qualifying Spouse may elect to waive the Spousal Survivor Annuity after the
death of the participant.
(a) NO SPOUSE. Spousal consent is not required if it is
established to the satisfaction of a Plan Representative that there is no
Qualifying Spouse or that the Qualifying Spouse cannot be
-70-
E-364
<PAGE> 76
located; if the spouse is legally incompetent and the spouse's legal guardian
gives consent; or if the participant is legally separated or has been abandoned
as determined by court order (unless a qualified Order provides otherwise).
(b) NOT NECESSARY. Spousal consent is not necessary for a
distribution of the Spousal Survivor Annuity after the date the participant
attains (or would have attained if not dead) the later of Normal Retirement Age
or age 62.
(c) IRREVOCABLE. Spousal consent is irrevocable.
7.11 SPECIAL PARTICIPANT ACCOUNT DISTRIBUTION RULES. A
participant's Participant Accounts are also subject to the following special
rules:
(a) VOLUNTARY. A participant's Voluntary Account is distributable
upon notice from the participant of a desire to begin distribution of all or
part of the Voluntary Account Balance.
(b) ROLLOVER. A participant's Rollover Account established by a
rollover qualified under Code Sections 402(a) or 408(d) is distributable upon
notice from the participant of a desire to begin distribution of all or part of
the Rollover Account balance. Payments must be made over a period not
exceeding the applicable life expectancies used by the distributing plan to
determine the minimum distribution with respect to the amount rolled over.
(c) TRANSFER. A participant's Rollover Account established by a
transfer directly from the trustee, custodian or insurer of a plan or related
trust qualified under Code Section 401(a) (Transferor Plan):
(i) RESTRICTED - CODE SECTION 401(K). Is subject to the
distribution restrictions of Code Sections 401(k)(2) and (10) to the
extent the amount transferred consists of elective contributions (or
amounts treated as elective contributions) under a plan with a Code
Section 401(k) arrangement; and
(ii) DISTRIBUTION TIMING. Which is transferred after the
Required Beginning Date under both the Transferor Plan and this Plan
must begin to be distributed in the calendar year
-71-
E-365
<PAGE> 77
following the calendar year in which the amount was transferred if the
Designated Beneficiary under this Plan has a life expectancy that is longer than
the life expectancy of the designated beneficiary under the Transferor Plan.
This distribution must be made over a period not exceeding the applicable life
expectancies used by the Transferor Plan to determine the participant's minimum
distribution with respect to the amount transferred.
7.12 DESIGNATION OF BENEFICIARY. A participant or a Designated
Beneficiary may designate the beneficiary or contingent beneficiary to receive
amounts payable under the Plan (other than the Spousal Survivor Annuity) in the
event of the participant's or Designated Beneficiary's death. The Designated
Beneficiary may not change a designation by the participant.
(a) MARRIED ACTIVE PARTICIPANT. Except as provided in a Qualified
Order, a married participant's beneficiary is the participant's legal spouse
unless the spouse consents otherwise.
(i) SPOUSAL CONSENT REQUIRED. Except as provided in a
Qualified Order, spousal consent is necessary for a beneficiary
designation of another and a change of beneficiary designation.
(ii) SPOUSAL CONSENT NOT REQUIRED. Spousal Consent is
not required to the extent a prior Qualified Order provides for
payment of any portion of a Participant's Account Balance to an
alternate payee under the Qualified Order or if it is established to
the satisfaction of a Plan Representative that there is no spouse or
that the spouse cannot be located; if the spouse is legally
incompetent and the spouse's legal guardian gives consent; or if the
participant is legally separated or has been abandoned as determined
by court order (unless a Qualified Order provides otherwise).
(iii) IRREVOCABLE. Spousal consent is irrevocable.
(b) METHOD. The designation, revocation, or alteration must be
made in writing on forms provided by the Committee. Any designation by a
participant and any spousal consent must state the specific nonspouse
beneficiary (including any class of beneficiaries or any contingent benefic-
-72-
E-366
<PAGE> 78
iaries) who will receive the benefit. If the Designated Beneficiary is a
trust, the spouse need only consent to the designation of the trust and need
not consent to the designation of trust beneficiaries or any changes of trust
beneficiaries. A designation may be altered or revoked at any time before the
participant's entire Account Balance has been distributed, with appropriate
spousal consent if another beneficiary is designated.
(c) DESIGNATED BENEFICIARY. A beneficiary other than an
individual or eligible trust will be recognized as a beneficiary but may not be
a Designated Beneficiary for purposes of this Article and Code Section
401(a)(9). All identifiable beneficiaries of an eligible trust are treated as
Designated Beneficiaries for those purposes with respect to the trust's
interest in the Plan. An eligible trust is a trust which, as of the later of
the date on which the trust in named as beneficiary or the participant's
Required Beginning Date (and for all subsequent periods during which the trust
is a beneficiary) is valid and irrevocable and which is provided to the Plan.
(d) FAILURE TO DESIGNATE. In the absence of an effective
designation, any benefit payable upon death is paid in the following priority
order: (1) the participant's surviving spouse, (2) the participant's surviving
issue, per stirpes, or (3) to those who would receive the personal property of
the participant under Michigan law of intestate succession.
7.13 CLAIMS PROCEDURE. A participant or beneficiary and the
Committee must observe the following procedures for claims to benefits:
(a) INITIAL CLAIM. A participant, beneficiary or legal
representative must file an Application for Distribution with the Committee.
The Committee must grant or deny the request within ninety (90) days after
receipt unless special circumstances require an extension of time. The
extension must not exceed an additional ninety (90) days. The Committee must
notify the applicant in writing of the extension and the reasons for the
extension.
(b) DENIAL OF CLAIM. If a claim is denied, the Committee must
provide to the applicant a written notice containing the reason for the denial,
reference to Plan provisions upon which the
-73-
E-367
<PAGE> 79
denial is based, a description of additional information necessary to permit
granting the claim and an explanation of the Plan's claim review procedure. If
notice of a denial of claim or an extension of time has not been received by
the applicant within ninety (90) days, the claim is deemed denied.
(c) EMPLOYER REVIEW. Within sixty (60) days after a denial is
received, the applicant may request a full and fair review upon written
application to the Committee. The applicant may review pertinent documents and
submit issues and comments in writing to the Committee. The Committee must
make a decision on review and notify the applicant of the decision within sixty
(60) days of receipt of the application unless special circumstances require an
extension of time. The extension may not exceed an additional sixty (60) days.
The Committee must notify the applicant in writing of the extension and the
reasons for the extension. The decision upon review must meet the requirements
for denial of a claim.
7.14 FACILITY OF PAYMENT. A payment made under this section fully
discharges the Employer, the Committee and the Trustee from all future
liability with respect to the payment.
(a) INCAPACITY. If a person entitled to payment is legally,
physically or mentally incapable of receiving or acknowledging payment, the
Committee may direct payment: directly to the person; to the person's legal
representative; to the spouse, child or relative by blood or marriage of the
person; to the person with whom the person resides; or by expending the payment
directly for the benefit of the person. A payment made other than to the
person is intended to be used for the person's exclusive benefit.
(b) LEGAL REPRESENTATIVE. The Committee shall not be required to
commence probate proceedings or to secure the appointment of a legal
representative.
(c) DETERMINATIONS. The Committee may act upon affidavits in
making any determination. The Committee, in relying upon affidavits or having
made a reasonable effort to locate any person entitled to payment, is
authorized to direct payment to a successor beneficiary or another person. A
person omitted from payment has no rights on account of payments so made.
-74-
E-368
<PAGE> 80
(d) ANTI-ESCHEAT. If the Committee cannot locate a person
entitled to payment, the amount is a forfeiture. The forfeiture is reinstated
if a claim is made within the applicable limitations period by a person
entitled to payment.
7.15 QUALIFIED ORDER. Distribution to the recipient under a
Qualified Order must be made in accordance with Code Section 401(a)(9) and this
Article applied by substituting the recipient for the participant, except that
the distribution to the recipient need not satisfy the minimum distribution
incidental benefit rule.
(a) DESIGNATION OF BENEFICIARY. A recipient may designate a
beneficiary under the Plan but may not elect any form of payment which requires
distribution over the joint lives or life expectancy of the recipient and the
designated beneficiary.
(b) LIMITATION. Where, because of a Qualified Order, more than
one individual is treated as a Qualifying Spouse or Designated Beneficiary with
respect to a participant, the total amount payable as a Spousal Survivor
Annuity, as the survivor portion of the Joint and Spousal Survivor benefit or
otherwise may not exceed the amount payable if there were only one Qualifying
Spouse or Designated Beneficiary. Where a Qualified Order allocates a portion
of the participant's accrued benefit to or with respect to a former spouse or
alternate payee, the Joint and Spousal Survivor benefit, the Spousal Survivor
Annuity and any other amounts payable to a Qualifying Spouse or Designated
Beneficiary are based on the vested accrued benefit less the amount payable to
or with respect to the former spouse or alternate payee.
7.16 DIRECT ROLLOVER RULES. This Section applies to distributions
made on or after January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee's election under this
Article, a Distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
-75-
E-369
<PAGE> 81
(a) ELIGIBLE ROLLOVER DISTRIBUTION. An Eligible Rollover
Distribution is an distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(b) ELIGIBLE RETIREMENT PLAN. An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributee's
eligible rollover distribution. However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
(c) DISTRIBUTEE. A Distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse or
former spouse who is the alternate payee under a qualified domestic relations
order, as defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
(d) DIRECT ROLLOVER. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
-76-
E-370
<PAGE> 82
ARTICLE VIII
INSURANCE OR ANNUITIES
8.1 TYPES OF POLICIES AND CONTRACTS. The Committee may direct the
purchase of an annuity contract or permanent or term life insurance policy
(Policy) which satisfies the requirements of this Article.
(a) ADDITIONAL RIGHTS. A Policy must be convertible to cash or
periodic income. A Policy may provide for disability waiver of premium or for
conversion to a larger policy.
(b) OWNERSHIP. A Policy must be owned by the Trustee.
8.2 PREMIUMS - DIVIDENDS. Premiums on each Policy must be paid on
the premium due dates. Dividends may be applied to: reduce premiums; increase
the value of the Policy subject to the limits in this Article; or increase the
allocation to the participant's account.
8.3 ACTIVE PARTICIPANT LIFE INSURANCE. An Active Participant may
elect to invest a portion of any account in a Policy covering the Participant.
(a) INCIDENTAL PREMIUM LIMITATION. The aggregate premiums paid
from a participant's Employer Account(s) must not equal or exceed the greater
of:
(i) PERMANENT LIFE. If for a permanent life Policy
(with a level death benefit and premium), fifty percent (50%) of the
contributions and forfeitures allocated to the Participant's
Account(s);
(ii) TERM LIFE. If for other than a permanent life
Policy (or a combination of permanent and other life policies),
twenty-five percent (25%) of the contributions and forfeitures
allocated to the Participant's Account(s);
(iii) ONE HUNDRED TIMES. More than the amount necessary
to provide a Policy
-77-
E-371
<PAGE> 83
with a face value of one hundred times (100x) the actuarially
determined anticipated monthly benefit; or
(iv) TWO YEAR ACCUMULATION. If paid only from funds
accumulated for at least two (2) years, more than the amount of the
accumulation.
(b) INABILITY TO PAY PREMIUM. If payment of a premium would
exceed the Incidental Premium Limitations, the premium may be:
(i) BORROW. Paid by borrowing against the cash value of
the Policy. Borrowing against the account of more than one
Participant must occur in the ratio that the cash value of the
Policies in the account bears to the total cash values of Policies in
all accounts;
(ii) REDUCE. Reduced by partial conversion of the Policy
to paid up insurance or by partial conversion to cash; or
(iii) DIVIDENDS. Paid by using accumulated Policy
dividends.
