EXHIBIT 10 (d)
CROMPTON & KNOWLES CORPORATION 1/24/94
Annual Incentive Compensation Plan
For "A " Group of Senior Executives
1. PURPOSE. The purpose of the Crompton & Knowles
Corporation Annual Incentive Compensation Plan for the "A" Group of
Senior Executives ("the Plan") is to provide incentives for senior
management tied directly to the Company's return on resources used
in the business.
2. EFFECTIVE DATE OF THE PLAN. The Plan amends and
supercedes the current Incentive Plan for Crompton & Knowles
Executives -- Group A in its entirety. The Plan shall become
effective upon its approval by the Committee on Executive
Compensation with the concurrence of the Board of Directors,
commencing with the Company's 1987 fiscal year.
3. ADMINISTRATION. The Plan shall be administered by
the Committee on Executive Compensation (the "Committee") of the
Board of Directors of the Company consisting of not less than three
non-employee directors who are deemed to be "disinterested" under
Section 16 of the Securities Exchange Act of 1984. Subject to the
provisions of the Plan, the Committee shall be authorized to
interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the
Plan. The determinations of the Committee in the administration of
the Plan, as described herein, shall be final and conclusive.
4. ELIGIBILITY. Selected senior management executives
of the Company may be deemed eligible for awards under the Plan.
As of the date of adoption of the Plan, only the Chairman and Chief
Executive Officer is eligible, but other executives may be added at
any time and from time to time at the discretion of the Committee.
5. ANNUAL INCENTIVE POOL DETERMINATION. A pool of
funds calculated as a percent of pre-tax income of the Company will
be available for awards each year under the Plan, based on the
Company's financial performance. The initial financial measure
used to gauge performance will be after-tax net income of the
Company as a percent of average common equity as reported to
shareholders, or Return on Equity.
Pre-tax income shall mean the Company's income as
reported to shareholders before provisions for Federal, state and
local income taxes and before accruals for this Plan. The schedule
to be used to calculate the award pool for the Chairman and Chief
Executive Officer is shown in the following table (interpolation
shall be used between the points for interim levels of
performance):
Return on Equity - % of Pre-Tax Income for "A" Fund
Less than 15.0% - 0%
15.0 - .30
16.5 - .50
18.0 - .75
19.5 - 1.00
21.0 - 1.25
22.5 or More - 1.50
If other participants are later added to the Plan,
the "A" Fund will be increased to accommodate their awards, and if
participants are subsequently removed from the Plan, the "A" Fund
will be reduce, in either case as determined by the Committee. In
any year, the Committee shall have the authority to adjust the
schedule and/or to adopt another performance measure if it is
deemed appropriate.
6. AWARD DETERMINATION. As soon as practicable after
the end of each fiscal year of the Company, the Committee shall
approve incentive award payments to participants from the incentive
pool based on the Company's financial results for such year as
reported to its shareholders. Payments of approved amounts will
not be made until after the final earnings have been satisfactorily
reviewed by the outside auditors. The Committee may adjust results
for extraordinary events and may adjust awards for individual
performance. The Committee shall not be obligated to pay out all
of the award pool for any fiscal year. In no event shall the bonus
to be paid to a participant in any one year exceed $650,000 or 100%
of the participant's base salary for such year, whichever is the
lesser amount. Awards will be paid in cash as soon as practicable
following year end.
7. MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are applicable to this Plan:
(a) Participation in the Plan does not guarantee
continued employment of any participant with
the Company;
(b) Plan payments will be added to a
participant's salary for purpose of computing benefits
under the Company's life insurance plan, its Individual
Account Retirement Plan, and its Employee
Stock Purchase and Savings Plan;
(c) The Company will have the right to withhold
taxes as required by law from any payments
under the Plan.
8. AMENDMENT OR TERMINATION. The Committee shall have
the authority to amend, suspend, or terminate any or all provisions
of the Plan at any time.
AMENDED EXHIBIT 10 (j)
SUPPLEMENTAL RETIREMENT AGREEMENT
AMENDMENT dated as of October 20, 1993 to the Supplemental
Retirement Agreement dated as of April 1, 1985 (the "Agreement") by
and between Vincent A. Calarco of Woodbridge, Connecticut (the
"Employee") and Crompton & Knowles Corporation, a Massachusetts
corporation (the "Corporation").
WITNESSETH:
WHEREAS, the Employee and the Corporation wish to make certain
changes in the Agreement and to restate the Agreement, as
previously amended and as amended hereby, in the form of this
Amended Supplemental Retirement Agreement;
NOW, THEREFORE, the Employee and the Corporation hereby agree
that the Agreement as previously amended shall be restated in its
entirety to read as follows:
I. The Corporation has entered into this contract to induce
the Employee to enter its employment, recognizing that in the case
of a limited number of key executive employees to whom similar
contracts may be offered the ordinary retirement benefits provided
under the Corporation's retirement system do not afford sufficient
incentive in terms of economic security, when compared with
retirement arrangements available from other prospective employers
who have been, are, or may be competing for their services.
However, nothing herein shall be deemed a contract of employment
for any minimum fixed term, or to restrict the freedom of the
Corporation or the Employee to terminate the employment
relationship between them at any time.
II. In the event this contract has been executed before
either or both such conditions have been fulfilled, it is
expressly agreed that the Employee shall be entitled to no
benefits by reason of this Agreement unless and until he shall have
completed five (5) years of continuous employment by the
Corporation (all references herein to the Corporation to be deemed
to include any subsidiary, which shall be defined as meaning any
corporation of which this Corporation owns all of the voting stock)
and shall have attained forty-five (45) years of age.
III. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Normal Retirement Date" shall mean the first day
of the month on or next after the Employee's sixty-fifth
(65th) birthday.
(b) "Compensation" shall mean all of the Employee's
cash compensation for a calendar year, including salary, any
amount contributed by the Employee to a cash or deferred plan
under Section 401(k) of the Internal Revenue Code of 1986, as
amended, and any incentive compensation award or bonus with
respect to such year (even if paid in a
subsequent year), but excluding any incentive compensation
award or bonus paid during such year with respect to a prior
year and extraordinary earnings such as insurance costs or
gains on exercise of stock options.
(c) "Actuarial Equivalent" shall mean an amount of
equivalent value computed on the basis of the actuarial
assumptions used from time to time by the actuarial consultants
employed by the Corporation in connection with its employee benefit
plans, but using an interest assumption which is not less than the
Pension Benefit Guaranty Corporation interest assumption in effect
at the beginning of the month as of which the
computation is made.
(d) "Cause" shall mean (i) the Employee's willful and
continued failure to substantially perform assigned duties with the
Corporation (other than any such failure resulting from incapacity
due to physical or mental illness or any such actual or anticipated
failure resulting from termination for Good
Reason), after a demand for substantial performance is delivered to
the Employee by the Board of Directors of the Corporation,
specifically identifying the manner in which the Board believes
that the duties have not been substantially performed, or
(ii) the Employee's willful conduct which is demonstrably and
materially injurious to the Corporation. For purposes of this
sub-paragraph (d), no act, or failure to act, shall be considered
"willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that such action or omission was in the
best interest of the Corporation.
(e) "Good Reason" shall mean (i) the assignment to the
Employee of any duties inconsistent in any respect with the
Employee's position (including status, offices, titles, and
reporting requirements), authority, duties, or responsibilities as
contemplated by any Employment Agreement between the Employee and
the Corporation, or any other action by the Corporation which
results in a diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after
receipt of notice thereof given by the Employee; (ii) any failure
by the Corporation to comply with any of the provisions of any
Employment Agreement between the Employee and the Corporation,
other than an insubstantial and inadvertent failure which is
remedied by the Corporation promptly after receipt of notice
thereof given by the Employee; (iii) any change not concurred in by
the Employee in the location of the office at which the
Employee is principally based, except for travel reasonably
required in the performance of the Employee's responsibilities and
substantially consistent with prior business travel
obligations of the Employee; or (iv) any purported termination by
the Corporation of the Employee's employment otherwise than as
permitted by any Employment Agreement between the Employee and the
Corporation.
(f) "Change in Control" shall mean a change in control of the
Corporation of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on January 1, 1988, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, such a "Change in Control" shall be
deemed to have occurred if: (i) a third person, including a
"group" as such term is used in Section 13(d)(3) of the Exchange
Act, other than the trustee of any employee benefit plan of the
Corporation, becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Corporation;
(ii) during any period of 24 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of the Corporation (the "Board" generally and,
as of the date of this Agreement, the "Incumbent Board") cease for
any reason (other than retirement upon reaching normal retirement
age, disability, or death) to constitute at least a majority of the
Board; provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Corporation's shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the Directors of the Corporation, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or (iii) the Corporation shall cease to be a publicly owned
corporation having its outstanding Common Stock listed on the New
York Stock Exchange or quoted in the NASDAQ National Market System.
(g) "Projected Compensation" shall mean (i) for any
calendar year throughout which the Employee is employed by the
Corporation, his Compensation (as defined in paragraph 3(b) hereof)
for such year, and (ii) for any calendar year during or after which
his employment has been terminated, the compensation the Employee
would have received for such year if he had received (A) salary at
a rate determined by projecting his annual rate of salary at the
end of the last full calendar year of his
employment forward at a rate equal to 5% in excess of the annual
percentage change in the Consumer Price Index as published by the
U.S. Bureau of Labor Statistics for such year and (B) a bonus
equal to 40% of his salary as thus projected.
IV. If, prior to his Normal Retirement Date, the Employee
shall voluntarily terminate his employment with the Corporation
without Good Reason or his employment shall be terminated by the
Corporation for Cause, he shall thereby forfeit all rights and
benefits under this Agreement. If the employment of the Employee
shall be terminated on or after his Normal Retirement date, or if,
prior to that date but after the conditions of paragraph 2 hereof
have been satisfied, the Employee shall voluntarily
terminate his employment for Good Reason or his employment shall be
terminated by the Corporation without Cause, this Agreement shall
continue in full force and effect, and the Employee shall become
entitled to the rights and benefits hereinafter set forth upon the
occurrence of the events respectively giving rise
thereto.
V. If the Employee shall remain in employment by the
Corporation until and shall reach his Normal Retirement Date, he
shall be entitled to receive a supplemental retirement benefit
under this Agreement which shall be at an annual rate equal to the
amount by which
(a) fifty percent (50%) of the Employee's average
annual Compensation during those five (5) calendar years in
which such Compensation was highest during the ten (10)
calendar years immediately preceding his Normal Retirement
Date
exceeds
(b) the annual benefit, payable for the life of the
Employee commencing on his Normal Retirement Date and
without refund, which is the Actuarial Equivalent of that
portion of the Employee's total accounts held under the
Corporation's Individual Account Retirement Plan (the
"IARP") which is attributable to contributions made to the
IARP by the Corporation.
Such supplemental retirement benefit shall commence on the
Employee's actual retirement date and shall be payable in one of
the benefit payment forms described in paragraph 8, as the
Employee shall elect.
VI. If the Employee's employment by the Corporation shall be
terminated (other than by reason of his death or disability) prior
to his Normal Retirement Date under circumstances not resulting in
his forfeiture of benefits and rights under
paragraph 4 of this Agreement, he shall be entitled to receive a
reduced supplemental retirement benefit under this Agreement which
shall be at an annual rate computed as follows:
(a) There shall first be determined the amount by
which
(i) fifty percent (50%) of the Employee's average
annual Compensation during those five (5) calendar
years in which such Compensation was highest during the
ten (10) calendar years immediately preceding the year
in which the termination of his employment occurs
exceeds
(ii) the annual benefit, payable for the life of
the Employee commencing on the date of the termination
of his employment and without refund, which is the
Actuarial Equivalent of that portion of the Employee's
total accounts under the IARP which is attributable to
contributions made to the IARP by the Corporation.
(b) The amount thus determined shall then be
multiplied by a fraction in which the numerator shall be the
number of full years of continuous service the Employee
shall have completed prior to the termination of his
employment and the denominator shall be the number of full
years of continuous service he would have completed had he
remained in the continuous service of the Corporation until
his normal retirement date.
Such reduced supplemental retirement benefit shall commence on the
first day of the month following the Employee's termination of
employment and shall be payable in one of the benefit payment forms
described in paragraph 8, as the Employee shall elect.
Anything in this paragraph or paragraph 4 to the contrary
notwithstanding, if, prior to his Normal Retirement Date but after
a Change in Control of the Corporation shall have occurred, the
Corporation shall terminate the Employee's employment other than
for Cause, disability, or death or the employment of the Employee
shall be terminated voluntarily by the Employee for Good Reason, he
shall be entitled to elect to receive a supplemental retirement
benefit under this Agreement, whether or not the Employee shall
have then satisfied the conditions of paragraph 2 hereof, in lieu
of any benefit he is entitled to receive under sub-paragraphs (a)
and (b) of this paragraph 6, which shall be at an annual rate
computed as follows:
(c) If the Employee has not attained the age of 55 on
the date his termination of employment occurs, his benefit
shall be equal to the amount by which
(i) fifty percent (50%) of the Employee's average
annual Projected Compensation during those five (5)
calendar years in which such Projected Compensation is
highest during the ten (10) calendar years immediately
preceding the year in which he would have attained age 55
exceeds
(ii) the annual benefit, payable for the life of
the Employee commencing on the date of the termination
of his employment and without refund, which is the
Actuarial Equivalent of that portion of the Employee's
total accounts under the IARP which is attributable to
contributions made to the IARP by the Corporation.
(d) If the Employee has attained age 55 on the date
his termination of employment occurs, his benefit shall be
equal to the amount determined under sub-paragraph (a) of this
paragraph without the application of sub-paragraph (b) hereof.
Such supplemental retirement benefit under sub-paragraph (c) or (d)
hereof shall commence on the first day of the month following the
month in which the Employee attains age 65 and shall be payable in
one of the benefit payment forms described in
paragraph 8, as the Employee shall elect.
VII. If in the opinion of the Corporation the Employee becomes
totally and permanently disabled at any time while in the
employment of the Corporation and after the conditions of
paragraph 2 hereof have been satisfied, he shall become entitled to
a disability benefit which shall be at an annual rate equal to the
amount by which
(a) seventy-five percent (75%) of the Employee's
average annual Compensation during the last five (5)
consecutive calendar years preceding the year in which his
disability occurs
exceeds
(b) the annual benefit which the Employee would be
entitled to receive under the Corporation's Long Term
Disability Insurance Program if he was then eligible for
benefits thereunder (regardless of whether he participates in
said Program);
provided, however, that if the Employee is not entitled to
receive any benefit under said Program, the disability benefit to
which he is entitled hereunder shall be in an amount equal to forty
percent (40%) of the Employee's average annual Compensation
determined as provided in sub-paragraph (a) above, and provided
further that the disability benefit to which the Employee is
entitled hereunder shall in no event be less than five percent (5%)
of his average annual Compensation determined as provided in
sub-paragraph (a) above. Such disability benefit shall be
payable in equal monthly installments, the first payment to be made
on the first day of the month following that in which the
Employee's salary is terminated because of such disability, and
payments shall be made on the first day of each month thereafter
so long as such total disability subsists and the Employee lives;
provided, however, if the Employee lives until his Normal
Retirement Date, he may thereupon elect to receive, in lieu of the
disability benefit he had been receiving under this
paragraph, the supplemental retirement benefit to which he would
then be entitled under paragraph 6 if his employment by the
Corporation had terminated other than by reason of disability on
the date his disability occurred.
