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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 25, 1998 Commission file number: 0-25066
OWOSSO CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2756709
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
The Triad Building, 2200 Renaissance Boulevard
Suite 150, King of Prussia, PA 19406
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 275-4500
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 [ ]
As of March 5, 1998, 5,814,883 shares of the Registrant's Common Stock, $.01 par
value, were outstanding.
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OWOSSO CORPORATION
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Statements of Operations 3
for the Three Months Ended January 25, 1998 and
January 26, 1997 (unaudited)
Condensed Consolidated Balance Sheets at 4
January 25, 1998 (unaudited) and October 26, 1997
Condensed Consolidated Statements of Cash Flows 5
for the Three Months Ended January 25, 1998 and
January 26, 1997 (unaudited)
Notes to Condensed Consolidated Financial Statements 6
(unaudited)
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 14
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OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended
----------------------------------
January 25, January 26,
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 34,054,000 $ 30,162,000
Cost of products sold 26,558,000 23,252,000
------------ ------------
Gross profit 7,496,000 6,910,000
Expenses:
Selling, general and administrative 5,006,000 4,810,000
Corporate 1,400,000 1,264,000
------------ ------------
Income from operations 1,090,000 836,000
Interest expense 1,124,000 983,000
Other income 45,000 51,000
------------ ------------
Income (loss) before income taxes 11,000 (96,000)
Income tax expense (benefit) 5,000 (41,000)
------------ ------------
Net income (loss) 6,000 (55,000)
Dividends and accretion on preferred stock (265,000) (260,000)
------------ ------------
Net income (loss) available for common stockholders $ (259,000) $ (315,000)
============ =============
Basic and diluted earnings (loss) per common share $ (0.04) $ (0.05)
============ =============
Weighted average number of common shares outstanding 5,809,000 5,809,000
============ =============
</TABLE>
See notes to condensed consolidated financial statements.
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OWOSSO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
January 25, October 26,
1998 1997
------------- -------------
ASSETS (Unaudited) (See Note)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 625,000 $ 840,000
Receivables, net 21,075,000 19,868,000
Inventories, net 24,641,000 23,084,000
Prepaid expenses and other 1,154,000 1,153,000
Deferred taxes 1,039,000 1,039,000
------------- -------------
Total current assets 48,534,000 45,984,000
PROPERTY, PLANT AND EQUIPMENT, NET 28,711,000 27,443,000
GOODWILL, NET 28,677,000 29,048,000
OTHER INTANGIBLE ASSETS, NET 7,860,000 8,054,000
OTHER ASSETS 1,259,000 1,152,000
------------- -------------
TOTAL ASSETS $ 115,041,000 $ 111,681,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 10,475,000 $ 8,821,000
Accrued expenses 5,582,000 6,323,000
Current portion of related party debt 3,750,000 3,750,000
Current portion of long-term debt 1,592,000 2,479,000
------------- -------------
Total current liabilities 21,399,000 21,373,000
LONG-TERM DEBT, LESS CURRENT PORTION 52,521,000 48,619,000
POSTRETIRMENT BENEFITS 1,826,000 1,812,000
DEFERRED TAXES 3,269,000 3,147,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY 36,026,000 36,730,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 115,041,000 $ 111,681,000
============= =============
</TABLE>
Note: the balance sheet at October 26, 1997 has been condensed from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
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OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
January 25, January 26,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 6,000 $ (55,000)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation 1,085,000 983,000
Amortization 573,000 621,000
Other 8,000 23,000
Changes in operating assets and liabilities (1,731,000) (799,000)
----------- -----------
Net cash (used in) provided by operating activities (59,000) 773,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (2,362,000) (1,073,000)
Other (99,000) (101,000)
----------- -----------
Net cash used in investing activities (2,461,000) (1,174,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 4,150,000 3,200,000
Proceeds from long-term debt -- 350,000
Payments on long-term debt (1,135,000) (369,000)
Payments on related party debt -- (2,225,000)
Dividends paid (710,000) (710,000)
----------- -----------
Net cash provided by financing activities 2,305,000 246,000
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NET DECREASE IN CASH AND CASH EQUIVALENTS (215,000) (155,000)
CASH AND CASH EQUIVALENTS, BEGINNING 840,000 840,000
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CASH AND CASH EQUIVALENTS, ENDING $ 625,000 $ 685,000
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 1,023,000 $ 884,000
=========== ===========
Taxes paid $ 202,000 $ --
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company - The consolidated financial statements represent the
consolidated financial position, results of operations and cash flows
of Owosso Corporation and subsidiaries (the "Company"). The
subsidiaries include: Motor Products - Owosso Corporation ("Motor
Products"), Motor Products - Ohio Corporation ("MP-Ohio"), Stature
Electric, Inc. ("Stature"), Owosso Motor Group, Inc. ("Motor Group")
and Cramer Company ("Cramer"), (collectively the "Motor Companies"),
and Snowmax, Incorporated ("Snowmax"), The Landover Company
("Dura-Bond"), Sooner Trailer Manufacturing Co. ("Sooner"), DewEze
Manufacturing, Inc., including Parker Industries ("DewEze") and Great
Bend Manufacturing, Inc. ("Great Bend"). The Company is a diversified
manufacturer of products in narrowly defined niche markets and
currently operates in two business segments, Engineered Component
Products (the Motor Companies, Snowmax and Dura-Bond) and Specialized
Equipment (Sooner, DewEze and Great Bend). In the Engineered Component
Products segment, the Company's products, primarily motors, replacement
cam shaft bearings and heat transfer "fin and tube" coils, are sold
primarily to original equipment manufacturers or service providers who
use them in their end product or service. The products sold in the
Specialized Equipment segment, primarily all-aluminum horse trailers
and agricultural and turf maintenance equipment, are almost exclusively
final products sold through dealers to their users. Nearly all of the
Company's customers are located in North America.
Financial Statements - The condensed consolidated balance sheet as of
January 25, 1998 and the condensed consolidated statements of
operations and cash flows for the three-month periods ended January 25,
1998 and January 26, 1997 have been prepared by the Company, without
audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) considered necessary to present
fairly the financial position, results of operations and cash flows as
of January 25, 1998 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
October 26, 1997 Annual Report on Form 10-K.
Reclassifications - Certain reclassifications have been made to the
1997 consolidated financial statements to conform to the 1998
presentation.
Seasonality - Sales of certain of the Company's specialized equipment
tend to be seasonal with lowest sales during the first quarter and
higher sales during the fourth fiscal quarter, corresponding with the
fall harvest season for farmers. Sales of the Company's engineered
component products experience less seasonality but generally are lowest
during the first fiscal quarter.
Cyclicality - The Company's Engineered Component Products segment is
subject to changes in the overall level of domestic economic activity.
The Specialized Equipment segment is subject to changes in certain
sectors of the agricultural economy, which may be influenced by climate
changes and government policy. The segment's horse trailer sales, which
have not tended to be
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affected by changes in the agricultural economy, have had a moderating
effect on the results of the entire Specialized Equipment segment, but
are subject to the overall domestic business cycle.
Earnings (loss) per share - Effective for the first quarter of fiscal
1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." In accordance with the
provisions of the Standard, all prior periods presented have been
restated. Basic earnings per common share is computed by dividing net
earnings (the numerator) by the weighted average number of common
shares outstanding during each period (the denominator). The
computation of diluted earnings per common share is similar to that of
basic earnings per common share, except that the denominator is
increased by the dilutive effect of stock options outstanding, computed
using the treasury stock method.
New Accounting Pronouncements - In June 1997, the Financial Accounting
Standards Board (the "FASB") issued SFAS No. 130, "Reporting
Comprehensive Income." This statement, which establishes standards for
reporting and disclosure of comprehensive income, is effective for
fiscal years beginning after December 15, 1997, although earlier
adoption is permitted. Reclassification of financial information for
earlier periods presented for comparative purposes is required under
SFAS No. 130. As this statement only requires additional disclosures in
the Company's consolidated financial statements, its adoption will not
have any impact on the Company's consolidated financial position or
results of operations. The Company expects to adopt SFAS No. 130 in the
first quarter of fiscal 1999.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement, which
establishes standards for reporting information about operating
segments and requires the reporting of selected information about
operating segments in interim financial statements, is effective for
fiscal years beginning after December 15, 1997, although earlier
adoption is permitted. Reclassification of segment information for
earlier periods presented for comparative purposes is required under
SFAS No. 131. The Company has not yet completed its analysis of the
effects of adopting this statement on its presentation of financial
data by business segment. The Company expects to adopt SFAS No. 131 in
the first quarter of fiscal 1999.
2. INVENTORIES
January 25, October 26,
1998 1997
------------ -------------
Raw materials and purchased parts $ 9,943,000 $ 9,325,000
Work in process 5,222,000 5,014,000
Finished goods 9,476,000 8,745,000
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Total $ 24,641,000 $ 23,084,000
============ =============
3. COMMITMENTS AND CONTINGENCIES
The Company is subject to federal, state and local environmental
regulation with respect to its operations. The Company believes that it
is operating in substantial compliance with applicable environmental
regulations. Manufacturing and other operations at the Company's
various facilities may result, and may have resulted, in the discharge
and release of hazardous substances
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and waste from time to time. The Company routinely responds to such
incidents as deemed appropriate pursuant to applicable federal, state
and local environmental regulations.
Cramer is a party to a consent decree with the State of Connecticut
pursuant to which it has agreed to complete its environmental
investigation of the site on which its facility is located and conduct
any remedial measures which may be required. Cramer is also in
negotiations with the former operator of the site concerning the
reimbursement by the former operator of any costs the Company has
incurred or may incur in the future in connection with this matter. The
Company does not believe that the resolution of this matter will have a
material adverse effect on the financial results of the Company.
The Company has been named as a potentially responsible party with
respect to two hazardous substance disposal sites currently under
remediation by the U.S. Environmental Protection Agency under its
"Superfund" program. With respect to both sites, based on the minimal
amount of waste alleged to have been contributed to the site by the
Company, the Company expects to resolve the matter through the payment
of de minimis amounts.
Sooner and DewEze have arrangements with a number of financial
institutions to provide floor plan financing for their dealers, which
require them to repurchase repossessed products from the financial
institutions in the event of a default by the financed dealer. Their
obligation is typically to repurchase the equipment at 90% of the
purchase price for the first 180 days, 80% for the next 90 days and 70%
for the next 90 days, after which the obligation expires. In the event
of a default by all of the financed dealers, the Company would be
required to repurchase approximately $7.9 million of product as of
January 25, 1998. The Company does not believe that its obligation
under these repurchase agreements will have a material adverse effect
on the financial results of the Company. Neither subsidiary has taken
possession on any equipment pursuant to the repurchase obligations in
these contracts.
In addition to the matters reported herein, the Company is involved in
litigation dealing with numerous aspects of its business operations.
The Company believes that settlement of such litigation will not have a
material effect on its consolidated financial position or results of
operations.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion addresses the financial condition of the Company as of
January 25, 1998 and the results of operations for the three-month periods ended
January 25, 1998 and January 26, 1997. This discussion should be read in
conjunction with the financial statements included elsewhere herein and the
Management's Discussion and Analysis and Financial Statement sections of the
Company's Annual Report on Form 10-K to which the reader is directed for
additional information.
Seasonality. Sales of certain of the Company's specialized equipment tend to be
seasonal, with lowest sales during the first fiscal quarter and higher sales
during the fourth fiscal quarter, corresponding with the fall harvest season for
farmers. Sales of the Company's engineered component products experience less
seasonality but generally are lowest during the first fiscal quarter.
Results of Operations
The following table sets forth for the periods indicated the percentage
relationship that certain items in the Company's Condensed Consolidated
Statements of Operations bear to net sales.
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
January 25, January 26,
1998 1997
----- -----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of products sold 78.0% 77.1%
----- -----
Gross profit 22.0% 22.9%
Expenses:
Selling, general and administrative 14.7% 15.9%
Corporate 4.1% 4.2%
----- -----
Income from operations 3.2% 2.8%
Interest expense 3.3% 3.3%
Other income -0.1% -0.2%
----- -----
Income (loss) before income taxes 0.0% -0.3%
Income tax expense (benefit) 0.0% -0.1%
----- -----
Net income (loss) 0.0% -0.2%
Dividends and accretion on preferred stock 0.8% 0.8%
----- -----
Net income (loss) available for common stockholders -0.8% -1.0%
----- -----
</TABLE>
Three months ended January 25, 1998 compared to three months ended January 26,
1997
Net sales. For the first quarter of 1998, net sales increased 12.9%, to $34.1
million, as compared to net sales of $30.2 million in the first quarter of 1997.
In the Company's Engineered Component Products segment, net sales increased
8.5%, to $18.7 million in 1998 from $17.2 million in 1997, primarily as a result
of increased sales volume at the Motor Companies to existing customers and the
addition of new customers. Sales of heat transfer coils at Snowmax and
replacement camshaft bearings at Dura-Bond were generally flat as compared to
the prior year quarter.
Net sales in the Specialized Equipment segment increased 18.7%, to $15.4 million
in the first quarter of 1998, as compared to $13.0 million in the prior year
quarter. This increase reflects a 21.7%, or $1.5 million, increase in sales of
agricultural equipment, resulting from the continuing strong agricultural
market, and a 15.3%, or $925,000, increase in sales of aluminum trailers.
9
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Gross profit. For the first quarter of 1998, gross profit increased to $7.5
million, or 22.0% of net sales, as compared to $6.9 million, or 22.9% of net
sales in the prior year quarter.
Gross profit in the Engineered Component Products segment increased 8.9%, to
$4.4 million, or 23.7% of net sales, as compared to $4.1 million, or 23.6% of
net sales in the first quarter of 1997, principally as a result of increased
sales at the Motor Companies. Gross profit at Snowmax and Dura-bond were
essentially flat when compared with the prior year quarter.
In the Specialized Equipment segment, gross profit increased 8.0%, to $3.1
million, as compared to $2.8 million, in 1997, primarily as a result of
increased sales of agricultural equipment, partially offset by a reduction in
gross profit at Sooner Trailer, attributable primarily to changes in product
mix. As a percentage of net sales, gross profit decreased to 19.9% in 1998, from
21.9% in the prior year quarter. This decrease was principally a result of
changes in product mix at Sooner Trailer. In response to this decrease, the
Company has discontinued the production of certain low-margin livestock trailers
and has instituted price increases on certain other models.
Selling, general and administrative expenses. As a percentage of net sales,
selling, general and administrative expenses decreased to 14.7%, or $5.0
million, in the first quarter of 1998, as compared to 15.9%, or $4.8 million in
the prior year quarter. In the Engineered Component Products segment, selling
general and administrative expenses were $2.4 million in both 1998 and 1997. As
a percentage of net sales, such expenses decreased to 12.8% in 1998 from 14.1%
in the prior year quarter. In the Specialized Equipment segment, selling,
general and administrative expenses were $2.6 million, or 17.0% of net sales, in
1998, as compared to $2.4 million, or 18.3% of net sales, in the prior year
quarter. The increase in selling, general and administrative expenses in this
segment was primarily the result of an increase in sales personnel and increased
advertising and promotional costs.
Corporate expenses. In the first quarter of 1998, corporate expenses were $1.4
million, or 4.1% of net sales, as compared to $1.3 million, or 4.2% of net sales
in 1997. Corporate expenses increased primarily as a result of higher personnel
and medical insurance costs.
Income from operations. For the first quarter of 1998, income from operations
increased 30.5%, to $1.1 million, or 3.2% of net sales, as compared to $836,000,
or 2.8% of net sales, in 1997.
Among other measures, the Company evaluates the operating performance of its
business segments and its individual subsidiaries based on business unit income,
which is defined as income from operations before allocation of corporate
expenses. The Company believes this measurement most closely reflects the
subsidiaries' individual contributions. On this basis, business unit income for
the Engineered Component Products segment increased 23.9%, to $2.0 million, in
the first quarter of 1998, as compared to $1.6 million, in the prior year
quarter. As a percentage of net sales, business unit income for this segment
increased to 10.9% in 1998 from 9.5% in 1997. These increases were primarily a
result of strong sales at the Motor Companies and a reduction in selling,
general and administrative expenses as a percentage of net sales.
Business unit income from the Specialized Equipment segment was $460,000 in the
first quarter of 1998, as compared to $465,000 in 1997. These results reflect a
$241,000 increase in business unit income from the agricultural equipment
companies, as a result of continuing strong sales, offset by a $246,000 decrease
in business unit income from Sooner Trailer, primarily as a result of changes in
product mix and increased selling, general and administrative expenses.
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Interest expense. For the first quarter of 1998, interest expense was $1.1
million, as compared to $1.0 million in 1997. This increase was the result of
increased borrowings under the Company's revolving credit agreement.
Income tax expense (benefit). The Company's effective income tax rate was 45.5%
for 1998, while the benefit recorded in the prior year quarter was at an
effective rate of 42.7%.
Net income (loss) available for common stockholders. Net loss available for
common stockholders was $259,000, or $.04 per share, in the first quarter of
1998, as compared to a net loss of $315,000, or $.05 per share, in the prior
year quarter. Income (loss) available for common stockholders is calculated by
subtracting dividends on preferred stock of $188,000 for both 1998 and 1997 and
by deducting the non-cash accretion in book value of preferred stock of $77,000
and $72,000 for 1998 and 1997, respectively.
Liquidity and Capital Resources
Cash and cash equivalents were $625,000 at January 25, 1998, exclusive of
$407,000 of cash that was restricted under industrial revenue financings. This
compares to cash of $840,000 and restricted cash of $298,000 as of October 26,
1997. Working capital increased to $27.1 million at January 25, 1998 from $24.6
million at October 26, 1997. This increase was a result of additional
investments in accounts receivable and inventory of $1.2 million and $1.6
million, respectively, as well as a reduction in the current portion of
long-term debt of $887,000, partially offset by an increase in accounts payable
of $1.7 million. Net cash used in operating activities was $59,000, as compared
to net cash provided by operating activities of $773,000 in the prior year
quarter. The decrease in cash from operations was principally the result of
increased accounts receivable and inventories, primarily in response to
increased sales, partially offset by improved operating results.
Net cash used in investing activities included $2.4 million for capital
expenditures for equipment. Of this amount, approximately $1.4 million was
invested in the Engineered Component Products segment and $399,000 in the
Specialized Equipment segment. The remainder, $554,000, was invested in computer
equipment and software upgrades at the corporate office. The Company currently
plans to invest approximately $3.5 million during the remainder of fiscal 1998,
primarily for added capacity and production efficiencies in the Engineered
Component Products segment. Management anticipates funding capital expenditures
with cash from operations and proceeds from the Company's revolving credit
facility. The Company is also evaluating the expansion of its production
capabilities at one of the Motor Companies. Such expansion could increase
capital expenditures in fiscal 1998, and the Company intends to seek industrial
revenue financing if it proceeds with the project.
Net cash used in financing activities included net borrowings under the
Company's $55.0 million revolving credit agreement of $4.2 million, debt
repayments of $1.1 million and the payment of dividends of $710,000.
The Company maintains a $55.0 million revolving credit agreement with two banks
with a termination date of March 31, 2000. At January 25, 1998, $38.8 million
was outstanding and $16.2 million was available for additional borrowing under
the agreement. Interest is payable, at the Company's option, at either the agent
bank's prime rate or at a spread over the London Interbank Offered Rate that
varies with the Company's ratio of total debt to EBITDA. The LIBOR spread was
2.0% at January 25, 1998. The agreement contains customary financial and other
covenants, including fixed charges, cash flow and net worth ratios, restrictions
on certain asset sales, mergers and other significant transactions and a
negative pledge on assets. The fixed charges coverage ratio was amended during
the first quarter of 1998 to allow for greater flexibility in purchasing
machinery and equipment. The Company anticipates that it will remain in
compliance with these covenants for the foreseeable future.