(c) DISTRIBUTION. Upon beginning distribution, no further
premiums may be paid. The Policy must be: converted into cash; converted to a
nontransferable paid up annuity allowing distribution only under methods
permitted under Section 7.3; sold to the participant; or distributed as a part
of the Vested Account.
(d) VESTING. The value of each Policy or annuity contract is
vested under the vesting provisions applicable to the account in which it is
held.
(e) NONDISCRIMINATION. All participants must be treated equally
to the extent possible in view of their desire for life insurance protection,
their insurability and the ratings and regulations of the insurance company.
(f) ACCOUNTING. An accounting record of the premiums paid on, and
the cash value of, each Policy must be made on each Allocation Date. The cash
value of a Policy is not a part of the balance of any account for purposes of
allocating the earnings, losses and adjustments in value of the Trust.
-78-
E-372
<PAGE> 84
ARTICLE IX
ADMINISTRATION
9.1 FIDUCIARY RESPONSIBILITIES. The responsibilities of the
Employer and the Committee are set forth in the Plan. The responsibilities of
the Trustee and Investment Manager are set forth in the Trust. This division
of responsibility is an allocation of fiduciary responsibility under Section
405(c)(1) of ERISA.
9.2 EMPLOYER. The Employer has sole responsibility for:
(a) CONTRIBUTIONS. Determining and making Employer Contributions;
(b) FIDUCIARY APPOINTMENT. Appointing and removing the Trustee,
the Contract Administrator, the Investment Manager and the Committee;
(c) AMENDMENT, TERMINATION. Amending or terminating the Plan and
the Trust; and
(d) EXPENSES. Paying the expenses of administering the Plan and
the Trust which may not be paid with Plan assets or which otherwise are not
paid by the Trustee out of Plan assets.
9.3 EMPLOYER ACTION. Action by the Employer must be taken by
resolution of its Board of Directors or by a written instrument executed by
three or more officers.
9.4 INVESTMENT MANAGER APPOINTMENT. Any Investment Manager must
be an investment advisor registered under the Investment Advisors Act of 1940
or an insurance company qualified to perform investment management services
under the laws of the State of Virginia. An Investment Manager must file its
written acceptance with the Employer acknowledging status as a named fiduciary.
Upon acceptance, the Employer must notify the Trustee of the appointment.
9.5 COMMITTEE. The Committee has responsibility for general
administration of the Plan.
-79-
E-373
<PAGE> 85
(a) APPOINTMENT. The Committee may consist of one or more
persons. In the absence of a Committee, the Employer has the responsibilities
of the Committee designated by the Plan. Any members of the Committee who are
employees must not receive compensation for their services to the Committee.
(b) AUTHORITY. The Committee has the duty and power to:
(i) CONSTRUCTION. Exercise discretionary
authority to construe and interpret the Plan and decide all questions of
eligibility for participation and benefits;
(ii) PROCEDURES. Prescribe procedures and forms
for applications for benefits, benefit elections, loans, if provided, and
designation of beneficiaries;
(iii) DISCLOSE. Disclose to participants, as
required by law, a summary of the Plan, a summary of annual reports to the
government, benefit accruals, entitlement to the benefits and notices of
application for determination;
(iv) REPORTING. Make governmental reports
required by law including annual and periodic reports to the United States
Internal Revenue Service and the Department of Labor;
(v) INFORMATION. Receive from and transmit to
the Employer, the Trustee, the Investment Manager and the participants such
information as shall be necessary for the proper administration of the Plan;
(vi) FINANCIAL REPORTS. Receive and retain
reports of the financial condition of the Trust Fund from the Trustee and the
Investment Manager;
(vii) BENEFIT AUTHORIZATION. Determine
entitlement to, and the amount of, benefits and loans and authorize benefit
payments and loans, if provided;
(viii) AGENTS. Appoint or employ individuals to
assist in the administration of the Plan and other agents it deems advisable,
including legal counsel;
(ix) RULES. Promulgate rules and decisions to be
uniformly and consistently applied under similar circumstances;
-80-
E-374
<PAGE> 86
(x) BONDING. Assure that all fiduciaries are
bonded as required by ERISA; and
(xi) RECOVER. Recover Plan benefits improperly
paid, through offset and reduction of subsequent benefit payments or otherwise.
(c) PROCEDURE. The Committee must elect one of its members as
chairperson and may designate a secretary. The Committee must keep a record of
all meetings and forward all necessary communications to the Trustee. Any
delegation of duties by the Committee must state the scope of the delegation
with reasonable specificity. The Committee acts by a majority of its members,
either by vote at a meeting or by signature to a writing. Action by the
Committee must be evidenced by a written and duly executed instrument.
9.6 FIDUCIARY STANDARDS. Each fiduciary must act solely in the
interest of participants and beneficiaries:
(a) PRUDENTLY. With the care, skill and diligence of a prudent
person;
(b) EXCLUSIVE PURPOSE. For the exclusive purpose of providing
benefits and paying expenses of administration; and
(c) PROHIBITED TRANSACTION. To avoid engaging in a prohibited
transaction under the Code or ERISA unless an exemption is obtained.
9.7 INTER-RELATIONSHIP OF FIDUCIARIES. Each fiduciary warrants
that any of its actions are in accordance with the Plan and Trust. Each
fiduciary may rely upon the action of another fiduciary and is not required to
inquire into the propriety of any action. Each fiduciary is responsible for
the proper exercise of its responsibilities.
9.8 INDEMNIFICATION. Except to the extent required by ERISA, as
amended, no member of the Committee or any sub-committee shall be liable for
any act, omission, determination,
-81-
E-375
<PAGE> 87
construction or communication made by the member, the Committee or any other
member. The Employer hereby agrees to indemnify and save harmless each person
now or hereafter acting as a member of the Committee from all loss or damage
that may or might result from acts as a member, except to the extent that any
liability is imposed as a result of the member's gross negligence or willful
misconduct. The Employer may purchase insurance to indemnify a member for that
liability.
9.9 PAYMENT OF EXPENSES. The Employer may elect to pay all or a
portion of the administrative expenses of the Plan. If the Employer does not
elect to pay all of the administrative expenses of the Plan which may be paid
out of Plan assets, the Trustee shall pay those expenses or the remaining
portion of those expenses (to the extent not precluded by ERISA) and charge the
payment against the Plan assets. Notwithstanding that general rule, with
respect to the expenses relating to the portion of the Plan assets attributable
to amounts contributed pursuant to the PAYSOP or TRASOP provisions of the Code
under this or a predecessor plan, only the lesser of one-hundred thousand
dollars ($100,000.00) or ten percent (10%) of dividends not in excess of
one-hundred thousand dollars ($100,000.00) received on Stock during the Plan
Year plus five percent (5%) of dividends in excess of one-hundred thousand
dollars ($100,000.00) received during the Plan Year may be paid by the Trustee
out of Plan assets.
9.10 LIMITATION OF LIABILITY AND LEGAL ACTION. Except as otherwise
provided in ERISA, as amended, as a condition of participation in the Plan,
each participant agrees that the Employer, the Committee, the Contract
Administrator and the Trustee shall not in any way be subject to suit,
litigation, or any legal liability in connection with the Plan and Trust or
their operation, except for its or their own negligence or willful misconduct.
Except as otherwise provided in ERISA, as amended, each participant hereby
releases the Employer, its officers and agents, the Committee, the Contract
Administrator and the Trustee from any and all such liability or obligation.
(a) PARTIES. Except as otherwise provided in ERISA, as amended,
in any action or
-82-
E-376
<PAGE> 88
proceeding involving all or any portion of the Plan, the Trust, or its
administration, each Employer, the Committee and the Trustee shall be the only
necessary parties. No person in the employ of (or formerly employed by) an
Employer, or any beneficiary or other person having or claiming to have an
interest in the Trust Fund or under the Plan, shall be entitled to any notice
of process; nor shall such persons be entitled to participate in any such
action or proceedings.
(b) BINDING RESULT. Any final judgment entered in any such action
or proceeding which is not appealed or appealable shall be binding and
conclusive on the parties and all persons having or claiming to have an
interest in the Trust Fund or under the Plan.
-83-
E-377
<PAGE> 89
ARTICLE X
AMENDMENT AND TERMINATION OF PLAN
10.1 AMENDMENT. The Board of Directors of Electro-Tec Corporation
or any three officers of Electro-Tec Corporation may amend the Plan. An
amendment must not:
(a) DECREASE BENEFITS. Retroactively decrease a participant's
account balance or eliminate an optional form of distribution unless required
or permitted by law;
(b) DIVERSION. Divert or use the Trust other than for the
exclusive benefit of participants and their beneficiaries; or
(c) COMPANY INTEREST. Give the Employer any interest in the Trust
until all liabilities are satisfied.
(d) PROTECTED BENEFITS. Reduce or eliminate Code Section 411(d)
(6) protected benefits, to the extent accrued, unless required or permitted by
law.
10.2 VESTING SCHEDULE AMENDMENT. A participant's current vested
status may not be decreased by amendment at any time. A participant with at
least three (3) years of service (five (5) years of service if the participant
does not have one or more Hours of Service in any Plan Year beginning after
December 31, 1988) whose vested interest would be decreased by an amendment may
irrevocably elect to remain under the former vesting rule.
(a) ELECTION PERIOD. The period for election begins no later than
the date the amendment is adopted and ends sixty (60) days after the latest of
the date that: the amendment is adopted; the amendment is effective; or the
participant is notified of the amendment.
(b) FAILURE. A participant who does not make an election is
subject to the amended vesting schedule for allocations made after the later of
the date the amendment is adopted or effective.
-84-
E-378
<PAGE> 90
10.3 TERMINATION. The Board of Directors of Electro-Tec
Corporation or any three officers of Electro-Tec Corporation may terminate the
Plan. If a favorable determination cannot be received from the Internal
Revenue Service upon initial qualification or an amendment to the Plan,
Electro-Tec Corporation may terminate the Plan as of the applicable effective
date. The Plan automatically terminates upon:
(a) LIQUIDATION, BANKRUPTCY. The liquidation or discontinuance of
the business of the Employer; the adjudication of the Employer as a bankrupt;
or a general assignment by the Employer to or for the benefit of its creditors.
(b) MERGER, CONSOLIDATION. Unless continued, the merger or
consolidation of the Employer into another entity which is the survivor, the
consolidation or other reorganization of the Employer, or the sale of
substantially all of the Employer's assets.
(c) DISCONTINUANCE OF CONTRIBUTIONS. A complete discontinuance of
contributions within the meaning of Code Section 411(d)(3), which occurs at the
end of the Plan Year following the Plan Year for which the last substantial
contribution was made.
10.4 PARTIAL TERMINATION. If the Plan terminates with respect to
less than all participants, the proportionate interest of the affected
participants shall be determined. The Committee must declare an interim
Allocation Date on the date of partial termination.
10.5 FULL VESTING. The Account Balance of each affected Active
Participant becomes fully vested and nonforfeitable upon termination (or
partial termination) of the Plan or upon a complete discontinuance of
contributions within Code Section 411(d)(3). For this purpose, the Account
Balance is the Account Balance which is funded as of the date of termination
(or partial termination).