VIII. The normal form in which the supplemental
retirement benefit payable under paragraph 5 or 6 of this
Agreement shall be paid shall be a monthly benefit payable for life
and without refund. In lieu of such normal benefit payment form,
the Employee may elect to receive his supplemental
retirement benefit hereunder in the form of a monthly benefit
payable for life with a period certain of up to 180 months, in the
form of a monthly benefit payable for a period certain, or in the
form of a monthly benefit payable for life with continuation of
such payments (or a specified percentage thereof) to such
beneficiary as the Employee may designate for the life of such
beneficiary. The amount of benefit payable under each such
alternative benefit payment form shall be the Actuarial
Equivalent of the benefit payable in the normal form to which the
Employee would otherwise be entitled hereunder. Any election of an
alternative benefit payment form shall be made in writing and may
be changed or rescinded by the Employee at any time prior to the
date on which benefit payments are to commence. The Employee shall
have the right to designate in writing the beneficiary or
beneficiaries to receive the benefit, if any, which is payable
under any benefit payment form after the Employee's death and may
change his designation of beneficiary from time to time, at any
time prior to the date on which benefit payments are to commence.
If there shall be no beneficiary designated and surviving at the
Employee's death, the estate of the Employee shall be the
beneficiary. Whenever any benefits hereunder become payable to the
beneficiary of the Employee, the Corporation may, in its
discretion, authorize payment of such benefits to the beneficiary
in a single lump sum which is the Actuarial Equivalent of such
benefits.
Anything in this paragraph 8 to the contrary
notwithstanding, at any time after the date on which benefit
payments commence, the Employee may elect to receive his benefits
hereunder in a single lump sum in an amount which is equal to 90%
of the Actuarial Equivalent of the benefit payable in the normal
form to which the Employee is otherwise entitled hereunder on the
date as of which such election is made.
IX. If the Employee shall die while currently receiving a
supplemental retirement benefit under the provisions of
paragraph 5 or 6 of this Agreement (or after his Normal
Retirement Date while currently receiving a supplemental
retirement benefit in lieu of the disability benefit provided under
paragraph 7) and the Employee shall have elected a benefit payment
form other than a monthly benefit payable for life with no period
certain, any benefits payable after his death shall be paid to his
beneficiary in accordance with the provisions of the benefit
payment form elected by the Employee. If the Employee shall die
having reached his Normal Retirement Date but prior to his actual
retirement date and the Employee shall have elected a benefit
payment form other than a monthly benefit payable for life with no
period certain, benefits shall be paid to his
beneficiary as if the Employee had commenced to receive benefits
under on the first day of the month in which his death occurred.
If the Employee shall die after the conditions of paragraph 2 have
been satisfied and while in the active employ of the
Corporation but prior to his Normal Retirement Date, or if the
Employee shall die while currently receiving a disability benefit
under paragraph 7 but prior to his Normal Retirement Date, a death
benefit shall be paid to the Employee's beneficiary, in lieu of any
other benefit under this Agreement, which shall be at an annual
rate equal to thirty-five percent (35%) of the
Employee's average annual Compensation during those five (5)
calendar years in which such Compensation was highest during the
ten (10) calendar years immediately preceding the year in which his
death occurs or the year in which his disability occurred, as the
case may be. Such death benefit shall be payable in equal monthly
installments beginning on the first day of the month following that
in which the death of the Employee occurs and continuing thereafter
for a period certain of 120 months;
provided that the Beneficiary entitled thereto may elect to have
such benefit paid in any of the forms described in paragraph 8 in
an amount which is the Actuarial Equivalent of the form of
benefit otherwise payable under this paragraph.
If the Employee shall die after having become entitled to a
benefit under sub-paragraph (c) or (d) of paragraph 6 hereof but
prior to attaining age 65, a death benefit shall be paid to the
Employee's beneficiary, in lieu of any other benefit under this
Agreement, which shall be the single sum Actuarial Equivalent value
as of the Employee's death of the benefit to which he would have
been entitled had he survived to age 65. Such death benefit shall
be payable in a lump sum as soon as practicable after the
Employee's death; provided that the beneficiary entitled thereto
may elect to have such death benefit paid in any of the forms
described in paragraph 8.
X. Anything in this Agreement to the contrary
notwithstanding, if at any time following termination of his
employment with the Corporation the Employee shall directly or
indirectly compete with the Corporation (which shall be deemed to
include any subsidiary or affiliate of the Corporation), whether as
an individual proprietor or entrepreneur or as an officer,
employee, partner, stockholder, or in any capacity connected with
any enterprise, in any business in which the Corporation is engaged
at the time of the termination of the Employee's
employment within any state or possession of the United States of
America or any foreign country within which business is then
specifically planned by the Corporation to be conducted, the
Corporation may suspend the payment of any benefits hereunder to
the Employee until such competition shall have ceased, and in the
event such competition by the Employee shall not have ceased to the
satisfaction of the Corporation within 90 days after the
Corporation shall have given written notice to the Employee to
cease the conduct thereof, the Corporation may at any time
thereafter terminate its obligations under this Agreement. For the
purpose of the preceding sentence, conducting business, doing
business, or engaging in business shall be deemed to embrace sales
to customers or performance of services for customers who are
within a relevant geographical area, without any necessity of any
presence of the Corporation therein. Nothing herein,
however, shall prohibit the Employee from acquiring or holding any
issue of stock or securities of any company which has any
securities listed on a national exchange or quoted in the daily
listing of over-the-counter market securities, provided that at any
one time he and members of his immediate family do not own more
than five percent (5%) of the voting securities of any such
company.
XI. This Agreement is an unfunded plan maintained for the
purpose of providing deferred compensation for one of a select
group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
The Corporation will make all benefit payments hereunder solely on
a current disbursement basis out of the general assets of the
Corporation, including without limitation from assets held in any
grantor trust established by the Corporation for the purpose of
making some or all of such payments.
XII. This Agreement shall bind and run to the benefit of the
successors and assigns of the Corporation, including any
corporation or other form of business organization with which it
may merge or consolidate or to which it may transfer
substantially all of its assets.
XIII. The rights of the Employee under this Agreement
shall not be assigned, hypothecated, or otherwise transferred in
any manner.
XIV. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Employee has hereunto signed his name
and Crompton & Knowles Corporation has caused this
instrument to be executed in its name and on its behalf by its duly
authorized officer, as of the 20th day of October, 1993.
/s/ Vincent A. Calarco
Vincent A. Calarco
CROMPTON & KNOWLES CORPORATION
By /s/ Marvin H. Happel
Marvin H. Happel
AMENDED EXHIBIT 10 (k)
SUPPLEMENTAL RETIREMENT AGREEMENT
AMENDMENT dated as of October 20, 1993 to the Supplemental
Retirement Agreement dated as of February 1, 1987 (the
"Agreement") by and between ________________ of _______,
___________ (the "Employee") and Crompton & Knowles Corporation, a
Massachusetts corporation (the "Corporation").
WITNESSETH:
WHEREAS, the Employee and the Corporation wish to make certain
changes in the Agreement and to restate the Agreement, as
previously amended and as amended hereby, in the form of this
Amended Supplemental Retirement Agreement;
NOW, THEREFORE, the Employee and the Corporation hereby agree
that the Agreement as previously amended shall be restated in its
entirety to read as follows:
(i. The Corporation has entered into this Agreement to induce
the Employee to continue in its employment, recognizing that in the
case of a limited number of key executive employees to whom similar
contracts may be offered the ordinary retirement benefits provided
under the Corporation's retirement system do not afford sufficient
incentive in terms of economic security, when compared with
retirement arrangements available from other prospective employers
who have been, are, or may be competing for their services.
However, nothing herein shall be deemed a
contract of employment for any minimum fixed term, or to restrict
the freedom of the Corporation or the Employee to terminate the
employment relationship between them at any time.
(ii. It is expressly agreed that the Employee was not
entitled to any benefits by reason of this Agreement unless and
until he had completed five (5) years of continuous employment by
the Corporation from the effective date of this Agreement, which
was February 1, 1987. All references herein to the Corporation
shall be deemed to include any subsidiary, which shall be defined
as meaning any corporation of which this Corporation owns all of
the voting stock.
(iii. For the purposes of this Agreement, the following
terms shall have the following meanings:
(a) "Normal Retirement Date" shall mean the first day
of the month on or next after the Employee's sixty-fifth
(65th) birthday.
(b) "Compensation" shall mean all of Employee's cash
compensation for a calendar year, including salary, any amount
contributed by the Employee to a cash or deferred plan under
Section 401(k) of the Internal Revenue Code of 1986, as amended,
and any incentive compensation award or bonus with respect to such
year (even if paid in a subsequent year), but excluding any
incentive compensation award or bonus paid during such year with
respect to a prior year and extraordinary earnings such as
insurance costs or gains on exercise of stock options.
(c) "Actuarial Equivalent" shall mean an amount of
equivalent value computed on the basis of the actuarial
assumptions used from time to time by the actuarial consultants
employed by the Corporation in connection with its employee benefit
plans, but using an interest assumption which is not less than the
Pension Benefit Guaranty Corporation interest assumption in effect
at the beginning of the month as of which the
computation is made.
(d) "Company Plan Benefit" shall mean the amount of benefit
payable to or for the account of the Employee from the
Corporation's Individual Account Retirement Plan (or from any other
retirement plan sponsored by the Corporation which may hereafter be
adopted in lieu of or in addition to said Individual Account
Retirement Plan) which is attributable to contributions made by the
Corporation, calculated in the form of a straight life annuity
(regardless of the form in which such benefit may actually be
payable).
(e) "Cause" shall mean (i) the Employee's willful and
continued failure to substantially perform assigned duties with the
Corporation (other than any such failure resulting from incapacity
due to physical or mental illness or any such actual or anticipated
failure resulting from termination for Good
Reason), after a demand for substantial performance is delivered to
the Employee by the Board of Directors of the Corporation,
specifically identifying the manner in which the Board believes
that the duties have not been substantially performed, or (ii) the
Employee's willful conduct which is demonstrably and
materially injurious to the Corporation. For purposes of this
sub-paragraph (e), no act, or failure to act, shall be considered
"willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that such action or omission was in the
best interest of the Corporation.
(f) "Good Reason" shall mean (i) the assignment to the
Employee of any duties inconsistent in any respect with the
Employee's position (including status, offices, titles, and
reporting requirements), authority, duties, or responsibilities as
contemplated by any Employment Agreement between the Employee and
the Corporation, or any other action by the Corporation which
results in a diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after
receipt of notice thereof given by the Employee; (ii) any failure
by the Corporation to comply with any of the provisions of any
Employment Agreement between the Employee and the Corporation,
other than an insubstantial and inadvertent failure which is
remedied by the Corporation promptly after receipt of notice
thereof given by the Employee; (iii) any change not concurred in by
the Employee in the location of the office at which the
Employee is principally based, except for travel reasonably
required in the performance of the Employee's responsibilities and
substantially consistent with prior business travel
obligations of the Employee; or (iv) any purported termination by
the Corporation of the Employee's employment otherwise than as
permitted by any Employment Agreement between the Employee and the
Corporation.
(g) "Change in Control" shall mean a change in control of the
Corporation of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on January 1, 1988, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, such a "Change in Control" shall be
deemed to have occurred if: (i) a third person, including a "group"
as such term is used in Section 13(d)(3) of the Exchange Act, other
than the trustee of any employee benefit plan of the Corporation,
becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of the
Corporation's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Corporation;
(ii) during any period of 14 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of the Corporation (the "Board" generally and,
as of the date of this Agreement, the "Incumbent Board") cease for
any reason (other than retirement upon reaching normal retirement
age, disability, or death) to constitute at least a majority of the
Board; provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Corporation's shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the Directors of the Corporation, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent
Board; or (iii) the Corporation shall cease to be a publicly owned
corporation having its outstanding Common Stock listed on the New
York Stock Exchange or quoted in the NASDAQ National Market System.
(h) "Projected Compensation" shall mean (i) for any
calendar year throughout which the Employee is employed by the
Corporation, his Compensation (as defined in paragraph 3(b) hereof)
for such year, and (ii) for any calendar year during or after which
his employment has been terminated, the compensation the Employee
would have received for such year if he had received (A) salary at
a rate determined by projecting his annual rate of salary at the
end of the last full calendar year of his
employment forward at a rate equal to 5% in excess of the annual
percentage change in the Consumer Price Index as published by the
U.S. Bureau of Labor Statistics for such year and (B) a bonus equal
to 40% of his salary as thus projected.
(iv. If, prior to his Normal Retirement Date, the Employee
shall voluntarily terminate his employment with the Corporation
(except as hereinafter provided) or his employment shall be
terminated by the Corporation for Cause, he shall thereby forfeit
all rights and benefits under this Agreement. If the employment of
the Employee shall be terminated on or after his Normal
Retirement Date, or if, prior to that date but after the
conditions of paragraph 2 hereof have been satisfied, the
Employee shall voluntarily terminate his employment with the
approval of the Corporation (as evidenced by vote of its Board of
Directors or the Committee thereof authorized to administer this
Agreement) or his employment shall be terminated by the
Corporation without Cause, this Agreement shall continue in full
force and effect, and the Employee shall become entitled to the
rights and benefits hereinafter set forth upon the occurrence of
the events respectively giving rise thereto.
(v. If the Employee shall remain in employment by the
Corporation until and shall reach his Normal Retirement Date, he
shall be entitled to receive a supplemental retirement benefit
under this Agreement which shall be at an annual rate equal to the
amount by which
(a) thirty-five percent (35%) of the Employee's
average annual Compensation during those five (5) calendar
years in which such Compensation was highest during the ten
(10) calendar years immediately preceding his Normal
Retirement Date
exceeds
(b) the annual amount of the Company Plan Benefit
payable to the Employee, determined as of his Normal
Retirement Date.
Such supplemental retirement benefit shall commence on the
Employee's actual retirement date and shall be payable in one of
the benefit payment forms described in paragraph 8, as the
Employee shall elect.
(vi. If the Employee's employment by the Corporation shall be
terminated (other than by reason of his death or disability) prior
to his Normal Retirement Date under circumstances not resulting in
his forfeiture of benefits and rights under
paragraph 4 of this Agreement, he shall be entitled to receive a
reduced supplemental retirement benefit under this Agreement which
shall be at an annual rate computed as follows:
(a) There shall first be determined the amount which
is equal to thirty-five percent (35%) of the Employee's
average annual Compensation during those five (5) calendar
years in which such Compensation was highest during the ten
(10) calendar years immediately preceding the year in which
the termination of his employment occurs.