The Company has interest rate swap agreements with its two banks with notional
amounts totaling $15.0 million. The Company entered into these agreements to
change the fixed/variable interest rate mix of its
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debt portfolio, in order to reduce the Company's aggregate risk from movements
in interest rates. The agreements require the Company to make quarterly fixed
payments on the notional amount at rates of 7.0675% and 7.09% through July 2002
in exchange for receiving payments at the three-month London Interbank Offered
Rate.
The Company believes anticipated funds to be generated from future operations
and available credit facilities will be sufficient to meet anticipated operating
and capital needs. To make significant acquisitions, additional financing may be
required.
The Company is currently engaged in active discussions regarding certain
material acquisitions as well as dispositions of certain of the Company's
operating subsidiaries. No definitive agreements or commitments currently exist
for the potential transactions and there can be no assurance that any of the
potential transactions will be completed.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
The following information is provided pursuant to the "Safe Harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Certain statements in
Management's Discussion and Analysis of this Form 10-Q, including those which
express "belief", "anticipation" or "expectation" as well as other statements
which are not historical fact, are "forward-looking statements" made pursuant to
these provisions.
The Company cautions readers that the following important factors, among others,
have in the past affected and could in the future affect the Company's actual
results of operations and cause the Company's actual results to differ
materially from the results expressed in any forward-looking statements made by
or on behalf of the Company:
o The Company's results have been and can be expected to continue
to be affected by the general economic conditions in the United
States and specific economic factors influencing the
manufacturing and agricultural sectors of the economy. Lower
demand for the Company's products can lower revenues as well as
cause underutilization of the Company's plants, leading to
reduced gross margins.
o Commodity prices can have a material influence on the Company's
results. Grain prices and cattle prices can affect demand for
certain agricultural equipment sold by the businesses in the
Company's Specialized Equipment segment. Metal prices,
particularly aluminum, copper and steel, can affect the Company's
costs as well as demand for the Company's products and the value
of inventory held at the end of a reporting period. Lack of
availability of certain commodities could also disrupt the
Company's production.
o Weather can affect the success of the grain harvest in the United
States, which can directly affect demand for the Company's grain
handling equipment.
o The Company's Sooner Trailer subsidiary has experienced
production inefficiencies that have caused increased production
costs and lower gross margins. Continuation of such
inefficiencies could continue to adversely affect the Company's
results of operations.
o Changes in demand that change product mix may reduce operating
margins by shifting demand toward less profitable products.
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o Loss of a substantial customer may affect results of operations.
o The Company's results can be affected by engineering difficulties
in designing new products or applications for existing products
to meet the requirements of its customers.
o Obsolescence or quality problems leading to returned goods in
need of repair can affect the value of the Company's inventories
and its profitability.
o The Company has a substantial amount of floating rate debt.
Increases in short-term interest rates could be expected to
increase the Company's interest expense.
o Acquisitions are an important part of the Company's growth
strategy. Acquisitions may have a dilutive effect on the
Company's earnings and could effect the Company's available
credit and interest costs. Conversely, the Company may from time
to time divest of product lines or business units. Any such
divestiture may involve costs of disposition or loss on the
disposition that could reduce the Company's results. In addition,
acquisitions or dispositions could effect the Company's relative
mix of operating results from engineered component products and
specialized equipment, thereby effecting the seasonality and
cyclicality of such operating results.
13
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Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
10.1 Eighth Amendment to Credit Agreement by and among Owosso
Corporation, its subsidiaries, NBD Bank, PNC Bank, N.A., and
ABD Bank, as Agent, dated as of December 29, 1997.
10.2 Owosso Corporation 401(k) Savings Plan
27 Financial Data Schedule
(b) Form 8-K
No reports on Form 8-K were filed during the quarter ended
January 25, 1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OWOSSO CORPORATION
Date: March 10, 1998 By: /s/ George B. Lemmon, Jr.
--------------------------------
George B. Lemmon, Jr.
President, Chief Executive
Officer, and Director
By: /s/ John H. Wert, Jr.
--------------------------------
John H. Wert, Jr.
Senior Vice President - Finance,
Chief Financial Officer, and
Treasurer and Secretary
15
<PAGE>
Execution Copy
EIGHTH AMENDMENT TO CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT, dated as of December 29,
1997 (this "Amendment"), is by and among OWOSSO CORPORATION, a Pennsylvania
corporation ("Owosso"), AHAB INVESTMENT COMPANY, a Delaware corporation
("Ahab"), CRAMER COMPANY, a Delaware corporation ("Cramer"), DEWEZE
MANUFACTURING, INC., a Pennsylvania corporation ("DewEze"), THE LANDOVER
COMPANY, a Pennsylvania corporation, and the survivor of the merger with Snyder
Industries Group, Inc., a Washington corporation ("Landover"), MOTOR
PRODUCTS-OWOSSO CORPORATION, a Delaware corporation ("Motor Products"), SNOWMAX,
INCORPORATED, a Pennsylvania corporation ("Snowmax"), SOONER TRAILER
MANUFACTURING CO., a Delaware corporation ("Sooner"), MOTOR PRODUCTS-OHIO
CORPORATION, a Delaware corporation ("Motor Products-Ohio"), GREAT BEND
MANUFACTURING COMPANY, INC., a Kansas corporation, STATURE ELECTRIC, INC., a New
York corporation ("Stature"), and OWOSSO MOTOR GROUP, INC., a Pennsylvania
corporation ("Motor Group" and, together with Owosso, Ahab, Cramer, DewEze,
Landover, Motor Products, Snowmax, Sooner, Motor Products-Ohio, Great Bend,
Stature and Motor Group, collectively the "Borrowers" and individually a
"Borrower"), NBD BANK, a Michigan banking corporation formerly known as NBD
Bank, N.A. ("NBD"), PNC BANK, NATIONAL ASSOCIATION, a national banking
association ("PNC" and, together with NBD, collectively the "Banks" and
individually a "Bank"), and NBD BANK, as agent (in such capacity, the "Agent")
for the Banks.
INTRODUCTION
A. The Borrowers, the Banks and the Agent are parties to the Credit
Agreement, dated as of October 31, 1994, as amended by the First Amendment to
Credit Agreement, dated as of August 1, 1995, the Second Amendment to Credit
Agreement, dated as of September 1, 1995, the Third Amendment to Credit
Agreement, dated as of October 31, 1995, and the Fourth Amendment to Credit
Agreement, dated as of March 8, 1996, the Fifth Amendment to Credit Agreement,
dated as of May 31, 1996, the Sixth Amendment to Credit Agreement, dated as of
December 1, 1996, and the Seventh Amendment to Credit Agreement, dated as of
March 3, 1997 (the "Credit Agreement"), pursuant to which the Banks provide to
the Borrowers, on a joint and several liability basis, a revolving credit
facility in the aggregate principal amount of $55,000,000.
B. The Borrowers, the Banks and the Agent now desire to amend the
Credit Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual agreements herein and in
the Credit Agreement contained, the parties hereto agree as follows:
<PAGE>
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT
The Credit Agreement hereby is amended as follows:
1.2 The definition of the term "Fixed Charges" in Section 1.1 is
amended to read in full as follows:
"Fixed Charges" of any person shall mean, for any period, the sum,
without duplication, of (a) interest paid or payable during such period
by such person on Indebtedness of such person, plus (b) the maximum
scheduled amount of principal or other sums required to be paid by such
person during the period of four fiscal quarters of such person
immediately following such period with respect to Indebtedness
(including the current portion of any Capital Lease) of such person
having a final maturity more than one year from the date of creation of
such Indebtedness, but excluding, for purposes of this clause (b) only,
the Excluded Indebtedness, plus (c) all debt discount and expense
amortized or required to be amortized during such period by such
person, plus (d) Operating Lease Rental Expense of such person for such
period, plus (e) all capital expenditures made by such person during
such period, except that, for the purpose of determining consolidated
fixed charges of the Borrowers and their Subsidiaries with respect to
each of the Borrowers' fiscal quarters ending on or about January 31,
1998, April 30, 1998 and July 31, 1998, consolidated capital
expenditures of the Borrowers and their Subsidiaries shall be deemed to
equal one-quarter (1/4) of the projected consolidated capital
expenditures of the Borrowers and their Subsidiaries (as such
projection may be revised from time to time as shown in any revised
projection certified by the chief financial officer of Owosso furnished
to the Banks and the Agent with the next certificate of such officer
furnished to the Banks and the Agent under Section 5.1(d)(iv)) for the
Borrowers' fiscal year ending on or about October 31, 1998, plus (f)
all dividends and other distributions paid or payable or otherwise
accumulating during such period on any capital stock of such person.
1.2 Section 5.2(c) is amended to read in full as follows:
(c) Fixed Charges Coverage. Permit or suffer the ratio of
Consolidated Fixed Charges Coverage Availability of the Borrowers and
their Subsidiaries to Consolidated Fixed Charges of the Borrowers and
their Subsidiaries to be less than (i) 0.75 to 1.00 as of the end of
either of the Borrowers' fiscal quarters ending on or
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<PAGE>
about January 31, 1997 or April 30, 1997, (ii) 0.80 to 1.00 as of the
end of the Borrowers' fiscal quarter ending on or about July 31, 1997,
(iii) 1.00 to 1.00 as of the end of the Borrowers' fiscal quarter
ending on or about October 31, 1997 or January 31, 1998, (iv) 1.10 to
1.00 as of the end of any of the Borrowers' fiscal quarters ending on
or about April 30, 1998, July 31, 1998, October 31, 1998, January 31,
1999 or April 30, 1999, or (v) 1.25 to 1.00 as of the end of any of the
Borrowers' fiscal quarters ending at any time thereafter; such ratio to
be determined as of the last day of each fiscal quarter of the
Borrowers for the period of four fiscal quarters of the Borrowers then
ended. For purposes of determining from time to time the Borrowers'
compliance with this subsection, each Person that is a Borrower or a
Subsidiary of a Borrower at the time of such determination shall be
deemed to have been a Borrower or a Subsidiary of a Borrower, as the
case may be, for the entire period relevant to such determination
(i.e., in each case, the period of four fiscal quarters of the
Borrowers then ended) and each Person that was a Borrower or Subsidiary
of a Borrower at any time during such relevant period, but is no longer
a Borrower or Subsidiary of a Borrower, as the case may be, at the time
of such determination, shall be deemed not to have been a Borrower or a
Subsidiary of a Borrower, as the case may be, at any time during such
period.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Amendment, each
Borrower represents and warrants that:
2.1 The execution, delivery and performance by the Borrowers of this
Amendment have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of the stockholders of any
Borrower, (b) violate any provisions of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to any Borrower or of the Articles of Incorporation or By-Laws of
any Borrower, or (c) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower is a party or by which any Borrower or its
properties may be bound or affected.
2.2 No authorization, consent, approval, license, exemption of or
filing, declaration or registration with any governmental authority or any
non-governmental person or entity, including without limitation any creditor or
stockholder of any Borrower, is required on the part of any Borrower in
connection with the execution, delivery and performance of this Amendment, or
the transactions contemplated hereby or as a condition to the legality, validity
or enforceability of this Amendment.
-3-
<PAGE>
2.3 This Amendment is a legal, valid and binding obligation of the
Borrowers enforceable against the Borrowers in accordance with its terms.
2.4 After giving effect to the amendments contained in Article 1 of
this Amendment and to Section 4.2 of this Amendment, the representations and
warranties contained in Article IV of the Credit Agreement are true on and as of
the date hereof with the same force and effect as if made on and as of the date
hereof, provided that none of Stature, Motor Products-Ohio, Great Bend, Motor
Group or Snyder shall be deemed a "Borrower" with respect to, but only with
respect to, such representations and warranties regarding historical matters not
involving any such Borrower.
ARTICLE 3. CONSENT TO PREPAYMENT OF
THOMAS L. FRENCH SUBORDINATED DEBT
Owosso has informed the Banks and the Agent that it desires to prepay
in full that certain Promissory Note dated August 2, 1996 in the principal
amount of $802,543.41 made by Owosso in favor of Thomas L. French (the
"Subordinated Note"). The Subordinated Note is subordinate to, among other
things, all indebtedness, obligations and liabilities of Owosso to the Agent and
the Banks pursuant to that certain Subordination Agreement, dated as of August
2, 1996, among Thomas L. French, Owosso and the Agent (the "Subordination
Agreement"). Owosso has requested the Banks and the Agent to consent to the
prepayment in full of the Subordinated Note. The Banks and the Agent hereby
consent to such prepayment, provided that (a) no Default or Event of Default
shall have occurred and be continuing (both before and after such prepayment),
(b) such consent is limited to the prepayment of the Subordinated Note as
provided herein, and such consent shall not be deemed to be a waiver of or
consent to any other action or omission in violation of the Credit Agreement or
the Subordination Agreement, or a waiver or modification of any provision of the
Credit Agreement or the Subordination Agreement, except the provisions of
Section 5.2(l) of the Credit Agreement and the provisions of the Subordination
Agreement as such provisions apply to the Subordinated Note, and (c) such
consent shall not be deemed to prejudice any other right or rights which any of
the Banks or the Agent may now have or have in the future under or in connection
with the Credit Agreement or the Subordination Agreement.
ARTICLE 4. MISCELLANEOUS
4.1 If any Borrower shall fail to perform or observe any term, covenant
or agreement in this Amendment, or any representation or warranty made by any
Borrower in this Amendment shall prove to have been incorrect in any material
respect when made, such occurrence shall be deemed to constitute an Event of
Default.
4.2 All references to the Credit Agreement in any agreement,
certificate or instrument referred to in the Credit Agreement, or delivered
pursuant thereto or in connection therewith or in any other document, hereafter
shall be deemed references to the Credit Agreement, as amended hereby.
-4-
<PAGE>
4.3 All agreements, certificates and instruments executed pursuant to
the Credit Agreement or in connection therewith and, subject to the amendments
herein provided, the Credit Agreement, shall in all respects continue in full
force and effect and are hereby ratified and confirmed.
4.4 Capitalized terms used but not defined in this Amendment shall have
the respective meanings ascribed thereto in the Credit Agreement.
4.5 This Amendment shall be governed by and construed in accordance
with the laws of the State of Michigan.
4.6 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto were upon the same instrument.
4.7 The Borrowers agree, jointly and severally, to pay the reasonable
fees and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman, counsel for
the Agent, in connection with the negotiation and preparation of this Amendment
and the documents referred to herein and the consummation of the transactions
contemplated hereby, and in connection with advising the Agent as to its rights
and responsibilities with respect thereto.
[The rest of this page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and delivered as of the date first above written.
BORROWERS: OWOSSO CORPORATION
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Senior Vice President
Finance and Chief
Financial Officer
AHAB INVESTMENT COMPANY
By: /s/ Norman J. Shuman
--------------------------------
Its: Vice-President
---------------------
CRAMER COMPANY
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
DEWEZE MANUFACTURING, INC.
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
THE LANDOVER COMPANY
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
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<PAGE>
MOTOR PRODUCTS-OWOSSO
CORPORATION
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
GREAT BEND MANUFACTURING
COMPANY, INC.
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
SNOWMAX, INCORPORATED
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
SOONER TRAILER MANUFACTURING CO.
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
MOTOR PRODUCTS-OHIO
CORPORATION
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
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<PAGE>
STATURE ELECTRIC, INC.
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Secretary/Treasurer
---------------------
OWOSSO MOTOR GROUP, INC.
By: /s/ John H. Wert, Jr.
-----------------------------------
Its: Asst. Secretary/Treasurer
-------------------------
Agent and Banks: NBD BANK, as Agent and as a Bank
By: /s/ Willaim C. Goodhue
-----------------------------------
Its: Vice-President
---------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Heidi S. Bahmueller
-----------------------------------
Its: Banking Officer
------------------------
<PAGE>
OWOSSO CORPORATION
401(k) SAVINGS PLAN
Effective May 1, 1995
(WORKING COPY INCORPORATING AMENDMENTS 1997-1 & 1997-2)
<PAGE>
OWOSSO CORPORATION
401(k) SAVINGS PLAN
<TABLE>
<CAPTION>
Section Page
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<S> <C>
ARTICLE 1
INTRODUCTION.............................................................................................1
ARTICLE 2
DEFINITIONS AND CONSTRUCTION.............................................................................3
2.1. Definitions........................................................................................3
2.2. Construction; Headings............................................................................19
ARTICLE 3
PARTICIPATION AND SERVICE...............................................................................20
3.1. Eligibility to Participate........................................................................20
3.2. Commencement of Participation.....................................................................21
3.3. Cessation of Participation........................................................................21
3.4. Years of Service..................................................................................21
3.5. Special Rules for Participation and Vesting.......................................................22
3.6. Participation and Service upon Reemployment.......................................................23
3.7. Transfers to Affiliates and Change in Status......................................................23
ARTICLE 4
CONTRIBUTIONS...........................................................................................25
4.1. Company Contributions.............................................................................25
4.2. Time and Manner of Contribution...................................................................29
4.3. Conditions on Company Contributions...............................................................30
4.4. Contributions by Participants.....................................................................31
4.5. Limitations on Matching Contributions.............................................................31
4.6. Limitations on Elective Deferral Contributions....................................................32
4.7. Income Attributable to Excess Aggregate Contributions and Excess Aggregate
Deferrals......................................................................................34
4.8. Other Limitations under Code section 401(m).......................................................35
ARTICLE 5
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS...................................................................36
5.1. Individual Accounts...............................................................................36
5.2. Account Adjustments...............................................................................36
5.3. Maximum Additions.................................................................................40
5.4. Defined Contribution and Defined Benefit Plans....................................................42
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
5.5. No Rights Created by Allocation...................................................................44
ARTICLE 6
PAYMENT OF BENEFITS.....................................................................................45
6.1. Retirement or Disability..........................................................................45
6.2. Death.............................................................................................45
6.3. Other Termination of Employment...................................................................45
6.4. Forfeitures.......................................................................................47
6.5. Time of Payment of Benefits.......................................................................48
6.6. Mode of Payment of Benefits.......................................................................52
6.7. Designation of Beneficiary........................................................................52
6.8. Information Required from Beneficiary.............................................................54
6.9. Rollovers........................................................................................54
6.10. Withdrawals......................................................................................55
6.11. Loans to Participants and Former Participants....................................................58
6.12. Loans from Merged Plan..........................................................................64
6.13. Direct Rollovers.................................................................................65
ARTICLE 7
TRUST FUND..............................................................................................67
7.1. Exclusive Benefit of Employees and Beneficiaries..................................................67
7.2. Investment Directions by Participants.............................................................67
7.3. Investment Funds..................................................................................69
7.4. Special Rules Concerning the Owosso Stock Fund....................................................69
ARTICLE 8
ADMINISTRATION..........................................................................................72
8.1. Duties and Responsibilities of Fiduciaries........................................................72
8.2. Allocation of Duties and Responsibilities.........................................................73
8.3. Membership of Committee...........................................................................73
8.4. Expenses..........................................................................................73
8.5. Records and Reports...............................................................................73
8.6. Other Powers and Duties...........................................................................74
8.7. Rules and Decisions; Non-Discriminatory Actions...................................................75
8.8. Authorization of Benefit Payments.................................................................75
8.9. Applications and Forms for Benefits...............................................................75
8.10. Facility of Payment..............................................................................76
8.11. Liabilities......................................................................................76
8.12. Claims Procedure.................................................................................76
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 9
MISCELLANEOUS...........................................................................................79
9.1. Nonguarantee of Employment........................................................................79
9.2. Rights to Trust Assets............................................................................79
9.3. Nonalienation of Benefits.........................................................................79
9.4. Discontinuance of Company Contributions...........................................................80
ARTICLE 10
AMENDMENTS AND ACTION BY COMPANY........................................................................81
10.1. Amendments Generally.............................................................................81
10.2. Amendments to Vesting Schedule...................................................................81
10.3. Action by Company................................................................................82
ARTICLE 11
SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS.................................................83
11.1. Successor Employer...............................................................................83
11.2. Plan Assets......................................................................................83
ARTICLE 12
PLAN TERMINATION........................................................................................84
12.1. Right to Terminate...............................................................................84
12.2. Liquidation of the Trust Fund....................................................................84
12.3. Manner of Distribution...........................................................................84
ARTICLE 13
DETERMINATION OF TOP-HEAVY STATUS.......................................................................85
13.1. General..........................................................................................85
13.2. Top-Heavy Plan...................................................................................85
13.3. Super Top-Heavy Plan.............................................................................85
13.4. Cumulative Accrued Benefits and Cumulative Accounts..............................................85
13.5. Definitions......................................................................................86
13.6. Vesting..........................................................................................86
13.7. Minimum Contributions............................................................................87
13.8. Defined Benefit and Defined Contribution Plan Fractions..........................................88
ARTICLE 14
PARTICIPATING COMPANIES.................................................................................89
14.1. Effective Date of Participation..................................................................89
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
14.2. Reallocation of Forfeitures......................................................................89
14.3. Administration...................................................................................89
14.4. Contributions....................................................................................90
14.5. Withdrawal of Participating Company..............................................................90
APPENDIX A
Special Rules With Respect to the Merged Account and Voluntary Contribution Account
APPENDIX B
Participating Companies
</TABLE>
-iv-
<PAGE>
OWOSSO CORPORATION
401(k) SAVINGS PLAN
ARTICLE 1
INTRODUCTION
This Owosso Corporation 401(k) Savings Plan (the "Plan") was
established by Sooner Trailer Manufacturing Co. effective May 1, 1995 for the
benefit of its eligible employees. Effective as of July 1, 1995, Owosso
Corporation (the "Company") assumed sponsorship of the Plan, and a 401(k) cash
or deferred and a company stock investment fund feature were added to the Plan.