10.6 MERGER OR CONSOLIDATION OF PLAN. A merger, consolidation, or
transfer of Plan assets
-85-
E-379
<PAGE> 91
or liabilities may occur if:
(a) AUTHORIZATION. The other plan is qualified and authorizes
the merger, consolidation or transfer;
(b) EQUAL BENEFIT. Each participant's benefit will be at least
equal to the participant's benefit if the Plan was terminated immediately
before the merger, consolidation or transfer; and
(c) PROTECTED BENEFITS. Code Section 411(d)(6) protected
benefits, to the extent accrued, are not reduced or eliminated unless required
or permitted by law.
-86-
E-380
<PAGE> 92
ARTICLE XI
MISCELLANEOUS
11.1 NONASSIGNABILITY. Except for a Qualified Order, benefits are
not subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy (Assignment), before
actual receipt. Any Assignment which violates this section is void. The right
to receive a benefit is not an asset for insolvency or bankruptcy.
11.2 EMPLOYMENT RIGHTS NOT ENLARGED. The Plan does not create any
employment rights or restrict the Employer's right to discharge an employee.
11.3 PARTICIPANTS' RIGHTS LIMITED. The Plan does not give any
participant: any interest in the Employer's assets, business or affairs; the
right to question any Employer action or policy; or the right to examine
Employer books and records. The rights of all participants are limited to the
right to receive payment of benefits when due.
11.4 INTERPRETATION AND CONSTRUCTION. The use of the singular
includes the plural where applicable, and vice versa. The headings in the Plan
do not limit or extend the provisions of the Plan. Capitalized terms, except
where capitalized solely for grammar, have the meanings as provided in the
Plan.
(a) QUALIFICATION. Provisions must be interpreted and construed
to maintain the qualification of the Plan.
(b) SEVERABILITY. If a provision is unenforceable in a legal
proceeding, the provision is severed only for that proceeding.
11.5 COUNTERPARTS. The Plan may be executed in any number of
counterparts, each of
-87-
E-381
<PAGE> 93
which is considered an original.
11.6 GOVERNING LAW. The Plan is governed by the applicable laws of
the United States of America (including the Code, ERISA, securities law, labor
law, age discrimination law, and civil rights law) and, to the extent not
preempted, by the laws of Virginia.
ELECTRO-TEC CORPORATION
By: /s/ Lawrence J. Cawley
---------------------------------
Lawrence J. Cawley
Its President
And: /s/ John F. Brocci
---------------------------------
John F. Brocci
Its Secretary
Dated this 14 day of December, 1994
-88-
E-382
<PAGE> 94
APPENDIX A
SECTION 1.1 - SPECIAL EFFECTIVE DATES
<TABLE>
<CAPTION>
Section Rule Effective Date
- ------- ---- --------------
<S> <C> <C>
5.2(d), 7.6(f) Irrevocable six-month elections. September 1, 1992
6.7 Identification of Investment Options. January 1, 1992
6.7 Investment direction authority by non-Active January 1, 1994
Participants.
6.8, App. D and E ERISA Section 404(c) rules. January 1, 1994
7.1(j) Early commencement of payment to Alternate January 1, 1994
Payees.
7.15 Direct Rollovers. January 1, 1993
</TABLE>
E-383
<PAGE> 95
APPENDIX B
SECTION 2.6 - EXPLANATION OF DEFINITION OF COMPENSATION
Compensation as provided in Section 2.6 of this Plan excludes all other forms
of remuneration, such as but not limited to:
. EXPENSE PAYMENTS. Reimbursements or other expense allowances
whether under an accountable or a nonaccountable plan;
. WELFARE PLANS. Employer contributions to or benefits paid
from any statutory or non-statutory unemployment or other
welfare plan (other than elective salary deferral
contributions to the Kaydon Corporation Flexible Benefits Plan
treated as Employer Contributions) whether or not such plan
is funded with insurance; and long term disability payments
(amounts described in Code Sections 104(a)(3), 105(a), and
105(h), whether or not includible in the gross income of the
Employee);
. MOVING EXPENSES. Amounts paid or reimbursed by the
Employer (or Affiliated Employer) for moving
expenses incurred by the Employee,
. STOCK OPTION PLANS. The value of a non-qualified
stock option granted to the Employee by the
Employer (or Affiliated Employer) and amounts
realized from the exercise of a non-qualified stock
option, amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option, or when restricted stock
(or property) held by the Employee either becomes
freely transferable or is no longer subject to a
substantial risk of forfeiture;
. SECTION 83(B). The amount includible in the gross
income of the Employee as a result of a Code Section
83(b) election,
. DEFERRED COMPENSATION CONTRIBUTIONS. Contributions
made by the Employer (or Affiliated Employer) to a
plan of deferred compensation or to a simplified
employee pension described in Code Section 408(k)
(other than elective salary deferral contributions
to the Employer's (or Affiliated Employer's) 401(k)
plans treated as Employer Contributions);
. DEFERRED COMPENSATION DISTRIBUTIONS. Any
distributions from a plan of deferred compensation;
. MEALS AND LODGING. Meals and lodging (whether or
not includible in the gross income of the employee),
. EDUCATIONAL ASSISTANCE. Educational assistance
benefits;
. DEPENDENT CARE. Dependent Care benefits;
E-384
<PAGE> 96
Appendix B 2
. SEVERANCE PAY. Severance pay; and
. OTHER. Aall other fringe benefits (cash and non-
cash) and all other amounts which receive special
tax benefits.
E-385
<PAGE> 97
APPENDIX C
SECTION 2.7(D)(II) - TOP HEAVY ACTUARIAL ASSUMPTIONS
C.1 TOP HEAVY DETERMINATION.
(a) INTEREST RATE. 5%.
(b) MORTALITY. 1971 Group Annuity Table.
E-386
<PAGE> 98
APPENDIX D
SECTION 6.7(A)(I) - LIST OF INVESTMENT FUNDS AVAILABLE UNDER THE PLAN
D.1 The following Investment Funds are presently available under the
Plan.
1. The Parkstone Prime Obligations Fund (the "Money Market
Fund");
2. The Parkstone Bond Fund (the "Bond Fund");
3. The Parkstone High Income Equity Fund (the "Income
Equity Fund");
4. The Parkstone Small Capitalization Fund (the "Small
Capitalization Fund");
5. The Parkstone Balanced Fund (the "Balanced Fund");
6. The First of America Income Advantage Fund (the "Income
Advantage Fund"); and
7. Effective July 1, 1992, Kaydon Stock (the "Stock
Account").
D.2 The Parkstone Intermediate Government Obligations Fund (the
"Government Obligations Fund") was previously available, but is not
available for additional allocations after December 31, 1993. That
Investment Fund is available for additional allocations until
December 31, 1993 and will continue to be available for existing
allocations to the Option on December 31, 1993 until March 31, 1994.
E-387
<PAGE> 99
APPENDIX E
SECTION 6.8 - INFORMATION PROVIDED TO COMPLY WITH SECTION 404(C) OF ERISA
Individuals eligible to direct investments under the Plan shall receive:
E.1 Automatically:
- An explanation to participants that the Plan is intended to
constitute a plan described in Section 404(c) of ERISA and that the
fiduciaries of the Plan may be relieved of liability for any losses
which are the direct and necessary result of investment instructions
given by such participant;
- A description of the investment alternatives available under the
Plan and, with respect to each designated investment alternative, a
general description of the investment objectives and risk and return
characteristics of each such alternative, including information
relating to the type and diversification of assets comprising the
portfolio of the designated investment alternative;
- Information identifying any designated investment manager;
- An explanation of the circumstances under which participants may
give investment instructions and an explanation of any specified
limitations on those instructions under the terms of the Plan,
including any restrictions on transfers to or from a designated
investment alternative, and any restrictions on the exercise of
voting, tender and similar rights appurtenant to a participant's
investment in an investment alternative;
- A description of any transaction fees and expenses which affect the
participant's account balance in connection with purchases or sales
of interests in investment alternatives (for example, commissions,
sales loads, deferred sales charges, redemption, or exchange fees)
and periodic information regarding the actual expenses charged
against participants' accounts for the expenses of carrying out
investment instructions and in general.
- Information regarding the name, address and phone number of the plan
fiduciary (and, if applicable, the person or persons designated by
the plan fiduciary to act on its behalf) responsible for providing
the information described below upon request of a participant and a
description of the information described below which may be obtained
on request;
E-388
<PAGE> 100
Appendix E 2
- A description of the procedures established to provide for the
confidentiality of information relating to the purchase, holding and
sale of Kaydon stock, and the exercise of voting, tender and similar
rights, by participants, and the name, address and phone number of
the plan fiduciary responsible for monitoring compliance with those
procedures; and
- In the case of each investment alternative which is subject to the
Securities Act of 1933, and in which the participant has no assets
invested, immediately following the participant's initial
investment, a copy of the most recent prospectus provided to the
Plan (or a copy of such most recent prospectus immediately prior to
the participant's initial investment in that alternative);
subsequent to an investment in an investment alternative, any
materials provided to the Plan relating to the exercise of voting,
tender or similar rights which are incidental to the holding in the
account of the participant of an ownership interest in that
alternative to the extent that the rights are passed through to
participants under the Plan, as well as a description of or
reference to plan provisions relating to the exercise of voting,
tender or similar rights.
E.2 On Request:
- A description of the annual operating expenses of each designated
investment alternative (for example, investment management fees,
administrative fees, transaction costs) which reduce the rate of
return to participants, and the aggregate amount of those expenses
expressed as a percentage of average net assets of the designated
investment alternative;
- Copies of any prospectuses, financial statements and reports, and of
any other materials relating to the investment alternatives
available under the Plan, to the extent that information is provided
to the Plan;
- A list of the assets comprising the portfolio of each designated
investment alternative which constitutes plan assets, the value of
each such asset (or the proportion of the investment alternative
which it comprises), and, with respect to each asset which is a
fixed rate investment contract issued by a bank, savings and loan
association or insurance company, the name of the
E-389
<PAGE> 101
Appendix E 3
issuer of the contract, the term of the contract and the rate of
return on the contract;
- Information concerning the value of shares or units in designated
investment alternatives available to participants under the Plan,
as well as the past and current investment performance of the
alternatives determined, net of expenses, on a reasonable and
consistent basis; and
- Information concerning the value of shares or units in designated
investment alternatives held in the account of the participant.
E-390
<PAGE> 102
APPENDIX F
SECTION 6.8 - POLICIES AND PROCEDURES RE: COMPLIANCE WITH SECTION 404(C) OF
ERISA
F.1 Policy and Procedure To Inform Participants of Actual Expenses
Charged Against Accounts. Participants will be periodically
informed of the actual expenses incurred with respect to their
respective individual accounts, including but not limited to a
description of any transaction fees and expenses which affect the
participant's account balance in connection with purchases or sales
of interests in investment alternatives (for example, commissions,
sales loads, deferred sales charges, redemption, or exchange fees)
and periodic information regarding the actual expenses charged
against participants' accounts for the expenses of carrying out
investment instructions and in general. Electro-Tec Corporation
will contract with a contract administrator who will be obligated to
provide information at least quarterly to participants regarding
those actual expenses. The contract administrator will also respond
to participants' reasonable requests for information about actual
expenses on a basis more frequently than quarterly, and will also
make available a procedure for participants to obtain advance
information regarding expenses to be charged in certain
circumstances.
F.2 Policy and Procedure to Provide For Confidentiality of Information
Regarding Stock. Electro-Tec Corporation intends that information
relating to the purchase, holding and sale of Kaydon stock and the
exercise of voting, tender and similar rights by participants be
maintained on a confidential basis. Electro-Tec Corporation will
follow the following procedure to maintain that confidentiality,
except to the extent necessary to comply with Federal laws or state
laws not pre-empted by ERISA.