(b) The amount thus determined shall be multiplied by
a fraction in which the numerator shall be the number of
full years of continuous service the Employee shall have
completed between the effective date of this Agreement and the
termination of his employment and the denominator shall be the
number of full years of continuous service he would have
completed between the effective date of this Agreement and his
Normal Retirement Date had he remained in the
continuous service of the Corporation until his Normal
Retirement Date.
(c) There shall then be subtracted from the amount
thus determined the annual amount of the Company Plan
Benefit payable to the Employee, determined as of the date
of the termination of his employment.
Such reduced supplemental retirement benefit shall commence on the
first day of the month following the Employee's termination of
employment and shall be payable in one of the benefit payment forms
described in paragraph 8, as the Employee shall elect.
Anything in this paragraph or paragraph 4 to the contrary
notwithstanding, if, prior to his Normal Retirement Date but after
a Change in Control of the Corporation shall have occurred, the
Corporation shall terminate the Employee's employment other than
for Cause, disability, or death or the employment of the Employee
shall be terminated voluntarily by the Employee for Good Reason,
he shall be entitled to elect to receive a supplemental retirement
benefit under this Agreement, whether or not the Employee shall
have then satisfied the conditions of paragraph 2 hereof, in lieu
of any benefit he is entitled to receive under sub-paragraphs
(a)-(c), inclusive, of this paragraph 6, which shall be at an
annual rate computed as follows:
(d) If the Employee has not attained the age of 55 on
the date his termination of employment occurs, his benefit
shall be equal to the amount by which
(i) thirty-five percent (35%) of the Employee's
average annual Projected Compensation during those
five (5) calendar years in which such Projected
Compensation is highest during the ten (10)
calendar years immediately preceding the year in
which he would have attained age 55
exceeds
(ii) the annual amount of the Company Plan
Benefit payable to the Employee, determined as of
the date of the termination of his employment.
(e) If the employee has attained age 55 on the date
his termination of employment occurs, his benefit shall be
equal to the amount determined under sub-paragraphs (a) and
(c) of this paragraph without the application of sub-
paragraph (b) hereof.
Such supplemental retirement benefit under sub-paragraph (d) or (e)
hereof shall commence on the first day of the month following the
month in which the Employee attains age 65 and shall be payable in
one of the benefit payment forms described in
paragraph 8, as the Employee shall elect.
(vii. If the Employee becomes qualified for benefits under
any long term disability plan sponsored by the Corporation as a
result of total disability while in the employment of the
Corporation and after the conditions of paragraph 2 hereof have
been satisfied, but prior to his Normal Retirement Date, he shall
become entitled to a disability benefit hereunder which shall be at
an annual rate computed as follows:
(a) There shall first be determined the amount which
is equal to thirty five percent (35%) of the Employee's
average annual Compensation during those five (5) calendar
years in which such Compensation was highest during the ten
(10) calendar years preceding the year in which his
disability occurs.
(b) The amount thus determined shall be multiplied by
a fraction in which the numerator shall be the number of
full years of continuous service the Employee shall have
completed between the effective date of this Agreement and the
date his employment terminates on account of disability and
the denominator shall be the number of full years of
continuous service he would have completed between the
effective date of this Agreement and his Normal Retirement
Date had he remained in the continuous service of the
Corporation until his Normal Retirement Date.
(c) There shall then be subtracted from the amount thus
determined the annual amount of the Company Plan Benefit payable to
the Employee, determined as of the date his disability benefit
hereunder is to commence.
Such disability benefit shall commence on the date the benefits
payable to the Employee under such long term disability plan
sponsored by the Corporation cease, if the Employee is then living,
and shall be payable in one of the benefit payment forms described
in paragraph 8, as the Employee shall elect.
(viii. The normal form in which the benefit payable under
paragraphs 5, 6, or 7 of this Agreement shall be paid shall be a
monthly benefit payable for life and without refund. In lieu of
such normal benefit payment form, the Employee may elect to receive
his benefit hereunder in the form of a monthly benefit payable for
life with a period certain of up to 180 months, in the form of a
monthly benefit payable for a period certain, or in the form of a
monthly benefit payable for life with continuation of such payments
(or a specified percentage thereof) to such beneficiary as the
Employee may designate for the life of such beneficiary. The
amount of benefit payable under each such alternative benefit
payment form shall be the Actuarial
Equivalent of the benefit payable in the normal form to which the
Employee would otherwise be entitled hereunder. Any election of an
alternative benefit payment form shall be made in writing and may
be changed or rescinded by the Employee at any time prior to the
date on which benefit payments are to commence. The Employee shall
have the right to designate in writing the beneficiary or
beneficiaries to receive the benefit, if any, which is payable
under any benefit payment form after the Employee's death and may
change his designation of beneficiary from time to time, at any
time prior to the date on which benefit payments are to commence.
If there shall be no beneficiary designated and surviving at the
Employee's death, the estate of the Employee shall be the
beneficiary. Whenever any benefits hereunder become payable to the
beneficiary of the Employee, the Corporation may, in its
discretion, authorize payment of such benefits to the beneficiary
in a single lump sum which is the Actuarial Equivalent of such
benefits.
Anything in this paragraph 8 to the contrary
notwithstanding, at any time after the date on which benefit
payments commence, the Employee may elect to receive his benefits
hereunder in a single lump sum in an amount which is equal to 90%
of the Actuarial Equivalent of the benefit payable in the normal
form to which the Employee is otherwise entitled hereunder on the
date as of which such election is made.
(ix. If the Employee shall die while currently receiving a
benefit under the provisions of paragraphs 5, 6, or 7 of this
Agreement and the Employee shall have elected a benefit payment
form other than a monthly benefit payable for life with no period
certain, any benefits payable after his death shall be paid to his
beneficiary in accordance with the provisions of the benefit
payment form elected by the Employee. If the Employee shall die
after having reached his Normal Retirement Date but prior to his
actual retirement date and the Employee shall have elected a
benefit payment form other than a monthly benefit payable for life
with no period certain, benefits shall be paid to his
beneficiary as if the Employee had commenced to receive benefits
hereunder on the first day of the month in which his death
occurred. If the Employee shall die after the condition of
paragraph 2 has been satisfied and while in the active employ of
the Corporation but prior to his Normal Retirement Date, or if the
Employee shall die after having become entitled to receive a
disability benefit under paragraph 7 but prior to his Normal
Retirement Date, a death benefit shall be paid to the Employee's
beneficiary, in lieu of any other benefit under this Agreement,
which shall be at an annual rate equal to twenty percent (20%) of
the Employee's average annual Compensation during those five (5)
calendar years in which such Compensation was highest during the
ten (10) calendar years immediately preceding the year in which his
death occurs or the year in which his disability occurred, as the
case may be. Such death benefit, which shall be in addition to any
Company Plan Benefit or benefits under any group life insurance
plan sponsored by the Corporation which is payable on account of
the Employee's death, shall be payable in equal
monthly installments beginning on the first day of the month
following that in which the death of the Employee occurs and
continuing thereafter for a period certain of 120 months;
provided that the Beneficiary entitled thereto may elect to have
such benefit paid in any of the forms described in paragraph 8 in
an amount which is the Actuarial Equivalent of the form of
benefit otherwise payable under this paragraph.
If the Employee shall die after having become entitled to a
benefit under sub-paragraph (d) or (e) of paragraph 6 hereof but
prior to attaining age 65, a death benefit shall be paid to the
Employee's beneficiary, in lieu of any other benefit under this
Agreement, which shall be the single sum Actuarial Equivalent value
as of the Employee's death of the benefit to which he would have
been entitled had he survived to age 65. Such death benefit shall
be payable in a lump sum as soon as practicable after the
Employee's death; provided that the beneficiary entitled thereto
may elect to have such death benefit paid in any of the forms
described in paragraph 8.
(x. Anything in this Agreement to the contrary
notwithstanding, if at any time following termination of his
employment with the Corporation the Employee shall directly or
indirectly compete with the Corporation (which shall be deemed to
include any subsidiary or affiliate of the Corporation), whether as
an individual proprietor or entrepreneur or as an officer,
employee, partner, stockholder, or in any capacity connected with
any enterprise, in any business in which the Corporation is engaged
at the time of the termination of the Employee's
employment within any state or possession of the United States of
America or any foreign country within which business is then
specifically planned by the Corporation to be conducted, the
Corporation may suspend the payment of any benefits hereunder to
the Employee until such competition shall have ceased, and in the
event such competition by the Employee shall not have ceased to the
satisfaction of the Corporation within 90 days after the
Corporation shall have given written notice to the Employee to
cease the conduct thereof, the Corporation may at any time
thereafter terminate its obligations under this Agreement. For the
purpose of the preceding sentence, conducting business, doing
business, or engaging in business shall be deemed to embrace sales
to customers or performance of services for customers who are
within a relevant geographical area, without any necessity of any
presence of the Corporation therein. Nothing herein,
however, shall prohibit the Employee from acquiring or holding any
issue of stock or securities of any company which has any
securities listed on a national exchange or quoted in the daily
listing of over-the-counter market securities, provided that at any
one time he and members of his immediate family do not own more
than five percent (5%) of the voting securities of any such
company.
(xi. This Agreement is an unfunded plan maintained for the
purpose of providing deferred compensation for one of a select
group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974.
The Corporation will make all benefit payments hereunder solely on
a current disbursement basis out of the general assets of the
Corporation, including without limitation from assets held in any
grantor trust established by the Corporation for the purpose of
making some or all of such payments.
(xii. This Agreement shall bind and run to the benefit of
the successors and assigns of the Corporation, including any
corporation or other form of business organization with which it
may merge or consolidate or to which it may transfer
substantially all of its assets.
(xiii. The rights of the Employee under this Agreement
shall not be assigned, hypothecated, or otherwise transferred in
any manner.
(xiv. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the Employee has hereunto signed his name
and Crompton & Knowles Corporation has caused this
instrument to be executed in its name and on its behalf by its duly
authorized officer, as of the 20th day of October, 1993.
Employee
CROMPTON & KNOWLES CORPORATION
By:
CROMPTON & KNOWLES CORPORATION EXHIBIT 10 (l)
SUPPLEMENTAL RETIREMENT AGREEMENT TRUST AGREEMENT
This Agreement made this 20th day of October, 1993 by and
between Crompton & Knowles Corporation, a Massachusetts
corporation (the "Company"), and Shawmut Bank, N.A., a national
banking association organized and existing under the laws of the
United States of America (the "Trustee").
WITNESSETH:
WHEREAS, the Company has adopted the nonqualified deferred
compensation plans listed in Appendix A hereto and may adopt
similar plans or arrangements in the future (individually, a "Plan"
and collectively, the "Plans");
WHEREAS, the Company has incurred or expects to incur
liability under the terms of the Plans with respect to the
individuals participating therein;
WHEREAS, the Company wishes to establish a trust
(hereinafter called the "Trust") and to contribute to the Trust
assets that shall be held therein, subject to the claims of the
Company's creditors in the event of the Company's Insolvency (as
herein defined), until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the
Plans;
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the
status of any of the Plans as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I
of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of funds
to assist it in meeting its liabilities under the Plans;
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held, and disposed of as
follows:
Section (i. Establishment of Trust
(a) The Company hereby deposits with the Trustee in trust the
sum of $10.00, which shall become the principal of the Trust to be
held, administered, and disposed of by the Trustee as provided in
this Trust Agreement.
(b) The Trust hereby established is revocable by the
Company; it shall become irrevocable upon the occurrence of a
Change in Control, as defined herein.
(c) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon,
shall be held separate and apart from other funds of the Company
and shall be used exclusively for the uses and purposes of Plan
participants and general creditors of the Company as herein set
forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 3(a) hereof.
(e) The Company, in its sole discretion, may at any time or
from time to time make additional deposits of cash or other
property in trust with the Trustee to augment the principal to be
held, administered, and disposed of by the Trustee as provided in
this Trust Agreement. Upon a Change of Control, the Company shall,
as soon as possible but in no event later than 30 days following
the Change of Control, make an irrevocable contribution to the
Trust in an amount that is sufficient to pay each Plan participant
or beneficiary the benefits to which each of them would be entitled
pursuant to the terms of each Plan as of the date in which the
Change of Control occurred.
Section (ii. Payments to Plan Participants
and Their Beneficiaries
(a) The Trustee shall keep such records and maintain such
books and accounts as shall at all times be sufficient to
indicate, for accounting purposes, the proportionate part of the
Trust fund as constituted from time to time which is held by it for
each Plan participant under each Plan. For this purpose only, the
Trustee shall create and maintain a separate account for each Plan
participant (and such sub-accounts as may be
contemplated by any Plan) and shall credit thereto all
contributions made by the Company to fund benefits payable to such
Plan participant and shall charge thereto all payments made to or
for the account of such Plan participant. Anything in the
foregoing to the contrary notwithstanding, no Plan participant
shall have a preferred claim on, or any beneficial interest in, the
account maintained for him by the Trustee or any assets of the
Trust fund allocated thereto for accounting purposes. The Trustee
may hold the Trust fund as a single fund, regardless of how many
Plans and/or Plan participants are participating
hereunder, and may from time to time invest and reinvest the
commingled assets and receive the income and proceeds thereof and
make payments therefrom, all without regard to the source of any
part of the commingled assets.
(b) The Company shall from time to time deliver to the
Trustee a schedule (the "Payment Schedule") that indicates the
amounts payable in respect of each Plan participant (and his or her
beneficiaries), or that provides a formula or other
instructions acceptable to the Trustee for determining the
amounts so payable, the form in which such amount is to be paid (as
provided for or available under the Plans), and the time of
commencement of payment of such amounts. Except as otherwise
provided herein, the Trustee shall make payments to the Plan
participants and their beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state, or local taxes
that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plans and shall pay amounts
withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld, and paid
by the Company.
(c) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plans shall be determined by
the Company or such party as it shall designate under the Plans,
and any claim for such benefits shall be considered and reviewed
under the procedures set out in the Plans.
(d) The Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of any Plan. The Company shall notify the Trustee of its
decision to make payment of benefits directly prior to the time
amounts are payable to Plan participants or their
beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits
in accordance with the terms of any Plan, the Company shall make
the balance of each such payment as it falls due. The Trustee
shall notify the Company when principal and earnings of the Trust
are not sufficient to make payments as provided in Section 2(b)
above.
Section (iii. Trustee Responsibility Regarding
Payments to Trust Beneficiary When Company
Is Insolvent
(a) The Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
The Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) the Company is unable to pay its debts as
they become due, or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of the
Company under federal and state law as set forth below:
(1) The Board of Directors and the Chief
Executive Officer of the Company shall have the duty to
inform the Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of
the Company alleges in writing to the Trustee that the
Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending
such determination, the Trustee shall discontinue
payment of benefits to Plan participants or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of
the Company's Insolvency, or has received notice from
the Company or a person claiming to be a creditor
alleging that the Company is Insolvent, the Trustee
shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such
evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee
with a reasonable basis for making a determination
concerning the Company's solvency.