Also effective July 1, 1995, the Landover Company Money Purchase Pension Plan,
the Owosso Corporation Money Purchase Pension Plan and the DewEze Profit Sharing
Plan (collectively, the "Merged Plans") were merged with and into the Plan.
The account balances of Participants attributable to their
participation in the Merged Plans were merged into this Plan from the Merged
Plan and are allocated in a Merged Account and, for purposes of Voluntary
Contributions previously allocated under a Merged Plan, a Voluntary Contribution
Account.
This Plan is to be maintained according to the terms of this
instrument. The Committee has the authority to manage the administration of this
Plan. The assets of this Plan are held in trust by the Trustees in accordance
with the terms of the Trust agreement, which is considered to be an integral
part of this Plan. Except as may be provided in the Trust agreement, the
Trustees have the exclusive authority to manage and control the assets of this
Plan. Notwithstanding any other provision of this Plan, Company contributions
for Plan Years hereunder shall be made without regard to current or accumulated
earnings and profits for the
<PAGE>
taxable year or years ending with or within such Plan Year. Nevertheless, this
Plan is designed to qualify as a profit sharing plan for purposes of section
401(a) of the Code.
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<PAGE>
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1. Definitions. The following initially capitalized words
and phrases, when used in this Plan, shall have the following meanings:
Actual Contribution Percentage means the average of the ratios
(calculated separately for each Eligible Employee) of the sum of the amount of
Matching Contributions made by the Company on behalf of each Eligible Employee
for such Plan Year (including any Qualified Supplemental Contributions made
pursuant to Section 4.1(d) of the Plan) to the Eligible Employee's compensation
for such Plan Year. For purposes of determining the Actual Contribution
Percentage, compensation for any Plan Year shall satisfy the provisions of
section 414(s) of the Code, but shall not include any amount paid on account of
services performed prior to the date upon which the Eligible Employee became
eligible to commence participation in the Plan.
Actual Contribution Percentage Test means the test described
in Section 4.5.
Actual Deferral Percentage means the average of ratios
(calculated separately for each Eligible Employee) of the amount of Elective
Deferral Contributions made by the Company on behalf of each Eligible Employee
for such Plan Year (including any Qualified Matching Contributions and/or
Qualified Supplemental Contributions made pursuant to Section 4.1(d) of the
Plan) to the Eligible Employee's compensation for such Plan Year. For purposes
of determining the Actual Deferral Percentage, compensation for such Plan Year
shall satisfy the provisions of section 414(s) of the Code, but shall not
include any amount paid on account of
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<PAGE>
services performed prior to the date upon which the Eligible Employee became
eligible to commence participation in the Plan.
Actual Deferral Percentage Test means the test described in
Section 4.6.
Affiliate means the Company and any employer which has not
adopted this Plan and is a member of a controlled group of corporations (as
defined in section 414(b) of the Code) which includes the Company; any trade or
business (whether or not incorporated) which is under common control (as defined
in section 414(c) of the Code) with the Company; any organization (whether or
not incorporated) which is a member of an affiliated service group (as defined
in section 414(m) of the Code) which includes the Company; and any other entity
required to be aggregated with the Company pursuant to regulations under section
414(o) of the Code.
Annual Additions means, with respect to each Limitation Year,
the total of the Company contributions and Forfeitures allocated to a
Participant's Employer Contribution Account pursuant to the provisions of this
Plan, plus amounts described in sections 415(l)(1) and 419A(d)(2) of the Code,
if any. Annual Additions also shall include any additions to the account of a
Participant under any other qualified defined contribution plan maintained by
the Company or an Affiliate.
For purposes of determining Annual Additions, compensation for
any Limitation Year shall mean a Participant's or Former Participant's
compensation as reported to the Participant or Former Participant on Form W-2
(adjusted, however, to include only those items specified in Treas. Reg.
ss.1.415-2(d)(2)(i) and to exclude those items specified in Treas. Reg.
ss.1.415-2(d)(3)) for the Limitation Year, plus the compensation, if any, paid
by an Affiliate for such Limitation Year.
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<PAGE>
Beneficiary means a person or persons (natural or otherwise)
designated by a Participant in accordance with the provisions of Section 6.7 to
receive any death benefit which shall be payable under this Plan.
Board of Directors or Board means prior to July 1, 1995, the
board of directors of Sooner Trailer Manufacturing Co.; and on or after July 1,
1995, the board of directors of Owosso Corporation, as constituted from time to
time.
Calendar Quarter means the period of three calendar months
commencing on January 1, April 1, July 1, and October 1.
Code means the Internal Revenue Code of 1986, as amended from
time to time, including any regulations promulgated thereunder.
Committee means the individuals appointed pursuant to Section
8.3 to administer the Plan.
Company means prior to July 1, 1995, Sooner Trailer
Manufacturing Co.; and on and after July 1, 1995, Owosso Corporation, its
successor or successors, and any Affiliate that adopts this Plan with the
approval of the Board of Directors; provided, however, that for purposes of
amending or terminating the Plan, Company shall mean the Board of Directors of
Sooner Trailer Manufacturing Co. prior to July 1, 1995 and on and after July 1,
1995, the Board of Directors of Owosso Corporation, the actions of which shall
be binding on any Affiliate that adopts this Plan. Appendix B lists the
companies participating in the Plan.
Compensation means the fixed and basic salary or wage paid by
the Company during the applicable period, including the amount of Elective
Deferral Contributions (if any) authorized by a Participant hereunder, unless
specifically excluded, and the amount of any other
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<PAGE>
pre-tax contributions made by the Company on behalf of the Participant to any
plan established in accordance with section 125 of the Code; but excluding
overtime, bonuses and any amounts the Employee receives with respect to periods
when he is not an Eligible Employee. Notwithstanding the foregoing, for purposes
of calculating Company contributions under Section 4.1 of the Plan,
"Compensation" shall not include any amount paid on account of services
performed prior to the date upon which the Participant's participation in the
Plan commenced.
The annual Compensation for each Participant taken into
account under the Plan shall not exceed $150,000, as adjusted by the Secretary
or his designate at the same time and in the same manner as under section 415(d)
of the Code. In determining the Compensation of a Participant for this
limitation, the rules of section 414(q)(6) of the Code shall apply, except that
in applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year. For purposes of determining who is a
Highly Compensated Employee, Compensation shall mean compensation as defined in
section 414(q)(7) of the Code.
DewEze Plan means the DewEze Profit Sharing Plan as in effect
on June 30,1995, which merged with and into this Plan effective as of July 1,
1995.
Disability means a physical or mental condition which, in the
judgment of the Committee, based upon medical reports and other evidence
satisfactory to the Committee, presumably permanently prevents an Employee from
satisfactorily performing his usual duties for the Company or the duties of such
other position or job which the Company makes available to him and for which
such Employee is qualified by reason of his training, education or experience.
-6-
<PAGE>
Discretionary Matching Employer Contributions means the
amounts attributable to discretionary matching contributions transferred from
the Great Bend Plan and such other contributions made pursuant to Section
4.1(b)(ii) of the Plan.
Effective Date means May 1, 1995, which is the date on which
the provisions of this Plan generally become effective.
Elective Deferral Contribution Account means the account
maintained for a Participant to record his share of Elective Deferral
Contributions under Section 5.2(b)(i) and adjustments relating thereto.
Elective Deferral Contributions means the contributions made
by the Company on a Participant's behalf pursuant to Section 4.1(a).
Eligible Employee means as of each Entry Date, each Employee
who is eligible to participate in the Plan pursuant to Section 3.1.
Employee means an individual who is employed by the Company
and with respect to whom the Company is required to withhold taxes from
remuneration paid to such individual by the Company for personal services
rendered to the Company, including any officer or director who shall so qualify
and any individual who is deemed to be a "leased employee" within the meaning of
section 414(n)(2) of the Code. The term Employee excludes any person who is
included in a unit of employees covered by a collective bargaining agreement
which does not provide for his membership in the Plan if the issue of retirement
benefits has been a subject of collective bargaining.
Employer Contribution Account means the account consisting of
a Participant's Elective Deferral Contribution Account, Matching Contribution
Account, Supplemental
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Contribution Account, Qualified Matching Contribution Account and Qualified
Supplemental Contribution Account.
Entry Date means January 1, April 1, July 1 and October 1 of
each year.
ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time, including any regulations promulgated
thereunder.
Excess Aggregate Contributions means with respect to any Plan
Year, the excess of the aggregate amount of Matching Contributions taken into
account for Highly Compensated Employees for such Plan Year over the maximum
amount of Matching Contributions permitted for Highly Compensated Employees
under subsection (i) or (ii) as applicable of Section 4.5(a) (determined by
reducing contributions made on behalf of Highly Compensated Employees in order
of their contribution percentages commencing with the highest such contribution
percentage).
Excess Aggregate Deferrals means with respect to each Plan
Year, the excess of the aggregate amount of Elective Deferral Contributions
authorized to be made by Highly Compensated Employees for such Plan Year over
the maximum amount of Elective Deferral Contributions permitted to be made by
Highly Compensated Employees under subsection (i) or (ii) as applicable of
Section 4.6(a) (determined by reducing Elective Deferral Contributions made by
Highly Compensated Employees in order of their deferral percentages commencing
with the highest such deferral percentage).
Family Member means an individual described in section
414(q)(6)(B) of the Code.
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Fiduciary means any individual who is designated as a
fiduciary by the Company or by law, but only with respect to the specific
responsibilities of each with respect to Plan and Trust administration.
Forfeiture means the portion of a Participant's Matching
Contribution Account, Merged Account and Supplemental Contribution Account
forfeited as a result of a Termination of employment before full vesting under
Section 6.3.
Former Participant means any former Employee who has a balance
remaining in his Employer Contribution Account, Merged Account, Voluntary
Contribution Account or Rollover Account as of the close of any Plan Year.
Great Bend Employer Contribution Account means the account
maintained on behalf of a Participant employed by Great Bend Manufacturing Co.,
Inc. to record the amounts, if any, attributable to Discretionary Matching
Employer Contributions.
Great Bend Plan means the Great Bend Manufacturing Co., Inc.
Employee Retirement Plan as in effect on December 31, 1996 which was merged with
and into this Plan effective January 1, 1997.
Highly Compensated Employee means:
(a) An Eligible Employee who performs service during
the determination year and is described in one or more of the following groups:
(i) An Employee who is a 5% owner, as
defined in Code section 416(i)(1)(A)(iii), at any time during the determination
year or the look-back year.
(ii) An Employee who receives compensation
in excess of $75,000 (indexed in accordance with Code section 415(d)) during the
look-back year.
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(iii) An Employee who receives compensation
in excess of $50,000 (indexed in accordance with Code section 415(d)) during the
look-back year and is a member of the top-paid group for the look-back year.
(iv) An Employee who is an officer, within
the meaning of Code section 416(i), during the look-back year and who receives
compensation in the look-back year greater than 50% of the dollar limitation in
effect under Code section 415(b)(1)(A) for the calendar year in which the
look-back year begins.
(v) An Employee who is both described in
paragraph (ii), (iii) or (iv) above when these paragraphs are modified to
substitute the determination year for the look-back year and one of the 100
Employees who receive the most compensation from the employer during the
determination year.
(b) For purposes of the definition of Highly
Compensated Employee, the following definitions and rules shall apply:
(i) The determination year is the Plan Year
for which the determination of who is highly compensated is being made.
(ii) The look-back year is the Plan Year for
purposes of determining Highly Compensated Employees under this Plan and under
all other plans or arrangements maintained by the Employer for which such
determination is required in accordance with section 414(q) of the Code and the
applicable regulations.
(iii) The top-paid group consists of the top
20% of employees ranked on the basis of compensation received during the year.
For purposes of determining the
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number of employees in the top-paid group, employees described in Code section
414(q)(8) and Treas. Reg. ss.1.414(q)-1T, Q&A 9(b) are excluded.
(iv) The number of officers is limited to 50
(or, if lesser, the greater of 3 employees or 10% of employees) excluding those
employees who may be excluded in determining the top-paid group.
(v) When no officer has compensation in
excess of 50% of the Code section 415(b)(1)(A) limit, the highest paid officer
is treated as highly compensated.
(c) For purposes of the definition of Highly
Compensated Employee, compensation is compensation within the meaning of Code
section 415(c)(3), including elective or salary reduction contributions to a
cafeteria plan, cash or deferred arrangement or tax-sheltered annuity.
(i) Employers aggregated under Code sections
414(b), (c), (m), or (o) are treated as a single employer.
(d) A Highly Compensated Employee who is either a 5%
owner or one of the ten most highly compensated employees is subject to the
family member aggregation rules of Code section 414(q)(6). "Family member" for
this purpose shall mean the spouse and the lineal ascendants and descendants
(and spouses of such ascendants and descendants) of any employee or former
employee.
Hours of Service means:
(a) Performance of Duties. The actual hours for which
an Employee is paid or entitled to be paid for the performance of duties by the
Company.
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(b) Nonworking Paid Time. Each hour for which an
Employee is paid or entitled to be paid by the Company on account of a period of
time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity, disability, layoff, jury duty, military duty or leave of absence;
provided, however, no more than 501 Hours of Service shall be credited to an
Employee on account of any single continuous period during which he performed no
duties; and provided further that no credit shall be given for payments made or
due under a plan maintained solely for the purpose of complying with applicable
workmen's or unemployment compensation or disability insurance laws or for
payments which solely reimburse an Employee for medical or medically related
expenses incurred by the Employee.
(c) Maternity, Paternity and FMLA Leave. Solely for
purposes of determining whether a One-Year Break in Service has occurred for
eligibility to participate or vesting, each hour for which an Employee is absent
from employment by reason of (1) pregnancy of the Employee, (2) birth of a child
of the Employee, (3) placement of a child with the Employee in connection with
the adoption of the child by an individual or (4) caring for the child during
the period immediately following the birth or placement for adoption. Hours of
Service shall also for these limited purposes include each Hour for which an
Employee who has worked for the Company or an Affiliate for at least 12 months
and for at least 1,250 Hours of Service during the year preceding the start of
the leave, is absent from employment on an unpaid family leave for up to 12
weeks, as provided for in the Family and Medical Leave Act of 1993 (the "FMLA
Leave"), by reason of (1) the birth or adoption of a child, (2) the care of a
spouse, child or parent with a serious health condition, or (3) his or her own
serious health condition, provided
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that such an Employee provides the Company with a 30-day advance notice if the
leave is foreseeable, and/or medical certification satisfactory to support his
or her request for leave because of a serious health condition. For purposes of
determining whether an Employee's leave qualifies as a "FMLA Leave" in order to
be credited with Hours of Service under this Plan, the Family and Medical Leave
Act of 1993 and the regulations promulgated thereunder shall apply. During the
period of absence, the Employee shall be credited with the number of hours that
would be generally credited but for such absence or if the general number of
work hours is unknown, eight Hours of Service for each normal workday during the
leave (whether or not approved). These hours shall be credited to the
computation period in which the leave or absence commences if crediting of such
hours is required to prevent the occurrence of a One-Year Break in Service in
such computation period, and in all other cases in the immediately following
computation period. The computation period shall be the Plan Year. Unless
otherwise required under the FMLA and the regulations promulgated thereunder, no
more than 501 Hours of Service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours of Service credited under this subsection (c) shall
not be credited for purposes of sharing in Company contributions pursuant to
Section 5.2(b).
(d) Back Pay. Each hour for which back pay,
irrespective of mitigation of damages, is either awarded or agreed to by the
Company; provided, however, Hours of Service credited under paragraphs (a), (b)
and (c) above shall not be reaccredited by operation of this paragraph.
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(e) Equivalencies. The Committee shall have the
authority to use an equivalency method for counting Hours of Service for
performance of duties by non-hourly Employees based on a semi-monthly payroll
period. Pursuant to Department of Labor Regulation ss.2530.200b-3(e), an
Employee shall be credited with 95 hours of service for each semi-monthly
payroll period for which the Employee would be required to be credited with at
least one Hour of Service under Department of Labor Regulation ss.2530.200b-2.
(f) Miscellaneous.
(i) Unless the Committee directs otherwise,
the methods of determining Hours of Service when payments are made for other
than the performance of duties and of crediting such Hours of Service to Plan
Years set forth in Department of Labor Regulations ss.2530.200b-2(b) and (c)
promulgated by the Secretary of Labor shall be used hereunder and are
incorporated by reference into the Plan.
(ii) Participants on military leaves of
absence who are not directly or indirectly compensated or entitled to be
compensated by the Company while on such leave shall be credited with Hours of
Service as required by Section 9 of the Military Selective Service Act.
(iii) Notwithstanding any other provision of
this Plan to the contrary, an Employee shall not be credited with Hours of
Service more than once with respect to the same period of time.
Income means the net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities,
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other investment transactions and expenses paid from the Trust Fund. In
determining the Income of the Trust Fund for any period, assets shall be valued
on the basis of their fair market value.
Investment Manager means an investment adviser, bank or
insurance company, meeting the requirements of section 3(38) of ERISA, appointed
by the Company to manage the Plan's assets in accordance with the Trust
agreement.
Landover Plan means the Landover Company Money Purchase
Pension Plan as in effect on June 30, 1995, which merged with and into this Plan
effective as of July 1, 1995.
Limitation Year means the Plan Year.
Matching Contribution Account means the account maintained for
a Participant to record his share of Matching Contributions under Section
5.2(b)(ii) and adjustments relating thereto.
Matching Contributions means the contributions made by the
Company pursuant to Section 4.1(b).
Merged Account means the account maintained on behalf of a
Participant to record the amounts, if any, other than Voluntary Contributions,
previously contributed to a Merged Plan.
Merged Plan means the Landover Plan, the Owosso Plan and the
DewEze Plan, as the case may be.
Nonhighly Compensated Employee means an Eligible Employee who
is neither a Highly Compensated Employee nor a Family Member.
Normal Retirement Date means the first day of the month
coinciding with or next following the Participant's 65th birthday.
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One-Year Break in Service or Break in Service means a Plan
Year during which an Employee has not completed more than 500 Hours of Service
with the Company.
Owosso Plan means the Owosso Corporation Money Purchase
Pension Plan as in effect on June 30, 1995, which merged with and into this Plan
effective as of July 1, 1995.
Owosso Stock means the common stock of Owosso Corporation.
Participant means a person who has become covered by the Plan
in accordance with the provisions of Article 3 and whose participation has not
terminated hereunder.