A. Participant directions to purchase or sell Kaydon stock are
communicated to the local Human Resources representative who then
communicates the direction to the Contract Administrator or the
Trustee. Alternatively, the participant may use the Contract
Administrator's telephone response system to bypass the local Human
Resources representative. In either case, the information regarding
purchases, sales or holding of Kaydon stock acquired by the Human
E-391
<PAGE> 103
Appendix F 2
Resources department of the Plan Sponsor, the Contractor
Administrator, or the Trustee (or any other involved party) shall
not be provided to any individual employed by the Plan Sponsor or to
any department of the Plan Sponsor except as provided above or as
necessary to allow the Plan Sponsor to provide information about
Kaydon stock to participants.
B. Participants are provided information for the exercise of, and
actually exercise, voting, tender and similar rights relating to
Kaydon stock through the Contract Administrator, the Trustee and the
third-party proxy voting service. Information regarding the
exercise of voting, tender and similar rights relating to Kaydon
stock shall not be provided to any individual employed by the Plan
Sponsor or to any department of the Plan Sponsor except as provided
above.
C. The Benefits Committee is responsible for determining from time to
time that the procedures to provide for the confidentiality of
information regarding the purchase, holding and sale of Kaydon stock
and the exercise of voting, tender and similar rights with respect
to such stock are sufficient to safeguard the confidentiality of the
information in the circumstances described in this Policy, that such
procedures are being followed, and that an independent fiduciary is
appointed to carry out activities relating to Kaydon stock in those
situations which the Benefits Committee determines involve a
potential for undue employer influence upon participants with regard
to the direct or indirect exercise of shareholder rights.
D. The Committee is also responsible for determining when there are
circumstances involving a potential for undue employer influence
upon participants with regard to the direct or indirect exercise of
shareholder rights and making referral to the independent fiduciary
in those circumstances.
E. First of America Bank-West Michigan is the independent fiduciary
responsible for carrying out activities relating to Kaydon stock in
any situations in which the Committee determines involve a potential
for undue employer influence upon participants with regard to the
direct or indirect exercise of shareholder rights.
E-392
<PAGE> 104
APPENDIX G
SECTION 7.2(A)(V) - ADDITIONAL RULES REGARDING HARDSHIP WITHDRAWALS
An immediate and heavy financial need also includes:
- Living Expenses. Living expenses for the basic necessities of food,
shelter, clothing and similar items where the participant establishes
that the life or health of the participant or a family member dependent
on the participant is or will be threatened if the assistance is not
provided.
- Debts. Accumulated debts of the participant which the participant
establishes were incurred for items which would otherwise constitute an
immediate and heavy financial need under the terms of the Plan.
- Automobile. The reasonable cost of an automobile which the participant
establishes is necessary for the participant to remain gainfully
employed.
- Adoption. The reasonable costs of adoption of a child by the participant.
E-393
<PAGE> 105
APPENDIX H
SECTION 9.1 - PARTIES RESPONSIBLE FOR CERTAIN PLAN FUNCTIONS
H.1 Contract Administrator. Retirement Plan Services, Inc.
H.2 Trustee. First of America Bank-West Michigan.
H.3 Administrative Committee or Committee.
John F. Brocci
Lawrence J. Cawley
Stephen K. Clough
Shelley A. Schwemley
Thomas C. Sorrells, III
E-394
<PAGE> 1
EXHIBIT 11
KAYDON CORPORATION
CALCULATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
===========================================================
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net Income $29,226,000 $27,695,000 $10,374,000
----------- ----------- -----------
Average common shares outstanding 16,683,000 17,252,000 17,357,000
Net common shares issuable in respect to
common stock equivalents, with a dilutive effect 43,000 61,000 82,000
----------- ----------- -----------
Total common and common share
equivalent shares 16,726,000 17,313,000 17,439,000
Primary earnings per common share $ 1.75 $ 1.60 $ 0.59
FULLY DILUTED EARNINGS PER SHARE:
Net Income $29,226,000 $27,695,000 $10,374,000
----------- ----------- -----------
Average common shares outstanding 16,684,000 17,252,000 17,357,000
Net common shares issuable in respect to
common stock equivalents, with a dilutive effect 50,000 66,000 91,000
----------- ----------- -----------
Total common and common share
equivalent shares 16,734,000 17,318,000 17,448,000
Fully diluted earnings per common share $ 1.75 $ 1.60 $ 0.59
</TABLE>
E-395
<PAGE> 1
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
1994 COMPARED TO 1993
Net sales increased to $204,695,000 in 1994 from $184,060,000 in 1993, up
11.2%. The increase was attributable to increases in most operations as well as
the addition of Industrial Tectonics Inc ("ITI"), acquired in January of this
year and Kenyon Power Transmission acquired in December of last year. The
backlog of unshipped orders at the end of the year also increased to $88,360,000
from $84,385,000 last year; however, backlog continues to become less indicative
of future results since changes have occurred in both order lead times and the
committed quantities. Many customers now utilize just-in-time inventory
practices.
Gross profit as a percentage of sales in 1994 was 37.2% compared to 36.8% in
1993. The increase primarily reflects improved manufacturing results as well as
continued cost control.
Selling and administrative expenses as a percentage of sales in 1994 was
12.9% compared to 12.7% in 1993. The small increase is predominately a result
of slightly higher expense accruals.
Net interest income this year was $609,000 compared to $142,000 last year.
The increase resulted from larger cash equivalents and securities balances and
lower debt levels throughout the year.
The effective tax rate for 1994 of 38.0% was essentially unchanged from 37.7%
in 1993.
1993 COMPARED TO 1992
Net sales increased slightly from $183,904,000 to $184,060,000 in 1993. The
backlog of unshipped orders at the end of the year also increased to $84,385,000
from $83,296,000 in 1992. The backlog increase reversed a downward trend over
the last several years.
Gross profit as a percentage of sales in 1993 was 36.8% compared to 36.0% in
1992. The increase resulted from improvements in manufacturing operations.
Selling and administrative expenses decreased to $23,467,000 or 12.7% of
sales from $23,958,000 or 13.0% of sales. The slight decrease in selling and
administrative expenses as a percentage of sales represented the Company's
efforts to control expenses.
Net interest income in 1993 of $142,000 compared to net interest expense of
$1,471,000 in 1992 resulted from the repayment during late 1992 of the Cooper
Bearings acquisition debt and the repayment of $10,000,000 of Industrial
Revenue Bonds in early January of 1993.
The effective tax rate for 1993 was 37.7% compared to 37.1% in 1992. The
increase was a direct result of the increased corporate tax rates created by
the Omnibus Budget Reconciliation Act of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $85,886,000 at December 31, 1994 as compared to
$71,810,000 at December 31, 1993, reflecting current ratios of 3.1 for both
periods. The working capital increase of $14,076,000 results primarily from
an increase of $15,139,000 in cash and securities reflecting strong cash flow
from operations.
Total debt decreased $7,312,000 from December 31, 1993 to a level of
$8,000,000. The $8,000,000 of long-term debt is Industrial Revenue Bonds
issued at favorable interest rates which we do not anticipate paying ahead of
schedule. Cash and securities of $39,667,000 exceed total debt by
$31,667,000 compared to $9,216,000 last year for an increase of $22,451,000.
The increased net cash position was achieved even after the January acquisition
of ITI utilized $7,268,000 of cash.
Cash generation from operating activities was a record at $44,176,000, up
12.6% over last year's results of $39,237,000. Net capital expenditures during
the year relating to plant and equipment were $6,746,000, and the Company spent
approximately $1,651,000 to repurchase 73,600 shares of its stock on the open
market. The Company has now purchased 833,600 of the 1,000,000 shares approved
by the Board of Directors in September of 1993. In addition, the Company
purchased marketable securities with a value of $11,092,000 at December 31,
1994.
Planned capital requirements for 1995 consist principally of capital
expenditures relating to plant and equipment, cash dividends to stockholders
and the potential purchase of the remaining 166,400 shares of the Company's
stock, pursuant to the plan discussed in the previous paragraph. Planned
capital expenditures relating to environmental issues are not expected to be
material; however, such expenditures could be influenced by the enactment of
new or revised environmental regulations and laws. It is expected that these
capital requirements will be financed by operating activities.
The Company is actively seeking potential acquisitions and, depending upon
the size and structure of such acquisitions, financing may be required.
During 1994, the Company reached agreements with its banks for an increased
domestic credit line of $85,000,000, up from $60,000,000 last year. The
Company also had in place at December 31, 1994, short-term lines of credit of
$31,000,000 and a foreign revolving credit and term loan agreement of
$2,500,000. No borrowings exist under either the short-term lines of credit
or the revolving credit and term loan agreements at December 31, 1994.
OTHER
EFFECT OF FOREIGN CURRENCY TRANSLATION
A portion of the Company's sales, income and cash flows is derived from its
international operations. The financial position and the results of operations
of the Company's foreign subsidiaries (primarily Europe) are measured using
local currency of the countries in which they operate and are translated into
U.S. dollars. Accordingly, the Company's consolidated operating results and
net assets will fluctuate depending upon the strengthening or weakening of the
U.S. dollar. To date, the impact of the fluctuations of foreign currencies
relative to the U.S. dollar has not had a significant impact on the Company's
consolidated financial statements.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
During the first quarter of this year, the Statement of Financial Accounting
Standards No. 112, "Employers'
15
E-396 and E-397
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Accounting for Postemployment Benefits," was adopted as required. The
cumulative effect of the change in accounting principle resulted in a non-cash,
after-tax charge of $2,000,000.
SUPPLEMENTAL INFORMATION ON CHANGING PRICES
The impact of inflation on the Company has been moderate over the last
several years and is believed to be consistent with that of the industry as a
whole.
ENVIRONMENTAL
Environmental protection laws continue to affect the Company's manufacturing
operations. The Company has complied with these laws by making various capital
expenditures for pollution control equipment and through plant operational
practices. This compliance has not had, nor does the Company expect it to have,
a material effect on financial results. Of course, the Company cannot assess
the possible effect of compliance with the enactment of future regulations and
laws.
In late 1985, Kaydon entered into discussions with the Michigan Department
of Natural Resources ("MDNR") to develop a remedial cleanup plan for one of its
plant sites in Muskegon, Michigan, which is on the Environmental Protection
Agency's ("EPA") National Priority List. In 1986, Kaydon took measures
necessary to clean up the site according to the plan approved by the MDNR.
These measures included the removal and disposal of contaminated soils and the
drilling of ground-water monitoring wells, the results of which have been
continually reported to the MDNR. Management believes that it has worked with
the MDNR and EPA to the letter and spirit of the law. The site is being
evaluated to determine if further action is required. While it is impossible to
forecast the ultimate future cost, management believes, based upon ten years of
evaluating the site, that such cost will not be material to its operating
results.
LITIGATION
The Company, together with other companies, certain former officers, and
certain current and former directors, has been named as a co-defendant in
lawsuits filed in the federal court of New York. The suits purport to be class
actions on behalf of all persons who have unsatisfied personal injury and
property damage claims against Keene Corporation. The premise of the suits is
that assets of Keene were transferred to Bairnco subsidiaries, of which Kaydon
was one in 1983, at less than fair value. The suits also allege that the
Company, among other named defendants, was a successor to and alter ego of
Keene. Earlier this year an examiner was appointed by a bankruptcy court to
examine the issues at stake. On September 23, 1994, the "Preliminary Report of
the Examiner" was made public. In the report, the examiner stated that the
alleged fraudulent conveyance claims against the Company appear to be
time-barred by the statute of limitations, subject to certain possible
exceptions which the Company does not believe are significant or factual.