(3) If at any time the Trustee has determined
that the Company is Insolvent, the Trustee shall
discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust
for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general
creditors of the Company with respect to benefits due
under the Plans or otherwise.
(4) The Trustee shall resume the payment of
benefits to Plan participants or their beneficiaries in
accordance with Section 2 of this Trust Agreement only
after the Trustee has determined that the Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plans
for the period of such discontinuance, less the aggregate amount of
any payments made to Plan participants or their beneficiaries by
the Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
Section 4. Payments to Company.
Except as provided in Section 3 hereof, after the Trust has
become irrevocable, the Company shall have no right or power to
direct the Trustee to return to the Company or to divert to others
any of the Trust assets before all payment of benefits have been
made to Plan participants and their beneficiaries pursuant to the
terms of the Plans, except that in the event the Company shall
certify in writing to the Trustee that the value of the account
maintained for any Plan participant or beneficiary is at least 125%
of the benefits to which such Plan participant or beneficiary would
be entitled pursuant to the terms of each Plan as of the date of
such certification, the Trustee shall return to the Company the
amount of such account in excess of 125% of such benefits.
Section 5. Investment Authority
(a) The Trustee shall from time to time inform the Company
and each Plan participant as to the investment media available for
investment of the Trust fund, including stock, bonds,
securities, and other property (which may include interests in
trust funds that have been or shall hereafter be created and
maintained by the Trustee as trustee for the collective
investment of trust funds), shares or other interests in open-end
management investment companies (including without limitation any
company to which the Trustee or any affiliate of the Trustee
provides advice and/or other services for which such company pays
the Trustee or its affiliate compensation), and insurance
policies on the lives of Plan participants. After consulting with
each Plan participant, the Company shall direct in writing how
contributions made to the Trustee for the account of such Plan
Participant under each Plan and the portion of the Trust fund which
is from time to time allocated to the account
established and maintained for such Plan participant under each
such Plan pursuant to Section 2(a) shall be invested among the
investment media from time to time offered by the Trustee for
investment of the Trust fund.
(b) The Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by the Company. All
rights associated with assets of the Trust shall be exercised by
the Trustee or the persons designated by the Trustee, and shall in
no event be exercisable by or rest with Plan
participants.
(c) The Company shall have the right at any time, and from
time to time in its sole discretion, to substitute assets of equal
fair market value for any asset held by the Trust. This right is
exercisable by the Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
Section 6. Disposition of Income
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, and all gains and losses on
investments of the Trust shall be allocated to the accounts
maintained for Plan participants pursuant to Section 2(a) hereof.
Section 7. Accounting by
Trustee
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between the Company and the Trustee. Within
90 days following the close of each calendar year and within 90
days after the removal or resignation of the Trustee, the Trustee
shall deliver to the Company a written account of its
administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing
all cash, securities, and other property held in the Trust at the
end of such year or as of the date of such removal or
resignation, as the case may be.
Section 8. Responsibility of Trustee
(a) The Trustee shall act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims, provided, however, that the Trustee shall incur no
liability to any person for any action taken pursuant to a
direction, request, or approval given by the
Company which is contemplated by, and in conformity with, the terms
of the Plans or this Trust and is given in writing by the Company.
In the event of a dispute between the Company and a party, the
Trustee may apply to a court of competent jurisdiction to resolve
the dispute.
(b) If the Trustee undertakes or defends any litigation
arising in connection with this Trust, the Company agrees to
indemnify the Trustee against the Trustee's costs, expenses, and
liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments. If the Company does not pay such costs, expenses, and
liabilities in a reasonably timely manner, the Trustee may obtain
payment from the Trust.
(c) The Trustee may consult with legal counsel (who may also
be counsel for the Company generally) with respect to any of its
duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants, or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, the Trustee
shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or
to loan to any person the proceeds of any borrowing against such
policy.
(f) However, notwithstanding the provisions of Section 8(e)
above, the Trustee may loan to the Company the proceeds of any
borrowing against an insurance policy held as an asset of the
Trust.
(g) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee
The Company shall pay all administrative and Trustee's fees
and expenses. If not so paid, the fees and expenses shall be paid
from the Trust.
Section 10. Resignation and Removal of Trustee
(a) The Trustee may resign at any time by written notice to
the Company, which shall be effective 60 days after receipt of such
notice unless the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 60 days
notice or upon shorter notice accepted by the Trustee.
(c) In the event of a Change of Control, as defined herein,
the Trustee may not be removed by the Company for two years
thereafter.
(d) If the Trustee resigns or is removed within two years of
a Change of Control, as defined herein, the Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of the Trustee's
resignation or removal.
(e) Upon resignation or removal of the Trustee and
appointment of a successor Trustee, all assets of the Trust shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within 60 days after receipt of notice
of resignation, removal, or transfer unless the Company extends the
time limit.
(f) If the Trustee resigns or is removed, a successor shall
be appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraphs (a) or
(b) of this section. If no such appointment has been made, the
Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of
the Trustee in connection with any such proceeding shall be allowed
as administrative expenses of the Trust.
Section 11. Appointment of Successor Trustee
(a) If the Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, the Company may appoint any third
party, such as a bank trust department or other party that may be
granted corporate trustee powers under state law, as a successor to
replace the Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The
former Trustee shall execute any instrument necessary or reasonably
requested by the Company or the successor Trustee to evidence the
transfer.
(b) If the Trustee resigns or is removed pursuant to the
provisions of Section 10(d) hereof and selects a successor
Trustee, the Trustee may appoint any third party such as a bank
trust department or other party that may be granted corporate
trustee powers under state law. The appointment of a successor
Trustee shall be effective when accepted in writing by the new
Trustee. The new Trustee shall have all the rights and powers of
the former Trustee, including ownership rights in Trust assets.
The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the
transfer.
(c) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing
Trust assets, subject to Sections 7 and 8 hereof. The successor
Trustee shall not be responsible for, and the Company shall
indemnify and defend the successor Trustee from, any claim or
liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at
the time it becomes successor Trustee.
Section 12. Amendment or Termination
(a) This Trust Agreement may be amended by a written
instrument executed by the Trustee and the Company.
Notwithstanding the foregoing, no such amendment shall conflict
with the terms of the Plans or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plans, unless sooner revoked
in accordance with Section 1(b) hereof. Upon termination of the
Trust any assets remaining in the Trust shall be returned to the
Company.
(c) Upon written approval of Plan participants or
beneficiaries entitled to payment of benefits pursuant to the terms
of the Plans, the Company may terminate this Trust prior to the
time all benefit payments under the Plans have been made. All
assets in the Trust at termination shall be returned to the
Company.
Section 13. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered, or subjected to attachment, garnishment, levy,
execution, or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(d) For purposes of this Trust, Change of Control shall mean
a change in control of the Company of a nature that would be
required to be reported in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a
"Change of Control" shall be deemed to have occurred if: (i) a
third person, including a "group" as such term is used in Section
13(d)(3) of the Exchange Act, other than the trustee of any
employee benefit plan of the Company, becomes the beneficial owner,
directly or indirectly, of 20% or more of the combined voting power
of the Company's outstanding voting securities ordinarily having
the right to vote for the election of directors of the Company;
(ii) during any period of 24 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of the Company (the "Board" generally and as of
the date hereof the "Incumbent
Board") cease for any reason (other than retirement upon reaching
normal retirement age, disability, or death) to constitute at least
a majority of the Board; provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this Trust Agreement,
considered as though such person were a member of the Incumbent
Board; or (iii) the Company shall cease to be a publicly owned
corporation having its outstanding Common Stock listed on the New
York Stock Exchange or quoted in the NASDAQ National Market System.
(e) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in writing
that a Change of Control of the Company has occurred. If a
participant or beneficiary alleges in writing to the Trustee that
a Change of Control has occurred, the Trustee shall have no duty to
inquire whether a Change of Control has occurred. The Trustee may
in all events rely on such evidence concerning a Change of Control
as may be furnished to the Trustee and that provides the Trustee
with a reasonable basis for making a
determination that a Change of Control has occurred.
Section 14. Effective Date
The effective date of this Trust Agreement shall be October
20, 1993.
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Trust Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
CROMPTON & KNOWLES CORPORATION
By:/s/ Marvin H. Happel
Marvin H. Happel
Its Vice President-Organization
SHAWMUT BANK, N.A.
By:/s/ Lois E. Uliana, A.V.P.
Lois E. Uliana, A.V.P.
CROMPTON & KNOWLES CORPORATION EXHIBIT 10 (m)
AMENDED
BENEFIT EQUALIZATION PLAN
I. Purpose of the Plan. The purpose of the Plan, as amended in
its entirety to read as follows, is to provide eligible
employees of Crompton & Knowles Corporation and its
subsidiaries with deferred compensation and benefits
substantially equivalent to those they would have received
under Qualified Plans of the Company in which they
participate, in the absence of certain limitations on
contributions and benefits which are imposed by the Code on
such Qualified Plans. The effective date of the Plan as
originally adopted was January 1, 1987. The effective date of
the amended Plan is October 20, 1993.
II. Definitions. The following terms shall have the following
meanings for purposes of the Plan:
(a) "Code" means the Internal Revenue Code of 1986 as
presently in effect and as it may be amended from time
to time hereafter.
(b) "Committee" means the Committee referred to in Section
17 hereof.
(c) "Company" means Crompton & Knowles Corporation, a
Massachusetts corporation, any subsidiary thereof, and
any successor thereto.
(d) "Compensation" means a Participant's compensation or
salary as defined under each applicable Qualified Plan
pursuant to which benefits are determined under this
Plan.
(e) "ERISA" means the Employee Retirement Income Security
Act of 1974 as presently in effect and as it may be
amended from time to time hereafter.
(f) "Participant" means any eligible employee of the
Company who becomes eligible to receive a benefit of
any type from this Plan or whose beneficiary may be
eligible to receive any such benefit.
(g) "Plan" means the Benefit Equalization Plan of the
Company as set forth herein and as it may be amended
from time to time.
(h) "Qualified Plan" means any employee benefit plan of the
Company which constitutes a qualified plan under
Section 401 of the Code, including without limitation
the Company's Individual Account Retirement Plan
("IARP") and its Employee Stock Ownership Plan (the
"ESOP").
(i) "Section 401(k) Limitation" means the limit (as
adjusted from time to time) imposed by Section 402(g)
of the Code on elective deferrals pursuant to a
qualified cash or deferred arrangement under Section
401(k) of the Code which may be excluded from the gross
income of an individual for any taxable year.
(j) "Section 415 Limitation" means the annual limit imposed
by Section 415 of the Code on contributions and other
additions which may be made with respect to a
Participant under Qualified Plans in which he
participates.
III. Eligible Employees. Any employee of the Company who is a
member of the Management Committee and who is a participant
in one or more Qualified Plans shall be eligible to
participate herein and to receive benefits hereunder. IV.
Section 401(k) Account. If the Section 401(k) Limitation
shall apply at anytime during a taxable year to elective
deferrals of a Participant which would otherwise have been
contributed to a Qualified Plan, the Company shall
thereafter allocate to an account maintained on its books
(the Participant's "Section 401(k) Account") amounts equal to
the amounts which it would have contributed to the
Qualified Plan as voluntary participant contributions on
behalf of the Participant from time to time during the
remainder of such year in the absence of the Section 401(k)
Limitation. The Participant may direct the Company to change
the rate of his contributions and may suspend or resume his
contributions in the manner and at the times set forth in the
Qualified Plan pursuant to which such
contributions would have been made in the absence of the
Section 401(k) Limitation.
V. Section 415 Accounts. If the Section 415 Limitation shall
apply at any time during a taxable year to employee or
employer contributions which would otherwise have been made to
a Qualified Plan by or on behalf of a Participant, the Company
shall thereafter allocate to accounts maintained on its books
(the Participant's "Section 415 Accounts") amounts equal to
the amounts which it would have withheld from the
Participant's compensation for contributions to the
Qualified Plan and which it would have contributed to the
Qualified Plan as employer contributions on behalf of the
Participant from time to time during the remainder of such
year in the absence of the Section 415 Limitation, assuming
(in the case of matching employer contributions under the
ESOP) that the Participant continues to make contributions to
this Plan during such period. The Company shall maintain
separate Section 415 Accounts with respect to each Qualified
Plan pursuant to which amounts are allocated for the benefit
of a Participant under this Section and a separate Account for
employee and employer contributions made with respect to each
such Qualified Plan.
VI. Contributions with Respect to Bonuses. Anything in the IARP
or the ESOP to the contrary notwithstanding, beginning in
1988, all employee and employer contributions which would
otherwise be contributed to the IARP or the ESOP with
respect to any bonus payable to a Participant under any
Company bonus plan in which he participates shall be made to
the Plan and shall be allocated to his appropriate Section 415
Account under the Plan. Each Participant shall be deemed to
have waived any right he may have to participate in the IARP
and the ESOP to the extent that employee and employer
contributions with respect to any bonus payable to him are
made to the Plan (rather than to the IARP or the ESOP)
pursuant to the provisions of this Section.
VII. Treatment under Other Agreements. Anything in this Plan to
the contrary notwithstanding, all compensation earned by a
Participant which is contributed to an Account under the Plan
in lieu of being paid to the Participant or to a
Qualified Plan on his behalf shall be treated as
compensation paid to the Participant for the payroll period
or (in the case of a bonus) for the year in which earned for
purposes of any Supplemental Retirement Agreement between
the Company and such Participant, and all amounts payable to
a Participant from the Plan which are attributable to
employer contributions (including earnings thereon) made to
this Plan in lieu of to the IARP shall be treated as if they
were payable from the IARP for purposes of any such
Supplemental Retirement Agreement.
VIII. Investment of Accounts. After consulting with each
Participant, the Company shall direct the Trustee
referred to in Section 15 hereof in writing how such
Participant's Accounts under the Plan shall be invested
among the investment media from time to time offered by
the Trustee for investment of such Accounts under the
Trust Agreement. The benefits due to each Participant
under the Plan at any time and from time to time shall be
equal to the balance of such Participant's Accounts under
the Trust Agreement.
IX. Form and Time of Benefit Payments. Amounts held in the
Accounts maintained for a Participant under the Plan will be
distributed by the Company in the same form and at the same
time as elected by the Participant (or his spouse or
beneficiary, if applicable) for payment of benefits from the
Qualified Plan with respect to which such amounts are
payable hereunder unless the Participant shall have elected,
in a manner and on a form approved by the Committee, not
less than 30 days prior to the termination of the
Participant's employment for any reason, to receive the
value of such Accounts in either five, ten, or fifteen annual
installments. If a Participant shall elect to
receive the value of his Accounts in installments, the first
such installment shall be paid promptly after the
termination of the Participant's employment and each
succeeding installment shall be paid on or before the last
day in January of each succeeding year until the total
number of installments elected by the Participant shall have
been paid. Each such installment shall be in an amount
determined by multiplying the balance of the Participant's
Accounts as of the last day of the month preceding the date of
payment thereof by a fraction, the numerator of which shall be
one and the denominator of which shall be the number of
installments remaining to be paid to the
Participant. Except as provided in Section 15 hereof, all
amounts payable to or on behalf of a Participant under the
Plan shall be payable form the general assets of the
Participant's employer.