Plan means the Owosso Corporation 401(k) Savings Plan, as
amended or restated from time to time.
Plan Year means the 12 consecutive month period commencing
January l and ending December 31; provided, however, that the first Plan Year
shall be a short Plan Year beginning May 1, 1995 and ending December 31, 1995.
Qualified Matching Contribution Account means the account
maintained for a Participant to record his share of Qualified Matching
Contributions under Section 5.2(b)(iv) and adjustments relating thereto.
Qualified Matching Contributions means matching contributions
made by the Company to the Plan on behalf of Participants pursuant to Section
4.1(d) for the purpose of satisfying the Actual Deferral Percentage Test.
Qualified Supplemental Contribution Account means the account
maintained for a Participant to record his share of Qualified Supplemental
Contributions under Section 5.2(b)(v) and adjustments relating thereto.
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Qualified Supplemental Contributions means a contribution made
by the Company to the Plan on behalf of Participants pursuant to Section 4.1(d)
for the purpose of satisfying the Actual Contribution Percentage Test and/or the
Actual Deferral Percentage Test.
Retirement means Termination of employment with the Company at
or after Normal Retirement Date.
Rollover Account means the account maintained on behalf of a
Participant to record the amounts, if any, rolled over to this Plan from another
qualified plan pursuant to Section 6.9, and adjustments relating thereto.
Spouse (Surviving Spouse) means the person to whom a
Participant is legally married; provided, that a former spouse will be treated
as the spouse or surviving spouse to the extent provided under a qualified
domestic relations order as described in section 414(p) of the Code.
Supplemental Contribution Account means the account maintained
for a Participant to record his share of Supplemental Contributions under
Section 5.2(b)(iii) and adjustments relating thereto.
Supplemental Contributions means the contributions made by the
Company pursuant to Section 4.1(c).
Terminated or Termination means a termination of employment
with the Company or with an Affiliate for any reason other than the transfer of
employment from the Company to an Affiliate or from an Affiliate to another
Affiliate.
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Trust (or Trust Fund) means the trust instrument approved by
the Company and the Trustee and such additional and successor trust instruments
or other agreements as may be executed for purposes of providing a vehicle for
investment of the assets of the Plan.
Trustee or Trustees means any corporation or individuals
appointed by the Board of Directors of the Company to administer the Trust.
Valuation Date means each day of the Plan Year as of which
assets of the Trust are valued, and for purposes of the Owosso Stock Fund, the
last business day of each Calendar Quarter.
Voluntary Contribution Account means the account maintained
for a Participant to record his Voluntary Contributions, if any, previously made
to a Merged Plan.
Year of Service means the service credited to a Participant
under Section 3.4 of the Plan for the purpose of determining such Employee's
vested percentage in his Matching Contribution Account, Merged Account and
Supplemental Contribution Accounts. In addition, an Employee who was employed by
the Company or an Affiliate on July 1, 1995 shall be credited with one Year of
Service for each Plan Year of his last period of continuous employment with the
Company or the Affiliate (starting on the date it became an Affiliate) prior to
July 1, 1995 during which he was credited with at least 1,000 Hours of Service
with the Company or Affiliate, to the extent the Employee was credited with such
service under a Merged Plan.
2.2. Construction; Headings. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender, unless
the context clearly indicates to the contrary. References to the singular, where
appearing in the Plan, shall be deemed to include the
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plural, unless the context clearly indicates to the contrary. Titles of Sections
are inserted for convenience of reference only and shall not affect the meaning
or construction of the Plan.
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ARTICLE 3
PARTICIPATION AND SERVICE
3.1. Eligibility to Participate.
(a) Each Employee of Sooner Trailer Manufacturing Co.
who, as of May 1, 1995, is regularly scheduled to work 30 or more hours per week
shall be eligible to become a Participant in the Plan on the Effective Date. Any
Employee who was a Participant in a Merged Plan as of June 30, 1995 shall
continue as a Participant in this Plan as of July 1, 1995. Any Employee who was
a Participant in the Great Bend Plan as of December 31, 1996 shall continue as a
Participant in this Plan as of January 1, 1997. Each other Employee shall be
eligible to become a Participant in the Plan on the later of (1) the date on
which he first completes 1,000 Hours of Service with the Company during an
eligibility computation period, or (2) July 1, 1995; provided, however, that if
such Employee is not credited with 1,000 Hours of Service during his initial
eligibility computation period (as defined in (b) below), such Employee shall be
eligible to become a Participant as of the date on which he is credited with at
least 1,000 Hours of Service during any succeeding eligibility computation
period.
(b) An Employee's initial eligibility computation
period shall be the twelve consecutive month period beginning with the date the
Employee first performs an Hour of Service with the Company. Thereafter, the
eligibility computation period of an Employee shall be the Plan Year that
includes the first anniversary of the date of his first Hour of Service.
(c) Notwithstanding the foregoing, (1) an Employee
who is a "leased employee" within the meaning of section 414(n) of the Code
shall not be eligible to participate in this Plan; (2) an Employee whose
employment is covered under the terms of a collective
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bargaining agreement that does not provide for participation herein shall not be
eligible to participate in this Plan; and (3) Employees who are neither United
States citizens nor resident aliens shall not be eligible to participate in this
Plan, unless specifically included by a duly adopted resolution of the Board.
3.2. Commencement of Participation. Each Employee who has
satisfied the requirements of Section 3.1 shall commence participation in the
Plan on the Entry Date coinciding with or next following the date he satisfies
such eligibility requirements; provided, however, that Sooner Trailer
Manufacturing Co. Employees who, as of May 1, 1995, are eligible to participate
pursuant to Section 3.1 shall commence participation in the Plan on May 1, 1995.
3.3. Cessation of Participation. An Employee shall cease to be
eligible to participate hereunder upon the earlier of (i) the date on which he
retires under the Retirement provisions of the Plan or (ii) the date on which
his employment with the Company Terminates for any other reason, including death
or Disability.
3.4. Years of Service.
(a) Each Participant shall have his vested interest
in his Matching Contribution Account, Merged Account, Supplemental Contribution
Account and Great Bend Employer Contribution Account calculated based on his
Years of Service. Subject to the reemployment provisions of Section 3.6, each
Participant or Employee shall be credited with a Year of Service for vesting
purposes for each Plan Year in which he is credited with at least 1,000 Hours of
Service.
(b) Except as provided in Article 13, if a
Participant fails to complete in any Plan Year at least 1,000 Hours of Service
for any reason other than Retirement, Disability
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or death, that Plan Year shall not be considered as a Year of Service for the
purpose of determining the Participant's vested interest in accordance with
Section 6.3, but the Participant's Employer Contribution Account, Merged
Account, Voluntary Contribution Account and Rollover Account shall continue to
receive Income allocations in accordance with Section 5.2(a). In the event such
Participant completes at least 1,000 Hours of Service in a subsequent Plan Year,
such subsequent Plan Year shall be considered as a Year of Service for the
purpose of determining the Participant's vested interest in accordance with
Section 6.3.
(c) With respect to any Participant who was a
participant in the Great Bend Plan, Years of Service credited under the Great
Bend Plan shall be credited under this Plan; provided, however, that in no event
shall that Participant's vested interest under Section 6.3 be less than that
Participant's vested interest under the Great Bend Plan.
3.5. Special Rules for Participation and Vesting. For purposes
of determining an Employee's eligibility to participate in the Plan pursuant to
Section 3.1 and for purposes of determining a Participant's vested interest in
his Matching Contribution Account, Merged Account and Supplemental Contribution
Accounts pursuant to Section 6.3, Hours of Service shall include an Employee's
Hours of Service (i) with an Affiliate after it became an Affiliate hereunder;
(ii) while a "leased employee" (as defined in section 414(n) of the Code) with
the Company or an Affiliate after it became an Affiliate; or (iii) while an
Employee whose employment is covered under the terms of a collective bargaining
agreement that does not provide for participation in this Plan.
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3.6. Participation and Service upon Reemployment. Upon the
reemployment of any person who had previously been employed by the Company, the
following rules shall apply in determining his participation in the Plan and his
Years of Service under Section 3.5:
(a) Participation. If the reemployed Employee was not
a Participant in the Plan or a Merged Plan during his prior period of
employment, he must meet the requirements of Section 3.1 for participation in
the Plan as if he were a new Employee. If, however, that Employee had satisfied
the eligibility requirements of Section 3.1 but was not a Participant in the
Plan, he shall commence participation on the later of his date of reemployment
or the first Entry Date following his satisfaction of the requirements of
Section 3.1.
If the reemployed Employee was a Participant in the Plan or a
Merged Plan during his prior period of employment, he shall be entitled to
participate in the Plan on the date of his reemployment.
A reemployed Employee who resumes participation in the Plan on
his date of reemployment will be eligible to (re)commence Elective Deferral
Contributions as of the Entry Date next following his date of reemployment, in
accordance with procedures established by the Committee. (i) Service. A
reemployed Employee or Participant shall continue to be subject to the vesting
schedule set forth in Section 6.3(b), and any Years of Service credited at the
end of his prior period of employment shall be reinstated as of the date of his
reemployment.
3.7. Transfers to Affiliates and Change in Status. A
Participant's status as such under the Plan shall be modified in the manner set
forth below, upon and after the date as of which a Participant (i) is
transferred to an Affiliate; (ii) becomes a "leased employee" as defined
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in section 414(n) of the Code; or (iii) becomes an Employee whose terms of
employment are covered under a collective bargaining agreement that does not
provide for participation in the Plan, in the manner set forth below.
The Participant shall share in Company contributions and
Forfeitures only to the extent of his Compensation up to the time such transfer
or change in status occurs and shall not thereafter share in Company
contributions unless he later is transferred back to the Company or again
becomes an Eligible Employee and becomes eligible under the terms of the Plan to
share in such allocations. No further contributions shall be made to the Plan on
behalf of such Participant unless and until such Participant again becomes an
Eligible Employee. The Participant shall continue to share in Income allocations
pursuant to Section 5.2(a) and his vested percentage, if applicable, shall be
determined pursuant to Section 6.3 by taking into account his continued
employment with the Company or an Affiliate in accordance with the rules set
forth in Section 3.6.
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ARTICLE 4
CONTRIBUTIONS
4.1. Company Contributions.
(a) Elective Deferral Contributions.
(i) Elective Deferral. Subject to the
limitations of Sections 4.6 and 5.3, effective July 1, 1995, each Participant
may execute an election, in writing and in accordance with procedures
established by the Committee, to reduce his Compensation (as determined without
regard to this Section 4.1(a)) received on and after the effective date of the
election through payroll reductions by an amount equal to from one percent (1%)
to fifteen percent (15%), in whole percentages, of his Compensation payable with
respect to any payroll period.
(ii) Dollar Limit. Notwithstanding the
foregoing, the total amount of Elective Deferral Contributions that a
Participant may elect to have contributed by the Company on his behalf pursuant
to 4.1(a)(i) for any Plan Year shall not exceed $9,240 (adjusted to reflect the
cost of living adjustment factor prescribed by the Secretary of the Treasury or
his designate under section 415(d) of the Code for Plan Years beginning after
December 31, 1995).
(iii) Change in Amount of Elective Deferral
Contributions. Upon at least thirty (30) days' written notice to the Committee,
each Participant may elect to change the amount of Elective Deferral
Contributions he has authorized the Company to contribute to the Plan on his
behalf pursuant to Section 4.1(a)(i), in accordance with the rules established
therefor by the Committee. Such election shall become effective as of the Entry
Date
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next following the date on which the Participant makes the election.
Notwithstanding the foregoing, a Participant may authorize the Company to cease
making Elective Deferral Contributions on his behalf at any time, upon written
notice to the Committee. Elective Deferral Contributions shall cease as soon as
administratively feasible following such election. A Participant who has ceased
making Elective Deferral Contributions may again authorize Elective Deferral
Contributions to be made to the Plan on his behalf as of any subsequent Entry
Date following a suspension period of at least twelve months (or at such other
times as the Committee may determine), upon at least 30 days' advance written
notice on a form provided by the Committee for such purpose.
(iv) Distribution of Elective Deferral
Contributions in Excess of Code section 402(g) Limitations. In the event that a
Participant's Elective Deferral Contributions for any calendar year exceed
$9,240 (adjusted by the Secretary of the Treasury or his delegate for Plan Years
beginning after December 31, 1995) the Committee shall reduce the percentage
designated pursuant to this Section 4.1(a), in a manner prescribed by the
Committee, to the extent necessary to ensure compliance with this limitation,
and shall return any such excess (and any Income allocable thereto) to the
Participant no later than April 15 of the year following the Participant's
taxable year in which the excess was contributed. In the event that a
Participant is also a participant in another qualified cash or deferred
arrangement (as defined in Code section 401(k)), a simplified employee pension
(as defined in Code section 408(k)), or a salary reduction arrangement (within
the meaning of Code section 3121(a)(5)(D)), and the elective deferrals (as
defined in Code section 402(g)(3)) made under such other arrangement(s) and this
Plan cumulatively exceed $9,240 (adjusted pursuant to applicable Treasury
Regulations for Plan
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Years beginning after December 31, 1995) for the Participant's taxable year,
then the Participant must, not later than March 1 following the close of that
taxable year, inform the Committee of the excess by a written notice containing
such representations, and, subject to such conditions and agreements as the
Committee may reasonably require, request that his Elective Deferral
Contributions under this Plan be reduced by an amount specified by him. The
Participant shall be deemed to have notified the Committee of such excess to the
extent any such excess is calculated by taking into account only a Participant's
Elective Deferral Contributions under this Plan and any elective deferrals (as
defined in Code section 402(g)(3)) under any other plans maintained by the
Company. Such excess (and any Income allocable thereto) shall be distributed not
later than April 15 of the taxable year following the year in which the Elective
Deferral Contributions were made. Any Matching Contributions (and earnings
thereon) attributable to Elective Deferral Contributions which are returned to a
Participant under this Section 4.1(a)(iv) shall be forfeited and allocated to
the Accounts of other Participants pursuant to Section 5.2(c). The amount to be
distributed under this Section 4.1(a)(iv) shall be reduced by any amount distri
buted under Section 4.6 and the amount to be distributed under Section 4.6 shall
be reduced by any amount distributed under this Section 4.1(a)(iv).
(b) Matching Contributions.
(i) Effective July 1, 1995, the Company
shall contribute for each Plan Year for each Participant who authorizes Elective
Deferral Contributions an amount as determined by the Board of Directors in its
sole discretion in advance of and with respect to such Plan Year. The
determination of the amount of such contribution shall be made pursuant to a
duly adopted resolution prior to the beginning of the Plan Year for which such
contribution is to
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be made. The amount of such contribution shall not exceed the maximum amount
allowable as a deduction by the Company under the Code for such Plan Year and
shall be subject to the limitations of Sections 5.3 and 4.5. The amount of the
Matching Contributions set forth in the first sentence of this Section 4.1(b)(i)
may be prospectively amended by a duly adopted resolution of the Board of
Directors. Notwithstanding the foregoing, this Section 4.1(b)(i) shall not apply
with respect to any Participant directly employed by the Great Bend
Manufacturing Company, Inc.
(ii) Effective January 1, 1997, the Company
shall contribute for each Plan Year for each Participant directly employed by
the Great Bend Manufacturing Company, Inc. who authorizes Elective Deferral
Contributions an amount, not to exceed 4% of such Participant's Compensation, as
determined by the Board of Directors in its sole discretion in advance of and
with respect to such Plan Year. The amount of such contribution shall not exceed
the maximum amount allowable as a deduction by the Company under the Code for
such Plan Year and shall be subject to the limitations of Sections 5.3 and 4.5.
The amount of the Matching Contribution set forth in the first sentence of this
Section 4.1(b)(ii) may be prospectively amended by a duly adopted resolution of
the Board of Directors
(c) Supplemental Contributions. The Company shall
contribute for each Plan Year an amount equal to three percent (3%) of the
Compensation of Participants for such Plan Year, which contribution shall be
reduced, however, by any amounts forfeited from the accounts of Participants.
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(d) Qualified Contributions. The Company may make a
Qualified Matching Contribution and/or a Qualified Supplemental Contribution to
the Plan, as determined by the Board of Directors in its sole discretion. The
amount of such contributions, if any, shall be determined by the Board of
Directors. Such contributions may be made on behalf of all Participants or only
on behalf of Participants who are Nonhighly Compensated Employees, as determined
by the Board of Directors. The determination of the amount of such
contribution(s) and, respecting Qualified Supplemental Contributions, whether
such contribution shall be applied to satisfy the Actual Contribution Percentage
Test set forth in Section 4.5 or the Actual Deferral Percentage Test set forth
in Section 4.6, or both, shall be made pursuant to a duly adopted resolution
prior to the date prescribed by law, including extensions therefor, for filing
the Company's federal income tax return for the Company's fiscal year which
includes or coincides with such Plan Year. Such resolution also shall specify
the Plan Year on account of which the contribution will be made. The amount of
such contribution shall not exceed the maximum amount allowable as a deduction
by the Company under the Code for such Plan Year and shall be subject to the
limitations of Section 5.3.
4.2. Time and Manner of Contributions. All Company
contributions shall be paid directly to the Trustee. Elective Deferral
Contributions withheld pursuant to Section 4.1(a)(i) for any Plan Year shall be
transmitted by the Company to the Trustee as soon as practicable following the
payroll period of withholding, but in no event later than 90 days following the
end of the payroll period for which such Elective Deferral Contribution is being
made (or such later date as permitted in regulations issued by the Secretary of
the Treasury or his delegate). Matching Contributions, Supplemental
Contributions, Qualified Matching Contributions and
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Qualified Supplemental Contributions for any Plan Year shall be transmitted
directly to the Trustee not later than the date prescribed by law for filing the
Company's federal income tax return, including extensions, for such Plan Year.
Amounts rolled over or transferred to a Participant's Rollover Account shall be
transmitted to the Trustee as soon as practicable following the date on which
the amount is rolled over or transferred to the Plan, but in no event later than
30 days after the date the amount is rolled over or transferred to the Plan.
4.3. Conditions on Company Contributions. To the extent
permitted or required by ERISA and the Code, contributions under this Plan are
subject to the following conditions:
(a) If the Company makes a contribution, or any part
thereof, by mistake of fact, such contribution or part thereof shall be returned
to the Company within one year after such contribution is made;
(b) Contributions to the Trust Fund are specifically
conditioned on the initial qualification of the Plan under the Code; in the
event the Plan is determined to be disqualified, contributions made in respect
of any period subsequent to the effective date of such disqualification shall be
returned to the Company within one year after the effective date of
disqualification;
(c) Contributions to the Plan are specifically
conditioned upon their deductibility under the Code; to the extent a deduction
is disallowed for any such contribution, such amount shall be returned to the
Company within one year after the disallowance of the deduction; and
(d) The amount of any Company contribution shall be
subject to the limitations prescribed in Section 5.3.
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4.4. Contributions by Participants. Participants are neither
required nor permitted to make after-tax contributions to the Plan on their own
behalf.
4.5. Limitations on Matching Contributions.
(a) The amount of Matching Contributions made in each
Plan Year of all eligible Participants under the Plan shall comply with either
(i) or (ii) below:
(i) The Actual Contribution Percentage for
Highly Compensated Employees shall not exceed the Actual Contribution Percentage
for Non-Highly Compensated Employees multiplied by 1.25.
(ii) (A) The excess of the Actual
Contribution Percentage for Highly Compensated Employees over the Actual
Contribution Percentage for Non-Highly Compensated Employees shall not exceed
two percentage points; and
(B) The Actual Contribution Percentage
for Highly Compensated Employees shall not be greater than the Actual
Contribution Percentage of Non-Highly Compensated Employees multiplied by 2.0
(or such lesser amount as the Secretary of the Treasury shall prescribe to
prevent the multiple use of this limitation with respect to any Highly
Compensated Employee).
(b) For purposes of this Section 4.5, Family Members
shall be aggregated in accordance with section 401(k) of the Code.