Although the examiner has made certain recommendations regarding a mechanism to
resolve the claims against the Company, the Court has not taken any action
related to the report. Nevertheless, in the Company's opinion, the report
reinforces management's original view that the claims will ultimately not be
sustained. Accordingly, no provision has been reflected in the consolidated
financial statements for any alleged damages. Management believes that the
outcome of this litigation will not have a material adverse effect on the
Company's financial position.
Various other claims, lawsuits and environmental matters arising in the
normal course of business are pending against the Company. Management
believes that the outcome of these matters will not have a material adverse
effect on the Company's financial position or results of operations.
<TABLE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Quarters (amounts in thousands except per share data)
-------------------------------------------------------------------------------------------
1st 2nd 3rd 4th Total
---------------- --------------- ---------------- --------------- -----------------
1994 1993 1994 1993 1994 1993 1994 1993 1994 1993
------- ------ ------ ------ ------ ------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . $50,125 48,035 52,032 47,195 50,279 44,023 52,259 44,807 204,695 184,060
Gross Profit . . . . . . . . . . . . $17,912 16,506 19,966 17,294 18,871 16,487 19,401 17,494 76,150 67,781
Income Before Cumulative Prior
Year Effect of Change in
Accounting Principle . . . . . . $ 7,192 6,770 8,023 7,013 7,710 6,811 8,301 7,101 31,226 27,695
Cumulative Prior Year Effect of
Change in Accounting Principle . . $(2,000) -- -- -- -- -- -- -- (2,000) --
------- ------ ------ ------ ------ ------ ------ ------ ------- -------
Net Income . . . . . . . . . . . . . $ 5,192 6,770 8,023 7,013 7,710 6,811 8,301 7,101 29,226 27,695
======= ====== ====== ====== ====== ====== ====== ====== ======= =======
Earnings per Share :
Income Before Cumulative Prior
Year Effect of Change in
Accounting Principle . . . . . . $ 0.43 0.39 0.48 0.40 0.46 0.39 0.50 0.42 1.87 1.60
Cumulative Prior Year Effect of
Change in Accounting Principle . . $ (0.12) -- -- -- -- -- -- -- (0.12) --
------- ------ ------ ------ ------ ------ ------ ------ ------- -------
Net Income . . . . . . . . . . . . . 0.31 0.39 0.48 0.40 0.46 0.39 0.50 0.42 1.75 1.60
======= ====== ====== ====== ====== ====== ====== ====== ======= =======
Market Price:
High . . . . . . . . . . . . . . . $ 25.25 31.75 24.25 28.00 23.50 26.75 24.88 22.25 25.25 31.75
Low . . . . . . . . . . . . . . . $ 20.25 23.50 19.75 24.75 20.38 18.00 22.50 18.50 19.75 18.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
E-398
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF KAYDON CORPORATION:
We have audited the accompanying consolidated balance sheets of Kaydon
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, stockholders'
investment and cash flows for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kaydon Corporation and
subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As explained in Notes 4, 10 and 11 to the consolidated financial
statements, effective January 1, 1992, the Company changed its methods of
accounting for income taxes and postretirement benefits other than pensions;
and effective January 1, 1994, the Company changed its method of accounting for
postemployment benefits.
/s/ Arthur Andersen LLP
Grand Rapids, Michigan,
January 19, 1995
17
E-399
<PAGE> 4
CONSOLIDATED BALANCE SHEETS
KAYDON CORPORATION AND SUBSIDIARIES
DECEMBER 31, 1994 AND 1993
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------ ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,575,000 $ 24,528,000
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,092,000 --
Accounts receivable, less allowances of
$1,224,000 in 1994 and $1,077,000 in 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 27,230,000 24,543,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,746,000 51,529,000
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,145,000 5,920,000
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,788,000 106,520,000
------------ ------------
Plant and Equipment, at cost:
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,303,000 3,133,000
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,557,000 30,201,000
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,246,000 122,666,000
------------ ------------
165,106,000 156,000,000
Less - accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . (103,859,000) (95,923,000)
------------ ------------
61,247,000 60,077,000
------------ ------------
Cost in excess of net tangible assets of purchased businesses, net . . . . . . . . . . . . . . . 43,691,000 43,628,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,858,000 7,197,000
------------ ------------
$243,584,000 $217,422,000
============ ============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 1,312,000
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 312,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,856,000 6,724,000
Accrued expenses -
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,238,000 4,449,000
Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,141,000 8,224,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,805,000 3,103,000
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,862,000 10,586,000
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,902,000 34,710,000
------------ ------------
Long-term postretirement and postemployment benefit obligations . . . . . . . . . . . . . . . . . 28,112,000 25,184,000
------------ ------------
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000,000 13,688,000
------------ ------------
Stockholders' Investment:
Preferred stock -
($.10 par value, 2,000,000 shares authorized; none issued) . . . . . . . . . . . . . . . . -- --
Common stock -
($.10 par value, 48,000,000 shares authorized; 17,540,790 and 17,509,265
shares issued in 1994 and 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,754,000 1,751,000
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,762,000 15,179,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,718,000 148,214,000
Less - treasury stock, at cost; (893,224 and 819,624 shares in 1994 and 1993) . . . . . . . . . (17,047,000) (15,396,000)
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,617,000) (5,908,000)
------------ ------------
166,570,000 143,840,000
------------ ------------
$243,584,000 $217,422,000
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
18
E-400
<PAGE> 5
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
KAYDON CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $204,695,000 $184,060,000 $183,904,000
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . 128,545,000 116,279,000 117,724,000
------------ ------------ ------------
Gross Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,150,000 67,781,000 66,180,000
Selling and administrative expenses . . . . . . . . . . . . . . 26,391,000 23,467,000 23,958,000
------------ ------------ ------------
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . 49,759,000 44,314,000 42,222,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (304,000) (270,000) (1,823,000)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . 913,000 412,000 352,000
------------ ------------ ------------
Income Before Income Taxes and Cumulative . . . . . . . . . . . . .
Prior Year Effect of Changes in Accounting Principles . . . . . 50,368,000 44,456,000 40,751,000
Provision for income taxes . . . . . . . . . . . . . . . . . . 19,142,000 16,761,000 15,133,000
------------ ------------ ------------
Income Before Cumulative Prior Year Effect of
Changes in Accounting Principles . . . . . . . . . . . . . . . 31,226,000 27,695,000 25,618,000
Cumulative Prior Year Effect of Changes in
Accounting Principles for:
Postemployment benefits, net of income tax
benefit of $1,200,000 . . . . . . . . . . . . . . . . . . . (2,000,000) -- --
Postretirement benefits, net of income tax
benefit of $9,547,000 . . . . . . . . . . . . . . . . . . . -- -- (16,047,000)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . -- -- 803,000
------------ ------------ ------------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,226,000 $ 27,695,000 $ 10,374,000
============ ============ ============
Earnings Per Share Before Cumulative Prior Year
Effect of Changes in Accounting Principles . . . . . . . . . . $ 1.87 $ 1.60 $ 1.47
Cumulative Prior Year Effect of Changes in
Accounting Principles for:
Postemployment benefits . . . . . . . . . . . . . . . . . . (0.12) -- --
Postretirement benefits . . . . . . . . . . . . . . . . . . -- -- (0.92)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . -- -- 0.04
------------ ------------ ------------
Earnings Per Share . . . . . . . . . . . . . . . . . . . . . . . . $ 1.75 $ 1.60 $ 0.59
============ ============ ============
Dividends Per Share . . . . . . . . . . . . . . . . . . . . . . . $ 0.41 $ 0.37 $ 0.32
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
19
E-401
<PAGE> 6
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S INVESTMENT
<TABLE>
KAYDON CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cumulative
Common Paid-in Retained Treasury Translation
Stock Capital Earnings Stock Adjustment Total
---------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 . . . . $ 869,000 $13,592,000 $122,723,000 $ (963,000) $ 1,280,000 $137,501,000
Net income, 1992 . . . . . . . -- -- 10,374,000 -- -- 10,374,000
Cash dividends declared . . . . -- -- (5,465,000) -- -- (5,465,000)
Two-for-one stock split . . . . 869,000 (869,000) -- -- -- --
Issuance of 51,450 shares of
common stock under
stock option plan . . . . . 5,000 949,000 -- -- -- 954,000
Current year translation
adjustment . . . . . . . . . -- -- -- -- (7,098,000) (7,098,000)
Adjustment for minimum
pension liability . . . . . -- -- (190,000) -- -- (190,000)
---------- ----------- ------------ ------------ ------------ ------------
Balance, December 31, 1992 . . . . 1,743,000 13,672,000 127,442,000 (963,000) (5,818,000) 136,076,000
Net income, 1993 . . . . . . . -- -- 27,695,000 -- -- 27,695,000
Cash dividends declared . . . . -- -- (6,387,000) -- -- (6,387,000)
Issuance of 73,625 shares
of common stock under
stock option plan . . . . . 8,000 1,507,000 -- -- -- 1,515,000
Purchase of 761,182 shares
of treasury stock . . . . . -- -- -- (14,433,000) -- (14,433,000)
Current year translation
adjustment . . . . . . . . . -- -- -- -- (90,000) (90,000)
Adjustment for minimum
pension liability . . . . . -- -- (536,000) -- -- (536,000)
---------- ----------- ------------ ------------ ------------ ------------
Balance, December 31, 1993 . . . . 1,751,000 15,179,000 148,214,000 (15,396,000) (5,908,000) 143,840,000
Net income, 1994 . . . . . . . -- -- 29,226,000 -- -- 29,226,000
Cash dividends declared . . . . -- -- (6,840,000) -- -- (6,840,000)
Issuance of 31,525 shares of
common stock under
stock option plan . . . . . 3,000 583,000 -- -- -- 586,000
Purchase of 73,600 shares of
treasury stock . . . . . . . -- -- -- (1,651,000) -- (1,651,000)
Current year translation
adjustment . . . . . . . . . -- -- -- -- 1,291,000 1,291,000
Adjustment for minimum
pension liability . . . . . -- -- 118,000 -- -- 118,000
---------- ----------- ------------ ------------ ------------ ------------
Balance, December 31, 1994 . . . . $1,754,000 $15,762,000 $170,718,000 $(17,047,000) $ (4,617,000) $166,570,000
========== =========== ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
20
E-402
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
KAYDON CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,226,000 $ 27,695,000 $ 10,374,000
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization . . . . . . . . . . . . . . . 10,641,000 10,264,000 11,194,000
Cumulative prior year effect of changes
in accounting principles . . . . . . . . . . . . . . . . 2,000,000 -- 15,244,000
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . (2,594,000) (2,625,000) (2,989,000)
Changes in assets and liabilities, net of
effects of acquisitions of businesses:
Accounts receivable . . . . . . . . . . . . . . . . . . (1,097,000) (2,710,000) 3,603,000
Inventories . . . . . . . . . . . . . . . . . . . . . . (483,000) 4,290,000 (75,000)
Other current assets . . . . . . . . . . . . . . . . . 171,000 1,236,000 (983,000)
Accounts payable . . . . . . . . . . . . . . . . . . . 1,650,000 819,000 (2,778,000)
Accrued expenses . . . . . . . . . . . . . . . . . . . 3,934,000 1,202,000 4,268,000
Long-term postretirement and
postemployment benefit obligations . . . . . . . . . 728,000 (934,000) 524,000
------------ ------------ ------------
Net cash provided by operating activities . . . . . . 44,176,000 39,237,000 38,382,000
------------ ------------ ------------
Cash Flows from Investing Activities:
Purchases of marketable securities . . . . . . . . . . . . . . (11,092,000) -- --
Additions to plant and equipment, net . . . . . . . . . . . . . (6,746,000) (5,088,000) (6,057,000)
Acquisitions of businesses . . . . . . . . . . . . . . . . . . (7,268,000) (716,000) --
------------ ------------ ------------
Net cash used in investing activities . . . . . . (25,106,000) (5,804,000) (6,057,000)
------------ ------------ ------------
Cash Flows from Financing Activities:
Principal payments of long-term debt . . . . . . . . . . . . . (7,000,000) (10,000,000) (14,275,000)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . (6,687,000) (6,270,000) (5,202,000)
Net (payments) borrowings under lines of credit . . . . . . . . (312,000) 222,000 (6,783,000)
Proceeds from issuance of common stock . . . . . . . . . . . . 518,000 1,189,000 789,000
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . (1,651,000) (14,433,000) --
Proceeds from issuance of long-term debt . . . . . . . . . . . -- 7,000,000 --
------------ ------------ ------------
Net cash used in financing activities . . . . . . (15,132,000) (22,292,000) (25,471,000)
------------ ------------ ------------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . 109,000 (277,000) (1,052,000)
------------ ------------ ------------
Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . 4,047,000 10,864,000 5,802,000
Cash and Cash Equivalents - Beginning of Year . . . . . . . . . . 24,528,000 13,664,000 7,862,000
------------ ------------ ------------
Cash and Cash Equivalents - End of Year . . . . . . . . . . . . . $ 28,575,000 $ 24,528,000 $ 13,664,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
21
E-403
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KAYDON CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Kaydon
Corporation and its wholly-owned domestic and foreign subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated.