X. Withdrawals. (a) For Hardship. A Participant may apply
to the Committee for a withdrawal on account of hardship of
any part or all of the vested portion of the funds allocated
to his Accounts under the Plan. The Committee shall
determine in its sole discretion whether a hardship exists
and, if so, the amount which may be withdrawn to meet such
hardship. For purposes of this Section, hardship shall be
deemed to have occurred only in the event the Participant
shall have incurred financial needs arising as a result of any
one or more of the reasons which are permitted to be treated
as a "hardship" for purposes of withdrawals from a Qualified
Plan meeting the requirements of Section 401(k) of the Code.
(b) After Termination of Employment. At any time after the
termination of a Participant's employment with the Company for any
reason, the Participant (or, in the event of his death, his
beneficiary) may elect to receive all benefits to which he is
entitled hereunder in a single lump sum in an amount which is equal
to 90% of the value of the benefits to which the
Participant or his beneficiary is otherwise entitled hereunder on
the date as of which such election is made.
XI. Termination of Employment. If the employment of a
Participant shall terminate for any reason, any amount due
such Participant under this Plan, to the extent then vested
as determined under each Qualified Plan separately, shall be
held under the terms of this Plan and paid in accordance with
the provisions of Section 9 of this Plan. If a
participant is not fully vested under the terms of a
Qualified Plan upon termination of his employment and
thereby forfeits his right to all or a percentage of his
benefits from such Qualified Plan, the Participant shall also
forfeit the same percentage of any benefits under this Plan
which are attributable to the Qualified Plan under which
benefits are thus forfeited.
XII. Beneficiary Designation. Each Participant shall be entitled
to designate in writing a beneficiary or beneficiaries to
receive the benefits, if any, which are payable under this
Plan in the event of the Participant's death and may change
the beneficiary designation at any time and from time to time.
If there shall be no beneficiary designated and surviving at
the Participant's death, the beneficiary of any benefits
payable from an Account under this Plan shall be the same
person or persons designated as beneficiary under the
Qualified plan with respect to which such benefits are payable
hereunder.
XIII. Nonassignable Rights. Except as otherwise provided by
this Plan, no right or benefit of a Participant under
this Plan may be assigned, encumbered, or transferred
in any manner.
XIV. Independence of Agreement. The benefits payable under this
Plan shall be independent of and in addition to any other
employment agreement that may exist from time to time
between the Company and any Participant or any other
compensation payable by the Company to the Participant
whether as salary, bonus, or otherwise. This Plan shall not
be deemed to constitute a contract of employment between any
Participant and the Company, nor shall any provision hereof
restrict the rights of any Participant to terminate his
employment.
XV. Trust Agreement. The Company has established the Crompton &
Knowles Corporation Benefit Equalization Plan Trust
Agreement (the "Trust Agreement") with Shawmut Bank, N.A. as
trustee (the "Trustee") and has contributed to the trust
established thereby assets to be held therein, subject to the
claims of the Company's creditors in the event of the
Company's insolvency (as therein defined), until paid to
participants in this Plan and their beneficiaries in the
manner and at the times specified in this Plan. All amounts
which the Company is obligated to allocate to Accounts of
Participants under the Plan shall be paid over or delivered to
the Trustee, to be held and invested as provided in the Trust
Agreement. Anything in the Plan to the contrary
notwithstanding, all benefits to which a Participant or his
beneficiary may become entitled under the Plan shall be
payable by the Trustee pursuant to the terms of the Trust
Agreement, and unless and until the Company becomes
insolvent (as defined in the Trust Agreement), the sole
obligation of the Company shall be to make contributions to
the Trustee as provided in this Section 15.
XVI. Non-Secured Promise. The rights of a Participant (or his
spouse or beneficiary, if applicable) under this Plan shall
be solely those of an unsecured creditor of the Company. No
Participant shall have any preferred claim on, or any
beneficiary ownership interest in, any asset acquired or
held by the Company in connection with liabilities assumed by
it under the Plan or any asset held by the Trustee under the
Trust Agreement prior to the time such assets are paid to the
Participant pursuant to the terms of the Plan or the Trust
Agreement, and all rights created under the Plan or the Trust
Agreement shall be mere unsecured contractual rights of the
Participant (or his spouse or beneficiary) against the Company
or the Trustee, as the case may be. XVII. Administration. The
Plan shall be administered by the Employee Benefits
Committee appointed from time to time by the Board of
Directors of Crompton & Knowles
Corporation. Except as limited by the express
provisions of the Plan or by the terms of the
resolution of the Board by which the Committee shall
have been established, the Committee shall have
authority and discretion to determine the rights and
benefits of Participants under the Plan, establish from
time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations
deemed necessary or advisable for the administration of
the Plan.
XVIII. Amendment or Termination. The Committee on Executive
Compensation of the Board of Directors of Crompton &
Knowles Corporation may amend, suspend, or terminate
the Plan or any portion thereof at any time; provided,
however, that no amendment, suspension, or termination of
the Plan shall adversely affect the right of a
Participant to any benefits which accrued pursuant to the
provisions of the Plan prior to the date such amendment,
suspension, or termination is adopted or becomes
effective.
XIX. Governing Law. The Plan shall be governed by and construed
in accordance with the laws of the State of Connecticut
insofar as such laws do not contravene Federal laws
applicable to the Plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its officer thereunto duly authorized as of the 27th
day of January, 1994.
CROMPTON & KNOWLES CORPORATION
By:/s/ Marvin H. Happel
Marvin H. Happel
Title:
CROMPTON & KNOWLES CORPORATION EXHIBIT 10 (n)
BENEFIT EQUALIZATION PLAN TRUST AGREEMENT
This Agreement made this 20th day of October, 1993 by and
between Crompton & Knowles Corporation, a Massachusetts
corporation (the "Company"), and Shawmut Bank, N.A., a national
banking association organized and existing under the laws of the
United States of America (the "Trustee").
WITNESSETH:
WHEREAS, the Company has heretofore established a trust
pursuant to the Agreement and Declaration of Trust dated as of
January 12, 1988 (the "Prior Trust Agreement") by and between the
Company and Shawmut Worcester County Bank, N.A., now known as
Shawmut Bank, N.A.;
WHEREAS, pursuant to the provisions of Section 13 of the Prior
Trust Agreement, the Company wishes to amend the Prior Trust
Agreement in its entirety and to substitute therefor the following
Trust Agreement;
WHEREAS, the Company has adopted the nonqualified deferred
compensation plans listed in Appendix A hereto and may adopt
similar plans or arrangements in the future (individually, a "Plan"
and collectively, the "Plans");
WHEREAS, the Company has incurred or expects to incur
liability under the terms of the Plans with respect to the
individuals participating therein;
WHEREAS, the Company wishes to contribute to the trust
established hereby (the "Trust") assets that shall be held
therein, subject to the claims of the Company's creditors in the
event of the Company's Insolvency (as herein defined), until paid
to Plan participants and their beneficiaries in such manner and at
such times as specified in the Plans;
WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the
status of any of the Plans as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I
of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of the Company to make
contributions to the Trust to provide itself with a source of funds
to assist it in meeting its liabilities under the Plans;
NOW, THEREFORE, the Company does hereby amend the Prior Trust
Agreement in its entirety and does substitute therefor the Trust as
set forth herein, the Trustee agrees to act as Trustee of the
Trust, and the Company and the Trustee do hereby agree that the
Trust shall be comprised, held, and disposed of as follows:
Section (i. Establishment of Trust
(a) The Company hereby deposits with the Trustee in trust the
sum of $10.00, which shall become the principal of the Trust to be
held, administered, and disposed of by the Trustee as provided in
this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon,
shall be held separate and apart from other funds of the Company
and shall be used exclusively for the uses and purposes of Plan
participants and general creditors of the Company as herein set
forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any
assets of the Trust. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against the Company. Any
assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the
event of Insolvency, as defined in Section 3(a) hereof.
(e) The Company shall, from time to time, make
contributions to the Trust in amounts that are sufficient to pay
each Plan participant or beneficiary the benefits to which Plan
participants or their beneficiaries shall be entitled pursuant to
the terms of each Plan. Such contributions shall be irrevocable
except as provided in Section 4 hereof.
Section (ii. Payments to Plan Participants
and Their Beneficiaries
(a) The Trustee shall keep such records and maintain such
books and accounts as shall at all times be sufficient to
indicate, for accounting purposes, the proportionate part of the
Trust fund as constituted from time to time which is held by it for
each Plan participant under each Plan. For this purpose only, the
Trustee shall create and maintain a separate account for each Plan
participant (and such sub-accounts as may be
contemplated by any Plan) and shall credit thereto all
contributions made by the Company to fund benefits payable to such
Plan participant and shall charge thereto all payments made to or
for the account of such Plan participant. Anything in the
foregoing to the contrary notwithstanding, no Plan participant
shall have a preferred claim on, or any beneficial interest in, the
account maintained for him by the Trustee or any assets of the
Trust fund allocated thereto for accounting purposes. The Trustee
may hold the Trust fund as a single fund, regardless of how many
Plans and/or Plan participants are participating
hereunder, and may from time to time invest and reinvest the
commingled assets and receive the income and proceeds thereof and
make payments therefrom, all without regard to the source of any
part of the commingled assets.
(b) The Company shall from time to time deliver to the
Trustee a schedule (the "Payment Schedule") that indicates the
amounts payable in respect of each Plan participant (and his or her
beneficiaries), or that provides a formula or other
instructions acceptable to the Trustee for determining the
amounts so payable, the form in which such amount is to be paid (as
provided for or available under the Plans), and the time of
commencement of payment of such amounts. Except as otherwise
provided herein, the Trustee shall make payments to the Plan
participants and their beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state, or local taxes
that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plans and shall pay amounts
withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld, and paid
by the Company.
(c) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plans shall be determined by
the Company or such party as it shall designate under the Plans,
and any claim for such benefits shall be considered and reviewed
under the procedures set out in the Plans.
(d) The Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the
terms of any Plan. The Company shall notify the Trustee of its
decision to make payment of benefits directly prior to the time
amounts are payable to Plan participants or their
beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits
in accordance with the terms of any Plan, the Company shall make
the balance of each such payment as it falls due. The Trustee
shall notify the Company when principal and earnings of the Trust
are not sufficient to make payments as provided in Section 2(b)
above.
Section (iii. Trustee Responsibility Regarding
Payments to Trust Beneficiary When Company
Is Insolvent
(a) The Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.
The Company shall be considered "Insolvent" for purposes of this
Trust Agreement if (i) the Company is unable to pay its debts as
they become due, or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of the
Company under federal and state law as set forth below:
(1) The Board of Directors and the Chief
Executive Officer of the Company shall have the duty to
inform the Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of
the Company alleges in writing to the Trustee that the
Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending
such determination, the Trustee shall discontinue
payment of benefits to Plan participants or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of
the Company's Insolvency, or has received notice from
the Company or a person claiming to be a creditor
alleging that the Company is Insolvent, the Trustee
shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such
evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee
with a reasonable basis for making a determination
concerning the Company's solvency.
(3) If at any time the Trustee has determined
that the Company is Insolvent, the Trustee shall
discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust
for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way
diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general
creditors of the Company with respect to benefits due
under the Plans or otherwise.
(4) The Trustee shall resume the payment of
benefits to Plan participants or their beneficiaries in
accordance with Section 2 of this Trust Agreement only
after the Trustee has determined that the Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plans
for the period of such discontinuance, less the aggregate amount of
any payments made to Plan participants or their beneficiaries by
the Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
Section 4. Payments to Company.
Except as provided in Section 3 hereof, after the Trust has
become irrevocable, the Company shall have no right or power to
direct the Trustee to return to the Company or to divert to others
any of the Trust assets before all payment of benefits have been
made to Plan participants and their beneficiaries pursuant to the
terms of the Plans, except that in the event any benefits otherwise
payable to a Plan participant are forfeited under the terms of any
Plan, the Trustee shall, in accordance with the instructions of the
Company certified to be in
accordance with the applicable Plan, return the amount of any such
forfeited Benefits to the Company (unless the Company shall then be
Insolvent).
Section 5. Investment Authority
(a) The Trustee shall from time to time inform the Company
and each Plan participant as to the investment media available for
investment of the Trust fund, including stock, bonds,
securities, and other property (which may include interests in
trust funds that have been or shall hereafter be created and
maintained by the Trustee as trustee for the collective
investment of trust funds), shares or other interests in open-end
management investment companies (including without limitation any
company to which the Trustee or any affiliate of the Trustee
provides advice and/or other services for which such company pays
the Trustee or its affiliate compensation), and insurance
policies on the lives of Plan participants. After consulting with
each Plan participant, the Company shall direct in writing how
contributions made to the Trustee for the account of such Plan
Participant under each Plan and the portion of the Trust fund which
is from time to time allocated to the account
established and maintained for such Plan participant under each
such Plan pursuant to Section 2(a) shall be invested among the
investment media from time to time offered by the Trustee for
investment of the Trust fund.
(b) The Trustee may invest in securities (including stock or
rights to acquire stock) or obligations issued by the Company. All
rights associated with assets of the Trust shall be exercised by
the Trustee or the persons designated by the Trustee, and shall in
no event be exercisable by or rest with Plan
participants.
(c) The Company shall have the right at any time, and from
time to time in its sole discretion, to substitute assets of equal
fair market value for any asset held by the Trust. This right is
exercisable by the Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
Section 6. Disposition of Income
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, and all gains and losses on
investments of the Trust shall be allocated to the accounts
maintained for Plan participants pursuant to Section 2(a) hereof.
Section 7. Accounting by
Trustee
The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between the Company and the Trustee. Within
90 days following the close of each calendar year and within 90
days after the removal or resignation of the Trustee, the Trustee
shall deliver to the Company a written account of its
administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing
all cash, securities, and other property held in the Trust at the
end of such year or as of the date of such removal or
resignation, as the case may be.
Section 8. Responsibility of Trustee
(a) The Trustee shall act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims, provided, however, that the Trustee shall incur no
liability to any person for any action taken pursuant to a
direction, request, or approval given by the
Company which is contemplated by, and in conformity with, the terms
of the Plans or this Trust and is given in writing by the Company.
In the event of a dispute between the Company and a party, the
Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation
arising in connection with this Trust, the Company agrees to
indemnify the Trustee against the Trustee's costs, expenses, and
liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such
payments. If the Company does not pay such costs, expenses, and
liabilities in a reasonably timely manner, the Trustee may obtain
payment from the Trust.
(c) The Trustee may consult with legal counsel (who may also
be counsel for the Company generally) with respect to any of its
duties or obligations hereunder.
(d) The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants, or other
professionals to assist it in performing any of its duties or
obligations hereunder.