(c) For purposes of this Section 4.5, the Actual
Contribution Percentage for any Highly Compensated Employee who is eligible to
have matching and voluntary contributions allocated to his account under two or
more plans or arrangements described in section 401(a) or 401(k) of the Code
that are maintained by the Company or an
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Affiliate shall be determined as if all such matching and voluntary
contributions were made under a single plan.
(d) If this Plan is aggregated with any other plan or
plans for purposes of satisfying sections 401(a) or 410(b), then matching and
voluntary contributions made under all such plans shall be treated as having
been made under a single plan for purposes of this Section 4.5.
(e) In order to satisfy the Actual Contribution
Percentage Test, the Company may make a Qualified Supplemental Contribution,
pursuant to Section 4.1(d). Such contribution(s) shall be aggregated with the
Matching Contributions in accordance section 401(m) of the Code.
(f) If the amount of Matching Contributions made on
behalf of Highly Compensated Employees in a Plan Year would not comply with
either (i) or (ii) of Section 4.5(a), and the Company does not make a Qualified
Supplemental Contribution, then by the last day of the following Plan Year, the
Excess Aggregate Contributions for such Plan Year (including any Income
attributable to such contributions) shall be distributed to Highly Compensated
Employees on the basis of the respective portions of such Excess Aggregate
Contributions attributable to each such Highly Compensated Employee.
4.6. Limitations on Elective Deferral Contributions.
(a) The amount of Elective Deferral Contributions
made in each Plan Year of all eligible Participants under the Plan shall comply
with either (i) or (ii) below:
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(i) The Actual Deferral Percentage for
Highly Compensated Employees shall not exceed the Actual Deferral Percentage for
Non-Highly Compensated Employees multiplied by 1.25.
(ii) (A) The excess of the Actual Deferral
Percentage for Highly Compensated Employees over the Actual Deferral Percentage
for Non-Highly Compensated Employees shall not exceed two percentage points; and
(B) The Actual Deferral Percentage for
Highly Compensated Employees shall not be greater than the Actual Deferral
Percentage of Non-Highly Compensated Employees multiplied by 2.0 (or such lesser
amount as the Secretary of the Treasury shall prescribe to prevent the multiple
use of this limitation with respect to any Highly Compensated Employee).
(b) For purposes of this Section 4.6, Family Members
shall be aggregated in accordance with section 401(k) of the Code.
(c) For purposes of this Section 4.6, the Actual
Deferral Percentage for any Highly Compensated Employee who is eligible to have
pre-tax contributions allocated to his account under two or more plans or
arrangements described in section 401(k) of the Code that are maintained by the
Company or an Affiliate shall be determined as if all such pre-tax contributions
were made under a single plan.
(d) If this Plan is aggregated with any other plan or
plans for purposes of satisfying sections 401(a) or 410(b), then pre-tax
contributions made under all such plans shall be treated as having been made
under a single plan for purposes of this Section 4.6.
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(e) In order to satisfy the Actual Deferral
Percentage Test, the Company may make a Qualified Matching Contribution and/or a
Qualified Supplemental Contribution, pursuant to Section 4.1(d). Such
contribution(s) shall be aggregated with the Elective Deferral Contributions in
accordance section 401(k) of the Code.
(f) If the amount of Elective Deferral Contributions
authorized by Highly Compensated Employees in a Plan Year would not comply with
either (i) or (ii) of Section 4.6(a), and the Company does not make a Qualified
Matching Contribution or a Qualified Supplemental Contribution, then by the last
day of the following Plan Year, the Excess Aggregate Deferrals for such Plan
Year (including any Income attributable to such deferrals) shall be distributed
to Highly Compensated Employees on the basis of the respective portions of such
Excess Aggregate Deferrals attributable to each such Highly Compensated
Employee. If any amounts have been distributed to any Highly Compensated
Employee for the Plan Year pursuant to Section 4.1(a)(iv), then any amount that
is required to be distributed pursuant to this Section 4.6 shall be reduced by
such amount.
4.7. Income Attributable to Excess Aggregate Contributions and
Excess Aggregate Deferrals. The Income attributable to a Participant's Excess
Aggregate Contributions or Excess Aggregate Deferrals pursuant to Section 4.5 or
4.6 shall be determined by multiplying the Income for the preceding Plan Year
allocable to a Participant's Matching Contributions or Elective Deferral
Contributions, as applicable, by a fraction, the numerator of which is the
Excess Aggregate Contribution or Excess Aggregate Deferral as determined
pursuant to Section 4.5 or 4.6, as applicable, on behalf of the Participant for
the preceding Plan Year and the denominator of which is the sum of (a) the
Participant's account balances attributable to
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Matching Contributions or Elective Deferral Contributions, as applicable, as of
the first day of the preceding Plan Year, and (b) the Participant's Matching
Contributions or Elective Deferral Contributions, as applicable, for the
preceding Plan Year.
Notwithstanding the foregoing, the Income attributable to the
period between the end of the Plan Year and the date such excess is returned
shall be equal to 10% of the Income allocable to Excess Aggregate Contributions
or Excess Aggregate Deferrals, as applicable, for the previous Plan Year
multiplied by the number of months which have elapsed since the last day of the
prior Plan Year. Solely for determining the number of months which have elapsed
for purposes of the preceding sentence, amounts distributed on or before the
15th day of the month will be deemed to have been distributed on the last day of
the preceding month; amounts distributed after the 15th day of the month shall
be deemed distributed on the first day of the next following month.
Income determined by this Section 4.6 shall be distributed in
accordance with Section 4.5 or 4.6, as applicable.
4.8. Other Limitations under Code section 401(m). The limits
in Sections 4.5 and 4.6 shall be adjusted to avoid multiple use of the
alternative limitation (as set forth in Section 4.5(a)(ii) and Section
4.6(a)(ii)) for any Highly Compensated Employee in violation of Code section
401(m)(9).
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ARTICLE 5
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1. Individual Accounts. The Committee shall create and
maintain adequate records to disclose the interest in the Trust of each
Participant, Former Participant and Beneficiary. Such records shall be in the
form of individual accounts and credits, and charges shall be made to such
accounts in the manner herein described. The maintenance of individual accounts
is for accounting purposes only, and a segregation of the assets of the Trust
Fund with respect to each account shall not be required. While such accounts
shall distinguish between Matching Contributions, Elective Deferral
Contributions, Supplemental Contributions, Qualified Matching Contributions and
Qualified Supplemental Contributions, and adjustments relating respectively
thereto, there shall be one account maintained for each Participant reflecting
the Matching Contributions, Elective Deferral Contributions, Supplemental
Contributions, Qualified Matching Contributions and Qualified Supplemental
Contributions made to the Plan by or on behalf of each Participant and
reflecting amounts transferred, merged (including the Merged Account and the
Voluntary Contributions Account) or rolled over to a Participant's Rollover
Account, as applicable. Distributions and withdrawals made from an account shall
be charged to the account as of the date paid.
5.2. Account Adjustments. The accounts of Participants, Former
Participants and Beneficiaries shall be adjusted in accordance with the
following:
(a) Income. The Income of the Trust Fund shall be
allocated as of each Valuation Date to the accounts of Participants, Former
Participants and Beneficiaries who have unpaid balances in their accounts on a
Valuation Date in proportion to the balances in such
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accounts immediately after the preceding Valuation Date, but after first
reducing each such account by any distributions or withdrawals from such
accounts during the interim period.
If a Participant, Former Participant or Beneficiary becomes
entitled to a distribution from his account or accounts during a Plan Year, the
Committee shall instruct the Trustees to determine the Income as of the next
Valuation Date; and the account or accounts of any Participant, Former
Participant or Beneficiary to be distributed as of that Valuation Date shall be
adjusted proportionately to reflect such Income.
(b) Company Contributions. The Company's contribution
for each Plan Year shall be allocated among the Elective Deferral Contribution
Accounts, Matching Contribution Accounts, Supplemental Contribution Accounts,
Qualified Matching Contribution Accounts and Qualified Supplemental Contribution
Accounts of those eligible Participants who had Compensation during the Plan
Year. Allocations under this subsection (b) shall be made as follows:
(i) Elective Deferral Contributions. The
Company's Elective Deferral Contribution for the Plan Year made pursuant to
Section 4.1(a) shall be credited directly to the Elective Deferral Contribution
Account of each Participant who authorized an Elective Deferral Contribution in
accordance with their respective deferral elections.
(ii) Matching Contributions. The Company's
Matching Contribution for the Plan Year made pursuant to Section 4.1(b) shall be
allocated to the Matching Contribution Accounts of each Participant who
authorized Elective Deferral Contributions.
(iii) Supplemental Contributions. Except as
provided below with respect to a Participant who dies, Terminates employment due
to Disability or Retires, the
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Company's Supplemental Contribution for the Plan Year made pursuant to Section
4.1(c) shall be allocated to the Supplemental Contribution Account of each
Participant who has completed at least 1,000 Hours of Service with the Company
during the Plan Year and who was employed by the Company on the last day of the
Plan Year, according to the ratio that each Participant's Compensation for the
Plan Year bears to the Compensation of all Participants for such Plan Year.
Solely for purposes of determining eligibility to receive a Supplemental
Contribution under this clause (iii), in the event a Participant dies,
Terminates employment due to Disability or Retires, such Participant must have
been credited with the same portion of 1,000 Hours of Service as the portion of
the Plan Year prior to death, Disability or Retirement is of the full Plan Year,
but such Participant does not have to be employed by the Company on the last day
of the Plan Year. In the event a Participant dies, Terminates employment due to
Disability or Retires, the Company's Supplemental Contribution for the Plan Year
made pursuant to Section 4.1(c) shall be allocated to the Supplemental
Contribution Account of such Participant only to the extent of such
Participant's Compensation up to the time of his death, Termination of
employment due to Disability or Retirement.
(iv) Qualified Matching Contributions. In
the event that the Company makes a Qualified Matching Contribution for all
Participants, the Company's Qualified Matching Contribution for the Plan Year
made pursuant to Section 4.1(d) shall be allocated to the Qualified Matching
Contribution Accounts of each Participant who elected Elective Deferral
Contributions according to the ratio that each Participant's Elective Deferral
Contributions for the Plan Year bears to the Elective Deferral Contributions
made on behalf of all Participants for such Plan Year. In the event that the
Company makes a Qualified Matching Contribution only on
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behalf of Nonhighly Compensated Employees, then such contribution shall be
allocated to the Qualified Matching Contribution Accounts of each Nonhighly
Compensated Employee who elected Elective Deferral Contributions according to
the ratio that each Nonhighly Compensated Employee's Elective Deferral
Contributions for the Plan Year bears to the Elective Deferral Contributions
made on behalf of all Nonhighly Compensated Employees for such Plan Year.
(v) Qualified Supplemental Contributions. In
the event that the Company makes a Qualified Supplemental Contribution for all
Participants, the Company's Qualified Supplemental Contribution for the Plan
Year made pursuant to Section 4.1(d) shall be allocated to the Qualified
Supplemental Contribution Accounts of each Participant according to the ratio
that each Participant's Compensation for the Plan Year bears to the Compensation
of all Participants for such Plan Year. In the event that the Company makes a
Qualified Supplemental Contribution only on behalf of Nonhighly Compensated
Employees, then such contribution shall be allocated to the Qualified
Supplemental Contribution Accounts of each Nonhighly Compensated Employee
according to the ratio that each Nonhighly Compensated Employee's Compensation
for the Plan Year bears to the Compensation of all Nonhighly Compensated
Employees for such Plan Year.
(c) Forfeitures. As of the end of each Plan Year,
Forfeitures which have become available for general allocation pursuant to
Section 6.4 during such Plan Year shall, subject to Section 14.2, be used to
reduce the amount of Supplemental Contributions made pursuant to Section 4.1(c),
and to the extent of any excess, shall be allocated to the Supplemental
Contribution Account of all Participants who are entitled to share in
Supplemental Contributions for that Plan Year as provided in Section
5.2(b)(iii), according to the ratio that each such
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Participant's Compensation for the Plan Year bears to the total Compensation of
all such Participants for the Plan Year.
(d) Deemed Date of Allocation. All credits or
deductions made under this Article 5 to Participants' accounts shall be deemed
to have been made no later than the last day of the Plan Year though actually
determined thereafter.
5.3. Maximum Additions.
(a) Notwithstanding any other provision of the Plan
to the contrary, the total Annual Additions made to the accounts of a
Participant for any Limitation Year shall not exceed the lesser of $30,000 (or
if greater, one-fourth (1/4) of the defined benefit plan dollar limitation as
defined in section 415(b)(1)(B) of the Code) or 25% of the Participant's
compensation (as defined for purposes of the definition of Annual Additions)
paid to a Participant by the Company or an Affiliate for such Limitation Year.
(b) If such Annual Additions would (if made) exceed
such limitation, then the Elective Deferral Contribution made for that
Limitation Year on behalf of the Participant pursuant to Section 4.1(a) in
excess of the amount on which any Matching Contribution for that Limitation Year
is based shall be returned to such Participant to the extent required to
eliminate such excess.
(c) If after complying with the provisions of
subsection (b) an excess would still exist, then the Company's Matching
Contribution made for that Limitation Year pursuant to Section 4.1(b) shall be
reduced with respect to such Participant to the extent required to eliminate
such excess.
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(d) If after complying with the provisions of
subsections (b) and (c) an excess would still exist, then the remaining Elective
Deferral Contribution made for that Limitation Year on behalf of the Participant
pursuant to Section 4.1(a) shall be returned to such Participant to the extent
required to eliminate such excess.
(e) If after complying with the provisions of
subsections (b), (c) and (d) an excess would still exist, then the Supplemental
Contribution made for that Limitation Year pursuant to Section 4.1(c) shall be
reduced with respect to such Participant to the extent required to eliminate
such excess.
(f) If after complying with the provisions of
subsections (b), (c), (d) and (e) an excess would still exist, the Company's
Qualified Matching Contribution made for that Limitation Year pursuant to
Section 4.1(d) shall be reduced with respect to such Participant to the extent
required to eliminate such excess.
(g) If after complying with the provisions of
subsections (b), (c), (d), (e) and (f) an excess would still exist, the
Company's Qualified Supplemental Contribution made for that Limitation Year
pursuant to Section 4.1(d) shall be reduced with respect to such Participant to
the extent required to eliminate such excess.
(h) If after complying with the provisions of
subsections (b), (c), (d), (e), (f) and (g) an excess would still exist, then
such excess shall remain unallocated and be held in a non-interest bearing
suspense account. Amounts held in such suspense account shall be allocated in
subsequent Limitation Years in accordance with Section 5.2(b)(iii) until the
suspense account is exhausted. No additional Company contributions shall be made
until the suspense account is exhausted.
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(i) The limitation set forth in this Section shall be
applied by aggregating all defined contribution plans maintained by the Company.
5.4. Defined Contribution and Defined Benefit Plans.
Notwithstanding any other provision of the Plan to the contrary, the total
Annual Additions on behalf of a Participant for any Limitation Year shall not
cause the sum of that Participant's defined contribution plan fraction and
defined benefit plan fraction (as those terms are defined below) to exceed 1.0.
If the sum of such fractions would exceed 1.0 for any Limitation Year, the
excess amount will be eliminated first by making appropriate adjustments under
any defined benefit plan maintained by the Company and then under this Plan.
(a) Defined Benefit Plan Fraction: A fraction, the
numerator of which is the sum of the Participant's Projected Annual Benefits (as
defined in Section 5.4(b))under all the defined benefit plans (whether or not
terminated) maintained by the Company and the denominator of which is the lesser
of 125 percent of the dollar limitation in effect for the Plan Year under
section 415(b)(1)(A) of the Code or 140 percent of the Participant's Highest
Average Compensation. Highest Average Compensation shall mean the average
compensation (as defined in Section 2.1 for purposes of Annual Additions) for
the three consecutive Years of Service with the Company that produces the
highest average.
(b) Projected Annual Benefit: The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) to which the Participant would be entitled under the
terms of the plan, assuming:
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(i) the Participant will continue employment
until his social security retirement age under the plan (or current age, if
later), and
(ii) the Participant's compensation for the
current plan year and all other relevant factors used to determine benefits
under the plan will remain constant for all future limitation years.
(c) Defined Contribution Plan Fraction: A fraction,
the numerator of which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not terminated)
maintained by the Company for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's nondeductible
employee contributions to this and all other defined contribution plans, whether
or not terminated, maintained by the Company), and the denominator of which is
the sum of the Maximum Aggregate Amounts for the current and all prior
Limitation Years of Service with the Company (regardless of whether a defined
contribution plan was maintained by the Company). The Maximum Aggregate Amount
in any Plan Year is the lesser of 125 percent of the dollar limitation in effect
under section 415(c)(1)(A) of the Code or 35 percent of the Participant's
compensation (as defined in section 1.415-2(d) of Treasury Regulations, and
limited in accordance with section 401(a)(17) of the Code) for such year.
(d) Company: For purposes of this Section 5.4,
Company shall mean the Company that adopts this Plan and all members of a
controlled group of corporations (as defined in section 414(b) of the Code as
modified by section 415(h) of the Code), all commonly controlled trades or
businesses (as defined in section 414(c) of the Code as modified by section
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415(h) of the Code) or affiliated service groups (as defined in section 414(m)
of the Code), of which the adopting Company is a part.
5.5. No Rights Created by Allocation. Any allocation made and
credited to the account of a Participant, Former Participant or Beneficiary
under this Article shall not cause such Participant, Former Participant or
Beneficiary to have any right, title or interest in or to any assets of the
Trust Fund except at the time or times, and under the terms and conditions,
expressly provided in this Plan.
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ARTICLE 6
PAYMENT OF BENEFITS
6.1. Retirement or Disability. If a Participant's employment
is terminated by reason of his Retirement or Disability, then such Participant
shall be entitled to receive the entire amount credited to his Employer
Contribution Account, Rollover Account, Voluntary Contribution Account and
Merged Account in the manner and at the time provided in Sections 6.5 and 6.6.
6.2. Death. In the event that the Termination of employment of
a Participant is caused by his death, or in the event that a Participant or
Former Participant who is entitled to receive distributions pursuant to Section
6.1 or 6.3 dies prior to receiving the full amount of such distributions, the
entire amount remaining in his Employer Contribution Account, Voluntary
Contribution Account, Merged Account and Rollover Account shall be paid to his
Beneficiary in the manner and at the time provided in Sections 6.5 and 6.6, but
only after receipt by the Committee of acceptable proof of death.
6.3. Other Termination of Employment.
(a) An Employee or Participant shall have a fully
vested and nonforfeitable interest in his Elective Deferral Contribution
Account, Voluntary Contribution Account, Qualified Matching Contribution
Account, Qualified Supplemental Contribution Account and Rollover Account, and
shall have a vested interest in his Matching Contribution Account, Supplemental
Contribution Account and Merged Account, in accordance with the following
schedule based on the Participant's Years of Service:
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Vested Forfeited
Years of Service Percentage Percentage
- ---------------- ---------- ----------
less than 1 year 0% 100%
1 year but less than 2 10% 90%
2 years but less than 3 20% 80%
3 years but less than 4 30% 70%
4 years but less than 5 40% 60%
5 years but less than 6 60% 40%
6 years but less than 7 80% 20%
7 years or more 100% 0%
If a Participant's employment with the Company is Terminated before his Normal
Retirement Date for any reason other than death or Disability, the Participant
shall be entitled to receive the entire amount credited to his Elective Deferral
Contribution Account, Qualified Matching Contribution Account, Qualified
Supplemental Contribution Account, Voluntary Contribution Account and Rollover
Account, and an amount equal to his vested interest in his Matching Contribution
Account, Supplemental Contribution Account and Merged Account, in the manner and
at the time provided in Sections 6.5 and 6.6. Notwithstanding the foregoing, any
Participant who is employed by the Company or an Affiliate upon attainment of
age 65, or terminates employment on account of death or Disability, shall have a
fully vested and nonforfeitable interest in his Matching Contribution Account,
Supplemental Contribution Account, and Merged Account.