DESCRIPTION OF BUSINESS:
The Company designs, manufactures and sells custom-engineered products for
a broad and diverse customer base. The Company's principal products include
antifriction bearings, bearing systems, filters, filter housings, high
performance rings, sealing rings, specialty retaining rings and balls, shaft
seals and slip-rings. These products are used by customers in a wide variety
of medical, instrumentation, material handling, machine tool positioning,
aerospace, defense, construction and other industrial applications.
CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES:
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." In accordance with the provisions of this
statement, the Company's cash and cash equivalents and marketable securities
are considered "held-to-maturity" and are stated at amortized cost which
approximates fair market value at December 31, 1994. Cash and cash equivalents
have maturity dates of three months or less from the date of purchase.
Marketable securities include United States Treasury Bills with maturity dates
of less than one year. Both cash equivalents and marketable securities are
high-credit quality financial instruments. The Company's portfolio of cash and
cash equivalents and marketable securities consists of the following at
December 31,:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Cash and cash equivalents:
Cash held in banks . . . . . . . . . . . . . . . . . . . . . . . $ 2,725,000 $ 3,860,000
U.S. Treasury Bills . . . . . . . . . . . . . . . . . . . . . . 20,294,000 17,011,000
Other cash equivalents . . . . . . . . . . . . . . . . . . . . . 5,556,000 3,657,000
----------- -----------
28,575,000 24,528,000
Marketable Securities:
U.S. Treasury Bills . . . . . . . . . . . . . . . . . . . . . . 11,092,000 --
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,667,000 $24,528,000
=========== ===========
</TABLE>
INVENTORIES:
Inventories are valued at the lower of cost or market and include
material, labor and overhead. Cost is determined using the first-in, first-out
("FIFO") method for substantially all inventories. Inventories are summarized
as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------------
1994 1993
----------- -----------
<S> <C> <C>
Raw material . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,136,000 $12,251,000
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . 11,995,000 10,347,000
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . 28,615,000 28,931,000
----------- -----------
$53,746,000 $51,529,000
=========== ===========
</TABLE>
PLANT AND EQUIPMENT:
Plant and equipment are stated at cost. The cost is depreciated over the
estimated useful lives of the assets using the straight-line method. Useful
lives vary among the classifications, but generally fall within the following
ranges:
Buildings, land improvements and
leasehold improvements . . . . . . . . . . . . . . . . 10 - 40 years
Machinery and equipment . . . . . . . . . . . . . . . . 3 - 15 years
Leasehold improvements are amortized over the terms of the respective
leases or over their useful lives, whichever is shorter. Renewals and
betterments are capitalized while maintenance and repairs are charged to
operations in the year incurred.
RESEARCH AND DEVELOPMENT COSTS:
Research and development costs, which are not material to the consolidated
statements of income, are expensed as incurred.
COST IN EXCESS OF NET TANGIBLE ASSETS OF PURCHASED BUSINESSES:
Cost in excess of net tangible assets of purchased businesses ("goodwill")
totaling $16,239,000 arose prior to 1971 and is not being amortized since, in
the opinion of management, there has been no diminution in value. Goodwill
acquired after 1970 is being amortized on a straight-line basis over a period
of 40 years and is stated net of accumulated amortization of $2,807,000 and
$1,971,000 at December 31, 1994 and 1993, respectively.
The Company continually evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance may not be recoverable. When
factors indicate that such cost should be evaluated for possible impairment,
the Company uses an estimate of the related business segment's undiscounted net
income over the remaining life of the goodwill in measuring whether the cost is
recoverable.
22
E-404
<PAGE> 9
- --------------------------------------------------------------------------------
OTHER ASSETS:
Other assets include, among other items, deferred tax assets and various
patents and noncompete agreements. Deferred tax assets are further discussed
in Note 4. Patents and noncompete agreements are being amortized on a
straight-line basis ranging from 4 to 15 years. They are stated net of
accumulated amortization of $2,474,000 and $2,118,000 at December 31, 1994 and
1993, respectively.
FOREIGN CURRENCY TRANSLATION:
The financial position and results of operations of the Company's United
Kingdom and German subsidiaries are measured using the local currency as the
functional currency. Assets and liabilities are translated at the exchange
rate in effect at year end. Income statement accounts are translated at the
average rate of exchange in effect during the year. The resulting translation
adjustment is recorded as a separate component of stockholders' investment.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of financial instruments included in current assets
and current liabilities approximate fair value due to the short-term nature of
these instruments. The stated value of the Company's long-term debt
approximates fair value as interest rates on that debt are tied to the prime
rate and adjust frequently to prevailing market conditions.
(2) CAPITAL STOCK
On April 16, 1992, the Company's stockholders approved an amendment to the
Articles of Incorporation increasing the authorized common stock from
12,000,000 to 48,000,000 shares of $.10 par value stock. Subsequent to
receiving approval to increase the authorized shares, on April 16, 1992, the
Board of Directors approved a two-for-one stock split for stockholders of
record at April 30, 1992. Common stock was increased by $869,000 with an
offsetting reduction to additional paid-in capital, to reflect the $.10 par
value per share for each additional share issued.
Where applicable, references in the financial statements with regard to
number of shares of common stock or related per share amounts have been
restated to reflect the stock split.
(3) EARNINGS PER SHARE
Earnings per share of common stock are based on the weighted average of
outstanding common shares and common share equivalents to the extent they are
dilutive during the three years presented (approximately 16,726,000, 17,313,000,
17,439,000 in 1994, 1993 and 1992, respectively).
(4) INCOME TAXES
Effective January 1, 1992, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse.
As of January 1, 1992, the Company recorded a tax credit of approximately
$803,000 or $.04 per share, which represents the net decrease in the deferred
tax liability as of that date. Such amount has been reflected in the 1992
consolidated statement of income as a cumulative prior year effect of a change
in accounting principle. There was no significant effect on 1992 pretax income
resulting from the adoption of SFAS 109.
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Current:
U.S. Federal . . . . . . . $17,909,000 $15,263,000 $13,031,000
State . . . . . . . . . . . 2,393,000 2,060,000 2,046,000
Foreign . . . . . . . . . . 1,348,000 1,401,000 1,461,000
U.S. Federal
Rate Change . . . . . . . -- 445,000 --
----------- ----------- -----------
21,650,000 19,169,000 16,538,000
----------- ----------- -----------
Deferred:
U.S. Federal . . . . . . . (1,669,000) (1,260,000) (1,281,000)
State . . . . . . . . . . (277,000) (43,000) (124,000)
Foreign . . . . . . . . . (562,000) (928,000) --
U.S. Federal
Rate Change . . . . . . . -- (177,000) --
----------- ----------- -----------
(2,508,000) (2,408,000) (1,405,000)
----------- ----------- -----------
$19,142,000 $16,761,000 $15,133,000
=========== =========== ===========
</TABLE>
In 1994, 1993 and 1992, the Company's effective tax rates were 38.0%,
37.7% and 37.1%, respectively, of income before income taxes and cumulative
prior year effect of changes in accounting principles and differed from the
U.S. federal statutory income tax rate primarily due to the effect of state
income taxes, net of the federal tax benefit.
Cash expended for income taxes totaled $21,261,000 in 1994, $19,603,000 in
1993 and $15,164,000 in 1992.
23
E-405
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
KAYDON CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The tax effect and type of significant temporary differences by component
which gave rise to the net deferred tax asset as of December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION> 1994 1993
----------- -----------
<S> <C> <C>
Deferred tax assets:
Postretirement and
postemployment
benefit obligations . . . . . . . . $11,594,000 $10,077,000
Financial accruals and reserves
not currently deductible . . . . . . 5,496,000 3,857,000
Inventory accounting method
and basis differences . . . . . . . 3,405,000 2,969,000
Other . . . . . . . . . . . . . . . . . 643,000 580,000
Valuation allowance . . . . . . . . . -- --
----------- -----------
21,138,000 17,483,000
----------- -----------
Deferred tax liabilities:
Plant and equipment basis
differences, including
depreciation and
amortization . . . . . . . . . . . . (7,398,000) (7,889,000)
Other . . . . . . . . . . . . . . . . (666,000) (584,000)
----------- -----------
(8,064,000) (8,473,000)
----------- -----------
$13,074,000 $ 9,010,000
=========== ===========
</TABLE>
The Company has not provided for United States income taxes on
undistributed earnings of foreign subsidiaries. Recording of deferred income
taxes on these undistributed earnings is not required as these earnings have
been permanently reinvested. The amounts subject to U.S. taxation upon
remittance of these earnings as dividends would be substantially offset by
available foreign tax credits.
(5) SHORT-TERM DEBT
The Company has short-term lines of credit with banks totaling $31,000,000
with no outstanding borrowings at December 31, 1994. The rates of interest on
the outstanding balances of each of these lines are at or slightly below the
applicable prime commercial rate (as defined in the respective agreements),
which was 8.5% at December 31, 1994. The weighted average interest rate during
1994 was approximately 6.5%.
(6) LONG-TERM DEBT
The Company's long-term debt consists of the following at December 31,:
<TABLE>
<CAPTION>
1994 1993
---------- -----------
<S> <C> <C>
Industrial Revenue Bonds . . . . . . . . $8,000,000 $ 8,000,000
Revolving credit lines . . . . . . . . . -- 7,000,000
---------- -----------
8,000,000 15,000,000
Less-current portion . . . . . . . . . . -- (1,312,000)
---------- -----------
$8,000,000 $13,688,000
========== ===========
</TABLE>
The Company has $85,000,000 of domestic and $2,500,000 of foreign
borrowings available under its revolving credit and term loan agreements, none
of which are outstanding at December 31, 1994. The borrowing rate is defined
in the agreements and is the prime commercial rate or lower. The available
interest rate at December 31, 1994 was 6.63%. Commitment fees ranging from .2%
to .375% of the unused portion of credit are charged quarterly.