(e) The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, the Trustee
shall have no power to name a beneficiary of the policy other than
the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or
to loan to any person the proceeds of any borrowing against such
policy.
(f) However, notwithstanding the provisions of Section 8(e)
above, the Trustee may loan to the Company the proceeds of any
borrowing against an insurance policy held as an asset of the
Trust.
(g) Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the
Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to
the Internal Revenue Code.
Section 9. Compensation and Expenses of Trustee
The Company shall pay all administrative and Trustee's fees
and expenses. If not so paid, the fees and expenses shall be paid
from the Trust.
Section 10. Resignation and Removal of Trustee
(a) The Trustee may resign at any time by written notice to
the Company, which shall be effective 60 days after receipt of such
notice unless the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 60 days
notice or upon shorter notice accepted by the Trustee.
(c) In the event of a Change of Control, as defined herein,
the Trustee may not be removed by the Company for two years
thereafter.
(d) If the Trustee resigns or is removed within two years of
a Change of Control, as defined herein, the Trustee shall select a
successor Trustee in accordance with the provisions of Section
11(b) hereof prior to the effective date of the Trustee's
resignation or removal.
(e) Upon resignation or removal of the Trustee and
appointment of a successor Trustee, all assets of the Trust shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within 60 days after receipt of notice
of resignation, removal, or transfer unless the Company extends the
time limit.
(f) If the Trustee resigns or is removed, a successor shall
be appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraphs (a) or
(b) of this section. If no such appointment has been made, the
Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of
the Trustee in connection with any such proceeding shall be allowed
as administrative expenses of the Trust.
Section 11. Appointment of Successor Trustee
(a) If the Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, the Company may appoint any third
party, such as a bank trust department or other party that may be
granted corporate trustee powers under state law, as a successor to
replace the Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The
former Trustee shall execute any instrument necessary or reasonably
requested by the Company or the successor Trustee to evidence the
transfer.
(b) If the Trustee resigns or is removed pursuant to the
provisions of Section 10(d) hereof and selects a successor
Trustee, the Trustee may appoint any third party such as a bank
trust department or other party that may be granted corporate
trustee powers under state law. The appointment of a successor
Trustee shall be effective when accepted in writing by the new
Trustee. The new Trustee shall have all the rights and powers of
the former Trustee, including ownership rights in Trust assets. The
former Trustee shall execute any instrument necessary or reasonably
requested by the successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing
Trust assets, subject to Sections 7 and 8 hereof. The successor
Trustee shall not be responsible for, and the Company shall
indemnify and defend the successor Trustee from, any claim or
liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at
the time it becomes successor Trustee.
Section 12. Amendment or Termination
(a) This Trust Agreement may be amended by a written
instrument executed by the Trustee and the Company.
Notwithstanding the foregoing, no such amendment shall conflict
with the terms of the Plans or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plans. Upon termination of
the Trust any assets remaining in the Trust shall be returned to
the Company.
(c) Upon written approval of Plan participants or
beneficiaries entitled to payment of benefits pursuant to the terms
of the Plans, the Company may terminate this Trust prior to the
time all benefit payments under the Plans have been made. All
assets in the Trust at termination shall be returned to the
Company.
Section 13. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered, or subjected to attachment, garnishment, levy,
execution, or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(d) For purposes of this Trust, Change of Control shall mean
a change in control of the Company of a nature that would be
required to be reported in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a
"Change of Control" shall be deemed to have occurred if: (i) a
third person, including a "group" as such term is used in Section
13(d)(3) of the Exchange Act, other than the trustee of any
employee benefit plan of the Company, becomes the beneficial owner,
directly or indirectly, of 20% or more of the combined voting power
of the Company's outstanding voting securities ordinarily having
the right to vote for the election of directors of the Company;
(ii) during any period of 24 consecutive months individuals who, at
the beginning of such consecutive 24-month period, constitute the
Board of Directors of the Company (the "Board" generally and as of
the date hereof the "Incumbent
Board") cease for any reason (other than retirement upon reaching
normal retirement age, disability, or death) to constitute at least
a majority of the Board; provided that any person becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of the directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this Trust Agreement,
considered as though such person were a member of the Incumbent
Board; or (iii) the Company shall cease to be a publicly owned
corporation having its outstanding Common Stock listed on the New
York Stock Exchange or quoted in the NASDAQ National Market System.
(e) The Board of Directors and the Chief Executive Officer of
the Company shall have the duty to inform the Trustee in writing
that a Change of Control of the Company has occurred. If a
participant or beneficiary alleges in writing to the Trustee that
a Change of Control has occurred, the Trustee shall have no duty to
inquire whether a Change of Control has occurred. The Trustee may
in all events rely on such evidence concerning a Change of Control
as may be furnished to the Trustee and that provides the Trustee
with a reasonable basis for making a
determination that a Change of Control has occurred.
Section 14. Effective Date
The effective date of this Trust Agreement shall be October
20, 1993.
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Trust Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
CROMPTON & KNOWLES CORPORATION
By:/s/ Marvin H. Happel
Marvin H. Happel
Its Vice President-Organization
SHAWMUT BANK, N.A.
By:/s/ Lois E. Uliana
Lois E. Uliana
Assistant Vice President
CROMPTON & KNOWLES CORPORATION EXHIBIT 10 (o)
1988 LONG TERM INCENTIVE PLAN
Section 1. Purpose
The purpose of the Plan is to attract and retain key
employees of the Company and its Subsidiaries and to motivate such
employees to put forth maximum efforts for the success of the
business by offering them long term performance-based incentives
and an opportunity to acquire ownership of the Company's Stock.
Section 2. Definitions
For purposes of the Plan, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of the
Company.
(b) "Change in Control", "Potential Change in Control",
and "Change in Control Price" have the meanings set forth
in Sections 10(b), (c), and (d), respectively.
(c) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Commission" means the Securities and Exchange
Commission or any successor agency.
(e) "Committee" means the Committee referred to in
Section 3.
(f) "Company" means Crompton & Knowles Corporation, a
corporation organized under the laws of the Commonwealth of
Massachusetts, or any successor corporation.
(g) "Disability" means permanent and total disability
as determined under procedures established by the Committee
for purposes of the Plan.
(h) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3(d)(3), as promulgated by the Commission
under the Exchange Act, or any successor definition adopted by the
Commission.
(i) "Early Retirement" means retirement, with the
consent for purposes of the Plan of the Committee or such
officer of the Company as may be designated from time to time by
the Committee, from active employment with the Company or
a Subsidiary prior to Normal Retirement.
(j) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
(k) "Fair Market Value" means, except as provided in
Section 7(b), the mean, as of any given date, between the
highest and lowest reported sales prices of the Stock on the New
York Stock Exchange Composite Index on such date (or, if
there is no reported sale on such date, on the last
preceding date on which any reported sale occurred), or if no such
reported sales prices are available, the fair market value
of the Stock as determined by the Committee in good faith.
(l) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "incentive stock
option" within the meaning of Section 422A of the Code.
(m) "Long Term Performance Award" or "Long Term Award"
means an award under Section 9.
(n) "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
(o) "Normal Retirement" means retirement from active
employment with the Company or a Subsidiary at or after age
65.
(p) "Plan" means the Crompton & Knowles Corporation
1988 Long Term Incentive Plan, as set forth herein and as
hereafter amended from time to time.
(q) "Restricted Stock" means an award under Section 8.
(r) "Retirement" means Normal or Early Retirement.
(s) "Rule 16b-3" means Rule 16b-3 as promulgated by the
Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
(t) "Stock" means the Common Stock, $1.00 par value, of
the Company.
(u) "Stock Appreciation Right" means a right granted
under Section 7.
(v) "Stock Option" or "Option" means an option granted
under Section 6.
(w) "Subsidiary" means any business entity in which the
Company, directly or indirectly, owns 50 percent or more of
the total combined voting power of all classes of stock or other
equity interest.
Section 3. Administration
The Plan shall be administered by the Committee on
Executive Compensation of the Board, or such other committee of the
Board, composed of not less than three Disinterested Persons, as
shall be designated by the Board from time to time. If at any time
no Committee designated to administer the Plan shall be in office,
the functions of the Committee specified in the Plan shall be
exercised by the Board.
Except as limited by the express provisions of the Plan,
the Committee shall have the sole and complete authority:
(a) to select the officers and other key employees to
whom Stock Options, Stock Appreciation Rights, Restricted
Stock, and Long Term Performance Awards may from time to time be
granted;
(b) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Long Term Performance
Awards, or any combination thereof are to be granted,
hereunder;
(c) to determine the number of shares to be covered by
each award granted hereunder;
(d) to determine the terms and conditions of any award
granted hereunder (including, but not limited to, the share
price, any restriction or limitation, and any vesting acceleration
or forfeiture waiver regarding any Stock Option or other
award and the shares of Stock relating thereto), based on
such factors as the Committee shall determine;
(e) to adjust the performance goals and measurements
applicable to performance-based awards pursuant to the
terms of the Plan; and
(f) to determine to what extent and under what
circumstances Stock and other amounts payable with respect
to an award shall be deferred.
The Committee shall have the authority to adopt, alter, and
repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and any award issued
under the Plan (and any agreement relating thereto), and otherwise
to supervise the administration of the Plan. The Committee may act
only by a majority of its members then in office, except that the
members thereof may authorize any one or more of their number or
any officer of the Company to execute and deliver documents on
behalf of the Committee. Any determination made by the Committee
pursuant to the provisions of the Plan with respect to any award
shall be made in its sole discretion at the time of the grant of
the award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company Plan participants.
Section 4. Stock Subject to Plan
The total number of shares of Stock reserved and available
for distribution pursuant to Stock Options or other awards under
the Plan shall be 334,582 shares plus such number of shares of
Stock previously approved by the stockholders of the Company for
issuance pursuant to the Company's 1983 Stock Option Plan as are
not used under such plan. Such shares may consist, in whole or in
part, of authorized and unissued shares or issued shares
heretofore or hereafter reacquired and held as treasury shares.
Upon the exercise of a Stock Appreciation Right, the full number of
shares to which the Stock Appreciation Right relates shall be
deemed to have been distributed under the Plan, and upon the
payment of a Long Term Performance Award in the form of cash, the
full number of shares that could have been purchased with such cash
at the Fair Market Value of the Stock on the date of such payment
shall be deemed to have been distributed under the Plan. If the
outstanding Stock Option or Stock Appreciation Right shall expire
or terminate without having been exercised in full, or if any
Restricted Stock award or Long Term Performance Award is forfeited
in whole or in part, the shares subject to the unexercised or
forfeited portion of such award shall again be available for
distribution in connection with awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in
corporate structure affecting the Stock, such substitution or
adjustments shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option
price of shares subject to outstanding Stock Options, in the
determination of the amount payable upon exercise of outstanding
Stock Appreciation Rights, and in the number of shares subject to
other outstanding awards granted under the Plan as may be
determined by the Committee, in its sole discretion, to be
equitable to prevent substantial dilution or enlargement of the
rights granted to participants hereunder, provided, however, that
the number of shares subject to any award will always be a whole
number. The Committee shall give notice to each participant of any
adjustment made pursuant to this paragraph, and upon such notice,
such adjustment shall be effective and binding for all purposes of
the Plan.
Section 5. Eligibility
Officers and other key employees of the company and its
Subsidiaries (but excluding members of the Committee and any person
who serves only as a director) who in the opinion of the Committee
are responsible for or contribute to the management, growth, and
profitability of the business of the Company or its Subsidiaries
are eligible to be granted awards under the Plan.
Section 6. Stock Options
Stock Options may be granted alone or in addition to other
awards granted under the Plan and may be of two types: Incentive
Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under the Plan shall be in such form as the Committee may
from time to time approve. The Committee shall have the authority
to grant any optionee Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options (in each case with or
without Stock Appreciation Rights). To the extent that any Stock
Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option. The Committee
shall not grant Stock Options to any one individual with respect to
more than twenty-five percent (25%) of the shares of Stock reserved
for distribution pursuant to Stock Options or other awards under
the Plan.
Stock Options shall be evidenced by option agreements, the
terms and provisions of which may differ. An option agreement
shall indicate on its face whether it is an agreement for Incentive
Stock Options or Non-Qualified Stock Options. The grant of a Stock
Option shall occur on the date the Committee by resolution selects
an employee as a participant in any grant of Stock Options,
determines the number of Stock Options to be granted to such
employee, and specifies the terms and provisions of the option
agreement; provided, however, that the Committee may designate in
such resolution a later date as the date of grant of any or all of
the Stock Options covered thereby. The Company shall notify a
participant of any grant of Stock Options, and a written option
agreement or agreements shall be duly executed between the Company
and the participant.
Anything in the Plan to the contrary notwithstanding, no
term of the Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered nor shall any discretion or
authority granted under the Plan be exercised so as to disqualify
the Plan under Section 422A of the Code or, without the consent of
the optionee affected, to disqualify any Incentive Stock Option
under such Section 422A.
Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions as the Committee shall deem desirable:
(a) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be equal to the Fair
Market Value of the Stock on the date of grant or such higher price
as shall be determined by the Committee at grant.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no incentive Stock Option
shall be exercisable more than 10 years after the date of grant of
the Option, and no Non-Qualified Stock Option shall be
exercisable more than 10 years and one month after the date
of grant of the Option.
(c) Exercisability. Stock Options shall be exercisable
at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided,
however, that, except as provided in Sections 6(f), (g),
(h), and 10, no Stock Option shall be exercisable prior to the
first anniversary date of the granting of the Stock Option.
If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may at any time
waive such installment exercise provisions, in whole or in
part, based on such factors as the Committee may determine.
(d) Method of Exercise. Subject to the provisions of
this Section 6, Stock Options may be exercised, in whole or
in part, at any time during the option term by giving written
notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in cash (including check,
bank draft, money order, or such other instrument as the
Company may accept). Unless otherwise determined by the
Committee at any time or from time to time, payment in full or in
part may also be made (i) by delivering a duly executed
notice of exercise together with irrevocable instructions by the
optionee to a broker to deliver promptly to the Company
sufficient proceeds from a sale or loan of the shares
subject to the Stock Option to pay the purchase price, or (ii) in
the form of unrestricted Stock already owned by the
optionee or, in the case of the exercise of a Non-Qualified Stock
Option, Restricted Stock subject to an award hereunder
(based, in each case, on the Fair Market Value of the Stock
on the date the Stock Option is exercised). If payment of the
option exercise price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock, such
Restricted Stock (and any replacement shares relating thereto)
shall remain restricted in accordance with the original
terms of the Restricted Stock award in question, and any additional
Stock received upon the exercise shall be subject to the
same forfeiture restrictions, unless otherwise determined
by the Committee.
No shares of Stock shall be issued until full payment
therefor has been made. Subject to any forfeiture
restrictions that may apply if a Stock Option is exercised using
Restricted Stock, an optionee shall have all of the rights
of a stockholder of the Company, including the right to vote the
shares and the right to receive dividends, with respect to
shares subject to the Stock Option when the optionee has
given written notice of exercise, has paid in full for such shares,
and, if requested, has given the representation described
in Section 13(a).