(b) An Employee or Participant who was previously a
Participant in the Great Bend Plan shall have a fully vested and nonforfeitable
interest in his Elective Deferral Contribution Account, Voluntary Contribution
Account, Qualified Matching Contribution Account, Qualified Supplemental
Contribution Account, and Rollover Account, and shall have a
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vested interest in his Great Bend Employer Contribution Account in accordance
with the following schedule based on the Participant's Years of Service:
Years of Service Vested Percentage Forfeitable Percentage
- ---------------- ----------------- ----------------------
less than one year 0% 100%
1 but less than 2 20% 80%
2 but less than 3 40% 60%
3 but less than 4 60% 40%
4 but less than 5 80% 20%
5 or more 100% 0%
6.4. Forfeitures. Upon Termination of employment, the
non-vested portion, if any, of a Participant's Matching Contribution Account,
Supplemental Contribution Account, and Merged Account shall be immediately
Forfeited and used to reduce Supplemental Contributions or allocated to
Participants' accounts pursuant to Section 5.2(c), as of the end of the Plan
Year in which the Participant Terminated employment. If the Former Participant
resumes employment covered under the Plan prior to incurring five consecutive
One-Year Breaks in Service and if the Former Participant repays, prior to the
earlier of the date which is five years after the date he is reemployed by the
Company or the close of the first period of five consecutive One-Year Breaks in
Service after the date of distribution, the amount of the distribution, if any,
he received at his previous Termination of employment, the repaid amount plus
the amount Forfeited from his previous Matching Contribution Account,
Supplemental Contribution Account and Merged Account shall be reallocated to the
respective accounts from which they were distributed, and
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shall become the beginning balances of his new accounts under the Plan. The
restoration allocation shall first be made from Forfeitures otherwise available
for the Plan Year of restoration. If Forfeitures are insufficient to allow for
complete restoration, then the restoration allocation shall be made from Company
contributions. If the Former Participant is reemployed prior to incurring five
consecutive One-Year Breaks in Service, but does not repay to the Plan the
amount of distribution he received at his prior termination of employment, prior
to the earlier of the date which is five years after the date he is reemployed
by the Company or the close of the first period of five consecutive One-Year
Breaks in Service after the date of distribution, then a restoration allocation
pursuant to this Section shall not be made. If a Former Participant does not
receive a distribution of the "vested percentage" of his Matching Contribution
Account, Supplemental Contribution Account and Merged Account, and resumes
employment prior to completing five consecutive One-Year Beaks in Service, then
a restoration allocation pursuant to this Section shall be made. If the Former
Participant does not receive a distribution of the "vested percentage" of his
Matching Contribution Account, Merged Account and Supplemental Contribution
Account, and does not return to the employ of the Company prior to incurring
five consecutive One-Year Breaks in Service, any amounts held under such
Accounts that are not forfeited, that are attributable to the Participant's
service prior to the One-Year Breaks in Service and that are not distributed,
shall be fully vested and nonforfeitable at all times notwithstanding any other
provision of this Plan.
6.5. Time of Payment of Benefits.
(a) Subject to a Participant's consent in accordance
with subparagraph (e) of this Section 6.5, distribution to a Participant of his
Employer Contribution Account,
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Voluntary Contribution Account, Merged Account and Rollover Account on account
of Retirement pursuant to Section 6.1 on or after Normal Retirement Date shall
be made as soon as practicable following such Retirement (valued as of the
Valuation Date coincident with such Retirement).
(b) Subject to a Participant's consent in accordance
with subsection (e) of this Section 6.5, a distribution to a Participant of his
Employer Contribution Account, Voluntary Contribution Account, Merged Account
and Rollover Account, on account of Disability pursuant to Section 6.1, shall be
made as soon as practicable following such Disability (valued as of the
Valuation Date coincident with such Disability).
(c) Distribution of a Participant's or Former
Participant's Employer Contribution Account, Voluntary Contribution Account,
Merged Account and Rollover Account payable on account of the death of a
Participant or Former Participant pursuant to Section 6.2 shall commence as soon
as practicable, but no later than five years after such death (valued as of the
Valuation Date coincident with such death); provided, however, that if the
Participant's designated Beneficiary is the Surviving Spouse of such Participant
or Former Participant, such distribution shall not be required to begin prior to
the date on which the Participant or Former Participant would have attained age
70 1/2 (although the Surviving Spouse may elect to receive benefits prior to
this date). Any amount payable to a child pursuant to the death of a Participant
or Former Participant shall be treated as if it were payable to the
Participant's or Former Participant's Surviving Spouse if such amount would
become payable to the Surviving Spouse upon such child reaching majority (or
other designated event permitted by regulations).
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(d) Subject to subsection (e) of this Section, a
distribution to a Participant of his Elective Deferral Contribution Account,
Voluntary Contribution Account, Qualified Matching Contribution Account,
Qualified Supplemental Contribution Account and Rollover Account, and the vested
percentage, if applicable, in his Matching Contribution Account, Supplemental
Contribution Account and Merged Account payable on account of other Termination
of employment pursuant to Section 6.3, shall be made as soon as practicable
following such Termination (valued as of the Valuation Date coincident with such
Termination.)
(e) If the vested percentage of a Participant's
Employer Contribution Account, Merged Account, Voluntary Contribution Account
and Rollover Account balances exceeds $3,500, no distribution from a
Participant's Employer Contribution Account, Merged Account, Voluntary
Contribution Account and Rollover Account may be made prior to a Participant's
Normal Retirement Date (other than as a result of death) without obtaining the
Participant's consent, at such time and in such manner as may be required by the
Code, to such distribution being made prior to his Normal Retirement Date. If
the Former Participant does not consent to such distribution, benefits shall
remain in the Trust Fund and shall continue to receive Income allocations
pursuant to Section 5.2(a). In such event, such benefits shall not be
distributed to the Participant (or his Beneficiary) until the Valuation Date
coincident with his Normal Retirement Date, or his death, if sooner, (valued as
of such Valuation Date).
(f) Except as required under subsection (g) of this
Section 6.5, and unless the Participant or Former Participant elects otherwise,
payment of benefits under this Plan shall commence not later than sixty (60)
days after the close of the Plan Year in which the latest of the following
events occurs: (a) the Participant or Former Participant attains age 65; (b) the
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tenth (10th) anniversary of the Plan Year in which the Participant or Former
Participant commenced participation in the Plan; or (c) the Termination of the
Participant's service with the Company.
(g) Distribution of benefits to a Participant or
Former Participant who attains age 70 1/2 after December 31, 1987 must commence
no later than April 1 of the calendar year following the calendar year in which
the Participant or Former Participant attains age 70 1/2.
Distribution of benefits to a Participant or Former
Participant who attained age 70 1/2 before January 1, 1988 and is not a
five-percent owner must commence no later than April 1 of the calendar year
following the calendar year in which the Participant or Former Participant
attained age 70 1/2, or the calendar year following the calendar year in which
the Participant or Former Participant retires, if later.
For a Participant or Former Participant who attained age 70
1/2 prior to January 1, 1988 and is a five-percent owner, distribution must
commence no later than April 1 of the calendar year following the later of:
(i) the calendar year in which the
Participant or Former Participant attained age 70 1/2 or
(ii) the earlier of:
(I) the calendar year with or
within which ends the Plan Year in which the
Participant or Former Participant became a
five percent owner or
(II) the calendar year in which the
Participant or Former Participant retires.
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For purposes of this section, a Participant or Former
Participant is considered a five-percent owner if the Participant or Former
Participant is a five-percent owner (as defined in section 416(i) of the Code)
at any time following the date on which the Participant or Former Participant
attains age 66 1/2, even if the Participant or Former Participant subsequently
ceases to be a five-percent owner. Distributions under this Section will be made
in accordance with section 401(a)(9) of the Code.
6.6. Mode of Payment of Benefits.
(a) Any amount to which a Participant shall become
entitled hereunder shall be distributed to him in a lump sum cash payment,
except as provided in Appendix A hereto; provided, however, shares of Owosso
Stock shall be distributed in kind.
(b) If a Participant or Former Participant dies
before his benefits commence to be paid to him, any amount to which a
Beneficiary shall become entitled hereunder shall be distributed to him in a
lump sum.
(c) All distributions pursuant to this Section shall
be made in cash, securities or other property, or in a combination thereof, as
the Trustees, to the extent permitted by the Code, may determine, and as
uniformly applied to a given class of accounts.
6.7. Designation of Beneficiary. Each Participant or Former
Participant from time to time may designate any person or persons (who may be
designated contingently or successively and who may be an entity other than a
natural person) as his Beneficiary or Beneficiaries to whom his Plan benefits
are to be paid if he dies before receipt of all such benefits. Each Beneficiary
designation shall be made on a form prescribed by the Committee and will be
effective only when filed with it during the Participant's or Former
Participant's lifetime.
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Each Beneficiary designation filed with the Committee will cancel all
Beneficiary designations previously filed with it by that Participant or Former
Participant. The revocation of a Beneficiary designation, no matter how
effected, shall not require the consent of any designated Beneficiary.
If any Participant or Former Participant fails to designate a
Beneficiary in the manner provided above, or if the Beneficiary designated dies
before such Participant's or Former Participant's death or before complete
distribution of the benefits payable hereunder, such benefits shall be paid in
the following order of priority: first, to the Participant's or Former
Participant's Surviving Spouse, if any; second, to the Participant's or Former
Participant's surviving children, if any, in equal shares; third, to the estate
of the last to die of such Participant or Former Participant and his Beneficiary
or Beneficiaries.
Notwithstanding the foregoing, the Surviving Spouse of a
Participant or Former Participant shall be deemed to be the Participant's or
Former Participant's designated Beneficiary, and shall be entitled to receive
any distribution on account of the Participant's or Former Participant's death
in a lump sum, unless the Participant or Former Participant designates a
Beneficiary other than the Surviving Spouse and such Surviving Spouse consents
irrevocably in writing to the designation of such alternate Beneficiary and the
Spouse's consent acknowledges the effect of such designation and is witnessed by
a notary public or a member of the Committee. The requirements of this paragraph
may be waived if it is established to the satisfaction of the Committee that the
consent may not be obtained because there is no Spouse or because the Spouse
cannot be located or because of such other circumstances as may be prescribed by
regulation.
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6.8. Information Required from Beneficiary. If at, after or
during the time when a benefit is payable to any Beneficiary, the Committee upon
request of the Trustee or at its own instance, delivers by registered or
certified mail to the Beneficiary at the Beneficiary's last known address a
written demand for his then address, or for satisfactory evidence of his
continued life, or both, and, if the Beneficiary fails to furnish the
information to the Committee within three years from the mailing of the demand,
then the Committee shall distribute to the party next entitled thereto under
Section 6.7 above as if the Beneficiary were then deceased.
6.9. Rollovers and Transfers. An Employee, with the prior
approval of the Committee, may contribute to the Trust any property which either
is (i) a direct transfer of an eligible rollover distribution under 401(a)(31)
of the Code; (ii) rolled over by the Employee after his receipt of such amount
from a plan qualified under section 401(a) of the Code; or (iii) rolled over
from a "conduit" Individual Retirement Account (as defined in section 408 of the
Code) established by the Employee upon his receipt of such amount from a plan
qualified under section 401(a) of the Code (provided, however, that any amount
rolled over to the Plan qualifies as a rollover amount as defined by Code
section 402 at the time of the rollover). The amount of cash or the fair market
value of any other property transferred to the Trust pursuant to this Section
shall be credited to the Employee's Rollover Account (if contributed pursuant to
clause (i) or (ii) above), as of the Valuation Date next following such transfer
or rollover.
An Employee who wishes to roll over property pursuant to
clause (ii) or (iii) above must do so no later than 60 days after receiving a
distribution from the distributing plan or Individual Retirement Account.
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An Employee who has not satisfied the participation
requirements of Section 3.1 shall be permitted to make a rollover or transfer to
the Plan, subject to the approval of the Committee, provided that the Committee
has determined that such rollover or transfer meets the requirements set forth
in the preceding paragraph. The Committee shall establish a Rollover Account, as
applicable, for any such Employee, in accordance with the provisions of this
Section.
In no event shall such Employee become eligible to have
Elective Deferral Contributions made on his behalf or to receive allocations of
Matching Contributions, Supplemental Contributions, Qualified Matching
Contributions or Qualified Supplemental Contributions prior to fulfilling the
eligibility requirements of Section 3.1 and any other
requirements for such contributions under the Plan.
6.10. Withdrawals.
(a) Non-Hardship Withdrawals. A Participant may
withdraw up to 100% of the amounts credited to his Rollover Account and
Voluntary Contribution Account, but not less than $1,000 at any one time. A
Participant who has reached age 59 1/2, while still employed, may request a
withdrawal of all or a portion of his interest in his Employer Contribution
Account.
(b) Hardship Withdrawals. Notwithstanding anything
herein to the contrary, a Participant who has not attained at least age 59 1/2
while still employed, may request a withdrawal on account of hardship from his
Elective Deferral Contribution Account; provided, however, that no withdrawal
from a Participant's Elective Deferral Contribution Account may include Income
credited to such Account.
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Hardship withdrawals shall be made in accordance with uniform
and nondiscriminatory rules and procedures established by the Committee and
shall not be made in any manner that favors highly compensated Participants or
officers or shareholders of the Company. In the event that the Committee denies
a Participant's request for a hardship withdrawal under this Section of the
Plan, the Participant shall be permitted to ask for a review of the decision in
accordance with the Claims Procedure set forth in Section 8.12.
The application to make a hardship withdrawal shall be
approved if the conditions of subsections (i) and (ii) below are met:
(i) A Participant must have an immediate and
heavy financial need for one of the following reasons:
(A) the purchase (excluding
mortgage payments) of a principal residence;
(B) payment of tuition, related
educational fees, and room and board expenses for the next twelve months of
post-secondary education for the Participant, his Spouse, children or dependents
(as defined in section 152 of the Code);
(C) the need to prevent the
eviction of the Participant from his principal residence, or foreclosure of the
mortgage on his principal residence;
(D) expenses for medical care
described in section 213(d) of the Code previously incurred by the Participant,
his Spouse or dependents (as defined in section 152 of the Code) or necessary
for such persons to obtain such medical care;
(E) any other reason which the
Secretary of the Treasury, or his delegate, may determine qualifies as a
hardship withdrawal; and
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(ii) The Participant must be unable to
obtain the necessary funds from one of the following sources:
(A) reimbursement or compensation
by insurance or otherwise;
(B) reasonable liquidation of the
Participant's assets, or the assets of the Participant's dependents, such that
it would not cause a hardship;
(C) distribution of after-tax
contributions, if applicable, or other permissible distributions from this Plan,
or any other plan;
(D) cessation of elective or
after-tax contributions to this Plan, to the extent applicable, or any other
plan;
(E) loans from this Plan or any
other plan; or
(F) borrowing from commercial
sources on reasonable terms.
For purposes of hardship withdrawals under this Section, an
immediate and heavy financial need cannot reasonably be relieved by any of the
sources listed above if the effect of such action would be to increase the
amount of the need. The amount of the distribution cannot be in excess of the
amount of the immediate and heavy financial need of the Participant. The amount
of an immediate and heavy financial need may include any amounts necessary to
pay any federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution.
In the event of any hardship distribution to a Participant
hereunder, the Company shall not make Elective Deferral Contributions, Matching
Contributions, Qualified Matching
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Contributions or Qualified Supplemental Contributions under the Plan on behalf
of such Participant, and the Participant shall not make any elective deferral
contributions or voluntary employee contributions under any other qualified or
nonqualified compensation plans maintained by the Company or any Affiliate,
including without limitation stock option and stock purchase plans and cash or
deferred arrangements that are part of a cafeteria plan under section 125 of the
Code, during the twelve calendar months immediately following the effective date
of such hardship withdrawal. In addition, the applicable limit under section
402(g) of the Code for the Participant's taxable year immediately following the
taxable year of the hardship withdrawal shall be reduced by the amount of such
Participant's Elective Deferral Contributions and other elective deferral
contributions under other plans maintained by the Company or any Affiliate made
during the taxable year of the hardship distribution.
(c) Timing of Withdrawals. A written application for
any withdrawal under this Section must be submitted to the Committee at least 30
days prior to the date specified for the withdrawal, or such other periods of
time as the Committee may determine from time to time.
6.11. Loans to Participants and Former Participants. The
provisions of this Section 6.11 shall apply to loans made, renewed,
renegotiated, modified, or extended on or after July 1, 1997.
(a) Loan Application. Effective July 1, 1997, a
Participant who is an Employee of a Participating Affiliate or who is a "party
in interest" to the Plan under ERISA ss.3(14) may apply in writing, at any time
during the Plan Year, to the Committee for a loan from the vested portion of his
Employer Contribution Account in the Plan. The Committe
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shall rule upon such applications in a uniform and nondiscriminatory manner in
accordance with the rules and guidelines established in this Article.
(b) Loan Approval.
(i) No more than one application by a
Participant for a loan shall be approved during any PlanYear.
(ii) The Committee shall have the right to
reject a loan application on the basis of a Participant's credit worthiness and
financial need or such other factors as would be considered in a normal
commercial setting by an entity in the business of making loans and as the
Committee determines necessary to safeguard the Fund.
(c) Amount of Loan.
(i) In no event shall a Participant be
permitted to have more than one loan outstanding at any time from this Plan. The
minimum amount of any loan shall be an amount determined by the Committee and
communicated to Participants.
(ii) The amount of any loan, when added to
the amount of a Participant's outstanding loans under the Plan and all other
plans qualified under section 401(a) of the Code which are sponsored by the
Participating Company or any Participating Affiliate shall not exceed the lesser
of:
(1) $50,000, reduced by the excess
(if any) of:
(A) the Participant's
highest outstanding balance of loans during the one-year period ending on the
day before the date on which such loan is made to the Participant, over
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(B) the outstanding balance
of loans made to the Participant on the date such loan is made to the
Participant; or
(2) fifty percent (50%) of the sum
of the value of the Participant's nonforfeitable portion of his Employer
Contribution Account in this Plan and his nonforfeitable accounts under all
other defined contribution plans qualified under section 401(a) of the Code
which are sponsored by the Participating Company or any Participating Affiliate,
provided that the application of this Paragraph (2) shall not reduce the amount
that may be borrowed below $10,000; or
(3) the value of the Participant's
nonforfeitable Employer Contribution Account.
(d) Terms of Loan.
(i) The interest rate on loans shall be: (1)
determined by the Committee, (2) at least commensurate with rates charged for
similar loans by entities in the business of making loans, and (3) adjusted from
time to time as circumstances warrant. Security for each loan granted pursuant
to this Article shall be, to the extent necessary, the currently unpledged
portion of, first the Participant's Employer Contribution Account, second his
Rollover Account, third, his Employer Matching Contribution Account, fourth his
Merged Plans Account (where applicable) and, fourth, his Great Bend Account
(where applicable). In no event shall more than fifty percent (50%) of the
Participant's vested portion of his Employer Contribution Account as of the date
the loan is made be used as security for the loan. In its sole discretion, the
Committee may require such additional security as it deems necessary.
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(ii) Each loan shall be evidenced by the
Participant's execution of a personal installment note on such form as shall be
supplied by the Committee. Each such note shall specify that, to the extent
repayment is not required sooner by the terms of Subsection (d) of this Section,
repayment shall be included in installments over 12, 24, 36, 48 or 60 months
from the date on which the loan is distributed. All loans from the Plan shall be
non-renewable. Each note shall also specify the interest rate as determined by
the Committee at the time the loan is approved.
(iii) All loans shall be repaid in
approximately equal installments through payroll deductions or in such other
manner as the Committee may determine. A Participant may repay the outstanding
balance of any loan in one lump sum at any time by notifying the Committee of
his intent to do so and by forwarding to the Committee payment in full of the
then outstanding loan balance, plus interest accrued to the date of payment. The
amount of principal and interest repaid by a Participant shall be credited to
such Participant's Employer Contribution Account as each repayment is made.