The Industrial Revenue Bonds ("IRB's") are due from 1997 through 1999 and
provide for monthly interest payments at a floating rate derived from the prime
commercial rate, market conditions and the credit rating of the bank issuing
the letter of credit collateralizing the bonds. The IRB's are subject to
purchase and put agreements whereby the bondholders may, at their option, sell
the bonds to the Company at face value in 1996.
The annual maturities for long-term debt, assuming the IRB bondholders do
not exercise their option to sell the bonds to the Company, are summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1995 . . . . . . . . . . . . . . . . . --
1996 . . . . . . . . . . . . . . . . . --
1997 . . . . . . . . . . . . . . . . . $4,000,000
1998 . . . . . . . . . . . . . . . . . --
1999 . . . . . . . . . . . . . . . . . $4,000,000
Thereafter . . . . . . . . . . . . . . --
</TABLE>
Provisions of the IRB and revolving credit agreements contain covenants
which require, among other things, the maintenance of a minimum working capital
ratio and a specified level of stockholders' investment. At December 31, 1994,
the Company was in compliance with these provisions.
Cash expended for interest on debt totaled $306,000 in 1994, $349,000 in
1993 and $1,943,000 in 1992.
(7) STOCK OPTIONS
On April 21, 1993, the Company's stockholders approved two new stock
option plans, the 1993 Stock Option Plan and the 1993 Non-Employee Directors
Stock Option Plan. The Company's previous stock option plan, created in 1984
with a term of ten years, was terminated in 1993. The 1993 Stock Option Plan
has a maximum 1,000,000 shares available for grant of which 832,250 remained
available for grant at December 31, 1994. The 1993 Non-Employee Directors
Stock Option Plan has a maximum 100,000 shares available for grant of which
90,000 remained available for grant at December 31, 1994. Under the terms of
both Plans, the purchase price of shares subject to each option granted will
not be less than fair market value at the date of grant. Options granted
become exercisable at the rate of 25% per year, commenc-
24
E-406
<PAGE> 11
- --------------------------------------------------------------------------------
ing one year after the date of grant and expiring five years from the date of
grant. No charges to operations are recorded with respect to authorization,
grants or exercising of these options.
A summary of stock option information is as follows:
<TABLE>
<CAPTION>
OPTIONS PRICE RANGE
------- -------------
<S> <C> <C>
Outstanding at
December 31, 1991 . . . . . . 634,400 $12.63-$23.75
Granted . . . . . . . . . . . . 73,000 $19.38-$24.25
Exercised . . . . . . . . . . . (51,450) $12.63-$19.38
Cancelled . . . . . . . . . . . (24,250) $19.38
------- -------------
Outstanding at
December 31, 1992 . . . . . . 631,700 $12.69-$24.25
Granted . . . . . . . . . . . . 124,750 $22.00-$27.00
Exercised . . . . . . . . . . . (73,625) $12.69-$19.38
Cancelled . . . . . . . . . . . (17,250) $19.38-$24.25
------- -------------
Outstanding at
December 31, 1993 . . . . . . 665,575 $16.25-$27.00
Granted . . . . . . . . . . . . 54,000 $23.88
Exercised . . . . . . . . . . . (31,525) $16.25-$19.38
Cancelled . . . . . . . . . . . (9,875) $19.38-$22.00
------- -------------
Outstanding at
December 31, 1994 . . . . . . 678,175 $16.88-$27.00
======= =============
Exercisable at
December 31, 1994 . . . . . . 424,560 $16.88-$27.00
======= =============
</TABLE>
(8) PLANT CONSOLIDATION
During 1993, the Company closed one of its plants and moved the operations
to two existing plants. This consolidation did not result in the
discontinuation of any product lines. In addition to severance and relocation
costs incurred of approximately $900,000, the consolidation generated a
$2,158,000 reduction in the accrued postretirement benefit obligation, offset
by a $1,163,000 increase in accrued pension cost. The net effect of the plant
consolidation was not significant to the operating results or financial
position of the Company.
(9) EMPLOYEE BENEFIT PLANS
The Company maintains several defined benefit pension plans which cover
substantially all employees. Benefits paid under these plans are based
generally on employees' years of service and compensation during the final
years of employment. The Company's policy is to fund the minimum amounts
required by the Employee Retirement Income Security Act of 1974. Plan assets
consist principally of publicly traded equity and debt securities which
included 80,000 shares of Kaydon Corporation common stock at December 31, 1994
and 1993.
Net pension cost includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Service cost - benefits
earned during the year . . . . . . . . . . . . . . . . $ 1,170,000 $ 1,187,000 $ 1,280,000
Interest cost on projected
benefit obligation . . . . . . . . . . . . . . . . . . 2,417,000 2,288,000 2,217,000
Actual return on plan
assets . . . . . . . . . . . . . . . . . . . . . . . . (1,236,000) (3,314,000) (1,761,000)
Net amortization and
deferral-
Amortization of
unrecognized net
transition obligation . . . . . . . . . . . . . . 14,000 49,000 48,000
Deferral of unrecognized
net (loss) gain . . . . . . . . . . . . . . . . . (1,057,000) 1,290,000 (197,000)
One-time curtailment
loss (Note 8) . . . . . . . . . . . . . . . . . . . -- 1,163,000 --
----------- ----------- -----------
Net pension cost . . . . . . . . . . . . . . . . . . . . $ 1,308,000 $ 2,663,000 $ 1,587,000
=========== =========== ===========
</TABLE>
The funded status of the plans as of September 30, 1994 and amounts
recognized in the accompanying consolidated balance sheet as of December 31,
1994 are as follows:
<TABLE>
<CAPTION>
Plans With Plans With
Assets Accumulated
Exceeding Benefits
Accumulated Exceeding
Benefits Assets
------------ ------------
<S> <C> <C>
Accumulated present value of
benefit obligation-
Vested benefits . . . . . . . . . . . . . . . . . . $(12,031,000) $(15,299,000)
Nonvested benefits . . . . . . . . . . . . . . . . (320,000) (1,797,000)
------------ ------------
Accumulated benefit
obligation . . . . . . . . . . . . . . . . . . . . . . (12,351,000) (17,096,000)
Effect of projected
future salary increases . . . . . . . . . . . . . . . (3,424,000) (204,000)
Projected benefit obligation . . . . . . . . . . . . . . (15,775,000) (17,300,000)
Fair value of plan assets . . . . . . . . . . . . . . . 16,061,000 11,118,000
------------ ------------
Plan assets in excess of (less than)
projected benefit obligation . . . . . . . . . . . . . 286,000 (6,182,000)
Unrecognized net transition
(asset) obligation . . . . . . . . . . . . . . . . . . (325,000) 527,000
Unrecognized prior service cost . . . . . . . . . . . . . (379,000) 1,395,000
Unrecognized net (gain) loss . . . . . . . . . . . . . . (606,000) 1,241,000
Adjustments required to
recognize minimum liability . . . . . . . . . . . . . . -- (2,826,000)
------------ ------------
Pension costs accrued as of
September 30, 1994 . . . . . . . . . . . . . . . . . . (1,024,000) (5,845,000)
Accrual for fourth
quarter 1994 . . . . . . . . . . . . . . . . . . . . . (70,000) (263,000)
Contributions for fourth
quarter 1994 . . . . . . . . . . . . . . . . . . . . . -- 577,000
Pension costs accrued as of
------------ ------------
December 31, 1994 . . . . . . . . . . . . . . . . . . $ (1,094,000) $ (5,531,000)
============ ============
</TABLE>
25
E-407
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
KAYDON CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The funded status of the plans as of September 30, 1993 and amounts
recognized in the accompanying consolidated balance sheet as of December 31,
1993 are as follows:
<TABLE>
<CAPTION>
Plans With Plans With
Assets Accumulated
Exceeding Benefits
Accumulated Exceeding
Benefits Assets
------------ ------------
<S> <C> <C>
Accumulated present value of
benefit obligation-
Vested benefits . . . . . . . . . . . . . . . . . . . . $(11,374,000) $(15,395,000)
Nonvested benefits . . . . . . . . . . . . . . . . . . . (537,000) (1,519,000)
------------ ------------
Accumulated benefit
obligation . . . . . . . . . . . . . . . . . . . . . . (11,911,000) (16,914,000)
Effect of projected
future salary increases . . . . . . . . . . . . . . . (3,177,000) --
------------ ------------
Projected benefit obligation . . . . . . . . . . . . . . (15,088,000) (16,914,000)
Fair value of plan assets . . . . . . . . . . . . . . . 16,153,000 10,940,000
------------ ------------
Plan assets in excess of (less than)
projected benefit obligation . . . . . . . . . . . . . 1,065,000 (5,974,000)
Unrecognized net transition
(asset) obligation . . . . . . . . . . . . . . . . . . (369,000) 595,000
Unrecognized prior service cost . . . . . . . . . . . . (398,000) 1,198,000
Unrecognized net (gain) loss . . . . . . . . . . . . . . (998,000) 1,469,000
Adjustments required to
recognize minimum liability . . . . . . . . . . . . . -- (3,001,000)
------------ ------------
Pension costs accrued as of
September 30, 1993 . . . . . . . . . . . . . . . . . . (700,000) (5,713,000)
Accrual for fourth
quarter 1993 . . . . . . . . . . . . . . . . . . . . . (113,000) (261,000)
Contributions for fourth
quarter 1993 . . . . . . . . . . . . . . . . . . . . . -- 145,000
------------ ------------
Pension costs accrued as of
December 31, 1993 . . . . . . . . . . . . . . . . . .
$ (813,000) $ (5,829,000)
============ ============
</TABLE>
The assumptions used in the determination of net pension cost were as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate . . . . . . . . . . . . . . . 7.75% 7.50% 8.25%
Rate of salary progression . . . . . . . . . 4.50% 4.50% 5.00%
Long-term rate of return on assets . . . . . 9.00% 9.00% 9.00%
</TABLE>
The Company and its domestic subsidiaries also offer 401(k) savings plans in
which substantially all of their employees may participate. The majority of the
contributions to the plans are made by the employees.
(10) OTHER POSTRETIREMENT BENEFITS
The Company provides certain retiree health care and life insurance
benefits covering the majority of U.S. salaried and hourly employees.
Employees are generally eligible for benefits upon retirement or long-term
disability and completion of a specified number of years of credited service.
These benefits are subject to cost-sharing provisions and other limitations.
The Company does not pre-fund these benefits and has the right to modify or
terminate certain of these benefits in the future.
During the fourth quarter of 1992, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," retroactive to January 1, 1992.
This statement requires the accrual of the cost of providing postretirement
benefits for medical, dental and life insurance coverage over the active
service period of the employee. The Company elected to immediately recognize
the accumulated liability, measured as of January 1, 1992 which totaled
$16,047,000 or $.92 per share after tax. In addition, this change in
accounting principle also decreased 1992 income after tax by $1,088,000 or $.06
per share.