(e) Non-transferability of Options. No Stock Option
shall be transferable by the optionee other than by will or
by the laws of descent and distribution, and all Stock Options
shall be exercisable, during the optionee's lifetime, only
by the optionee or by the guardian or legal representative of the
optionee, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of
the optionee named in the option agreement and any person to whom
an option is transferred by will or the laws of descent and
distribution. Shares issued upon exercise of a Stock
Option shall be issued in the name of the optionee or, at the
request of the optionee, in the name of such optionee and
the optionee's spouse with right of survivorship.
(f) Termination by Death. Subject to Section 6(j), if
an optionee's employment terminates by reason of death, any
Stock Option held by such optionee may thereafter be exercised, to
the extent then exercisable or on such accelerated basis as
the Committee may determine, for a period of two years from
the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Subject to
Section 6(j), if an optionee's employment terminates by
reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it
was exercisable at the time of termination or on such
accelerated basis as the Committee may determine, for a period of
two years from the date of such termination of employment
or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that, if
the optionee dies within such two-year period, any
unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such two-year period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
In the event of termination of employment by reason of
Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes
of Section 422A of the Code, such Stock Option will
thereafter be treated as Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. Subject to
Section 6(j), if an optionee's employment terminates by
reason of Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it
was exercisable at the time of Retirement or on such
accelerated basis as the Committee may determine, for a period of
three years from the date of such termination of employment
or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that, if
the optionee dies within such three-year period, any
unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-year period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
In the event of termination of employment by reason of
Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes
of Section 422A of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
(i) Other Termination. Subject to Section 6(j), if an
optionee's employment terminates for any reason other than
death, Disability, Retirement, or cause, any Stock Option held by
such optionee may thereafter be exercised by the optionee,
to the extent it was exercisable at the time of
termination, for a period of three months from the date of such
termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such
three-month period, any unexercised Stock Option held by
such optionee shall, notwithstanding the expiration of such
three-month period, continue to be exercisable to the
extent to which it was exercisable at the time of death for a
period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option,
whichever period is the shorter. If an optionee's employment is
terminated for cause, all rights under any Stock Option
held by such optionee shall expire immediately upon the giving to
the optionee of notice of such termination, unless
otherwise determined by the Committee.
(j) Incentive Stock Option Limitations. To the extent
required for "incentive stock option" status under Section
422A of the Code, the aggregate Fair Market Value (determined as of
the time of grant) of the Stock with respect to which
Incentive Stock Options granted after 1986 are exercisable
for the first time by an optionee during any calendar year under
the Plan and any other stock option plan of the Company or
any subsidiary or parent corporation (within the meaning of
Section 425 of the Code) after 1986 shall not exceed $100,000. In
the event a portion of a Stock Option designated as an
Incentive Stock Option exceeds said $100,000 limitation, such
portion shall be treated as a Non-Qualified Stock Option.
The Committee is authorized to provide at grant that,
to the extent permitted under Section 422A of the Code, if
a participant's employment with the Company and its Subsidiaries is
terminated by reason of death, Disability or Retirement and
the portion of any Incentive Stock Option that is otherwise
exercisable during the post-termination period specified under
Sections 6(f), (g), or (h), applied without regard to this
Section 6(j), is greater than the portion of such option that is
exercisable as an "incentive stock option" during such
post-termination period under Section 422A, such
post-termination period shall automatically be extended (but not
beyond the stated term of such Stock Option) to the extent
necessary to permit the optionee to exercise such Incentive Stock
Option (either as an Incentive Stock Option or, if exercised
after the expiration periods that apply for the purposes of
Section 422A, as a Non-Qualified Stock Option). The Committee is
also authorized to provide at grant for a similar extension
of the post-termination exercise period in the event of a
Change in Control or a Potential Change in Control.
(k) Cashing Out of Options. In an case when a Stock
Option is exercised after the death of an optionee, the
Committee may elect to cash out all or any part of the Stock Option
by paying the person to whom the Stock Option has been
transferred by reason of the death of the Optionee an
amount, in cash or shares of Stock, equal in value to the excess of
the Fair Market Value of the Stock over the option price on
the effective date of such cash out.
(l) Substitute Options. Stock Options or Stock
Appreciation Rights may be granted under the Plan from time
to time in substitution for stock options or stock appreciation
rights held by employees of any corporation who, as the
result of a merger, consolidation, or combination of such
other corporation with, or the acquisition of all or substantially
all of the assets or stock of such other corporation by,
the Company or a Subsidiary, become employees of the Company or a
Subsidiary. The terms and conditions of any substitute
Stock Options or Stock Appreciation Rights so granted may
vary from the terms and conditions set forth in the Plan to such
extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the
provisions of the stock options or stock appreciation rights in
substitution for which they are granted; provided, however,
that in the event a stock option for which a substitute Stock
Option is being granted is an incentive stock option, no
such variation shall be permitted the effect of which would
be to adversely affect the status of any such substitute Stock
Options as an Incentive Stock Option.
Section 7. Stock Appreciation Rights
A Stock Appreciation Right may be granted in conjunction
with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such Right may be granted
either at or after the time of grant of such Stock Option. In the
case of an Incentive Stock Option, such Right may be granted only
at the time of grant of such Stock Option. A Stock Appreciation
Right independent of a Stock Option grant may also be awarded by
the Committee, in which event the provisions of this Section 7
shall be applied for purposes of determining the operation of such
Stock Appreciation Right as if a Non-Qualified Stock Option had
been granted on the date of the grant of and in conjunction with
such independent Stock Appreciation Right.
A Stock Appreciation Right granted with respect to a given
Stock Option shall terminate and no longer be exercisable to the
extent of the shares with respect to which the related Stock Option
is exercised or terminates. A Stock Appreciation Right may be
exercised by an optionee in accordance with the provisions of this
Section 7 by surrendering the applicable portion of the related
Stock Option in accordance with procedures established by the
Committee. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed
in Section 7(b). The Stock Option which has been so surrendered
shall no longer be exercisable to the extent the related Stock
Appreciation Right has been exercised.
Stock Appreciation Rights shall be subject to such terms
and conditions as shall be determined by the Committee, including
the following:
(a) Exercisability. A Stock Appreciation Right shall
be exercisable only at such time or times and to the extent
that the Stock Option to which it relates is exercisable in
accordance with the provisions of Section 6 and this
Section 7; provided, however, that a Stock Appreciation Right shall
not be exercisable during the first six months of its term
by an optionee who is actually or potentially subject to
Section 16(b) of the Exchange Act, unless otherwise determined by
the Committee in the event of death or Disability of the
optionee prior to the expiration of the six-month period.
(b) Payment Upon Exercise. Upon the exercise of a
Stock Appreciation Right, an optionee shall be entitled to
receive an amount in cash, shares of Stock, or both equal in value
to the excess of the Fair Market Value on the date of
exercise of one share of Stock over the option exercise price per
share specified in the related Stock Option multiplied by
the number of shares in respect of which the Stock
Appreciation Right shall have been exercised. The Committee shall
have the right to determine the form of payment in each
case.
In the case of a Stock Appreciation Right held by an
optionee who is actually or potentially subject to Section
16(b) of the Exchange Act, the Committee:
(i) may require that such Stock Appreciation
Right be exercised only in accordance with the
applicable "window period" provisions of Rule 16b-3; and
(ii) in the case of a Stock Appreciation Right
relating to a Non-Qualified Stock Option, may provide
that the amount to be paid upon exercise of such Stock Appreciation
Right during a Rule 16b-3 "window period" shall be
based on the highest mean sales price of the Stock as
reported on the New York Stock Exchange Composite Index on any day
during such "window period".
(c) Non-transferability. A Stock Appreciation Right
shall be transferable only when and to the extent that the
related Stock Option would be transferable under Section 6(e).
(d) Effect of Change in Control. The Committee may
provide, at the time of grant, that a Stock Appreciation
Right can be exercised only in the event of a Change in Control or
a Potential Change in Control, subject to such terms and
conditions as the Committee may specify at grant. The
Committee may also provide that, in the event of a Change in
Control or a Potential Change in Control, the amount to be
paid upon the exercise of a Stock Appreciation Right shall be based
on the Change in Control Price, subject to such terms and
conditions as the Committee may specify at grant.
Section 8. Restricted Stock
(a) Administration. Shares of Restricted Stock may be
issued either alone or in addition to other awards granted
under the Plan. The Committee shall determine the officers and key
employees to whom and the time or times at which grants of
Restricted Stock will be made, the number of shares to be
awarded, the time or times within which such awards may be subject
to forfeiture, and any other terms and conditions of the
awards, in addition to those contained in Section 8(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other
factors or criteria as the Committee shall determine. The
provisions of Restricted Stock awards need not be the same with
respect to each recipient.
(b) Awards and Certificates. Each participant
receiving a Restricted Stock award shall be issued a
certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such
participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such
award, substantially in the following form:
"The transferability of this certificate and the shares
of stock represented hereby are subject to the terms
and conditions (including forfeiture) of the Crompton & Knowles
Corporation 1988 Long Term Incentive Plan and a
Restricted Stock Agreement. Copies of such Plan and
Agreement are on file at the offices of Crompton & Knowles
Corporation, One Station Place, Metro Center, Stamford,
Connecticut 06902."
The Committee may require that the certificates evidencing
such shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a condition of
any Restricted Stock award, the participant shall have
delivered a stock power, endorsed in blank, relating to the
Stock covered by such award.
(c) Terms and Conditions. Shares of Restricted Stock
shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and
the Restricted Stock Agreement referred to in Section
8(c)(vi), during such period commencing with the date of such award
as shall be set by the Committee (the "Restriction
Period"), the participant shall not be permitted to sell,
assign, transfer, pledge, or otherwise encumber shares of
Restricted Stock. Within these limits, the Committee
may provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions, in whole or
in part, based on service, performance, and such other
facts or criteria as the Committee may determine.
(ii) Except as provided in Section 8(c)(i), the
participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a stockholder of the
Company, including the right to vote the shares and the
right to receive any cash dividends thereon; provided, however,
that the Committee may provide at the time of an award
that cash dividends shall be automatically deferred and
reinvested in additional Restricted Stock. Dividends on Restricted
Stock which are payable in Stock shall be paid in the
form of additional shares of Restricted Stock.
(iii) Except to the extent otherwise provided in
the applicable Restricted Stock Agreement and Sections
8(c)(i) and (iv), upon termination of a participant's employment
for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the
participant.
(iv) In the event of the death of a participant
during the Restriction Period or in the event of
hardship or other special circumstances of a participant whose
employment is involuntarily terminated (other than for
cause) during the Restriction Period, the Committee may waive in
whole or in part any or all remaining restrictions with
respect to such participant's shares of Restricted
Stock.
(v) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock
subject to such Restriction Period, unlegended certificates for
such shares shall be delivered to the participant.
(vi) Each award shall be confirmed by, and be
subject to the terms of, a Restricted Stock Agreement.
Section 9. Long Term Performance Awards
(a) Awards and Administration. Long Term Performance
Awards may be awarded either alone or in addition to other
awards granted under the Plan. The Committee shall determine the
nature, length, and starting date of the performance period
(the "Performance Period") for each Long Term Performance
Award, which shall be at least two years (subject to Section 10),
and shall determine the performance objectives to be used
in valuing Long Term Performance Awards and determining the
extent to which such Long Term Performance Awards have been earned.
Performance objectives may vary from participant to
participant and between groups of participants and shall be based
upon such Company, Subsidiary, business unit, or individual
performance factors or criteria as the Committee may deem
appropriate, including, but not limited to, earnings per share or
return on equity. Performance Periods may overlap and
participants may participate simultaneously with respect to
Long Term Performance Awards that are subject to different
Performance Periods and different performance factors and
criteria. Long Term Performance Awards shall be confirmed by,
and be subject to the terms of, a Long Term Performance Award
Agreement. The terms of such awards need not be the same
with respect to each participant.
At the beginning of each performance Period, the
Committee shall determine for each Long Term Performance
Award subject to such Performance Period the range of dollar values
or number of shares of Stock (including Restricted Stock)
to be awarded to the participant at the end of the
Performance Period if and to the extent that the relevant measures
of performance for such Long Term Performance Award are
met. Such dollar values or number of shares of Stock may be fixed
or may vary in accordance with such performance or other
criteria as may be determined by the Committee.
(b) Adjustment of Awards. The Committee may adjust the
performance goals and measurements applicable to Long Term
Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the
Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual
items, events, or circumstances in order to avoid windfalls
or hardships.
(c) Termination of Employment. Subject to Section 10
and unless otherwise provided in the applicable Long Term
Performance Award Agreement, if a participant terminates employment
during a Performance Period because of death, Disability,
or Retirement, such participant shall be entitled to a
payment with respect to each outstanding Long Term Performance
Award at the end of the applicable Performance Period:
(i) based, to the extent relevant under the
terms of the award, upon the participant's performance
for the portion of such Performance Period ending on the date of
termination and the performance of the Company or any
applicable business unit for the entire Performance
Period, and
(ii) prorated for the portion of the Performance
Period during which the participant was employed by the
Company or a Subsidiary, all as determined by the Committee. The
Committee may provide for an earlier payment in
settlement of such award in such amount and under such
terms and conditions as the Committee deems appropriate. Subject
to Section 10 and except as otherwise provided in the
applicable Long Term Performance Award Agreement, if a
participant terminates employment during a Performance Period for
any other reason, then such participant shall not be
entitled to any payment with respect to the Long Term
Performance Awards subject to such Performance Period, unless the
committee shall otherwise determine.
(d) Form of Payment. The earned portion of a Long Term
Performance Award may be paid currently or on a deferred
basis with such interest or earnings equivalent as may be
determined by the Committee. Payment shall be made in the
form of cash or whole shares of Stock, including Restricted
Stock, or a combination thereof, either in a lump sum payment or in
annual installments, all as the Committee shall determine.
Section 10. Change in Control Provisions
(a) Impact of Event. In the event of:
(i) a "Change in Control" as defined in Section
10(b), unless otherwise determined by the Committee or
the Board prior to the occurrence of such Change in Control, or
(ii) a "Potential Change in Control" as defined
in Section 10(c), but only if and to the extent so
determined by the Committee or the Board, the following
acceleration and valuation provisions shall apply:
(1) Any Stock Options and Stock Appreciation
Rights outstanding as of the date such Change in
Control or such Potential Change in Control is determined to have
occurred and not then exercisable and vested shall
become fully exercisable and vested; provided,
however, that, in the case of Stock Appreciation Rights held by an
optionee who is actually subject to Section 16(b)
of the Exchange Act, such Stock Appreciation Rights shall not
become exercisable and vested unless they shall have
been outstanding for at least six months at the
date such Change in Control is determined to have occurred.
(2) The restrictions and forfeiture provisions
applicable to any Restricted Stock shall lapse, and
such Restricted Stock shall become fully vested.