(iv) Notwithstanding the above, in the event
a Participant who has an outstanding loan takes a personal leave of absence for
a period of not more than one year or any periodic loan repayment is not made in
full due to temporary reduction in the Participant's Compensation that is not
expected to continue for a period of more than one year, the Committee shall
waive payment on the loan during the leave of absence or the period during which
the Participant's Compensation is reduced. In such case, (1) if the loan is for
a period of less than 60 months, the period of repayments shall be extended for
the period necessary to permit repayment, or (2) otherwise, the loan shall be
reamortized over its remaining
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term; provided, however, that the period of repayment for any loan shall not
exceed a total of 60 months.
(v) If, and only if:
(1) the Participant dies;
(2) the Participant (other than a
Participant who continues to be a party in interest) has a Termination of
employment;
(3) the Compensation of a
Participant who is an Employee of a Participating Company is discontinued or
decreased below the amount necessary to amortize the loan and such status
continues for more than one year;
(4) the loan is not repaid by the
time the note matures including any extensions pursuant to Subsection (iv);
(5) the Participant attempts to
revoke any payroll deduction authorization for repayment of the loan without the
consent of the Committee;
(6) the Participant fails to pay
any installment of the loan when due and the Committee elects to treat such
failure as default;
(7) the outstanding balance of the
loan, plus interest accrued to the date of determination, exceeds 50 percent
(50%) of the total value of the Participant's Employer Contribution Account
pledged as security for the loan, determined as of the Valuation Date coincident
with or next preceding the date of determination; or
(8) any other event occurs which
the Committee, in its sole discretion, believes may jeopardize the repayment of
the loan; before a loan is repaid in full, the unpaid balance thereof, with
interest due thereon, shall become
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immediately due and payable. The Participant (or his beneficiary, in the event
of the Participant's death) may satisfy the loan by paying the outstanding
balance of the loan within 30 days. If the loan and interest are not repaid
within the time specified, the Committee shall satisfy the indebtedness from the
amount of the Participant's vested interest in his Employer Contribution Account
as provided in Subsection (vi) before making any payments otherwise due
hereunder to the Participant or his beneficiary.
(vi) Enforcement. The Committee shall give
written notice to the Participant (or his beneficiary in the event of the
Participant's death) of an event of default described in Subsection (4) of
Section (v). If the loan and interest are not paid within thirty (30) days of
the date of the notice, the amount of the Participant's vested interest in his
Employer Contribution Account shall be reduced by the amount of the unpaid
balance of the loan, with interest due thereon, and the Participant's
indebtedness shall thereupon be discharged to the extent of the reduction. In
addition, if the value of the Participant's total vested interest in his
Employer Contribution Account pledged as security for the loan is insufficient
to discharge fully the Participant's indebtedness, the Participant's account.
shall be used to reduce the Participant's indebtedness at such time as the
Participant is entitled to a distribution under Article VI or a withdrawal under
Article VI from his account. Such action shall not operate as a waiver of the
rights of the Company, the Committee, the Trustee, or the Plan under applicable
law. The Committee also shall be entitled to take any and all other actions
necessary and appropriate to foreclose upon any property other than the
Participant's Account pledged as security for the loan or to otherwise enforce
collection of the outstanding balance of the loan.
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6.12. Loans from Merged Plan. The provisions of this Section
6.12 will apply to any loan outstanding to a Participant due to his
participation in and previous loan from a Merged Plan. Such loans shall be
repaid in equal installments by payroll deductions, for a period previously
arrived at by mutual agreement between the Merged Plan and the Participant;
provided, however, that each loan must be repaid within five years of the date
on which the loan was made or upon the Participant's Termination of any nature,
whichever occurs first, except that a Merged Plan may have agreed to a repayment
period that exceeds five years if the loan was used to acquire a principal
residence of the Participant. A loan issued to a Former Participant shall be
repaid in equal monthly installments by the Former Participant and must be
repaid within five years of the date on which the loan was made, except that the
Merged Plan may have set the repayment period at a period that exceeds five
years if the loan is used to acquire a principal residence of the Former
Participant.
In the event of a default on the loan repayment for a period
of 60 days, all payments on the loan shall be due and payable immediately. In
such event, the Trustee may authorize, in the case of a Participant, the payment
thereof from the Participant's present or future interest in the Plan, or, in
the case of a Former Participant, foreclosure on the security for the loan. The
Participant may not authorize the Company to make any Elective Deferral
Contributions to the Plan on his behalf until the first payroll period
commencing twelve calendar months following the date of default. In the case of
a Participant who Terminates employment and defaults on a loan repayment for a
period of 60 days following the date of Termination, the outstanding balance of
such loan shall be considered part of the distribution payable on account of the
Termination.
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Except in the case of a hardship withdrawal pursuant to
Section 6.10, no distribution shall be made to any Participant, Former
Participant or to the Beneficiary of such Participant or Former Participant
unless and until all unpaid loans, including interest accrued thereon, made to
such Participant or Former Participant whose account is subject to distribution
have been liquidated.
6.13. Direct Rollovers. Notwithstanding any provision
of the Plan to the contrary, a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an Eligible Rollover
Distribution paid in a Direct Rollover to an Eligible Retirement Plan specified
by the Distributee. The Direct Rollover may be given to the Distributee in the
form of a check made payable to the Eligible Retirement Plan.
For purposes of this Section, the following initially
capitalized words and phrases shall have the following meanings:
(i) "Direct Rollover" means a payment by the
Plan to an Eligible Retirement Plan specified by the Distributee.
(ii) "Distributee" means an Employee or
former Employee, and also means a surviving spouse of an Employee or former
Employee, or a spouse or former spouse of an Employee or former Employee who is
the alternate payee under a qualified domestic relations order (as defined in
section 414(p) of the Code), with respect to the interest in the Plan of such
spouse, former spouse, or surviving spouse.
(iii) "Eligible Retirement Plan" means (A)
an individual retirement account described in section 408(a) of the Code; (B) an
individual retirement annuity described in section 408(b) of the Code; (C) an
annuity plan described in section 403(a) of the
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Code; or (D) a qualified trust described in section 401(a) of the Code that
accepts Eligible Rollover Distributions; provided, however, that in the case of
a surviving spouse, an Eligible Retirement Plan means only an individual
retirement account or an individual retirement annuity.
(iv) "Eligible Rollover Distribution" shall
mean any distribution of all or any portion of a Distributee's interest in the
Plan, except that such term does not include (A) any distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of ten years or
more; (B) any distribution to the extent any such distribution may be required
pursuant to section 401(a)(9) of the Code; (C) any distribution that is exempt
from the mandatory withholding requirements under Treas. Reg. ss.31.3405(c)-1T
(or any successor regulation) because the aggregate taxable distributions
expected to be received by the Distributee during the calendar year do not
exceed $200 (or any greater amount specified in the regulation), or (D) the
portion of any distribution that is not includible in the gross income of the
Distributee.
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ARTICLE 7
TRUST FUND
7.1. Exclusive Benefit of Employees and Beneficiaries. All
contributions under this Plan shall be paid to the Trustee and deposited in the
Trust Fund. All assets of the Trust Fund, including investment Income, shall be
retained for the exclusive benefit of Participants, Former Participants and
Beneficiaries and shall be used to pay benefits to such persons or to pay
administrative expenses of the Plan and Trust Fund to the extent not paid by the
Company. Except as provided in Section 4.3, 5.3 or 12.2, the assets of the Trust
Fund shall not revert to or inure to the benefit of the Company.
7.2. Investment Directions by Participants or Former
Participants.
(a) As of each Entry Date or more frequent dates as
determined by the Committee, a Participant or Former Participant may change his
designation with respect to the investment of amounts credited to his Elective
Deferral Contribution Account, Matching Contribution Account, Voluntary
Contribution Account, Qualified Supplemental Contribution Account, Qualified
Matching Contribution Account, and Rollover Account, and with respect to future
contributions allocated to such Accounts, in the investment options provided by
the Committee, subject to the conditions in Section 7.3 and paragraphs (b) and
(c) of this Section. If a Participant or Former Participant does not exercise
his option to direct the investment of such accounts, a Participant or Former
Participant will be deemed to have authorized the Committee to direct such
investments on his behalf. Amounts credited to a Participant's Supplemental
Contribution Account and Merged Account shall be Trustee directed.
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(b) A Participant or Former Participant who elects to
invest in more than one fund must designate to each fund so elected in whole
percentage increments of the contributions or the amounts in the Accounts to
which the designation applies.
(c) Participant or Former Participant directions
described in paragraphs (a) and (b) of this Section 7.2 shall be effective as of
the Entry Date so designated by the Participant, if a properly completed
election form is received by the Committee at least ten (10) days prior to such
Entry Date, or such other period of time as the Committee may designate. Any
investment direction by a Participant or Former Participant shall continue in
full force and effect until changed by the Participant or Former Participant.
Such directions are subject to the approval of the Committee and shall be made
in accordance with the terms, conditions and procedures established by the
Committee. Notwithstanding Sections 5.2(a) and 8.4, all earnings and expenses,
including commissions and transfer taxes, realized or incurred in connection
with any investments pursuant to a Participant's or Former Participant's
directions, shall be credited or charged to the Participant's or Former
Participant's account for which the investment is made.
(d) If a Participant exercises his option to direct
the investment of his Account, then to the extent permitted by ERISA, no person
who is otherwise a fiduciary under the Plan shall be liable under ERISA for any
loss, or by reason of any breach which results from such Participant's exercise
of such option. Except for purposes of the Stock Fund, the Plan shall be
considered an "ERISA Section 404(c) Plan" pursuant to Reg. ss.2550.404c-1.
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7.3. Investment Funds. The Trust Fund shall consist of
separate investment funds selected by the Committee. The Committee may, in its
discretion, establish additional funds and may terminate any fund from time to
time. The investment funds under the Plan shall include the "Owosso Stock Fund"
which shall invest in common stock of Owosso Corporation; except to the extent
that it is necessary that a portion of the Trust Fund be invested in short-term
marketable securities pending investment in common stock or pending distribution
of benefits. A Participant or Former Participant may invest only his Elective
Deferral Contribution Account, Matching Contribution Account, Rollover Account
and Voluntary Contribution Account in the Owosso Stock Fund.
7.4. Special Rules Concerning the Owosso Stock Fund.
(a) Eligible Individual Account Plan. With respect to
investments in the Owosso Stock Fund, it is intended that this Plan shall be an
eligible individual account plan within the meaning of ERISA Section 407(d)(3),
and that, except as otherwise provided herein, up to 100 percent of the assets
of the Plan may be invested in Owosso Stock in accordance with the provisions of
the Plan.
(b) Voting of Shares. Before each annual or special
meeting of shareholders of Owosso Corporation, there shall be sent to each
Participant (other than a Participant with no amounts in his account invested in
the Owosso Stock Fund as of the record date for proxy solicitations) a copy of
the proxy soliciting material for the meeting, together with a form requesting
instructions to the Trustees on how to vote the shares of Owosso Stock credited
to such Participant's account. Upon receipt of such instructions, the Trustees
shall vote
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shares as instructed. Shares for which instructions are not received shall, to
the extent consistent with the Trustees' duties, not be voted.
(c) Quarterly Adjustment of Participants' Accounts in
Owosso Stock Fund. As of each Valuation Date, the Trustees shall determine the
fair market value of the assets in the Owosso Stock Fund. As soon as practicable
after each such Valuation, the Trustees shall deliver in writing to the
Administrator a valuation of each Fund, together with a statement of the amount
of net income or loss (including appreciation or depreciation in value of the
Owosso Stock) since the previous Valuation Date. Promptly after the preparation
of this valuation, the Trustees shall allocate any dividends received that are
attributable to Owosso Stock held in Participants' accounts as of the record
date of the dividend to such accounts. Such dividends shall be invested in the
Owosso Stock Fund.
(d) Apportionment/Reapportionment of Investments in
the Owosso Stock Fund. Any apportionment or reapportionment to or from the
Owosso Stock Fund shall be based on the value of Owosso Stock as of the
Valuation Date immediately preceding the date on which such apportionment or
reapportionment is to be made. Fractional shares shall not be purchased; any
amount remaining after the purchase of a whole number of shares shall be
invested on behalf of the Participant in cash or short-term marketable
securities. If the total amount apportioned or reapportioned by Participants to
the Owosso Stock Fund as of any Valuation Date exceeds the amount of Owosso
Stock then available for purchase, investment in Owosso Stock shall be made pro
rata based on the dollar value of the amount designated by each Participant for
investment in the Owosso Stock Fund. Any amount not invested in Owosso
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Stock because of the limitation of this subsection (d) shall be invested on
behalf of the Participant in cash or short-term marketable securities.
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ARTICLE 8
ADMINISTRATION
8.1. Duties and Responsibilities of Fiduciaries. A Fiduciary
shall have only those specific powers, duties, responsibilities and obligations
as are specifically given him under this Plan or the Trust. In general, the
Company, by action of its Board of Directors, shall have the sole responsibility
for making the contributions provided for under Section 4.1, shall have the sole
authority to appoint and remove the Trustees, the Committee, and any Investment
Manager which may be provided for under the Trust (except to the extent the
Board of Directors designates one or more individuals to appoint or remove the
Investment Manager), and shall have the sole authority to amend or terminate, in
whole or in part, this Plan or the Trust. The Committee shall have the sole
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust. The Board of Directors shall
have the right to designate investment and funding policies under which the
Trustee shall act. Except as provided in the Trust agreement and within the
scope of any funding and investment policies designated by the Board of
Directors, the Trustee shall have the sole responsibility for the administration
of the Trust and the management of the assets held under the Trust. It is
intended that each Fiduciary shall be responsible for the proper exercise of his
own powers, duties, responsibilities and obligations under this Plan and the
Trust and generally shall not be responsible for any act or failure to act of
another Fiduciary. A Fiduciary may serve in more than one fiduciary capacity
with respect to the Plan (including service both as Trustee and as a member of
the Committee.)
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8.2. Allocation of Duties and Responsibilities. The Committee,
by written instrument signed by any of its members, may designate persons other
than the Committee to carry out any of its duties and responsibilities. Any
duties and responsibilities thus allocated must be described in the written
instrument. If any person other than an Employee of the Company is so
designated, such person must acknowledge in writing his acceptance of the duties
and responsibilities thus allocated to him. All such instruments shall be
attached to, and shall be made a part of, the Plan.
8.3. Membership of Committee; Voting; Meetings. The Committee
shall consist of at least three persons who shall be appointed by the Company's
Board of Directors to administer the Plan. The Committee members shall serve at
the pleasure of the Board of Directors and without compensation. Any member of
the Committee may resign by giving written notice addressed to the Board of
Directors of the Company, effective upon delivery or at any other date specified
therein. The Committee shall act by a majority vote of its members at a meeting,
or by written consent of all its members without a meeting.
8.4. Expenses. The Company shall pay all expenses authorized
and incurred by the Committee in the administration of the Plan except to the
extent such expenses are paid from the Trust.
8.5. Records and Reports. The Committee shall exercise such
authority and responsibility as it deems appropriate in order to comply with
ERISA with respect to: (i) maintaining records of Participants' Years of
Service, account balances and the percentage of such account balances which are
nonforfeitable under the Plan; (ii) notifications to Participants; and (iii)
annual reports and registration with the Internal Revenue Service.
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8.6. Other Powers and Duties. The Committee shall have such
duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) to construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and time of payment of
any benefits hereunder;
(b) to prescribe procedures to be followed by
Participants, Former Participants or Beneficiaries filing applications for
benefits;
(c) to prepare and distribute information explaining
the Plan;
(d) to receive from the Company and from
Participants, Former Participants and Beneficiaries such information as shall be
necessary for the proper administration of the Plan;
(e) to furnish the Company, upon request, such annual
reports with respect to the administration of the Plan as are reasonable and
appropriate;
(f) to receive, review and keep on file (as it deems
convenient or proper) reports of the financial condition, and of the receipts
and disbursements, of the Trust Fund from the Trustees;
(g) to appoint or employ advisors including legal and
actuarial counsel to render advice with regard to any responsibility of the
Committee under the Plan or to assist in the administration of the Plan; and
(h) to review domestic relations orders and to
determine whether they constitute qualified domestic relations orders within the
meaning of section 414(p) of the Code.
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(i) to review and approve applications for
withdrawals submitted by Participants in accordance with Section 6.10.
The Committee shall have no power to add to, subtract from or
modify any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
8.7. Rules and Decisions; Non-Discriminatory Actions. Any
action taken by the Committee involving discretion on its part in determining an
individual's rights or benefits or Plan interpretation shall be handled in a
non-discriminatory manner. The Committee shall have the power to interpret and
construe the provisions of the Plan, to determine eligibility to participate in
the Plan, to make and enforce such rules and regulations as the Committee shall
deem necessary, desirable or appropriate for the efficient administration of the
Plan, and to decide such questions as may arise in connection with the operation
of the Plan, including interpretation of ambiguous plan provisions,
determination of disputed facts, or application of plan provisions to
unanticipated circumstances. When making any determination, the Committee shall
be entitled to rely upon information furnished by a Participant, Former
Participant or Beneficiary, the Company, the legal counsel of the Company, or
the Trustee. Such determinations shall be entitled to the maximum deference
permitted by law.
8.8. Authorization of Benefit Payments. The Committee shall
issue proper directions to the Trustee concerning all benefits which are to be
paid from the Trust Fund pursuant to the provisions of the Plan.
8.9. Applications and Forms for Benefits. The Committee may
require a Participant, Former Participant or Beneficiary to complete and file
with it an application for a
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benefit, and to furnish all pertinent information requested by it. The Committee
may rely upon all such information so furnished to it, including the
Participant's, Former Participant's or Beneficiary's current mailing address.
8.10. Facility of Payment. Whenever, in the Committee's
opinion, a person entitled to receive any payment hereunder, of a benefit or
installment thereof, is under a legal disability or is incapacitated in any way
so as to be unable to manage his financial affairs, the Committee may direct the
Trustee to make payments of such benefits to such person, or to his legal
representative or to a relative or friend of such person, for his benefit, or
the Committee may direct the Trustee to apply the payment for the benefit of
such person in such manner as the Committee considers advisable.
8.11. Liabilities. To the extent permissible by section 410 of
ERISA and other applicable law, the Committee and each person to whom duties and
responsibilities have been allocated pursuant to Section 8.2 may be indemnified
and held harmless by the Company to an extent determined by the Company's Board
of Directors with respect to any breach of alleged responsibilities performed or
to be performed hereunder.
8.12. Claims Procedure:
(a) Filing of Claim. Any Participant, Former
Participant or Beneficiary under the Plan, or any alternate payee under a
domestic relations order ("Claimant"), may file a written claim for a Plan
benefit or for a determination of the qualified status of a domestic relations
order ("claim") with the Committee or with a person named by the Committee to
receive claims under the Plan.
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(b) Notification on Denial of Claim. In the event of
a denial or limitation of any benefit or payment due to or requested by any
Claimant, Claimant shall be given a written notification containing specific
reasons for the denial or limitation of his benefit. The written notification
shall contain specific reference to the pertinent Plan provisions on which the
denial or limitation of the claim is based. In addition, it shall contain a
description of any additional material or information necessary for the Claimant
to perfect a claim and an explanation of why such material or information is
necessary. Further, the notification shall provide appropriate information as to
the steps to be taken if the Claimant wishes to submit his claim for review.
This written notification shall be given to a Claimant within 90 days after
receipt of his claim by the Committee unless special circumstances require an
extension of time to process the claim. If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the Claimant prior to the termination of said 90-day period and such notice
shall indicate the special circumstances which make the postponement
appropriate.