The components of net postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1994 1993
---------- -----------
<S> <C> <C>
Service cost . . . . . . . . . . . . . . $ 586,000 $ 689,000
Interest cost on accumulated
benefit obligation . . . . . . . . . . 1,848,000 1,850,000
Amortization of unrecognized
prior service cost . . . . . . . . . . (241,000) (301,000)
One-time gain due to
curtailment (Note 8) . . . . . . . . . -- (2,158,000)
---------- -----------
Net postretirement benefit cost . . . . $2,193,000 $ 80,000
========== ===========
</TABLE>
The plans' funded status at December 31, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees . . . . . . . . . . . . . . $(10,809,000) $(12,085,000)
Fully eligible active plan
participants . . . . . . . . . . . (163,000) (100,000)
Other active plan
participants . . . . . . . . . . . (10,826,000) (9,757,000)
------------ ------------
Projected benefit
obligation . . . . . . . . . . (21,798,000) (21,942,000)
Plan assets . . . . . . . . . . . . . . -- --
------------ ------------
Funded status . . . . . . . . . . . . . (21,798,000) (21,942,000)
Unrecognized prior
service cost . . . . . . . . . . . . . (3,078,000) (3,288,000)
Unrecognized net gain . . . . . . . . . (2,536,000) (1,154,000)
------------ ------------
Accrued postretirement
benefit obligation . . . . . . . . . . $(27,412,000) $(26,384,000)
============ ============
</TABLE>
26
E-408
<PAGE> 13
- --------------------------------------------------------------------------------
The accrued postretirement benefit obligation is reflected in the Company's
consolidated balance sheets as follows:
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Current liability . . . . . . . . $ (1,200,000) $ (1,200,000)
Long-term liability . . . . . . . (26,212,000) (25,184,000)
------------ ------------
Total obligation . . . . . . . . . $(27,412,000) $(26,384,000)
============ ============
</TABLE>
The accumulated postretirement benefit obligation ("APBO") was actuarially
determined based on assumptions regarding the discount rate and projected future
increases in postretirement benefit costs ("the healthcare cost trend rate").
The assumptions used in the determination of the APBO and the net
postretirement benefit cost were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Discount rate . . . . . . . . . . . . . . 7.75% 7.50% 8.25%
Healthcare cost trend rates -
Participants under 65 years of age . . 14.00% 15.00% 16.00%
Participants 65 years of age
and over . . . . . . . . . . . . . . 10.00% 10.50% 11.50%
</TABLE>
The healthcare cost trend rates for participants under the age of 65 and
participants 65 years of age and over are assumed to decrease ratably to 6% (6%
in 1993, 7% in 1992) by 2002 and remain at that level thereafter. A 1%
increase in the healthcare cost trend rate would have increased the APBO by
approximately $3,023,000, and the net postretirement benefit cost by
approximately $332,000 in 1994.
(11) POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." This statement requires employers to accrue for
benefits provided to former or inactive employees after employment, but prior
to retirement. For the Company, this statement primarily applies to costs
associated with disability-related benefits. The cumulative effect of this
change in accounting principle resulted in a charge to net income of $2,000,000
in 1994.
(12) LEASE COMMITMENTS
Total minimum rentals payable under operating leases that have initial or
remaining noncancellable lease terms in excess of one year as of December 31,
1994 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1995 . . . . . . . . . . . . . $ 694,000
1996 . . . . . . . . . . . . . 631,000
1997 . . . . . . . . . . . . . 527,000
1998 . . . . . . . . . . . . . 476,000
1999 . . . . . . . . . . . . . 337,000
Thereafter . . . . . . . . . . 2,147,000
</TABLE>
Aggregate rental expense charged to operations was $1,351,000, $1,249,000
and $1,339,000 in 1994, 1993 and 1992, respectively.
(13) ACQUISITION
The Company acquired certain assets and certain liabilities of
Industrial Tectonics Inc ("ITI"), a manufacturer of specialty balls used in
measuring devices, floats, valves, ball point pens and antifriction bearings,
located in Dexter, Michigan. The acquisition was accounted for using the
purchase method of accounting and, accordingly, the results of operations of
ITI have been included in the 1994 consolidated financial statements since
January 28, 1994, the effective date of the acquisition. The cash
consideration for the acquisition, net of cash acquired, was approximately
$7,268,000.
(14) CONTINGENCIES
The Company, together with other companies, certain former officers, and
certain current and former directors, has been named as a co-defendant in
lawsuits filed in the federal court of New York. The suits purport to be class
actions on behalf of all persons who have unsatisfied personal injury and
property damage claims against Keene Corporation. The premise of the suits is
that assets of Keene were transferred to Bairnco subsidiaries, of which Kaydon
was one in 1983, at less than fair value. The suits also allege that the
Company, among other named defendants, was a successor to and alter ego of
Keene. Earlier this year an examiner was appointed by a bankruptcy court to
examine the issues at stake. On September 23, 1994, the "Preliminary Report
of the Examiner" was made public. In the report, the examiner stated that the
alleged fraudulent conveyance claims against the Company appear to be
time-barred by the statute of limitations, subject to certain possible
exceptions which the Company does not believe are significant or factual.
Although the examiner has made certain recommendations regarding a mechanism to
resolve the claims against the Company, the Court has not taken any action
related to the report. Nevertheless, in the Company's opinion, the report
reinforces management's original view that the claims will ultimately not be
sustained. Accordingly, no provision has been reflected in the consolidated
financial statements for any alleged damages. Management believes that the
outcome of this litigation will not have a material adverse effect on the
Company's financial position.
Various other claims, lawsuits and environmental matters arising in the
normal course of business are pending against the Company. Management believes
that the outcome of these matters will not have a material adverse effect on
the Company's financial position or results of operations.
27
E-409
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
KAYDON CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(15) BUSINESS SEGMENT INFORMATION
The Company operates predominately in one industry segment, the design,
manufacture and sale of custom-engineered products. During 1994, 1993 and
1992, sales to no single customer exceeded 10% of total sales. Transfers
between geographic areas represent the selling price of sales to affiliates,
which is generally based on cost plus a mark-up. Corporate assets are those
assets maintained for general purposes, principally cash, cash equivalents and
cost in excess of net tangible assets of purchased businesses. All other
assets have been identified with domestic or foreign operations. Information
regarding the Company's operations in the United States and Europe for 1994,
1993 and 1992 is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994 UNITED STATES EUROPE ELIMINATIONS CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers . . . . . . . . . . . . $183,865,000 $20,830,000 $ -- $204,695,000
Transfers between geographic areas . . . . . . . . . . . -- 3,119,000 (3,119,000) --
------------ ----------- ----------- ------------
Total sales. . . . . . . . . . . . . . . . . . . . . . $183,865,000 $23,949,000 $(3,119,000) $204,695,000
============ =========== =========== ============
Operating income . . . . . . . . . . . . . . . . . . . . $ 46,069,000 $ 4,147,000 $ (457,000) $ 49,759,000
Interest income, net . . . . . . . . . . . . . . . . . . 609,000
------------
Income before income taxes and cumulative prior year
effect of changes in accounting principles . . . . . $ 50,368,000
============
Identifiable assets . . . . . . . . . . . . . . . . . . $141,128,000 $25,698,000 -- $166,826,000
Corporate assets . . . . . . . . . . . . . . . . . . . . 76,758,000
------------
Total assets . . . . . . . . . . . . . . . . . . . . . $243,584,000
============
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993 UNITED STATES EUROPE ELIMINATIONS CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers . . . . . . . . . . . . $165,611,000 $18,449,000 $ -- $184,060,000
Transfers between geographic areas . . . . . . . . . . . -- 4,503,000 (4,503,000) --
------------ ----------- ----------- ------------
Total sales. . . . . . . . . . . . . . . . . . . . . . $165,611,000 $22,952,000 $(4,503,000) $184,060,000
============ =========== =========== ============
Operating income . . . . . . . . . . . . . . . . . . . . $ 40,267,000 $ 4,764,000 $ (717,000) $ 44,314,000
Interest income, net . . . . . . . . . . . . . . . . . . 142,000
------------
Income before income taxes and cumulative prior year
effect of changes in accounting principles . . . . . $ 44,456,000
============
Identifiable assets . . . . . . . . . . . . . . . . . . $131,918,000 $21,783,000 -- $153,701,000
Corporate assets . . . . . . . . . . . . . . . . . . . . 63,721,000
------------
Total assets . . . . . . . . . . . . . . . . . . . . . $217,422,000
============
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992 UNITED STATES EUROPE ELIMINATIONS CONSOLIDATED
- -----------------------------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers . . . . . . . . . . . . $161,646,000 $22,258,000 $ -- $183,904,000
Transfers between geographic areas . . . . . . . . . . . -- 6,229,000 (6,229,000) --
------------ ----------- ----------- ------------
Total sales. . . . . . . . . . . . . . . . . . . . . . $161,646,000 $28,487,000 $(6,229,000) $183,904,000
============ =========== =========== ============
Operating income . . . . . . . . . . . . . . . . . . . . $ 36,941,000 $ 5,952,000 $ (671,000) $ 42,222,000
Interest expense, net . . . . . . . . . . . . . . . . . (1,471,000)
------------
Income before income taxes and cumulative prior year
effect of changes in accounting principles . . . . . $ 40,751,000
============
Identifiable assets . . . . . . . . . . . . . . . . . . $132,067,000 $17,659,000 -- $149,726,000
Corporate assets . . . . . . . . . . . . . . . . . . . . 61,241,000
------------
Total assets . . . . . . . . . . . . . . . . . . . . . $210,967,000
============
</TABLE>
28
E-410
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
--------------------------
<TABLE>
<S> <C> <C>
1. Name: Kaydon International, Inc.
Place of Incorporation: United States Virgin Islands
Date of Incorporation: July 16, 1991
2. Name: Kaydon Ring and Seal, Inc.
Place of Incorporation: Delaware
Date of Incorporation: June 30, 1986
3. Name: Kaydon S.A. de C.V.
Place of Incorporation: Nuevo Leon, United Mexican States
Date of Incorporation: April 10, 1987
4. Name: I.D.M. Electronics Ltd.
Place of Incorporation: United Kingdom
Date of Incorporation: July 1, 1957
5. Name: Electro-Tec Corp.
Place of Incorporation: Delaware
Date of Incorporation: October 27, 1967
6. Name: Cooper Roller Bearings Company Limited
Place of Incorporation: United Kingdom
Date of Incorporation: June 16, 1982
7. Name: Cooper Split Roller Bearings Corporation
Place of Incorporation: Virginia
Date of Incorporation: January 1, 1974
8. Name: Cooper Geteilte Rollenlager GmbH
Place of Incorporation: Germany
Date of Incorporation: March 19, 1974
9. Name: Industrial Tectonics Inc
Place of Incorporation: Delaware
Date of Incorporation: November 22, 1991
</TABLE>
E-411
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To Kaydon Corporation:
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this Form 10-K, into
the Company's previously filed Form S-8 Registration Statement Numbers 2-89399,
2-92778, 33-48762, 33-61646 and 33-61648.
/s/ Arthur Andersen LLP
- -----------------------
ARTHUR ANDERSEN LLP
Grand Rapids, Michigan
March 28, 1995
E-412
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF KAYDON CORP. FOR THE YEAR ENDED DECEMBER 31, 1994, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 28,575
<SECURITIES> 11,092
<RECEIVABLES> 28,454
<ALLOWANCES> 1,224
<INVENTORY> 53,746
<CURRENT-ASSETS> 126,788
<PP&E> 165,106
<DEPRECIATION> 103,859
<TOTAL-ASSETS> 243,584
<CURRENT-LIABILITIES> 40,902
<BONDS> 8,000
<COMMON> 1,754
0
0
<OTHER-SE> 164,816
<TOTAL-LIABILITY-AND-EQUITY> 243,584
<SALES> 204,695
<TOTAL-REVENUES> 204,695
<CGS> 128,545
<TOTAL-COSTS> 128,545
<OTHER-EXPENSES> 26,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (609)
<INCOME-PRETAX> 50,368
<INCOME-TAX> 19,142
<INCOME-CONTINUING> 31,226
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (2,000)
<NET-INCOME> 29,226
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
</TABLE>