(3) The value of all outstanding Stock Options,
Stock Appreciation Rights, and Restricted Stock
shall, unless otherwise determined by the Committee at or after
grant, be cashed out on the basis of the "Change in
Control Price", as defined in Section 10(d), as of
the date such Change in Control or such Potential Change in Control
is determined to have occurred or such other date
as the Committee may determine prior to the Change in
Control.
(4) Any outstanding Long Term Performance Awards
shall, unless the Committee otherwise determines,
be vested and paid out based on the prorated target results for the
Performance Periods in question, unless the
Committee provides prior to the Change in Control
event for a different payment.
(b) Definition of "Change in Control". For purposes of
Section 10(a), a "Change in Control" means a change in
control of the Company of a nature that would be required, to be
reported in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the effective date of the
Plan, pursuant to Section 13 or 15(d) of the Exchange Act; provided
that, without limitation, such a "Change in Control"
shall be deemed to have occurred if:
(i) A third person, including a "group" as such
term is used in Section 13(d)(3) of the Exchange
Act, other than the trustee of a Company employee benefit plan,
becomes the beneficial owner, directly or
indirectly, of 20 percent or more of the combined voting power
of the Company's outstanding voting securities
ordinarily having the right to vote for the
election of directors of the Company;
(ii) During any period of 24 consecutive months
individuals who, at the beginning of such
consecutive 24-month period, constitute the Board of Directors of
the Company (the "Board" generally and as of the
effective date of the Plan the "Incumbent Board") cease for
any reason (other than retirement upon reaching normal
retirement age, disability, or death) to constitute
at least a majority of the Board; provided that any person becoming
a director subsequent to the effective date of the
Plan whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least
three-quarters of the directors comprising the
Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in
connection with an actual or threatened election
contest relating to the election of the Directors of the Company,
as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or
(iii) The Company shall cease to be a publicly
owned corporation having its outstanding Stock
listed on the New York Stock Exchange or quoted in the NASDAQ
National Market System.
(c) Definition of "Potential Change in Control". For
purposes of Section 10(a), a "Potential Change in
Control" means the happening of any one of the following:
(i) The entering into an agreement by the
Company, the consummation of which would result in
a Change in Control of the Company as defined in Section 10(b); or
(ii) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person, or
group (other than the trustee of a Company employee benefit plan)
of securities of the Company representing five
percent or more of the combined voting power of the Company's
outstanding voting securities and the adoption by the
Board of a resolution to the effect that a
Potential Change in Control of the Company has occurred for
purposes of the Plan.
(d) Change in Control Price. For purposes of this
Section 10, "Change in Control Price" means the highest
price per share paid in any transaction reported on the New York
Stock Exchange Composite Index or paid or offered in
any bona fide transaction related to an actual or potential
Change in Control of the Company at any time during the
preceding 60-day period as determined by the Committee,
except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options,
such price shall be based only on transactions reported
for the date on which the Committee decides to cash out such Stock
Options.
Section 11. Amendments and Termination
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made which would
impair the rights of an optionee under a Stock Option or a
recipient of a Stock Appreciation Right, Restricted Stock award, or
Long Term Performance Award therefore granted without the
optionee's or recipient's consent or which, without the approval of
the Company's stockholders, would:
(a) except as expressly Provided in the Plan, increase
the total number of shares reserved for the purpose of
the Plan;
(b) decrease the option price of any Stock Option to
less than the Fair Market Value on the date of grant;
(c) change the class of employees eligible to
participate in the Plan; or
(d) extend the maximum option periods under Section
6(b).
The Committee may amend the terms of any Stock Option or
other award theretofore granted, prospectively or
retroactively, but no such amendment shall impair the right of any
holder without the holder's consent. Subject to the above
provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting
rules, as well as other developments.
Section 12. Unfunded Status of Plan
It is presently intended that the Plan constitute an
"unfunded" plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to
deliver Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the
Plan.
Section 13. General Provisions
(a) All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to
such stock transfer orders and other restrictions as the committee
may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require
any optionee purchasing shares pursuant to a Stock Option
to represent to and agree with the Company in writing that the
optionee is acquiring the shares without a view to the
distribution thereof.
(b) Nothing contained in this Plan shall prevent the
Company or a Subsidiary from adopting other or additional
compensation arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any
employee any right to continued employment nor shall it
interfere in any way with the right of the Company or a Subsidiary
to terminate the employment of any employee at any time.
(d) No later than the date on which the Company is
required to withhold taxes in respect of an award, the
participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any
Federal, state, local, or other taxes of any kind required by
law to be withheld with respect to such award or any payment or
distribution made in connnection therewith. Unless
otherwise determined by the Committee, withholding obligations may
be settled with Stock, including Stock that is part of the
award that gives rise to the withholding requirement;
provided, however, that in the case of any optionee who is actually
subject to Section 16(b) of the Exchange Act, any such
settlement shall comply with the applicable requirements of Rule
16(b)-3. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and
the Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any
payment otherwise due to the participant.
(e) The reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall
only be permissible if sufficient shares of Stock are available
under Section 3 for such reinvestment (taking into account
then outstanding Stock Options and other Plan awards).
(f) The Committee shall establish such procedures as
it deems appropriate for a participant to designate a
beneficiary to whom any amounts payable with respect to outstanding
awards under the Plan in the event of the participant's
death are to be paid.
(g) The Plan and all awards made and actions taken
thereunder shall be governed by and construed in
accordance with the laws of the State of Connecticut.
Section 14. Effective Date of Plan; Shareholder Approval
The Plan shall be effective as of the date it is adopted by
the Board, subject however to the approval of the Plan by the
holders of at least a majority of the outstanding shares of Stock
of the Company present or represented and entitled to vote at a
meeting of shareholders of the Company. Awards may be made under
the Plan on and after its effective date; provided, however, that
any such awards shall be null and void if shareholder approval of
the Plan is not obtained within 12 months of the adoption of the
Plan by the Board.
Section 15. Term of Plan
No Stock Option, Stock Appreciation Right, Restricted Stock
award, or Long Term Performance Award shall be granted on or after
the tenth anniversary of the effective date of the Plan, but awards
granted prior to such tenth anniversary (including, without
limitation, Long Term Performance Awards for Performance Periods
commencing prior to such tenth anniversary) may extend beyond that
date.
Adopted: April 11, 1989
Amended: October 17, 1990
Amended: May 19, 1993
Amended: October 20, 1993
CROMPTON & KNOWLES CORPORATION EXHIBIT 10 (u)
1993 Stock Option Plan for Non - Employee Directors
1. Purpose
The purpose of this 1993 Stock Option Plan for Non - Employee
Directors (the "Plan") of Crompton & Knowles Corporation (the
"Company") is to attract and retain highly qualified non-employee
directors of the Company and to encourage non-employee directors to
own shares of the Company's Common Stock, $.10 par value ("Common
Stock").
2. Participation
All directors of the Company who are not employees of the
Company or any subsidiary of the Company shall be eligible to
participate in the Plan.
3. Administration
(a) Grants. Grants of stock options under the Plan shall be
automatic as provided in Section 6.
(b) Committee. A committee (the "Committee"), which shall be
the Committee on Executive Compensation of the Board or
such other committee composed of three or more directors
or other persons appointed for such purpose by the Board,
shall administer the Plan. If at any time no committee designated
to administer the Plan shall be in office, the functions
of the Committee shall be exercised by the Board.
(c) Rules; Committee Action. The Committee shall have the
authority to adopt, alter and repeal such administrative
rules, guidelines, and practices governing the Plan as it
shall from time to time deem advisable and to interpret the terms
and provisions of the Plan and any award issued under the
Plan (and any agreement relating thereto). The Committee
may act only by a majority of its members then in
office, except that the members thereof may authorize any
one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee.
4. Stock Available for Options
(a) Shares Available. Subject to adjustment under subsection
(b), options may be granted under the Plan in respect of
a maximum of 100,000 shares of Common Stock. Shares
subject to an option that expires or terminates
unexercised shall again be available for options hereunder to the
extent of such expiration or termination. Shares issued
under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(b) Adjustment. In the event of any stock dividend,
extraordinary cash dividend, creation of a class of
equity securities, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange of
shares, issuance of warrants or activation of rights to
purchase Common Stock at a price substantially below fair
market value, or similar change affecting the Common
Stock, such adjustment shall be made in the maximum number and
kind of shares subject to the Plan, in the number and kind of
shares subject to outstanding options and subsequent
options grants, and in the purchase price of outstanding
options as the Board shall deem to be appropriate under the
circumstances to prevent substantial dilution or enlargement of
the rights granted to participants hereunder.
5. Nonstatutory Stock Options
All options granted under the Plan shall be nonstatutory
options not intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
6. Terms and Conditions of Options
Each option granted under the Plan shall be evidenced by a
written instrument in such form as the Committee may approve and
shall be subject to the following terms and conditions:
(a) Grant of Options. As used in the Plan, the term "Grant
Date" means the date of the first meeting of the Board in
each calendar year (or, in the case of a director first
elected or appointed to the Board after such first meeting, the
date of the meeting at which such director is first elected
or appointed). Each year, an option shall be granted
automatically to each eligible director on the Grant Date
to purchase that number of full shares of Common Stock
determined by dividing the amount of the annual retainer then
payable to directors for service on the Board by the Fair
Market Value (as hereinafter defined) of the Common Stock
on the Grant Date.
(b) Purchase Price. The purchase price for Common Stock
subject to an option shall be 100% of the Fair Market
Value of the Common Stock on the Grant Date.
(c) Fair Market Value. As used in the Plan, the term "Fair
Market Value" means the mean, as of any given date,
between the highest and lowest reported sales prices of
the Common Stock on the New York Stock Exchange Composite
Index on such date (or, if there is no reported sale on such date,
on the last preceding date on which any reported sale
occurred).
(d) Expiration Date of Options. The expiration date of each
option shall be fixed by the Committee, but no option
granted under the Plan shall be exercisable more than ten
years after the Grant Date.
(e) Exercisability of Options. Options shall be exercisable
in whole or in part with respect to 50% of the shares
covered thereby on or after the first anniversary of the
Grant Date and as to the remaining 50% of such shares on
or after the second anniversary of the Grant Date.
(f) Termination of Service. In the event service on the
Board by the holder of any option terminates for any
reason other than disability, death, or Change in Control
(as hereinafter defined), the then outstanding options of such
holder may thereafter be exercised, to the extent
exercisable at the time of such termination, for a period
of one year from the date of such termination but in no
event after the stated expiration date of each option.
(g) Disability or Death; Change in Control. In the event
service on the Board by the holder of any option
terminates by reason of disability, death, or Change in
Control, the then outstanding options of such holder will become
immediately exercisable, to the extent not otherwise
exercisable, and will expire one year after such
termination. Such options may be exercised during such
one-year period regardless of their stated expiration dates. The
rights of the option holder may be exercised by the
holder's guardian or legal representative in the case of
disability and by the beneficiary designated by the
holder in writing delivered to the Company or, if none has been
designated, the holder's estate in the case of death.
(h) Exercise and Payment. Options may be exercised only by
written notice to the Secretary of the Company
accompanied by payment of the full purchase price for the
shares as to which they are exercised. The purchase price may be
paid in cash, in shares of Common Stock already owned for
at least six months by the optionee (or other person
entitled to exercise the option), or partly in cash and
partly in such shares of Common Stock. The value of shares
delivered in payment of the purchase price shall be their
Fair Market Value, as determined above, as of the date of
exercise. Upon receipt of such notice and payment, the
Company shall promptly issue and deliver to the optionee (or other
person entitled to exercise the option) a certificate or
certificates for the number of shares as to which the
exercise is made.
(i) Change in Control. As used herein, a "Change in Control"
means a change in control of the Company of a nature that
would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K, as in effect on the
effective date of the Plan, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a "Change in
Control" shall be deemed to have occurred if:
(i) A third person, including a "group" as such term
is used in Section 13(d)(3) of the Exchange Act,
other than the trustee of a Company employee
benefit plan, becomes the beneficial owner, directly or
indirectly, of 20 percent or more of the combined voting
power of the Company's outstanding voting
securities ordinarily having the right to vote for
the election of directors of the Company;
(ii) During any period of 24 consecutive months
individuals who, at the beginning of such
consecutive 24-month period, constitute the Board
of Directors of the Company (the "Board" generally and as of the
effective date of the Plan the "Incumbent Board")
cease for any reason (other than retirement upon
reaching normal retirement age, disability, or
death) to constitute at least a majority of the Board;
provided that any person becoming a director subsequent to the
effective date of the Plan whose election, or
nomination for election by the Company's
shareholders, was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board
(other than an election or nomination of an individual
whose initial assumption of office is in
connection with an actual or threatened election
contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as
though such person were a member of the Incumbent
Board; or
(iii) The Company shall cease to be a publicly owned
corporation having its outstanding stock listed on
the New York Stock Exchange or quoted in the
NASDAQ National Market System.
7. Options not Transferable
Options granted under the Plan shall not be transferable by
the holder other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income
Security Act ("ERISA") or the rules thereunder.
8. Limitation of Rights
Neither the Plan nor the granting of any option hereunder
shall constitute an agreement or understanding that the Company
will retain a director for any period of time or at any particular
rate of compensation. The holder of an option shall have no rights
as a shareholder with respect to shares as to which the option has
not been exercised and payment made hereunder.
9. Purchase for Investment
Unless the options and shares of Common Stock covered by the
Plan have been registered under the Securities Act of 1933, as
amended, or the Company has determined that such registration is
unnecessary, each holder exercising an option may be required by
the Company to represent in writing that such holder is acquiring
the shares subject to the option for his own account for investment
and not with a view to, or for sale in connection with, the
distribution of any part thereof.
10. Compliance with Regulations
It is the intention of the Company that the Plan comply in all
respects with Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act and that eligible directors remain disinterested
persons for purposes of administering other employee benefit plans
of the Company and having such other plans be exempt from Section
16(b) of the Exchange Act. Therefore, if any Plan provision or
Committee rule is later found not to be in compliance with Rule
16b-3 or if any Plan provision or Committee rule would disqualify
eligible directors from remaining disinterested persons, that
provision or rule shall be deemed null and void, and in all events
the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
11. Effective Date of the Plan
The Plan shall be effective as of the date it is adopted by
the Board. Options granted under the Plan may not be exercised
prior to the time the Plan shall have been approved by the holders
of a majority of the outstanding Common Stock present or
represented and entitled to vote at a meeting of shareholders of
the Company. If such approval of the Plan by the shareholders is
not obtained within one year of the adoption of the Plan by the
Board, the Plan and any options granted pursuant to the Plan shall
be null and void.
12. Amendment of the Plan
The Board may amend, suspend, or terminate the Plan or any
portion thereof at any time, provided that no amendment affecting
the amount of Common Stock subject to options granted under the
Plan, the exercise price of options, or the timing of grants may be
made more than once every six months, other than to comport with
changes in the Code, ERISA, or the rules thereunder.
13. Governing Law
The Plan shall be governed by and interpreted in accordance
with the laws of the Commonwealth of Massachusetts.