(c) Right of Review. In the event of a denial or
limitation of a benefit, the Claimant or his duly authorized representative
shall be permitted to review pertinent documents and to submit to the Committee
issues and comments in writing. In addition, the Claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Committee; provided, however, that such written
request must be received by the Committee (or its delegate to receive such
requests) within sixty days after receipt by the Claimant of written
notification of the denial or limitation of the claim. The sixty day requirement
may be waived by the Committee in appropriate cases.
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(d) Decision on Review.
(i) A decision shall be rendered by the
Committee within 60 days after the receipt of the request for review, provided
that where special circumstances require an extension of time for processing the
decision, the decision may be postponed on written notice to the Claimant (prior
to the expiration of the initial 60 day period), for an additional 60 days, but
in no event shall the decision be rendered more than 120 days after the receipt
of such request for review.
(ii) Notwithstanding subparagraph (i), if
the Committee specifies a regularly scheduled time, at least quarterly, to
review such appeals, a Claimant's request for review will be acted upon at the
specified time immediately following the receipt of the Claimant's request
unless such request is filed within 30 days preceding such time. In such
instance, the decision shall be made no later than the date of the second
specified time following the Committee's receipt of such request. If special
circumstances (such as a need to hold a hearing) require a further extension of
time for processing a request, a decision shall be rendered not later than the
third specified time of the Committee following the receipt of such request for
review, and written notice of the extension shall be furnished to the Claimant
prior to the commencement of the further extension.
(iii) Any decision by the Committee shall be
furnished to the Claimant in writing and in a manner calculated to be understood
by the Claimant and shall set forth the specific reason(s) for the decision and
the specific Plan provision(s) on which the decision is based.
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ARTICLE 9
MISCELLANEOUS
9.1. Nonguarantee of Employment. Nothing contained in this
Plan shall be construed as a contract of employment between the Company and any
Employee, or as a right of any Employee to be continued in the employment of the
Company, or as a limitation of the right of the Company to discharge any of its
Employees, with or without cause.
9.2. Rights to Trust Assets. No Employee or Beneficiary shall
have any right to, or interest in, any assets of the Trust Fund upon Termination
of employment or otherwise, except as provided from time to time under this
Plan, and then only to the extent of the benefits payable under the Plan to such
Employee or Beneficiary out of the assets of the Trust Fund. All payments of
benefits as provided for in this Plan shall be made solely out of the assets of
the Trust Fund.
9.3. Nonalienation of Benefits. Except as may be permitted by
law, and except as may be required or permitted by a qualified domestic
relations order as defined in section 414(p) of the Code, benefits payable under
this Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary, including any such liability
which is for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the Employee, prior to actually being
received by the person entitled to the benefit under the terms of the Plan; and
any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder shall be
void. The Trust
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Fund shall not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits hereunder.
9.4. Discontinuance of Company Contributions. In the event of
permanent discontinuance of contributions to the Plan by the Company, the
accounts of all Participants shall, as of the date of such discontinuance,
become fully-vested and nonforfeitable.
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ARTICLE 10
AMENDMENTS AND ACTION BY COMPANY
10.1. Amendments Generally. The Company reserves the right to
make from time to time any amendment or amendments to this Plan or Trust which
do not cause any part of the Trust Fund to be used for, or diverted to, any
purpose other than the exclusive benefit of Participants, Former Participants or
their Beneficiaries; provided, however, that the Company may make any amendment
it determines necessary or desirable, with or without retroactive effect, to
comply with the Code or ERISA.
No amendment to the Plan shall decrease a Participant's or
Former Participant's Employer Contribution Account, Voluntary Contribution
Account, Merged Account or Rollover Account or eliminate an optional form of
distribution except as may be permitted by the Code or ERISA.
10.2. Amendments to Vesting Schedule. Any amendment to the
Plan which alters the vesting schedule set forth in Section 6.3 shall be deemed
to include the following terms:
(a) The vested percentage of a Participant in that
portion of his Employer Contribution Account under the Plan derived from Company
contributions, determined as of the later of the date such amendment is adopted
or the date such amendment becomes effective, shall not be less than such
nonforfeitable percentage computed under the Plan on such date without regard to
such amendment; and
(b) Each Participant having not less than three (3)
Years of Service at the later of the date such amendment was adopted or became
effective shall be permitted to elect
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irrevocably to have his vested percentage computed under the Plan without regard
to such amendment. Such election must be made within 60 days from the later of
(i) the date the amendment was adopted, (ii) the date the amendment became
effective, or (iii) the date the Participant is issued written notice of such
amendment by the Committee.
Notwithstanding the preceding sentence, no election need be
provided to any Participant whose nonforfeitable percentage in his Employer
Contribution Account under the Plan, as amended at any time, cannot be less than
such percentage determined without regard to such amendment.
10.3. Action by Company. Any action by the Company under this
Plan shall be by a duly adopted resolution of its Board of Directors, or by any
person or persons duly authorized by a duly adopted resolution of that Board of
Directors to take such action.
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ARTICLE 11
SUCCESSOR EMPLOYER AND MERGER OR
CONSOLIDATION OF PLANS
11.1. Successor Employer. In the event of the dissolution,
merger, consolidation or reorganization of the Company, provision may be made by
which the Plan and Trust will be continued by the successor; and, in that event,
such successor shall be substituted for the Company under the Plan. The
substitution of the successor shall constitute an assumption of Plan liabilities
by the successor, and the successor shall have all of the powers, duties and
responsibilities of the Company under the Plan.
11.2. Plan Assets. There shall be no merger or consolidation
of the Plan with, or transfer of assets or liabilities of the Trust Fund to, any
other plan of deferred compensation maintained or to be established for the
benefit of all or some of the Participants of the Plan, unless each Participant
would (if either this Plan or the other plan then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (if this Plan had then terminated),
and unless a duly adopted resolution of the Board of Directors of the Company
authorizes such merger, consolidation or transfer of assets.
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ARTICLE 12
PLAN TERMINATION
12.1. Right to Terminate. In accordance with the procedures
set forth herein, the Company may terminate the Plan at any time in whole or in
part. In the event of the dissolution, merger, consolidation or reorganization
of the Company, the Plan shall terminate and the Trust Fund shall be liquidated
unless the Plan is continued by a successor to the Company in accordance with
Section 11.1.
12.2. Liquidation of the Trust Fund. Upon the complete or
partial termination of the Plan, the accounts of all Participants affected
thereby shall become fully-vested and nonforfeitable, to the extent funded, and
the Committee shall direct the Trustee to distribute the assets remaining in the
Trust Fund after payment of any expenses properly chargeable thereto, to
Participants, Former Participants and Beneficiaries in proportion to their
respective account balances.
If, after all liabilities of the Plan to Participants, Former
Participants and their Beneficiaries have been satisfied or provided for, any
assets remain unallocated in the suspense account provided for in Section 5.2(c)
or 5.3(h), such assets shall be distributed to the Company.
12.3. Manner of Distribution. To the extent that no
discrimination in value results, any distribution after termination of the Plan
may be made in cash or in securities, or other assets in kind, or in a
combination thereof, as the Trustees may determine and as uniformly applied to a
given class of accounts. All non-cash distributions shall be valued at fair
market value at date of distribution.
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ARTICLE 13
DETERMINATION OF TOP-HEAVY STATUS
13.1. General. Notwithstanding any other provision of the Plan
to the contrary, for any Plan Year in which the Plan is a Top-Heavy Plan or
Super Top-Heavy Plan, as defined below, the provisions of this Article shall
apply, but only to the extent required by section 416 of the Code and the
regulations thereunder.
13.2. Top-Heavy Plan. This Plan shall be Top-Heavy and an
Aggregation Group shall be a Top-Heavy Group if, as of the Determination Date
for such Plan Year, the sum of the Cumulative Accrued Benefits and Cumulative
Accounts of Key Employees for the Plan Year exceeds 60% of the aggregate of all
the Cumulative Accounts and Cumulative Accrued Benefits.
(a) If the Plan is not included in a Required
Aggregation Group with other plans, then it shall be Top-Heavy only if (i) when
considered by itself it is a Top-Heavy Plan and (ii) it is not included in a
Permissive Aggregation Group that is not a Top-Heavy Group.
(b) If the Plan is included in a Required Aggregation
Group with other plans, it shall be Top-Heavy only if the Required Aggregation
Group, including any permissively aggregated plans, is Top-Heavy.
13.3. Super Top-Heavy Plan. This Plan shall be a Super
Top-Heavy Plan if it would be a Top-Heavy Plan under Section 13.2, by
substituting 90% for 60%.
13.4. Cumulative Accrued Benefits and Cumulative Accounts. The
determination of the Cumulative Accrued Benefits and Cumulative Accounts under
the Plan shall be made in accordance with section 416 of the Code and the
regulations thereunder.
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13.5. Definitions.
(a) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group.
(b) "Determination Date" means with respect to any
Plan Year, the last day of the preceding Plan Year, or in the case of the first
Plan Year of any plan, the last day of such Plan Year, or such other date as
permitted by the Secretary of the Treasury or his delegate.
(c) "Employer" means the Company and its Affiliates.
(d) "Key Employee" means those individuals described
in section 416(i)(1) of the Code and the regulations thereunder.
(e) "Non-Key Employee" means those individuals who
are not Key Employees and includes former Key Employees.
(f) "Permissive Aggregation Group" means a Required
Aggregation Group plus any other plans selected by the Company provided that all
such plans when considered together satisfy the requirements of sections
401(a)(4) and 410 of the Code.
(g) "Required Aggregation Group" means a plan
maintained by the Employer in which a Key Employee is a participant or which
enables any plan in which a Key Employee is a participant to meet the
requirements of Code section 401(a)(4) or Code section 410.
13.6. Vesting. For each Plan Year in which the Plan is
Top-Heavy or Super Top-Heavy, the minimum vesting requirements of Code section
416(b) shall be satisfied by use of the schedule set forth below:
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Vested Forfeited
Years of Service Percentage Percentage
- ---------------- ---------- ----------
less than 2 years 0% 100%
2 years but less than 3 20% 80%
3 years but less than 4 40% 60%
4 years but less than 5 60% 40%
5 years but less than 6 80% 20%
6 years or more 100% 0%
13.7. Minimum Contributions. For each Plan Year in which the
Plan is Top-Heavy or Super Top-Heavy, minimum Employer contributions for a
Participant who is a Non-Key Employee shall be required to be made on behalf of
each Participant who is employed by the Company on the last day of the Plan
Year. The amount of the minimum contribution shall be the lesser of the
following percentages of compensation (as determined under section 415 of the
Code and the regulations thereunder):
(i) Three percent (3%), or
(ii) The highest percentage at which Company
contributions or Forfeitures are made under the Plan for the Plan Year on behalf
of any Key Employee.
(A) For purposes of subparagraph
(ii), all defined contribution plans included in a Required Aggregation Group
shall be treated as one plan.
(B) This paragraph (ii) shall not
apply if the Plan is included in a Required Aggregation Group and the Plan
enables a defined benefit plan included in the Required Aggregation Group to
meet the requirements of section 401(a)(4) or 410 of the Code.
This Section shall not apply to the extent a Participant who
is a Non-Key Employee is covered by another qualified plan(s) of the Company and
the Company has provided
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that the minimum contribution requirements applicable to this Plan will be
satisfied by the other plan(s).
13.8. Defined Benefit and Defined Contribution Plan Fractions.
For any Plan Year in which the Plan is Super Top-Heavy, or for any Plan Year in
which the Plan is Top-Heavy and the additional minimum contributions or benefits
required under section 416(h) of the Code are not provided, the dollar
limitations in the denominator of the Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction as defined in Sections 5.4(a) and 5.4(c) shall be
multiplied by 100 percent rather than 125 percent. If the application of the
provisions of this Section would cause any Participant to exceed 1.0 for any
Limitation Year, then the application of this Section shall be suspended as to
such Participant until such time as he no longer exceeds 1.0. During the period
of such suspension, there shall be no Company contributions, forfeitures or
voluntary nondeductible contributions allocated to such Participant under this
Plan or under any other defined contribution plan of the Company and there shall
be no benefit accruals for such Participant under any defined benefit plan of
the Company.
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ARTICLE 14
PARTICIPATING COMPANIES
14.1. Effective Date of Participation. Any Affiliate of the
Company, with the approval of the Board of Directors, may elect to become a
"participating company" in this Plan as of the date of the action by its board
of directors to adopt the Plan, or such other date as its board of directors may
specify. For purposes of determining the maximum deductible contribution by the
Company in any Plan Year, there may be taken into account the aggregate
Compensation paid to or accrued by the Participants of the participating company
since the first day of the Plan Year in which such participation takes effect.
Appendix B lists the participating companies.
14.2. Reallocation of Forfeitures. Whenever any portion of a
Participant's Account is forfeited by him, such Forfeitures shall be applied
pursuant to Section 6.4 of the Plan to reduce required contributions from the
Company provided that such Forfeitures shall be applied first to reduce the
contributions required from the participating company which employed the
Participant whose account was so forfeited, and to the extent there is an
excess, Forfeitures shall be allocated to the Supplemental Contribution Accounts
of Participants who are Employees of the participating company which employed
the Participant whose account was so forfeited.
14.3. Administration. Each participating company shall be
deemed to be a part of the Plan; provided, however, that with respect to all of
its relations with the Trustees and the Plan Committee for purpose of this Plan,
each participating company shall be deemed to have designated irrevocably the
Company as its agent. Unless the context of the Plan clearly indicates
otherwise, the "Company" shall be deemed to include each participating company
as related to its adoption of the Plan.
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14.4. Contributions. Each participating company shall make
contributions to the Plan on behalf of its own Employees in accordance with
Article 4.
14.5. Withdrawal of Participating Company. The board of
directors of a participating company may vote at any time to withdraw from
participation in the Plan. In such event, the Income of the Trust Fund shall be
valued as of the date of such withdrawal, and assets representing the accounts
of all Participants employed by such participating company shall be segregated
into a separate trust. Following its withdrawal, the participating company shall
exercise all rights, powers and duties with respect to such separate trust.
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APPENDIX A
Special Rules With Respect to the Merged Account and Voluntary Contribution
Account
For a Participant who has an interest in a Merged Account or a
Voluntary Contribution Account, the following special rules shall apply. The
remainder of such Participant's Plan benefit shall be paid as otherwise provided
under the Plan.
A Participant with an interest in the Merged Account or the
Voluntary Contribution Account shall be entitled to receive the Merged Account
and/or the Voluntary Contribution Account balance in cash in a single lump sum
as provided in Section 6.6. A Participant may also elect any one of the
following options for payment of his Merged Account and/or Voluntary
Contribution Account benefit:
For Merged Account and Voluntary Contribution Account Benefit
Attributable to Participation in a Merged Plan
1. Subject to the requirement of spousal consent, with respect
to any Participant whose vested interest in his account exceeds $3,500 and who
wishes to receive benefits other than as a lump sum payment, the Participant may
elect the following optional forms of benefit distribution:
(a) A qualified joint and survivor annuity provided
for by the application of a designated amount of the vested account balances of
the Participant to the purchase of such an annuity with payments continuing
until the first day of the month in which the Participant's death occurs, and on
the first day of the following month a surviving spouse's benefit of at least
fifty percent (50%) of the Participant's benefit, provided, however, that the
Participant may instruct in writing prior to the purchase of such an annuity
that a larger surviving
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spouse's benefit be provided (up to a maximum of a one hundred percent (100%)
surviving spouse's benefit).
(b) A single life annuity provided for by the
application of a designated amount of the vested Account balance of the
Participant to the purchase of such an annuity provided, however, that a married
Participant must have his spouse consent to benefits in this form, and absent
such spousal consent, benefits will be paid in the form of a qualified joint and
survivor annuity pursuant to paragraph (i) above.
(c) A single life annuity as described in (ii) above,
with a guaranteed period payment (selected by the Participant) not in excess of
the Participant's life expectancy or the joint and survivor's life expectancy of
the Participant and Beneficiary.
(d) Installment payments in substantially equal
amounts at least annually over a period not to exceed the life expectancy of the
Participant or the joint and last survivor life expectancy of the Participant
and his designated Beneficiary.
(e) A combination of a lump sum payment and
installment payments as described in subsection (d).
2. In the event that the Participant has elected a benefit
involving a life annuity, the following rules shall be applied in a uniform and
nondiscriminatory manner with respect to the election of this life annuity form
of benefit.
(a) At any time prior to the benefit payment date,
the Participant may elect to waive coverage under the qualified joint and
survivor annuity. No such waiver shall be effective, however, unless consented
to by the Participant's spouse.
A-2
<PAGE>
(b) If a Participant executes a waiver which is
effective under subsection (a) hereof, such Participant's benefits under the
Plan shall be distributed in the life annuity form.
(c) A Participant's waiver under subsection (a)
hereof shall be in writing in a form acceptable to the Committee and shall be
effective only if delivered to the Committee during the election period
described in subsection (a) hereof.
(d) Any waiver delivered by the Participant to the
Committee in accordance with the provisions of subsection (a) hereof may be
revoked by the Participant upon written notice delivered to the Committee during
the election period identified in subsection (a) hereof.
(e) No Participant's waiver under subsection (a)
hereof shall be effective prior to receipt by the Committee of a spouse's
consent, as described in subsection (f) hereof, nor shall any Participant's
waiver under subsection (a) hereof remain in effect after receipt by the
Committee, during the election period described in subsection (a) hereof, of a
revocation by such spouse of such consent.
(f) A Participant who does not establish to the
satisfaction of the Committee that he has no spouse on the benefit payment date,
may elect to receive the life annuity form only if his spouse (or a spouse's
legal guardian if the spouse is legally incompetent) executes a written
instrument whereby:
(i) such spouse consents not to receive a
qualified joint and survivor annuity; and
A-3
<PAGE>
(ii) such instrument acknowledges the effect
of the election to which the spouse's consent is being given and is witnessed by
a representative of the Plan or by a notary public; and
(iii) such instrument does not restrict the
Participant as to the specific Beneficiary or Beneficiaries designated by the
Participant pursuant to his election or to the Participant's right to designate
any Beneficiary or Beneficiaries without any further consent by the spouse; and
(iv) such spouse consents to the
Participant's election of a single life annuity, or to the Participant's right
to choose any optional form without any further consent by the spouse; and
(v) such instrument is subject to revocation
in writing by such spouse during the election period described in subsection (a)
hereof; or
(vi) the Participant (A) establishes to the
satisfaction of the Committee that his spouse cannot be located or (B) furnishes
a court order to the Committee establishing that the Participant is legally
separated or has been abandoned (within the meaning of local law), unless a
qualified domestic relations order as defined in section 414(p) of the Code
pertaining to such Participant provides that the spouse's consent be obtained.
3. All forms of benefits elected herein must provide for the
payment of no more than incidental benefits pursuant to section 401(a)(9)(G) of
the Code.
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<PAGE>
APPENDIX B
Participating Companies
(1) Cramer Company
(2) DewEze Manufacturing, Inc.
(3) The Landover Company
(4) Motor Products-Owosso Corporation
(5) Motor Products-Ohio Corporation
(6) Owosso Corporation
(7) Snowmax, Incorporated
(8) Sooner Trailer Manufacturing
(9) Great Bend Manufacturing Co., Inc.
B-1
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-25-1998
<PERIOD-END> JAN-25-1998
<CASH> 625
<SECURITIES> 0
<RECEIVABLES> 21,512
<ALLOWANCES> 437
<INVENTORY> 24,641
<CURRENT-ASSETS> 48,534
<PP&E> 57,302
<DEPRECIATION> 28,591
<TOTAL-ASSETS> 115,041
<CURRENT-LIABILITIES> 21,399
<BONDS> 52,521
0
14,042
<COMMON> 59
<OTHER-SE> 22,375
<TOTAL-LIABILITY-AND-EQUITY> 115,041
<SALES> 34,054
<TOTAL-REVENUES> 34,054
<CGS> 26,558
<TOTAL-COSTS> 26,558
<OTHER-EXPENSES> 6,406
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,124
<INCOME-PRETAX> 11
<INCOME-TAX> 5
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<CHANGES> 0
<NET-INCOME> 6
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
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